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What changed in Vitesse Energy, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Vitesse Energy, 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.

+315 added−365 removedSource: 10-K (2025-03-12) vs 10-K (2024-02-26)

Top changes in Vitesse Energy, Inc.'s 2024 10-K

315 paragraphs added · 365 removed · 255 edited across 5 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

137 edited+39 added−42 removed257 unchanged
Biggest changeThese factors include, but are not limited to, the following: ■ changes in global supply and demand for oil and natural gas; ■ changes in NYMEX WTI oil prices and NYMEX Henry Hub natural gas prices; ■ the volatility and uncertainty of regional pricing differentials; ■ future repurchases (or additional possible releases) of oil from the strategic petroleum reserve by the United States Department of Energy; ■ the actions of OPEC and other major oil producing countries; ■ worldwide and regional economic, political and social conditions impacting the global supply and demand for oil and natural gas, which may be driven by various risks including war, terrorism, political unrest, or health epidemics; ■ the price and quantity of imports of foreign oil and natural gas; 30 Table of Contents ■ political and economic conditions, including embargoes, in oil-producing countries or affecting other oil-producing activity; ■ the outbreak or escalation of military hostilities, including between Russia and Ukraine and in the Middle East, and the potential destabilizing effect such conflicts may pose for the global oil and natural gas markets; ■ inflation; ■ the level of global oil and natural gas exploration, production activity and inventories; ■ changes in U.S. energy policy; ■ weather conditions; ■ outbreak of disease; ■ technological advances affecting energy consumption; ■ domestic and foreign governmental taxes, tariffs and/or regulations; ■ proximity and capacity of processing, gathering, and storage facilities, oil and natural gas pipelines and other transportation facilities; ■ the price and availability of competitors’ supplies of oil and natural gas in captive market areas; and ■ the price and availability of alternative fuels.
Biggest changeDepartment of Energy; 31 Table of Contents ■ the actions of OPEC and other major oil producing countries; ■ worldwide and regional economic, political and social conditions impacting the global supply and demand for oil and natural gas, which may be driven by various risks including war, terrorism, political unrest, or health epidemics; ■ the price and quantity of imports of foreign oil and natural gas; ■ political and economic conditions, including embargoes, in oil-producing countries or affecting other oil-producing activity; ■ the outbreak or escalation of military hostilities, including between Russia and Ukraine and in the Middle East, and the potential destabilizing effect such conflicts may pose for the global oil and natural gas markets; ■ inflation and changes in U.S. trade policy, including the imposition of tariffs and resulting consequences; ■ the level of global oil and natural gas exploration, production activity and inventories; ■ changes in U.S. energy policy; ■ weather conditions; ■ outbreak of disease; ■ technological advances affecting energy consumption; ■ domestic and foreign governmental taxes, tariffs or regulations; ■ proximity and capacity of processing, gathering, and storage facilities, oil and natural gas pipelines and other transportation facilities; ■ the price and availability of competitors’ supplies of oil and natural gas in captive market areas; and ■ the price and availability of alternative fuels.
These include provisions that: ■ prevent our stockholders from calling a special meeting or acting by written consent; ■ require advance notice of any stockholder nomination for the election of directors or any stockholder proposal; ■ provide for a plurality voting standard in contested director elections; ■ authorize only our Board to fill director vacancies and newly created directorships; ■ authorize our Board to adopt, amend or repeal our Amended and Restated Bylaws without stockholder approval; and ■ authorize our Board to issue one or more series of “blank check” preferred stock.
These include provisions that: ■ prevent our stockholders from calling a special meeting or acting by written consent; ■ require advance notice of any stockholder nomination for the election of directors or any stockholder proposal; ■ provide for a plurality voting standard in contested director elections; ■ authorize only our Board of Directors to fill director vacancies and newly created directorships; ■ authorize our Board of Directors to adopt, amend or repeal our Amended and Restated Bylaws without stockholder approval; and ■ authorize our Board of Directors to issue one or more series of “blank check” preferred stock.
Lower oil and natural gas prices may limit our ability to comply with the covenants under our Revolving Credit Facility and/or limit our ability to access borrowing availability thereunder, which is dependent on many factors including the value of our proved reserves.
Lower oil and natural gas prices may limit our ability to comply with the covenants under our Revolving Credit Facility or limit our ability to access borrowing availability thereunder, which is dependent on many factors including the value of our proved reserves.
Drilling for and producing oil and natural gas are high risk activities with many uncertainties that could adversely affect our financial condition or results of operations. Our operators’ drilling activities are subject to many risks, including the risk that they will not discover commercially productive reservoirs.
Drilling for and producing oil and natural gas are high risk activities with many uncertainties that could adversely affect our financial condition or results of operations. Our and our operators’ drilling activities are subject to many risks, including the risk that they will not discover commercially productive reservoirs.
Unrealized hedging losses on commodity derivatives attributable to significant increases in oil prices may also cause a net loss for a given period. In addition, fluctuations in oil and natural gas prices have impacted our Predecessor unit-based compensation expense for prior periods and may impact our stock-based compensation expense.
Unrealized hedging losses on commodity derivatives attributable to significant increases in oil prices may also cause a net loss for a given period. In addition, fluctuations in oil and natural gas prices have impacted unit-based compensation expense for our Predecessor for prior periods and may impact our stock-based compensation expense.
Determining the amount of oil and natural gas recoverable from various formations involves significant complexity and uncertainty. Oil and natural gas reserve engineering requires subjective estimates of underground accumulations of oil and/or natural gas and assumptions concerning future oil and natural gas prices, production levels, and operating, and development costs.
Determining the amount of oil and natural gas recoverable from various formations involves significant complexity and uncertainty. Oil and natural gas reserve engineering requires subjective estimates of underground accumulations of oil or natural gas and assumptions concerning future oil and natural gas prices, production levels, and operating, and development costs.
Seasonal weather conditions, extreme climatic events, and shifts in meteorological conditions, which may be impacted by climate change, may adversely affect our operators’ ability to conduct drilling and completion activities and to sell oil and natural gas for periods of time or affect demand for oil and gas, in some of the areas where our properties are located.
Seasonal weather conditions, extreme climatic events, and shifts in meteorological conditions, which may be impacted by climate change, may adversely affect our and our operators’ ability to conduct drilling and completion activities and to sell oil and natural gas for periods of time or affect demand for oil and gas, in some of the areas where our properties are located.
The frequency and severity of severe winter weather conditions and shifts in regional temperature and precipitation patterns, which could result in increases in severity or frequency of droughts, storms, flooding, or wildfires, could cause physical damage to our operators’ assets, disrupt our operators’ supply chains (for example, through water use curtailments imposed during a prolonged drought), or otherwise adversely impact the production activities on our interests.
The frequency and severity of severe winter weather conditions and shifts in regional temperature and precipitation patterns, which could result in increases in severity or frequency of droughts, storms, flooding, or wildfires, could cause physical damage to our and our operators’ assets, disrupt supply chains (for example, through water use curtailments imposed during a prolonged drought), or otherwise adversely impact the production activities on our interests.
Oil and natural gas prices and/or other conditions have in the past and may in the future cause oil and natural gas operators to file for bankruptcy.
Oil and natural gas prices or other conditions have in the past and may in the future cause oil and natural gas operators to file for bankruptcy.
Furthermore, various third-party resources that we rely on, directly or indirectly, in the operation of our business (such as pipelines and other infrastructure) could suffer interruptions or breaches from cyber-attacks or similar events that are entirely outside our control, and any such events could significantly disrupt our business operations and/or have a material adverse effect on our results of operations.
Furthermore, various third-party resources that we rely on, directly or indirectly, in the operation of our business (such as pipelines and other infrastructure) could suffer interruptions or breaches from cyber-attacks or similar events that are entirely outside our control, and any such events could significantly disrupt our business operations or have a material adverse effect on our results of operations.
The same could also arise from other factors, including but not limited to lower commodity prices or production; operating difficulties; changes in oil and natural gas reserve engineering; increased operating and/or capital costs; lending requirements or regulations; or other factors affecting our lenders’ ability or willingness to lend (including factors that may be unrelated to our company).
The same could also arise from other factors, including but not limited to lower commodity prices or production; operating difficulties; changes in oil and natural gas reserve engineering; increased operating or capital costs; lending requirements or regulations; or other factors affecting our lenders’ ability or willingness to lend (including factors that may be unrelated to our company).
Any significant reduction in our borrowing base could result in a default under current and/or future debt instruments, negatively impact our liquidity and our ability to fund our operations and, as a result, could have a material adverse effect on our financial position, results of operations and cash flow.
Any significant reduction in our borrowing base could result in a default under current or future debt instruments, negatively impact our liquidity and our ability to fund our operations and, as a result, could have a material adverse effect on our financial position, results of operations and cash flow.
Moreover, public interest in environmental protection has increased in recent years, and environmental organizations have opposed, with some success, certain drilling projects. Part of the regulatory environment in which we do business includes, in some cases, legal requirements for obtaining environmental assessments, environmental impact studies and/or plans of development before commencing drilling and production activities.
Moreover, public interest in environmental protection has increased in recent years, and environmental organizations have opposed, with some success, certain drilling projects. Part of the regulatory environment in which we do business includes, in some cases, legal requirements for obtaining environmental assessments, environmental impact studies or plans of development before commencing drilling and production activities.
The hydraulic fracturing process is typically regulated by state oil and natural gas commissions though EPA has published permitting guidance and regulations covering certain hydraulic fracturing activities and investigated impacts of hydraulic fracturing on water resources. State regulation of hydraulic fracturing typically imposes permitting, public disclosure, and well construction requirements.
The hydraulic fracturing process is typically regulated by state oil and natural gas commissions though the EPA has published permitting guidance and regulations covering certain hydraulic fracturing activities and investigated impacts of hydraulic fracturing on water resources. State regulation of hydraulic fracturing typically imposes permitting, public disclosure, and well construction requirements.
In addition, failure to report dividend income in a manner consistent with the IRS Forms 1099-DIV may cause the IRS to assert audit adjustments to a stockholder’s U.S. federal income tax return.
In addition, failure to report dividend income in a manner consistent with the IRS Forms 1099-DIV may cause the IRS to assert audit adjustments to a stockholder’s U.S. federal income tax return.
Summary Risk Factors We believe that the risks associated with our business, and consequently the risks associated with an investment in our equity or debt securities, fall within the following categories: Risks Relating to Our Common Stock ■ Vitesse is an emerging growth company and the information we provide stockholders may be different from information provided by other public companies, which may result in a less active trading market for our common stock and higher volatility in our stock price. ■ Although we expect to continue to pay dividends, we cannot provide assurance that we will pay dividends on our common stock, and our indebtedness may limit our ability to pay dividends on our common stock. ■ Certain provisions in our Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws and Delaware law may discourage takeovers. ■ Your percentage ownership in Vitesse may be diluted in the future. ■ Our Amended and Restated Certificate of Incorporation designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees.
Summary Risk Factors We believe that the risks associated with our business, and consequently the risks associated with an investment in our equity or debt securities, fall within the following categories: Risks Relating to Our Common Stock ■ Vitesse is an emerging growth company and the information we provide stockholders may be different from information provided by other public companies, which may result in a less active trading market for our common stock and higher volatility in our stock price. ■ Although we expect to continue to pay dividends, we cannot provide assurance that we will pay dividends on our common stock, and our indebtedness may limit our ability to pay dividends on our common stock. ■ Certain provisions in our Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws and Delaware law may discourage takeovers. ■ Stockholders percentage ownership in Vitesse may be diluted in the future. ■ Our Amended and Restated Certificate of Incorporation designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees.
For as long as we are an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to: ■ not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act of 2002; ■ exemption from new or revised financial accounting standards applicable to public companies until such standards are also applicable to private companies; ■ reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and 28 Table of Contents ■ exemptions from the requirement of holding a nonbinding advisory vote on executive compensation and stockholder approval on golden parachute compensation not previously approved.
For as long as we are an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to: ■ not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act of 2002; ■ exemption from new or revised financial accounting standards applicable to public companies until such standards are also applicable to private companies; ■ reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and 29 Table of Contents ■ exemptions from the requirement of holding a nonbinding advisory vote on executive compensation and stockholder approval on golden parachute compensation not previously approved.
Enhanced climate disclosure requirements could result in additional legal and accounting costs and accelerate the trend of certain stakeholders and lenders restricting or seeking more stringent conditions with respect to their investments in certain carbon-intensive sectors. States may also pass laws imposing more expansive disclosure requirements for climate-related risks.
Enhanced climate disclosure requirements could result in additional legal and accounting costs and accelerate the trend of certain stakeholders and lenders restricting or seeking more stringent conditions with respect to their investments in certain carbon-intensive sectors. States may pass laws imposing more expansive disclosure requirements for climate-related risks.
Such climatic events may also be impacted or exacerbated by the effects of climate change. The ability of our operators to mitigate the adverse impacts of these events depends in part on the effectiveness of their resiliency planning in design and disaster preparedness and response, which may not have considered every eventuality.
Such climatic events may also be impacted or exacerbated by the effects of climate change. Our ability and the ability of our operators to mitigate the adverse impacts of these events depends in part on the effectiveness of resiliency planning in design and disaster preparedness and response, which may not have considered every eventuality.
Moreover, failure or a perception (whether or not valid) of failure to implement ESG strategies or achieve ESG goals or commitments, including any GHG emission reduction or carbon intensity goals or commitments, could result in private litigation and damage our reputation, cause investors or consumers to lose confidence in us, and negatively impact our operations.
Moreover, failure or a perception (whether or not valid) of failure to pursue or implement ESG strategies or achieve ESG goals or commitments, including any GHG emission reduction or carbon intensity goals or commitments, could result in private litigation and damage our reputation, cause investors or consumers to lose confidence in us, and negatively impact our operations.
The terms of the Tax Matters Agreement require us to indemnify Jefferies and certain related parties for certain taxes and losses that (i) result primarily from, individually or in the aggregate, the breach of certain representations and warranties made by us (including in connection with the IRS ruling or the tax opinion regarding the tax treatment of the Distribution) or covenants made by us (applicable to actions or failures to act by us and our subsidiaries following the completion of the Distribution), (ii) are attributable to actions we take 48 Table of Contents following the Distribution and result from the failure of the transfer of the Vitesse Energy equity interests to Vitesse, together with the Distribution, to qualify as (a) a reorganization described in Section 355(a) and Section 368(a)(1)(D) of the Code, (b) a transaction in which the stock distributed thereby is “qualified property” for purposes of Sections 355(c) and 361(c) of the Code, or (c) a transaction in which Jefferies, Vitesse and the holders of Jefferies common stock recognize no income or gain for U.S. federal income tax purposes pursuant to Sections 355, 361 and 1032 of the Code, including, as a result of the application of Section 355(e) of the Code to the Distribution as a result of a 50% or greater change in ownership as described below, or (iii) are attributable to taxes with respect to Vitesse Energy or Vitesse Oil for tax periods or portions thereof ending before the Distribution, including as may arise on audit.
The terms of the Tax Matters Agreement require us to indemnify Jefferies and certain related parties for certain taxes and losses that (i) result primarily from, individually or in the aggregate, the breach of certain representations and warranties made by us (including in connection with the IRS ruling or the tax opinion regarding the tax treatment of the Distribution) or covenants made by us (applicable to actions or failures to act by us and our subsidiaries following the completion of the Distribution), (ii) are attributable to actions we take following the Distribution and result from the failure of the transfer of the Vitesse Energy equity interests to Vitesse, together with the Distribution, to qualify as (a) a reorganization described in Section 355(a) and Section 368(a)(1)(D) of the Code, (b) a transaction in which the stock distributed thereby is “qualified property” for purposes of Sections 355(c) and 361(c) of the Code, or (c) a transaction in which Jefferies, Vitesse and the holders of Jefferies common stock recognize no income or gain for U.S. federal income tax purposes pursuant to Sections 355, 361 and 1032 of the Code, including, as a result of the application of Section 355(e) of the Code to the Distribution as a result of a 50% or greater change in ownership as described below, or (iii) are attributable to taxes with respect to Vitesse Energy or Vitesse Oil for tax periods or portions thereof ending before the Distribution, including as may arise on audit.
Although we expect to continue to pay dividends, we cannot provide assurance that we will pay dividends on our common stock, and our indebtedness may limit our ability to pay dividends on our common stock. The timing, declaration, amount of and payment of future dividends, if any, to stockholders will fall within the discretion of our Board.
Although we expect to continue to pay dividends, we cannot provide assurance that we will pay dividends on our common stock, and our indebtedness may limit our ability to pay dividends on our common stock. The timing, declaration, amount of and payment of future dividends, if any, to stockholders will fall within the discretion of our Board of Directors.
Although the length and impact of these ongoing military conflicts are highly unpredictable, the military conflicts in Ukraine and in the Middle East have led to market disruptions, including significant volatility in oil and natural gas prices, credit and capital markets, as well as supply chain disruptions.
Although the length and impact of these ongoing conflicts are highly unpredictable, the conflicts in Ukraine and in the Middle East have led to market disruptions, including significant volatility in oil and natural gas prices, credit and capital markets, as well as supply chain disruptions.
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; ■ geological risk, which refers to the risk that hydrocarbons may not be present or, if present, may not be recoverable economically; ■ 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.
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; 36 Table of Contents ■ the assumption of unknown liabilities, losses or costs for which we are not indemnified or for which our indemnity is inadequate; ■ geological risk, which refers to the risk that hydrocarbons may not be present or, if present, may not be recoverable economically; ■ 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.
Should the Company be targeted by any such litigation, we may incur liability, which, to the extent that societal pressures or political or other factors are involved, could be imposed without regard to causation or contribution to the asserted damage, or to other mitigating factors.
Should we be targeted by any such litigation, we may incur liability, which, to the extent that societal pressures or political or other factors are involved, could be imposed without regard to causation or contribution to the asserted damage, or to other mitigating factors.
For example, we could grant the holders of preferred stock the right to elect some number of the members of our Board in all events or upon the happening of specified events, or the right to veto specified transactions.
For example, we could grant the holders of preferred stock the right to elect some number of the members of our Board of Directors in all events or upon the happening of specified events, or the right to veto specified transactions.
Our Board may change the timing and amount of any future dividend payments or eliminate the payment of future dividends to our stockholders at its discretion, without advance notice to our stockholders.
Our Board of Directors may change the timing and amount of any future dividend payments or eliminate the payment of future dividends to our stockholders at its discretion, without advance notice to our stockholders.
Our Board’s decisions regarding the payment of future dividends, if any, will depend upon many factors, including our financial condition, earnings, capital requirements of our business, covenants associated with certain of our debt service obligations, legal requirements or limitations, industry practice, and other factors deemed relevant by our Board.
The decisions of our Board of Directors regarding the payment of future dividends, if any, will depend upon many factors, including our financial condition, earnings, capital requirements of our business, covenants associated with certain of our debt service obligations, legal requirements or limitations, industry practice, and other factors deemed relevant by our Board of Directors.
Additionally, our operators may be subject to operational restrictions or additional expenses regarding compliance with laws and regulations to protect endangered species, sensitive habitat, or other natural resources, which in turn could adversely impact our results of operations. See Part I. Items 1 and 2.
Additionally, our operators may be subject to operational restrictions or additional expenses regarding compliance with laws and regulations to protect endangered species, sensitive habitats, or other natural resources, which in turn could adversely impact our results of operations. See Part I. Items 1 and 2.
Under the DGCL, our Board may not authorize payment of a dividend unless it is either paid out of our surplus, as calculated in accordance with the DGCL, or if we do not have a surplus, it is paid out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year.
Under the DGCL, our Board of Directors may not authorize payment of a dividend unless it is either paid out of our surplus, as calculated in accordance with the DGCL, or if we do not have a surplus, paid out of our net profits for the fiscal year in which the dividend is declared or the preceding fiscal year.
Because our oil and natural gas properties are not as diversified 36 Table of Contents geographically as some of our competitors, our profitability may be disproportionately exposed to the effect of any regional events, including fluctuations in prices of oil and natural gas produced from the wells in the region, natural disasters, restrictive governmental regulations, transportation capacity constraints, weather, curtailment of production or interruption of transportation and processing, and any resulting delays or interruptions of production from existing or planned new wells.
Because our oil and natural gas properties are not as diversified geographically as some of our competitors, our profitability may be disproportionately exposed to the effect of any regional events, including fluctuations in prices of oil and natural gas produced from the wells in the region, natural disasters, restrictive governmental regulations, transportation capacity constraints, weather, curtailment of production or interruption of transportation and processing, and any resulting delays or interruptions of production from existing or planned new wells.
Your percentage ownership in Vitesse may be diluted in the future. Your percentage ownership in Vitesse may be diluted in the future because of the settlement or exercise of equity-based awards that have been granted and that we expect will continue to be granted to our directors, officers and other employees under our equity incentive plan.
Stockholders percentage ownership in Vitesse may be diluted in the future because of the settlement or exercise of equity-based awards that have been granted and that we expect will continue to be granted to our directors, officers and other employees under our equity incentive plan.
The present value of future net cash flows from our proved reserves is not necessarily the same as the current market value of our estimated proved reserves. We base the estimated discounted future net cash flows from our proved reserves using Standardized Measure and PV-10, each of which uses specified pricing and cost assumptions.
The present value of future net cash flows from our proved reserves is not necessarily the same as the current market value of our estimated proved reserves. We estimate discounted future net cash flows from our proved reserves using Standardized Measure and PV-10, each of which uses specified pricing and cost assumptions.
We describe these and other risks in much greater detail below. 27 Table of Contents Risks Relating to Our Common Stock An active, liquid trading market for our common stock may not continue, which may limit your ability to sell your shares.
We describe these and other risks in much greater detail below. 28 Table of Contents Risks Relating to Our Common Stock An active, liquid trading market for our common stock may not continue, which may limit your ability to sell your shares.
The passage of any legislation as a result of these proposals or any similar changes in U.S. federal income tax laws could eliminate or postpone certain tax deductions that currently are available with respect to oil and natural gas development or increase costs, and any such changes could have an adverse effect on our financial position, results of operations and cash flows.
The passage of any legislation as a result of these proposals or any changes in U.S. federal income tax laws could eliminate or postpone certain tax deductions that currently are available with respect to oil and natural gas development or increase costs, or result in other tax-related changes, and any such changes could have an adverse effect on our financial position, results of operations and cash flows.
Such legislation and regulations could significantly increase the cost of derivative contracts (including from swap recordkeeping and reporting requirements and through requirements to post collateral which could adversely affect our available liquidity), materially alter the terms of derivative contracts, reduce the availability of derivatives to protect against risks we encounter, reduce our ability to monetize or restructure our existing derivative contracts, and increase our exposure to less creditworthy counterparties.
Such legislation and regulations could significantly increase the cost of derivative contracts (including from swap recordkeeping and reporting requirements and through requirements to post collateral which could adversely affect our 45 Table of Contents available liquidity), materially alter the terms of derivative contracts, reduce the availability of derivatives to protect against risks we encounter, reduce our ability to monetize or restructure our existing derivative contracts, and increase our exposure to less creditworthy counterparties.
Such transactions may include (but are not limited to) acquisitions by Vitesse or Jefferies using its own stock, the merger or consolidation of Vitesse or Jefferies with or into another company, redemptions, recapitalizations, stock dividends, and sales or issuances of stock. Taxable gain or loss on the sale of our common stock could be more or less than expected.
Such transactions may include (but are not limited to) acquisitions by Vitesse or Jefferies using its own stock, the merger or consolidation of Vitesse or Jefferies with or into another company, redemptions, recapitalizations, stock dividends, and sales or issuances of stock. 49 Table of Contents Taxable gain or loss on the sale of our common stock could be more or less than expected.
In the event that we are unable to timely determine the portion of our distributions that constitute a “dividend” for U.S. federal income tax purposes, or a stockholder’s broker or withholding agent chooses to withhold taxes from distributions in a manner inconsistent with our determination of the amount that constitutes a “dividend” for such purposes, a stockholder’s broker or other withholding agent may overwithhold taxes 49 Table of Contents from distributions paid.
In the event that we are unable to timely determine the portion of our distributions that constitute a “dividend” for U.S. federal income tax purposes, or a stockholder’s broker or withholding agent chooses to withhold taxes from distributions in a manner inconsistent with our determination of the amount that constitutes a “dividend” for such purposes, a stockholder’s broker or other withholding agent may overwithhold taxes from distributions paid.
Additionally, depending on the results and mitigation recommendations presented in environment assessments or environmental impact statements required under NEPA, our operators and their service providers could incur added costs, and be subject to delays, limitations or prohibitions in the scope of crude oil and natural gas projects or performance of midstream services.
Additionally, depending on the results and mitigation recommendations presented in environment assessments or environmental impact statements required under NEPA, we and our operators and related service providers could incur added costs, and be subject to delays, limitations or prohibitions in the scope of crude oil and natural gas projects or performance of midstream services.
The lack of available capacity on these systems and facilities, whether as a result of proration, growth in demand outpacing growth in capacity, physical damage, scheduled maintenance, legal or other reasons such as suspension of service due to legal challenges (see below regarding the Dakota Access Pipeline), could result in a substantial increase in costs, declines in realized oil and natural gas prices, the shut-in of producing wells or the delay or discontinuance of development plans for our properties.
The lack of available capacity on these systems and facilities, whether as a result of proration, growth in demand outpacing growth in capacity, physical damage, scheduled maintenance, legal or other reasons such as suspension of service due to legal challenges (see below regarding the DAPL), could result in a substantial increase in costs, declines in realized oil and natural gas prices, the shut-in of producing wells or the delay or discontinuance of development plans for our properties.
This could limit access to jobsites and operators’ ability to service wells in these areas.
This could limit access to jobsites and our and our operators’ ability to service wells in these areas.
If an event of default under our Revolving Credit 41 Table of Contents Facility occurs and remains uncured, the lenders thereunder would not be required to lend any additional amounts to us and could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable.
If an event of default under our Revolving Credit Facility occurs and remains uncured, the lenders thereunder would not be required to lend any additional amounts to us and could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable.
Losses could therefore occur for uninsurable or uninsured risks or in amounts in excess of existing 31 Table of Contents insurance coverage. The occurrence of an event that is not fully covered by insurance could have a material adverse impact on our business activities, financial condition and results of operations.
Losses could therefore occur for uninsurable or uninsured risks or in amounts in excess of existing insurance coverage. The occurrence of an event that is not fully covered by insurance could have a material adverse impact on our business activities, financial condition and results of operations.
Any significant variance could materially affect the estimated quantities and present value of reserves shown in this Annual Report on Form 10-K, subsequent reports we file with the SEC or other company materials. 32 Table of Contents Our future success depends on our ability to replace reserves.
Any significant variance could materially affect the estimated quantities and present value of reserves shown in this Annual Report on Form 10-K, subsequent reports we file with the SEC or other company materials. Our future success depends on our ability to replace reserves.
The passage of any legislation as a result of these proposals and other similar changes in U.S. federal income tax laws or the imposition of new or increased taxes or fees on natural gas and oil extraction could adversely affect our operations and cash flows.
The passage of any legislation as a result of these proposals and other similar changes in U.S. federal income tax laws or the imposition of new or increased taxes or fees on natural gas and oil extraction could increase our future tax liabilities and adversely affect our operations and cash flows.
Although we seek to mitigate volatility and potential declines in oil and natural gas prices through derivative arrangements that hedge a portion of our expected production, this merely seeks to mitigate (not eliminate) these risks, and such activities come with their own risks.
Although we seek to mitigate volatility and potential declines in oil and natural gas prices through derivative arrangements that hedge a portion of our expected production, this merely mitigates (and does not eliminate) these risks, and such activities come with their own risks.
The insolvency of an operator of any of our properties, the failure of an operator of any of our properties to adequately perform operations or an operator’s breach of applicable agreements could reduce our production and revenue and result in our liability to governmental authorities for compliance with environmental, safety and other regulatory requirements, to the operator’s suppliers and vendors and to royalty owners under oil and natural gas leases jointly owned with the operator or another insolvent owner.
The insolvency of an operator of any of our properties, the failure of an operator of any of our properties to adequately perform operations or an operator’s breach of applicable agreements could reduce our production and revenue and result in liabilities to Governmental Entities for compliance with environmental, safety and other regulatory requirements, to the operator’s suppliers and vendors and to royalty owners under oil and natural gas leases jointly owned with the operator or another insolvent owner.
The use of other funds to satisfy such asset retirement costs could impair our ability to dedicate our capital to other areas of our business. We depend on computer and telecommunications systems, and failures in our systems or cybersecurity threats, attacks or other disruptions could significantly disrupt our business operations.
The use of other funds to satisfy such asset retirement costs could impair our ability to dedicate our capital to other areas of our business. 39 Table of Contents We depend on computer and telecommunications systems, and failures in our systems or cybersecurity threats, attacks or other disruptions could significantly disrupt our business operations.
While we may elect pursue to certain ESG strategies in the future, the goals of such are aspirational and may not have the intended impact on our business.
While we may elect to pursue certain ESG strategies in the future, any such goals are aspirational and may not have the intended impact on our business.
We may be unable to successfully integrate any assets we may acquire in the future into our business or achieve the anticipated benefits of such acquisitions. We may not be able to integrate the acquired assets into our existing business in an efficient and effective manner or achieve the anticipated benefits of such acquisitions.
We may be unable to successfully integrate any assets we may acquire in the future into our business or achieve the anticipated benefits of such acquisitions. We may not be able to integrate the acquired assets into our existing business in an efficient and effective manner or achieve the anticipated benefits of acquisitions such as the Lucero Acquisition.
Delays in obtaining regulatory approvals or drilling permits, the failure to obtain a drilling permit for a well or 45 Table of Contents the receipt of a permit with unreasonable conditions or costs could have a material adverse effect on the development of our properties.
Delays in obtaining regulatory approvals or drilling permits, the failure to obtain a drilling permit for a well or the receipt of a permit with unreasonable conditions or costs could have a material adverse effect on the development of our properties.
Numerous changes over time to the assumptions on which our reserve estimates are based result in the actual quantities of oil and natural gas our operators ultimately recover being different from our reserve estimates.
Numerous changes over time to the assumptions on which our reserve estimates are based result in the actual quantities of oil and natural gas our operators ultimately recover being different from our reserve 33 Table of Contents estimates.
If any of those representations, covenants or assumptions are inaccurate, the tax opinion may not be valid and the tax consequences of the Distribution and certain related transactions could differ from those described above.
If any of those representations, covenants or 48 Table of Contents assumptions are inaccurate, the tax opinion may not be valid and the tax consequences of the Distribution and certain related transactions could differ from those described above.
The development of our proved undeveloped reserves may take longer and may require higher levels of capital expenditures than we anticipate. Therefore, these undeveloped reserves may not be ultimately developed or produced. Approximately 30% of our estimated net proved reserves volumes were classified as proved undeveloped as of December 31, 2023.
The development of our proved undeveloped reserves may take longer and may require higher levels of capital expenditures than we anticipate. Therefore, these undeveloped reserves may not be ultimately developed or produced. Approximately 32% of our estimated net proved reserves volumes were classified as proved undeveloped as of December 31, 2024.
We may also receive pressure from investors, lenders or other groups to adopt more aggressive climate or other ESG-related goals, but we cannot guarantee that we will be able to 40 Table of Contents implement such goals because of potential costs or technical or operational obstacles.
We may also receive pressure from investors, lenders or other groups to adopt more aggressive climate or other ESG-related goals, but we cannot guarantee that we will be able to pursue or implement such goals because of potential costs or technical or operational obstacles.
We are often not entitled to contractual indemnification for environmental liabilities and acquire properties on an “as is” basis, and, as is the case with certain liabilities associated with the assets acquired in our recent acquisitions, we are entitled to indemnification for only certain operational liabilities.
We are often not entitled to contractual indemnification for environmental liabilities and acquire properties on an “as is” basis, and, as is the case with certain liabilities 37 Table of Contents associated with the assets acquired in our recent acquisitions, we are entitled to indemnification for only certain operational liabilities.
Risks Relating to Legal and Regulatory Matters ■ Restrictions on our ability to acquire federal leases and more stringent regulations affecting our operators’ exploration and production activities on federal lands may adversely impact our business. ■ Our business involves the selling and shipping of oil by rail, which involves risks of derailment, accidents and liabilities associated with cleanup and damages, as well as potential regulatory changes that may adversely impact our business, financial condition or results of operations. ■ Our derivative activities expose us to potential regulatory risks. ■ Failure to comply with federal, state and local environmental laws and regulations could result in substantial penalties and adversely affect our business. ■ The adoption of climate change legislation or regulations restricting emissions of carbon dioxide, methane, and other greenhouse gases could result in increased operating costs and reduced demand for the oil and natural gas we produce.
Risks Relating to Legal and Regulatory Matters ■ Restrictions on our ability to acquire federal leases and more stringent regulations affecting our and our operators’ exploration and production activities on federal lands may adversely impact our business. ■ Potential future legislation or the imposition of new or increased taxes or fees may generally affect the taxation of oil and natural gas exploration and development companies and may adversely affect our operations and cash flows. ■ Our business involves the selling and shipping of oil by rail, which involves risks of derailment, accidents and liabilities associated with cleanup and damages, as well as potential regulatory changes that may adversely impact our business, financial condition or results of operations. ■ Our derivative activities expose us to potential regulatory risks. ■ Failure to comply with federal, state and local environmental laws and regulations could result in substantial penalties and adversely affect our business. ■ The adoption of climate change legislation or regulations restricting emissions of carbon dioxide, methane, and other greenhouse gases could result in increased operating costs and reduced demand for the oil and natural gas we produce.
From time to time, legislation has been proposed that would, if enacted into law, make significant changes to U.S. tax laws, including certain key U.S. federal income tax provisions currently available to oil and natural gas companies.
From time to time, U.S. federal and state level legislation has been proposed that would, if enacted into law, make significant changes to U.S. tax laws, including to certain key U.S. federal and state income tax provisions currently applicable to oil and natural gas companies.
The market price of our common stock may fluctuate widely, depending on many factors, some of which may be beyond our control, including: ■ actual or anticipated fluctuations in our business, financial condition and results of operations due to factors related to our business; ■ competition in the oil and natural gas industry and our ability to compete successfully; ■ success or failure of our business strategies; ■ our ability to retain and recruit qualified personnel; ■ our quarterly or annual earnings, or those of other companies in our industry; ■ our level of indebtedness, our ability to make payments on or service our indebtedness and our ability to obtain financing as needed; ■ announcements by us or our competitors of significant acquisitions or dispositions; ■ changes in accounting standards, policies, guidance, interpretations or principles; ■ the failure of securities analysts to continue to cover our common stock; ■ changes in earnings estimates by securities analysts or our ability to meet those estimates; ■ the operating and stock price performance of other comparable companies; ■ investor perception of our company and the oil and natural gas industry; ■ overall market fluctuations, including the cyclical nature of the oil and natural gas market; ■ results from any material litigation or government investigation; ■ changes in laws and regulations (including tax laws and regulations) affecting our business; and ■ general economic conditions, credit and capital market conditions and other external factors.
The market price of our common stock may fluctuate widely, depending on many factors, some of which may be beyond our control, including: ■ actual or anticipated fluctuations in our business, financial condition and results of operations due to factors related to our business; ■ competition in the oil and natural gas industry and our ability to compete successfully; ■ success or failure of our business strategies; ■ whether the Lucero Acquisition is accretive and may be dilutive to our earnings per share; ■ the ultimate timing, outcome and results of integrating and executing on Lucero’s operations; ■ our ability to retain and recruit qualified personnel; ■ our quarterly or annual earnings, or those of other companies in our industry; ■ our level of indebtedness, our ability to make payments on or service our indebtedness and our ability to obtain financing as needed; ■ announcements by us or our competitors of significant acquisitions or dispositions; ■ changes in accounting standards, policies, guidance, interpretations or principles; ■ the failure of securities analysts to continue to cover our common stock; ■ changes in earnings estimates by securities analysts or our ability to meet those estimates; ■ the operating and stock price performance of other comparable companies; ■ investor perception of our company and the oil and natural gas industry; ■ overall market fluctuations, including the cyclical nature of the oil and natural gas market; ■ results from any material litigation or government investigation; ■ changes in laws and regulations (including tax laws and regulations) affecting our business; and ■ general economic conditions, credit and capital market conditions and other external factors.
Therefore, these undeveloped reserves may not be ultimately developed or produced. ■ Our acquisition strategy will subject us to certain risks associated with the inherent uncertainty in evaluating properties for which we have limited information. ■ The majority of our producing properties are located in the Williston Basin, making us vulnerable to risks associated with operating in one major geographic area. ■ The loss of any member of our management team, upon whose knowledge, relationships with industry participants, leadership and technical expertise we rely, could diminish our ability to conduct our operations and harm our ability to execute our business plan. ■ Deficiencies of title to our interests could significantly affect our financial condition. ■ Inflation could adversely impact our ability to control our costs, including the operating expenses and capital costs of our operators. ■ Our derivatives activities could adversely affect our profitability, cash flow, results of operations and financial condition. ■ Asset retirement costs are difficult to predict and may be substantial.
Therefore, these undeveloped reserves may not be ultimately developed or produced. ■ Our business plan requires the expenditure of significant capital, which we may be unable to obtain on favorable terms or at all. ■ Our acquisition strategy will subject us to certain risks associated with the inherent uncertainty in evaluating properties for which we have limited information. ■ The majority of our producing properties are located in the Williston Basin, making us vulnerable to risks associated with operating in one major geographic area. ■ The loss of any member of our management team, upon whose knowledge, relationships with industry participants, leadership and technical expertise we rely, could diminish our ability to conduct our operations and harm our ability to execute our business plan. ■ Deficiencies of title to our interests could significantly affect our financial condition. ■ Inflation could adversely impact our ability to control our costs, including the operating expenses and capital costs of our operators. ■ Our derivatives activities could adversely affect our profitability, cash flow, results of operations and financial condition. 27 Table of Contents ■ Asset retirement costs are difficult to predict and may be substantial.
In 2014, the NDI Commission, North Dakota’s chief energy regulator, adopted a policy to reduce the volume of natural gas flared from oil wells in the Williston Basin.
In 2014, the NDIC, North Dakota’s chief energy regulator, adopted a policy to reduce the volume of natural gas flared from oil wells in the Williston Basin.
Congress has considered legislation to reduce emissions of GHGs, including methane, a primary component of natural gas, and carbon dioxide, a byproduct of the burning of natural gas.
In recent years Congress has considered legislation to reduce emissions of GHGs, including methane, a primary component of natural gas, and carbon dioxide, a byproduct of the burning of natural gas.
These disruptions in the oil and natural gas markets have caused, and could continue to cause, significant volatility in energy prices, which could have a material effect on our business. Prolonged unfavorable economic conditions or uncertainty as a result of these military conflicts may adversely affect our business, financial condition, and results of operations.
These disruptions have caused, and could continue to cause, significant volatility in energy prices, which could have a material effect on our business. Prolonged unfavorable economic conditions or uncertainty as a result of these conflicts may adversely affect our business, financial condition, and results of operations.
For example, our estimated proved reserves as of December 31, 2023 were calculated under SEC rules by applying year-end SEC prices based on the twelve-month unweighted arithmetic average of the first day of the month oil and natural gas prices for such year end of $78.21 per Bbl and $2.64 per MMBtu, which for certain periods during this time were substantially different from the available market prices.
For example, our estimated proved reserves as of December 31, 2024 were calculated under SEC rules by applying year-end SEC prices based on the twelve-month unweighted arithmetic average of the first day of the month oil and natural gas prices for such year end of $76.32 per Bbl and $2.13 per MMBtu, which for certain periods during this time were substantially different from the available market prices.
These and other provisions of our Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws and Delaware law may discourage, delay or prevent certain types of transactions involving an actual or a threatened acquisition or change in control of us including unsolicited takeover attempts, even though the transaction may offer our stockholders the opportunity to sell their shares of our common stock at a price above the prevailing market price.
These and other provisions of our Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws and Delaware law may discourage, delay or prevent certain types of transactions involving an actual or a threatened acquisition or change in control of us including unsolicited takeover attempts, even though the transaction may offer our stockholders the opportunity to sell their shares of our common stock at a price above the prevailing market price. 30 Table of Contents Stockholders percentage ownership in Vitesse may be diluted in the future.
The NDI Commission requires operators to develop gas capture plans that describe how much natural gas is expected to be produced, how it will be delivered to a processor and where it will be processed. As of November 1, 2020, the enforceable gas capture percentage goal is 47 Table of Contents 91%.
The NDIC requires operators to develop gas capture plans that describe how much natural gas is expected to be produced, how it will be delivered to a processor and where it will be processed. As of November 1, 2020, the enforceable gas capture percentage goal is 91%.
For example, North Dakota requires operators to disclose the amount of water and chemicals used in hydraulic fracturing, subject to certain trade-secret exemptions. From time to time, there have also been various proposals to regulate hydraulic fracturing at the federal level and the Biden Administration could pursue regulatory initiatives to restrict hydraulic fracturing operations on federal lands.
For example, North Dakota requires operators to disclose the amount of water and chemicals used in hydraulic fracturing, subject to certain trade-secret exemptions. From time to time, there have also been various proposals to regulate hydraulic fracturing at the federal level or restrict hydraulic fracturing operations on federal lands.
In addition, drilling and producing operations on our acreage may be curtailed, delayed or canceled by our operators as a result of other factors, including: ■ declines in oil or natural gas prices; ■ infrastructure limitations, such as the natural gas gathering and processing constraints experienced in the Williston Basin in 2019; ■ the high cost, shortages or delays of equipment, materials and services; ■ unexpected operational events, pipeline ruptures or spills, adverse weather conditions and natural disasters, facility or equipment malfunctions, and equipment failures or accidents; ■ title problems; ■ pipe or cement failures and casing collapses; ■ lost or damaged oilfield development and services tools; ■ laws, regulations, and other initiatives related to environmental matters, including those addressing alternative energy sources, the phase-out of fossil fuel vehicles and the risks of global climate change; ■ compliance with environmental and other governmental requirements; ■ increases in severance taxes; ■ regulations, restrictions, moratoria and bans on hydraulic fracturing; ■ unusual or unexpected geological formations, and pressure or irregularities in formations; ■ loss of drilling fluid circulations; ■ environmental hazards, such as oil, natural gas or well fluids spills or releases, pipeline or tank ruptures and discharges of toxic gas; ■ fires, blowouts, craterings and explosions; ■ uncontrollable flows of oil, natural gas or well fluids; and ■ pipeline capacity curtailments.
In addition, drilling and producing operations on our acreage may be curtailed, delayed or canceled by our operators as a result of other factors, including: ■ declines in oil or natural gas prices; ■ infrastructure limitations, such as the natural gas gathering and processing constraints experienced in the Williston Basin in 2019; ■ the high cost, shortages or delays of equipment, materials and services; ■ unexpected operational events, pipeline ruptures or spills, adverse weather conditions and natural disasters, facility or equipment malfunctions, and equipment failures or accidents; ■ title problems; ■ pipe or cement failures and casing collapses; ■ lost or damaged oilfield development and services tools; ■ laws, regulations, and other initiatives related to environmental matters, including those addressing alternative energy sources, the phase-out of fossil fuel vehicles and the risks of global climate change; ■ compliance with environmental and other governmental requirements; ■ increases in severance taxes; ■ regulations, restrictions, moratoria and bans on hydraulic fracturing; ■ unusual or unexpected geological formations, and pressure or irregularities in formations; ■ loss of drilling fluid circulations; ■ environmental hazards, such as oil, natural gas or well fluids spills or releases, pipeline or tank ruptures and discharges of toxic gas; ■ fires, blowouts, craterings and explosions; ■ uncontrollable flows of oil, natural gas or well fluids; and ■ pipeline capacity curtailments. 32 Table of Contents In addition to causing curtailments, delays and cancellations of drilling and producing operations, many of these events can cause substantial losses, including personal injury or loss of life, damage to or destruction of property, natural resources and equipment, pollution, environmental contamination, loss of wells and regulatory penalties.
Additional regulation could impact rates charged by our operators and impact their ability to enter into gathering and transportation agreements, which costs could be passed through to us. The Dakota Access Pipeline (the “DAPL”), a major pipeline transporting oil from the Williston Basin, is subject to ongoing litigation that could threaten its continued operation.
Additional regulation could impact rates charged by our operators and impact their ability to enter into gathering and transportation agreements, which costs could be passed through to us. 34 Table of Contents The DAPL, a major pipeline transporting oil from the Williston Basin, is subject to ongoing litigation that could threaten its continued operation.
In July 2020, a federal district court vacated the DAPL’s easement to cross the Missouri River at Lake Oahe and ordered the pipeline be shut down pending the completion of an environmental impact 33 Table of Contents statement (“EIS”) to determine whether the DAPL poses a threat to the Missouri River and drinking water supply of the Standing Rock Sioux Reservation.
In July 2020, a federal district court vacated the DAPL’s easement to cross the Missouri River at Lake Oahe and ordered the pipeline be shut down pending the completion of an EIS to determine whether the DAPL poses a threat to the Missouri River and drinking water supply of the Standing Rock Sioux Reservation.
In addition, delays in the development of reserves could cause us to have to reclassify our proved undeveloped reserves as unproved reserves. Our acquisition strategy will subject us to certain risks associated with the inherent uncertainty in evaluating properties for which we have limited information. We intend to continue to expand our operations in part through acquisitions.
In addition, delays in the development of reserves could cause us to have to reclassify our proved undeveloped reserves as unproved reserves. Our acquisition strategy will subject us to certain risks associated with the inherent uncertainty in evaluating properties for which we have limited information.
The Company is not currently a defendant in any of these lawsuits, but it could be named in actions in the future making similar allegations.
We are not currently a defendant in any of these lawsuits, but it could be named in actions in the future making similar allegations.
Competition in our markets is intense and depends, among other things, on the number of competitors in the market, their financial resources, their degree of geological, geophysical, engineering and management expertise and capabilities, their pricing policies, their ability to develop properties on time and on budget, their ability to select, acquire and develop reserves and their ability to foster and maintain relationships.
Competition in our markets is intense and depends, among other things, on the number of competitors in the market, their financial resources, their degree of geological, geophysical, engineering and management expertise and capabilities, their pricing policies, their ability to develop properties on time and on budget, their ability to select, acquire and develop reserves and their ability to foster and maintain relationships. 38 Table of Contents Our competitors include entities with greater technical, physical and financial resources.
The ultimate impacts of these policy directives and ongoing and future litigation concerning BLM leases and the use of the SC-GHGs metric cannot be predicted at this time, but such could affect the character of new regulations on certain federal oil and gas leases or oil and gas infrastructure on federal lands, which in turn could adversely impact our operators’ and our results of operations.
The ultimate impacts of these regulatory 43 Table of Contents initiatives concerning BLM leases and the use of the SC-GHGs metric cannot be predicted at this time, but such could affect the character of new regulations on certain federal oil and gas leases or oil and gas infrastructure on federal lands, which in turn could adversely impact our operators’ and our results of operations.
In addition, it is possible that the current presidential administration could expand regulation of the OTC derivatives market and the entities that participate in that market through either the Dodd-Frank Act or the enactment of new legislation.
In addition, it is possible that regulation of the OTC derivatives market and the entities that participate in that market could be expanded through either the Dodd-Frank Act or the enactment of new legislation.
Our competitors include entities with greater technical, physical and financial resources. In addition, companies and certain private equity firms not previously investing in oil and natural gas may choose to acquire reserves to establish a firm supply or simply as an investment. Any such companies will also increase market competition which may directly affect us.
In addition, companies and certain private equity firms not previously investing in oil and natural gas may choose to acquire reserves to establish a firm supply or simply as an investment. Any such companies will also increase market competition which may directly affect us.
The success and timing of development activities by our operators will depend on a number of factors that will largely be outside of our control, including oil and natural gas prices and other factors generally affecting the oil and natural gas industry’s operating environment; the timing and amount of capital expenditures; their expertise and financial resources; approval of other participants in drilling wells; selection of technology; and the rate of production of reserves, if any. 34 Table of Contents The inability of one or more of our operators to meet their financial obligations to us may adversely affect our financial results.
The success and timing of development activities by our operators will depend on a number of factors that will largely be outside of our control, including oil and natural gas prices 35 Table of Contents and other factors generally affecting the oil and natural gas industry’s operating environment; the timing and amount of capital expenditures; their expertise and financial resources; approval of other participants in drilling wells; selection of technology; and the rate of production of reserves, if any.
Our decision to acquire a property will depend in part on the evaluation of data obtained from production reports and engineering studies, geophysical and geological analyses and seismic and other information, the results of which are often inconclusive and subject to various interpretations.
We intend to continue to expand our operations in part through acquisitions such as the Lucero Acquisition. Our decision to acquire a property will depend in part on the evaluation of data obtained from production reports and engineering studies, geophysical and geological analyses and seismic and other information, the results of which are often inconclusive and subject to various interpretations.
Global, industry-wide supply chain disruptions have resulted in shortages in labor, materials and services. Such shortages have resulted in inflationary cost increases for labor, materials and services and could continue to cause costs to increase as well as scarcity of certain products and raw materials.
Such shortages have resulted in inflationary cost increases for labor, materials and services and could cause future costs to increase as well as scarcity of certain products and raw materials.
Any change in the level of our dividends or the suspension of the payment thereof could have a material adverse effect on the market price of our common stock.
Any change in the level of our dividends or the suspension of the payment thereof could have a material adverse effect on the market price of our common stock. For additional information, please see —Risks Relating to Our Common Stock—.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed3 unchanged
Biggest changeMine Safety Disclosures None. 51 Table of Contents PART II
Biggest changeMine Safety Disclosures None. 52 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+3 added−4 removed9 unchanged
Biggest changeThe number of record holders does not necessarily bear any relationship to the number of beneficial owners of our common stock. Securities Authorized for Issuance Under Equity Compensation Plans See the information incorporated by reference under Part III. Item 12. Security Ownership of Certain Beneficial Owners and Management regarding securities authorized for issuance under our equity compensation plans.
Biggest changeThe number of record holders does not necessarily bear any relationship to the number of beneficial owners of our common stock. In conjunction with the Lucero Arrangement, on March 7, 2025, we issued 8,169,368 shares of our common stock to close the transaction. Securities Authorized for Issuance Under Equity Compensation Plans See the information incorporated by reference under Part III.
Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs October 1, 2023 to October 31, 2023 — $ — — 59.8 million November 1, 2023 to November 30, 2023 — — — 59.8 million December 1, 2023 to December 31, 2023 — — — 59.8 million Total — $ — — $ 59.8 million (1) In February 2023, our Board approved a Stock Repurchase Program authorizing the repurchase of up to $60 million of the Company’s common stock.
Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs October 1, 2024 to October 31, 2024 — $ — — 59.8 million November 1, 2024 to November 30, 2024 — — — 59.8 million December 1, 2024 to December 31, 2024 — — — 59.8 million Total — $ — — $ 59.8 million (1) In February 2023, our Board approved a Stock Repurchase Program authorizing the repurchase of up to $60 million of the Company’s common stock.
This graph tracks the performance of a $100 investment in our common stock and in each index (including reinvestment of all dividends) from January 17, 2023 to December 31, 2023. The stock price performance included in this graph is not necessarily indicative of future stock price performance.
This graph tracks the performance of a $100 investment in our common stock and in each index (including reinvestment of all dividends) from January 17, 2023 to December 31, 2024. The stock price performance included in this graph is not necessarily indicative of future stock price performance.
The table below sets forth the information with respect to purchases made by or on behalf of the Company, or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) of our common stock during the quarter ended December 31, 2023.
The table below sets forth the information with respect to purchases made by or on behalf of the Company, or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) of our common stock during the quarter ended December 31, 2024.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the New York Stock Exchange under the symbol “VTS.” The closing price for our common stock on February 15, 2024 was $22.16 per share.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the New York Stock Exchange under the symbol “VTS.” The closing price for our common stock on March 10, 2025 was $23.77 per share.
We paid cash dividends of $58.0 million to our equity holders during the year ended December 31, 2023.
We paid cash dividends of $63.6 million to our equity holders during the year ended December 31, 2024.
In January 2024, 792,000 restricted stock units vested with the Company retaining 332,840 of the vested shares to fund employee tax withholding of $6.9 million with the retained shares subsequently retired by the Company. These retained and retired shares are not included in the above table because they do not constitute a repurchase of equity securities.
During 2024, 852,000 restricted stock units of certain executive officers vested with the Company retaining 354,069 of the vested shares to fund employee tax withholding of $7.5 million with the retained shares subsequently retired by the Company. These retained and retired shares are not included in the above table because they do not constitute a repurchase of equity securities.
Authorized Capital Stock The Company has authorized 95,000,000 shares of common stock, par value $0.01 per share and 5,000,000 shares of preferred stock, par value $0.01 per share. Shares Outstanding As of February 15, 2024, we had 29,453,975 shares of our common stock outstanding, held by approximately 1,188 stockholders of record.
Authorized Capital Stock The Company has authorized 95,000,000 shares of common stock, par value $0.01 per share and 5,000,000 shares of preferred stock, par value $0.01 per share. Shares Outstanding Immediately prior to the closing of the Lucero Acquisition on March 7, 2025, we had 30,409,973 shares of our common stock outstanding, held by approximately 1,141 stockholders of record.
Removed
Recent Sales of Unregistered Securities In connection with the Pre-Spin-Off Transactions, Vitesse Energy Finance and holders of vested Vitesse Energy MIUs (other than Messrs. Gerrity and Cree) transferred their respective equity interests in Vitesse Energy to Vitesse in exchange for 25,918,163 shares and 163,544 shares, respectively, of common stock of Vitesse.
Added
Item 12. Security Ownership of Certain Beneficial Owners and Management regarding securities authorized for issuance under our equity compensation plans. 53 Table of Contents Recent Sales of Unregistered Securities None.
Removed
The transfers were consummated shortly before the 52 Table of Contents Distribution. Shares of Vitesse common stock were issued to Vitesse Energy Finance and such holders of vested Vitesse Energy MIUs as consideration for their respective ownership interests in Vitesse Energy pursuant to Section 4(a)(2) of the Securities Act.
Added
In January 2025, 792,000 restricted stock units of certain executive officers vested with the Company retaining 335,797 of the vested shares to fund employee tax withholding of $8.9 million with the retained shares subsequently retired by the Company.
Removed
In connection with the Pre-Spin-Off Transactions, Jefferies Capital Partners and Gerrity Bakken transferred their respective equity interests in Vitesse Oil to Vitesse in exchange for 1,976,213 shares and 144,099 shares, respectively, of common stock of Vitesse. The transfers were consummated concurrently with the transfer of Vitesse Energy to Vitesse and shortly before the Distribution.
Added
In February 2025, 23,136 restricted stock units of certain executive officers vested with the Company retaining 9,458 of the vested shares to fund employee tax withholding of $0.2 million with the retained shares subsequently retired by the Company.
Removed
Shares of Vitesse common stock were issued to Jefferies Capital Partners and Gerrity Bakken as consideration for their respective ownership interests in Vitesse Oil pursuant to Section 4(a)(2) of the Securities Act.

Item 7. Management's Discussion & Analysis

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

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Biggest changeYEAR ENDED DECEMBER 31, INCREASE (DECREASE) ($ in thousands, except per unit data) 2023 2022 AMOUNT PERCENT Operating Results: Revenue Oil $ 218,396 $ 233,622 $ (15,226) (7 %) Natural gas 15,509 48,268 (32,759) (68 %) Total revenue $ 233,905 $ 281,890 $ (47,985) (17 %) Operating Expenses Lease operating expense $ 39,514 $ 31,133 $ 8,381 27 % Production taxes 21,625 24,092 (2,467) (10 %) General and administrative 23,934 19,833 4,101 21 % Depletion, depreciation, amortization, and accretion 81,745 63,732 18,013 28 % Equity-based compensation 32,233 (10,766) 42,999 *nm Interest Expense $ 5,276 $ 4,153 $ 1,123 27 % Income Tax Expense $ 61,946 $ — $ 61,946 *nm Commodity Derivative Gain (Loss) $ 12,484 $ (30,830) $ 43,314 140 % Production Data: Oil (MBbls) 2,968 2,575 393 15 % Natural gas (MMcf) 8,232 7,274 958 13 % Combined volumes (MBoe) 4,340 3,787 553 15 % Daily combined volumes (Boe/d) 11,889 10,376 1,513 15 % Average Realized Prices before Hedging: Oil (per Bbl) $ 73.59 $ 90.73 $ (17.14) (19 %) Natural gas (per Mcf) 1.88 6.64 (4.76) (72 %) Combined (per Boe) 53.90 74.43 (20.53) (28 %) Average Realized Prices with Hedging: Oil (per Bbl) $ 73.99 $ 72.66 $ 1.33 2 % Natural gas (per Mcf) 1.88 6.56 (4.68) (71 %) Combined (per Boe) 54.17 61.99 (7.82) (13 %) Average Costs (per Boe): Lease operating expense $ 9.11 $ 8.22 $ 0.89 11 % Production taxes 4.98 6.36 (1.38) (22 %) General and administrative 5.52 5.24 0.28 5 % Depletion, depreciation, amortization, and accretion 18.84 16.83 2.01 12 % * Not meaningful Oil and Natural Gas Revenue and Volumes.
Biggest changeYEAR ENDED DECEMBER 31, INCREASE (DECREASE) ($ in thousands, except per unit data) 2024 2023 AMOUNT PERCENT Operating Results: Revenue Oil $ 230,164 $ 218,396 $ 11,768 5 % Natural gas 11,834 15,509 (3,675) (24 %) Total revenue $ 241,998 $ 233,905 $ 8,093 3 % Operating Expenses Lease operating expense $ 47,599 $ 39,514 $ 8,085 20 % Production taxes 21,500 21,625 (125) (1 %) General and administrative 23,510 23,934 (424) (2 %) Depletion, depreciation, amortization, and accretion 100,308 81,745 18,563 23 % Equity-based compensation 8,110 32,233 (24,123) (75 %) Interest Expense $ 9,980 $ 5,276 $ 4,704 89 % Income Tax Expense $ 7,672 $ 61,946 $ (54,274) (88 %) Commodity Derivative (Loss) Gain $ (2,348) $ 12,484 $ (14,832) (119 %) Production Data: Oil (MBbls) 3,291 2,968 323 11 % Natural gas (MMcf) 8,809 8,232 577 7 % Combined volumes (MBoe) 4,759 4,340 419 10 % Daily combined volumes (Boe/d) 13,003 11,889 1,114 9 % Average Realized Prices before Hedging: Oil (per Bbl) $ 69.94 $ 73.59 $ (3.65) (5 %) Natural gas (per Mcf) 1.34 1.88 (0.54) (29 %) Combined (per Boe) 50.85 53.90 (3.05) (6 %) Average Realized Prices with Hedging: Oil (per Bbl) $ 71.48 $ 73.99 $ (2.51) (3 %) Natural gas (per Mcf) 1.34 1.88 (0.54) (29 %) Combined (per Boe) 51.91 54.17 (2.26) (4 %) Average Costs (per Boe): Lease operating expense $ 10.00 $ 9.11 $ 0.89 10 % Production taxes 4.52 4.98 (0.46) (9 %) General and administrative 4.94 5.52 (0.58) (11 %) Depletion, depreciation, amortization, and accretion 21.08 18.84 2.24 12 % Oil and Natural Gas Revenue and Volumes.
See Notes to Consolidated Financial Statements—Note 5—Credit Facility for further details regarding the Revolving Credit Facility. Material Cash Requirements. Our material short-term cash requirements include payments under our short-term lease agreements, recurring payroll and benefits obligations for our employees, capital and operating expenditures and other working capital needs.
See Notes to the Consolidated Financial Statements —Note 5—Credit Facility for further details regarding the Prior Revolving Credit Facility. Material Cash Requirements. Our material short-term cash requirements include payments under our short-term lease agreements, recurring payroll and benefits obligations for our employees, capital and operating expenditures and other working capital needs.
Selected Factors That Affect Our Operating Results Our revenues, cash flows from operations and future growth depend substantially upon: ■ the timing and success of drilling and production activities by our operating partners; ■ the prices and the supply and demand for oil, natural gas and NGLs; ■ the quantity of oil and natural gas production from the wells in which we participate; ■ changes in the fair value of the derivative instruments; ■ our ability to continue to identify and acquire high-quality acreage and drilling opportunities; and ■ the level of our operating expenses.
Selected Factors That Affect Our Operating Results Our revenues, cash flows from operations and future growth depend substantially upon: ■ the timing and success of our drilling and production activities and those of our operating partners; ■ the prices and the supply and demand for oil, natural gas and NGLs; ■ the quantity of oil and natural gas production from the wells in which we participate; ■ changes in the fair value of the derivative instruments; ■ our ability to continue to identify and acquire high-quality acreage and drilling opportunities; and ■ the level of our operating expenses.
We will carefully monitor and may adjust our projected capital expenditures in response to success or lack of success in drilling activities, changes in prices, availability of financing and joint venture opportunities, drilling and acquisition costs, industry conditions, the timing of regulatory approvals, the availability of rigs, change in service costs, contractual obligations, internally generated cash flow and other factors both within and outside our control.
We will carefully monitor and may adjust our projected capital expenditures in response to success or lack of success in drilling activities, changes in prices, availability of financing and joint venture opportunities, drilling and acquisition costs, industry conditions, the timing of regulatory approvals, the availability of rigs, change in service costs, contractual obligations, internally generated cash flow and other factors both within and outside our control, including the Lucero Acquisition.
Gain (loss) on commodity derivatives, net. We utilize commodity derivative financial instruments to reduce our exposure to fluctuations in the prices of oil and gas.
Commodity derivatives gain (loss), net. We utilize commodity derivative financial instruments to reduce our exposure to fluctuations in the prices of oil and gas.
See Notes to Consolidated Financial Statements—Note 4— Fair Value Measurements for further information on these contracts and their fair values as of December 31, 2023, which fair values represent the estimated cash settlement amount required to terminate such instruments based on forward price curves for commodities as of that date. Dividends.
See Notes to Consolidated Financial Statements—Note 4— Fair Value Measurements for further information on these contracts and their fair values as of December 31, 2024, which fair values represent the estimated cash settlement amount required to terminate such instruments based on forward price curves for commodities as of that date. Dividends.
We cannot provide specific timing for repayments of outstanding borrowings on our Revolving Credit Facility, or the associated interest payments, as the timing and amount of borrowings and repayments cannot be forecasted with certainty and are based on working capital requirements, commodity prices and acquisition and divestiture activity, among other factors.
We cannot provide specific timing for repayments of outstanding borrowings on our Revolving Credit Facility, or the associated interest payments, as the timing and amount of borrowings and repayments cannot be forecasted with certainty and are based on working capital requirements, commodity prices and acquisition and divestiture activity (including the Lucero Acquisition), among other factors.
Fluctuations in our price differentials and realizations are due to several factors such as NGL value net of processing costs, gathering and transportation fees, takeaway capacity relative to production levels, regional storage capacity, seasonal demand for heating fuel and seasonal refinery maintenance temporarily depressing demand.
Fluctuations in our natural gas price differentials and realizations are due to several factors such as NGL value net of processing costs, gathering and transportation fees, takeaway capacity relative to production levels, regional storage capacity, seasonal demand for heating fuel and seasonal refinery maintenance temporarily depressing demand.
As a result of such commodity price volatility, which we expect to continue throughout 2024, our earnings and operating cash flows can vary substantially. While we do hedge a substantial portion of our production, we are still significantly subject to movements in commodity prices.
As a result of such commodity price volatility, which we expect to continue throughout 2025, our earnings and operating cash flows can vary substantially. While we do hedge a substantial portion of our production, we are still significantly subject to movements in commodity prices.
Recently Issued or Adopted Accounting Pronouncements For discussion of recently issued or adopted accounting pronouncements, see Notes to the Consolidated Financial Statements—Note 2—Significant Accounting Policies.” Off Balance Sheet Arrangements We currently do not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources. 68 Table of Contents
Recently Issued or Adopted Accounting Pronouncements For discussion of recently issued or adopted accounting pronouncements, see Notes to the Consolidated Financial Statements—Note 2—Significant Accounting Policies.” Off Balance Sheet Arrangements We currently do not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Whenever we conclude the carrying value may not be recoverable, we estimate the expected undiscounted future net cash flows of our oil and natural gas properties using proved and risked probable and possible reserves based on our development plans and best estimate of future production, commodity pricing, reserve risking, gathering, processing and transportation deductions, production tax rates, lease operating expenses and future development costs.
Whenever we conclude the carrying value may not be recoverable, we estimate the expected undiscounted future net cash flows of our oil and natural gas properties using proved and risked probable and possible reserves based on our development plans and best estimate of future production, commodity pricing, reserve risking, gathering, processing and transportation deductions, production tax rates, lease operating expenses and 56 Table of Contents future development costs.
While we believe that our future cash flows from operations will be able to sustain the current level of dividends, future dividends may change based on a variety of factors, including contractual restrictions, legal limitations (the most common of which are limitations set forth in a company’s organizational documents and insolvency), business developments and the judgment of our Board.
While we believe that our future cash flows from operations will be able to sustain an increasing level of dividends, future dividends may change based on a variety of factors, including contractual restrictions, legal limitations (the most common of which are limitations set forth in a company’s organizational documents and insolvency), business developments and the judgment of our Board.
Gains on our derivatives generally indicate lower oil revenues in the future while losses indicate higher future oil revenues. 63 Table of Contents The table below summarizes our commodity derivative gains and losses that were recorded in the periods presented.
Gains on our derivatives generally indicate lower oil revenues in the future while losses indicate higher future oil revenues. 60 Table of Contents The table below summarizes our commodity derivative gains and losses that were recorded in the periods presented.
The decreases in realized oil and natural gas prices were primarily due to lower benchmark commodity prices in the year ended December 31, 2023 as compared to the year ended December 31, 2022, as well as increased differentials.
The decreases in realized oil and natural gas prices were primarily due to lower benchmark commodity prices in the year ended December 31, 2024 as compared to the year ended December 31, 2023, as well as increased differentials.
The exact impact of each of these items is difficult to quantify as each of our operators pass through these costs in a different manner. Historically, commodity prices have been volatile and we expect the volatility to continue in the future.
The exact impact of each of these items is difficult to quantify as each of our operators pass through these costs in a different manner. 57 Table of Contents Historically, commodity prices have been volatile and we expect the volatility to continue in the future.
The table below reconciles the pre-tax PV-10 value of our proved reserves at SEC prices as of December 31, 2023 to the Standardized Measure.
The table below reconciles the pre-tax PV-10 value of our proved reserves at SEC prices as of December 31, 2024 to the Standardized Measure.
We expect that our liquidity going forward will be primarily derived from cash flows from our operations, cash on hand and availability under the Revolving Credit Facility and that these sources of liquidity will be sufficient to provide us the ability to fund our material cash requirements for the next twelve months, as described below, including our planned capital expenditures program, as well as dividends and our share repurchase program.
We expect that our liquidity going forward will be primarily derived from cash flows from our operations, cash on hand and availability under the Revolving Credit Facility and proceeds from equity or debt offerings and that these sources of liquidity will be sufficient to provide us the ability to fund our material cash requirements for the next twelve months, as described below, including our planned capital expenditures program, as well as dividends and our share repurchase program.
For additional information on the impact of changing prices and market conditions on our financial position, see Part II. Item 7A Quantitative and Qualitative Disclosures About Market Risk. Effects of Inflation and Pricing.
For additional information on the impact of changing prices and market conditions on our financial position, see Part II. Item 7A Quantitative and Qualitative Disclosures About Market Risk. 63 Table of Contents Effects of Inflation and Pricing.
The increase per Boe for the year ended December 31, 2023 compared with the year ended December 31, 2022 was related to increased workover operations and higher service costs. The increased workover costs were responsible for approximately $0.48/Boe of the increase and should result in increased production when these wells return to production. Production Tax Expense.
The increase per Boe for the year ended December 31, 2024 compared with the year ended December 31, 2023 was related to increased workover operations and higher service costs. The increased workover costs were responsible for approximately $0.10/Boe of the increase and should result in increased production when these wells return to production. Production Tax Expense.
The factors used to determine fair value may include, but are not limited to, recent sales prices of comparable properties, indications from marketing activities, the present value of future revenues, 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 realizing the projected cash flows. 55 Table of Contents Income tax expense.
The factors used to determine fair value may include, but are not limited to, recent sales prices of comparable properties, indications from marketing activities, the present value of future revenues, 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 realizing the projected cash flows.
Our provision for taxes includes both federal and state taxes. We record our federal income taxes in accordance with accounting for income taxes under GAAP, which results in the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities.
We record our federal income taxes in accordance with accounting for income taxes under GAAP, which results in the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the book carrying amounts and the tax basis of assets and liabilities.
Gain (loss) on commodity derivatives, net is comprised of (1) cash gains and losses we recognize on settled commodity derivatives during the period, and (2) non-cash mark-to-market gains and losses we incur on commodity derivative instruments outstanding at period-end. Lease operating expenses.
Gain (loss) on commodity derivatives, net is comprised of (i) cash gains and losses we recognize on settled commodity derivatives during the period, and (ii) non-cash mark-to-market gains and losses we incur on commodity derivative instruments outstanding at period-end. Lease operating expenses.
The discount rate is a rate that management believes is representative of current market conditions and includes estimates for a risk premium and other operational risks. For the years ended December 31, 2023, December 31, 2022, and November 30, 2021 and the month ended December 31, 2021 we did not record any impairment expense.
The discount rate is a rate that management believes is representative of current market conditions and includes estimates for a risk premium and other operational risks. For the years ended December 31, 2024, 2023, and 2022 we did not record any impairment expense.
The provision for income taxes for the year ended December 31, 2023 differs from the amount that would be provided by applying the statutory U.S. federal income tax rate of 21% to pre-tax income primarily due to §162(m) limitations on certain covered employee compensation and state income taxes.
The effective tax rate of 26.7% for the year ended December 31, 2024 differs from the amount that would be provided by applying the statutory U.S. federal income tax rate of 21% to pre-tax income primarily due to §162(m) limitations on certain covered employee compensation and state income taxes.
Factors that we expect will continue to impact commodity prices include product demand connected with global economic conditions, inflationary factors, industry production and inventory levels, the United States Department of Energy’s future planned repurchases (or additional possible releases) of oil from the strategic petroleum reserve, technology advancements, production quotas or other actions imposed by OPEC countries, actions of regulators, and regional supply interruptions or fears thereof that may be caused by military conflicts (including invasion), civil unrest, pandemic or political uncertainty.
Factors that we expect will continue to impact commodity prices include product demand connected with global economic conditions, inflationary factors, industry production and inventory levels, the United States Department of Energy’s planned repurchases (or possible releases) of oil from the strategic petroleum reserve, technology advancements, production quotas or other actions imposed by OPEC and other oil-producing countries, the imposition of tariffs and resulting consequences, actions of regulators, and regional supply interruptions or fears thereof that may be caused by military conflicts, civil unrest or political uncertainty.
In addition, as the prices of oil and natural gas and cost levels change from year to year, the economics of producing our reserves may change and therefore the estimate of proved reserves may also change. Approximately 30% of our proved oil and gas reserve volumes are categorized as proved undeveloped reserves.
In addition, as the prices of oil and natural gas and cost levels change from year to year, the economics of producing our 64 Table of Contents reserves may change and therefore the estimate of proved reserves may also change. Approximately 32% of our proved oil and gas reserve volumes are categorized as proved undeveloped reserves.
Our oil price differential to the weighted average WTI benchmark price during the year ended December 31, 2023 was negative $4.19 per Bbl, as compared to a negative $3.39 per Bbl during the year ended December 31, 2022, primarily due to less favorable local market pricing, including gathering and transportation costs, as compared to the benchmark price.
Our oil price differential to the weighted average WTI benchmark price during the year ended December 31, 2024 was negative $5.90 per Bbl, as compared to a negative $4.19 per Bbl during the year ended December 31, 2023, primarily due to less favorable local market pricing, including gathering and transportation costs, as compared to the benchmark price.
For the year ended December 31, 2023, the relationship of capital expenditures, proved reserves and production from certain producing fields yielded a depletion rate (excluding depreciation, amortization and accretion) of $18.68 per Boe compared with $16.71 per Boe for the year ended December 31, 2022.
For the year ended December 31, 2024, the relationship of capital expenditures, proved reserves and production from certain producing fields yielded a depletion rate (excluding depreciation, amortization and accretion) of $20.92 per Boe compared with $18.68 per Boe for the year ended December 31, 2023.
The increase for the year ended December 31, 2023 was due to a higher SOFR interest rate in the year ended December 31, 2023 despite a lower average outstanding balance on our Revolving Credit Facility during the year ended December 31, 2023 compared to 2022.
The increase for the year ended December 31, 2024 was due to a higher SOFR interest rate in the year ended December 31, 2024 and a higher average outstanding balance on our Revolving Credit Facility during the year ended December 31, 2024 compared to 2023.
Our oil price differential to the weighted average benchmark price during the year ended December 31, 2023 was negative $4.19 per Bbl, as compared to a negative $3.39 per Bbl during the year ended December 31, 2022, primarily due to less favorable local market pricing as compared to the benchmark price.
Our oil price differential to the weighted average benchmark price during the year ended December 31, 2024 was negative $5.90 per Bbl, as compared to a negative $4.19 per Bbl during the year ended December 31, 2023, primarily due to less favorable local market pricing as compared to the benchmark price.
The decrease in oil and natural gas revenue was due to a 28% decrease in the average realized prices per Boe before hedging, and was partially offset by a 15% increase in production volumes for the year ended December 31, 2023.
The increase in oil and natural gas revenue was due to a 10% increase in production volumes, and was partially offset by a 6% decrease in the average realized prices per Boe before hedging for the year ended December 31, 2024.
The exact impact of each of these items is difficult to quantify as each of our operators pass through these costs in a different manner. Lease Operating Expense. Lease operating expense increased to $9.11 per Boe for the year ended December 31, 2023 from $8.22 per Boe for the year ended December 31, 2022.
The exact impact of each of these items is difficult to quantify as each of our operators passes through these costs in a different manner. Lease Operating Expense. Lease operating expense increased to $10.00 per Boe for the year ended December 31, 2024 from $9.11 per Boe for the year ended December 31, 2023.
Our net realized natural gas price during the year ended December 31, 2023 was $1.88 per Mcf, representing a 74% realization relative to average Henry Hub pricing, compared to a net realized natural gas price of $6.64 per Mcf during the year ended December 31, 2022, representing a 103% realization relative to average Henry Hub pricing.
Our net realized natural gas price during the year ended December 31, 2024 was $1.34 per Mcf, representing a 62% realization relative to average Henry Hub pricing, compared to a net realized natural gas price of $1.88 per Mcf during the year ended December 31, 2023, representing a 74% realization relative to average Henry Hub pricing.
At December 31, 2023, all of our derivative contracts were recorded at their fair value, which was a net asset of $11.1 million, an increase of $11.3 million from the $0.2 million net liability recorded as of December 31, 2022.
At December 31, 2024, all of our derivative contracts were recorded at their fair value, which was a net asset of $3.7 million, a decrease of $7.4 million from the $11.1 million net asset recorded as of December 31, 2023, while a net liability of $0.2 million was recorded as of December 31, 2022.
Total production taxes decreased to $21.6 million for the year ended December 31, 2023 from $24.1 million for the year ended December 31, 2022, primarily due to the decrease in oil and gas revenue in 2023. Production taxes are primarily based on oil revenue and natural gas production, excluding gains and losses associated with hedging activities.
Total production taxes decreased to $21.5 million for the year ended December 31, 2024 from $21.6 million for the year ended December 31, 2023. Production taxes are primarily based on oil revenue and natural gas production, excluding gains and losses associated with hedging activities.
The increase in general and administrative expense per Boe, excluding the Spin-Off costs, was primarily due to higher costs associated with being a public company. DD&A. DD&A increased to $81.7 million for the year ended December 31, 2023 compared with $63.7 million for the year ended December 31, 2022.
The increase in general and administrative expense per Boe, excluding the Spin-Off and Lucero Acquisition costs, was due to higher legal costs and costs associated with being a public company. DD&A. DD&A increased to $100.3 million for the year ended December 31, 2024 compared with $81.7 million for the year ended December 31, 2023.
The decrease in average realized prices per Boe before hedging decreased oil and natural gas revenue by approximately $77.7 million, while the increase in production volumes increased oil and natural gas revenue by approximately $29.8 million.
The increase in production volumes increased oil and natural gas revenue by approximately $21.3 million, while the decrease in average realized prices per Boe before hedging decreased oil and natural gas revenue by approximately $13.2 million.
The oil and natural gas industry is cyclical and the demand for goods and services of oil field companies, suppliers and others associated with the industry put pressure on the economic stability and pricing structure within the industry.
The oil and natural gas industry is cyclical and the demand for goods and services of oil field companies, suppliers and others associated with the industry put pressure on the economic stability and pricing structure within the industry. Higher prices for oil and natural gas could result in increases in the costs of materials, services and personnel.
YEAR END DECEMBER 31, (in thousands) 2023 2022 Realized gain (loss) on commodity derivatives (1) $ 1,166 $ (47,124) Unrealized gain (loss) on commodity derivatives (1) 11,318 $ 16,294 Total commodity derivative gain (loss) $ 12,484 $ (30,830) (1) Realized and unrealized gains and losses on commodity derivatives are presented herein as separate line items but are combined for a total commodity derivative gain (loss) in the consolidated statements of operations included in this Annual Report on Form 10-K.
YEAR ENDED DECEMBER 31, (in thousands) 2024 2023 Realized gain on commodity derivatives (1) $ 5,065 $ 1,166 Unrealized (loss) gain on commodity derivatives (1) (7,413) 11,318 Total commodity derivative (loss) gain $ (2,348) $ 12,484 (1) Realized and unrealized gains and losses on commodity derivatives are presented herein as separate line items but are combined for a total commodity derivative (loss) gain in the consolidated statements of operations included in this Annual Report on Form 10-K.
FOR THE YEAR ENDED DECEMBER 31, (in thousands) 2023 Pre-Tax Present Value of Estimated Future Net Revenues (Pre-Tax PV10%) $ 682,070 Future Income Taxes, Discounted at 10% $ (106,379) Standardized Measure of Discounted Future Net Cash Flows $ 575,691 Uncertainties are inherent in estimating quantities of proved reserves, including many risk factors beyond our control.
FOR THE YEAR ENDED DECEMBER 31, (in thousands) 2024 Pre-Tax Present Value of Estimated Future Net Revenues (Pre-Tax PV10%) $ 586,590 Future Income Taxes, Discounted at 10% $ (80,259) Standardized Measure of Discounted Future Net Cash Flows $ 506,331 Uncertainties are inherent in estimating quantities of proved reserves, including many risk factors beyond our control.
Our net realized natural gas price during the year ended December 31, 2023 was $1.88 per Mcf, representing a 74% realization relative to the weighted average NYMEX natural gas price, compared to a net realized natural gas price of $6.64 per Mcf during the year ended December 31, 2022, representing a 103% realization relative to the weighted average NYMEX natural gas price.
Our net realized natural gas price during the year ended December 31, 2024 was $1.34 per Mcf, representing a 62% realization relative to the weighted 59 Table of Contents average NYMEX natural gas price, compared to a net realized natural gas price of $1.88 per Mcf during the year ended December 31, 2023, representing a 74% realization relative to the weighted average NYMEX natural gas price.
Any of the foregoing can have a substantial impact on the prices of oil and natural gas, which in turn impacts the decision of our operators to drill and extract resources.
Any of the foregoing can have a substantial impact on the prices of oil and natural gas, which in turn impacts our decisions and the decision of our operators to drill and extract resources. Source of Our Revenues We derive our revenues from the sale of oil and natural gas produced from our properties.
A valuation allowance is established to reduce deferred tax assets if it is more likely than not that the related tax benefits will not be realized. Vitesse Energy, our Predecessor, was a limited liability company.
A valuation allowance is established to reduce deferred tax assets if it is more likely than not that the related tax benefits will not be realized.
The increase of $18.0 million or 28% was the result of a 15% increase in production and a 12% increase in the DD&A rate for the year ended December 31, 2023 compared with the year ended December 31, 2022.
The increase of $18.6 million or 23% was the result of a 10% increase in production and a 12% increase in the DD&A rate for the year ended December 31, 2024 compared with the year ended December 31, 2023.
W e paid cash dividends to our equity holders of $58.0 million during the year ended December 31, 2023.
W e paid cash dividends to our equity holders of $63.6 million during the year ended December 31, 2024.
Costs related to the Spin -Off are included in both periods. Excluding costs related to the Spin-Off, the per Boe rate for the years ended December 31, 2023 and 2022 would have been $3.94 and $3.15, respectively.
Costs related to the Spin-Off are included in 2023 and costs related to the Lucero Acquisition are included in 2024. Excluding these costs, the per Boe rate for the years ended December 31, 2024 and 2023 would have been $4.47 and $3.94, respectively.
The increase in production accounted for a $10.4 million increase in DD&A expense while the increase in the DD&A rate accounted for a $7.6 million increase in DD&A expense.
The increase in production accounted for a $8.8 million increase in DD&A expense while the increase in the DD&A rate accounted for a $9.7 million increase in DD&A expense.
General and administrative expense increased to $23.9 million for the year ended December 31, 2023 from $19.8 million for the year ended December 31, 2022. General and administrative expense on a per Boe basis increased to $5.52 for the year ended December 31, 2023 from $5.24 for the year ended December 31, 2022.
General and administrative expense decreased to $23.5 million for the year ended December 31, 2024 from $23.9 million for the year ended December 31, 2023. General and administrative expense on a per Boe basis decreased to $4.94 for the year ended December 31, 2024 from $5.52 for the year ended December 31, 2023.
The increase in the depletion rate was driven by a combination of decreased oil and natural gas reserves related to the lower oil and natural gas prices and the impact of acquisitions in the year ended December 31, 2023. Equity-based Compensation.
The increase in the depletion rate was driven by decreased oil and natural gas reserves related to the lower oil and natural gas prices combined with higher operating expenses and the impact of acquisitions and related capital expenditures in the year ended December 31, 2024. Equity-based Compensation.
Oil and natural gas revenue decreased to $233.9 million for the year ended December 31, 2023 from $281.9 million for the year ended December 31, 2022.
Oil and natural gas revenue increased to $242.0 million for the year ended December 31, 2024 from $233.9 million for the year ended December 31, 2023.
Gain (Loss) on Commodity Derivatives is comprised of (1) cash gains and losses we recognize on settled commodity derivative instruments during the period, and (2) unsettled gains and losses we incur on commodity derivative instruments outstanding at period-end.
Gain (loss) on commodity derivatives, net is comprised of (i) cash gains and losses we recognize on settled commodity derivatives during the period, and (ii) non-cash mark-to-market gains and losses we incur on commodity derivative instruments outstanding at period-end.
Risk Factors and “Cautionary Statement Concerning Forward-Looking Statements.” Executive Overview Our business strategy is focused on creating long-term stockholder value through the profitable acquisition, development and production of oil and natural gas assets at attractive rates of return, while maintaining a strong balance sheet and distributing a meaningful dividend to our stockholders.
Executive Overview Our business strategy is focused on creating long-term stockholder value through the profitable acquisition, development and production of oil and natural gas assets that provide an attractive return on invested capital, while maintaining a strong balance sheet and distributing a meaningful dividend to our stockholders.
As of December 31, 2023, we had a working interest in 5,734 gross (157.5 net) productive wells and 224 gross (6.7 net) wells that were being drilled or completed, and an additional 363 gross (9.9 net) wells that had been permitted for development by our operators.
As of December 31, 2024, we had a working interest in 6,071 gross (168.2 net) productive wells and 248 gross (9.7 net) wells that were being drilled or completed, and an additional 362 gross (8.0 net) wells that had been permitted for development by our operators.
Production taxes are paid on produced oil and natural gas based on a percentage of revenues from products sold at market prices (not hedged prices) or at fixed rates established by federal, state or local taxing authorities. We seek to take full advantage of all credits and exemptions in our various taxing jurisdictions.
Production taxes are paid on produced oil and natural gas based on a percentage of revenues from products sold at market prices (not hedged prices) or at fixed rates established by federal, state or local taxing authorities. In general, the production taxes we pay correlate to the changes in oil and natural gas revenues. DD&A.
If our EBITDAX Ratio does not exceed 2.25 to 1.00, and if our total outstanding credit usage does not exceed 80% of the Commitments, we may also make distributions if our free cash flow (as defined under the Revolving Credit Facility) is greater than $0 and we have delivered a certificate to our lenders attesting to the foregoing.
If our EBITDAX Ratio does not exceed 2.25 to 1.00, and if our total outstanding credit usage does not exceed 80% of the Commitments, we may also make distributions if our free cash flow (as defined under the Revolving Credit Facility) is greater than $0 and we have delivered a certificate to our lenders attesting to the foregoing. 62 Table of Contents As of December 31, 2024, the Company’s borrowing base was $245.0 million with an aggregate elected commitment of $235.0 million of which $117.0 million was outstanding.
General and administrative expenses include overhead, including payroll and benefits for our corporate staff, costs of maintaining our headquarters, costs of managing our acquisition and development operations, franchise taxes, audit and other professional fees and legal compliance. For fiscal 2022 and 2023, general and administrative expenses included non-recurring costs related to the Spin-Off. Interest expense.
General and administrative expenses. General and administrative expenses include overhead, including payroll and benefits for our corporate staff, costs of maintaining our headquarters, costs of managing our acquisition and development operations, franchise taxes, audit and other professional fees and legal compliance.
We continually monitor potential capital sources for opportunities to enhance liquidity or otherwise improve our financial position. Working Capital. Our working capital balance fluctuates as a result of changes in commodity pricing and production volumes, the collection of revenue receivables, expenditures related to our acquisition and development, and production operations and the impact of our outstanding commodity derivative instruments.
Our working capital balance fluctuates as a result of changes in commodity pricing and production volumes, the collection of revenue receivables, expenditures related to our acquisition and development, and production operations and the impact of our outstanding commodity derivative instruments.
As a successful efforts company, costs associated with the acquisition, drilling, and equipping of successful exploratory wells and costs of successful and unsuccessful development wells are capitalized. Accretion expense relates to the passage of time of our asset retirement obligations. General and administrative expenses.
DD&A includes the systematic expensing of the capitalized costs incurred to acquire, explore and develop oil and natural gas properties. As a successful efforts company, costs associated with the acquisition, drilling, and equipping of successful exploratory wells and costs of successful and unsuccessful development wells are capitalized. Accretion expense relates to the passage of time of our asset retirement obligations.
We do not capitalize any portion of the interest paid on applicable borrowings. We include the amortization of deferred financing costs, commitment fees and annual agency fees as interest expense. Impairment expense.
As a result, we incur interest expense that is affected by both fluctuations in interest rates and our financing decisions. We do not capitalize any portion of the interest paid on applicable borrowings. We include the amortization of deferred financing costs, commitment fees and annual agency fees as interest expense. Impairment expense.
For more information on our outstanding derivatives, see Notes to Consolidated Financial Statements—Note 6—Derivative Instruments. Cash used in investing activities during the years ended December 31, 2023 and 2022 was $120.7 million and $84.6 million, respectively, as compared to $43.3 million during the year ended November 30, 2021 and $4.0 million during the month ended December 31, 2021.
For more information on our outstanding derivatives, see Notes to Consolidated Financial Statements—Note 6—Derivative Instruments. Cash used in investing activities during the years ended December 31, 2024, 2023 and 2022 was $115.3 million, $120.7 million, and $84.6 million, respectively. Cash used in investing activities primarily relates to capital expenditures for acquisition and development costs.
The average calendar 2023 WTI oil price was $77.58 per Bbl or 18% lower than the average WTI price per Bbl in calendar 2022. Our settled derivatives increased our realized oil price per Bbl by $0.40 in calendar 2023 and decreased our realized oil price per Bbl by $18.07 in calendar 2022.
The average calendar 2024 WTI oil price was $75.69 per Bbl or 2% lower than the average WTI price per Bbl in calendar 2023. Our settled derivatives increased our realized oil price per Bbl by $1.54 in calendar 2024 and increased our realized oil price per Bbl by $0.40 in calendar 2023.
We recorded income tax expense of $61.9 million for the year ended December 31, 2023 related to federal and state income taxes, including $44.1 million recorded at Spin-Off as discussed below.
During the year ended December 31, 2023, we recorded income tax expense of $61.9 million related to federal and state income taxes.
For the year ended December 31, 2023 total capital expenditures was $120.5 million, including development expenditures and our acquisition activity. We expect to fund future capital expenditures with cash generated from operations and, if required, borrowings under our Revolving Credit Facility. The foregoing excludes larger acquisitions, which are typically not included in our annual capital expenditures budget.
For the year ended December 31, 2024 total capital expenditures was $115.2 million, including development expenditures and our acquisition activity. We expect to fund future capital expenditures with cash generated from operations and, if required, borrowings under our Revolving Credit Facility.
Our average 2023 realized oil price per Bbl after reflecting settled derivatives was $73.99 compared to $72.66 in 2022. The average calendar 2023 NYMEX natural gas price was $2.53 per MMBtu, or 61% lower than the average NYMEX price per MMBtu in calendar 2022.
Our average 2024 realized oil price per Bbl after reflecting settled derivatives was $71.48 compared to $73.99 in 2023. The average calendar 2024 NYMEX natural gas price was $2.19 per MMBtu, or 13% lower than the average NYMEX price per MMBtu in calendar 2023. We had no gas price derivatives in place in calendar 2024 and 2023.
The increase was due to changes to forward commodity prices relative to prices on our open commodity derivative contracts and new contracts entered into in the year ended December 31, 2023. Income Tax Expense.
The decrease in 2024 and asset increase in 2023 was due to changes to forward commodity prices relative to prices on our open commodity derivative contracts and new contracts entered into in the respective years. Income Tax Expense. We recorded income tax expense of $7.7 million for the year ended December 31, 2024 related to federal and state income taxes.
Our cash flows for the years ended December 31, 2023, December 31, 2022 and November 30, 2021 and the month ended December 31, 2021 are presented below: FOR THE YEARS ENDED DECEMBER 31, FOR THE MONTH ENDED DECEMBER 31, FOR THE YEAR ENDED NOVEMBER 30, (in thousands) 2023 2022 2021 2021 Cash flows provided by operating activities $ 141,942 $ 147,041 $ 12,520 $ 86,971 Cash flows used in investing activities (120,666) (84,583) (3,956) (43,317) Cash flows used in financing activities (30,731) (57,807) (6,009) (42,587) Net (decrease) increase in cash $ (9,455) $ 4,651 $ 2,555 $ 1,067 During the year ended December 31, 2023, we generated $141.9 million of cash from operations, a decrease of 3% from the year ended December 31, 2022 despite a 17% decrease in total revenue.
Our cash flows for the years ended December 31, 2024, 2023 and 2022 are presented below: FOR THE YEARS ENDED DECEMBER 31, (in thousands) 2024 2023 2022 Cash flows provided by operating activities $ 155,003 $ 141,942 $ 147,041 Cash flows used in investing activities (115,321) (120,666) (84,583) Cash flows used in financing activities (37,267) (30,731) (57,807) Net increase (decrease) in cash $ 2,415 $ (9,455) $ 4,651 During the year ended December 31, 2024, we generated $155.0 million of cash from operations, an increase of 9% from the year ended December 31, 2023 driven by a 3% increase in total revenue.
The cash used in financing activities during the fiscal years ended December 31, 2022 and November 30, 2021 was related to $20.0 million and $30.5 million, respectively, of net repayments under our Prior Revolving Credit Facility as compared to net borrowings of $28.0 million during the fiscal year ended December 31, 2023 under our Revolving Credit Facility.
The cash used in financing activities was related to distributions to our equity holders of $63.6 million, $58.0 million and $36.0 million during the years ended December 31, 2024, 2023 and 2022, respectively and net repayments of $20.0 million during the year ended December 31, 2022 under our Prior Revolving Credit Facility.
In 2022, approximately 55% of our oil volumes and 6% of our natural gas volumes were covered by financial hedges, which resulted in a realized loss on oil derivatives of $46.5 million and a realized loss on natural gas derivatives of $0.6 million after settlements.
In 2024, approximately 59% of our oil volumes and none of our natural gas volumes were covered by financial hedges, which resulted in a realized gain on oil derivatives of $5.1 million.
As of December 31, 2023, we had oil swaps covering 1,374,998 Bbls at a weighted average price of $78.95 per Bbl for calendar 2024 and oil swaps covering the sale of 180,000 Bbls at a weighted average price of $75.30 per Bbl for calendar 2025. As of December 31, 2023, we had no natural gas derivative contracts.
As of December 31, 2024, we had oil swaps covering 2,304,003 Bbls at a weighted average price of $71.16 per Bbl for calendar 2025 and oil swaps covering the sale of 917,994 Bbls at a weighted average price of $66.95 per Bbl for calendar 2026. As of December 31, 2024, we had no natural gas derivative contracts.
Our cash spending for acquisition activities was $35.7 million, $28.5 million and $6.2 million during the fiscal years ended December 31, 2023, December 31, 2022, and November 30, 2021, respectively, and $0.1 million in the month ended December 31, 2021.
Our cash spending for acquisition activities was $21.1 million, $35.7 million and $28.5 million during the years ended December 31, 2024, 2023 and 2022, respectively. Cash used in financing activities was $37.3 million, $30.7 million, and $57.8 million during the years ended December 31, 2024, 2023 and 2022, respectively.
Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in Part I. Item 1A.
Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in Part I. Item 1A. Risk Factors and “Cautionary Statement Concerning Forward-Looking Statements.” This section generally discusses certain 2024 and 2023 items and certain year-to-year comparisons between 2024 and 2023.
Production taxes as a percentage of oil and natural gas sales before hedging adjustments were 9.2% and 8.5% for the years ended December 31, 2023 and 2022, respectively.
Production taxes as a percentage of oil and natural gas sales before hedging adjustments were 8.9% and 9.2% for the years ended December 31, 2024 and 2023, respectively. The lower production tax rate was driven by the production mix and the relative tax rates on oil and natural gas revenue. General and Administrative Expense.
Our financial and operating performance for the year ended December 31, 2023 included the following: ■ Total revenue of $233.9 million. ■ Cash flows from operations of $141.9 million. ■ Net loss of $19.7 million. ■ Proved reserves of 40.6 MMBoe and $682.1 million PV-10 value at December 31, 2023, as estimated by our third-party reserve engineers using SEC guidelines. ■ Total debt of $81.0 million at December 31, 2023. ■ Paid $58.0 million in dividends to our equity holders.
Our financial and operating performance for the year ended December 31, 2024 included the following: ■ Paid $63.6 million in dividends to our equity holders. ■ Production of 13,003 Boe/d with 69% of production from oil. ■ Total revenue of $242.0 million. ■ Net income of $21.1 million. ■ Cash flows from operations of $155.0 million. ■ Invested $115.2 million in capital development and acquisitions. ■ Proved reserves of 40.3 MMBoe and $587 million PV-10 value at December 31, 2024, as estimated by our third-party reserve engineers using SEC guidelines. ■ Total debt of $117.0 million at December 31, 2024.
The price at which our natural gas production is sold may reflect either a discount or premium to the Henry Hub benchmark price. Thus, our operating results are also affected by changes in the oil price differentials between the applicable benchmark and the sales prices we receive for our oil production.
Thus, our operating results are also affected by changes in the oil price differentials between the applicable benchmark and the sales prices we receive for our oil production.
The cost of drilling wells can vary significantly, driven in part by volatility in commodity prices that can substantially impact the level of drilling activity. Generally, higher oil prices have led to increased drilling activity, with the increased demand for drilling and completion services driving these costs higher. Lower oil prices have generally had the opposite effect.
Generally, higher oil prices have led to increased drilling activity, with the increased demand for drilling and completion services driving these costs higher. Lower oil prices have generally had the opposite effect.
At December 31, 2023, we had $0.6 million of unrestricted cash on hand and $164.0 million available under our borrowing base. At December 31, 2022, we had $10.0 million of unrestricted cash on hand and $152.0 million available under our borrowing base in our Prior Revolving Credit Facility.
Liquidity and Capital Resources Overview. At December 31, 2024 and 2023, we had $3.0 million and $0.6 million of unrestricted cash on hand and $128.0 million and $164.0 million available under our Revolving Credit Facility, respectively.
World-wide supply in terms of output, especially production from properties within the United States, the production quota set by OPEC, the conflicts in Ukraine and in the Middle East and the strength of the U.S. dollar can adversely impact oil prices. The price at which our oil production is sold typically reflects a discount to the WTI benchmark price.
Worldwide supply in terms of output, especially production from properties within the United States, the production quotas set by OPEC and certain other oil-producing countries, the conflicts in Ukraine and in the Middle East and the strength of the U.S. dollar can adversely impact oil prices.
During the year ended December 31, 2023, the Predecessor was contributed into Vitesse resulting in a change in tax status and the recording of a $44.1 million deferred tax liability related to the temporary difference between the tax and GAAP basis of the assets of the Predecessor and an offsetting charge to income tax expense. 60 Table of Contents Change in Fiscal Year End On November 30, 2021, our Board and the Board of Managers of our Predecessor approved a change in our fiscal year end and that of our Predecessor from November 30 to December 31.
In January 2023, in connection with the Spin-Off, the Predecessor was contributed into Vitesse resulting in a change in tax status and the recording of a $44.1 million deferred tax liability related to the temporary difference between the tax and GAAP basis of the assets of the Predecessor and an offsetting charge to income tax expense.
The increase in current assets in 2023 as compared to 2022 was primarily due to an increase of $7.9 million in our commodity derivative instruments due to forward oil price decreases and more advantageous hedge instruments in place at December 31, 2023, and an increase of $3.5 million in revenue receivable primarily due to higher oil and natural gas revenue in the fourth quarter, partially offset by a decreased cash balance of $9.5 million.
The decrease in current assets in 2024 as compared to 2023 was due to a decrease of $6.2 million in our commodity derivative instruments due to forward oil price decreases as compared to hedged oil prices, and a decrease of $5.1 million in revenue receivable primarily due to lower oil and natural gas revenue in the fourth quarter, partially offset by an increase in our cash balance of $2.4 million and an increase in other receivables of $1.5 million primarily related to prepayments and a higher receivable from commodity derivative 61 Table of Contents instruments.
One of the primary sources of variability in our cash provided by operating activities is commodity price volatility, which we partially mitigate through the use of commodity derivative contracts.
A minimum level of derivative coverage is required by certain debt covenants. See Part II. Item 7A. Quantitative and Qualitative Disclosures about Market Risk. One of the primary sources of variability in our cash provided by operating activities is commodity price volatility, which we partially mitigate through the use of commodity derivative contracts.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeSETTLEMENT PERIOD OIL (barrels) WEIGHTED AVERAGE PRICE $ Swaps-Crude Oil 2024: Q1 402,498 $ 79.03 Q2 382,500 $ 79.13 Q3 327,500 $ 78.50 Q4 262,500 $ 78.53 2025: Q1 90,000 $ 75.30 Q2 90,000 $ 75.30 See Notes to the Consolidated Financial Statements—Note 4—Fair Value Measurements and —Note 6—Derivative Instruments for further details regarding our commodity derivatives.
Biggest changeSETTLEMENT PERIOD OIL (Bbls) WEIGHTED AVERAGE PRICE Swaps-Crude Oil 2025: Q1 526,500 $72.55 Q2 649,503 $71.85 Q3 586,503 $69.99 Q4 541,497 $70.25 2026: Q1 353,997 $66.90 Q2 329,997 $66.90 Q3 119,997 $67.10 Q4 114,003 $67.10 See Notes to the Consolidated Financial Statements—Note 4—Fair Value Measurements and —Note 6—Derivative Instruments for further details regarding our commodity derivatives.
At our option, borrowings under the Revolving Credit Facility bear interest at either an adjusted forward-looking term rate based on SOFR (“Term SOFR”) or an adjusted base rate (“Base Rate”) (the highest of the administrative agent’s prime rate, the Federal Funds Rate plus 0.50% or the 30-day Term SOFR rate plus 1.0%), plus a spread ranging from 1.75% to 2.75% with respect to Base Rate borrowings and 2.75% to 3.75% with respect to Term SOFR borrowings, in each case based on the borrowing base utilization percentage.
At our option, borrowings under the Revolving Credit Facility bear interest at either an adjusted forward-looking term rate based on SOFR (“Term SOFR”) or an adjusted base rate (“Base Rate”) (the highest of the administrative agent’s prime rate, the Federal Funds Rate plus 0.50% or the 30-day Term SOFR rate plus 1.0%), plus a spread ranging from 1.50% to 2.50% with respect to Base Rate borrowings and 2.50% to 3.50% with respect to Term SOFR borrowings, in each case based on the borrowing base utilization percentage.
Any interim cash needs are funded by cash from operations or borrowings under our Revolving Credit Facility. The following table summarizes our open crude oil swap contracts as of December 31, 2023, by fiscal quarter.
Any interim cash needs are funded by cash from operations or borrowings under our Revolving Credit Facility. The following table summarizes our open crude oil swap contracts as of December 31, 2024, by fiscal quarter.
Based upon our open commodity derivative positions at December 31, 2023, a hypothetical $1 increase or decrease in the NYMEX WTI strip price would increase or decrease our net commodity derivative position by approximately $1.5 million. The hypothetical change in fair value could be a gain or a loss depending on whether commodity prices decrease or increase.
Based upon our open commodity derivative positions at December 31, 2024, a hypothetical $1 increase or decrease in the NYMEX WTI strip price would increase or decrease our net commodity derivative position by approximately $3.1 million. The hypothetical change in fair value could be a gain or a loss depending on whether commodity prices decrease or increase.
Assuming no change in the amount outstanding, the impact on interest expense of a 1% increase or decrease in the average interest rate would be an approximate $0.5 million increase or decrease in interest expense for the year ended December 31, 2023. 69 Table of Contents Item 8.
Assuming no change in the amount outstanding, the impact on interest expense of a 1% increase or decrease in the average interest rate would be an approximate $1.0 million increase or decrease in interest expense for the year ended December 31, 2024. 66 Table of Contents Item 8.
The prices we receive for our production depend on numerous factors beyond our control.
The prices we receive for our production depend on numerous factors beyond our 65 Table of Contents control.
Interest Rate Risk Our long-term debt is composed of borrowings that contain floating interest rates. Our Revolving Credit Facility interest rate is a floating rate option that is designated by us within the parameters established by the underlying agreement.
Interest Rate Risk Our Revolving Credit Facility interest rate is a floating rate option that is designated by us within the parameters established by the underlying agreement.

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