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What changed in Riley Exploration Permian, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Riley Exploration Permian, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+302 added−297 removedSource: 10-K (2025-03-05) vs 10-K (2024-03-06)

Top changes in Riley Exploration Permian, Inc.'s 2024 10-K

302 paragraphs added · 297 removed · 189 edited across 5 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

118 edited+56 added−75 removed279 unchanged
Biggest changeThe amount of any dividend will depend on the amount of cash we generate from operations, which will fluctuate from quarter to quarter based on, among other things: • the volumes of crude oil, natural gas and NGLs that we produce; • market prices of crude oil, natural gas and NGLs and their effect on our drilling and development plan; • the levels of our operating expenses, maintenance expenses and general and administrative expenses; • regulatory action affecting: • the supply of, or demand for, crude oil, natural gas and NGLs; • our operating costs or our operating flexibility; • prevailing economic conditions; and • adverse weather conditions. 53 Table of Contents In addition, the actual amount of cash we will have available for dividends will depend on other factors, some of which are beyond our control, including: • our debt service requirements and other liabilities; • our ability to borrow under our debt agreements to fund our capital expenditures and operating expenditures and to pay dividends; • fluctuations in our working capital needs; • restrictions on dividends contained in any of our debt agreements; • the cost of acquisitions, if any; and • other business risks affecting our cash levels.
Biggest changeThe amount of any dividend will depend on the amount of cash we generate from operations, which will fluctuate from quarter to quarter based on, among other things: • the volumes of crude oil, natural gas and NGLs that we produce; • market prices of crude oil, natural gas and NGLs and their effect on our drilling and development plan; • the levels of our operating expenses, maintenance expenses and general and administrative expenses; • regulatory action affecting: 53 Table of Contents • the supply of, or demand for, crude oil, natural gas and NGLs; • our operating costs or our operating flexibility; • prevailing economic conditions; and • adverse weather conditions.
The TCJA remains unclear in 51 Table of Contents some respects and continues to be subject to potential amendments and technical corrections. The United States Treasury Department and the IRS have issued significant guidance since the TCJA was enacted, interpreting the TCJA and clarifying some of the uncertainties, and are continuing to issue new guidance.
The TCJA remains unclear in some respects and continues to be subject to potential amendments and technical 51 Table of Contents corrections. The United States Treasury Department and the IRS have issued significant guidance since the TCJA was enacted, interpreting the TCJA and clarifying some of the uncertainties, and are continuing to issue new guidance.
Our bylaws provide that, unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on the Company’s behalf, any action asserting a breach of fiduciary duty owed by Company’s directors, officers, other employees or stockholders to the Company or its stockholders, any action asserting a claim against the Company arising pursuant to the Delaware General Corporation Law or as to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware, or any action asserting a claim arising pursuant to the Company’s certificate of incorporation or bylaws or governed by the internal affairs doctrine.
Our bylaws provide that, unless the Company consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on the Company’s behalf, any action asserting a breach of fiduciary duty owed by Company’s directors, officers, other employees or stockholders to the Company or our stockholders, any action asserting a claim against the Company arising pursuant to the Delaware General Corporation Law or as to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware, or any action asserting a claim arising pursuant to the Company’s certificate of incorporation or bylaws or governed by the internal affairs doctrine.
Enhanced scrutiny on ESG matters related to, among other things, concerns raised by advocacy groups about climate change, hydraulic fracturing, natural gas flaring, GHG emissions, waste disposal, oil spills, and explosions of natural gas transmission pipelines may lead to increased regulatory scrutiny, which may, in turn, lead to new state and federal safety and environmental laws, regulations, guidelines, and enforcement interpretations.
Enhanced scrutiny on ESG matters related to, among other things, concerns raised by investors and advocacy groups about climate change, hydraulic fracturing, natural gas flaring, GHG emissions, waste disposal, oil spills, and explosions of natural gas transmission pipelines may lead to increased regulatory scrutiny, which may, in turn, lead to new state and federal safety and environmental laws, regulations, guidelines, and enforcement interpretations.
Further, many factors may curtail, delay, or cancel our scheduled drilling projects, including the following: • delays and increased costs imposed by or resulting from compliance with environmental and other regulatory requirements including limitations on or resulting from wastewater discharge and disposal, subsurface injections, greenhouse gas emissions, and hydraulic fracturing; • pressure or irregularities in geological formations; 41 Table of Contents • increases in the cost of, or shortages or delays in availability of drilling rigs and qualified personnel for hydraulic fracturing activities; • shortages of or delays in obtaining water resources, suitable proppant, and chemicals in sufficient quantities for use in hydraulic fracturing activities; • equipment failures or accidents; • lack of available gathering facilities or delays in construction of gathering facilities; • lack of available capacity or disruptions in operation of interconnecting transmission pipelines and processing facilities; • adverse weather conditions, such as tornadoes, droughts, ice storms, and extreme freeze events; • lack of available treatment or disposal options for oil and natural gas waste, including produced water; • environmental hazards, such as oil and natural gas leaks, oil spills, pipeline and tank ruptures, encountering naturally occurring radioactive materials, and unauthorized discharges of brine, well stimulation and completion fluids, toxic gases or other pollutants into the air, surface and subsurface environment; • issues related to permitting under and compliance with environmental and other governmental regulations; • declines or volatility in oil, natural gas, and NGL prices; • limited availability of financing at acceptable terms; • title problems or legal disputes regarding leasehold rights; and • limitations in the market for oil, natural gas, and NGLs.
Further, many factors may curtail, delay, or cancel our scheduled drilling projects, including the following: • delays and increased costs imposed by or resulting from compliance with environmental and other regulatory requirements including limitations on or resulting from wastewater discharge and disposal, subsurface injections, greenhouse gas emissions, and hydraulic fracturing; • pressure or irregularities in geological formations; • increases in the cost of, or shortages or delays in availability of drilling rigs and qualified personnel for hydraulic fracturing activities; • shortages of or delays in obtaining water resources, suitable proppant, and chemicals in sufficient quantities for use in hydraulic fracturing activities; • equipment failures or accidents; • lack of available gathering facilities or delays in construction of gathering facilities; • lack of available capacity or disruptions in operation of interconnecting transmission pipelines and processing facilities; • adverse weather conditions, such as tornadoes, droughts, ice storms, and extreme freeze events; • lack of available treatment or disposal options for oil and natural gas waste, including produced water; • environmental hazards, such as oil and natural gas leaks, oil spills, pipeline and tank ruptures, encountering naturally occurring radioactive materials, and unauthorized discharges of brine, well stimulation and completion fluids, toxic gases or other pollutants into the air, surface and subsurface environment; • issues or challenges related to permitting under and compliance with environmental and other governmental regulations; • declines or volatility in oil, natural gas, and NGL prices; 43 Table of Contents • limited availability of financing at acceptable terms; • title problems or legal disputes regarding leasehold rights; and • limitations in the market for oil, natural gas, and NGLs.
While no comprehensive climate change legislation has been implemented at the federal level, the EPA and states or groupings of states have pursued legal initiatives in recent years that seek to reduce GHG emissions through efforts that include consideration of cap-and-trade programs, carbon taxes, GHG reporting and tracking programs and regulations that directly limit GHG emissions from certain sources.
While no comprehensive climate change legislation has been implemented at the federal level, the EPA, the BLM, and states or groupings of states have pursued legal initiatives in recent years that seek to reduce GHG emissions through efforts that include consideration of cap-and-trade programs, carbon taxes, GHG reporting and tracking programs and regulations that directly limit GHG emissions from certain sources.
Such enforcement actions often involve taking difficult and costly compliance measures or corrective actions. Failure to comply with these laws and regulations may result in the assessment of sanctions, including administrative, civil or criminal penalties, the imposition of investigatory or remedial obligations, and the issuance of orders limiting or prohibiting some or all of our operations.
Such enforcement actions often involve taking difficult and costly compliance measures or corrective actions. Failure to comply with these laws and regulations may result in the assessment of sanctions, including administrative, civil or criminal fines and penalties, the imposition of investigatory or remedial obligations, and the issuance of orders limiting or prohibiting some or all of our operations.
Our bylaws provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between the Company and its stockholders, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes with the Company or its directors, officers, employees or stockholders.
Our bylaws provide that the Court of Chancery of the State of Delaware will be the exclusive forum for substantially all disputes between the Company and our stockholders, which could limit stockholders’ ability to obtain a favorable judicial forum for disputes with the Company or our directors, officers, employees or stockholders.
Among other things, these provisions: • allow the authorized number of directors to be changed only by resolution of the Board; • after a certain date, limit the manner in which stockholders can remove directors from the Board; • establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to the Board; • after a certain date, require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by written consent; • limit who may call stockholder meetings; • authorize the Board to issue preferred stock without stockholder approval, which could be used to institute a shareholder rights plan, or so-called “poison pill,” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by the Board; and • after a certain date, require the approval of the holders of at least 66 2/3% of the votes that all the stockholders would be entitled to cast to amend or repeal certain provisions of our charter or bylaws.
Among other things, these provisions: 55 Table of Contents • allow the authorized number of directors to be changed only by resolution of the Board; • after a certain date, limit the manner in which stockholders can remove directors from the Board; • establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to the Board; • after a certain date, require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by written consent; • limit who may call stockholder meetings; • authorize the Board to issue preferred stock without stockholder approval, which could be used to institute a shareholder rights plan, or so-called “poison pill,” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by the Board; and • after a certain date, require the approval of the holders of at least 66 2/3% of the votes that all the stockholders would be entitled to cast to amend or repeal certain provisions of our charter or bylaws.
Increases in the differential between the benchmark prices for oil and natural gas, such as the NYMEX WTI and NYMEX Henry Hub, and the realized price we receive could significantly reduce our revenues and our cash flow from operations.
Increases in the negative price differential between the benchmark prices for oil and natural gas, such as the NYMEX WTI and NYMEX Henry Hub, and the realized price we receive could significantly reduce our revenues and our cash flow from operations.
While reporting on ESG metrics remains voluntary, access to capital and investors is likely to favor companies with robust ESG programs in place. Finally, increasing concentrations of GHG in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, floods and other climatic events.
While reporting on ESG metrics remains voluntary, access to capital and investors is likely to favor companies with robust ESG programs in place. Finally, increasing concentrations of GHG in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, floods, extreme temperatures and other climatic events.
Any acquisition involves potential risks that may disrupt our business, including the following, among other things: • mistaken assumptions about volumes or the timing of those volumes, revenues or costs, including synergies; • an inability to successfully integrate the acquired assets or businesses; 38 Table of Contents • the assumption of unknown liabilities; • exposure to potential lawsuits; • limitations on rights to indemnity from the seller; • the diversion of management’s and employees’ attention from other business concerns; • unforeseen difficulties operating in new geographic areas; and • customer or key employee losses at the acquired businesses.
Any acquisition involves potential risks that may disrupt our business, including the following, among other things: • mistaken assumptions about volumes or the timing of those volumes, revenues or costs, including synergies; • an inability to successfully integrate the acquired assets or businesses; • the assumption of unknown liabilities; • exposure to potential lawsuits; • limitations on rights to indemnity from the seller; • the diversion of management’s and employees’ attention from other business concerns; • unforeseen difficulties operating in new geographic areas; and • customer or key employee losses at the acquired businesses.
Our undeveloped acreage must be drilled before lease expirations to hold the acreage by production or by other operations. In highly competitive markets for acreage, failure to drill sufficient wells to hold acreage could result in a substantial lease renewal cost or, if renewal is not feasible, loss of our lease and prospective drilling opportunities.
Our undeveloped acreage must be drilled before lease expirations to hold the acreage by production or by other methods. In highly competitive markets for acreage, failure to drill sufficient wells to hold acreage could result in a substantial lease renewal cost or, if renewal is not feasible, loss of our lease and prospective drilling opportunities.
Our exploration, exploitation, development, and production activities and equipment could be adversely affected by extreme weather conditions, such as floods, lightening, drought, ice and other storms, prolonged freeze events, and tornadoes, which may cause a loss of production from temporary cessation of activity or lost or damaged facilities and equipment.
Our exploration, exploitation, development, and production activities and equipment could be adversely affected by extreme weather conditions, such as floods, lightning, drought, ice and other storms, prolonged freeze events, and tornadoes, which may cause a loss of production from temporary cessation of activity or lost or damaged facilities and equipment.
We may, in the future, determine it prudent or be required by applicable laws or regulations to establish and fund one or more decommissioning, surface equipment removal, plugging, abandonment, and reclamation reserve funds to provide for payment of future decommissioning, surface equipment removal, plugging, abandonment, and reclamation costs, which could decrease funds available to service debt obligations.
We may, in the future, determine it prudent or be required by applicable laws or regulations to establish and fund one or more decommissioning, removal, plugging, abandonment, and reclamation reserve funds to provide for payment of future decommissioning, removal, plugging, abandonment, and reclamation costs, which could decrease funds available to service debt obligations.
In addition, such reserves, if established, may not be sufficient to satisfy such future decommissioning, surface equipment removal, plugging, abandonment, and reclamation costs and we will be responsible for the payment of the balance of such costs. SEC rules could limit our ability to book additional proved undeveloped reserves in the future.
In addition, such reserves, if established, may not be sufficient to satisfy such future decommissioning, removal, plugging, abandonment, and reclamation costs and we will be responsible for the payment of the balance of such costs. SEC rules could limit our ability to book additional proved undeveloped reserves in the future.
At December 31, 2023, the majority of our total estimated proved reserves were attributable to properties located in the Northwest Shelf within the Permian Basin of West Texas and Southeastern New Mexico, an area in which industry activity has increased rapidly.
At December 31, 2024, the majority of our total estimated proved reserves were attributable to properties located in the Northwest Shelf within the Permian Basin of West Texas and Southeastern New Mexico, an area in which industry activity has increased rapidly.
Sales by the Company of common stock under the ATM or other sales by the Company of securities under a registration statement or in private placements, could be dilutive to existing shareholders. Additionally, sales by the Company or selling stockholders of securities, or the perception that such sales may occur, could adversely affect the trading price for our common stock.
Sales by the Company of securities under a registration statement or in private placements, could be dilutive to existing shareholders. Additionally, sales by the Company or selling stockholders of securities, or the perception that such sales may occur, could adversely affect the trading price for our common stock.
Negative public perception could cause the permits the Company requires to conduct its operations to be withheld, delayed, or burdened by requirements that restrict the Company’s ability to profitably conduct its business. We may be unable to quickly adapt to changes in market/investor priorities.
Negative public perception could cause the permits the Company requires to conduct our operations to be withheld, delayed, or burdened by requirements that restrict the Company’s ability to profitably conduct our business. We may be unable to quickly adapt to changes in market/investor priorities.
In the future, we may not be able to access adequate funding under our Credit Facility as a result of a decrease in borrowing base due to the issuance of new indebtedness, the outcome of a subsequent borrowing base redetermination or an unwillingness or inability on the part of lending counterparties to meet their funding obligations and the inability of other lenders to provide additional funding to cover the defaulting lender’s portion.
In the future, we may not be able to access adequate funding under our Credit Facility as a result of a decrease in borrowing base due to the issuance of new indebtedness, the outcome of a subsequent borrowing base redetermination or an unwillingness or inability on the part of lending counterparties to meet their funding obligations and the inability of other lenders to provide 39 Table of Contents additional funding to cover the defaulting lender’s portion.
We have exposure to credit risk through receivables from purchasers of our oil, natural gas and NGL production. One purchaser accounted for 70% of our revenues and another purchaser accounted for more than 10% of our revenues for the year ended December 31, 2023.
We have exposure to credit risk through receivables from purchasers of our oil, natural gas and NGL production. One purchaser accounted for 70% of our revenues and another purchaser accounted for more than 10% of our revenues for the year ended December 31, 2024.
These provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or its directors, officers, employees or stockholders, which may discourage such lawsuits against the Company and its directors, officers, employees or stockholders.
These provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or our directors, officers, employees or stockholders, which may discourage such lawsuits against the Company and our directors, officers, employees or stockholders.
We are unable to predict sudden changes in a counterparty’s creditworthiness or ability to perform. Even if we do accurately predict sudden changes, our ability to negate the risk may be limited depending upon market conditions. During periods of declining commodity prices, our derivative contract receivable positions could generally increase, which increases our counterparty credit exposure.
We are unable to predict sudden changes in a counterparty’s creditworthiness or ability to perform. Even if we do accurately predict sudden changes, our ability to negate the risk may be limited depending upon market conditions. 40 Table of Contents During periods of declining commodity prices, our derivative contract receivable positions could generally increase, which increases our counterparty credit exposure.
We are responsible for compliance with all applicable laws and regulations regarding the decommissioning, surface equipment removal, plugging, abandonment, and reclamation of our facilities at the end of their economic life, the costs of which may be substantial.
We are responsible for compliance with all applicable laws and regulations regarding the decommissioning, removal, plugging, abandonment, and reclamation of our facilities at the end of their economic life, the costs of which may be substantial.
Historically, one of the key drivers in the unconventional resource industry has been growth in production and reserves. With historical volatility in oil and natural gas prices and the likelihood that rising interest rates will increase the cost of borrowing, capital efficiency and free cash flow from earnings have become the key drivers for energy companies, particularly shale producers.
Historically, one of the key drivers in the unconventional resource industry has been growth in production and reserves. With historical volatility in oil and natural gas prices and the potential for rising interest rates will increase the cost of borrowing, capital efficiency and free cash flow from earnings have become the key drivers for energy companies, particularly shale producers.
For example, we cannot control the success of drilling and development activities on 34 Table of Contents properties operated by third parties, which depend on a number of factors under the control of a third-party operator, including such operator’s determinations with respect to, among other things, the nature and timing of drilling and operational activities, the timing and amount of capital expenditures and the selection of suitable technology.
For example, we cannot control the success of drilling and development activities on properties operated by third parties, which depend on a number of factors under the control of a third-party operator, including such operator’s determinations with respect to, among other things, the nature and timing of drilling and operational activities, the timing and amount of capital expenditures and the selection of suitable technology.
FERC may also impose administrative and criminal remedies and 46 Table of Contents disgorgement of profits associated with any violation. While our operations have not been regulated by FERC as a natural gas company under the NGA, FERC has adopted regulations that may subject certain of our otherwise non-FERC jurisdictional facilities to FERC annual reporting requirements.
FERC may also impose administrative and criminal remedies and disgorgement of profits associated with any violation. While our operations have not been regulated by FERC as a natural gas company under the NGA, FERC has adopted regulations that may subject certain of our otherwise non-FERC jurisdictional facilities to FERC annual reporting requirements.
If market or other economic conditions deteriorate or if oil, natural gas and NGL prices decline, we may incur impairment charges, which may have a material adverse effect on our results of operations.
If market or other economic conditions deteriorate or if oil, natural gas and NGL prices decline, we may incur impairment losses, which may have a material adverse effect on our results of operations.
In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against those companies. Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources, which could significantly harm our business, financial condition, results of operations and reputation.
In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against those companies. Such litigation, if instituted, could result in substantial costs and 52 Table of Contents diversion of management attention and resources, which could significantly harm our business, financial condition, results of operations and reputation.
Any drilling activities we are able to 40 Table of Contents conduct on these potential locations may not be successful or result in our ability to add additional proved reserves to our overall proved reserves or may result in a downward revision of our estimated proved reserves, which could have a material adverse effect on our future business and results of operations.
Any drilling activities we are able to conduct on these potential locations may not be successful or result in our ability to add additional proved reserves to our overall proved reserves or may result in a downward revision of our estimated proved reserves, which could have a material adverse effect on our future business and results of operations.
Spills or other releases of regulated substances, including such spills and releases that occur in the future, could expose us to material losses, expenditures and liabilities under applicable environmental laws and regulations.
Spills or other releases of regulated substances, including such spills and releases that occur in the future, could expose us to material losses, expenditures and liabilities under applicable environmental and health and safety laws and regulations.
It is not possible to predict these costs with certainty since they will be a function of regulatory requirements at the time of decommissioning, surface equipment removal, plugging, abandonment, and reclamation.
It is not possible to predict these costs with certainty since they will be a function of regulatory requirements at the time of decommissioning, removal, plugging, abandonment, and reclamation.
FERC regulation may indirectly impact gathering services not directly subject to FERC regulation. FERC’s policies and practices across the range of its natural gas regulatory activities, including, for example, its policies on interstate open access transportation, ratemaking, capacity release, and market center promotion may indirectly affect intrastate markets.
FERC regulation may indirectly impact gathering services not directly subject to FERC regulation. FERC’s policies and practices across the range of its natural gas regulatory activities, including, for example, its policies on interstate open access 48 Table of Contents transportation, ratemaking, capacity release, and market center promotion may indirectly affect intrastate markets.
These factors include the following: • worldwide and regional economic conditions impacting the global supply and demand for oil, natural gas, and NGLs; • private and government investment in and regulatory incentives for non-fossil fuel energy production; • changes in applicable laws and regulations; • the price and quantity of foreign imports, including foreign oil; • the actions by members of OPEC+; • political, economic, and military conditions in or affecting other producing countries, including embargoes or conflicts in the Middle East, Africa, South America and Russia; • the level of global oil and natural gas exploration and production activity; 28 Table of Contents • the level of global oil and natural gas inventories; • prevailing prices on local price indices in the areas in which we operate; • the cost of producing and delivering oil and natural gas and conducting other operations; • the recovery rates of new oil, natural gas and NGL reserves; • lead times associated with acquiring equipment and products, and availability of qualified personnel; • late deliveries of supplies; • technical difficulties or failures; • the proximity, capacity, cost, and availability of gathering and transportation facilities; • localized and global supply and demand fundamentals and transportation availability; • localized and global weather conditions and events; • public health concerns such as pandemic diseases; • technological advances affecting energy consumption, including advances in exploration, development and production technologies; • shareholder activism or activities by non-governmental organizations to restrict the exploration, development and production of oil, natural gas, and NGLs; • uncertainty in capital and commodities markets and the ability of companies in our industry to raise equity capital and debt financing; • the price and availability of alternative fuels; and • domestic, local, and foreign governmental regulation and taxes.
These factors include the following: • worldwide and regional economic conditions impacting the global supply and demand for oil, natural gas, and NGLs; • private and government investment in, regulatory incentives for, and purchaser and consumer preferences for non-fossil fuel energy production; • changes in applicable laws and regulations; • the price and quantity of foreign imports, including foreign oil; • the actions by members of OPEC+; • political, economic, and military conditions in or affecting other producing countries, including embargoes or conflicts in the Middle East, Africa, South America and Russia; • the level of global oil and natural gas exploration and production activity; • the level of global oil and natural gas inventories; • prevailing prices on local price indices in the areas in which we operate; • the cost of producing and delivering oil and natural gas and conducting other operations; • the recovery rates of new oil, natural gas and NGL reserves; • lead times associated with acquiring equipment and products, and availability of qualified personnel; • late deliveries of supplies; • technical difficulties or failures; • the proximity, capacity, cost, and availability of gathering and transportation facilities; • localized and global supply and demand fundamentals and transportation availability; • localized and global weather conditions and events; • public health concerns such as pandemic diseases; • technological advances affecting energy consumption, including advances in exploration, development and production technologies; • shareholder activism or activities by non-governmental organizations to restrict the exploration, development and production of oil, natural gas, and NGLs; • uncertainty in capital and commodities markets and the ability of companies in our industry to raise equity capital and debt financing; • the price and availability of alternative fuels; and • domestic, local, and foreign governmental regulation, taxes and tariffs. 28 Table of Contents Lower commodity prices will reduce our cash flows and borrowing ability.
Failure to comply with those regulations in the future could subject us to civil penalty liability, as described in “Business—Regulation of the Oil and Gas Industry.” A change in the jurisdictional characterization of our natural gas assets by federal, state or local regulatory agencies or a change in policy by those agencies may result in increased regulation of our natural gas assets, which may cause our revenues to decline and operating expenses to increase.
Failure to comply with those regulations in the future could subject us to civil penalty liability, as described in “Business—Regulation of the Oil and Gas Industry.” A change in the jurisdictional characterization of our natural gas assets or planned midstream project by federal, tribal, state or local regulatory agencies or a change in policy by those agencies may result in increased regulation of our natural gas assets, which may cause our revenues to decline and operating expenses to increase.
These events could lead to financial losses from remedial actions, loss of business or potential liability. 44 Table of Contents Loss of our information and computer systems could adversely affect our business. We are dependent on our information systems and computer-based programs, including our well operations information, seismic data, electronic data processing and accounting data.
These events could lead to financial losses from remedial actions, loss of business or potential liability. Loss of our information and computer systems could adversely affect our business. We are dependent on our information systems and computer-based programs, including our well operations information, seismic data, electronic data processing and accounting data.
Using lower prices in estimating proved reserves would likely result in a reduction in proved reserve volumes due to economic limits. There is a limited amount of production data from horizontal wells completed in the Permian Basin and its San Andres Formation.
Using lower prices in estimating proved reserves would likely result in a reduction in proved reserve volumes due to economic limits. There is a limited amount of production data from horizontal wells completed in the Permian Basin and its Yeso and San Andres Formations.
As a result, reserve estimates associated with horizontal wells in this area are subject to greater uncertainty than estimates associated with reserves attributable to vertical wells in the same area. Reserve engineers rely in part on the production history of nearby wells in establishing reserve estimates for a particular well or field.
As a result, reserve estimates associated with horizontal wells in these areas are subject to greater uncertainty than estimates associated with reserves attributable to vertical wells in the same area. Reserve engineers rely in part on the production history of nearby wells in establishing reserve estimates for a particular well or field.
If we are unable to replace our current and future production, the value of our reserves will decrease, and our business, financial condition and results of operations would be adversely affected. We depend upon several significant purchasers for the sale of most of our oil and natural gas production.
If we are unable to replace our current and future production, the value of our reserves will decrease, and our business, financial condition and results of operations would be adversely affected. We depend upon a few significant purchasers for the sale of most of our oil and natural gas production.
In addition, to the extent our suppliers source their products or raw materials from foreign markets, the cost of such equipment could be impacted if the United States imposes tariffs on imported goods from countries 42 Table of Contents where these goods are produced.
In addition, to the extent our suppliers source their products or raw materials from foreign markets, the cost of such equipment could be impacted if the United States imposes tariffs on imported goods from countries where these goods are produced.
If the price differentials pursuant to which our production is subject were to widen due to oversupply or other factors, our revenue could be negatively impacted. 33 Table of Contents An increase in the differential between NYMEX WTI and the reference or regional index price used to price our oil and natural gas would reduce our cash flows from operations.
If the price differentials pursuant to which our production is subject were to widen due to oversupply or other factors, our revenue could be negatively impacted. An increase in the differential between NYMEX WTI and the reference or regional index price used to price our oil and natural gas would reduce our cash flows from operations.
Under our certificate of incorporation, certain of our stockholders and/or one or more of their respective affiliates are permitted to engage in business activities or invest in or acquire businesses which may compete with our business or do business with any client of 56 Table of Contents ours.
Under our certificate of incorporation, certain of our stockholders and/or one or more of their respective affiliates are permitted to engage in business activities or invest in or acquire businesses which may compete with our business or do business with any client of ours.
In addition, we depend upon several significant purchasers for the sale of most of our oil and natural gas production. We cannot assure you that we will continue to have ready access to suitable markets for our future oil and natural gas production.
In addition, we depend upon a few significant purchasers for the sale of most of our oil and natural gas production. We cannot assure you that we will continue to have ready access to suitable markets for our future oil and natural gas production.
In addition, our obligations under our Credit Facility are secured by substantially all of our assets, and if we are unable to repay our indebtedness under our Credit Facility, the lenders can seek to foreclose on our assets. 39 Table of Contents Our indebtedness could reduce our financial flexibility.
In addition, our obligations under our Credit Facility are secured by substantially all of our assets, and if we are unable to repay our indebtedness under our Credit Facility, the lenders can seek to foreclose on our assets. Our indebtedness could reduce our financial flexibility.
Accruals for such liability, penalties or sanctions may be insufficient. Judgments and estimates to determine 47 Table of Contents accruals or range of losses related to legal and other proceedings could change from one period to the next, and such changes could be material.
Accruals for such liability, penalties or sanctions may be insufficient. Judgments and estimates to determine accruals or range of losses related to legal and other proceedings could change from one period to the next, and such changes could be material.
Further, our drilling operations may be curtailed, delayed or cancelled as a result of numerous factors, including: • unexpected drilling conditions; • title problems; 30 Table of Contents • pressure or lost circulation in formations; • equipment failure or accidents; • adverse weather conditions; • compliance with environmental and other governmental or contractual requirements; and • increase in the cost of, shortages or delays in the availability of, electricity, supplies, materials, drilling or workover rigs, equipment and services.
Further, our drilling operations may be curtailed, delayed or cancelled as a result of numerous factors, including: • unexpected drilling conditions; • title problems; • pressure or lost circulation in formations; • equipment failure or accidents; • adverse weather conditions; • compliance with environmental, health and safety, and other governmental or contractual requirements; and • increase in the cost of, shortages or delays in the availability of, electricity, supplies, materials, drilling or workover rigs, equipment and services.
Our operations are subject to electrical power outages, regional competition for available power, and increased energy costs. Power outages, which may last beyond our backup and alternative power arrangements, would harm our operations and our business. We also may be subject to risks and unanticipated costs associated with obtaining power from various utility companies.
Our operations are subject to electrical power outages, regional competition for available power, and increased energy costs. Power outages, which may last beyond our backup and alternative power arrangements, would harm our operations and our business. 45 Table of Contents We also may be subject to risks and unanticipated costs associated with obtaining power from various utility companies.
The development of our estimated proved undeveloped reserves may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our estimated proved undeveloped reserves may not be ultimately developed or produced. A t December 31, 2023, approximately 44% of our total estimated proved reserves were classified as proved undeveloped.
The development of our estimated proved undeveloped reserves may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our estimated proved undeveloped reserves may not be ultimately developed or produced. A t December 31, 2024, approximately 38% of our total estimated proved reserves were classified as proved undeveloped.
The TCJA significantly changed the U.S. federal income taxation of U.S. corporations, including by reducing the U.S. corporate income tax rate, limiting interest deductions and certain deductions for executive compensation, permitting immediate expensing of certain capital expenditures, and revising the rules governing net operating losses.
The Tax Cuts and Jobs Act of 2017 ("TCJA") significantly changed the U.S. federal income taxation of U.S. corporations, including by reducing the U.S. corporate income tax rate, limiting interest deductions and certain deductions for executive compensation, permitting immediate expensing of certain capital expenditures, and revising the rules governing net operating losses.
Changes in environmental laws and regulations occur frequently and tend to become more stringent over time, and any changes that result in more stringent or costly well drilling, construction, completion or water management activities, air emissions control or waste handling, storage, transport, disposal or cleanup requirements could require us to make significant expenditures to attain and maintain compliance and may otherwise have a material adverse effect on our results of 45 Table of Contents operations, competitive position or financial condition.
Changes in environmental and health and safety laws and regulations occur frequently and tend to become more stringent over time, and any changes that result in more stringent or costly well drilling, construction, completion or water management activities, worker protection, air emissions control or waste handling, storage, transport, disposal or cleanup requirements could require us to make significant expenditures to attain and maintain compliance and may otherwise have a material adverse effect on our results of operations, competitive position or financial condition.
The operating and financial restrictions and covenants in our Credit Facility and our Senior Notes restrict, and any future financing agreements likely will restrict, our ability to finance future operations or capital needs, engage, expand or pursue our business activities or pay dividends.
The operating and financial restrictions and covenants in our Credit Facility and our Senior Notes restrict, and any future financing agreements likely will restrict, our ability to finance future operations or capital needs, engage, expand or pursue our 38 Table of Contents business activities or pay dividends.
Our future results will suffer if we do not effectively manage our expanded operations. As a result of our recent acquisitions, the size and geographic footprint of our business has increased.
Our future results will suffer if we do not effectively manage our expanded operations. As a result of our recent acquisitions, the size of our business has increased.
Negative public perception regarding us and/or our industry resulting from, among other things, concerns raised by advocacy groups about hydraulic fracturing, oil spills, seismic activity, greenhouse gas emissions, and explosions of natural gas 43 Table of Contents transmission lines may lead to increased regulatory scrutiny, which may, in turn, lead to new state and federal safety and environmental laws, regulations, guidelines and enforcement interpretations.
Negative public perception regarding us and/or our industry resulting from, among other things, concerns raised by advocacy groups about hydraulic fracturing, oil or produced water spills, groundwater contamination, seismic activity, greenhouse gas emissions, and explosions of natural gas transmission lines may lead to increased regulatory scrutiny, which may, in turn, lead to new state and federal safety and environmental laws, regulations, guidelines and enforcement interpretations.
Our exploration and production activities are subject to all of the operating risks associated with drilling for and producing oil and natural gas, including the risk of fire, explosions, blowouts, surface cratering or other cratering, uncontrollable flows of natural gas, oil, well fluids and formation water, pipe or pipeline failures, processing or transportation capacity constraints or disruptions, abnormally pressured formations, casing collapses, reservoir damage and environmental hazards such as oil, produced water or chemical spills, natural gas leaks, ruptures or discharges of toxic gases. 35 Table of Contents Any of these risks could adversely affect our ability to conduct operations or result in substantial loss to us as a result of claims for: • injury or loss of life; • medical monitoring; • natural resources damages; • employee/employer liabilities and risks, including wrongful termination, discrimination, labor organizing, retaliation claims, and general human resource related matters; • damage to and destruction of property, natural resources and equipment; • pollution and other environmental hazards or damage; • abnormally pressured formations, fires or explosions or natural disasters; • mechanical difficulties, such as stuck oil field drilling and service tools and casing collapse; • regulatory investigations and penalties; • landowner claims for property damage and restoration costs; • suspension of our operations; • repair and remediation costs.
Our activities are subject to all of the operating risks associated with drilling for, producing, gathering and compressing oil and natural gas, including the risk of fire, explosions, blowouts, surface cratering or other cratering, uncontrollable flows of natural gas, oil, well fluids and formation water, pipe or pipeline failures, processing or transportation capacity constraints or disruptions, damages to pipelines, compressor stations and related equipment, abnormally pressured formations, casing collapses, reservoir damage and environmental hazards such as oil, produced water or chemical spills, natural gas leaks, ruptures or discharges of toxic gases. 35 Table of Contents Any of these risks could adversely affect our ability to conduct operations or result in substantial loss to us as a result of claims for: • injury or loss of life; • exposure to or release of hazardous substances; • medical monitoring; • natural resources damages; • employee/employer liabilities and risks, including wrongful termination, discrimination, labor organizing, retaliation claims, and general human resource related matters; • damage to and destruction of property, natural resources and equipment; • pollution and other environmental hazards or damage; • abnormally pressured formations, fires or explosions or natural disasters; • mechanical difficulties, such as stuck oilfield drilling and service tools and casing collapse; • regulatory investigations, injunctions, fines, and penalties; • landowner claims for property damage and restoration costs; • suspension of our operations; • repair, corrective action, and remediation costs.
Until a greater number of horizontal wells have been completed in the San Andres Formation, and a longer production history from these wells has been established, there may be a greater variance in our proved reserves on a year-over-year basis due to the 31 Table of Contents transition from vertical to horizontal reserves in both the proved developed and proved undeveloped categories.
Until a greater number of horizontal wells have been completed in the Yeso and San Andres Formations, and a longer production history from these wells has been established, there may be a greater variance in our proved reserves on a year-over-year basis due to the transition from vertical to horizontal reserves in both the proved developed and proved undeveloped categories.
Any such liabilities, penalties, suspensions, terminations or regulatory changes could materially adversely affect our financial condition and results of operations. We are responsible for the decommissioning, surface equipment removal, plugging, abandonment, and reclamation costs for our facilities.
Any such liabilities, penalties, suspensions, terminations or regulatory changes could materially adversely affect our financial condition and results of operations. 47 Table of Contents We are responsible for the decommissioning, removal, plugging, abandonment, and reclamation costs for our facilities.
Our executive officers, directors and principal stockholders have the ability to control or significantly influence all matters submitted to the Company’s stockholders for approval. As of December 31, 2023, our executive officers, directors and principal stockholders, in the aggregate, ow n 67.5% of t he fully diluted common stock of the Company.
Our executive officers, directors and principal stockholders have the ability to control or significantly influence all matters submitted to the Company’s stockholders for approval. As of December 31, 2024, our executive officers, directors and principal stockholders, in the aggregate, ow n 55.1% of t he fully diluted common stock of the Company.
The actual amount and timing of our future capital expenditures may differ materially from our estimates as a result of, among other things, oil, natural gas and NGL prices, actual drilling results, the availability of drilling rigs and other services and equipment, regulatory, technological and competitive developments, and worldwide and regional economic conditions.
The actual amount and timing of our future capital expenditures may differ materially from our estimates as a result of, among other things, oil, natural gas and NGL prices, actual drilling results, the availability of drilling rigs and other services and equipment, construction delays in our midstream project, cost of materials, regulatory, technological and competitive developments, and worldwide and regional economic conditions.
If these facilities are unavailable to us on commercially reasonable terms or otherwise (either temporarily or long-term), we could be forced to shut in some production or delay or discontinue drilling plans and commercial production following a discovery of hydrocarbons, as was the case in July and August 2023 when our producing wells in the Redlake field in New Mexico were shut in due to an unexpected maintenance issue with our third party processing plant.
If these facilities are unavailable to us on commercially reasonable terms or otherwise (either temporarily or long-term), we could be forced to shut in some production or delay or discontinue drilling plans and commercial production following a discovery of hydrocarbons, as was the case in July and August 2023 and in July 2024 when our producing wells in the Red Lake field in New Mexico were shut in due to unexpected maintenance issues with our third party processor.
As of December 31, 2023, approximately 6% of our net leasehold acreage was undeveloped or acreage on which wells have not been drilled or completed to a point that would pe rmit the production of commercial quantities of oil and natural gas regardless of whether such acreage contains proved reserves.
As of December 31, 2024, approximately 5% of our net leasehold acreage was undeveloped or acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil and natural gas, regardless of whether such acreage contains proved reserves.
The registration statement registers securities that may be issued by the Company in a maximum aggregate amount of up to $250,000,000, as well as up to 16,721,922 shares of common stock that may be resold by certain selling stockholders named in therein.
The registration statement registers securities that may be issued by the Company in a maximum aggregate amount of up to $250,000,000, as well as up to 12,037,813 shares of common stock that may be resold by certain selling stockholders named in therein.
As a result of this concent ration, a number of our properties could experience any of the same conditions at the same time and, when compared to other companies that have a more diversified portfolio of properties, we may be disproportionately exposed to the impact of regional supply and demand factors, delays or interruptions of production from wells in this area caused by governmental regulation, processing or transportation capacity constraints or disruptions, market limitations, water shortages or other drought or extreme weather related conditions or interruption of the processing or transportation of oil, natural gas or NGLs. 32 Table of Contents Specifically, demand for qualified personnel in this area, and the cost to attract and retain such personnel, may increase substantially in the future.
As a result of this concent ration, a number of our properties could experience any of the same conditions at the same time and, when compared to other companies that have a more diversified portfolio of properties, we may be disproportionately exposed to the impact of regional supply and demand factors, delays or interruptions of production from wells in this area caused by governmental regulation, processing or transportation capacity constraints or disruptions, market limitations, water shortages or other drought or extreme weather related conditions or interruption of the processing or transportation of oil, natural gas or NGLs.
Horizontal drilling in the San Andres Formation of the Permian Basin is a relatively recent development, whereas vertical drilling has been utilized by producers in this area for over 50 years. As a result, the amount of production data from horizontal wells available to reserve engineers is relatively small compared to that of production data from vertical wells.
Horizontal drilling in the San Andres and Yeso Formations of the Permian Basin is a relatively recent development, whereas vertical drilling has been utilized by producers in these areas for over 50 years. As a result, the amount of production data from horizontal wells available to reserve engineers is relatively small compared to that of production data from vertical wells.
These actions were taken in an effort to control induced seismic activity and recent increases in earthquakes in the Permian Basin, which have been linked by the U.S. and local seismologists to wastewater disposal in oil fields.
These actions have and are being taken in an effort to control induced seismic activity and recent increases in earthquakes in the Permian Basin, which have been linked by the U.S. and local seismologists to wastewater disposal in oilfields.
Risks Related to the Oil and Natural Gas Industry Drilling for and producing oil and natural gas are high risk activities with many uncertainties that could adversely affect our business, financial condition or results of operations.
Any such circumstance could materially adversely affect our results of operations, financial condition, cash flows and/or prospects. Risks Related to the Oil and Natural Gas Industry Drilling for and producing oil and natural gas are high risk activities with many uncertainties that could adversely affect our business, financial condition or results of operations.
We may need to access funding through capital market transactions. Due to our small public float, low market capitalization, limited operating history, ESG, and climate change restrictions, it may be difficult and expensive for us to raise additional funds.
We may need to access funding through capital market transactions. Due to our relative smaller public float and low market capitalization, ESG, and climate change policies and restrictions, it may be difficult and expensive for us to raise additional funds.
Any acquisition involves other potential risks, including, among other things: • the validity of our assumptions about reserves, future production, revenues and costs; • a decrease in our liquidity by using a significant portion of our cash from operations or borrowing capacity to finance acquisitions; • a significant increase in our interest expense or financial leverage if we incur additional debt to finance acquisitions; • the ultimate value of any contingent consideration agreed to be paid in an acquisition; • dilution to stockholders if we use equity as consideration for, or to finance, acquisitions; • the assumption of unknown liabilities, losses or costs for which we are not indemnified or for which our indemnity is inadequate; • an inability to hire, train or retain qualified personnel to manage and operate our growing business and assets; and • an increase in our costs or a decrease in our revenues associated with any potential royalty owner or landowner claims or disputes, or other litigation encountered in connection with an acquisition.
Inspections are often not performed on properties being acquired, and environmental matters, such as subsurface and groundwater contamination, are not necessarily observable even when an inspection is undertaken. 37 Table of Contents Any acquisition involves other potential risks, including, among other things: • the validity of our assumptions about reserves, future production, revenues and costs; • a decrease in our liquidity by using a significant portion of our cash from operations or borrowing capacity to finance acquisitions; • a significant increase in our interest expense or financial leverage if we incur additional debt to finance acquisitions; • the ultimate value of any contingent consideration agreed to be paid in an acquisition; • dilution to stockholders if we use equity as consideration for, or to finance, acquisitions; • the assumption of unknown liabilities, losses or costs for which we are not indemnified or for which our indemnity is inadequate; • an inability to hire, train or retain qualified personnel to manage and operate our growing business and assets; and • an increase in our costs or a decrease in our revenues associated with any potential royalty owner or landowner claims or disputes, or other litigation encountered in connection with an acquisition.
If FERC were to consider the status of an individual facility and determine that the facility or services provided by it are not exempt from FERC regulation under the NGA and that the facility provides interstate service, the rates for, and terms and conditions of, services provided by such facility would be subject to regulation by FERC under the NGA or the NGPA.
If FERC were to consider the status of an individual facility, including the new midstream project we plan to construct, and determine that the facility or services provided by it are not exempt from FERC regulation under the NGA and that the facility provides interstate service, the rates for, and terms and conditions of, services provided by such facility would be subject to regulation by FERC under the NGA or the NGPA and/or state regulations.
We may experience further cost increases for our operations to the extent that elevated inflation remains. We may not be able to keep pace with technological developments in our industry. The oil and natural gas industry is characterized by rapid and significant technological advancements and introductions of new products and services using new technologies.
We may experience further cost increases for our operations to the extent that there are increases in inflationary pressures or interest rates. We may not be able to keep pace with technological developments in our industry. The oil and natural gas industry is characterized by rapid and significant technological advancements and introductions of new products and services using new technologies.
The oil and natural gas industry is capital intensive. We make and expect to continue to make substantial capital expenditures for the exploitation, development, and acquisition of oil and natural gas reserves. We expect to fund our growth primarily through cash flow from operations, availability under our Credit Facility, and subsequent equity or debt offerings when appropriate.
We make and expect to continue to make substantial capital expenditures for the exploration, exploitation, development and acquisition of oil and natural gas reserves and the construction of midstream gathering, compression and pipeline facilities. We expect to fund our growth primarily through cash flow from operations, availability under our Credit Facility, and subsequent equity or debt offerings when appropriate.
For example, our estimated proved reserves as of December 31, 2023 were calculated under SEC rules using the unweighted arithmetic average first-day-of-the-month prices for the prior 12 months of $78.22 per Bbl for oil and NGL volumes and $2.64 per MMBtu for natural gas volumes.
For example, our estimated proved reserves as of December 31, 2024, were calculated under SEC rules using the unweighted arithmetic average first-day-of-the-month prices for the prior 12 months of $76.32 per Bbl for oil and NGL volumes and $2.13 31 Table of Contents per MMBtu for natural gas volumes.
Continuing or worsening inflationary issues and associated changes in monetary policy have resulted in and may result in additional increases to the cost of our goods, services and personnel, which in turn cause our capital expenditures and operating costs to rise. Inflation has been an ongoing concern in the U.S. since 2021.
Inflationary issues and associated changes in monetary policy have resulted in and may in the future result in increases to the cost of our goods, services and personnel, which in turn could cause our capital expenditures and operating costs to rise. Inflation has been an ongoing concern in the U.S. in recent years.
If our leases expire, we will lose our right to develop such properties. Substantially all of our producing properties are located in the Northwest Shelf within the Permian Basin of West Texas and Southeastern New Mexico, making us vulnerable to risks associated with operating in one major geographic area.
Substantially all of our producing properties are located in the Northwest Shelf within the Permian Basin of West Texas and Southeastern New Mexico, making us vulnerable to risks associated with operating in one major geographic area.
Our approximate 47,537 MBoe of estimated proved undeveloped reserves are estimated to require $322.7 million of development capital. Our development of these reserves may take longer and require higher levels of capital expenditures than we currently anticipate.
Our approximate 46,956 MBoe of estimated proved undeveloped reserves are estimated to require approximately $279 million of development capital. Our development of these reserves may take longer and require higher levels of capital expenditures than we currently anticipate.
Increased regulation and attention given to the hydraulic fracturing process and associated processes could lead to greater opposition to, and litigation concerning, oil and natural gas production activities using hydraulic fracturing techniques.
See “Items 1 and 2 Business and Properties – Regulation of the Oil and Natural Gas Industry”. Increased regulation and attention given to the hydraulic fracturing process and associated processes could lead to greater opposition to, and litigation concerning, oil and natural gas production activities using hydraulic fracturing techniques.
If our operations become subject to these more stringent standards, compliance with these and other environmental regulations could delay or prohibit our ability to obtain permits for operations or require us to install additional pollution control equipment, the costs of which could be significant.
If our operations become subject to more stringent standards, compliance with these and other environmental regulations could delay or prohibit our ability to obtain permits for operations or require us to install additional pollution control equipment, the costs of which could be significant. We are subject to complex laws that can affect the cost, manner or feasibility of doing business.
Our operations are subject to stringent federal, state and local laws and regulations governing occupational safety and health aspects of our operations, the discharge of materials into the environment and environmental and human health and safety protection.
Our operations are subject to stringent federal, tribal, state and local laws and regulations governing occupational safety and health aspects of our operations, the discharge of materials into the environment and environmental and human health and safety protection. Numerous governmental authorities, such as the EPA, the U.S.
For example, during the period from January 1, 2016 to December 31, 2023, NYMEX West Texas Intermediate (referred to as WTI) oil prices ranged from a high of $123.64 per Bbl on March 8, 2022 to a low of $(36.98) per Bbl on April 20, 2020.
For example, during the period from January 1, 2016 to December 31, 2024, NYMEX WTI oil prices ranged from a high of $123.64 per Bbl on March 8, 2022 to a low of negative $36.98 per Bbl on April 20, 2020. During 2024, WTI prices ranged from a high of $87.69 per Bbl to a low of $66.73 per Bbl.
Hydraulic fracturing involves the injection of water, sand or alternative proppant and chemicals under pressure into targeted geological formations to fracture the surrounding rock and stimulate production. Hydraulic fracturing is typically regulated by state oil and natural gas commissions. However, several federal agencies have asserted regulatory authority over certain aspects of the process.
Hydraulic fracturing involves the injection of water, sand or alternative proppant and chemicals under pressure into targeted geological formations to fracture the surrounding rock and stimulate production. Hydraulic fracturing is typically regulated by state oil and natural gas commissions.
It is our practice in acquiring oil and natural gas leases or interests not to incur the expense of retaining lawyers to examine the title to the mineral interest at the time of acquisition.
We may incur losses as a result of title defects in the properties in which we invest. It is our practice in acquiring oil and natural gas leases or interests not to incur the expense of retaining lawyers to examine the title to the mineral interest at the time of acquisition.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeRole of our Management Team Our Executive Vice President - Business Intelligence is responsible for the day-to-day management of our cybersecurity risks and for recommending the strategies and technologies used by the organization to collect, integrate and analyze business information to support the organization's strategic decisions.
Biggest changeCybersecurity Governance - Role of our Management Team Our Chief Information and Compliance Officer is responsible for the day-to-day management of our cybersecurity risks and for recommending the strategies and technologies used by the organization to collect, integrate and analyze business information to support the organization's strategic decisions.
Governance Role of our Board of Directors The Nominating and Corporate Governance Committee of the Board of Directors is primarily responsible for the oversight of our information security programs and cybersecurity incident response plans.
Cybersecurity Governance - Role of our Board of Directors The Nominating and Corporate Governance Committee of the Board of Directors is primarily responsible for the oversight of our information security programs and cybersecurity incident response plans.
He is supported by a cross-disciplinary team from the Company’s accounting, legal and risk oversight functions and its internal audit group. This incident response team meets quarterly and as needed to review the Company’s cybersecurity risk management initiatives and progress and cybersecurity metrics. On an annual basis, the incident response team coordinates a cybersecurity risk assessment.
He is supported by a cross-disciplinary team from the Company’s accounting, legal and risk oversight functions and our internal audit group. This incident response team meets quarterly and as needed to review the Company’s cybersecurity risk management initiatives and progress and cybersecurity metrics. On an annual basis, the incident response team coordinates a cybersecurity risk assessment.
We established a cyber subcommittee comprised of our senior management team that reports directly to the Board and its Committees regarding our cyber risks and threats, the status of initiatives strengthen our information security systems, assessments of our cybersecurity program and incident response plan, and our views of the emerging threat landscape.
We established a cyber subcommittee comprised of our senior management team that reports directly to the Board and its Committees regarding our cyber risks and threats, the status of initiatives strengthens our information security systems, assessments of our cybersecurity program and incident response plan, and our views of the emerging threat landscape.
These individuals are informed about, and monitor the prevention, mitigation, detection and remediation of cybersecurity incidents through their management of, and participation in, the cybersecurity risk management and strategy processes described above, including the operation of our incident response plan, and report to the 58 Table of Contents Board of Directors, Nominating and Corporate Governance Committee and Audit Committee, as the case may be, on any appropriate items.
These individuals are informed about, and monitor the prevention, mitigation, detection and remediation of cybersecurity incidents through their management of, and participation in, the cybersecurity risk management and strategy processes described above, including the operation of our incident response plan, and report to the Board of Directors, Nominating and Corporate Governance Committee and Audit Committee, as the case may be, on any appropriate items.
That said, as discussed more fully under “Item 1A – Risk Factors”, the sophistication of cyber 57 Table of Contents threats continues to increase, and the preventative actions we take to reduce the risk of cyber incidents and protect our systems and information may be insufficient.
That said, as discussed more fully under “Item 1A – Risk Factors”, the sophistication of cyber threats continues to increase, and the preventative actions we take to reduce the risk of cyber incidents and protect our systems and information may be insufficient.
The Chair of the Nominating and Corporate Governance Committee regularly reports to the Board of Director on cybersecurity risks and other matters reviewed by the Nominating and Corporate Governance Committee in conjunction with the management team. All materials or presentations on cybersecurity provided to the Nominating and Corporate Governance Committee are provided to all Board members.
The Chair of the Nominating and Corporate Governance Committee regularly reports to the Board of Director on cybersecurity risks and other matters reviewed by the 57 Table of Contents Nominating and Corporate Governance Committee in conjunction with the management team. All materials or presentations on cybersecurity provided to the Nominating and Corporate Governance Committee are provided to all Board members.
These plans are tested in conjunction with the Company’s annual testing of its cybersecurity incident response readiness and reporting through tabletop exercises.
These plans are tested in conjunction with the Company’s annual testing of our cybersecurity incident response readiness and reporting through tabletop exercises.
These risks include, among other things: operational risks, harm to our employees, suppliers or industry partners, intellectual property theft, fraud, extortion, and violation of data privacy or security laws.
These risks include, among other things: operational risks, harm to our employees, suppliers or industry partners, intellectual property theft, fraud, extortion, and violation of data 56 Table of Contents privacy or security laws.
Our Executive Vice President – Business Intelligence and our head of Internal Audit report directly to the Nominating and Corporate Governance Committee as well as the Audit Committee regarding these matters and are responsible for reporting to the Committees on our company-wide enterprise risk assessment, and that assessment also includes an evaluation of cyber risks and threats.
Our Chief Information and Compliance Officer and our head of Internal Audit report directly to the Nominating and Corporate Governance Committee as well as the Audit Committee regarding these matters and are responsible for reporting to the Committees on our company-wide enterprise risk assessment, and that assessment also includes an evaluation of cyber risks and threats.
The Executive Vice President of Business Intelligence has over 10 years of experience in the information technology area and holds a Master of Business Administration with a focus in Technology from Oklahoma Christian University. Additionally, our Vice President of Technology and Analytics has 10 years of professional experience in the information security area.
The Chief Information and Compliance Officer has over 11 years of experience in the information technology area and holds a Master of Business Administration with a focus in Technology from Oklahoma Christian University. Additionally, our Vice President of Technology and Analytics has 11 years of professional experience in the information security area.
Furthermore, on an annual basis, the Board of Directors and its Committees review and discuss our technology strategy with our Executive Vice President – Business Intelligence and approve our technology strategic plan.
Furthermore, on an annual basis, the Board of Directors and its Committees review and discuss our technology strategy with our Chief Information and Compliance Officer and approve our technology strategic plan.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSee Note 13 - Commitments and Contingencies in the Company's consolidated financial statements in "Item 15. Exhibits and Financial Statement Schedules" for a discussion of our commitments and contingencies.
Biggest changeSee Note 15 - Commitments and Contingencies in the Company's consolidated financial statements in "Item 15. Exhibits and Financial Statement Schedules" for a discussion of our commitments and contingencies. Item 4. Mine Safety Disclosures Not applicable. 58 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeOutstanding Equity Awards Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities in Column (a)) (a) (b) (c) Equity Compensation Plans Approved by Security Holders — — 1,075,626 Equity Compensation Plans Not Approved by Security Holders — — — Total — — 1,075,626 Unregistered Sales of Equity Securities None. 60 Table of Contents Issuer Repurchases of Equity Securities Our common stock repurchase activity during the fourth quarter of 2023 was as follows: Month Ended Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plan or Programs October 31 32,348 $ 31.80 — — November 30 170 $ 29.05 — — December 31 — $ — — — _____________________ (1) These amounts reflect the shares received by us from employees for the payment of personal income tax withholding on vesting transactions.
Biggest changeIssuer Repurchases of Equity Securities Our common stock repurchase activity during the fourth quarter of 2024 was as follows: Month Ended Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan or Programs Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plan or Programs October 31 51,434 $ 26.32 — — November 30 151 $ 29.61 — — December 31 — $ — — — _____________________ (1) These amounts reflect the shares received by us from employees for the payment of personal income tax withholding on vesting transactions.
The Company's Credit Facility and Senior Notes can limit the dividends the Company is able to pay unless the Company meets certain covenants in accordance with its credit agreement and the terms of the Senior Notes.
The Company's Credit Facility and Senior Notes can limit the dividends the Company is able to pay unless the Company meets certain covenants in accordance with our credit agreement and the terms of the Senior Notes.
The acquisition of the surrendered shares was not part of a publicly announced program to repurchase shares of our common stock. Any shares repurchased by the Company for personal tax withholdings are immediately retired upon repurchase. Item 6. Selected Financial Data [Reserved]
The acquisition of the surrendered shares was not part of a publicly announced program to repurchase shares of our common stock. Any shares repurchased by the Company for personal tax withholdings are immediately retired upon repurchase. 59 Table of Contents Item 6. Selected Financial Data [Reserved]
Dividends The Company declared quarterly dividends totaling approximately $27.9 million and $25.3 million for the years ended December 31, 2023 and 2022, respectively. The cash dividends were declared for all issued and outstanding common shares including unvested restricted stock issued under the Company's Amended and Restated 2021 Long-Term Incentive Plan.
Dividends The Company declared quarterly dividends totaling approximately $31.0 million and $27.9 million for the years ended December 31, 2024, and 2023, respectively. The cash dividends were declared for all issued and outstanding common shares including unvested restricted stock issued under the Company's Amended and Restated 2021 Long-Term Incentive Plan.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Shares of our common stock are listed on the NYSE American under the symbol "REPX". There were approximately 125 holders of record of our common stock as of February 29, 2024.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Shares of our common stock are listed on the NYSE American under the symbol "REPX". There were approximately 234 holders of record of our common stock as of February 28, 2025.
Added
Outstanding Equity Awards Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights Weighted Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities in Column (a)) (a) (b) (c) Equity Compensation Plans Approved by Security Holders — — 920,951 Equity Compensation Plans Not Approved by Security Holders — — — Total — — 920,951 Unregistered Sales of Equity Securities None.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeConstruction of the onsite power generation facility was predominately completed during 2023 with temporary power generation beginning in November 2023 and the onsite power generation facility expected to be operational in spring of 2024. 62 Table of Contents Results of Operations Comparison for the years ended December 31, 2023 and 2022 The following table sets forth selected operating data for the years ended December 31, 2023 and 2022: Years Ended December 31, 2023 2022 Revenues (in thousands): Oil sales $ 363,125 $ 298,723 Natural gas sales 2,612 10,755 NGLs 6,910 9,865 Oil and natural gas sales, net $ 372,647 $ 319,343 Production Data, net: Oil (MBbls) 4,802 3,217 Natural gas (MMcf) 5,865 3,229 NGLs (MBbls) 1,006 444 Total (MBoe) 6,786 4,199 Daily combined volumes (Boe/d) 18,590 11,505 Daily oil volumes (Bbls/d) 13,156 8,814 Average Realized Prices: Oil ($ per Bbl) $ 75.62 $ 92.86 Natural gas ($ per Mcf) 0.45 3.33 NGLs ($ per Bbl) 6.87 22.22 Combined ($ per Boe) $ 54.91 $ 76.05 Average Realized Prices, including derivative settlements: (1) Oil ($ per Bbl) $ 71.93 $ 71.75 Natural gas ($ per Mcf) 0.53 1.06 NGLs ($ per Bbl) 6.87 22.22 Combined ($ per Boe) $ 52.38 $ 58.13 _____________________ (1) The Company's calculation of the effects of derivative settlements includes losses on the settlement of its commodity derivative contracts.
Biggest changeThe following table sets forth selected operating data for the years ended December 31, 2024, and 2023: Years Ended December 31, 2024 2023 Revenues (in thousands): (1) Oil sales $ 408,935 $ 363,125 Natural gas sales (1,412) 2,612 NGLs sales 2,278 6,910 Oil and natural gas sales, net $ 409,801 $ 372,647 Production Data, net: Oil (MBbls) 5,519 4,802 Natural gas (MMcf) 7,484 5,865 NGLs (MBbls) 1,486 1,006 Total (MBoe) 8,252 6,786 Daily combined volumes (Boe/d) 22,546 18,590 Daily oil volumes (Bbls/d) 15,079 13,156 Average Realized Prices: (1) Oil ($ per Bbl) $ 74.10 $ 75.62 Natural gas ($ per Mcf) $ (0.19) $ 0.45 NGLs ($ per Bbl) $ 1.53 $ 6.87 Average Realized Prices, including derivative settlements: (1)(2) Oil ($ per Bbl) $ 73.67 $ 71.93 Natural gas ($ per Mcf) $ 0.37 $ 0.53 NGLs ($ per Bbl) (3) $ 1.53 $ 6.87 _____________________ (1) The Company's oil, natural gas and NGL sales are presented net of gathering, processing and transportation costs.
On April 3, 2023, and concurrent with the closing of the New Mexico Acquisition, the Company entered into the fourteenth amendment to the Credit Facility to, among other things, increase the maximum facility amount to $1.0 billion and the borrowing base from $225 million to $325 million, resulting in the addition of new lenders to the lending group.
On April 3, 2023, and concurrent with the closing of the 2023 New Mexico Acquisition, the Company entered into the fourteenth amendment to the Credit Facility to, among other things, increase the maximum facility amount to $1.0 billion and the borrowing base from $225 million to $325 million, resulting in the addition of new lenders to the lending group.
Business Combinations The Company periodically acquires assets and assumes liabilities in transactions accounted for as business combinations, such as the New Mexico Acquisition. In connection with the New Mexico Acquisition, we allocated the purchase price consideration of $324.7 million to the assets acquired and liabilities assumed based on estimated fair values as of the date of the acquisition.
Business Combinations The Company periodically acquires assets and assumes liabilities in transactions accounted for as business combinations, such as the 2023 New Mexico Acquisition. In connection with the 2023 New Mexico Acquisition, we allocated the purchase price consideration of $324.7 million to the assets acquired and liabilities assumed based on estimated fair values as of the date of the acquisition.
See Note 13 - Commitments and Contingencies in the Company's consolidated financial statements in "Item 15. Exhibits and Financial Statement Schedules" for a full discussion of our commitments and contingencies. Critical Accounting Estimates The preparation of financial statements requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
See Note 15 - Commitments and Contingencies in the Company's consolidated financial statements in "Item 15. Exhibits and Financial Statement Schedules" for a full discussion of our commitments and contingencies. Critical Accounting Estimates The preparation of financial statements requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes.
Exhibits and Financial Statement Schedules" for a full discussion of our acquisitions. See Note 3 - Summary of Significant Accounting Policies in the Company's consolidated financial statements in "Item 15. Exhibits and Financial Statement Schedules" for a full discussion of our significant accounting policies. Item 7A. Quantitative and Qualitative Disclosures About Market Risk Not applicable.
Exhibits and Financial Statement Schedules" for a full discussion of our acquisitions. See Note 3 - Summary of Significant Accounting Policies in the Company's consolidated financial statements in "Item 15. Exhibits and Financial Statement Schedules" for a full discussion of our significant accounting policies. Item 7A. Quantitative and Qualitative Disclosures About Market Risk Not applicable. Item 8.
We made a number of assumptions in estimating the fair value of assets acquired and liabilities assumed in the New Mexico Acquisition. The most significant assumptions relate to the estimated fair values of proved and unproved oil and gas properties.
We made a number of assumptions in estimating the fair value of assets acquired and liabilities assumed in the 2023 New Mexico Acquisition. The most significant assumptions relate to the estimated fair values of proved and unproved oil and gas properties.
Gain/Loss on Derivatives The Company recognizes settlements and changes in the fair value of its derivative contracts as a single component within other income (expense) on its consolidated statements of operations. We have oil and natural gas derivative contracts, including fixed price swaps, basis swaps and collars, that settle against various indices.
Gain/Loss on Derivatives The Company recognizes settlements and changes in the fair value of our derivative contracts as a single component within other income (expense) in our consolidated statements of operations. We have oil and natural gas derivative contracts, including fixed price swaps, basis swaps and collars, that settle against various indices.
The Company utilizes a discounted cash flow model in order to estimate fair value by modeling the present value of future cash flows, net of estimated operating and development costs using estimates of reserves, future commodity pricing, future production estimates, anticipated capital expenditures, and various discount rates commensurate with the risk 70 Table of Contents and current market conditions associated with the expected cash flow projected.
The Company utilizes a discounted cash flow model in order to estimate fair value by modeling the present value of future cash flows, net of estimated operating and development costs using estimates of reserves, future commodity pricing, future production estimates, anticipated capital expenditures, and various discount rates commensurate with the risk and current market conditions associated with the expected cash flow projected.
Of the remaining unproved leasehold costs at December 31, 2023, approximately $2.3 million is scheduled to expire in 2024. The Company expects to renew or extend these leases in 2024. If our drilling is not successful, this leasehold could become partially or entirely impaired.
Of the remaining unproved leasehold costs at December 31, 2024, approximately $2.2 million is scheduled to expire in 2025. The Company expects to renew or extend these leases in 2025. If our drilling is not successful, this leasehold could become partially or entirely impaired.
The Company’s principal liquidity requirements are to finance its operations, fund capital expenditures and acquisitions, make cash distributions and satisfy any indebtedness obligations. Cash flows are subject to a number of variables, including the level of oil and natural gas production and prices, and the significant capital expenditures required to more fully develop the Company’s oil and natural gas properties.
The Company’s principal liquidity requirements are to finance our operations, fund capital expenditures and acquisitions, pay dividends and satisfy any indebtedness obligations. Cash flows are subject to a number of variables, including the level of oil and natural gas production and prices, and the significant capital expenditures required to more fully develop the Company’s oil and natural gas properties.
At the end of each quarter, unproved leasehold costs are assessed for impairment by considering future drilling plans, drilling activity results, commodity price outlooks, planned future sales or expiration of all or a portion of such projects. At December 31, 2023, the Company had approximately $100.2 million of unproved leasehold.
At the end of each quarter, unproved leasehold costs are assessed for impairment by considering future drilling plans, drilling activity results, commodity price outlooks, planned future sales or expiration of all or a portion of such projects. At December 31, 2024, the Company had approximately $101.0 million of unproved leasehold.
Income Tax Expense Deferred income taxes are provided to reflect the future tax consequences or benefits of differences between the tax basis of assets and liabilities and their reported amounts in the financial statements using enacted tax rates. See Note 11 - Income Taxes in the Company's consolidated financial statements in "Item 15.
Deferred income taxes are provided to reflect the future tax consequences or benefits of differences between the tax basis of assets and liabilities and their reported amounts in the financial statements using enacted 67 Table of Contents tax rates. See Note 12 - Income Taxes in the Company's consolidated financial statements in "Item 15.
Different reserve engineers may make different estimates of reserve quantities based on the same data. A third-party reservoir engineering firm prepares our reserve report, which the estimates are based off of technical and economic data including, but not limited to, well test data, production data, historical price and cost information, and property ownership interests.
A third-party reservoir engineering firm prepares our reserve report, which the estimates are based off of technical and economic data including, but not limited to, well test data, production data, historical price and cost information, and property ownership interests.
Credit Facility and Senior Notes The Company's borrowing base on its Credit Facility was $375 million with outstanding borrowings of $185 million on December 31, 2023, representing available borrowing capacity of $190 million. On February 22, 2023, the Company amended its Credit Facility to, among other things, allow for the issuance of unsecured Senior Notes of up to $200 million.
Credit Facility and Senior Notes The Company's borrowing base on our Credit Facility was $400 million with outstanding borrowings of $115 million at December 31, 2024, representing available borrowing capacity of $285 million. On February 22, 2023, the Company amended our Credit Facility to, among other things, allow for the issuance of unsecured Senior Notes of up to $200 million.
Risk Factors." Working Capital Working capital is the difference in our current assets and our current liabilities. Working capital is an indication of liquidity and potential need for short-term funding.
For further discussion of risks related to our liquidity and capital resources, see "Item 1A. Risk Factors." Working Capital Working capital is the difference in our current assets and our current liabilities. Working capital is an indication of liquidity and potential need for short-term funding.
General and Administrative Expense ("G&A") G&A expenses include corporate overhead such as payroll and benefits for our corporate staff, share-based compensation expense, office rent for our headquarters, audit and other fees for professional services and legal compliance. G&A expenses are reported net of overhead recoveries.
General and Administrative ("G&A") Expense G&A expenses consist of administrative costs and share-based compensation expense. Administrative costs include corporate overhead such as payroll and benefits for our staff, office costs, fees for professional services such as audit and legal services, technology costs, insurance and other.
During the year ended December 31, 2023, the Company recognized a proved property impairment of $9.8 million relating to certain properties in Texas outside of the Company's acreage in the Champions Field.
During the year ended December 31, 2024, the Company recognized a proved property impairment of $11.3 million relating to certain properties in Texas outside of the Company's acreage in the Champions field and certain historical properties in New Mexico outside of the Company's acreage in the Red Lake field.
During the year ended December 31, 2023, the Company issued $200 million in principal amount of Senior Notes with a maturity date of April 2026. The proceeds from the Senior Notes were used to finance the New Mexico Acquisition. The principal balance of the Senior Notes as of December 31, 2023 was $185 million.
Substantially all of the Company’s assets are pledged to secure the Credit Facility. During the year ended December 31, 2023, the Company issued $200 million in principal amount of Senior Notes with a maturity date of April 2028. The proceeds from the Senior Notes were used to finance the 2023 New Mexico Acquisition.
The following table presents exploration costs for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (In thousands) Exploratory well expense (1) $ 3,447 $ — Expiration of unproved leasehold 696 1,953 Geological and geophysical costs 22 79 Total exploration costs $ 4,165 $ 2,032 _____________________ (1) The Company determined that an exploratory well was not capable of producing commercial quantities and expensed the associated drilling costs during the year ended December 31, 2023, Depletion, Depreciation, Amortization and Accretion Expense Depletion, depreciation and amortization is the systematic expensing of the capitalized costs incurred to acquire, explore and develop oil, natural gas and NGLs.
The following table presents exploration costs for the years ended December 31, 2024, and 2023: Year Ended December 31, 2024 2023 (In thousands) Exploratory well expense (1) $ — $ 3,447 Expiration of unproved leasehold 2,560 696 Geological and geophysical costs 35 22 Total exploration costs $ 2,595 $ 4,165 _____________________ (1) The Company determined that an exploratory well was not capable of producing commercial quantities and expensed the associated drilling costs during the year ended December 31, 2023 .
See Note 9 - Long-Term Debt in the Company's consolidated financial statements in "Item 15.
See Note 9 - Transactions with Related Parties in the Company's consolidated financial statements in "Item 15.
Additionally, our proved reserves represent the element of these calculations that require the most subjective judgments. Estimates of reserves are forecasts based on engineering data, projected future rates of production and the timing of future expenditures. The process of estimating oil, natural gas and NGL reserves requires substantial judgment, resulting in imprecise determinations, particularly for new discoveries.
Estimates of reserves are forecasts based on engineering data, projected future rates of production and the timing of future expenditures. The process 71 Table of Contents of estimating oil, natural gas and NGL reserves requires substantial judgment, resulting in imprecise determinations, particularly for new discoveries. Different reserve engineers may make different estimates of reserve quantities based on the same data.
The oil and natural gas properties acquired in the New Mexico Acquisition contributed 451 MBbls to the Company's NGL volumes for the 2023 period. 64 Table of Contents Contract Services - Related Party The following table presents the Company's revenue and costs associated with its contract services - related party transactions: Year Ended December 31, 2023 2022 (In thousands) Contract services - related parties (1) $ 2,400 $ 2,400 Cost of contract services - related parties (2) 579 450 Gross profit from contract services $ 1,821 $ 1,950 _____________________ (1) The Company’s contract services - related parties revenue is derived from master services agreements with related parties to provide certain administrative support services.
Contract Services - Related Party The following table presents the Company's revenue and costs associated with our contract services - related party transactions: Year Ended December 31, 2024 2023 (In thousands) Contract services - related parties (1) $ 380 $ 2,400 Cost of contract services - related parties (2) 363 579 Gross profit from contract services $ 17 $ 1,821 _____________________ (1) The Company’s contract services - related parties revenue was derived from master services agreements with related parties to provide certain administrative support services.
We record the fair value of the liability for ARO in the period in which the liability is incurred (at the time the wells are drilled or acquired) with the offset to property cost. The liability accretes each period until it is settled or the well is sold, at which time the liability is removed.
Capitalized costs are depleted using the units-of-production method. Accretion expense relates to ARO. We record the fair value of the liability for ARO in the period in which the liability is incurred (at the time the wells are drilled or acquired) with the offset to property cost.
Costs and Expenses The following table presents the Company's operating costs and expenses and other (income) expenses: Year Ended December 31, 2023 2022 Costs and Expenses: (In thousands) Lease operating expenses $ 58,817 $ 32,458 Production and ad valorem taxes $ 25,559 $ 19,273 Exploration costs $ 4,165 $ 2,032 Depletion, depreciation, amortization and accretion $ 65,055 $ 32,113 Impairment of oil and natural gas properties $ 9,760 $ 7,325 Administrative costs $ 26,569 $ 18,496 Share-based compensation 6,833 3,439 General and administrative expense $ 33,402 $ 21,935 Transaction costs $ 5,817 $ 2,638 Interest expense, net $ 31,816 $ 1,090 (Gain) loss on derivatives, net $ (6,193) $ 51,574 Income tax expense $ 34,461 $ 32,844 Lease Operating Expenses ("LOE") LOE are the costs incurred in the operation and maintenance of producing properties.
Exhibits and Financial Statement Schedules for more information. 64 Table of Contents Costs and Expenses The following table presents the Company's operating costs and expenses and other (income) expenses: Year Ended December 31, 2024 2023 Costs and Expenses: (In thousands) Lease operating expenses $ 71,463 $ 58,817 Production and ad valorem taxes $ 29,428 $ 25,559 Exploration costs $ 2,595 $ 4,165 Depletion, depreciation, amortization and accretion $ 74,900 $ 65,055 Impairment of oil and natural gas properties $ 11,317 $ 9,760 Other impairments $ 30,158 $ — Administrative costs $ 26,551 $ 26,569 Share-based compensation 8,138 6,833 General and administrative expense $ 34,689 $ 33,402 Transaction costs $ 1,573 $ 5,817 Interest expense, net $ 34,338 $ 31,816 (Gain) loss on derivatives, net $ 1,665 $ (6,193) Loss from equity method investment $ 721 $ 218 Income tax expense $ 28,074 $ 34,461 Lease Operating Expenses ("LOE") LOE are the costs incurred in the operation and maintenance of producing properties.
The increase in share-based compensation expense resulted from the increase in outstanding equity awards due in part to higher employee count as well as expense associated with equity awards attributable to a separation agreement with a former Company executive. Transaction Costs Transaction costs represent costs incurred on successful or unsuccessful business combinations or unsuccessful property acquisitions.
The increase in share-based compensation expense was primarily due to a higher employee count and an increase in outstanding equity awards. Transaction Costs Transaction costs represent costs incurred on successful or unsuccessful commercial transactions, business combinations or unsuccessful acquisitions.
For the years ended December 31, 2023 and 2022, the Company paid cash dividends of approximately $0.5 million and $0.2 million, respectively, to holders of restricted stock upon vesting. Contractual Obligations As of December 31, 2023, the Company has commitments with its primary midstream counterparty and has purchase commitments totaling $13.1 million related to its 2024 drilling program.
For the years ended December 31, 2024, and 2023, the Company paid cash dividends of approximately $0.7 million and $0.5 million, respectively, to holders of restricted stock upon vesting. Contractual Obligations As of December 31, 2024, the Company had a remaining volume commitment of less than seven years with our primary midstream counterparty in Texas.
On November 14, 2023, through the semi-annual redetermination, the Company increased its borrowing base to $375 million, resulting in the addition of two new lenders and the exit of one lender. The Credit Facility is set to mature in April 2026. Substantially all of the Company’s assets are pledged to secure the Credit Facility.
On November 14, 2023, through the semi-annual redetermination process and fifteenth amendment, the Company increased our borrowing base from $325 million to $375 million, resulting in the addition of two new lenders and the exit of one lender.
All costs incurred in the acquisition, exploration and development of properties (excluding costs of surrendered and abandoned leaseholds, delay lease rentals, dry holes and overhead related to exploration activities) are capitalized. Capitalized costs are depleted using the units-of-production method. Accretion expense relates to ARO.
Depletion, Depreciation, Amortization and Accretion Expense DD&A expense is the systematic expensing of the capitalized costs incurred to acquire, explore and develop oil, natural gas and NGLs. All costs incurred in the acquisition, exploration and development of properties (excluding costs of surrendered and abandoned leaseholds, delay lease rentals, dry holes and overhead related to exploration activities) are capitalized.
Expenses for electricity, compression, direct labor, saltwater disposal and materials and supplies comprise the most significant portion of our lease operating expenses. Certain operating cost components, such as direct labor and materials and supplies, generally remain relatively fixed across broad production volume ranges, but can fluctuate depending on activities performed during a specific period.
Certain operating cost components, such as direct labor and materials and supplies, generally remain relatively fixed across broad production volume ranges, but can fluctuate depending on activities performed during a specific period. For instance, repairs to our pumping equipment or surface facilities or subsurface maintenance result in increased production expenses in periods during which they are performed.
As of December 31, 2023, we had a working capital deficit of $31.1 million compared to a deficit of $25.3 million as of December 31, 2022. The current portion of our Senior Notes, which includes our regularly scheduled principal payments of $5 million per quarter, accounts for $20.0 million of our working capital deficit at December 31, 2023.
The current portion of our Senior Notes, which includes our regularly scheduled principal payments of $5 million per quarter, accounts for $20 million of our working capital deficit at December 31, 2024, and December 31, 2023. We utilize our Credit Facility and cash on hand to manage the timing of cash flows and fund short-term working capital deficits.
Likewise, our ability to issue equity and obtain credit facilities on favorable terms may be impacted by a variety of market factors as well as fluctuations in our results of operations. For further discussion of risks related to our liquidity and capital resources, see "Item 1A.
Cash on hand and operating cash flow can be subject to fluctuations due to trends and uncertainties that are beyond our control. Likewise, our ability to issue equity, debt and obtain credit facilities on favorable terms may be impacted by a variety of market factors as well as fluctuations in our results of operations.
If the carrying amount exceeds the estimated undiscounted future cash flows, we adjust the carrying amount of the oil and natural gas properties to estimated fair value. 66 Table of Contents During the year ended December 31, 2023, the Company recognized an impairment loss on proved properties of $9.8 million relating to certain properties in Texas outside of the Company's acreage in the Champions Field.
The Company recognized a non-cash impairment loss on proved properties of $9.8 million for the year ended December 31, 2023, which related to a decrease in fair value of certain properties in Texas outside of the Company's acreage in the Champions field.
(2) The Company's cost of contract services - related parties represents costs specifically attributable to the master service agreements the Company has in place with the respective related parties.
(2) The Company's cost of contract services - related parties represented costs specifically attributable to the master service agreements the Company had in place with the respective related parties. The management services agreement with Riley Exploration Group, LLC was terminated effective May 31, 2024, and the management services agreement with Combo Resources, LLC was terminated effective January 31, 2024.
Our revenues may vary significantly from period to period as a result of changes in the volume of production sold or changes in commodity prices. The Company’s total oil and natural gas revenue, net increased $53.3 million, or 17%, for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Our revenues from oil, natural gas and NGL sales do not include the effects of derivatives. Our revenues may vary significantly from period to period as a result of changes in the volume of production sold or changes in commodity prices.
Interest Expense Interest expense increased by $30.7 million during the year ended December 31, 2023 when compared to the year ended December 31, 2022.
During the year ended December 31, 2023, the transaction costs of $5.8 million related to the 2023 New Mexico Acquisition. Interest Expense, net Interest expense, net increased by $2.5 million during the year ended December 31, 2024, when compared to the year ended December 31, 2023.
Exhibits and Financial Statement Schedules" for a full discussion of our long-term debt. 69 Table of Contents Distributions For the year ended December 31, 2023, the Company authorized and declared quarterly dividends totaling approximately $27.9 million, with $27.3 million paid in cash and $0.6 million payable to holders of restricted stock upon vesting.
Dividends For the year ended December 31, 2024, the Company authorized and declared quarterly dividends totaling approximately $31.0 million, with $30.8 million paid in cash and $0.2 million accrued for the holders of restricted stock upon vesting.
For instance, repairs to our pumping equipment or surface facilities or subsurface maintenance result in increased production expenses in periods during which they are performed. Certain operating cost components, such as saltwater disposal associated with produced water, are variable and increase or decrease as hydrocarbon production levels and the volume of completion water disposal increases or decreases.
Certain operating cost components, such as saltwater disposal associated with produced water, are variable and increase or decrease as hydrocarbon production levels and the volume of water disposal increases or decreases. The Company’s LOE increased by $12.6 million for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Year Ended December 31, 2023 2022 (In thousands) Current income tax expense $ 6,872 $ 4,472 Deferred income tax expense 27,589 28,372 Total income tax expense $ 34,461 $ 32,844 Effective income tax rate 23.6 % 21.7 % The rise in our effective income tax rate was primarily due to the New Mexico Acquisition increasing our apportionment in New Mexico, which has a higher state tax rate than where we have historically operated.
Year Ended December 31, 2024 2023 (In thousands) Current income tax expense $ 24,872 $ 6,872 Deferred income tax expense 3,202 27,589 Total income tax expense $ 28,074 $ 34,461 Effective income tax rate 24.0 % 23.6 % The decrease in deferred income tax expense from 2023 to 2024 is primarily due to the 2023 New Mexico Acquisition, which allowed for more accelerated tax depreciation in 2023.
Total G&A expense increased by $11.5 million for the year ended December 31, 2023 compared to the year ended December 31, 2022. Administrative costs, which include payroll, benefits and non-payroll costs, increased by $8.1 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
Administrative costs remained flat for the year ended December 31, 2024, compared to the year ended December 31, 2023. Share-based compensation expense increased by $1.3 million for the year ended December 31, 2024, compared to the year ended December 31, 2023.
The increase for the year ended December 31, 2023 was primarily due to depletion associated with the oil and natural gas acquired in the New Mexico Acquisition and higher production on historical properties along with a higher depletion rate on the historical properties.
The increase for the year ended December 31, 2024, was primarily due to higher production in our Champions field and the inclusion of the 2023 New Mexico Acquisition for the full year as well as the 2024 New Mexico Asset Acquisition for part of the year.
The oil and natural gas properties acquired in the New Mexico Acquisition contributed $2.1 million to the Company's natural gas revenues for the 2023 period. • Natural gas sales volumes increased during the year ended December 31, 2023 compared to the year ended December 31, 2022 due to oil and natural gas properties acquired in the New Mexico Acquisition, production from new wells and workovers performed on existing wells.
Daily oil volumes increased by 15% due to increased production from new wells turned to sales in our Champions field as well as the 2023 and 2024 New Mexico Acquisitions. 63 Table of Contents Natural gas revenues For the year ended December 31, 2024, natural gas revenues decreased by $4.0 million compared to the year ended December 31, 2023.
These losses are included under other income (expense) on the Company’s consolidated statements of operations. 63 Table of Contents Oil and Natural Gas Revenues Our revenues are derived from the sale of our oil and natural gas production, including the sale of NGLs that are extracted from our natural gas during processing.
(3) During the periods presented, the Company did not have any NGL derivative contracts in place. 62 Table of Contents Oil and Natural Gas Revenues Our revenues are derived from the sale of our oil and natural gas production, including the sale of NGLs that are extracted from our natural gas during processing.
The following table presents the components of the Company's gain (loss) on derivatives, net for the years ended December 31, 2023 and 2022: Year Ended December 31, 2023 2022 (In thousands) Settlements on derivative contracts $ (17,221) $ (75,257) Non-cash gain on derivatives 23,414 23,683 Gain (loss) on derivatives, net $ 6,193 $ (51,574) Our earnings are affected by the changes in value of our derivative portfolio between periods and the related cash received or paid upon settlement of our derivatives.
The following table presents the components of the Company's gain (loss) on derivatives, net for the years ended December 31, 2024, and 2023: Year Ended December 31, 2024 2023 (In thousands) Settlements on derivative contracts $ 1,849 $ (17,221) Non-cash gain (loss) on derivatives (3,514) 23,414 Gain (loss) on derivatives, net $ (1,665) $ 6,193 Cash gains or losses on settled derivative contracts relate to contracts that settle during the period and are a function of the difference in settled versus contractual prices and the associated hedged volumes for each underlying commodity.
Ad valorem taxes increased for the year ended December 31, 2023 based on higher estimated property values and higher tax rates for the current taxable period. Exploration Costs Exploration costs consist of exploratory well expense, expiration of unproved leasehold, and geological and geophysical costs which include seismic survey costs.
Production and ad valorem taxes increased by $3.9 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to increases in our oil and natural gas sales, net and $0.8 million from the new waste emissions charge. 65 Table of Contents Exploration Costs Exploration costs consist of exploratory well expense, expiration of unproved leasehold, and geological and geophysical costs which include seismic survey costs.
The Company’s LOE increased by $26.4 million for the year ended December 31, 2023 compared to the year ended December 31, 2022.
The Company’s total oil and natural gas sales, net increased $37.2 million, or 10%, for the year ended December 31, 2024, compared to the year ended December 31, 2023.
We estimate the combination of the sources of capital discussed above will continue to be adequate to meet our short and long-term liquidity needs. Cash on hand and operating cash flow can be subject to fluctuations due to trends and uncertainties that are beyond our control.
In April 2024, the Company issued equity securities and used the proceeds to finance an acquisition, repay outstanding debt and for general corporate purposes. We estimate the combination of the sources of capital discussed above will continue to be adequate to meet our short and long-term liquidity needs.
Revenues from product sales are a function of the volumes produced, product quality, market prices, gas Btu content, as well as midstream counterparty fees and deducts. Our revenues from oil, natural gas and NGL sales do not include the effects of derivatives.
Realized prices and revenues from product sales are a function of the volumes produced, product quality, market prices, gas Btu content, as well as gathering, processing and transportation costs. Gathering, processing and transportation costs are allocated across natural gas and NGLs based on revenue, which leads to heightened fluctuations in such cost allocations across periods.
Natural gas revenues • For the year ended December 31, 2023, natural gas revenues decreased by $8.1 million, or 76%, compared to the year ended December 31, 2022. Realized natural gas prices decreased by 87% partially offset by an increase in volumes of 82% as compared to the year ended December 31, 2022.
Net cash provided by operating activities increased $39.1 million, or 19%, compared to year ended December 31, 2023. Oil and natural gas revenues increased $58.2 million due to an increase in our oil and natural gas production partially offset by a $21.1 million decrease due to lower realized pricing.
The increase in interest expense was primarily due to the higher debt balances as a result of financing for the New Mexico Acquisition, along with higher interest rates on borrowings under our Credit Facility for the year ended December 31, 2023 when compared to rates for the year ended December 31, 2022.
The increase in interest expense was primarily due to a full-year effect of the Senior Notes, which were the primary financing for the 2023 New Mexico Acquisition, including amortization of the discount.
NGLs revenues • For the year ended December 31, 2023, NGL revenues decreased by $3.0 million, or 30%, compared to the year ended December 31, 2022. Realized prices decreased by 69%, partially offset by an increase in volumes of 126% as compared to the year ended December 31, 2022.
This corresponded with a $0.34 decrease in the average Henry Hub price during the year ended December 31, 2024, and an increase in basis differentials due to regional supply imbalances. NGL revenues For the year ended December 31, 2024, NGL revenues decreased by $4.6 million, or 67%, compared to the year ended December 31, 2023.
Any such recession could prolong market volatility or cause a decline in commodity prices, among other potential impacts. The Company cannot estimate the length or gravity of the future impact these events will have on the Company's results of operations, financial position, liquidity and the value of oil and natural gas reserves.
The Company cannot estimate the length or gravity of the future impact these conditions will have on the Company's results of operations, financial position, liquidity and the value of the oil and natural gas reserves. 2024 New Mexico Asset Acquisition On May 7, 2024, the Company completed the acquisition of oil and natural gas properties in Eddy County, New Mexico ("2024 New Mexico Asset Acquisition"), which included 13,900 contiguous net acres adjacent to the Company's existing acreage in Eddy County, for a cash purchase price of approximately $19.1 million plus $0.5 million in transaction costs.
Depletion, depreciation, amortization and accretion expense increased by $32.9 million for the year ended December 31, 2023, compared to the year ended December 31, 2022.
The liability accretes each period until it is settled or the well is sold, at which time the liability is removed. DD&A expense increased by $9.8 million for the year ended December 31, 2024, compared to the year ended December 31, 2023.
The Company recognized an impairment loss on proved properties of $7.3 million for the year ended December 31, 2022, which related to a decrease in fair value of its historical properties in New Mexico. Oil and Natural Gas Reserves Our estimates of proved and proved developed reserves are a major component of our depletion calculation.
During the year ended December 31, 2024, the Company recognized a non-cash impairment loss on proved properties of $11.3 million relating to certain properties in Texas outside of the Company's acreage in the Champions field, in addition to historical properties in New Mexico outside of Red Lake.
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Risk Factors." Overview We operate in the upstream segment of the oil and natural gas industry and are focused on steadily growing conventional reserves, production and cash flow through the acquisition, exploration, development and production of oil, natural gas and NGLs primarily in the Permian Basin in West Texas and Southeastern New Mexico.
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Risk Factors." Overview Riley Permian is a growth-oriented, independent oil and natural gas company focused on horizontal drilling of conventional oil-saturated and liquids-rich formations that produce long-term stable cash flows in the Permian Basin. The majority of our acreage is located in Yoakum County, Texas and Eddy County, New Mexico.
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We intend to continue to develop our reserves and increase production through development drilling and exploration activities and through acquisitions that meet our strategic and financial objectives.
Added
Our strategic business objectives include enhancing the rate of return on our invested capital, generating sustainable free cash flow, maintaining a strong and flexible balance sheet while maximizing our returns to shareholders.
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Financial and Operating Highlights Financial and operating results reflect the following: • Increased total net equivalent production by 62% to 18.6 MBoe/d for the year ended December 31, 2023, as compared to the year ended December 31, 2022 • During the year ended December 31, 2023, 24 gross (18.2 net) horizontal wells were brought online to production • Realized average combined price on production sold of $54.91 per Boe, before derivative settlements, during the year ended December 31, 2023, including $75.62 per barrel for oil • Generated cash flow from operations of $207.2 million for the year ended December 31, 2023 • Incurred total accrual (activity based) capital expenditures before acquisitions of $135.8 million for the year ended December 31, 2023 as compared to $123.1 million for the year ended December 31, 2022 • Paid cash dividends on common shares of $27.7 million during the year ended December 31, 2023 • $15.3 million in cash and $356.0 million in total debt as of December 31, 2023 61 Table of Contents Recent Developments Market Conditions, Commodity Prices and Interest Rates The U.S. and global economies and markets have experienced heightened volatility following impactful geopolitical events, the effects of widespread inflation and the impact of significantly higher interest rates.
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We implement this strategy primarily through identification and capture of attractive development opportunities, optimization of our assets and pursuing complementary growth opportunities that increase our scale and meet our strategic and financial objectives. Recent Developments Geopolitical and Economic Conditions Commodity prices remain volatile.
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Prices for oil and natural gas are determined primarily by prevailing market conditions, which have been and could continue to be volatile. The combination of geopolitical events, inflation and the rising interest rate environment has led to increasing forecasts of a U.S. or global recession.
Added
General domestic and international political and economic conditions, including the military conflict between Russia and Ukraine, conflicts in the Middle East, and the U.S. and global response to such conflicts, global economic growth, actions of OPEC+ countries, and implementation of tariffs could prolong market volatility or cause a decline in commodity prices. Inflation continues to be an ongoing concern.
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New Mexico Acquisition On April 3, 2023, the Company completed the New Mexico Acquisition from Pecos for an adjusted purchase price of $325 million. The New Mexico Acquisition was funded through a combination of borrowings under the Company's Credit Facility and proceeds from the issuance of $200 million of Senior Notes.
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Although inflation moderated somewhat, inflationary pressures remain elevated, which in turn may cause our capital expenditures and operating costs to increase. During inflationary periods, interest rates have historically increased.
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Power Joint Venture In January 2023, the Company entered into an agreement to form a joint venture created for the purpose of constructing a new power infrastructure for onsite, baseload power generation using produced natural gas for its Champions Field.
Added
Increased interest rates could have the effects of raising our cost of capital and the potential for depressing economic growth, either of which (or the combination thereof) could hurt the financial and operating results of our business.
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The Company has an initial 30% investment in the joint venture company, RPC Power LLC, and is committed to providing its portion of capital.
Added
The 2024 New Mexico Asset Acquisition was accounted for as an asset acquisition, with the final purchase price and transaction costs being capitalized to oil and natural gas properties.
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The Company’s realized average combined price on its production for the year ended December 31, 2023 decreased by $21.14 per Boe, or 28% compared to the year ended December 31, 2022. Oil revenues • For the year ended December 31, 2023, oil revenues increased by $64.4 million, or 22%, compared to the year ended December 31, 2022.
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The acquisition was funded through a combination of proceeds from the 2024 Equity Offering and cash on hand. 60 Table of Contents RPC Power Joint Venture In January 2023, the Company formed a joint venture, RPC Power, for the purpose of constructing, owning and operating power generation assets which became fully operational in September of 2024.
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Of the increase, $147.2 million was attributable to an increase in volume, which was partially offset by $82.7 million attributable to a decrease in our realized price. Volumes increased by 49%, while realized prices decreased by 19% as compared to the year ended December 31, 2022.
Added
These assets use the Company’s produced natural gas to power a portion of our oilfield operations in Yoakum County, Texas.
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The oil and natural gas properties acquired in the New Mexico Acquisition contributed $71.9 million to the Company's oil revenues for the 2023 period. • Oil volumes increased during the year ended December 31, 2023 due to oil and natural gas assets acquired in the New Mexico Acquisition, production from new wells and workovers performed on existing wells.
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In May 2024, the Company entered into the Second Amended and Restated Limited Liability Company Agreement ("A&R LLC Agreement") to expand the scope of our joint venture to include the constructing, owning, and operating of additional new power generation and storage assets, which are expected to be operational beginning in late 2025 through 2026, for the sale of energy and ancillary services to ERCOT.
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During the year ended December 31, 2023, we brought online 24 gross (18.2 net) horizontal wells. The New Mexico Acquisition contributed oil volumes of approximately 931 MBbls for the 2023 period. • The average WTI price decreased by $17.32 per Bbl during the year ended December 31, 2023 when compared to the year ended December 31, 2022.
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In November 2024, the Company signed the Second Amendment to the A&R LLC Agreement, which increased the capital commitment for each owner from $42.5 million to $51.5 million. As of December 31, 2024, the Company owned 50% of the joint venture.
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The New Mexico Acquisition contributed 2,179 MMcf to the Company's natural gas volumes for the 2023 period. • The average Henry Hub price decreased by $3.92 per Mcf during the year ended December 31, 2023 compared to the year ended December 31, 2022.
Added
On February 28, 2025, the Company contributed an additional $6.3 million to the joint venture which increased our total capital contributions to $30 million. 2024 Equity Offering On April 8, 2024, the Company issued and sold 1,015,000 shares of common stock at a price of $27.00 per share.
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The oil and natural gas properties acquired in the New Mexico Acquisition contributed $5.3 million to the Company's NGL revenues for the 2023 period. • NGL sales volumes increased during the year ended December 31, 2023 compared to the year ended December 31, 2022 due to the New Mexico Acquisition, production from new wells and workovers performed on existing wells.
Added
Net proceeds from the issuance were approximately $25.4 million, after deducting underwriting discounts and commissions and expenses.
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For the year ended December 31, 2023, the increase was driven by a $20.0 million increase due to higher production, including $13.3 million attributable to the New Mexico Acquisition, and a $10.1 million increase due to higher 65 Table of Contents workover expense, including $7.6 million attributable to the New Mexico Acquisition, partially offset by a $3.7 million decrease primarily related to lower utility rates.

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