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What changed in Permian Resources Corp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Permian Resources Corp'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.

+417 added−454 removedSource: 10-K (2025-02-26) vs 10-K (2024-02-29)

Top changes in Permian Resources Corp's 2024 10-K

417 paragraphs added · 454 removed · 265 edited across 6 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

88 edited+58 added−48 removed170 unchanged
Biggest changeIf we are unable to obtain water from water suppliers or our recycling operations, it may need to be obtained from non-local sources and transported to drilling sites, resulting in increased costs, or we may be unable to economically drill for or produce oil and natural gas, each of which could have an adverse effect on our financial condition, results of operations and cash flows. 30 Table of Contents Our ability to produce crude oil, natural gas and NGLs economically and in commercial quantities could be impaired if we are unable to acquire adequate supplies of water for our drilling operations or are unable to recycle or dispose of the produced water we produce in an economical and environmentally safe manner.
Biggest changeIf we are unable to obtain water from water suppliers or our recycling operations, it may need to be obtained from non-local sources and transported to drilling sites, resulting in increased costs, or we may be unable to economically drill for or produce oil and natural gas, each of which could have an adverse effect on our financial condition, results of operations and cash flows.
In addition, sustained periods of low commodity prices for oil and natural gas and the resultant effect such prices may have on our drilling economics and our ability to raise capital may require us to re-evaluate and postpone, moderate or eliminate our planned drilling and completions operations, or suspend production from current wells, which could result in the reduction of our expected production 26 Table of Contents and some of our proved undeveloped reserves and related standardized measure.
In addition, sustained periods of low commodity prices for oil and natural gas and the resultant effect such prices may have on our drilling economics and our ability to raise capital may require us to re-evaluate and postpone, moderate or eliminate our planned drilling and 26 Table of Contents completions operations, or suspend production from current wells, which could result in the reduction of our expected production and some of our proved undeveloped reserves and related standardized measure.
Among other things, these rules require companies seeking permits for disposal wells to provide seismic activity data in permit applications, provide for more frequent monitoring and reporting for certain wells and allow the state to modify, suspend or terminate permits on grounds that a disposal well is likely to be, or determined to be, causing seismic activity.
Among other things, these rules require companies seeking permits for disposal wells to provide seismic activity data in permit applications, provide for more frequent monitoring and reporting for certain wells and allow the state to modify, suspend or terminate permits on grounds that a disposal well is likely, or determined, to be causing seismic activity.
Our Charter provide that, unless we consent in writing to the selection of an alternative forum, the (i) Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (A) any derivative action or proceeding brought on our behalf, (B) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our shareholders, (C) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, the Charter or our Bylaws or (D) any action asserting a claim against us that is governed by the internal affairs doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein; and (ii) subject to the foregoing, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, including all causes of action asserted against any defendant to such complaint.
Our Charter provides that, unless we consent in writing to the selection of an alternative forum, the (i) Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (A) any derivative action or proceeding brought on our behalf, (B) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our shareholders, (C) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, the Charter or our Bylaws or (D) any action asserting a claim against us that is governed by the internal affairs doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein; and (ii) subject to the foregoing, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, including all causes of action asserted against any defendant to such complaint.
Produced water that is not recycled generally gets disposed of in disposal wells that are operated by us or third-party contractors. Some studies have linked earthquakes or induced seismicity in certain areas to underground injection of produced water resulting from oil and gas activities, which has led to increased public and governmental scrutiny of injection safety.
Produced water that is not recycled is generally disposed in disposal wells that are operated by us or third-party contractors. Some studies have linked earthquakes or induced seismicity in certain areas to underground injection of produced water resulting from oil and gas activities, which has led to increased public and governmental scrutiny of injection safety.
The restrictions in OpCo’s debt agreements may also limit our ability to obtain future financings to withstand a future downturn in our business or the economy in general, or to otherwise conduct necessary corporate activities. We may also be prevented from taking advantage of business opportunities that arise because of the limitations that the restrictive imposed on OpCo.
The restrictions in OpCo’s debt agreements may also limit our ability to obtain future financings to withstand a future downturn in our business or the economy in general, or to otherwise conduct necessary corporate activities. We may also be prevented from taking advantage of business opportunities that arise because of the limitations that the restrictions imposed on OpCo.
In addition to the risks we face in drilling for and producing oil and natural gas, some factors that may directly or indirectly negatively impact our scheduled operations: • lack of available gathering or transportation facilities or delays in the constructing such facilities; • abnormal pressure or irregularities in geological formations; • shortages of or delays in obtaining equipment, qualified personnel, materials or resources; • equipment failures, accidents or other unexpected operational events; • delays imposed by or resulting from compliance with laws, regulations or litigation, including limitations resulting from wastewater disposal, emission of GHGs and limitations on hydraulic fracturing; • environmental hazards, such as oil and natural gas leaks, oil spills, pipeline and tank ruptures and unauthorized discharges of brine, well stimulation and completion fluids, toxic gases or other pollutants into the surface and subsurface environment; • natural disasters; • personal injuries and death; • terrorist attacks targeting oil and natural gas related facilities and infrastructure; • limited availability of financing at acceptable terms; • title problems; • adverse weather conditions; and • limitations in the market for oil and natural gas. 29 Table of Contents We are not insured against all risks.
In addition to the risks we face in drilling for and producing oil and natural gas, some factors that may directly or indirectly negatively impact our scheduled operations: • lack of available gathering or transportation facilities or delays in constructing such facilities; • abnormal pressure or irregularities in geological formations; • shortages of or delays in obtaining equipment, qualified personnel, materials or resources; • equipment failures, accidents or other unexpected operational events; • delays imposed by or resulting from compliance with laws, regulations or litigation, including limitations resulting from wastewater disposal, emission of GHGs and limitations on hydraulic fracturing; • environmental hazards, such as oil and natural gas leaks, oil spills, pipeline and tank ruptures and unauthorized discharges of brine, well stimulation and completion fluids, toxic gases or other pollutants into the surface and subsurface environment; • natural disasters and other weather events; • personal injuries and death; • terrorist attacks and cybersecurity risks targeting oil and natural gas related facilities and infrastructure; • limited availability of financing at acceptable terms; • title problems; and • limitations in the market for oil and natural gas. 29 Table of Contents We are not insured against all risks.
Moreover, while we may create and publish disclosures regarding ESG matters, many of the statements in those disclosures may be on hypothetical expectations and assumptions that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith.
Moreover, while we may create and publish disclosures regarding ESG matters, many of the statements in those disclosures may be on hypothetical expectations, assumptions and hypothetical scenarios that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith.
For instance, in response to concerns regarding induced seismicity, regulators in Texas have adopted new rules governing the permitting or re-permitting of wells used to dispose of produced water and other fluids resulting from the production of oil and gas.
For instance, in response to concerns regarding induced seismicity, regulators in Texas have adopted rules governing the permitting or re-permitting of wells used to dispose of produced water and other fluids resulting from the production of oil and gas.
For example, on June 2, 2023, the Biden administration issued a 20-year ban on new oil and gas leasing within a 10-mile radius of Chaco Culture National Historical Park in Northern New Mexico.
For example, the Biden administration issued a 20-year ban on new oil and gas leasing within a 10-mile radius of Chaco Culture National Historical Park in Northern New Mexico in June 2023.
Local governments also may seek to adopt ordinances within their jurisdictions regulating the time, place and manner of drilling activities in general or hydraulic fracturing activities in particular. State and federal regulatory agencies have also recently focused on a possible connection between the operation of injection wells used for natural gas and oil waste disposal and seismic activity.
Local governments also may seek to adopt ordinances within their jurisdictions regulating the time, place and manner of drilling activities in general or hydraulic fracturing activities in particular. State and federal regulatory agencies, including Texas, have also recently focused on a possible connection between the operation of injection wells used for natural gas and oil waste disposal and seismic activity.
Alternatively, if a court were to find this choice of forum provision inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving 42 Table of Contents such matters in other jurisdictions, which could adversely affect its business, financial condition, prospects, or results of operations.
Alternatively, if a court were to find this choice of forum provision inapplicable to, or unenforceable in 43 Table of Contents respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect its business, financial condition, prospects, or results of operations.
Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established single approach to identifying and measuring many ESG matters. Such disclosures may also be partially reliant on third-party information that we have not or cannot independently verify.
Such expectations, assumptions and hypothetical scenarios are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established single approach to identifying and measuring many ESG matters. Such disclosures may also be partially reliant on third-party information that we have not or cannot independently verify.
Restrictions on our ability to obtain water may have an adverse effect on our financial condition, results of operations and cash flows. Water is an essential component of deep shale oil and natural gas production during both the drilling and hydraulic fracturing processes. Drought conditions have persisted in Texas and New Mexico in past years.
Restrictions on our ability to obtain water may have an adverse effect on our financial condition, results of operations and cash flows. Water is an essential component of deep shale oil and natural gas production during both the drilling and hydraulic fracturing processes. Drought conditions have persisted in certain portions of Texas and New Mexico in past years.
See Note 1—Basis of Presentation and Summary of Significant Accounting Policies under Part II, Item 8 of this Annual Report for significant purchasers that accounted for more than 10% of our revenues for the years ended December 31, 2023, 2022 and 2021. The loss of any of our major purchasers could materially and adversely affect our revenues in the near-term.
See Note 1—Basis of Presentation and Summary of Significant Accounting Policies under Part II, Item 8 of this Annual Report for significant purchasers that accounted for more than 10% of our revenues for the years ended December 31, 2024, 2023 and 2022. The loss of any of our major purchasers could materially and adversely affect our revenues in the near-term.
Certain of our undeveloped leasehold acreage is subject to leases that will expire over the next several years unless production is established on units containing the acreage, the primary term is extended through continuous drilling provisions or the leases are renewed. As of December 31, 2023, over 96% of our total net acreage was held by production.
Certain of our undeveloped leasehold acreage is subject to leases that will expire over the next several years unless production is established on units containing the acreage, the primary term is extended through continuous drilling provisions or the leases are renewed. As of December 31, 2024, over 96% of our total net acreage was held by production.
Any elimination of, or downward revision in, our stock repurchase program or dividend policy could have an adverse effect on the market price of our common stock. 41 Table of Contents Provisions contained in our Charter and Bylaws, as well as provisions of Delaware law, could impair a takeover attempt, which may adversely affect the market price of our Common Stock.
Any elimination of, or downward revision in, our stock repurchase program or dividend policy could have an adverse effect on the market price of our common stock. 42 Table of Contents Provisions contained in our Charter and Bylaws, as well as provisions of Delaware law, could impair a takeover attempt, which may adversely affect the market price of our common stock.
Our producing properties are concentrated in the Permian Basin, making us vulnerable to risks associated with operating in a single geographic area. Our producing properties are geographically concentrated in West Texas and New Mexico in the Permian Basin. At December 31, 2023, all of our total estimated proved reserves were attributable to properties located in this area.
Our producing properties are concentrated in the Permian Basin, making us vulnerable to risks associated with operating in a single geographic area. Our producing properties are geographically concentrated in West Texas and New Mexico in the Permian Basin. At December 31, 2024, all of our total estimated proved reserves were attributable to properties located in this area.
Conservation measures, technological advances and negative shift in market perception toward the oil and natural gas industry could reduce demand for oil and natural gas.
Conservation measures, technological advances and any negative shift in market perception toward the oil and natural gas industry could reduce demand for oil and natural gas.
For example, a June 2022 settlement approved by a federal district court in Washington, D.C., obligates the BLM to redo its environment reports under NEPA for all oil and gas leases sold between 2015 and 2020, including leases in New Mexico.
For example, a June 2022 settlement approved by a federal district court in Washington, D.C., obligated the BLM to redo its environment reports under NEPA for all oil and gas leases sold between 2015 and 2020, including leases in New Mexico.
These cost increases result from a variety of factors beyond our control, such as increases in the cost of electricity, steel and other raw materials that we and our vendors rely upon; increased demand for labor, services and materials as drilling activity increases; and increased taxes.
These cost increases result from a variety of factors beyond our control, such as increases in the cost of electricity, steel and other raw materials that we and our vendors rely upon; increased demand for labor, services and materials as drilling activity increases; and increased tariffs and comparative taxes.
OpCo’s credit agreement with a syndicate of banks that provides for a five-year secured revolving credit facility, maturing in February 2027 (the “Credit Agreement”) and the indentures governing its senior notes contain a number of significant covenants, including restrictive covenants that may limit OpCo’s ability to, among other things: • incur additional indebtedness; • make loans to others; • make investments; • merge or consolidate with another entity; • make certain payments; • hedge future production or interest rates; • incur liens; • sell assets; and • engage in certain other transactions without the prior consent of the lenders.
OpCo’s credit agreement with a syndicate of banks that provides for a secured revolving credit facility, maturing in February 2028 (the “Credit Agreement”) and the indentures governing its senior notes contain a number of significant covenants, including restrictive covenants that may limit OpCo’s ability to, among other things: • incur additional indebtedness; • make loans to others; • make investments; • merge or consolidate with another entity; • make certain payments; • hedge future production or interest rates; • incur liens; • sell assets; and • engage in certain other transactions without the prior consent of the lenders.
In the event of such default: • the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest; • the lenders under OpCo’s revolving credit facility could elect to terminate their commitments thereunder, cease making further loans and institute foreclosure proceedings against our assets; and • we could be forced into bankruptcy or liquidation.
In the event of such default: • the holders of such indebtedness could elect to declare all the funds borrowed thereunder to be due and payable, together with accrued and unpaid interest; • the lenders under OpCo’s revolving credit facility could elect to terminate their commitments thereunder, cease making further loans and institute foreclosure proceedings against our assets; and 35 Table of Contents • we could be forced into bankruptcy or liquidation.
Any breach of our network may result in the loss of valuable business data, misappropriation of our customers’ or employees’ personal information, or a disruption of our business, which could harm our customer relationships and reputation, and result in lost revenues, fines or lawsuits.
Any breach of our network may result in the loss of valuable business data or critical infrastructure, misappropriation of our customers’ or employees’ personal information, or a disruption of our business, which could harm our customer relationships and reputation, and result in lost revenues, fines or lawsuits.
In addition, OpCo’s Credit Agreement requires us to maintain certain financial ratios or to reduce our indebtedness if we are unable to comply with such ratios. As of December 31, 2023, we were in full compliance with such financial ratios and covenants.
In addition, OpCo’s Credit Agreement requires us to maintain certain financial ratios or to reduce our indebtedness if we are unable to comply with such ratios. As of December 31, 2024, we were in full compliance with such financial ratios and covenants.
Our operations could be impaired if we are unable to recycle or dispose of the water we produce in an economical and environmentally safe manner. Where practicable, we strive to recycle the produced water for our future oil and gas operations.
Our operations could be impaired if we are unable to recycle or dispose of the produced water we generate in an economical and environmentally safe manner. Where practicable, we strive to recycle produced water for our future oil and gas operations.
OpCo’s revolving credit facility limits the amounts OpCo can borrow up to a borrowing base amount, which the lenders, in their sole discretion, determine semiannually in the spring and fall. The borrowing base depends on, among other things, projected 35 Table of Contents revenues from, and asset values of, the oil and natural gas properties securing the loan.
OpCo’s revolving credit facility limits the amounts OpCo can borrow up to a borrowing base amount, which the lenders, in their sole discretion, determine semiannually in the spring and fall. The borrowing base depends on, among other things, projected revenues from, and asset values of, the oil and natural gas properties securing the loan.
The threat of climate change continues to attract considerable attention in the United States and around the world. Numerous proposals have been made and could continue to be made at the international, national, regional and state levels of government to monitor, limit, and report existing emissions of greenhouse gases as well as to reduce such future emissions.
The threat of climate change continues to attract considerable attention in the United States and around the world. Numerous proposals have been made and could continue to be made at the international, national, regional and state levels of government to monitor, limit, and report existing emissions of GHGs as well as to reduce such future emissions.
Inspections may not always be performed on every well, and environmental problems, such as groundwater contamination, are not necessarily observable even when an inspection is undertaken. Even when problems are identified, the seller may be unwilling or unable to provide effective contractual protection against all or part of the problems.
Inspections may not always be performed on every well, and environmental problems, such as groundwater 32 Table of Contents contamination, are not necessarily observable even when an inspection is undertaken. Even when problems are identified, the seller may be unwilling or unable to provide effective contractual protection against all or part of the problems.
Any refinancing of indebtedness could be at higher interest rates and may require OpCo to comply with more onerous 34 Table of Contents covenants, which could further restrict business operations. The terms of existing or future debt instruments may restrict us from adopting some of these alternatives.
Any refinancing of indebtedness could be at higher interest rates and may require OpCo to comply with more onerous covenants, which could further restrict business operations. The terms of existing or future debt instruments may restrict us from adopting some of these alternatives.
These provisions include: • a classified board of directors, with only approximately one-third of our board of directors elected each year; • no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death, or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • the ability of our board of directors to determine whether to issue shares of our preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • the requirement that an annual meeting of stockholders may be called only by the chairman of the board of directors, the chief executive officers, or the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; • limiting the liability of, and providing indemnification to, our directors and officers; • controlling the procedures for the conduct and scheduling of stockholder meetings; • providing that directors may be removed prior to the expiration of their terms by stockholders only for cause; and • advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of the Company.
These provisions include: • no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; • the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death, or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors; • the ability of our board of directors to determine whether to issue shares of our preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; • a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; • the requirement that a special meeting of stockholders may be called only by the chairman of the board of directors, the chief executive officers, or the board of directors pursuant to a resolution adopted by a majority of the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; • limiting the liability of, and providing indemnification to, our directors and officers; • controlling the procedures for the conduct and scheduling of stockholder meetings; • providing that directors may be removed prior to the expiration of their terms by stockholders only for cause; and • advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of the Company.
In addition, we may experience delays in obtaining, or be unable to obtain, required permits, which may delay or interrupt our operations and limit our growth and revenue. 38 Table of Contents Certain environmental laws impose strict joint and several liability for costs required to remediate and restore sites where hazardous substances, hydrocarbons or solid wastes have been stored or released.
In addition, we may experience delays in obtaining, or be unable to obtain, required permits, which may delay or interrupt our operations and limit our growth and revenue. Certain environmental laws impose strict joint and several liability for costs required to remediate and restore sites where hazardous substances, hydrocarbons or solid wastes have been stored or released.
As of December 31, 2023, we had entered into derivative contracts covering a portion of our projected oil and gas production through 2023 (refer to Note 8—Derivative Instruments under Part II, Item 8 of this Annual Report for a summary of our derivative instruments as of December 31, 2023).
As of December 31, 2024, we had entered into derivative contracts covering a portion of our projected oil and gas production through 2026 (refer to Note 8—Derivative Instruments under Part II, Item 8 of this Annual Report for a summary of our derivative instruments as of December 31, 2024).
For example, certain lawmakers have proposed to reduce or ban further leasing on federal lands or to adopt further restrictions for same. To the extent such legislation is passed, it may adversely impact our operations, which could negatively impact our financial performance.
For example, certain lawmakers previously have proposed to reduce or ban further leasing on federal lands or to adopt further restrictions for same. To the extent such legislation is enacted, it may adversely impact our operations, which could negatively impact our financial performance.
Fuel conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to oil and natural gas, technological advances in fuel economy and energy generation devices, including as a result of the renewable energy incentives contained in the IRA, could reduce demand for oil and natural gas.
Fuel conservation measures, alternative fuel requirements, any increase in consumer demand for alternatives to oil and natural gas, technological advances in fuel economy and energy generation devices, including as a result of the renewable energy incentives contained in the IRA, could reduce demand for oil and natural gas.
The settlement stems from a 2016 lawsuit alleging that the BLM was not properly accounting for the cumulative climate impacts of its federal leasing program.
The settlement stemmed from a 2016 lawsuit alleging that the BLM was not properly accounting for the cumulative climate impacts of its federal leasing program.
Historically, oil, natural gas and NGL prices have been volatile and subject to fluctuations relating to a variety of additional factors that are beyond our control, including: • worldwide and regional economic conditions impacting the global supply of and demand for oil, natural gas and NGLs; • the price and quantity of foreign imports of oil, natural gas and NGLs; • political and economic conditions in or affecting other producing regions or countries, including the Middle East, Russia, Eastern Europe, Africa and South America; • actions of OPEC, its members and other state-controlled oil companies relating to oil price and production controls; • actions of U.S., European Union and other governments and governmental organizations relating to Russia’s oil, natural gas and NGLs, including through sanctions, import restrictions and commodity price caps; • actions of U.S. producers, and independent producers operating in other countries, relating to production levels; • political, economic and other conditions that affect perceived or actual demand for oil, natural gas and NGLs, including international trade disputes, sanctions and global health pandemics, epidemics and concerns; • the level of global exploration, development, production, and inventories; • actions of U.S. and other governments to strategically release oil, natural gas and NGLs from strategic reserves; • the availability of refining and storage capacity; • prevailing prices on local price indexes in the area in which we operate; • the proximity, capacity, cost and availability of gathering and transportation facilities; • the cost of exploring for, developing, producing and transporting reserves; • weather conditions and other natural disasters; • terrorist attacks targeting oil and natural gas related facilities and infrastructure; • technological advances affecting fuel economy, energy supply and energy consumption; • the effect of energy conservation measures, alternative fuel requirements and the price and availability of alternative fuels; • laws, regulations and taxes in the U.S. and in foreign jurisdictions that impact the demand for oil, natural gas and NGLs; • shareholder activism or activities by non-governmental organizations to restrict the exploration and production of oil and natural gas so as to minimize emissions of carbon dioxide and methane GHGs or otherwise; • localized and global supply and demand fundamentals; and • expectations about future commodity prices.
Historically, oil, natural gas and NGL prices have been volatile and subject to fluctuations relating to a variety of additional factors that are beyond our control, including: • worldwide and regional economic conditions impacting the global supply of and demand for oil, natural gas and NGLs; • the price and quantity of foreign imports of oil, natural gas and NGLs; • political and economic conditions in or affecting other producing regions or countries, including the Middle East, Russia, Eastern Europe, Africa and South America; • actions of OPEC, its members and other state-controlled oil companies relating to oil price and production controls; • actions of U.S., European Union and other governments and governmental organizations relating to Russia’s oil, natural gas and NGLs, including through sanctions, import restrictions and commodity price caps; • actions of U.S. producers, and independent producers operating in other countries, relating to production levels; • political, economic and other conditions that affect perceived or actual demand for oil, natural gas and NGLs, including international conflict, trade disputes, the imposition of tariffs or sanctions and global health concerns; • the level of global exploration, development, production, and inventories; • actions of U.S. and other governments to strategically release oil, natural gas and NGLs from strategic reserves; • the availability of refining and storage capacity; • prevailing prices on local price indexes in the area in which we operate; • the proximity, capacity, cost and availability of gathering and transportation facilities; • the cost of exploring for, developing, producing and transporting reserves; • weather conditions and other natural disasters, including winter storms, hurricanes, droughts, fires, earthquakes, flooding and tornadoes; • terrorist attacks and cybersecurity risks targeting oil and natural gas related facilities and infrastructure; • technological advances affecting fuel economy, energy supply and energy consumption; • the effect of energy conservation measures, alternative fuel requirements and the price and availability of alternative fuels; • laws, regulations and taxes in the U.S. and in foreign jurisdictions that impact the demand for oil, natural gas and NGLs; • shareholder activism or activities by non-governmental organizations to restrict the exploration and production of oil and natural gas so as to minimize emissions of carbon dioxide and methane GHGs or otherwise; • localized and global supply and demand fundamentals; and • expectations about future commodity prices.
In connection with these assessments, we perform a review of the subject properties that we believe to be generally consistent with industry practices. Our review will not reveal all existing or potential problems, nor will it permit us to become sufficiently familiar with the properties to fully assess their deficiencies and capabilities.
The accuracy of these assessments is inherently uncertain. In connection with these assessments, we perform a review of the subject properties that we believe to be generally consistent with industry practices. Our review will not reveal all existing or potential problems, nor will it permit us to become sufficiently familiar with the properties to fully assess their deficiencies and capabilities.
Future 33 Table of Contents collateral requirements will depend on arrangements with our counterparties, highly volatile commodity prices and interest rates. In addition, derivative arrangements could limit the benefit we would receive from increases in the prices for oil and natural gas, which could also have a material adverse effect on our financial condition.
Future collateral requirements will depend on arrangements with our counterparties, highly volatile commodity prices and interest rates. In addition, derivative arrangements could limit the benefit we would receive from increases in the prices for oil and natural gas, which could also have a material adverse effect on our financial condition.
We also have various multi-year agreements that relate to the sale, transportation or gathering of our oil and natural gas and may in the future enter into multi-year agreements for contracts for drilling rigs or other services.
We also have various multi-year agreements that relate to the sale, transportation or gathering of our oil, natural gas and NGLs and may in the future enter into multi-year agreements for contracts for other services.
Increases in interest rates could adversely affect our business. Our business and operating results can be harmed by factors such as the availability, terms of and cost of capital, increases in interest rates or a reduction in credit rating.
Increases in interest rates could adversely affect our business. Our business and operating results can be harmed by factors such as the availability, terms of and cost of capital, increases in interest rates, as a result of inflation or otherwise, or a reduction in credit rating.
Our current and future level of indebtedness could affect our operations in several ways, including the following: • require us to dedicate a substantial portion of our cash flow from operations to service our existing debt, thereby reducing the cash available to finance our operations and other business activities; • limit management’s discretion in operating our business and our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • increase our vulnerability to downturns and adverse developments in our business and the economy generally; • limit our ability to access the capital markets to raise capital on favorable terms or to obtain additional financing for working capital, capital expenditures, acquisitions, general corporate or other expenses or to refinance existing indebtedness; • place restrictions on our ability to obtain additional financing, make investments, lease equipment, sell assets and engage in business combinations; • make it more likely that a reduction in OpCo’s borrowing base following a periodic redetermination could require OpCo to repay a portion of its then-outstanding bank borrowings; • make us vulnerable to increases in interest rates as the indebtedness under OpCo’s revolving credit facility may vary with prevailing interest rates; • place us at a competitive disadvantage relative to our competitors with lower levels of indebtedness in relation to their overall size or less restrictive terms governing their indebtedness; and • make it more difficult for OpCo to satisfy its obligations under its debt and increase the risk that we may default on its debt obligations.
Our current and future level of indebtedness could affect our operations in several ways, including the following: • require us to dedicate a substantial portion of our cash flow from operations to service our existing debt, thereby reducing the cash available to finance our operations and other business activities; • limit management’s discretion in operating our business and our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • increase our vulnerability to downturns and adverse developments in our business and the economy generally; • limit our ability to access the capital markets to raise capital on favorable terms or to obtain additional financing for working capital, capital expenditures, acquisitions, general corporate or other expenses or to refinance existing indebtedness; • place restrictions on our ability to obtain additional financing, make investments, lease equipment, sell assets and engage in business combinations; • make it more likely that a reduction in OpCo’s borrowing base following a periodic redetermination could require OpCo to repay a portion of its then-outstanding bank borrowings; • make us vulnerable to increases in interest rates as the indebtedness under OpCo’s revolving credit facility may vary with prevailing interest rates; • place us at a competitive disadvantage relative to our competitors with lower levels of indebtedness in relation to their overall size or less restrictive terms governing their indebtedness; and • make it more difficult for OpCo to satisfy its obligations under its debt and increase the risk that we may default on its debt obligations. 34 Table of Contents We may not be able to generate sufficient cash to service all of OpCo’s indebtedness and may be forced to take other actions to satisfy OpCo’s obligations under applicable debt instruments, which may not be successful.
Therefore, our estimated PUDs may not be ultimately developed or produced. As of December 31, 2023, 24% of our total estimated proved reserves were classified as proved undeveloped. Development of these proved undeveloped reserves may take longer and require higher levels of capital expenditures than we currently anticipate.
Therefore, our estimated PUDs may not be ultimately developed or produced. As of December 31, 2024, 27% of our total estimated proved reserves were classified as proved undeveloped. Development of these proved undeveloped reserves may take longer and require higher levels of capital expenditures than we currently anticipate.
In addition, to the extent our suppliers source their products or raw materials from foreign markets, the cost of such equipment could be impacted if the United States imposes tariffs on imported goods from countries where these goods are produced.
In addition, to the extent our suppliers source their products or raw materials from foreign markets, the cost of such equipment could be impacted by tariffs imposed by the United States on imported goods from countries where these goods are produced.
In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters. Such ratings are used by some investors to inform 39 Table of Contents their investment and voting decisions.
In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters. Such ratings are used by some investors to inform their investment and voting decisions.
Certain governmental reviews are either underway or being proposed that focus on environmental aspects of hydraulic fracturing practices. The White House Council on Environmental Quality is coordinating an administration-wide review of hydraulic fracturing practices. Additionally, in December 2016, the EPA released its final report on the potential impacts of hydraulic fracturing on drinking water resources.
Certain governmental reviews are either underway or being proposed that focus on environmental aspects of hydraulic fracturing practices. The CEQ is coordinating an administration-wide review of hydraulic fracturing practices. Additionally, in December 2016, the EPA released its final report on the potential impacts of hydraulic fracturing on drinking water resources.
Another consequence of water disposal activities and seismic events may be lawsuits alleging that disposal well operations have caused damage to neighboring properties or otherwise violated state and federal rules regulating waste disposal. These developments could result in additional regulation and restrictions on our use of injection wells or commercial disposal wells to dispose of produced water.
Another potential consequence of produced water disposal activities and seismic events are lawsuits alleging that disposal well operations have caused damage to neighboring properties or otherwise violated state and federal rules regulating waste disposal. Such developments could result in additional regulation and restrictions on our use of injection wells or commercial disposal wells to dispose of produced water.
As of December 31, 2023, our aggregate long-term contractual obligation under these agreements was $120.4 million, which represents the gross minimum obligation but does not include amounts that may be due under certain contracts that contain variable pricing or volumetric components as the future obligations cannot be determined.
As of December 31, 2024, our aggregate long-term contractual obligation under these agreements was $396.1 million, which represents the gross minimum obligation but does not include amounts that may be due under certain contracts that contain variable pricing or volumetric components as the future obligations cannot be determined.
In addition, Congress has from time to time considered legislation to provide for federal regulation of hydraulic fracturing under the Safe Drinking Water Act (“SDWA”) and to require disclosure of the chemicals used in the hydraulic fracturing process. It is unclear how any additional federal regulation of hydraulic fracturing activities may affect our operations.
In addition, Congress has from time to time considered legislation to provide for federal regulation of hydraulic fracturing under the SDWA and to require disclosure of the chemicals used in the hydraulic fracturing process. It is unclear how any additional federal regulation of hydraulic fracturing activities may affect our operations.
Our estimated proved reserves as of December 31, 2023, and related standardized measure were calculated under rules of the SEC using twelve-month trailing average benchmark prices of $74.70 per barrel of oil (WTI Posted) and $2.64 per MMBtu (Henry Hub spot), which may be substantially higher or lower than the available spot prices in 2023.
Our estimated proved reserves as of December 31, 2024, and related standardized measure were calculated under rules of the SEC using twelve-month trailing average benchmark prices of $71.96 per barrel of oil (WTI Posted) and $2.13 per MMBtu (Henry Hub spot), which may be substantially higher or lower than the available spot prices in 2024.
Unfavorable ESG ratings and recent activism directed at shifting funding away from companies with energy-related assets could lead to increased negative investor sentiment toward us and to the diversion of investment to other industries, which could have a negative impact on our stock price and our or our access to and costs of capital.
While such ratings do not impact all investors’ investment or voting decisions, unfavorable ESG ratings and recent activism directed at shifting funding away from companies with energy-related assets could lead to increased negative investor sentiment toward us and to the diversion of investment to other industries, which could have a negative impact on our stock price and our or our access to and costs of capital.
Accordingly, our earnings may fluctuate significantly as a result of changes in fair value of our derivative instruments.
Accordingly, our earnings may fluctuate significantly as a result of changes in fair value of 33 Table of Contents our derivative instruments.
As of December 31, 2023, we had approximately $3.8 billion of total long-term debt and additional borrowing capacity of $2.0 billion under OpCo’s revolving credit facility (after giving effect to $5.7 million of outstanding letters of credit), all of which would be secured if borrowed.
As of December 31, 2024, we had approximately $4.2 billion of total long-term debt and additional borrowing capacity of $2.5 billion under OpCo’s revolving credit facility (after giving effect to $2.5 million of outstanding letters of credit), all of which would be secured if borrowed.
Further information about these agreements can be found at Note 14—Commitments and Contingencies under Part II, Item 8 of this Annual Report. Any failure by us to satisfy the minimum volume commitments in these agreements could adversely affect our results of operations and financial position.
Further information about these agreements can be found at Delivery Commitments under Part I, Items 1 and 2 and Note 14—Commitments and Contingencies 31 Table of Contents under Part II, Item 8 of this Annual Report. Any failure by us to satisfy the minimum volume commitments in these agreements could adversely affect our results of operations and financial position.
Recent and continuing disruptions and volatility in the global financial markets may lead to an increase in interest rates or a contraction in credit availability impacting our ability to finance operations. We require continued access to capital.
Recent and continuing disruptions and volatility in the global financial markets, due to the imposition of tariffs, geopolitical conflicts or otherwise, may lead to an increase in interest rates or a contraction in credit availability impacting our ability to finance operations. We require continued access to capital.
Please refer to Regulation of the Oil and Natural Gas Industry in Item 1 for further discussion on the topics referenced above and additional information on existing and proposed laws, regulations, treaties and international pledges intended to address GHGs and other climate change issues.
Please refer to Regulation of the Oil and Natural Gas Industry in Part I, Items 1 and 2 of this Annual Report for further discussion on the topics referenced above and additional information on existing and proposed laws, regulations, treaties and international pledges intended to address GHGs and other climate change issues.
While we cannot predict the ultimate impact of these changes or whether federal agencies will implement further reforms, any revisions to the federal leasing or permitting process that make it more difficult for us to pursue operations on federal lands may adversely impact our operations. In addition to administrative and policy risks, operations on federal lands also face litigation risks.
While we cannot predict the ultimate impact of these changes or whether federal agencies will implement further reforms, any revisions to the federal leasing or permitting process that make it more difficult for us to pursue operations on federal lands may adversely impact our operations.
For example, if the crude oil and natural gas prices used in our year-end reserve estimates were to increase or decrease by 10%, our proved reserve quantities at December 31, 2023 would increase by 14.4 MMBoe (1.6%) or decrease by 18.2 MMBoe (2.0%), respectively, and the pre-tax PV 10% of our proved reserves would increase or decrease by $1.9 billion (17%).
For example, if the crude oil and natural gas prices used in our year-end reserve estimates were to increase or decrease by 10%, our proved reserve quantities at December 31, 2024 would increase by 26.0 MMBoe (2.5%) or decrease by 27.1 MMBoe (2.6%), respectively, and the pre-tax PV 10% of our proved reserves would increase by $2.1 billion (19%) or decrease by $1.4 billion (13%).
The EPA report concluded that hydraulic fracturing activities have not led to widespread, systemic impacts on drinking water resources in the United States, although there are above-and-below ground mechanisms by which hydraulic fracturing activities have the potential to impact drinking water resources.
The EPA report concluded that hydraulic fracturing activities have not led to widespread, systemic impacts on drinking water resources in the United States, although there are above-and-below ground mechanisms by which hydraulic fracturing activities have the potential to impact drinking water resources. To date, EPA has taken no further action in response to the December 2016 report.
Increasing attention to climate change and natural capital, societal expectations on companies to address climate change, investor and societal expectations regarding voluntary ESG initiatives and disclosures, and consumer demand for alternative sources of energy may result in increased costs (including but not limited to increased costs associated with compliance, stakeholder engagement, contracting, and insurance), reduced demand for our products and our product and services, reduced profits, increased legislative and judicial scrutiny, investigations and litigation, and negative impacts on our stock price and access to capital markets.
Increasing attention from companies’ investors, customers, employees, regulatory bodies and other stakeholders, as well as natural capital and societal expectations, on companies to address climate change, investor and societal expectations regarding voluntary ESG initiatives and disclosures, and consumer demand for alternative sources of energy may result in increased costs (including but not limited to increased costs associated with compliance, stakeholder engagement, contracting, and insurance), reduced demand for our products and our product and services, reduced profits, increased legislative and judicial scrutiny, investigations and litigation, heightened scrutiny of our statements and initiatives, and negative impacts on our stock price and 39 Table of Contents access to capital markets.
Additionally, the increased competitiveness of alternative energy sources (such as electric vehicles, wind, solar, geothermal, tidal, fuel cells and biofuels) could reduce demand for oil and natural gas and, therefore, our revenues. Certain segments of the investor community have recently expressed negative sentiment towards investing in the oil and natural gas industry.
Additionally, the increased competitiveness of alternative energy sources (such as electric vehicles, wind, solar, geothermal, tidal, fuel cells and biofuels) could reduce demand for oil and natural gas and, therefore, our revenues.
Our Charter and Bylaws contain provisions that could have the effect of delaying or preventing changes in control or changes in our management without the consent of our board of directors.
Our Fifth Amended and Restated Certificate of Incorporation (as amended and restated, the“Charter”) and Second Amended and Restated Bylaws (as amended and restated, the “Bylaws”) contain provisions that could have the effect of delaying or preventing changes in control or changes in our management without the consent of our board of directors.
The impacts of these orders, pledges, agreements and any legislation or regulation promulgated to fulfill the United States’ commitments under the Paris Agreement, the Global Methane Pledge, or other international conventions cannot be predicted at this time.
The impacts of the United States’ withdrawal and other existing or future climate-related orders, pledges, agreements or any legislation or regulation promulgated in connection with the Paris Agreement, the Global Methane Pledge, or other international conventions cannot be predicted at this time.
Any failure by us to satisfy the minimum volume commitments could lead to contractual penalties that could adversely affect our results of operations and financial position. We have entered into certain multi-year supply and service agreements associated with energy and frac sand purchase agreements.
We have entered into multi-year agreements with some of our suppliers, service providers and the purchasers of our oil and natural gas, which contain minimum volume commitments. Any failure by us to satisfy the minimum volume commitments could lead to contractual penalties that could adversely affect our results of operations and financial position.
No assurance can be given that we will be able to identify additional suitable acquisition opportunities, negotiate acceptable terms, obtain financing for acquisitions on acceptable terms or successfully acquire identified targets.
We often are not entitled to contractual indemnification for environmental liabilities and acquire properties on an “as is” basis. Furthermore, no assurance can be given that we will be able to identify additional suitable acquisition opportunities, negotiate acceptable terms, obtain financing for acquisitions on acceptable terms or successfully acquire identified targets.
These completed, ongoing, or proposed studies could spur initiatives to further regulate hydraulic fracturing under the federal SDWA or other regulatory mechanisms. Additionally, from time to time, legislation has been introduced, but not enacted, in Congress to provide for federal regulation of hydraulic fracturing and to require disclosure of the chemicals used in the fracturing process.
Additionally, from time to time, legislation has been introduced, but not enacted, in Congress to provide for federal regulation of hydraulic fracturing and to require disclosure of the chemicals used in the fracturing process.
Our ability to effectively manage and operate our business depends significantly on information technology systems. The failure of these systems to operate effectively and support our operations, challenges in transitioning to upgraded or replacement systems, difficulty in integrating new or updated systems, or a breach in security of these systems could adversely impact the operations of our business.
Any failure of these systems to operate effectively and support our operations, challenge in transitioning to new upgraded or replacement systems, difficulty in integrating systems and updates across our growing business, or a breach of these systems could materially and adversely impact the operations of our business.
Any such shut-in or curtailment, or an inability to obtain favorable terms for delivery of the oil, natural gas and NGLs produced from our fields, would materially and adversely affect our financial condition and results of operations. 31 Table of Contents We have entered into multi-year agreements with some of our suppliers, service providers and the purchasers of our oil and natural gas, which contain minimum volume commitments.
Any such shut-in or curtailment, or an inability to obtain favorable terms for delivery of the oil, natural gas and NGLs produced from our fields, would materially and adversely affect our financial condition and results of operations.
We may be unable to make attractive acquisitions or successfully integrate acquired businesses, and any inability to do so may disrupt our business and hinder our ability to grow. In the future we may make acquisitions of assets or businesses that complement or expand our current business.
We may be unable to make attractive acquisitions or successfully integrate acquired businesses, and any inability to do so may disrupt our business and hinder our ability to grow. We intend to pursue a strategy focused on both reinvestment and future acquisitions.
Compliance with, and monitoring of, applicable laws, regulations and rules may be difficult, time consuming and costly. Those laws, regulations and rules and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, investments and results of operations.
Those laws, regulations and rules and their interpretation and application may also change from time to time, including as a result of new policies and priorities by the Trump administration, and those changes could have a material adverse effect on our business, investments and results of operations.
In addition, in response to findings that emissions of carbon dioxide, methane and other GHGs present an endangerment to public health and the environment, the EPA has adopted regulations pursuant to the CAA that, among other things, require Prevention of Significant Deterioration preconstruction and Title V operating permits for certain large stationary sources.
In response to findings that emissions of carbon dioxide, methane and other GHGs present an endangerment to public health and the environment, the EPA has adopted regulations pursuant to the CAA that, among other things, require PSD preconstruction and Title V operating permits for GHG emissions from certain large stationary sources, mandate monitoring and annual reporting of GHG emissions, and impose new standards for reducing methane emissions from oil and gas operations by limiting venting and flaring and implementing leak detection and repair programs.
Risks Related to Our Derivative Transactions, Debt and Access to Capital Our derivative activities could result in financial losses or could reduce our earnings. We may enter into derivative instrument contracts for a portion of our oil and natural gas production from time to time.
We may enter into derivative instrument contracts for a portion of our oil and natural gas production from time to time.
There may be future sales or other dilution of our equity, which may adversely affect the market price of our common stock. We are not restricted from issuing additional shares of common stock, including securities that are convertible into or exchangeable for, or that represent a right to receive, common stock.
We are not restricted from issuing additional shares of common stock, including securities that are convertible into or exchangeable for, or that represent a right to receive, common stock. Any issuance of additional shares of our common stock or convertible securities will dilute the ownership interest of our common stockholders.
From time to time, legislation has been proposed that, if enacted into law, would make significant changes to U.S. federal and state income tax laws affecting the oil and natural gas industry, including (i) eliminating the immediate deduction for intangible drilling and development costs, (ii) the repeal of the percentage depletion allowance for oil and natural gas properties and (iii) an extension of the amortization period for certain geological and geophysical expenditures.
From time to time, federal and state level legislation has been proposed that, if enacted into law, would make significant changes to tax laws, including to certain key U.S. federal and state income tax laws affecting the oil and natural gas industry.
At the state level, several states have adopted or are considering legal requirements that could impose more stringent permitting, disclosure and well construction requirements on hydraulic fracturing activities. For example, in May 2013, the Railroad Commission of Texas issued a “well integrity rule,” which updates the requirements for drilling, putting pipe down and cementing wells.
At the state level, several states have adopted or are considering legal requirements that could impose more stringent permitting, disclosure and well construction requirements on hydraulic fracturing activities.
In September 2022 at the closing of the Colgate Merger, we announced an upsized $500 million stock repurchase program, but this repurchase program may be suspended from ti me to time, modified, extended or discontinued by our board of directors at any time.
In 2024, our board of directors authorized a new stock repurchase program of $1 billion of our outstanding common stock, which replaced our previous $500 million stock repurchase program. However, this stock repurchase program may be suspended from ti me to time, modified, extended or discontinued by our board of directors at any time.
In addition, a failure to comply with applicable laws, regulations and rules, as interpreted and applied, could have a material adverse effect on our business and results of operations. 40 Table of Contents Risks Related to Our Common Stock and Capital Structure A negative shift in investor sentiment towards the oil and gas industry could adversely affect our ability to raise equity and debt capital.
In addition, a failure to comply with applicable laws, regulations and rules, as interpreted and applied, could have a material adverse effect on our business and results of operations.
Any increase in the borrowing base requires the consent of the lenders holding 100% of the commitments. In connection with amending the Credit Agreement in connection with closing the Earthstone Merger, the elected commitments were increased to $2.0 billion.
Any increase in the borrowing base requires the consent of the lenders holding 100% of the commitments. The elected commitments are currently $2.5 billion.
The SEC issued a proposed rule in March 2022 that would mandate disclosure of climate-related data, risks, and opportunities, including financial impacts, physical and transition risks, related governance and strategy, and GHG emissions, for certain public companies.
Separately, the SEC published a final rule that would mandate disclosure of climate-related data, risks, and opportunities, including financial impacts, physical and transition risks, related governance and strategy, and GHG emissions by certain registrants, though the implementation of this rule is currently paused pending the outcome of legal challenges against the rule.
In addition, debt agreements impose certain limitations on our ability to enter into mergers or combination transactions and our ability to incur certain indebtedness, which could indirectly limit our ability to engage in acquisitions of businesses. A security interruption or failure with respect to our information technology systems could harm our ability to effectively operate our business.
In addition, debt agreements impose certain limitations on our ability to enter into mergers or combination transactions and our ability to incur certain indebtedness, which could indirectly limit our ability to engage in certain acquisition activities. The success of any completed acquisition will depend on our ability to integrate effectively the acquired business, asset or property into our existing operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeGovernance Our cybersecurity risk management is primarily the responsibility of our VP of Information Technology and information technology teams.
Biggest changeGovernance Our cybersecurity risk management is primarily the responsibility of our Vice President and Chief Information Officer and the information technology teams he leads. Our Vice President and Chief Information Officer has 25 years of industry experience in the field of information systems, including information security and risk management.
In order to monitor our information technology systems and data and to identify potential threats to such, we maintain cybersecurity risk assessment and management programs.
In order to monitor our information technology systems and data and to identify, assess and manage potential threats to such, we maintain cybersecurity risk assessment and management programs.
As part of our cybersecurity risk management process, we conduct simulated cybersecurity incidents to ensure that we are prepared to respond to such incidents and to highlight any areas for potential improvement in our cyber incident preparedness. We have a cybersecurity incident management policy and response plan in place.
Our cybersecurity risk management processes are integrated into our broader risk management program. As part of our cybersecurity risk management process, we conduct simulated cybersecurity incidents to ensure that we are prepared to respond to such incidents and to highlight any areas for potential improvement in our cyber incident preparedness.
Cybersecurity breaches are evaluated by our information technology teams, which includes our VP of Information Technology. If an incident is deemed to be a breach, it is communicated to our legal department and management for evaluation, including whether the breach requires communication to the Board of Directors or investors through a relevant public filing.
If an incident is deemed to be a breach, it is communicated to our legal department and management for evaluation, including whether the breach requires communication to the Audit Committee or the Board of Directors or investors through a relevant public filing.
Such programs include, but are not limited to, annual security penetration tests performed both externally and internally, bi-annual security assessments against cybersecurity frameworks, continuous vulnerability scanning, incident response processes, monthly and annual security awareness and simulated phishing trainings for our employees, and various system alert monitoring and screenings.
As part of such programs, we endeavor to conduct annual security penetration tests both externally and internally, bi-annual security assessments against cybersecurity frameworks, continuous vulnerability scanning and monthly and annual security awareness and simulated phishing trainings for our employees. We have also implemented incident response processes and various system alert monitoring and screenings.
Our VP of Information Technology has over 25 years of industry experience in the field of information systems and oversees our risk assessment programs, remediation of known risks, processes for the regular monitoring of our information systems and our employee cybersecurity training programs.
He oversees our risk assessment programs, remediation of known risks, processes for the regular monitoring of our information systems and our employee cybersecurity training programs.
Removed
Our Board of Directors also oversees cybersecurity risk through our Audit Committee who reviews periodic reporting and updates regarding our risk management associated with cybersecurity. We have not experienced any cybersecurity incidents that have had a material impact on our business strategy, results of operations or financial condition.
Added
We have a cybersecurity incident management policy and response plan in place. Cybersecurity breaches are evaluated by our information technology teams, which includes our Vice President and Chief Information Officer.
Added
Our Board of Directors also oversees cybersecurity risks through the Audit Committee, which receives and assesses periodic reports and updates regarding our cybersecurity risk management from management and our Vice President and Chief Information Officer and then relays them to the Board of Directors as needed.
Added
Impact of Risks from Cybersecurity Threats As of the date of this report, we are not aware of any previous cybersecurity incidents that have materially affected or are reasonably likely to materially affect the Company, including our business strategy, results of operations and financial condition.
Added
We acknowledge that cybersecurity threats are continually evolving, and the possibility of future cybersecurity incidents, material or otherwise, remains. Despite the implementation of our cybersecurity processes, our security measures cannot guarantee that a significant cybersecurity incident will not occur. While we devote resources to our security measures designed to protect our systems and information, no security measure is infallible.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeWe are not aware of any material environmental claims existing as of December 31, 2023 which have not been provided for or would otherwise have a material impact on our financial statements; however, there can be no assurance that current regulatory requirements will not change or that unknown potential past non-compliance with environmental laws or other environmental liabilities will not be discovered on our properties.
Biggest changeWe are not aware of any other material environmental claims existing as of December 31, 2024 over our threshold which have not been provided for or would otherwise have a material impact on our financial statements; however, there can be no assurance that current regulatory requirements will not change or that unknown potential past non-compliance with environmental laws or other environmental liabilities will not be discovered on our properties.
ITEM 4. MINE SAFETY DISCLOSURE Not applicable. 44 Table of Contents PART II
ITEM 4. MINE SAFETY DISCLOSURE Not applicable. 45 Table of Contents PART II
Added
Item 103 of Regulation S-K promulgated under the Exchange Act requires disclosure regarding certain proceedings arising under federal, state or local environmental laws when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that the Company reasonably believes will exceed a specified threshold.
Added
Pursuant to such item, we have elected to use a $1 million threshold for purposes of determining whether disclosure of any such proceedings is required.
Added
We believe proceedings under this threshold are not material to our business and financial condition. 44 Table of Contents In connection with the Earthstone Merger, we assumed a liability related to potential environmental defects that were identified through diligence reviews associated with Earthstone’s previous acquisition of Novo Oil & Gas Legacy Holdings, LLC, Novo Intermediate, LLC and Novo Oil & Gas Holdings, LLC (collectively “Novo”).
Added
We have received a Tolling Agreement for Novo’s alleged violations but have not yet received a Notice of Violation (“NOV”).
Added
At this time, these violations are expected to result in a penalty that will be finalized upon issuance of the NOV; while the Company cannot predict the ultimate outcome of this matter, the potential for penalties or settlement costs could exceed $1 million.
Added
The Company does not believe that this matter will have a material adverse effect on its business, financial position, results of operations, or cash flows.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

98 edited+39 added−54 removed45 unchanged
Biggest changeThe following table provides the components of our net revenues and net production (net of all royalties, overriding royalties and production due to others) for the periods indicated, as well as each period’s average prices and average daily production volumes: Year Ended December 31, Increase/(Decrease) 2023 2022 $ % Net revenues (in thousands): Oil sales $ 2,696,777 $ 1,622,035 $ 1,074,742 66 % Natural gas sales (1) 142,077 276,957 (134,880) (49) % NGL sales (2) 282,039 232,273 49,766 21 % Oil and gas sales $ 3,120,893 $ 2,131,265 $ 989,628 46 % Average sales prices: Oil (per Bbl) $ 75.84 $ 88.95 $ (13.11) (15) % Effect of derivative settlements on average price (per Bbl) 1.81 (4.85) 6.66 137 % Oil including the effects of hedging (per Bbl) $ 77.65 $ 84.10 $ (6.45) (8) % Average NYMEX WTI price for oil (per Bbl) $ 77.62 $ 94.24 $ (16.62) (18) % Oil differential from NYMEX (1.78) (5.29) 3.51 66 % Natural gas price excluding the effects of GP&T (per Mcf) (1) $ 1.60 $ 4.86 $ (3.26) (67) % Effect of derivative settlements on average price (per Mcf) 0.29 (0.53) 0.82 155 % Natural gas including the effects of hedging (per Mcf) $ 1.89 $ 4.33 $ (2.44) (56) % Average NYMEX Henry Hub price for natural gas (per MMBtu) $ 2.53 $ 6.38 $ (3.85) (60) % Natural gas differential from NYMEX (0.93) (1.52) 0.59 39 % NGL price excluding the effects of GP&T (per Bbl) (2) $ 22.83 $ 35.97 $ (13.14) (37) % Net production: Oil (MBbls) 35,560 18,235 17,325 95 % Natural gas (MMcf) 119,182 59,692 59,490 100 % NGL (MBbls) 15,569 6,750 8,819 131 % Total (MBoe) (3) 70,992 34,934 36,058 103 % Average daily net production: Oil (Bbls/d) 97,424 49,958 47,466 95 % Natural gas (Mcf/d) 326,525 163,539 162,986 100 % NGL (Bbls/d) 42,654 18,494 24,160 131 % Total (Boe/d) (3) 194,499 95,708 98,791 103 % (1) Natural gas sales for the year ended December 31, 2023 include $48.9 million of gathering, processing and transportation costs (“GP&T”) that are reflected as a reduction to natural gas sales and $13.1 million for the year ended December 31, 2022.
Biggest changeThe following table provides the components of our net revenues and net production (net of all royalties, overriding royalties and production due to others) for the periods indicated, as well as each period’s average prices and average daily production volumes: Year Ended December 31, Increase/(Decrease) 2024 2023 $ % Net revenues (in thousands): Oil sales $ 4,362,965 $ 2,696,777 $ 1,666,188 62 % Natural gas sales (1) 240 142,077 (141,837) (100) % NGL sales (2) 637,529 282,039 355,490 126 % Oil and gas sales $ 5,000,734 $ 3,120,893 $ 1,879,841 60 % Average sales prices: Oil (per Bbl) $ 74.87 $ 75.84 $ (0.97) (1) % Effect of derivative settlements on average price (per Bbl) 0.03 1.81 (1.78) (99) % Oil including the effects of hedging (per Bbl) $ 74.90 $ 77.65 $ (2.75) (4) % Average NYMEX WTI price for oil (per Bbl) $ 75.72 $ 77.62 $ (1.90) (2) % Oil differential from NYMEX (0.85) (1.78) 0.93 52 % Natural gas price excluding the effects of GP&T (per Mcf) (1) $ 0.47 $ 1.60 $ (1.13) (71) % Effect of derivative settlements on average price (per Mcf) 0.34 0.29 0.05 17 % Natural gas including the effects of hedging (per Mcf) $ 0.81 $ 1.89 $ (1.08) (57) % Average NYMEX Henry Hub price for natural gas (per MMBtu) $ 2.24 $ 2.53 $ (0.29) (11) % Natural gas differential from NYMEX (1.77) (0.93) (0.84) (90) % NGL price excluding the effects of GP&T (per Bbl) (2) $ 23.75 $ 22.83 $ 0.92 4 % Net production: Oil (MBbls) 58,276 35,560 22,716 64 % Natural gas (MMcf) 220,900 119,182 101,718 85 % NGL (MBbls) 30,636 15,569 15,067 97 % Total (MBoe) (3) 125,730 70,992 54,738 77 % Average daily net production: Oil (Bbls/d) 159,225 97,424 61,801 63 % Natural gas (Mcf/d) 603,551 326,525 277,026 85 % NGL (Bbls/d) 83,706 42,654 41,052 96 % Total (Boe/d) (3) 343,523 194,499 149,024 77 % (1) Natural gas sales for the year ended December 31, 2024 include $104.1 million of GP&T costs that are reflected as a reduction to natural gas sales and $48.9 million for the year ended December 31, 2023.
On September 1, 2022, in connection with the Colgate Merger, OpCo entered into supplemental indentures whereby all of Colgate’s outstanding senior notes were assumed at the Colgate Merger closing date and became the senior unsecured debt of OpCo.
On September 1, 2022, in connection with the Colgate Merger, OpCo entered into supplemental indentures whereby all of Colgate’s outstanding senior notes were assumed at the Colgate Merger closing date and became the senior unsecured debt obligations of OpCo.
The Capped Call Transactions have an initial strike price of $6.28 per share of Class A Common Stock and an initial capped price of $8.4525 per share of Class A Common Stock (each subject to certain customary adjustments per the agreements).
The Capped Call Transactions have an initial strike price of $6.28 per share of Class A Common Stock and an initial capped price of $8.4525 per share of Class A Common Stock (each subject to certain customary adjustments).
Please refer to Note 16—Leases under Part II, Item 8 of this Annual Report for details on our operating lease commitments. (2) Financing leases consist of our ground lease related to the office building we purchased in Midland, Texas. The lease term is ninety-nine years and as a result, the commitments above have been shown at their current present value.
Please refer to Note 16—Leases under Part II, Item 8 of this Annual Report for details on our operating lease commitments. (2) Finance leases consist of our ground lease related to the office building we purchased in Midland, Texas. The lease term is ninety-nine years and as a result, the commitments above have been shown at their current present value.
The 2032 Senior Notes are treated as a single series of securities and will vote together as a single class, and have substantially identical terms, other than the issue date and issue price.
The 2032 Senior Notes are treated as a single series of securities and vote together as a single class, and have substantially identical terms, other than the issue date and issue price.
For further information on our Convertible Senior Notes and Senior Unsecured Notes, refer to Note 5—Long-Term Debt under Item 8 of this Annual Report. 57 Table of Contents Obligations and Commitments We routinely enter into or extend operating and transportation agreements, office and equipment leases, drilling rig contracts, among others, in the ordinary course of business.
For further information on our Convertible Senior Notes and Senior Unsecured Notes, refer to Note 5—Long-Term Debt under Item 8 of this Annual Report. 58 Table of Contents Obligations and Commitments We routinely enter into or extend operating and transportation agreements, office and equipment leases, drilling rig contracts, among others, in the ordinary course of business.
The Credit Agreement also requires OpCo to maintain compliance with the following financial ratios: (i) a current ratio, which is the ratio of OpCo’s consolidated current assets (including an add back of unused commitments under the revolving credit facility and excluding non-cash derivative assets and certain restricted cash) to its consolidated current liabilities (excluding the current portion of long-term debt under the Credit Agreement and non-cash derivative liabilities), of not less than 1.0 to 1.0; and (ii) a leverage ratio, as defined within the Credit Agreement as the ratio of total funded debt to consolidated EBITDAX (as defined within the Credit Agreement) for the most recent quarter annualized, of not greater than 3.5 to 1.0.
The Credit Agreement also requires OpCo to maintain compliance with the following financial ratios: (i) a current ratio, which is the ratio of OpCo’s consolidated current assets (including an add back of unused commitments under the revolving credit facility and excluding non-cash derivative assets and certain restricted cash) to its consolidated current liabilities (excluding the current portion of long-term debt under the Credit Agreement and non-cash derivative liabilities), of not less than 1.0 to 1.0; and (ii) a leverage ratio, which is the ratio of total funded debt to consolidated EBITDAX (with such terms defined within the Credit Agreement) for the most recent quarter annualized, of not greater than 3.5 to 1.0.
The senior notes assumed by OpCo included $550 million of 8.00% senior notes due 2027 (the “2027 8.00% Senior Notes”) and $500 million of 9.875% senior notes due 2031 (the “2031 Senior Notes”).
The senior notes assumed by OpCo included $550 million of 8.00% senior notes due 2027 (the “2027 8.00% Senior Notes”) and $500 million of 9.875% senior notes due 2031.
(5) Asset retirement obligations reflect the present value of the estimated future costs associated with the plugging and abandonment of oil and gas wells and the related land restoration in accordance with applicable laws and regulations. (6) Long-term debt consists of the principal amounts of our senior notes due as of December 31, 2023.
(5) Asset retirement obligations reflect the present value of the estimated future costs associated with the plugging and abandonment of oil and gas wells and the related land restoration in accordance with applicable laws and regulations. (6) Long-term debt consists of the principal amounts of our senior notes due as of December 31, 2024.
The following discussion and analysis contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control. Our actual results could differ materially from those discussed in these forward-looking statements.
The following discussion and analysis contain forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control. Our actual results could differ materially from those discussed in these forward-looking statements.
ITEM 6. [Reserved] 46 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements and related notes in “Item 8. Financial Statements and Supplementary Data” in this Annual Report.
ITEM 6. [Reserved] 47 Table of Contents ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the accompanying consolidated financial statements and related notes in “Item 8. Financial Statements and Supplementary Data” in this Annual Report.
In connection with the Convertible Senior Notes issuance, OpCo entered into privately negotiated capped call spread transactions (the “Capped Call Transactions”), that are expected to reduce potential dilution to our Class A Common Stock upon a conversion and/or offset any cash payments OpCo is required to make in excess of the principal amount of the Convertible Senior 56 Table of Contents Notes, subject to a cap.
In connection with the Convertible Senior Notes issuance, OpCo entered into privately negotiated capped call spread transactions (the “Capped Call Transactions”), that are expected to reduce potential dilution to our Class A Common Stock upon a conversion and/or offset any cash payments OpCo is required to make in excess of the principal amount of the Convertible Senior Notes, subject to a cap.
We have outlined certain of our accounting policies below which require the application of significant judgment by our management. 58 Table of Contents Oil and Natural Gas Reserve Quantities We use the successful efforts method of accounting for our oil and gas producing activities.
We have outlined certain of our accounting policies below which require the application of significant judgment by our management. 59 Table of Contents Oil and Natural Gas Reserve Quantities We use the successful efforts method of accounting for our oil and gas producing activities.
On December 13, 2023, OpCo issued additional notes under the indenture dated September 12, 2023 that totaled an additional $500 million of 7.00% senior notes (together with the Existing Notes, the “2032 Senior Notes”), which resulted in aggregate net proceeds of $982.5 million, after deducting the issuance discount of $2.5 million and debt issuance costs of $15.0 million.
On December 13, 2023, OpCo issued additional notes under the indenture dated September 12, 2023 that totaled an additional $500 million of 7.00% senior notes (together with the Original 2032 Notes, the “2032 Senior Notes”), which resulted in aggregate net proceeds of $982.5 million, after deducting the issuance discount of $2.5 million and debt issuance costs of $15.0 million.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2022 Annual Report on Form 10-K filed with the SEC for a discussion of the results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2023 Annual Report on Form 10-K filed with the SEC for a discussion of the results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022.
The following table summarizes our obligations and commitments as of December 31, 2023 to make future payments under long-term contracts for the time periods specified below.
The following table summarizes our obligations and commitments as of December 31, 2024 to make future payments under long-term contracts for the time periods specified below.
The obligations reported above represent our remaining minimum financial commitments pursuant to the terms of these contracts as of December 31, 2023, however actual expenditures may exceed the minimum commitments presented above.
The obligations reported above represent our remaining minimum financial commitments pursuant to the terms of these contracts as of December 31, 2024, however actual expenditures may exceed the minimum commitments presented above.
The Senior Unsecured Notes are fully and unconditionally guaranteed on a senior unsecured basis by the Company and each of OpCo’s current subsidiaries that guarantee OpCo’s Credit Agreement.
The Senior Unsecured Notes are fully and unconditionally guaranteed on a senior unsecured basis by the Company and each of OpCo’s current subsidiaries that guarantee borrowings under OpCo’s Credit Agreement.
The “cumulative total return” assumes that $100 was invested, including reinvestment of dividends, if any, in our Class A Common Stock, the S&P 500, and XOP on December 31, 2018 and tracks it through December 31, 2023. The results shown in the graph below are not necessarily indicative of future stock price performance.
The “cumulative total return” assumes that $100 was invested, including reinvestment of dividends, if any, in our Class A Common Stock, the S&P 500, and XOP on December 31, 2019, and tracks it through December 31, 2024. The results shown in the graph below are not necessarily indicative of future stock price performance.
Please refer to Note 16—Leases under Part II, Item 8 of this Annual Report for details on our financing lease commitments.
Please refer to Note 16—Leases under Part II, Item 8 of this Annual Report for details on our finance lease commitments.
The higher increase in gas and NGL volumes between periods as compare to the 95% increase in oil volumes was due to the producing wells acquired in the Earthstone Merger, which have a higher gas-to-oil ratio than our existing production base, and this has resulted in more volumes of gas and NGLs being added to our total production stream since the closing of the Earthstone Merger on November 1, 2023.
The higher increase in gas and NGL volumes between periods as compared to the 64% increase in oil volumes was mostly due to the producing wells acquired in the Earthstone Merger, which have a higher gas-to-oil ratio than our existing production base, and this has resulted in more volumes of gas and NGLs being added to our total production stream since the closing of the Earthstone Merger on November 1, 2023.
OpCo was in compliance with these covenants as of December 31, 2023 and through the filing of this Annual Report.
OpCo was in compliance with these covenants as of December 31, 2024 and through the filing of this Annual Report.
We recorded the acquired senior notes at their fair value as of the Colgate Merger closing, which were equal to 100% of par for the 2026 7.75% Senior Notes and 93.68% of par (a $49.3 million debt discount) for the 2029 Senior Notes.
We recorded the acquired senior notes at their fair value as of the Colgate Merger closing, which were equal to 100% of par for the 2026 7.75% Senior Notes and 92.96% of par (a $49.3 million debt discount) for the 2029 Senior Notes.
Accordingly, we can choose to defer or accelerate a portion of our planned capital expenditures depending on a variety of factors, including but not limited to: prevailing and anticipated prices for oil and natural gas; oil storage or transportation constraints; the success of our drilling activities; the availability of necessary equipment, infrastructure and capital; the receipt and timing of required regulatory permits and approvals; seasonal conditions; property or land acquisition costs; and the level of participation by other working interest owners.
Accordingly, we can choose to defer or accelerate a portion of our planned capital expenditures depending on a variety of factors, including but not limited to: (i) prevailing and anticipated prices for oil and natural gas; (ii) oil storage or transportation constraints; (iii) the success of our drilling activities; (iv) the availability of necessary equipment, infrastructure and capital; (v) the receipt and timing of required regulatory permits and approvals; (vi) seasonal conditions; (vii) property or land acquisition costs; and (viii) the level of participation by other working interest owners.
For the year ended December 31, 2023, we generated $2.2 billion of cash from operating activities, an increase of $841.8 million from 2022.
Cash Flows from 2023 Compared to 2022. For the year ended December 31, 2023, we generated $2.2 billion of cash from operating activities, an increase of $841.8 million from 2022.
To date, our primary uses of capital have been for drilling and development capital expenditures and the acquisition of oil and natural gas properties. We continually evaluate our capital needs and compare them to our capital resources. Our total capital expenditures incurred for the year ended December 31, 2023 were $1.5 billion.
To date, our primary uses of capital have been for drilling and development capital expenditures and the acquisition of oil and natural gas properties. We continually evaluate our capital needs and compare them to our capital resources. Our total capital expenditures incurred for development during the year ended December 31, 2024 were $2.1 billion.
For the year ended December 31, 2023, cash flows from operating activities, cash on hand, $1.0 billion in proceeds from the issuance of our 2032 Senior Notes and sales proceeds from divestitures together with contingent consideration of $175.4 million from the sale of oil and natural gas properties were used to: fund $1.5 billion of drilling and development cash expenditures; repay $830.0 million of borrowings outstanding from Earthstone’s credit facility that were assumed at closing of the Earthstone Merger; repay net borrowings of $385.0 million under our Credit Agreement; pay $236.0 million in dividends and cash distributions to holders of our Common Units; fund acquisitions of oil and gas properties of $234.3 million; and repurchase $162.4 million of our common stock. 55 Table of Contents Cash Flows from 2022 Compared to 2021.
For the year ended December 31, 2023, cash flows from operating activities, cash on hand, $1.0 billion in proceeds from the issuance of our senior notes due 2032 and sales proceeds from divestitures together with contingent consideration of $175.4 million from the sale of oil and natural gas properties were used to (i) fund $1.5 billion of drilling and development cash expenditures; (ii) repay $830.0 million of borrowings outstanding from Earthstone’s credit facility that were assumed at closing of the Earthstone Merger; (iii) repay net borrowings of $385.0 million under our Credit Agreement; (iv) pay $236.0 million in 56 Table of Contents dividends and cash distributions to holders of our Common Units; (v) fund acquisitions of oil and gas properties of $234.3 million; and (vi) repurchase $162.4 million of our common stock.
Factors that could cause or contribute to such differences include, but are not limited to, future market prices for oil, natural gas and NGLs, future production volumes, estimates of proved reserves, capital expenditures, economic and competitive conditions, inflation, regulatory changes, the implementation and actual result of the Earthstone Merger (defined below) and other uncertainties, as well as those factors discussed in “Cautionary Statement Concerning Forward-Looking Statements” and “Item 1A.
Factors that could cause or contribute to such differences include, but are not limited to, future market prices for oil, natural gas and NGLs, future production volumes, estimates of proved reserves, capital expenditures, economic and competitive conditions, inflation, regulatory changes, and other uncertainties, as well as those factors discussed in “Cautionary Statement Concerning Forward-Looking Statements” and “Item 1A.
We expect our total drilling, completion and facilities cash capital expenditures budget for 2024 to be between $1.9 billion to $2.1 billion.
We expect our total drilling, completion and facilities capital expenditures budget for 2025 to be between $1.9 billion to $2.1 billion.
Natural gas average sales price, however, excludes $0.41 per Mcf of such GP&T charges for the year ended December 31, 2023 and $0.22 for the year ended December 31, 2022.
Natural gas average sales price, however, excludes $0.47 per Mcf of such GP&T charges for the year ended December 31, 2024 and $0.41 for the year ended December 31, 2023.
The 15% decrease in the average realized oil price was mainly the result of 18% lower NYMEX crude prices between periods, which was slightly offset by improved oil differentials.
The 1% decrease in the average realized oil price was mainly the result of 2% lower NYMEX crude prices between periods, which was slightly offset by improved oil differentials.
As of December 31, 2023, we had no borrowings outstanding and $2.0 billion in available borrowing capacity, which was net of $5.7 million in letters of credit outstanding.
As of December 31, 2024, we had no borrowings outstanding and $2.5 billion in available borrowing capacity, which was net of $2.5 million in letters of credit outstanding.
On September 12, 2023, OpCo issued at par $500 million of 7.00% senior notes due 2032 (the “Existing Notes”) in a 144A private placement.
On September 12, 2023, OpCo issued $500 million of 7.00% senior notes due 2032 (the “Original 2032 Notes”) in a 144A private placement.
The following table highlights the quarterly average price trends for NYMEX WTI spot prices for crude oil and NYMEX Henry Hub index price for natural gas since the first quarter of 2021: 2021 2022 2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Crude Oil (per Bbl) $ 57.84 $ 66.06 $ 70.56 $ 77.09 $ 94.40 $ 108.34 $ 91.56 $ 82.64 $ 76.13 $ 73.78 $ 82.26 $ 78.32 Natural Gas (per MMBtu) $ 3.44 $ 2.88 $ 4.28 $ 4.74 $ 4.60 $ 7.39 $ 7.96 $ 5.55 $ 2.67 $ 2.12 $ 2.58 $ 2.74 Lower commodity prices and lower futures curves for oil and gas prices can result in impairments of our proved oil and natural gas properties or undeveloped acreage and may materially and adversely affect our operating cash flows, liquidity, 47 Table of Contents financial condition, results of operations, future business and operations, and/or our ability to finance planned capital expenditures, which could in turn impact our ability to comply with covenants under our Credit Agreement and senior notes.
The following table highlights the quarterly average price trends for NYMEX WTI spot prices for crude oil and NYMEX Henry Hub index price for natural gas since the first quarter of 2022: 2022 2023 2024 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Crude Oil (per Bbl) $ 94.40 $ 108.34 $ 91.56 $ 82.64 $ 76.13 $ 73.78 $ 82.26 $ 78.32 $ 76.96 $ 80.55 $ 75.16 $ 70.28 Natural Gas (per MMBtu) $ 4.60 $ 7.39 $ 7.96 $ 5.55 $ 2.67 $ 2.12 $ 2.58 $ 2.74 $ 2.41 $ 2.04 $ 2.08 $ 2.42 Lower commodity prices and lower futures curves for oil and gas prices can result in impairments of our proved oil and natural gas properties or undeveloped acreage and may materially and adversely affect our operating cash flows, liquidity, financial condition, results of operations, future business and operations, and/or our ability to finance planned capital 48 Table of Contents expenditures, which could in turn impact our ability to comply with covenants under our Credit Agreement and senior notes.
(3) Calculated by converting natural gas to oil equivalent barrels at a ratio of six Mcf of natural gas to one Boe. 50 Table of Contents Oil, Natural Gas and NGL Sales Revenues . Total net revenues for the year ended December 31, 2023 increased by $1.0 billion, or 46%, compared to the year ended December 31, 2022.
(3) Calculated by converting natural gas to oil equivalent barrels at a ratio of six Mcf of natural gas to one Boe. 51 Table of Contents Oil, Natural Gas and NGL Sales Revenues . Total net revenues for the year ended December 31, 2024 increased by $1.9 billion, or 60%, compared to the year ended December 31, 2023.
Credit Agreement OpCo, our consolidated subsidiary, has a five-year secured revolving Credit Agreement with a syndicate of banks maturing in February 2027 that, as of December 31, 2023, had a borrowing base of $4.0 billion and elected commitments of $2.0 billion.
Credit Agreement OpCo, our consolidated subsidiary, has a secured revolving Credit Agreement with a syndicate of banks maturing in February 2028 that, as of December 31, 2024, had a borrowing base of $4.0 billion and elected commitments of $2.5 billion.
Revenues are a function of oil, natural gas and NGL volumes sold and average commodity prices realized. Net production volumes for oil, natural gas, and NGLs increased 95%, 100% and 131%, respectively, between periods.
Revenues are a function of oil, natural gas and NGL volumes sold and average commodity prices realized. Net production volumes for oil, natural gas, and NGLs increased 64%, 85% and 97%, respectively, between periods.
As of February 23, 2024, there were 240 registered holders of record of our Class A Common Stock and 55 registered holders of record of our Class C Common Stock. Stock Performance Graph The following performance graph and related information shall deemed to be furnished, but not filed with the SEC.
As of February 21, 2025, there were 225 registered holders of record of our Class A Common Stock and 48 registered holders of record of our Class C Common Stock. Stock Performance Graph The following performance graph and related information shall deemed to be furnished, but not filed with the SEC.
NGL average sales price, however, excludes $4.71 per Bbl of such GP&T charges for the year ended December 31, 2023 and $1.56 per Bbl for the year ended December 31, 2022.
NGL average sales price, however, excludes $2.94 per Bbl of such GP&T charges for the year ended December 31, 2024 and $4.71 per Bbl for the year ended December 31, 2023.
Our DD&A rate can fluctuate as a result of finding and development costs incurred, acquisitions, impairments, as well as changes in proved developed and proved undeveloped reserves. Our DD&A rate per Boe was $14.19 for the year ended December 31, 2023 compared to $12.73 in 2022.
DD&A per Boe was $14.13 for the year ended December 31, 2024 compared to $14.19 for the same period in 2023. Our DD&A rate can fluctuate as a result of finding and development costs incurred, acquisitions, impairments, as well as changes in proved developed and proved undeveloped reserves. General and Administrative Expenses.
Merger and integration expense incurred during the year ended December 31, 2023 consisted of (i) $63.4 million in bankers’ advisory, legal, consultancy and accounting fees associated with the Earthstone Merger; (ii) $43.5 million in severance and related benefits associated with employee terminations that occurred in 2023 in connection with the Earthstone Merger; and (iii) $18.4 million in costs incurred during 2023 related to the Colgate Merger primarily related to employee severance charges and integration and consulting expenses.
These charges consisted of (i) $63.4 million in bankers’ advisory, legal, consultancy and accounting fees associated with the Earthstone Merger; (ii) $43.5 million in severance and related benefits associated with employee terminations that occurred in 2023 in connection with the Earthstone Merger; and (iii) $18.4 million in costs incurred during 2023 related to the Colgate Merger primarily consisting of employee severance charges and integration and consulting expenses. 53 Table of Contents Exploration and Other Expenses.
(2) NGL sales for the year ended December 31, 2023 include $73.3 million of GP&T that are reflected as a reduction to NGL sales and $10.6 million for the year ended December 31, 2022.
(2) NGL sales for the year ended December 31, 2024 include $90.0 million of GP&T costs that are reflected as a reduction to NGL sales and $73.3 million for the year ended December 31, 2023.
Higher G&A in 2023 was the result of a $25.4 million increase in cash G&A between periods.
Higher G&A in 2024 was the result of a $30.4 million increase in cash G&A between periods.
Year Ended December 31, (in thousands) 2023 2022 Income before income taxes $ 1,035,648 $ 870,132 Income tax expense (155,945) (120,292) Our provision for income taxes for the years ended December 31, 2023 and 2022 differs from the amounts that would be provided by applying the statutory U.S. federal income tax rate of 21% to pre-tax book income primarily due to (i) the portion of pre-tax net income that is attributable to our non-controlling interest and which is therefore not taxable to the Company; (ii) other permanent differences; (iii) state income taxes; and (iv) any changes during the period in our deferred tax asset valuation allowance.
Year Ended December 31, (in thousands) 2024 2023 Income before income taxes $ 1,550,851 $ 1,035,648 Income tax expense (300,342) (155,945) Our provision for income taxes for the years ended December 31, 2024 and 2023 differs from the amounts that would be provided by applying the statutory U.S. federal income tax rate of 21% to pre-tax book income primarily due to (i) the portion of pre-tax net income that is attributable to our non-controlling interest and which is therefore not taxable to the Company; (ii) other permanent differences; and (iii) state income taxes.
Analysis of Cash Flow Changes The following table summarizes our cash flows for the periods indicated: Year Ended December 31, (in thousands) 2023 2022 2021 Net cash provided by operating activities $ 2,213,499 $ 1,371,671 $ 525,619 Net cash used in investing activities (1,578,379) (1,205,049) (226,476) Net cash (used in) provided by financing activities (631,188) (106,625) (297,547) Cash Flows from 2023 Compared to 2022.
Analysis of Cash Flow Changes The following table summarizes our cash flows for the periods indicated: Year Ended December 31, (in thousands) 2024 2023 2022 Net cash provided by operating activities $ 3,411,968 $ 2,213,499 $ 1,371,671 Net cash used in investing activities (3,104,195) (1,578,379) (1,205,049) Net cash (used in) provided by financing activities 97,706 (631,188) (106,625) Cash Flows from 2024 Compared to 2023.
As commodity prices rise, costs of oilfield goods and services generally also increase; however, during periods of commodity price declines, oilfield costs typically lag and do not adjust downward as fast as oil prices do. In addition, the U.S. inflation rate has been steadily increasing during 2022 and 2023.
As commodity prices rise, costs of oilfield goods and services generally also increase; however, during periods of commodity price declines, oilfield costs typically lag and do not adjust downward as fast as oil prices do. In addition, the U.S. saw higher than normal inflation during 2023 and 2024.
Unproved properties consist of the costs we incurred to acquire undeveloped leasehold acreage as well as the costs we incurred to acquire unproved reserves. Unproved properties with individually significant acquisition costs are periodically assessed for impairment based on remaining lease term, drilling results, reservoir performance, seismic interpretation or changes in future plans to develop acreage.
Unproved properties consist of the costs we incur to acquire undeveloped leasehold acreage and unproved reserves. Unproved properties are periodically assessed for impairment based on remaining lease term, drilling results, reservoir performance, seismic interpretation or future plans to develop acreage.
The following table summarizes our depreciation, depletion and amortization (“DD&A”) for the periods indicated: Year Ended December 31, (in thousands, except per Boe data) 2023 2022 Depreciation, depletion and amortization $ 1,007,576 $ 444,678 Depreciation, depletion and amortization per Boe $ 14.19 $ 12.73 For the year ended December 31, 2023, DD&A expense amounted to $1.0 billion, an increase of $562.9 million from 2022.
The following table summarizes our depreciation, depletion and amortization (“DD&A”) for the periods indicated: Year Ended December 31, (in thousands, except per Boe data) 2024 2023 Depreciation, depletion and amortization $ 1,776,673 $ 1,007,576 Depreciation, depletion and amortization per Boe $ 14.13 $ 14.19 For the year ended December 31, 2024, DD&A expense amounted to $1.8 billion, an increase of $769.1 million from 2023.
For further information on the Credit Agreement, refer to Note 5—Long-Term Debt under Item 8 of this Annual Report. Convertible Senior Notes On March 19, 2021, OpCo issued $150.0 million in aggregate principal amount of Convertible Senior Notes.
For further information on the Credit Agreement, refer to Note 5—Long-Term Debt under Item 8 of this Annual Report. Convertible Senior Notes On March 19, 2021, OpCo issued $150.0 million of 3.25% senior unsecured convertible notes due 2028 (the “Convertible Senior Notes”).
The Convertible Senior Notes may become convertible prior to April 1, 2028, upon the occurrence of certain events or conditions being met as disclosed in Note 5—Long-Term Debt under Item 8 of this Annual Report.
The Convertible Senior Notes may become convertible prior to April 1, 2028, upon the occurrence of certain events or conditions being met as disclosed in Note 5—Long-Term Debt under Item 8 of this Annual Report. As of December 31, 2024, certain conditions have been met, and as a result, noteholders have the right to convert their Convertible Senior Notes.
Also during the year ended 2023, we paid in aggregate $86.5 million to repurchase 7.2 million Common Units of OpCo resulting in an equal number of associated shares of Class C Common Stock simultaneously being canceled under our stock repurchase program.
During the year ended 2024, we paid in aggregate $61.0 million to repurchase 3.8 million Common Units of OpCo resulting in an equal number of associated shares of Class C Common Stock simultaneously being canceled under our stock repurchase program.
On March 26, 2021, OpCo issued an additional $20.0 million of Convertible Senior Notes pursuant to the exercise of the underwriters’ over-allotment option to purchase additional notes.
On March 26, 2021, OpCo issued an additional $20.0 million of Convertible Senior Notes pursuant to the exercise of the underwriters’ over-allotment option to purchase additional notes. These issuances resulted in aggregate net proceeds to OpCo of $163.6 million.
These actions, coupled with relatively strong global demand and recent tensions in the Middle East, caused crude oil prices to increase during 2023, with NYMEX WTI spot prices reaching a high of $93.68 per barrel on September 27, 2023.
In addition, both Saudi Arabia and Russia announced unilateral production curtailments at separate times during 2023. These actions, coupled with relatively strong global demand and rising tensions in the Middle East, caused crude oil prices to increase during 2023, with NYMEX WTI spot prices reaching a high of $93.68 per barrel on September 27, 2023.
Lease operating expenses (“LOE”) for the year ended December 31, 2023 increased $201.9 million compared to the year ended December 31, 2022.
Lease operating expenses (“LOE”) for the year ended December 31, 2024 increased $311.4 million compared to the year ended December 31, 2023.
The stock repurchase program can be used to reduce our shares of common stock outstanding. Such repurchases would be made at terms and prices determined by us based upon prevailing market conditions, applicable legal requirements, available liquidity, compliance with our debt agreements and other factors.
Such repurchases would be made at terms and prices determined by us based upon prevailing market conditions, applicable legal requirements, available liquidity, compliance with our debt agreements and other factors.
These increasing factors were partially offset by higher merger and integration expense, severance and ad valorem taxes, lease operating expenses, GP&T, cash G&A expense and the timing of our receivable collections for the year ended December 31, 2022 as compared to the same 2021 period.
These increasing factors were partially offset by lower realized prices for oil and natural gas, higher costs including lease operating expenses, severance and ad valorem taxes, interest expense, GP&T expense, and cash G&A as well as the timing of our receivable collections for the year ended December 31, 2024 as compared to the same 2023 period.
These production increases were partially offset by decreases in the average realized sale prices for oil, natural gas and NGLs which decreased 15%, 67% and 37%, respectively, for the year ended December 31, 2023 compared to the same 2022 period.
These increases were partially offset by lower average realized sale prices for oil and natural gas which decreased 1% and 71%, respectively, for the year ended December 31, 2024 compared to the same 2023 period.
The following table summarizes exploration and other expenses for the periods indicated: Year Ended December 31, (in thousands) 2023 2022 Geological and geophysical costs $ 11,342 $ 7,401 Stock-based compensation - equity awards 2,541 2,721 Other expenses 5,454 1,256 Exploration and other expenses $ 19,337 $ 11,378 Exploration and other expenses were $19.3 million for the year ended December 31, 2023 compared to $11.4 million for the year ended December 31, 2022.
The following table summarizes exploration and other expenses for the periods indicated: Year Ended December 31, (in thousands) 2024 2023 Geological and geophysical costs $ 17,312 $ 11,342 Stock-based compensation expense 2,156 2,541 Other expenses 11,323 5,454 Exploration and other expenses $ 30,791 $ 19,337 Exploration and other expenses were $30.8 million for the year ended December 31, 2024 compared to $19.3 million for the year ended December 31, 2023.
The following table summarizes interest expense for the periods indicated: Year Ended December 31, (in thousands) 2023 2022 Credit Facility $ 30,049 $ 15,974 5.375% Senior Notes due 2026 15,557 15,557 7.75% Senior Notes due 2026 23,250 7,750 6.875% Senior Notes due 2027 24,500 24,500 8.00% Senior Notes due 2027 7,333 — 3.25% Convertible Senior Notes due 2028 5,525 5,525 5.875% Senior Notes due 2029 41,125 13,708 9.875% Senior Notes due 2031 8,229 — 7.00% Senior Notes due 2032 12,347 — Amortization of debt issuance costs, debt discount and debt premium 16,078 15,652 Interest capitalized (7,813) (3,021) Other interest expense 1,029 — Total $ 177,209 $ 95,645 Interest expense was $81.6 million higher for the year ended December 31, 2023 compared to the year ended December 31, 2022 mainly due to (i) $58.5 million in additional interest expense incurred from the senior notes that were assumed in the Colgate and Earthstone Mergers; (ii) $14.1 million in higher interest expense incurred on our credit facility due to a higher weighted average borrowings outstanding and effective interest rate during 2023; and (iii) $12.3 million in interest incurred on our Senior Notes due 2032 that were issued in September 2023.
The following table summarizes interest expense for the periods indicated: Year Ended December 31, (in thousands) 2024 2023 Credit Facility $ 16,062 $ 30,049 5.375% Senior Notes due 2026 15,556 15,557 7.75% Senior Notes due 2026 14,016 23,250 6.875% Senior Notes due 2027 6,397 24,500 8.00% Senior Notes due 2027 44,000 7,333 3.25% Convertible Senior Notes due 2028 5,524 5,525 5.875% Senior Notes due 2029 41,124 41,125 9.875% Senior Notes due 2031 49,376 8,229 7.00% Senior Notes due 2032 70,000 12,347 6.25% Senior Notes due 2033 25,347 — Amortization of debt issuance costs, debt discount and debt premium 6,563 16,078 Interest capitalized — (7,813) Loss on extinguishment of debt 8,585 — Other interest expense 2,206 1,029 Total $ 304,756 $ 177,209 Interest expense was $127.5 million higher for the year ended December 31, 2024 compared to the year ended December 31, 2023 mainly due to (i) $77.8 million in additional interest expense incurred for the senior notes assumed in the Earthstone Merger on November 1, 2023; (ii) $57.7 million in higher interest incurred on our senior notes due 2032 that were issued in September and December 2023; and (iii) $25.3 million in additional interest incurred on our 2033 Senior Notes that were issued in July 2024.
We funded our capital expenditures for 2023 entirely from cash flows from operations, and we expect to fund our 2024 capital expenditures budget entirely from cash flows from operations given our anticipated level of oil and gas production, current commodity prices and our commodity hedge positions in place. 54 Table of Contents Because we are the operator of a high percentage of our acreage, we can control the amount and timing of our capital expenditures.
We funded our capital expenditures for 2024 entirely from cash flows from operations, and we expect to fund our 2025 capital expenditures budget entirely from cash flows from operations given our anticipated level of oil and gas production, current commodity prices and our commodity hedge positions in place.
For business and asset acquisitions, we generally recognize the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at their estimated fair values on the acquisition date.
Business Combinations From time to time, we may complete acquisitions that are accounted for as business combinations that require us to recognize the identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at their estimated fair values on the acquisition date.
For the year ended December 31, 2023 we generated pre-tax net income of $1.0 billion and recorded income tax expense of $155.9 million. The primary factors decreasing our income tax expense below the U.S. statutory rate was the portion of pre-tax income that was attributable to our non-controlling interest partners and not taxable to the Company.
The primary factor decreasing our income tax expense below the U.S. statutory rate for both periods was the portion of pre-tax income that was attributable to our non-controlling interest partners and not taxable to the Company. For the Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 Refer to Item 7.
We continually make revisions to reserve estimates throughout the year as additional information becomes available, and we make changes to depletion rates in the same reporting period that changes to reserve estimates are made. Business Combinations From time to time, we may acquire assets and assume liabilities in transactions accounted for as business combinations, such as the Earthstone Merger.
We continually make revisions to reserve estimates throughout the year as additional information becomes available, and we make changes to depletion rates in the same reporting period that changes to reserve estimates are made.
Return of Capital Program During each quarter of the year ended December 31, 2023, we declared and paid a quarterly dividend of $0.05 per share of Class A Common Stock and a quarterly distribution of $0.05 per Class C Common Stock (each of which has an underlying Common Unit of OpCo).
During the year ended December 31, 2024, we declared and paid quarterly base dividends totaling $0.32 per share of Class A Common Stock and distributions totaling $0.32 per share of Class C Common Stock (each of which has an underlying common unit of OpCo (“Common Units”)).
Additionally, during the year ended December 31, 2023, our Board of Directors declared and paid 48 Table of Contents variable dividends and distributions totaling $0.17 per share of Class A Common Stock and Class C Common Stock. The cash dividends and distributions paid to common unitholders totaled $236.0 million for the year ended December 31, 2023.
Additionally, during the year ended December 31, 2024, we declared and paid variable dividends totaling $0.39 per share of Class A Common Stock and distributions totaling $0.39 per share of Class C Common Stock. The cash dividends and distributions paid totaled $560.9 million for the year ended December 31, 2024.
These oil volume increases were partially offset by normal production decline across our existing wells. Natural gas and NGLs are produced concurrently with our crude oil volumes, typically resulting in a high correlation between fluctuations in oil quantities sold and natural gas and NGL quantities sold driving the 100% and 131%, respectively, increase in gas and NGL volumes between periods.
Natural gas and NGLs are produced concurrently with our crude oil volumes, typically resulting in a high correlation between fluctuations in oil quantities sold and natural gas and NGL quantities sold driving the 85% and 97% increases in gas and NGL volumes, respectively, between periods.
In addition, we may, from time to time, seek to retire or purchase our outstanding senior notes through cash purchases and/or exchanges for debt in open-market purchases, privately negotiated transactions or otherwise. We cannot ensure that cash flows from operations or other sources of needed capital will be available at acceptable terms or at all.
In addition, we may, from time to time, seek to retire or purchase our outstanding senior notes through cash purchases and/or exchanges for debt in open-market purchases, privately negotiated transactions or otherwise.
The variable return program is structured to distribute at least 50% of free cash flow after the base dividend through a variable dividend, share repurchases or a combination of both. The mix between variable dividends and share repurchases are dependent upon market conditions during a given quarter.
The variable return program was structured to distribute at least 50% of our free cash flow after the base dividend through a variable dividend, share repurchases or a combination of both.
The primary factor contributing to higher DD&A expense in 2023 was the increase in our overall production volumes between periods, which increased DD&A expense by $459.0 million period over period, while higher DD&A rates between periods increased DD&A expense by $103.9 million.
The primary factor contributing to higher DD&A expense in 2024 was the increase in our overall production volumes between periods, which increased DD&A expense by $776.9 million period over period, while our lower DD&A rate of $14.13 per Boe decreased DD&A expense by $7.8 million between periods.
The following table summarizes our general and administrative (“G&A”) expenses for the periods indicated: Year Ended December 31, (in thousands) 2023 2022 Cash general and administrative expenses $ 85,978 $ 60,584 Stock-based compensation - equity awards 75,877 113,759 Stock-based compensation - liability awards — (24,174) Stock-based compensation - cash settled awards — 9,385 General and administrative expenses $ 161,855 $ 159,554 G&A expenses for the year ended December 31, 2023 were $161.9 million compared to $159.6 million for the year ended December 31, 2022.
The following table summarizes our general and administrative (“G&A”) expenses for the periods indicated: Year Ended December 31, (in thousands, except per Boe data) 2024 2023 Cash general and administrative expenses $ 116,387 $ 85,978 Stock-based compensation expense 58,243 75,877 General and administrative expenses $ 174,630 $ 161,855 Cash general and administrative expenses per Boe $ 0.93 $ 1.21 G&A expenses for the year ended December 31, 2024 were $174.6 million compared to $161.9 million for the year ended December 31, 2023.
This increase was primarily due to (i) higher payroll and employee-related costs associated with our G&A headcount, which increased from a year to date monthly average of 126 as of December 31, 2022 to 185 as of December 31, 2023 stemming from the Colgate and Earthstone Mergers; (ii) higher professional and legal fees between periods; and (iii) higher rent, software and office expenses between periods associated with the higher headcount.
This increase was primarily due to (i) G&A headcount increasing from an average of 185 for the year ended December 31, 2023 to 256 for the year ended December 31, 2024 stemming primarily from additional employees added as a result of the Earthstone Merger, which led to higher payroll and employee related costs; (ii) higher professional service fees between periods; and (iii) higher software expenses between periods.
Additionally, certain processors of our raw gas operated in higher ethane-recovery mode during the year ended December 31, 2023 as compared to the year ended December 31, 2022, which resulted in a higher percentage of NGLs being recovered from our wet gas stream during 2023.
NGL volumes were further positively impacted by processors of our raw gas operating in higher ethane-recovery during the year ended December 31, 2024 as compared to the year ended December 31, 2023 resulting in a higher percentage of NGLs being recovered from our wet gas stream between periods.
During the year ended December 31, 2022, generated pre-tax net income of $870.1 million and recorded income tax expense of $120.3 million.
For the year ended December 31, 2024 we generated pre-tax net income of $1.6 billion and recorded income tax expense of $300.3 million. During the year ended December 31, 2023, generated pre-tax net income of $1.0 billion and recorded income tax expense of $155.9 million.
For the year ended December 31, 2022, we generated $1.4 billion of cash from operating activities, an increase of $846.1 million from 2021. Cash provided by operating activities increased primarily due to higher realized prices for oil and gas, higher production volumes, and the timing of vendor payments during 2022 as compared to 2021.
For the year ended December 31, 2024, we generated $3.4 billion of cash from operating activities, an increase of $1.2 billion from 2023. Cash provided by operating activities increased primarily due to higher production volumes and lower merger and integration expense for the year ended December 31, 2024 as compared to the same 2023 period.
The following table sets forth selected operating expense data for the periods indicated: Year Ended December 31, Increase/(Decrease) 2023 2022 Change % Operating costs (in thousands): Lease operating expenses $ 373,772 $ 171,867 $ 201,905 117 % Severance and ad valorem taxes 240,762 155,724 85,038 55 % Gathering, processing, and transportation expense 89,282 97,915 (8,633) (9) % Operating cost metrics: Lease operating expenses (per Boe) $ 5.26 $ 4.92 $ 0.35 7 % Severance and ad valorem taxes (% of revenue) 7.7 % 7.3 % 0.4 % 6 % Gathering, processing, and transportation expense (per Boe) 1.26 2.80 (1.55) (55) % Lease Operating Expenses.
The following table sets forth selected operating expense data for the periods indicated: Year Ended December 31, Increase/(Decrease) 2024 2023 Change % Operating costs (in thousands): Lease operating expenses $ 685,172 $ 373,772 $ 311,400 83 % Severance and ad valorem taxes 377,731 240,762 136,969 57 % Gathering, processing, and transportation expense 183,602 89,282 94,320 106 % Operating cost metrics: Lease operating expenses (per Boe) $ 5.45 $ 5.26 $ 0.19 4 % Severance and ad valorem taxes (% of revenue) 7.6 % 7.7 % (0.1) % (1) % Gathering, processing, and transportation expense (per Boe) 1.46 1.26 0.20 16 % Lease Operating Expenses.
The higher well count in 2023 was due to (i) 309 gross operated horizontal wells acquired in the Colgate Merger on September 1, 2022 that operated for the entire year of 2023 compared to four months in 2022, (ii) 183 wells placed on production since December 31, 2022, and (iii) 1,190 gross operated horizontal wells acquired in the Earthstone Merger on November 1, 2023.
This increase in LOE was primarily related to our significantly higher well count between periods due to (i) wells acquired in the Earthstone Merger on November 1, 2023 that operated for the entire year of 2024 compared to two months in 2023; and (ii) additional wells placed on production since December 31, 2023. Severance and Ad Valorem Taxes.
In addition, during the year ended December 31, 2023, our Board of Directors also declared and paid total variable cash dividends of $0.17 per share of Class A Common Stock and total variable cash distributions of $0.17 per Common Unit of OpCo.
In addition, during the year ended December 31, 2024, we declared and paid variable dividends totaling $0.39 per share of Class A Common Stock and distributions totaling $0.39 per share of Class C Common Stock. The cash dividends and distributions paid to common unitholders totaled $560.9 million for the year ended December 31, 2024.
The Sixth Amendment, among other things, increased the borrowing base from $2.5 billion to $4.0 billion and maintained the elected commitments at $2.0 billion. On September 1, 2023, we entered into the fourth and fifth amendments to the Credit Agreement (the “Fourth Amendment” and the “Fifth Amendment”).
In connection with the 2024 spring borrowing base redetermination, we entered into the Seventh Amendment to the Credit Agreement, which, among other things, increased the elected commitments under the Credit Agreement to $2.5 billion from $2.0 billion and reaffirmed the borrowing base at $4.0 billion.
The Fifth Amendment was effective as of the closing date of the Earthstone Merger on November 1, 2023. 49 Table of Contents Results of Operations For the Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 During 2023, we completed the Earthstone Merger, and the results of operations of Earthstone were included in our financial and operational data beginning on November 1, 2023.
The Seventh Amendment, among other things, increased the elected commitments under the Credit Agreement to $2.5 billion from $2.0 billion and reaffirmed the borrowing base at $4.0 billion. 50 Table of Contents Results of Operations For the Year Ended December 31, 2024 Compared to the Year Ended December 31, 2023 During 2023, we completed the Earthstone Merger, and the results of operations of Earthstone were included in our financial and operational data beginning on November 1, 2023.
Gathering, processing and transportation costs (“GP&T”) for the year ended December 31, 2023 decreased $8.6 million compared to the year ended December 31, 2022. Additionally, GP&T decreased on a per Boe basis from $2.80 for the year ended December 31, 2022 to $1.26 per Boe for the year ended December 31, 2023.
Additionally, GP&T increased on a per Boe basis from $1.26 for the year ended December 31, 2023 to $1.46 per Boe for the year ended December 31, 2024.

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Item 7. Management's Discussion & Analysis

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

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Biggest changeThe Biden administration has since revoked the January 2021 rule; published an Advanced Notice of Proposed Rulemaking announcing an intent to solicit comments to help develop proposed regulations establishing a permitting system to authorize, under certain circumstances, the incidental take of migratory birds; and issued a Director’s Order “establishing criteria for the types of conduct that will be a priority for enforcement activities with respect to incidental take of migratory birds.” The identification or designation of previously unprotected species as threatened or endangered in areas where underlying property operations are conducted could cause us to incur increased costs arising from species protection measures, time delays or limitations on our exploration and production activities, which could have an adverse impact on our ability to develop and produce reserves.
Biggest changeThe identification or designation of previously unprotected species as threatened or endangered in areas where underlying property operations are conducted could cause us to incur increased costs arising from species protection measures, time delays or limitations on our exploration and production activities, which could have an adverse impact on our ability to develop and produce reserves.
However, since crude oil and natural gas are fungible products with well-established markets and numerous purchasers and are based on current demand for oil and natural gas, we believe that the loss of any major purchaser would not have a material adverse effect on our financial condition or results of operations.
However, since crude oil and natural gas are fungible products with well-established markets and numerous purchasers that are based on current demand for oil and natural gas, we believe that the loss of any major purchaser would not have a material adverse effect on our financial condition or results of operations.
Subsurface Injections In the course of our operations, we produce water in addition to natural gas, crude oil and NGLs. Water that is not recycled may be disposed of in disposal wells, which inject the produced water into non-producing subsurface formations.
Subsurface Injections In the course of our operations, we produce water in addition to natural gas, crude oil and NGLs. Produced water that is not recycled may be disposed of in disposal wells, which inject the produced water into non-producing subsurface formations.
The following is a summary of the more significant existing and proposed environmental and occupational safety and health laws, as amended from time to time, to which our business operations are or may be subject, and for which compliance may have a material adverse impact on our capital expenditures, results of operations or financial position.
The following is a summary of the more significant existing and proposed environmental and occupational safety and health laws and regulations, as amended from time to time, to which our business operations are or may be subject, and for which compliance may have a material adverse impact on our capital expenditures, results of operations or financial position.
Authorizations under NEPA are also subject to protest, appeal or litigation, any or all of which may delay or halt projects. Moreover, depending on the mitigation strategies recommended in the Environmental Assessments or Environmental Impact Statements, we could incur added costs, which may be substantial.
Individual authorizations under NEPA are also subject to protest, appeal or litigation, any or all of which may delay or halt projects. Moreover, depending on the mitigation strategies recommended in the Environmental Assessments or Environmental Impact Statements, we could incur added costs, which may be substantial.
We generally sell our oil, natural gas and NGL production to purchasers at prevailing market prices, which in certain cases are adjusted for contractual differentials, and the majority of our revenue contracts have terms greater than twelve months. We normally sell production to a relatively small number of customers, as is customary in our business.
We generally sell our oil, natural gas and NGL production to purchasers at prevailing market prices, which in certain cases are adjusted for contractual differentials, and the majority of our revenue contracts have terms greater than twelve months. 15 Table of Contents We normally sell production to a relatively small number of customers, as is customary in our business.
For example, the EPA promulgated rules in 2012 under the CAA that subject oil and natural gas production, processing, transmission and storage operations to regulation under the New Source Performance Standards (“NSPS”), and a separate set of requirements to address certain hazardous air pollutants frequently associated with oil and natural gas production and processing activities pursuant to the National Emissions Standards for Hazardous Air Pollutants program.
For example, the EPA has promulgated rules under the CAA that subject oil and natural gas production, processing, transmission and storage operations to regulation under the New Source Performance Standards (“NSPS”), and a separate set of requirements to address certain hazardous air pollutants frequently associated with oil and natural gas production and processing activities pursuant to the National Emissions Standards for Hazardous Air Pollutants program.
Among other matters, the EP Act of 2005 amended the NGA to add an anti-market manipulation provision that makes it unlawful for any entity to engage in prohibited behavior to be prescribed by FERC, and furthermore provides FERC with additional civil penalty authority.
Among other matters, the EP Act of 2005 amended the NGA to add an anti-market manipulation provision that 17 Table of Contents makes it unlawful for any entity to engage in prohibited behavior to be prescribed by FERC, and furthermore provides FERC with additional civil penalty authority.
Our competitors in the oil and natural gas industry are subject to the same regulatory requirements and restrictions that affect our operations, and as a result we do not expect compliance with such regulatory requirements to affect our operations in any way 15 Table of Contents that is of material difference from our competitors who are similarly situated.
Our competitors in the oil and natural gas industry are subject to the same regulatory requirements and restrictions that affect our operations, and as a result we do not expect compliance with such regulatory requirements to affect our operations in any way that is of material difference from our competitors who are similarly situated.
In addition, the United Nations-sponsored Paris Agreement calls for countries to set their own GHG emissions targets and be transparent about the measures each country will take to achieve its GHG emissions targets. However, the Paris Agreement does not impose any binding obligations on its participants.
The United Nations-sponsored Paris Agreement calls for countries to set their own GHG emissions targets and be transparent about the measures each country will take to achieve its GHG emissions targets; however, it does not impose any binding obligations on its participants.
We also face indirect competition from alternative energy sources. Our ability to acquire additional prospects and to find and develop reserves in the 14 Table of Contents future will depend on our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment.
We also face indirect competition from alternative energy sources. Our ability to acquire additional prospects and to find and develop reserves in the future will depend on our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment.
The CEA also prohibits knowingly delivering or causing to be delivered false or misleading or knowingly inaccurate reports concerning market information or conditions that affect or tend to affect the 16 Table of Contents price of a commodity.
The CEA also prohibits knowingly delivering or causing to be delivered false or misleading or knowingly inaccurate reports concerning market information or conditions that affect or tend to affect the price of a commodity.
These seismic events have also led to an increase in tort lawsuits filed against exploration and production companies, as well as the owners of underground injection wells.
These seismic events have also led to an increase in tort lawsuits filed against exploration and 20 Table of Contents production companies, as well as the owners of underground injection wells.
Numerous governmental entities, including the U.S. Environmental Protection Agency (the “EPA”) and analogous state agencies, have the power to enforce compliance with these laws and regulations and the permits issued under them, often requiring costly investigation or actions.
Numerous governmental entities, including the U.S. 18 Table of Contents Environmental Protection Agency (the “EPA”) and analogous state agencies, have the power to enforce compliance with these laws and regulations and the permits issued under them, often requiring costly investigation or actions.
In addition, OSHA’s hazard communication standard, the Emergency Planning and Community Right-to-Know Act, comparable state statutes and any implementing regulations require that we organize and/or disclose information about hazardous materials used or produced in our operations and that this information be provided to employees, state and local governmental authorities and citizens.
In addition, OSHA’s hazard communication standard, the Emergency Planning and Community Right-to-Know Act, the EPA’s Risk Management Program rule and comparable state statutes and their implementing regulations require that we organize and/or disclose information about hazardous materials used or produced in our operations and that this information be provided to employees, state and local governmental authorities and citizens.
However, any such change in the future could result in an increase in our, as well as the oil, natural gas and NGL exploration and production industry’s, costs to manage and dispose of wastes, which could have a material adverse effect on our results of operations and financial position.
However, any contrary conclusion resulting from future reviews could result in an increase in our, as well as the oil, natural gas and NGL exploration and production industry’s, costs to manage and dispose of wastes, which could have a material adverse effect on our results of operations and financial position.
The table below summarizes the purchasers that accounted for 10% or more of our total net revenues for the periods presented: Year Ended December 31, 2023 2022 2021 BP America 20 % 34 % 50 % Shell Trading (US) Company 20 % 21 % 22 % Enterprise Crude Oil, LLC 30 % 18 % — % Kinetik Holdings Inc. 5 % 8 % 11 % During these periods, no other purchaser accounted for 10% or more of our net revenues.
The table below summarizes the purchasers that accounted for 10% or more of our total net revenues for the periods presented: Year Ended December 31, 2024 2023 2022 Shell Trading (US) Company 31 % 20 % 21 % Enterprise Crude Oil, LLC 19 % 30 % 18 % BP America 11 % 20 % 34 % During these periods, no other purchaser accounted for 10% or more of our net revenues.
In addition, governmental, scientific, and public concern over the threat of climate change arising from increasing global greenhouse gas (“GHG”) emissions has resulted in higher political and regulatory risks in the United States, including climate change related pledges made by certain administrations.
In addition, governmental, scientific, and public concern over the threat of climate change arising from increasing global greenhouse gas (“GHG”) emissions has resulted in higher political and regulatory risks in the United States.
ESA and Migratory Birds The federal Endangered Species Act (“ESA”) and comparable state laws were established to protect endangered and threatened species. Pursuant to the ESA, if a species is listed as threatened or endangered, restrictions may be imposed on activities adversely affecting that species’ habitat. Similar protections are offered to migratory birds under the Migratory Bird Treaty Act.
Pursuant to the ESA, if a species is listed as threatened or endangered, restrictions may be imposed on activities adversely affecting that species’ habitat. Similar protections are offered to migratory birds under the Migratory Bird Treaty Act (“MBTA”).
Title to Properties We believe that we have satisfactory title to substantially all of our producing properties in accordance with generally accepted industry standards. Individual properties may be subject to burdens such as royalty, overriding royalty, working and other outstanding interests customary in the industry.
We currently expect our future production will satisfy all minimum volume commitments under these agreements. Title to Properties We believe that we have satisfactory title to substantially all of our producing properties in accordance with generally accepted industry standards. Individual properties may be subject to burdens such as royalty, overriding royalty, working and other outstanding interests customary in the industry.
In the event that a new, federal level of legal restrictions relating to the hydraulic fracturing process is adopted in areas where we operate, we may incur additional costs to comply with such federal requirements that may be significant in nature, and also 22 Table of Contents could become subject to additional permitting requirements and experience added delays or curtailment in the pursuit of exploration, development, or production activities.
In the event that new federal or more stringent state or local regulations relating to the hydraulic fracturing process are adopted in areas where we operate, we may incur additional costs to comply with such requirements that may be significant in nature, and we also could become subject to additional permitting requirements and experience added delays or curtailment in the pursuit of our exploration, development, or production activities.
In addition, in October 2015, the EPA issued a final rule under the CAA lowering the National Ambient Air Quality Standards for ground-level ozone from the current standard of 75 parts per billion (“ppb”) for the current 8-hour primary and secondary ozone standards to 70 ppb for both standards. The final rule became effective on December 28, 2015.
In 2015, the EPA issued a final rule under the CAA lowering the NAAQS for ground-level ozone from the current standard of 75 parts per billion (“ppb”) for the current 8-hour primary and secondary ozone standards to 70 ppb for both standards.
Although it is not possible at this time to predict how new laws or regulations that may be adopted or issued to address GHG emissions would impact our business, any such future laws, regulations or legal requirements imposing reporting or permitting obligations on, or limiting emissions of GHGs from, our equipment and operations could require us to incur costs to reduce emissions of GHGs associated with our operations, as well as delay or restrict our ability to permit GHG emissions from new or modified sources.
Although it appears unlikely in the near term that new federal laws or regulations may be adopted or issued to address GHG emissions, any such future laws, regulations or legal requirements imposing reporting or permitting obligations on, or limiting emissions of GHGs from, our equipment and operations could require us to incur costs to reduce emissions of GHGs associated with our operations, as well as delay or restrict our ability to permit GHG emissions from new or modified sources.
Finally, it should be noted that increasing concentrations of GHGs in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, floods, droughts and other extreme climatic events; if any such effects were to occur, they could have an adverse effect on our exploration and production operations.
Finally, it should be noted that increasing concentrations of GHGs in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, floods, droughts and other extreme climatic events; if any such effects were to occur, they could have an adverse effect on our exploration and production operations. 22 Table of Contents Moreover, in New Mexico, the state legislature is considering a bill that would codify New Mexico’s 98% methane capture rule previously adopted in 2022.
If the EPA were to adopt more stringent NAAQS for ground-level ozone as part of its reconsideration of the December 2020 decision, States are expected to implement more stringent permitting and pollution control requirements as a result of this new final rule, which could apply to our operations.
If the EPA were to adopt more stringent NAAQS for ground-level ozone, States are expected to implement more stringent permitting and pollution control requirements, which could apply to our operations.
Our proposed exploration, development and production activities are expected to include leasing of federal mineral interests, which will require the acquisition of governmental permits or authorizations that are subject to the requirements of NEPA. This process has the potential to delay or limit, or increase the cost of, the development of natural gas, oil and NGL projects.
Our proposed exploration, development and production activities are expected to include leasing of federal mineral interests, which will require the acquisition of governmental permits or authorizations and the support of infrastructure projects that may be subject to the requirements of NEPA.
Regulation of GHG Emissions In response to findings that emissions of carbon dioxide, methane and other GHGs endanger public health and the environment, the EPA has adopted regulations under existing provisions of the CAA that, among other things, establish Prevention of Significant Deterioration (“PSD”) preconstruction and Title V operating permit reviews for certain large stationary sources that are already potential major sources of certain principal, or criteria, pollutant emissions.
Compliance with one or more of these and other air pollution control and permitting requirements and rules has the potential to delay the development of natural gas, oil and NGL projects and increase our costs of development and production, which costs could be significant. 21 Table of Contents Regulation of GHG Emissions and Climate Change In response to findings that emissions of carbon dioxide, methane and other GHGs endanger public health and the environment, the EPA has adopted regulations under existing provisions of the CAA that, among other things, establish Prevention of Significant Deterioration (“PSD”) preconstruction and Title V operating permit reviews for GHG emissions from certain large stationary sources that are already potential major sources of certain principal, or criteria, pollutant emissions.
Increased costs associated with the transportation and disposal of produced water, including the cost of complying with regulations concerning produced water disposal, may reduce our profitability; however, these costs are commonly incurred by all oil, natural gas and NGL producers, and we do not believe that the costs associated with the disposal of produced water will affect our operations in any way that is of material difference from those of our competitors who are similarly situated. 19 Table of Contents Air Emissions The federal Clean Air Act (the “CAA”) and comparable state laws restrict the emission of air pollutants from many sources, such as tank batteries, through air emissions standards, construction and operating permitting programs and the imposition of other compliance standards.
Increased costs associated with the transportation and disposal of produced water, including the cost of complying with regulations concerning produced water disposal, may reduce our profitability; however, these costs are commonly incurred by all oil, natural gas and NGL producers, and we do not believe that the costs associated with the disposal of produced water will affect our operations in any way that is of material difference from those of our competitors who are similarly situated.
If in the future, the areas in which we operate were redesignated as nonattainment areas, this could subject us to increased regulatory burdens in the form of more stringent emission controls, emission offset requirements and increased permitting delays and costs.
While currently the areas in which we operate are not likely to be redesignated as a result of this change, if the areas in which we operate were, in the future, redesignated as nonattainment areas with respect to any NAAQS, our operations could be subjected to increased regulatory burdens in the form of more stringent emission controls, emission offset requirements and increased permitting delays and costs.
The SEC issued a proposed rule in March 2022 that would mandate extensive disclosure of climate-related data, risks, and opportunities, including financial impacts, physical and transition risks, related governance and strategy, and GHG emissions, for certain public companies.
Separately, the SEC finalized a rule that would mandate extensive disclosure of climate-related data, risks, and opportunities, including financial impacts, physical and transition risks, related governance and strategy, and GHG emissions, for certain public companies However, implementation of the SEC’s disclosure rule is currently stayed pending the outcome of litigation against it.
We may conduct operations on oil and natural gas leases in areas where certain species that are listed as threatened or endangered are known to exist and where other species that potentially could be listed as threatened or endangered under the ESA may exist. Moreover, as a result of a 2011 settlement agreement, the U.S.
We may conduct operations on oil and natural gas leases in areas where certain species that are listed as threatened or endangered are known to exist, including the Dunes Sagebrush Lizard and Lesser Prairie Chicken (the listing decisions of which are currently subject to ongoing litigation), and where other species that potentially could be listed as threatened or endangered under the ESA may exist.
On January 19, 2006, FERC issued Order No. 670, a rule implementing the anti-market manipulation provision of the EP Act of 2005, and subsequently denied rehearing.
The civil penalty provisions are applicable to entities that engage in the sale of natural gas for resale in interstate commerce. On January 19, 2006, FERC issued Order No. 670, a rule implementing the anti-market manipulation provision of the EP Act of 2005, and subsequently denied rehearing.
Activities on Federal Lands and State Lands Oil and natural gas exploration, development and production activities on federal lands, including American Indian lands and lands administered by the BLM, are frequently subject to permitting delays. Operations on these lands are also subject to the National Environmental Policy Act (“NEPA”).
Activities on Federal and State Lands Oil and natural gas exploration, development and production activities on federal lands, including American Indian lands and lands administered by the BLM, require compliance with detailed federal regulations and orders, including relating to plugging and abandonment, and are frequently subject to permitting delays.
NEPA requires federal agencies, including the BLM, to evaluate major actions having the potential to significantly impact the environment.
Operations on federal lands are also subject to the National Environmental Policy Act (“NEPA”). NEPA requires federal agencies, including the BLM, to evaluate major actions having the potential to significantly impact the environment.
However, it is possible that certain oil and natural gas drilling and production wastes now classified as nonhazardous solid wastes could be classified as 17 Table of Contents hazardous wastes in the future.
However, it is possible that certain oil and natural gas drilling and production wastes currently classified as nonhazardous solid wastes could be re-classified as hazardous wastes in the future, as RCRA requires the EPA to periodically review (and revise if necessary) such determinations.
If we were to have a portion of our leases designated as critical or suitable habitat, it could adversely impact the value of our leases. OSHA We are subject to the requirements of the Occupational Safety and Health Act (“OSHA”) and comparable state statutes whose purpose is to protect the health and safety of workers.
If we were to have a portion of our leases designated as critical or suitable habitat, it could adversely impact the value of our leases.
Under such laws, we could be required to undertake response or corrective measures, which could include removal of previously disposed substances and wastes, cleanup of contaminated property or performance of remedial plugging or pit closure operations to prevent future contamination, the costs of which could be substantial.
Under such laws, we could be required to undertake response or corrective measures, which could include removal of previously disposed substances and wastes, cleanup of contaminated property or performance of remedial plugging or pit closure operations to prevent future contamination, the costs of which could be substantial. 19 Table of Contents Water Discharges The Clean Water Act (the “CWA”) and comparable state laws impose restrictions and strict controls with respect to the discharge of pollutants, including spills, leaks of hazardous substances and placement of dredge and fill material into state waters and waters of the United States (“WOTUS”).
We provide fair and competitive wages to assist in retention of our top talent, and our compensation programs are integrated with our overall business strategies to incentivize performance and maximize shareholder returns. In addition, we conduct an equitable pay analysis at least annually to ensure that we are adequately and fairly compensating all employees based on their experience and performance.
We provide fair and competitive wages to assist in retention of our top talent, and our 24 Table of Contents compensation programs are integrated with our overall business strategies to incentivize performance and maximize shareholder returns.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation in this Annual Report, as amounts therein are reflected net of all royalties, overriding royalties and production due to others. These total oil volumes committed are subject to financial ship-or-pay penalties if such physical delivery commitments are not met.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation in this Annual Report, as amounts therein are reflected net of all royalties, overriding royalties and production due to others. (2) These agreements have a contractual term through December 31, 2031.
For example, Wyoming has promulgated rules related to the public disclosure of substances used in hydraulic fluid, testing requirements for water wells near drilling sites and leak detection and repair requirements for fugitive emissions from oil and gas production facilities.
Many states, including Texas and New Mexico, have promulgated rules related to the public disclosure of substances used in hydraulic fluid and testing requirements for water wells near drilling sites.
It is possible those developments could, in the future, affect our operations if the areas in which we operate are designated as critical or suitable habitat.
In April 2024, these agencies also issued a final rule allowing for the use of mitigation offsets in the context of federal agency action consultations. It is possible these developments could, in the future, affect our operations if the areas in which we operate are designated as critical or suitable habitat.
In response to these concerns, regulators in some states have adopted, and other states are considering adopting, additional requirements related to seismic safety. The Railroad Commission of Texas (the “TRRC”) issued a notice to operators in the Midland area to reduce daily injection volumes following multiple earthquakes above a 3.5 magnitude over an 18-month period.
The Railroad Commission of Texas (“TRRC”) issued a notice to operators in the Midland area to reduce daily injection volumes following multiple earthquakes above a 3.5 magnitude over an 18-month period. The notice also required disposal well operators to provide injection data to TRRC staff to further analyze seismicity in the area.
The EPA announced a final rule on December 2, 2023, which, among other things, requires the phase out of routine flaring of natural gas from new oil wells and routine leak monitoring at all well sites and compressor stations.
The EPA finalized updates to NSPS regulations applicable to oil and natural gas sources in December 2023 , which, among other things, requires the phase out of routine flaring of natural gas from new oil wells, routine leak monitoring, detection and repair obligations at all well sites and compressor stations, and reductions in emissions via capture and control systems or the use of zero-emission equipment in certain processes.
Such maximum civil penalty authority under the NGA and NGPA has been increased to adjust for inflation. FERC may now assess civil penalties under the NGA and NGPA of $1,388,496 per violation per day. The civil penalty provisions are applicable to entities that engage in the sale of natural gas for resale in interstate commerce.
Such maximum civil penalty authority under the NGA and NGPA has been increased to adjust for inflation. On January 14, 2025, FERC’s final rule became effective and it may now assess civil penalties under the NGA and NGPA of $1,584,648 per violation per day.
The EPA issued its anticipated area designations in November and December 2017. In December 2020, the EPA announced its intention to leave the ozone NAAQS unchanged at 70 ppb rather than lower them further.
In December 2020, the EPA announced its intention to leave the ground-level ozone NAAQS unchanged at 70 ppb rather than lower them further. However, under the Biden administration, the EPA announced a new review of this standard, which is currently ongoing.
However, any such adverse regulatory developments are expected to have no more than a minimal impact on our results, given our limited exposure of leases on federal lands. In addition, the New Mexico state legislature in 2019 considered House Bill 206, which, if passed, would have enacted an Environmental Review Act comparable to NEPA.
However, any such adverse regulatory developments are expected to have no more than a minimal impact on our results, given our limited exposure of leases on federal lands. 23 Table of Contents ESA and Migratory Birds The federal Endangered Species Act (“ESA”) and comparable state laws were established to protect endangered and threatened species.
Hydraulic Fracturing Activities Hydraulic fracturing is an important and common practice that is used to stimulate production of oil, natural gas and NGLs from dense subsurface rock formations. We regularly use hydraulic fracturing as part of our operations. Hydraulic fracturing is typically regulated by state oil and natural gas commissions.
Under the methane capture rule, oil and gas operators are required to capture 98% of their produced natural gas by December 31, 2026, and routine venting and flaring is prohibited. Hydraulic Fracturing Activities Hydraulic fracturing is an important and common practice that is used to stimulate production of oil, natural gas and NGLs from dense subsurface rock formations.
We offer a variety of programs that are designed to retain our employees and also provide opportunities to grow their professional careers while continuing to deliver value to the company. Additionally, we maintain a comprehensive suite of benefits that provide our employees with various options including retirement, health and wellness, and life and disability plans.
Additionally, we maintain a comprehensive suite of benefits that provide our employees with various options including retirement, health and wellness, and life and disability plans. We are committed to a highly qualified workforce because we believe employees with different skillsets, experiences and interests drive superior results.
We provide frequent trainings and monthly safety meetings for all field employees and have excelled in health, safety and environmental performance maintaining zero employee recordable incidents due to illnesses or injuries at the workplace. Offices Our principal executive offices are located at 300 N. Marienfeld Street, Suite 1000, Midland, Texas, 79701, and our telephone number is (432) 695-4222.
Any workplace injury reinforces the need for ongoing safety awareness and enhanced protocols to prevent future occurrences. Offices Our principal executive offices are located at 300 N. Marienfeld Street, Suite 1000, Midland, Texas, 79701, and our telephone number is (432) 695-4222.
As of December 31, 2023, we had 461 total employees. In addition, we hire independent contractors on an as needed basis but have no collective bargaining or employment agreements with our employees. We believe that our employees give us a sustainable competitive advantage, and we understand the need to attract, retain and train the best team possible.
As of December 31, 2024, we had 482 total employees. In addition, we hire independent contractors on an as needed basis and maintain an at-will employment relationship with our employees, without collective bargaining agreements or contracts guaranteeing ongoing employment.
However, several federal agencies have asserted regulatory authority over certain aspects of the process.
We regularly use hydraulic fracturing as part of our operations. Hydraulic fracturing is typically regulated by state oil and natural gas commissions. However, several federal agencies have asserted regulatory authority over certain aspects of the process.
If reconsidered and enacted in the future, the process contemplated by the Environmental Review Act has the potential, like NEPA, to delay or limit, or increase the cost of, the development of natural gas, oil and NGL projects in New Mexico, which costs could be substantial.
This process, including any additional requirements or procedures that may be included in the process or litigation over the sufficiency of the process, has the potential to delay or limit, or increase the cost of, the development of natural gas, oil and NGL projects.
For example, the EPA published final CAA regulations in 2012 and, in June 2016, establishing performance standards, including standards for the capture of air emissions released during oil and natural gas hydraulic fracturing, leak detection, and permitting (which are subject to revision, as discussed above); published in June 2016 an effluent limitation guideline final rule prohibiting the discharge of wastewater from onshore unconventional oil and natural gas extraction facilities to publicly owned wastewater treatment plants; and issued in 2014 an Advance Notice of Proposed Rulemaking regarding Toxic Substances Control Act (“TSCA”) reporting of the chemical substances and mixtures used in hydraulic fracturing.
For example, the EPA has issued permitting guidance under the SDWA for certain hydraulic fracturing activities involving the use of diesel fuels and published an effluent limitation guideline final rule prohibiting the discharge of wastewater from onshore unconventional oil and natural gas extraction facilities to publicly owned wastewater treatment plants.
Additionally, in November 2021, the Biden administration released “The Long-Term Strategy of the United States: Pathways to Net-Zero Greenhouse Gas Emissions by 2050,” which establishes a roadmap to net zero emissions in the United States by 2050 through, among other things, improving energy efficiency; decarbonizing energy sources via electricity, hydrogen, and sustainable biofuels; and reducing non-carbon dioxide GHG emissions, such as methane and nitrous oxide.
The Biden administration initiated multiple actions and rulemakings to address climate change which focused on, among other things, improving energy efficiency, 16 Table of Contents decarbonizing energy sources via electricity, hydrogen, and sustainable biofuels, restricting exploration and production activities on federal lands and reducing non-carbon dioxide GHG emissions, such as methane and nitrous oxide, all of which may impact the costs to produce, or the demand for, oil and natural gas.
Relatedly, the United States and European Union jointly announced the launch of the “Global Methane Pledge,” which aims to cut global methane pollution at least 30% by 2030 relative to 2020 levels, including “all feasible reductions” in the energy sector. These goals were reaffirmed in November 2022 at the 27th Conference of the Parties (“COP27”) in Sharm-El Sheik.
The United States’ most recent goal under the Paris Agreement was to reduce its net economy-wide GHG emissions by 61 to 66 percent from 2005 levels by 2035 and it co-launched the “Global Methane Pledge,” which aims to cut global methane pollution at least 30% by 2030 relative to 2020 levels, including “all feasible reductions” in the energy sector.
For example, in December 2016, the EPA and environmental groups entered into a consent decree to address the EPA’s alleged failure to timely assess its RCRA Subtitle D criteria regulations exempting certain exploration and production related oil and natural gas wastes from regulation as hazardous wastes under RCRA.
In 2019, pursuant to a 2016 consent decree entered into with environmental groups, the EPA completed a review of its RCRA requirements for the management of certain oil and natural gas wastes and concluded no federal regulatory revisions were necessary.
Removed
We believe our current production and reserves are sufficient to fulfill these physical delivery commitments, and production under the agreements is not tied to any specific property. Therefore, if our production is not sufficient to satisfy the firm delivery commitments above, we believe we can purchase sufficient volumes in the market at index-related prices to satisfy our commitments.
Added
These committed volumes are subject to under-delivery fees that would result in a financial obligation equal to a specified rate, subject to certain inflation factors.
Removed
President Biden has issued several executive orders focused on addressing climate change since taking office, which may impact the costs to produce, or demand for, oil and natural gas.
Added
Additionally, we have a firm crude oil sales agreement that provides for firm gross sales of 29,000 Bbls/d that is based upon prevailing market prices of ICE Brent and contractual differentials that ends on May 31, 2025. The total oil volumes committed under this agreement are subject to financial ship-or-pay penalties if such physical delivery commitments are not met.
Removed
The Biden administration has also proposed certain changes to the leasing and permitting programs for oil and natural gas development on federal lands, including imposing bans on new oil and gas leasing, cancelling issued oil and gas leases, and removing public lands from future oil and gas leasing.
Added
The Trump administration has announced an intention to reverse or remove support for many of these initiatives, though the extent to which, and the timeline for doing so, cannot be predicted at this time. Further, there is uncertainty as to what actions Congress will take with respect to the prior administration’s activities in this area.
Removed
The consent decree required the EPA to propose a rulemaking no later than March 15, 2019 for revision of certain Subtitle D criteria regulations pertaining to oil and natural gas wastes, or to sign a determination that revision of the regulations is not necessary.
Added
There continues to be uncertainty as to the federal government’s jurisdictional reach under the CWA, including with respect to wetlands. The EPA and the U.S. Army Corps of Engineers (the “Corps”) under the Obama, Trump and Biden administrations have pursued multiple rulemakings since 2015 in attempt of determining the scope of such reach.
Removed
After undertaking its review, the EPA concluded in 2019 that it does not need to regulate exploration and production waste, and specifically “drilling fluids, produced waters, and other wastes associated with the exploration, development, or production of oil, gas or geothermal energy.” The EPA concluded that states are adequately regulating exploration and production waste under the Subtitle D provisions of RCRA.
Added
Following legal actions, implementation of the most recent rule is currently split across the country. The rule is subject to an injunction in 27 states, including Texas, resulting in implementation of the pre-2015 rule adjusted to take into account jurisdictional limitations decided by the Supreme Court in Sackett v. EPA .
Removed
Water Discharges The Clean Water Act (the “CWA”) and comparable state laws impose restrictions and strict controls with respect to the discharge of pollutants, including spills and leaks of hazardous substances, into state waters and waters of the United States (“WOTUS”).
Added
The other 23 states, including New Mexico, are subject to a WOTUS-defining rule published in September 2023. Additionally, the Trump administration may pursue a new rulemaking to further revise or clarify the extent of federal jurisdiction under the CWA, though the substance and timing of such action cannot be predicted.
Removed
The CWA also prohibits the discharge of dredge and fill material into regulated waters, including wetlands, unless authorized by permit. The EPA and the U.S.
Added
As such, uncertainty remains with respect to future implementation of the rule and the outcome of the pending litigation. Many of our customers and service providers rely on permits obtained under the CWA for their oil and gas pipeline projects, the most common of which is Nationwide Permit 12 (“NWP 12”).
Removed
Army Corps of Engineers (the “Corps”) have issued rules attempting to clarify the federal jurisdictional reach over Waters of the United States since 2015 (“WOTUS rule”), including the Navigable Waters Protection Rule during the Trump administration, rules reverting back to the 1986 WOTUS definition during the Biden administration, and rules reinstating the pre-2015 definition in January 2023.
Added
NWP 12 is, from time to time, renewed or modified by the Corps, whose actions in turn may be subject to litigation.
Removed
However, in May 2023, the Supreme Court decided Sackett v. EPA , which sharply curtailed the EPA’s and Corps’ jurisdictional reach by limiting the types of wetlands that fell under WOTUS.
Added
To the extent any action expands the scope of the CWA in areas where we or our suppliers, customers or service providers operate or imposes new or enhanced permitting requirements, our operations could be adversely impacted by increased compliance costs and energy infrastructure project delays or cancellations.
Removed
Sackett codified the definition of WOTUS as only “geographical features” that are described in ordinary parlance as “streams, oceans, rivers, and lakes” and to adjacent wetlands that are “indistinguishable” from those bodies of water due to a continuous surface connection.
Added
In response to these concerns, regulators in some states have adopted, and other states are considering adopting, additional requirements related to seismic safety.
Removed
In September 2023, the EPA and the Corps published a direct-to-final rule redefining WOTUS to amend the January 2023 rule and align with the decision in Sackett .
Added
For example, New Mexico implemented protocols requiring operators to take various actions with respect to salt-water disposal wells within a specified proximity of recent seismic activity, including a requirement to limit injection rates if the seismic event in question reached a certain magnitude.
Removed
The final rule eliminated the “significant nexus” test from consideration 18 Table of Contents when determining federal jurisdiction and clarified that the CWA only extends to relatively permanent bodies of water and wetlands that have a continuous surface connection with such bodies of water. The final rule is currently subject to challenges in federal district courts.
Added
Air Emissions The federal Clean Air Act (“CAA”) and comparable state laws restrict the emission of air pollutants from many sources, such as tank batteries, through air emissions standards, construction and operating permitting programs and the imposition of other compliance standards.

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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 changeCollar Price Ranges ($/MMBtu) (4) Natural gas collars January 2024 - March 2024 6,815,081 74,891 $2.93 - $6.81 April 2024 - June 2024 5,013,679 55,095 2.68 - 5.04 July 2024 - September 2024 5,090,612 55,333 2.68 - 5.06 October 2024 - December 2024 5,106,101 55,501 2.75 - 5.29 (1) These natural gas swap contracts are settled based on the NYMEX Henry Hub price on each trading day within the specified monthly settlement period versus the contractual swap price for the volumes stipulated.
Biggest changeDifferential ($/MMBtu) (2) Natural gas basis differential swaps January 2025 - March 2025 11,070,000 123,000 $(0.83) April 2025 - June 2025 11,193,000 123,000 (1.35) July 2025 - September 2025 11,316,000 123,000 (1.23) October 2025 - December 2025 11,316,000 123,000 (1.25) January 2026 - March 2026 8,190,000 91,000 (1.09) April 2026 - June 2026 8,281,000 91,000 (2.27) July 2026 - September 2026 8,372,000 91,000 (1.29) October 2026 - December 2026 8,372,000 91,000 (0.98) January 2027 - March 2027 12,600,000 140,000 (0.46) April 2027 - June 2027 12,740,000 140,000 (1.11) July 2027 - September 2027 12,880,000 140,000 (0.62) October 2027 - December 2027 12,880,000 140,000 (0.87) (1) These natural gas swap contracts are settled based on the NYMEX Henry Hub price on each trading day within the specified monthly settlement period versus the contractual swap price for the volumes stipulated.
(2) These natural gas basis swap contracts are settled based on the difference between the Inside FERC’s West Texas WAHA price and the NYMEX price of natural gas during each applicable monthly settlement period.
(2) These natural gas basis swap contracts are settled based on the difference between the Inside FERC’s West Texas Waha Hub price and the NYMEX price of natural gas during each applicable monthly settlement period.
(5) These crude oil roll swap transactions are settled based on the difference between the arithmetic average of NYMEX WTI calendar month prices and the physical crude oil delivery month price. Period Volume (MMBtu) Volume (MMBtu/d) Wtd. Avg.
(3) These crude oil roll swap transactions are settled based on the difference between the arithmetic average of NYMEX WTI calendar month prices and the physical crude oil delivery month price. Period Volume (MMBtu) Volume (MMBtu/d) Wtd. Avg.
(4) These crude oil basis swap transactions are settled based on the difference between the arithmetic average of ARGUS MIDLAND WTI and ARGUS WTI CUSHING indices, during each applicable monthly settlement period.
(2) These crude oil basis swap transactions are settled based on the difference between the arithmetic average of ARGUS MIDLAND WTI and ARGUS WTI CUSHING indices, during each applicable monthly settlement period.
The table below summarizes the terms of the derivative contracts we had in place as of December 31, 2023 and additional contracts entered into through February 23, 2024. Refer to Note 8—Derivative Instruments under Item 8 of this Annual Report for open derivative positions as of December 31, 2023. Period Volume (Bbls) Volume (Bbls/d) Wtd. Avg.
The table below summarizes the terms of the derivative contracts we had in place as of December 31, 2024 and additional contracts entered into through February 21, 2025. Refer to Note 8—Derivative Instruments under Item 8 of this Annual Report for open derivative positions as of December 31, 2024. Period Volume (Bbls) Volume (Bbls/d) Wtd. Avg.
Changes in the fair value of derivative contracts from December 31, 2022 to December 31, 2023, are presented below: (in thousands) Commodity derivative asset (liability) Net fair value of oil and gas derivative contracts outstanding as of December 31, 2022 $ 114,466 Commodity hedge contract settlement payments, net of any receipts (99,410) Fair value of commodity hedge contracts acquired in the Earthstone Merger (35,499) Cash and non-cash mark-to-market gains (losses) on commodity hedge contracts (1) 114,016 Net fair value of oil and gas derivative contracts outstanding as of December 31, 2023 $ 93,573 (1) At inception, new derivative contracts entered into by us have no intrinsic value.
Changes in the fair value of derivative contracts from December 31, 2023 to December 31, 2024, are presented below: (in thousands) Commodity derivative asset (liability) Net fair value of oil and gas derivative contracts outstanding as of December 31, 2023 $ 93,573 Commodity hedge contract settlement payments, net of any receipts (77,203) Cash and non-cash mark-to-market gains (losses) on commodity hedge contracts (1) 94,986 Net fair value of oil and gas derivative contracts outstanding as of December 31, 2024 $ 111,356 (1) At inception, new derivative contracts entered into by us have no intrinsic value.
Differential ($/Bbl) (5) Crude oil roll differential swaps January 2024 - March 2024 3,148,600 34,600 $0.45 April 2024 - June 2024 3,385,018 37,198 0.45 July 2024 - September 2024 3,404,000 37,000 0.45 October 2024 - December 2024 3,404,000 37,000 0.45 January 2025 - March 2025 1,575,000 17,500 0.37 April 2025 - June 2025 1,592,500 17,500 0.37 July 2025 - September 2025 1,610,000 17,500 0.37 October 2025 - December 2025 1,610,000 17,500 0.37 (1) These crude oil swap transactions are settled based on the NYMEX WTI index price on each trading day within the specified monthly settlement period versus the contractual swap price for the volumes stipulated.
Differential ($/Bbl) (3) Crude oil roll differential swaps January 2025 - March 2025 3,932,000 43,689 $0.43 April 2025 - June 2025 4,095,000 45,000 0.44 July 2025 - September 2025 4,140,000 45,000 0.44 October 2025 - December 2025 4,140,000 45,000 0.44 January 2026 - March 2026 1,575,000 17,500 0.28 April 2026 - June 2026 1,592,500 17,500 0.28 July 2026 - September 2026 1,610,000 17,500 0.28 October 2026 - December 2026 1,610,000 17,500 0.28 (1) These crude oil swap transactions are settled based on the NYMEX WTI index price on each trading day within the specified monthly settlement period versus the contractual swap price for the volumes stipulated.
Based on our production for the year ended December 31, 2023, our oil and gas sales for the year ended December 31, 2023 would have moved up or down $269.7 million for each 10% change in oil prices per Bbl, $14.2 million for each 10% change in gas prices per Mcf, and $28.2 million for each 10% change in NGL prices per Bbl.
Based on our production for the year ended December 31, 2024, our oil and gas sales for the year ended December 31, 2024 would have moved up or down $436.3 million for each 10% change in oil prices per Bbl, minimally for each 10% change in natural gas prices per Mcf and $63.8 million for each 10% change in NGL prices per Bbl.
Differential ($/Bbl) (4) Crude oil basis differential swaps January 2024 - March 2024 3,148,600 34,600 $0.94 April 2024 - June 2024 3,385,018 37,198 0.95 July 2024 - September 2024 3,404,000 37,000 0.95 October 2024 - December 2024 3,404,000 37,000 0.95 January 2025 - March 2025 1,575,000 17,500 1.09 April 2025 - June 2025 1,592,500 17,500 1.09 July 2025 - September 2025 1,610,000 17,500 1.09 October 2025 - December 2025 1,610,000 17,500 1.09 Period Volume (Bbls) Volume (Bbls/d) Wtd.
Differential ($/Bbl) (2) Crude oil basis differential swaps January 2025 - March 2025 3,932,000 43,689 $1.11 April 2025 - June 2025 4,095,000 45,000 1.10 July 2025 - September 2025 4,140,000 45,000 1.10 October 2025 - December 2025 4,140,000 45,000 1.10 January 2026 - March 2026 1,575,000 17,500 1.15 April 2026 - June 2026 1,592,500 17,500 1.15 July 2026 - September 2026 1,610,000 17,500 1.15 October 2026 - December 2026 1,610,000 17,500 1.15 Period Volume (Bbls) Volume (Bbls/d) Wtd.
For additional information regarding our debt instruments, see Note 5—Long-Term Debt in Item 8 of this Annual Report. 63 Table of Contents
The long-term debt balance of $4.2 billion consists of our senior notes, which have fixed interest rates; therefore, this balance is not affected by interest rate movements. For additional information regarding our debt instruments, see Note 5—Long-Term Debt in Item 8 of this Annual Report. 63 Table of Contents
OpCo’s Credit Agreement interest rate is based on a SOFR spread, which exposes us to interest rate risk to the extent we have borrowings outstanding under this credit facility. As of December 31, 2023, we had no borrowings outstanding under the Credit Agreement.
Interest Rate Risk Our ability to borrow and the rates offered by lenders can be adversely affected by deteriorations in the credit markets and/or downgrades in our credit rating. OpCo’s Credit Agreement interest rate is based on a SOFR spread, which exposes us to interest rate risk to the extent we have borrowings outstanding under this credit facility.
A hypothetical upward or downward shift of 10% per Bbl in the NYMEX forward curve for crude oil as of December 31, 2023 would cause a $124.5 million increase or $125.1 million decrease, respectively, in this fair value position, and a hypothetical upward or downward shift of 10% per Mcf in the NYMEX forward curve for natural gas as of December 31, 2023 would cause a $8.6 million increase or $9.0 million decrease, respectively, in this same fair value position. 62 Table of Contents Interest Rate Risk Our ability to borrow and the rates offered by lenders can be adversely affected by deteriorations in the credit markets and/or downgrades in our credit rating.
A hypothetical upward or downward shift of 10% per Bbl in the NYMEX forward curve for crude oil as of December 31, 2024 would cause a $154.3 million increase or decrease, respectively, in this fair value position, and a hypothetical upward or downward shift of 10% per MMBtu in the NYMEX forward curve for natural gas as of December 31, 2024 would cause a $14.0 million increase or decrease, respectively, in this same fair value position.
Crude Price ($/Bbl) (1) Crude oil swaps January 2024 - March 2024 2,919,100 32,078 $77.10 April 2024 - June 2024 2,975,500 32,698 76.24 July 2024 - September 2024 2,990,000 32,500 75.40 October 2024 - December 2024 2,990,000 32,500 74.61 January 2025 - March 2025 1,575,000 17,500 73.33 April 2025 - June 2025 1,592,500 17,500 72.27 July 2025 - September 2025 1,610,000 17,500 71.25 October 2025 - December 2025 1,610,000 17,500 70.34 Period Volume (Bbls) Volume (Bbls/d) Wtd.
Crude Price ($/Bbl) (1) Crude oil swaps January 2025 - March 2025 4,050,000 45,000 $75.21 April 2025 - June 2025 4,095,000 45,000 73.87 July 2025 - September 2025 4,140,000 45,000 72.64 October 2025 - December 2025 4,140,000 45,000 71.60 January 2026 - March 2026 1,575,000 17,500 71.49 April 2026 - June 2026 1,592,500 17,500 70.61 July 2026 - September 2026 1,610,000 17,500 69.77 October 2026 - December 2026 1,610,000 17,500 69.08 61 Table of Contents Period Volume (Bbls) Volume (Bbls/d) Wtd.
We do not currently have or intend to enter into any derivative hedge contracts to protect against fluctuations in interest rates applicable to our outstanding indebtedness. The long-term debt balance of $3.8 billion consists of our senior notes, which have fixed interest rates; therefore, this balance is not affected by interest rate movements.
As of December 31, 2024, we had no borrowings outstanding under the Credit Agreement. We do not currently have or intend to enter into any derivative hedge contracts to protect against fluctuations in interest rates applicable to our outstanding indebtedness.
Gas Price ($/MMBtu) (1) Natural gas swaps January 2024 - March 2024 4,104,919 45,109 $3.77 April 2024 - June 2024 5,906,321 64,905 3.29 July 2024 - September 2024 5,949,388 64,667 3.43 October 2024 - December 2024 5,933,899 64,499 3.86 January 2025 - March 2025 3,600,000 40,000 4.32 April 2025 - June 2025 3,640,000 40,000 3.65 July 2025 - September 2025 3,680,000 40,000 3.83 October 2025 - December 2025 3,680,000 40,000 4.20 61 Table of Contents Period Volume (MMBtu) Volume (MMBtu/d) Wtd.
Gas Price ($/MMBtu) (1) Natural gas swaps January 2025 - March 2025 11,070,000 123,000 $3.44 April 2025 - June 2025 11,193,000 123,000 3.12 July 2025 - September 2025 11,316,000 123,000 3.43 October 2025 - December 2025 11,316,000 123,000 3.85 January 2026 - March 2026 8,190,000 91,000 4.08 April 2026 - June 2026 8,281,000 91,000 3.40 July 2026 - September 2026 8,372,000 91,000 3.65 October 2026 - December 2026 8,372,000 91,000 4.01 January 2027 - March 2027 12,600,000 140,000 4.24 April 2027 - June 2027 12,740,000 140,000 3.32 July 2027 - September 2027 12,880,000 140,000 3.58 October 2027 - December 2027 12,880,000 140,000 3.94 62 Table of Contents Period Volume (MMBtu) Volume (MMBtu/d) Wtd.
Removed
Avg. Collar Price Ranges ($/Bbl) (2) Crude oil collars January 2024 - March 2024 182,000 2,000 $60.00 - $76.01 April 2024 - June 2024 182,000 2,000 60.00 - 76.01 July 2024 - September 2024 184,000 2,000 60.00 - 76.01 October 2024 - December 2024 184,000 2,000 60.00 - 76.01 Period Volume (Bbls) Volume (Bbls/d) Wtd. Avg.
Removed
Put Price ($/Bbl) (3) Deferred Premium ($/Bbl) (3) Deferred premium puts January 2024 - March 2024 227,500 2,500 $65.00 $4.96 April 2024 - June 2024 227,500 2,500 65.00 4.96 July 2024 - September 2024 230,000 2,500 65.00 4.96 October 2024 - December 2024 230,000 2,500 65.00 4.96 60 Table of Contents Period Volume (Bbls) Volume (Bbls/d) Wtd. Avg.
Removed
(2) These crude oil collars are settled based on the NYMEX WTI index price on each trading day within the specified monthly settlement period versus the contractual floor and ceiling prices for the volumes stipulated.
Removed
(3) These crude oil deferred premium puts are settled based on the NYMEX WTI index price on each trading day within the specified monthly settlement period versus the contractual put prices for the volumes stipulated.
Removed
Differential ($/MMBtu) (2) Natural gas basis differential swaps January 2024 - March 2024 12,740,000 140,000 $(0.90) April 2024 - June 2024 10,920,000 120,000 (0.99) July 2024 - September 2024 11,040,000 120,000 (0.99) October 2024 - December 2024 11,040,000 120,000 (0.98) January 2025 - March 2025 3,600,000 40,000 (0.74) April 2025 - June 2025 3,640,000 40,000 (0.74) July 2025 - September 2025 3,680,000 40,000 (0.74) October 2025 - December 2025 3,680,000 40,000 (0.74) Period Volume (MMBtu) Volume (MMBtu/d) Wtd.
Removed
Avg. Differential ($/MMBtu) (3) Natural gas basis differential swaps January 2024 - March 2024 3,640,000 40,000 $0.00 Period Volume (MMBtu) Volume (MMBtu/d) Wtd. Avg.
Removed
(3) These natural gas basis swap contracts are settled based on the difference between the Houston Ship Channel (“HSC”) price and the NYMEX price of natural gas during each applicable monthly settlement period.
Removed
(4) These natural gas collars are settled based on the NYMEX Henry Hub price on each trading day within the specified monthly settlement period versus the contractual floor and ceiling prices for the volumes stipulated.

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