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What changed in US ENERGY CORP's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of US ENERGY CORP's 2024 and 2025 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 2025 report.

+262 added−312 removedSource: 10-K (2026-03-13) vs 10-K (2025-03-13)

Top changes in US ENERGY CORP's 2025 10-K

262 paragraphs added · 312 removed · 176 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

52 edited+29 added−14 removed101 unchanged
Biggest changeKey attributes of our oil and natural gas properties include the following: ● Estimated proved reserves of 1,976,791 barrels of oil equivalent (BOE) (81% oil and 19% natural gas) as of December 31, 2024, with a standardized measure value of $23.8 million. ● As of December 31, 2024, our oil and natural gas leases covered 207,243 gross acres and 147,782 net acres. ● 337 gross (327 net) producing wells as of December 31, 2024. ● 1,136 BOE per day average net production for 2024. 6 Table of Contents Recent Events: Divestment of Properties During the year ended December 31, 2024, the Company closed on a series of individual divestitures for a total of $14.0 million in net proceeds before transaction costs of $0.4 million.
Biggest changeKey attributes of our oil and natural gas properties include the following: ● Estimated proved reserves of 1,451,821 barrels of oil equivalent (BOE) (75% oil and 25% natural gas) as of December 31, 2025, with a standardized measure of value of $16.7 million, utilizing prices of $ 65.34 per barrel for oil and $ 3.39 per Mcf for natural gas in accordance with Securities and Exchange Commission requirements. ● As of December 31, 2025, our oil and natural gas leases covered 160,714 gross acres and 134,025 net acres. ● 231 gross (209 net) producing wells as of December 31, 2025. ● 451 BOE per day average net production for 2025.
Consideration for the transaction consisted of the following: (a) $2.0 million in cash, subject to customary adjustments; (b) 1,400,000 shares of the Company’s common stock; (c) a carried working interest whereby the Company agreed to cover and pay for 100% of Synergy’s costs attributable to the Synergy acreage, until the earlier of (i) 78 months from the closing date; or (ii) the date the total costs associated therewith total $20 million; (d) our agreement to pay Synergy 18% of the cash amounts we actually realize from any law or regulation from our sequestration of carbon oxides or similar substances derived directly from an agreed area of mutual interest including Synergy’s acreage; and (e) our agreement to pay Synergy 18% of the gain we may receive in connection with the sale of the future, first, gas processing plant located on Synergy’s acreage.
Consideration for the transaction consisted of the following: (a) $2.0 million in cash, subject to customary adjustments; (b) 1,400,000 shares of the Company’s common stock; (c) a carried working interest whereby the Company agreed to cover and pay for 100% of Synergy’s costs attributable to the Synergy acreage, until the earlier of (i) 78 months from the closing date; or (ii) the date the total costs associated therewith total $20 million; (d) our agreement to pay Synergy 18% of the cash amounts we actually realize from any law or regulation from our sequestration of carbon oxides or similar substances derived directly from an agreed area of mutual interest including Synergy’s acreage; and (e) our agreement to pay Synergy 18% of any gain we may receive in connection with the sale of the future, first, gas processing plant located on Synergy’s acreage.
Derivative Activities On September 10, 2024, the Company settled all of its then outstanding commodity derivative contracts for 2024 and 2025 production receiving $1.8 million. As of December 31, 2024, we no longer have any commodity derivative contracts outstanding.
Derivative Activities On September 10, 2024, the Company settled all of its then outstanding commodity derivative contracts for 2024 and 2025 production receiving $1.8 million. As of December 31, 2025 and 2024, we no longer have any commodity derivative contracts outstanding.
Ultimately, our future success will depend on our ability to develop or acquire additional reserves and resources at costs that allow us to remain competitive. 15 Table of Contents Available Information The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Exchange Act, are filed with the U.S.
Ultimately, our future success will depend on our ability to develop or acquire additional reserves and resources at costs that allow us to remain competitive. 16 Table of Contents Available Information The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Exchange Act, are filed with the U.S.
In his capacity as co-Managing Partner of Sage Road Capital, LLC, which indirectly controls and manages certain funds which own a majority interest in Banner, Woodford and Sage Road, Joshua L. Batchelor, a member of the Board of Directors of the Company, may be deemed to beneficially own the shares of Common Stock held by the Selling Stockholders.
In his capacity as co-Managing Partner of Sage Road Capital, LLC, which indirectly controls and manages certain funds which own a majority interest in Banner, Woodford and Sage Road, Joshua L. Batchelor, a then member of the Board of Directors of the Company, may be deemed to beneficially own the shares of common stock held by the Selling Stockholders.
Drilling fluids, produced water, and most of the other wastes associated with the exploration, development, and production of oil or gas are currently regulated under RCRA’s non-hazardous waste provisions. However, it is possible that certain oil and gas exploration and production wastes now classified as non-hazardous could be classified as hazardous wastes in the future.
Drilling fluids, produced water, and most of the other wastes associated with the exploration, development, and production of oil or gas are currently regulated under RCRA’s non-hazardous waste provisions. However, it is possible that certain oil and gas exploration and production wastes now classified as non-hazardous could be reclassified as hazardous wastes in the future.
Industry Operating Environment The industrial gas and oil and natural gas industries are affected by many factors that we generally cannot control. Government regulations, particularly in the areas of taxation, energy, climate change and the environment, can have a significant impact on operations and profitability.
Industry Operating Environment The industrial gas and oil and natural gas industries are affected by many factors that we cannot control. Government regulations, particularly in the areas of taxation, energy, climate change and the environment, can have a significant impact on operations and profitability.
Seasonal weather patterns and economic cycles also have a significant impact on commodity in both the industrial gas and oil and gas industries. These factors may adversely impact the supply and demand for our products and influence our ability to develop, produce, process and transport industrial gas, oil and natural gas.
Seasonal weather patterns and economic cycles also have a significant impact on commodity prices in both the industrial gas and oil and gas industries. These factors may adversely impact the supply and demand for our products and influence our ability to develop, produce, process and transport industrial gas, oil and natural gas.
Any efforts to improve our sustainability practices in response to these pressures may increase our costs, and we may be forced to implement technologies that are not economically viable in order to improve our sustainability performance and to meet the specific requirements to perform services for certain customers. 9 Table of Contents These various legislative, regulatory and other activities addressing greenhouse gas emissions could adversely affect our business, including by imposing reporting obligations on, or limiting emissions of greenhouse gases from, our equipment and operations, which could require us to incur costs to reduce emissions of greenhouse gases associated with our operations.
Any efforts to improve our sustainability practices in response to these pressures may increase our costs, and we may be forced to implement technologies that are not economically viable in order to improve our sustainability performance and to meet the specific requirements to perform services for certain customers. 10 Table of Contents These various legislative, regulatory and other activities addressing greenhouse gas emissions could adversely affect our business, including by imposing reporting obligations on, or limiting emissions of greenhouse gases from, our equipment and operations, which could require us to incur costs to reduce emissions of greenhouse gases associated with our operations.
Many of our activities and those of our third-party operating partners are covered under categorical exclusions which results in a shorter NEPA review process, however, the impact of the NEPA review process on our activities and those of our third-party operating partners is uncertain at this time and could lead to delays and increased costs that could materially adversely affect our revenues and results of operations. 11 Table of Contents Governmental Regulation Our operations are subject to various rules, regulations and limitations impacting the oil and natural gas exploration and production industry as a whole.
Many of our activities and those of our third-party operating partners are covered under categorical exclusions which results in a shorter NEPA review process, however, the impact of the NEPA review process on our activities and those of our third-party operating partners is uncertain at this time and could lead to delays and increased costs that could materially adversely affect our revenues and results of operations. 12 Table of Contents Governmental Regulation Our operations are subject to various rules, regulations and limitations impacting the oil and natural gas exploration and production industry as a whole.
Accordingly, we believe that access to oil pipeline transportation services generally will be available to us to the same extent as to our similarly situated competitors. 12 Table of Contents Regulation of Transportation and Sales of Natural Gas Historically, the transportation and sale for resale of natural gas in interstate commerce has been regulated by the FERC under the Natural Gas Act of 1938 (“NGA”), the Natural Gas Policy Act of 1978 (“NGPA”) and regulations issued under those statutes.
Accordingly, we believe that access to oil pipeline transportation services generally will be available to us to the same extent as to our similarly situated competitors. 13 Table of Contents Regulation of Transportation and Sales of Natural Gas Historically, the transportation and sale for resale of natural gas in interstate commerce has been regulated by the FERC under the Natural Gas Act of 1938 (“NGA”), the Natural Gas Policy Act of 1978 (“NGPA”) and regulations issued under those statutes.
Underwritten Offering On January 22, 2025, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Roth Capital Partners, LLC (the “Representative”), as representative of the several underwriters named in the Underwriting Agreement (the “Underwriters”), relating to an underwritten offering of 4,236,000 shares of common stock, par value $0.01 per share, of the Company (the “Common Stock”), at a price to the public of $2.65 per share (such offering, the “Offering”).
Underwritten Offering On January 22, 2025, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Roth Capital Partners, LLC (the “Representative”), as representative of the several underwriters named in the Underwriting Agreement (the “Underwriters”), relating to an underwritten offering of 4,236,000 shares of common stock, par value $0.01 per share, of the Company at a price to the public of $2.65 per share (such offering, the “Offering”).
In addition, any leakage from the subsurface portions of the injection wells may cause degradation of freshwater, potentially resulting in cancellation of operations of a well, issuance of fines and penalties from governmental agencies, incurrence of expenditures for remediation of the affected resource, and imposition of liability by third parties for property damages and personal injury. 10 Table of Contents The Occupational Safety and Health Act ( “ OSHA ” ).
In addition, any leakage from the subsurface portions of the injection wells may cause degradation of freshwater, potentially resulting in cancellation of operations of a well, issuance of fines and penalties from governmental agencies, incurrence of expenditures for remediation of the affected resource, and imposition of liability by third parties for property damages and personal injury. 11 Table of Contents The Occupational Safety and Health Act ( “ OSHA ” ).
We have historically explored for and produced oil and natural gas through a non-operator business model, however, during 2020 we acquired operated properties in North Dakota, New Mexico, Wyoming and the Texas Gulf Coast, and on January 5, 2022, we closed the acquisitions of certain oil and gas properties from three separate sellers, representing a diversified portfolio of primarily operated, producing, oil-weighted assets located across the Rockies, West Texas, Eagle Ford, and Mid-Continent regions.
We previously explored for and produced oil and natural gas through a non-operator business model, however, during 2020 we acquired operated properties in North Dakota, New Mexico, Wyoming and the Texas Gulf Coast, and on January 5, 2022, we closed the acquisitions of certain oil and gas properties from three separate sellers, representing a diversified portfolio of primarily operated, producing, oil-weighted assets located across the Rockies, West Texas, Eagle Ford, and Mid-Continent regions.
We have policies designed to promote ethical conduct and integrity that employees are required to read and acknowledge. 13 Table of Contents We strive to provide competitive, performance-based compensation and benefits to our employees, including market-competitive pay, and various healthcare, retirement, and other benefit packages.
We have policies designed to promote ethical conduct and integrity that employees are required to read and acknowledge. 14 Table of Contents We strive to provide competitive, performance-based compensation and benefits to our employees, including market-competitive pay, and various healthcare, retirement, and other benefit packages.
Like the regulation of interstate transportation rates, the regulation of intrastate transportation rates affects the marketing of natural gas that we produce, as well as the revenues we receive for sales of our natural gas. Research and Development No research and development expenditures have been incurred during the past three fiscal years.
Like the regulation of interstate transportation rates, the regulation of intrastate transportation rates affects the marketing of natural gas that we produce, as well as the revenues we receive for sales of our natural gas. Research and Development No research and development expenditures have been incurred during the past two fiscal years.
Under the terms of the Underwriting Agreement, the Company granted the Underwriters a 30-day option to purchase up to 635,400 additional shares of Common Stock (the “Option”), which was exercised in full on January 25, 2025. The sale of 4,871,400 shares of Common Stock (including the full 635,400 Option) in connection with the Offering, closed on January 23, 2025.
Under the terms of the Underwriting Agreement, the Company granted the Underwriters a 30-day option to purchase up to 635,400 additional shares of common stock (the “Option”), which was exercised in full on January 25, 2025. 7 Table of Contents The sale of 4,871,400 shares of common stock (including the full 635,400 Option) in connection with the Offering, closed on January 23, 2025.
Energy Corp. was incorporated in the State of Wyoming on January 26, 1966, and reincorporated to Delaware effective on August 3, 2022. We are an independent energy company focused on the acquisition and development of oil and natural gas producing properties in the continental United States.
Energy Corp. was incorporated in the State of Wyoming on January 26, 1966, and reincorporated to Delaware effective on August 3, 2022. We are an industrial gas and energy company focused on the acquisition and development of industrial gases, oil and natural gas producing properties in the continental United States.
Effective January 1, 1995, the FERC implemented regulations establishing an indexing system (based on inflation) for transportation rates for oil pipelines that allows a pipeline to increase its rates annually up to a prescribed ceiling, without making a cost-of-service filing. Every five years, the FERC reviews the appropriateness of the index level in relation to changes in industry costs.
The FERC has implemented regulations establishing an indexing system (based on inflation) for transportation rates for oil pipelines that allows a pipeline to increase its rates annually up to a prescribed ceiling, without making a cost-of-service filing. Every five years, the FERC reviews the appropriateness of the index level in relation to changes in industry costs.
For example, the Texas Railroad Commission (“RRC”) adopted new oil and natural gas permit rules in October 2014 for wells used to dispose of saltwater and other fluids resulting from the production of oil and natural gas in order to address these seismic activity concerns within the state.
For example, the Texas Railroad Commission (“RRC”) has adopted oil and natural gas permit rules for wells used to dispose of saltwater and other fluids resulting from the production of oil and natural gas in order to address these seismic activity concerns within the state.
Such seasonal anomalies can also pose challenges for meeting well drilling objectives and may increase competition for equipment, supplies and personnel during the spring and summer months, which could lead to shortages and increase costs or delay or temporarily halt our operations and those of our operating partners.
Such seasonal anomalies can also pose timing challenges and may increase competition for equipment, supplies and personnel during the spring and summer months, which could lead to shortages and increase costs or delay or temporarily halt our operations and those of our operating partners.
Our industrial gas project is under development and as such, there is no industrial gas production that is currently marketed. We had no significant delivery commitments as of December 31, 2024. Competition Our operations are highly competitive in the search for and acquisition of additional oil and gas reserves and industrial gas resources.
Our industrial gas project is under development and as such, there is no industrial gas production that is currently marketed. We had no significant delivery commitments as of December 31, 2025. Competition Our operations are highly competitive in the search for and acquisition of oil, natural gas, and industrial gas resources.
Significant factors that may impact commodity prices in the current fiscal year and future periods include the ongoing international conflicts, the level of inflation and interest rates, access to capital at commercial reasonable costs, attacks on merchant vessels in the Red Sea and related political developments in response to tariffs and international conflicts, demand in domestic, Asian and European markets, and the extent to which exporting nations manage commodity supply or incentivize incremental production.
Significant factors that may impact commodity prices in the current fiscal year and future periods include international conflicts, the level of inflation and interest rates, access to capital at commercial reasonable costs, and related political developments in response to tariffs and international conflicts, demand in domestic, Asian and European markets, and the extent to which exporting nations manage commodity supply or incentivize incremental production.
Waste Handling . The Resource Conservation and Recovery Act (“RCRA”) and comparable state statutes regulate the generation, transportation, treatment, storage, disposal, and cleanup of hazardous and non-hazardous wastes. Under the auspices of the United States Environmental Protection Agency (“EPA”), individual states administer some or all of the provisions of RCRA, sometimes in conjunction with their own, more stringent requirements.
Waste Handling . The Resource Conservation and Recovery Act (“RCRA”) and comparable state statutes regulate the generation, transportation, treatment, storage, disposal, and cleanup of hazardous and non-hazardous wastes. Under the auspices of the EPA, individual states administer some or all of the provisions of RCRA, sometimes in conjunction with their own, more stringent requirements.
The federal Clean Air Act (the “CAA”) and state air pollution laws and regulations provide a framework for national, state and local efforts to protect air quality. Applicable to our business and operations, the CAA regulates emissions, discharges and controls with respect to oil and natural gas production and natural gas processing operations.
The federal Clean Air Act (the “CAA”) and state air pollution laws and regulations provide a framework for national, state and local efforts to protect air quality. Applicable to our business and operations, the CAA regulates emissions from oil and natural gas production and processing operations.
Our fiscal year ends on December 31st. Interim results are presented on a quarterly basis for the quarters ended March 31st, June 30th, and September 30th, the first quarter, second quarter and third quarter, respectively, with the quarter ending December 31st being referenced herein as our fourth quarter.
Interim results are presented on a quarterly basis for the quarters ended March 31st, June 30th, and September 30th, the first quarter, second quarter and third quarter, respectively, with the quarter ending December 31st being referenced herein as our fourth quarter. Fiscal 2025 means the year ended December 31, 2025, whereas fiscal 2024 means the year ended December 31, 2024.
Forward Plan In 2025 and beyond, we intend to seek additional opportunities in the oil, natural gas and industrial gas sectors, including but not limited to further acquisition of assets, participation with industry partners in exploration and development projects, acquisition of existing companies, and the purchase of other industrial gas assets.
Forward Plan and Development In 2026 and beyond, we intend to seek additional opportunities in the oil, natural gas and industrial gas sectors, including but not limited to further acquisition of assets, participation with industry partners, and the acquisition of existing companies.
In South Texas, the Company divested its assets in Karnes County, Texas, for approximately $5.2 million in net cash proceeds after customary purchase price adjustments, effective April 1, 2024, with the transaction closing on July 31, 2024.
Properties". 6 Table of Contents Material Events: Divestment of Properties In South Texas, the Company divested its assets in Karnes County, Texas, for approximately $5.2 million in net cash proceeds after customary purchase price adjustments, effective April 1, 2024, with the transaction closing on July 31, 2024.
On January 7, 2025, we acquired an additional 24,000 net acres that are contiguous to our existing positions in Toole County including a non-producing well that is expected to be completed and tested in the first half of 2025. Additionally, we anticipate drilling 2 new exploratory wells on the acquired acreage in the first half of 2025.
On January 7, 2025, we acquired an additional 24,000 net acres that are contiguous to our existing positions in Toole County including a non-producing well that is expected to be completed and tested in the first half of 2026.
Our principal properties and operations are in the Rockies region (Montana, Wyoming, and North Dakota), the Mid-Continent (Oklahoma, Kansas, and North and East Texas), and the West Texas, South Texas and Gulf Coast regions.
Our principal properties and operations are in the Rockies region (Montana and Wyoming), the Mid-Continent (Oklahoma, and North and East Texas), and the Gulf Coast region.
Securities and Exchange Commission. Such reports and other information filed by the Company with the SEC are available free of charge at https://investors.usnrg.com/investors/sec-filings when such reports are available on the SEC’s website. The Company periodically provides other information for investors on its corporate website, https://usnrg.com.
Securities and Exchange Commission. Such reports and other information filed by the Company with the SEC are available free of charge at https://investors.usnrg.com/investors/sec-filings when such reports are available on the SEC’s website. The Company periodically provides other information for investors on its corporate website, https://usnrg.com. Further, the Company’s references to website URLs are intended to be inactive textual references only.
In these areas, we may be obligated to develop and implement plans to avoid potential adverse impacts on protected species, and we may be prohibited from conducting operations in certain locations or during certain seasons, such as breeding and nesting seasons, when our operations could have an adverse effect on these species.
Some of our operations are conducted in areas where protected species are known to exist. In these areas, we may be obligated to develop and implement plans to avoid potential adverse impacts on protected species, and we may be prohibited from conducting operations in certain locations or during certain seasons, such as breeding and nesting seasons.
Although we believe that this information is reliable, we cannot guarantee the accuracy and completeness of this information, we have not independently verified any of it and we have not commissioned any of the market or survey data that is presented in this Report. Please see the “Glossary” above for a list of abbreviations and definitions used throughout this Report.
Although we believe that this information is reliable, we cannot guarantee the accuracy and completeness of this information, we have not independently verified any of it and we have not commissioned any of the market or survey data that is presented in this Report.
Fiscal 2024 means the year ended December 31, 2024, whereas fiscal 2023 means the year ended December 31, 2023. Unless the context requires otherwise, references to the “Company,” “we,” “us,” “our,” “U.S. Energy,” and “U.S. Energy Corp.” refer specifically to U.S. Energy Corp. and its consolidated subsidiaries.
Unless the context requires otherwise, references to the “Company,” “we,” “us,” “our,” “U.S. Energy,” and “U.S. Energy Corp.” refer specifically to U.S. Energy Corp. and its consolidated subsidiaries.
These laws and regulations may: ● Require the acquisition of a permit or other authorization before construction or drilling commences and for certain other activities; ● Limit or prohibit construction, drilling and other activities on certain lands lying within wilderness and other protected areas; and ● Impose substantial liabilities for pollution resulting from operations. 7 Table of Contents The permits required for our operations may be subject to revocation, modification and renewal by issuing authorities.
These laws and regulations may: ● Require the acquisition of a permit or other authorization before construction or drilling commences and for certain other activities; ● Limit or prohibit construction, drilling and other activities on certain lands lying within wilderness and other protected areas; and ● Impose substantial liabilities for pollution resulting from operations.
Share repurchases under our approved share repurchase program continued in 2024, and we have extended the share repurchase program until June 30, 2026. These repurchases may resume so long as share prices remain attractive and repurchases remain in the best interests of both the Company and its stockholders.
Our share repurchase program was extended to June 30, 2026. Repurchases of shares may resume in 2026 so long as share prices remain attractive and repurchases remain in the best interests of both the Company and its stockholders.
These rules have required a number of modifications to the operations of our third-party operating partners, including the installation of new equipment to control emissions from compressors. 8 Table of Contents In addition, the EPA has developed, and continues to develop, stringent regulations governing emissions at specified sources.
These rules have required a number of modifications to the operations of our third-party operating partners, including the installation of new equipment to control emissions from compressors. 9 Table of Contents In addition, the EPA has adopted, and continues to adopt and revise, regulations governing emissions from oil and natural gas operations.
Payment of substantial liabilities in excess of coverage could require diversion of internal capital away from regular business, which could result in curtailment of projected future operations. Human Capital As of March 10, 2025, we had 20 full-time employees and 1 part-time employee, none of whom were subject to a collective bargaining agreement.
Payment of substantial liabilities in excess of coverage could require diversion of internal capital away from regular business, which could result in curtailment of projected future operations. Human Capital As of March 6, 2026, we had 20 employees, none of whom were subject to a collective bargaining agreement. In addition, we utilize several consultants on an as-needed basis.
Seasonality Winter weather conditions can limit or temporarily halt our drilling and producing activities. These constraints and the resulting shortages or high costs could delay or temporarily halt the operations and materially increase our operating and capital costs.
These constraints and the resulting shortages or high costs could delay or temporarily halt the operations and materially increase our operating and capital costs.
In addition, we utilize several consultants on an as-needed basis. We recognize that our employees are our most valuable assets and drive the way we pursue our short-term and long-term goals.
We recognize that our employees are our most valuable assets and drive the way we pursue our short-term and long-term goals.
Governmental authorities have the power to enforce their regulations, and violations are subject to fines or injunctions, or both. In the opinion of management, we are in substantial compliance with current applicable environmental laws and regulations and have no significant commitments for capital expenditures to comply with existing environmental requirements.
In the opinion of management, we are in substantial compliance with current applicable environmental laws and regulations and have no significant commitments for capital expenditures to comply with existing environmental requirements, although future regulatory changes could require additional capital expenditures.
The information contained on the websites referenced in this Form 10-K is not incorporated by reference into this filing. Further, the Company’s references to website URLs are intended to be inactive textual references only.
The information contained on the websites referenced in this Form 10-K is not incorporated by reference into this filing.
Environmental Laws and Regulations Environmental Matters Our operations and properties are subject to extensive and changing federal, state and local laws and regulations relating to environmental protection, including the generation, storage, handling, emission, transportation and discharge of materials into the environment, and relating to safety and health.
If all shares registered for resale under this prospectus were issued, such issuances would result in significant dilution to existing stockholders. 8 Table of Contents Environmental Laws and Regulations Environmental Matters Our operations and properties are subject to extensive and changing federal, state and local laws and regulations relating to environmental protection, including the generation, storage, handling, emission, transportation and discharge of materials into the environment, and relating to safety and health.
Industrial Gas Operations In June 2024, the Company acquired approximately 144,000 acres across the Kevin Dome in Toole County, Montana for the purposes of exploring and exploiting multiple, industrial gas streams. We are in the early stages of our exploration and development program primarily focusing on drilling and completing wells and evaluating processing plant designs and supporting infrastructure.
Industrial Gas Operations In June 2024, the Company acquired approximately 144,000 acres across the Kevin Dome in Toole County, Montana for the purposes of exploring and exploiting multiple, industrial gas streams.
Our working interest varies by project and may change over time based on the terms of our leases and operating agreements. We are also actively pursuing potential acquisitions of exploration, development and production-stage oil and natural gas properties or companies.
Oil and Natural Gas Operations We participate in oil and natural gas projects primarily as an operator. Our working interest varies by project and may change over time based on the terms of our leases and operating agreements.
This uncertainty also affects management’s accounting estimates and assumptions, which could result in greater variability in a variety of areas that depend on these estimates and assumptions, including investments, receivables, and forward-looking guidance. 14 Table of Contents Development During 2025, we will continue to evaluate opportunities to monetize legacy oil and natural gas assets and redeploy capital into our focus areas.
This uncertainty also affects management’s accounting estimates and assumptions, which could result in greater variability in a variety of areas that depend on these estimates and assumptions, including investments, receivables, and forward-looking guidance. 15 Table of Contents Seasonality Winter weather conditions can limit or temporarily halt our drilling and development activities.
Synergy is controlled by Mr. Duane H. King, a member of the Board of Directors of the Company, who serves as the Chief Executive Officer and Manager of Synergy, and John A. Weinzierl, the Company’s Chairman, who is an approximate sixty percent beneficial owner of Synergy.
Synergy On January 7, 2025, we entered and simultaneously closed the transactions contemplated by, a purchase and sale agreement, with Synergy Offshore LLC (“Synergy”). Synergy is controlled by Mr. Duane H. King, a member of the Board of Directors of the Company, who serves as the Chief Executive Officer and Manager of Synergy, and John A.
The CAA includes New Source Performance Standards (“NSPS”) for the oil and natural gas source category to address emissions of sulfur dioxide, methane and volatile organic compounds (“VOCs”) from new and modified oil and natural gas production, processing and transmission sources as well as a separate set of emission standards to address hazardous air pollutants frequently associated with oil and natural gas production and processing activities.
The CAA includes New Source Performance Standards ("NSPS") for the oil and natural gas source category addressing emissions of methane, volatile organic compounds ("VOCs"), and other pollutants, as well as National Emissions Stands for Hazardous Air Pollutants ("NESHAP").
You may also find information related to our corporate governance, board committees and code of ethics on our website.
You may also find information related to our corporate governance, board committees and code of ethics on our website. The Company uses, and will continue to use, its website (https://usnrg.com) and press releases, as additional means of disclosing public information to investors, the media and others interested in the Company.
These divestitures reflect the Company's strategic portfolio management, exiting non-core geographic regions to enhance liquidity, strengthen the balance sheet, and redirect capital toward high-growth opportunities. Acquisition of Properties Wavetech On June 26, 2024, we entered into and closed the transactions contemplated by, a purchase and sale agreement with Wavetech Helium (“Wavetech” and the “Purchase Agreement”).
The Company also closed on the sale of a portion of our Wyoming properties for approximately $500 thousand. Acquisition of Properties Wavetech On June 26, 2024, we entered into and closed the transactions contemplated by, a purchase and sale agreement with Wavetech Helium (“Wavetech” and the “Purchase Agreement”).
Among other things, the new rules impose green completion requirements on new hydraulically fractured or re-fractured oil wells and leak detection and repair requirements at well sites. We do not expect that the currently applicable NSPS or NESHAP requirements will have a material adverse effect on our business, financial condition or results of operations.
These regulations include expanded methane emission standards and leak detection requirements applicable to both new and existing sources. We do not expect that currently applicable NSPS or NESHAP requirements will have a material adverse effect on our business, financial condition or results of operations; however, future regulatory changes could require additional permitting, operational modifications or capital expenditures.
Office Location Our principal executive office is located at 1616 S. Voss Road, Suite 725, Houston, Texas 77057. Our telephone number is (346) 509-8734. Oil and Natural Gas Operations We participate in oil and natural gas projects primarily as an operator.
Other ongoing activities include the detail design of a processing facility, gathering and transportation system, and power infrastructure, as well as securing rights of way, injection agreements, and negotiating an offtake agreement with a third party. Office Location Our principal executive office is located at 1616 S. Voss Road, Suite 725, Houston, Texas 77057. Our telephone number is (346) 509-8734.
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During the fourth quarter 2023, we sold virtually all of our non-operated properties and as of December 31, 2024, operate 99% of our reserves. In 2024, we continued to divest legacy assets (see divestment of properties) and redeploy capital into our core focus areas.
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Please see the “Glossary of Oil, Natural and Industrial Gas Terms” above for a list of abbreviations and definitions used throughout this Report. Our fiscal year ends on December 31st.
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Contemporaneously, we are also pursuing disposal well permits and regulatory approvals for the sequestration carbon, which we believe are complementary to our ongoing development activities. We will also evaluate potential acquisitions we believe advance our project’s progress.
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Beginning in the fourth quarter 2023 and continuing through year-end 2025, we sold several legacy oil and natural gas assets and redeployed the capital into our industrial gas focus area. Our current oil and natural gas production is primarily located in the Rockies and Mid-Continent regions.
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The Company was also relieved of associated asset retirement obligations of $5.4 million.
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Additionally, we drilled and completed two new industrial gas wells in 2025 and have filed monitoring, reporting and verifications applications with the government regulators that, assuming approved, will allow us to inject or dispose of carbon dioxide and waste gases, which is complementary to our ongoing development activities.
Removed
The divestitures included primarily operated properties in Texas and Mid-Continent ("Mid-con") and encompassed 408 gross wells, with two prior dispositions, one relating to our South Texas properties and one relating to our East Texas properties, each discussed in greater detail below, accounting for the majority of the proceeds.
Added
Additional information about our oil and gas properties and operations can be found in "Item 2.
Removed
The net proceeds from these divestitures were used to repay the outstanding balance on our credit facility, bringing the balance as of December 31, 2024 to $0.0 million. We also used part of the proceeds to fund the continued development of the Company's industrial gas project in Montana.
Added
The net proceeds from these divestitures were used to fund the continued development of the Company's industrial gas project in Montana, as well as for general corporate purposes. These divestitures reflect the Company's strategic portfolio management, exiting non-core geographic regions to enhance liquidity, strengthen the balance sheet, and redirect capital toward high-growth opportunities.
Removed
As of March 10, 2025, we had drilled one of the two wells required to vest the Assigned Rights, and we expect this to be completed in the first half of 2025. Synergy On January 7, 2025, we entered and simultaneously closed the transactions contemplated by, a purchase and sale agreement, with Synergy Offshore LLC (“Synergy”).
Added
In 2025, the Company entered into a negotiated post-closing cash settlement and recognized a loss of $424 thousand on our $6.8 million divestment of properties located in Henderson, Anderson, Liberty, and Chambers County, Texas that closed on December 31, 2024 (as discussed above).
Removed
Under the terms of the Underwriting Agreement, the Company and the Company’s directors and executive officers and their affiliates, also agreed not to sell or transfer any Common Stock without first obtaining the written consent of the Representative, subject to certain exceptions (including the Sage Road Purchase, discussed below), for 60 days after January 22, 2025, the date of the final prospectus supplement relating to the Offering.
Added
Weinzierl, the Company’s Chairman, who was then an approximate sixty percent beneficial owner of Synergy.
Removed
Some of our operations are conducted in areas where protected species are known to exist.
Added
Stock Repurchase Program On January 29, 2025, the Board of Directors of the Company authorized and approved an extension of a then ongoing share repurchase program for up to $5.0 million of the outstanding shares of the Company’s common stock originally approved by the Board of Directors on April 26, 2023 and subsequently extended, subject to any future extensions in the discretion of the Board of Directors of the Company, the repurchase program is now scheduled to expire on June 30, 2026, when a maximum of $5.0 million of the Company’s common stock has been repurchased, or when such program is discontinued by the Board of Directors.
Removed
For example, under the EPA’s NSPS and National Emission Standards for Hazardous Air Pollutants (“NESHAP”) regulations, since January 1, 2015, owners and operators of hydraulically fractured natural gas wells (wells drilled principally for the production of natural gas) have been required to use so-called “green completion” technology to recover natural gas that formerly would have been flared or vented.
Added
Under the stock repurchase program, shares may be repurchased from time to time in the open market or through negotiated transactions at prevailing market prices, or by other means in accordance with federal securities laws.
Removed
In 2016, the EPA issued additional rules for the oil and natural gas industry to reduce emissions of methane, VOCs and other compounds. These rules apply to certain sources of air emissions that were constructed, reconstructed, or modified after September 18, 2015.
Added
Repurchases will be made at management’s discretion at prices management considers to be attractive and in the best interests of both the Company and its stockholders, subject to the availability of stock, general market conditions, the trading price of the stock, alternative uses for capital, and the Company’s financial performance.
Removed
However, any future laws and their implementing regulations may require us to obtain pre-approval for the expansion or modification of existing facilities or the construction of new facilities expected to produce air emissions, impose stringent air permitting requirements or require us to use specific equipment or technologies to control emissions.
Added
The repurchase program will be funded using the Company’s working capital. For the year ended December 31, 2025, the Company repurchased 197,400 shares of common stock for $317 thousand, at a weighted average price of $1.61 per share.
Removed
This could require a number of modifications to our operations, including the installation of new equipment to control emissions from our wells.
Added
For the year ended December 31, 2024, the Company repurchased 617,000 shares for $730 thousand at a weighted average price of $1.18 per share. As of December 31, 2025, a total of $3.5 million remained available under the repurchase program for future repurchases.
Removed
We will continue to monetize legacy assets and redeploy capital into our core focus areas. During the first half of 2025 we intend to complete two wells (including the well we drilled in the fourth quarter 2024) and drill two additional new wells targeting an industrial gas zone.
Added
Credit Facility On September 16, 2025, effective August 1, 2025, the Company entered into a First Amendment to Credit Agreement and Limited Waiver (“Amendment”) with FirstBank, as administrative agent for the lenders party thereto, and such lenders.
Removed
As part of our development activities, we will focus on performing two industrial gas well completions (including the well we drilled in the fourth quarter 2024) and drilling two new industrial gas wells. We may also participate in development projects with other operators near our acreage position in Toole County, Montana.
Added
Significant revisions made to the Credit Amendment as a result of the Amendment include extending the maturity date of amounts owed from January 5, 2026 to May 31, 2029, lowering the borrowing base from $20.0 million to $10.0 million, and deferring the next test period for the ratio of total debt to EBITDAX to March 31, 2026.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeCertain of these entities are party to agreements with the Company and if any of these companies enter into any additional transactions or agreements with our company, or other related party transactions or matters exist, potential conflicts of interest could arise from the directors performing services for us and these other entities. 39 Table of Contents Certain of our directors beneficially own approximately 52.9% of our outstanding common stock, which gives them majority voting control over stockholder matters, and each are also party to a Nominating and Voting Agreement, which allows them to control who is appointed to the Board of Directors of the Company and their interests may be different from your interests; and as a result of such ownership, we are a “ controlled company ” under applicable Nasdaq Capital Market Rules.
Biggest changeCertain of these entities are party to agreements with the Company and if any of these companies enter into any additional transactions or agreements with our company, or other related party transactions or matters exist, potential conflicts of interest could arise from the directors performing services for us and these other entities.
The Company’s operations are subject to disruption from natural or human causes beyond its control, including risks from hurricanes, severe storms, floods, lightning strikes, heat waves, other forms of severe weather, wildfires, ambient temperature increases, sea level rise, war, accidents, civil unrest, political events, fires, earthquakes, system failures, cyber threats, terrorist acts and epidemic or pandemic diseases such as the COVID-19 pandemic, some of which may be impacted by climate change and any of which could result in suspension of operations or harm to people or the natural environment.
The Company’s operations are subject to disruption from natural or human causes beyond its control, including risks from hurricanes, severe storms, floods, lightning strikes, heat waves, other forms of severe weather, wildfires, ambient temperature increases, sea level rise, war, accidents, civil unrest, political events, fires, earthquakes, system failures, cyber threats, terrorist acts and epidemic or pandemic diseases such as the COVID-19 pandemic, some of which may be impacted by climate change and any of which could result in suspension of operations or harm to people or the natural environment.
Our operations are subject to stringent and complex federal, state and local laws and regulations relating to the protection of human health and safety, the environment and natural resources.
Our operations are subject to stringent and complex federal, state and local laws and regulations relating to the protection of human health and safety, the environment and natural resources.
Certain environmental statutes impose strict, joint and several liability for costs required to clean up and restore sites where hazardous substances, hydrocarbons or wastes have been disposed or otherwise released. Moreover, local restrictions, such as state or local moratoria, city ordinances, zoning laws and traffic regulations, may restrict or prohibit the execution of operational plans.
Certain environmental statutes impose strict, joint and several liability for costs required to clean up and restore sites where hazardous substances, hydrocarbons or wastes have been disposed or otherwise released. Moreover, local restrictions, such as state or local moratoria, city ordinances, zoning laws and traffic regulations, may restrict or prohibit the execution of operational plans.
In addition, third parties, such as neighboring landowners, may file claims alleging property damage, nuisance or personal injury arising from our operations or from the release of hazardous substances, hydrocarbons or other waste products into the environment. The trend in environmental regulation is to place more restrictions and limitations on activities that may affect the environment.
In addition, third parties, such as neighboring landowners, may file claims alleging property damage, nuisance or personal injury arising from our operations or from the release of hazardous substances, hydrocarbons or other waste products into the environment. The trend in environmental regulation is to place more restrictions and limitations on activities that may affect the environment.
We monitor developments at the federal, state and local levels to keep informed of actions pertaining to future regulatory requirements that might be imposed in order to mitigate the costs of compliance with any such requirements.
We monitor developments at the federal, state and local levels to keep informed of actions pertaining to future regulatory requirements that might be imposed in order to mitigate the costs of compliance with any such requirements.
In addition, the Credit Agreement contains financial covenants, tested quarterly, that limit the Company’s ratio of total debt to EBITDAX (as defined in the Credit Agreement) to 3:1 and require its ratio of consolidated current assets to consolidated current liabilities (as each is described in the Credit Agreement) to remain at 1:1 or higher.
In addition, the Credit Agreement contains financial covenants, tested quarterly, that limit the Company’s ratio of total debt to EBITDAX (as defined in the Credit Agreement) to 3:1 and require its ratio of consolidated current assets to consolidated current liabilities (as each is described in the Credit Agreement) to remain at 1:1 or higher.
The prices we receive for any future production and levels of such production, will continue to depend on numerous factors, including the following: ● the domestic and foreign demand and supply of industrial gas, oil, NGLs, and natural gas; ● the prices and availability of competitors’ supplies of industrial gas, oil, NGLs, and natural gas; ● the actions of the exporting countries or organizations such as Organization of Petroleum Exporting Countries, and state-controlled companies relating to price and production controls; ● the price and quantity of foreign imports of industrial gas, oil, NGLs, and natural gas; ● the impact of U.S. dollar exchange rates on industrial gas, oil, NGLs, and natural gas prices and interest rates and inflation; ● domestic and foreign governmental regulations and taxes; ● speculative trading of industrial gas, oil, NGLs, and natural gas futures contracts; ● localized supply and demand fundamentals, including the availability, proximity, and capacity of gathering and transportation systems for natural gas; ● the availability of pipeline, other transportation and refining capacity; ● the prices and availability of alternative fuel sources; ● the threat, or perceived threat, or results, of viral pandemics, for example, as previously experienced with the COVID-19 pandemic; 19 Table of Contents ● weather conditions and natural disasters; ● political conditions in or affecting industrial gas, oil, NGLs, and natural gas producing regions, including the Middle East and South America, and the conflicts in Ukraine and Israel; ● the continued threat of terrorism and the impact of military action and civil unrest; ● public pressure on, and legislative and regulatory interest within, federal, state, and local governments to stop, significantly limit, or regulate hydraulic fracturing activities; ● the level of global industrial gas, oil, NGL, and natural gas inventories and exploration and production activity; ● authorization of exports from the United States of industrial gas, oil, and liquefied natural gas; ● the impact of energy conservation efforts; ● technological advances affecting energy and industrial gas consumption; and ● global economic conditions.
The prices we receive for any future production and levels of such production, will continue to depend on numerous factors, including the following: ● the domestic and foreign demand and supply of industrial gas, oil, NGLs, and natural gas; ● the prices and availability of competitors’ supply of industrial gas, oil, NGLs, and natural gas; ● the actions of the exporting countries or organizations such as Organization of Petroleum Exporting Countries, and state-controlled companies relating to price and production controls; ● the price and quantity of foreign imports of industrial gas, oil, NGLs, and natural gas; ● the impact of U.S. dollar exchange rates on industrial gas, oil, NGLs, and natural gas prices and interest rates and inflation; ● domestic and foreign governmental regulations and taxes; ● speculative trading of industrial gas, oil, NGLs, and natural gas futures contracts; ● localized supply and demand fundamentals, including the availability, proximity, and capacity of gathering and transportation systems for natural gas; ● the availability of pipeline, other transportation and refining capacity; ● the prices and availability of alternative fuel sources; ● the threat, or perceived threat, or results, of viral pandemics, for example, as previously experienced with the COVID-19 pandemic; 20 Table of Contents ● weather conditions and natural disasters; ● political conditions in or affecting industrial gas, oil, NGLs, and natural gas producing regions, including the Middle East and South America, and the conflicts in Ukraine and Israel; ● the continued threat of terrorism and the impact of military action and civil unrest; ● public pressure on, and legislative and regulatory interest within, federal, state, and local governments to stop, significantly limit, or regulate hydraulic fracturing activities; ● the level of global industrial gas, oil, NGL, and natural gas inventories and exploration and production activity; ● authorization of exports from the United States of industrial gas, oil, and liquefied natural gas; ● the impact of energy conservation efforts; ● technological advances affecting energy and industrial gas consumption; and ● global economic conditions.
These laws and regulations can restrict or impact our business activities in many ways including, but not limited to the following: ● requiring the installation of pollution-control equipment or otherwise restricting the handling or disposal of waste and other substances associated with operations; ● limiting or prohibiting construction activities in sensitive areas, such as wetlands, coastal regions or areas that contain endangered or threatened species and/or species of special statewide concern or their habitats; ● requiring investigatory and remedial actions to address pollution caused by our operations or attributable to former operations; ● requiring noise, lighting, visual impact, odor and/or dust mitigation, setbacks, landscaping, fencing, and other measures; ● restricting access to certain equipment or areas to a limited set of employees or contractors who have proper certification or permits to conduct work (e.g., confined space entry and process safety maintenance requirements); and ● restricting or even prohibiting water use based upon availability, impacts or other factors. 21 Table of Contents Failure to comply with these laws and regulations may trigger a variety of administrative, civil and criminal enforcement measures, including the assessment of monetary penalties, the imposition of remedial or restoration obligations, and the issuance of orders enjoining future operations or imposing additional compliance requirements.
These laws and regulations can restrict or impact our business activities in many ways including, but not limited to the following: ● requiring the installation of pollution-control equipment or otherwise restricting the handling or disposal of waste and other substances associated with operations; ● limiting or prohibiting construction activities in sensitive areas, such as wetlands, coastal regions or areas that contain endangered or threatened species and/or species of special statewide concern or their habitats; ● requiring investigatory and remedial actions to address pollution caused by our operations or attributable to former operations; ● requiring noise, lighting, visual impact, odor and/or dust mitigation, setbacks, landscaping, fencing, and other measures; ● restricting access to certain equipment or areas to a limited set of employees or contractors who have proper certification or permits to conduct work (e.g., confined space entry and process safety maintenance requirements); and ● restricting or even prohibiting water use based upon availability, impacts or other factors. 22 Table of Contents Failure to comply with these laws and regulations may trigger a variety of administrative, civil and criminal enforcement measures, including the assessment of monetary penalties, the imposition of remedial or restoration obligations, and the issuance of orders enjoining future operations or imposing additional compliance requirements.
Our corporate governance documents include provisions: ● a classified board of directors, as a result of which our board of directors is divided into three classes, with each class serving for staggered three-year terms; ● the removal of directors only for cause; ● requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our Board of Directors; ● authorizing blank check preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our common stock; and ● limiting the liability of, and providing indemnification to, our directors and officers. 46 Table of Contents Any provision of our Certificate of Incorporation or Amended and Restated Bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.
Our corporate governance documents include provisions: ● a classified board of directors, as a result of which our board of directors is divided into three classes, with each class serving for staggered three-year terms; ● the removal of directors only for cause; ● requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our Board of Directors; ● authorizing blank check preferred stock, which could be issued with voting, liquidation, dividend and other rights superior to our common stock; and ● limiting the liability of, and providing indemnification to, our directors and officers. 45 Table of Contents Any provision of our Certificate of Incorporation or Amended and Restated Bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.
The Credit Agreement also requires us to hedge certain oil and gas volumes, based on our utilization of the borrowing base. 41 Table of Contents Events of default under the Credit Agreement include: the failure by the Company to timely make payments due under the Credit Agreement; material misrepresentations or misstatements in any representation or warranty of any of the Loan Parties; failure by the Company or any of its subsidiaries to comply with their covenants under the Credit Agreement and other related agreements, subject in certain cases to rights to cure; certain defaults under other indebtedness of the Loan Parties; insolvency or bankruptcy-related events with respect to the Company or any of its subsidiaries; certain unsatisfied judgments against the Company or any of its subsidiaries in an amount in excess of $500,000; if the Credit Agreement or certain related agreements or security interests created by them cease to be in full force and effect; certain ERISA-related events reasonably expected to have a material adverse effect on the Company and its subsidiaries; and the occurrence of a change in control, each as discussed in greater detail in the Credit Agreement, and subject to certain cure rights.
The Credit Agreement also requires us to hedge certain oil and gas volumes, based on our utilization of the borrowing base. 40 Table of Contents Events of default under the Credit Agreement include: the failure by the Company to timely make payments due under the Credit Agreement; material misrepresentations or misstatements in any representation or warranty of any of the Loan Parties; failure by the Company or any of its subsidiaries to comply with their covenants under the Credit Agreement and other related agreements, subject in certain cases to rights to cure; certain defaults under other indebtedness of the Loan Parties; insolvency or bankruptcy-related events with respect to the Company or any of its subsidiaries; certain unsatisfied judgments against the Company or any of its subsidiaries in an amount in excess of $500,000; if the Credit Agreement or certain related agreements or security interests created by them cease to be in full force and effect; certain ERISA-related events reasonably expected to have a material adverse effect on the Company and its subsidiaries; and the occurrence of a change in control, each as discussed in greater detail in the Credit Agreement, and subject to certain cure rights.
Alternatively, if a court were to find one or more of these exclusive forum provisions inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above, we may incur additional costs associated with resolving such matters in other jurisdictions or forums, which could materially and adversely affect our business, financial condition, or results of operations. 47 Table of Contents General Risk Factors Because we are a smaller reporting company, the requirements of being a public company, including compliance with the reporting requirements of the Exchange Act and the requirements of the Sarbanes-Oxley Act and the Dodd-Frank Act, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner.
Alternatively, if a court were to find one or more of these exclusive forum provisions inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings described above, we may incur additional costs associated with resolving such matters in other jurisdictions or forums, which could materially and adversely affect our business, financial condition, or results of operations. 46 Table of Contents General Risk Factors Because we are a smaller reporting company, the requirements of being a public company, including compliance with the reporting requirements of the Exchange Act and the requirements of the Sarbanes-Oxley Act and the Dodd-Frank Act, may strain our resources, increase our costs and distract management, and we may be unable to comply with these requirements in a timely or cost-effective manner.
In addition to the risks described above, acquisitions and business combinations are accompanied by a number of inherent risks, including, without limitation, the following: ● the difficulty of integrating acquired companies, concepts and operations; ● the potential disruption of the ongoing businesses and distraction of our management and the management of acquired companies; 49 Table of Contents ● change in our business focus and/or management; ● difficulties in maintaining uniform standards, controls, procedures and policies; ● the potential impairment of relationships with employees and partners as a result of any integration of new management personnel; ● the potential inability to manage an increased number of locations and employees; ● our ability to successfully manage the companies and/or concepts acquired; ● the failure to realize efficiencies, synergies and cost savings; or ● the effect of any government regulations which relate to the business acquired.
In addition to the risks described above, acquisitions and business combinations are accompanied by a number of inherent risks, including, without limitation, the following: ● the difficulty of integrating acquired companies, concepts and operations; ● the potential disruption of the ongoing businesses and distraction of our management and the management of acquired companies; 48 Table of Contents ● change in our business focus and/or management; ● difficulties in maintaining uniform standards, controls, procedures and policies; ● the potential impairment of relationships with employees and partners as a result of any integration of new management personnel; ● the potential inability to manage an increased number of locations and employees; ● our ability to successfully manage the companies and/or concepts acquired; ● the failure to realize efficiencies, synergies and cost savings; or ● the effect of any government regulations which relate to the business acquired.
Derivative instruments also expose us to the risk of financial loss in some circumstances, including when: ● the counter-party to the derivative instrument defaults on its contract obligations; ● there is an increase in the differential between the underlying price in the derivative instrument and actual prices received; or ● the steps we take to monitor our derivative financial instruments do not detect and prevent transactions that are inconsistent with our risk management strategies. 30 Table of Contents In addition, depending on the type of derivative arrangements we enter into, the agreements could limit the benefit we would receive from increases in oil prices.
Derivative instruments also expose us to the risk of financial loss in some circumstances, including when: ● the counter-party to the derivative instrument defaults on its contract obligations; ● there is an increase in the differential between the underlying price in the derivative instrument and actual prices received; or ● the steps we take to monitor our derivative financial instruments do not detect and prevent transactions that are inconsistent with our risk management strategies. 31 Table of Contents In addition, depending on the type of derivative arrangements we enter into, the agreements could limit the benefit we would receive from increases in oil prices.
These types of shortages and subsequent price increases could significantly decrease our profit margin, cash flow and operating results and/or restrict or delay our ability to drill those wells and conduct those activities that we currently have planned and budgeted, causing us to miss our forecasts and projections. 33 Table of Contents Our oil and natural gas reserves are estimated and may not reflect the actual volumes of oil and natural gas we will receive, and significant inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.
These types of shortages and subsequent price increases could significantly decrease our profit margin, cash flow and operating results and/or restrict or delay our ability to drill those wells and conduct those activities that we currently have planned and budgeted, causing us to miss our forecasts and projections. 34 Table of Contents Our oil and natural gas reserves are estimated and may not reflect the actual volumes of oil and natural gas we will receive, and significant inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.
A prolonged period of weak, or a significant decrease in, industry activity and overall markets, may make it difficult to comply with our covenants and the other restrictions in the agreements governing our debt and current global and market conditions have increased the potential for that difficulty. 42 Table of Contents Risks Related to Our Common Stock We currently have 245,000,000 shares of common stock authorized and there may be future issuances of sales of our common stock, which could adversely affect the market price of our common stock and dilute a stockholder ’ s ownership of common stock.
A prolonged period of weak, or a significant decrease in, industry activity and overall markets, may make it difficult to comply with our covenants and the other restrictions in the agreements governing our debt and current global and market conditions have increased the potential for that difficulty. 41 Table of Contents Risks Related to Our Common Stock We currently have 245,000,000 shares of common stock authorized and there may be future issuances of sales of our common stock, which could adversely affect the market price of our common stock and dilute a stockholder ’ s ownership of common stock.
Uncertainty surrounding such hostilities may affect our operations in unpredictable ways, including the possibility that infrastructure facilities, including pipelines and gathering systems, production facilities, processing plants and refineries, could be targets of, or indirect casualties of, an act of terror, a cyber-attack or electronic security breach, or an act of war. 48 Table of Contents We may have difficulty managing growth in our business, which could have a material adverse effect on our business, financial condition and results of operations and our ability to execute our business plan in a timely fashion.
Uncertainty surrounding such hostilities may affect our operations in unpredictable ways, including the possibility that infrastructure facilities, including pipelines and gathering systems, production facilities, processing plants and refineries, could be targets of, or indirect casualties of, an act of terror, a cyber-attack or electronic security breach, or an act of war. 47 Table of Contents We may have difficulty managing growth in our business, which could have a material adverse effect on our business, financial condition and results of operations and our ability to execute our business plan in a timely fashion.
The legal process relating to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either of which factors is likely to materially reduce the market and price for our shares. 45 Table of Contents Our Certificate of Incorporation contains a specific provision that limits the liability of our directors for monetary damages to the Company and the Company ’ s stockholders and requires us, under certain circumstances, to indemnify officers, directors and employees.
The legal process relating to this matter if it were to occur is likely to be very costly and may result in us receiving negative publicity, either of which factors is likely to materially reduce the market and price for our shares. 44 Table of Contents Our Certificate of Incorporation contains a specific provision that limits the liability of our directors for monetary damages to the Company and the Company ’ s stockholders and requires us, under certain circumstances, to indemnify officers, directors and employees.
If the net book value reduced by the related net deferred income tax liability and asset retirement obligations exceeds the cost center ceiling limitation, a non-cash impairment charge is required in the period in which the impairment occurs. 35 Table of Contents Material write-downs or impairments of our oil and gas properties have in the past and may in the future have a material adverse effect on our assets and/or our financial condition, either of which may cause the value of our securities to decline in value.
If the net book value reduced by the related net deferred income tax liability and asset retirement obligations exceeds the cost center ceiling limitation, a non-cash impairment charge is required in the period in which the impairment occurs. 36 Table of Contents Material write-downs or impairments of our oil and gas properties have in the past and may in the future have a material adverse effect on our assets and/or our financial condition, either of which may cause the value of our securities to decline in value.
Any of these or other similar risks could lead to potential adverse short-term or long-term effects on our operating results and may cause us to not be able to realize any or all of the anticipated benefits of the acquisitions. 28 Table of Contents Many of our joint operating agreements contain provisions that may be subject to legal interpretation, including allocation of non-consent interests, complex payout calculations that impact the timing of reversionary interests, and the impact of joint interest audits.
Any of these or other similar risks could lead to potential adverse short-term or long-term effects on our operating results and may cause us to not be able to realize any or all of the anticipated benefits of the acquisitions. 29 Table of Contents Many of our joint operating agreements contain provisions that may be subject to legal interpretation, including allocation of non-consent interests, complex payout calculations that impact the timing of reversionary interests, and the impact of joint interest audits.
As a result, we may have to make substantial downward adjustments to our estimated proved reserves or industrial gas resources, each of which would have a material adverse effect on our business, financial condition, and results of operations. 20 Table of Contents The Company ’ s operations have in the past been, and could in the future be, disrupted by natural or human causes beyond its control.
As a result, we may have to make substantial downward adjustments to our estimated proved reserves or industrial gas resources, each of which would have a material adverse effect on our business, financial condition, and results of operations. 21 Table of Contents The Company ’ s operations have in the past been, and could in the future be, disrupted by natural or human causes beyond its control.
Accordingly, unsuccessful exploration or development activity affecting even a small number of wells could have a significant impact on our results of operations. Costs other than drilling and completion costs can also be significant for shale wells. 27 Table of Contents If our access to oil and natural gas markets is restricted, it could negatively impact our production and revenues.
Accordingly, unsuccessful exploration or development activity affecting even a small number of wells could have a significant impact on our results of operations. Costs other than drilling and completion costs can also be significant for shale wells. 28 Table of Contents If our access to oil and natural gas markets is restricted, it could negatively impact our production and revenues.
Any significant variance to our estimates could materially affect the quantities and present value of our reserves. 34 Table of Contents We may purchase industrial gas, oil and natural gas properties with liabilities or risks that we did not know about or that we did not assess correctly, and, as a result, we could be subject to liabilities that could adversely affect our results of operations.
Any significant variance to our estimates could materially affect the quantities and present value of our reserves. 35 Table of Contents We may purchase industrial gas, oil and natural gas properties with liabilities or risks that we did not know about or that we did not assess correctly, and, as a result, we could be subject to liabilities that could adversely affect our results of operations.
In the event required capital becomes unavailable in the future, or more costly, it could have a material adverse effect on our business, results of operations, and financial condition. 25 Table of Contents The development of industrial gas, oil and natural gas properties involves substantial risks that may result in a total loss of investment.
In the event required capital becomes unavailable in the future, or more costly, it could have a material adverse effect on our business, results of operations, and financial condition. 26 Table of Contents The development of industrial gas, oil and natural gas properties involves substantial risks that may result in a total loss of investment.
If these non-petroleum-based products and oil alternatives continue to expand and gain broad acceptance such that the overall demand for oil and gas is decreased, it could have an adverse effect on our operations and the value of our assets. 32 Table of Contents Permitting requirements could delay our ability to start or continue our operations.
If these non-petroleum-based products and oil alternatives continue to expand and gain broad acceptance such that the overall demand for oil and gas is decreased, it could have an adverse effect on our operations and the value of our assets. 33 Table of Contents Permitting requirements could delay our ability to start or continue our operations.
Additionally, evolving expectations on various ESG matters, including biodiversity, waste and water, may increase costs, require changes in how we operate and lead to negative stakeholder sentiment. 51 Table of Contents Global economic conditions could materially adversely affect our business, results of operations, financial condition and growth.
Additionally, evolving expectations on various ESG matters, including biodiversity, waste and water, may increase costs, require changes in how we operate and lead to negative stakeholder sentiment. 50 Table of Contents Global economic conditions could materially adversely affect our business, results of operations, financial condition and growth.
Such issuances may also serve to enhance existing management’s ability to maintain control of us, because the shares may be issued to parties or entities committed to supporting existing management. 50 Table of Contents Future litigation or governmental proceedings could result in material adverse consequences, including judgments or settlements.
Such issuances may also serve to enhance existing management’s ability to maintain control of us, because the shares may be issued to parties or entities committed to supporting existing management. 49 Table of Contents Future litigation or governmental proceedings could result in material adverse consequences, including judgments or settlements.
If the Company is unable to use the most advanced commercially available technology in its business, its financial condition and results of operations could be materially adversely affected. 24 Table of Contents Our business and operations were previously adversely affected by the COVID-19 pandemic and may be adversely affected by other similar outbreaks.
If the Company is unable to use the most advanced commercially available technology in its business, its financial condition and results of operations could be materially adversely affected. 25 Table of Contents Our business and operations were previously adversely affected by the COVID-19 pandemic and may be adversely affected by other similar outbreaks.
These fluctuations have particularly affected the market prices of securities of industrial gas, oil and natural gas companies like ours. 43 Table of Contents Our Common Stock may be delisted from The Nasdaq Capital Market if we cannot satisfy Nasdaq ’ s continued listing requirements.
These fluctuations have particularly affected the market prices of securities of industrial gas, oil and natural gas companies like ours. 42 Table of Contents Our Common Stock may be delisted from The Nasdaq Capital Market if we cannot satisfy Nasdaq ’ s continued listing requirements.
Such changes, if adopted, or other similar changes that reduce or eliminate deductions currently available with respect to industrial gas oil and gas exploration and development, could adversely affect our business, financial condition, results of operations, and cash flows. 52 Table of Contents
Such changes, if adopted, or other similar changes that reduce or eliminate deductions currently available with respect to industrial gas oil and gas exploration and development, could adversely affect our business, financial condition, results of operations, and cash flows. 51 Table of Contents
We depend to a significant degree upon the involvement of our management, specifically, our Chief Executive Officer, Ryan L. Smith. Our performance and success are dependent to a large extent on the efforts and continued employment of Mr. Smith. We do not believe that Mr.
We depend significantly upon the continued involvement of our present management. We depend to a significant degree upon the involvement of our management, specifically, our Chief Executive Officer, Ryan L. Smith. Our performance and success are dependent to a large extent on the efforts and continued employment of Mr. Smith. We do not believe that Mr.
Anti-takeover provisions in our Certificate of Incorporation and our Amended and Restated Bylaws, as well as provisions of Delaware law, might discourage, delay or prevent a change in control of our company or changes in our management and, therefore, depress the trading price of our common stock.
Anti-takeover provisions in our Certificate of Incorporation and our Amended and Restated Bylaws, as well as provisions of Delaware law, might discourage, delay or prevent an acquisition of the Company, a change in control of our company or changes in our management and, therefore, depress the trading price of our common stock.
In addition, changes in differentials could make it more difficult for us to effectively hedge our exposure to changes in commodity prices. 26 Table of Contents Unanticipated costs could require new capital that may not be available.
In addition, changes in differentials could make it more difficult for us to effectively hedge our exposure to changes in commodity prices. 27 Table of Contents Unanticipated costs could require new capital that may not be available.
Downward revision of volume estimates may adversely affect the Company’s operational or financial performance. 23 Table of Contents Industrial gas volume estimates are expressions of judgment based on knowledge, experience and industry practice.
Downward revision of volume estimates may adversely affect the Company’s operational or financial performance. 24 Table of Contents Industrial gas volume estimates are expressions of judgment based on knowledge, experience and industry practice.
Any of these risks could have a material adverse effect on our financial condition and results of operations. 31 Table of Contents Insurance may be insufficient to cover future liabilities.
Any of these risks could have a material adverse effect on our financial condition and results of operations. 32 Table of Contents Insurance may be insufficient to cover future liabilities.
These risks include, but are not limited to, the following: ● our ability to obtain sufficient cash flow from operations, borrowing, and/or other sources to fully develop our undeveloped acreage positions; ● volatility in industrial gas and oil and natural gas prices, including declines in prices, which would have a negative impact on operating cash flow and could require further ceiling test write-downs or impairments on our gas assets; ● the possibility that our business may be subject to new adverse regulatory or legislative actions (including changes to existing tax rules and regulations and changes in environmental regulation); ● the general risks of exploration and development activities, including the failure to find sufficient commercial quantities of industrial gas, oil and natural gas to provide a reasonable return on investment; ● future production rates, and/or the ultimate recoverability of reserves, falling below estimates; ● the ability to replace oil and natural gas reserves and industrial gas resources as they deplete from production; ● environmental risks; ● risks associated with our plan to develop additional operating capabilities, including the potential inability to recruit and retain personnel with the requisite skills and experience and liabilities we could assume or incur as an operator or to acquire operated properties or obtain operatorship of existing properties; 16 Table of Contents ● availability of pipeline capacity and other means of transporting production, and related midstream infrastructure and services; ● competition in leasing new acreage and for drilling programs with operating companies, resulting in less favorable terms or fewer opportunities being available; ● higher drilling and completion costs related to competition for drilling and completion services and shortages of labor and materials; ● disruptions resulting from unanticipated weather events, natural disasters, and public health crises and pandemics, such as the coronavirus, resulting in possible delays of drilling and completions and the interruption of anticipated production streams of hydrocarbons, which could impact expenses and revenues; ● our lack of effective disclosure controls and procedures and internal control over financial reporting; ● our ability to maintain the listing of our common stock on The Nasdaq Capital Market; ● dilution caused by new equity and/or debt offerings; ● our need for additional capital to complete future acquisitions, conduct our operations and fund our business, and our ability to obtain such necessary funding on favorable terms, if at all; ● the speculative nature of our industrial gas, oil and gas operations, and general risks associated with the exploration for, and production; including accidents, equipment failures or unanticipated mechanical problems which may occur while drilling or completing wells or in production activities; operational hazards and unforeseen interruptions for which we may not be adequately insured; the threat and impact of terrorist attacks, cyber-attacks or similar hostilities; declining reserves and production; and losses or costs we may incur as a result of title deficiencies or environmental issues in the properties in which we invest, any one of which may adversely impact our operations; ● changes in the legal and regulatory environment, including new or amended environmental legislation or regulatory initiatives which could result in increased costs, additional operating restrictions, or delays, or have other adverse effects on us; ● improvements in, or new discoveries of alternative energy technologies that could have a material adverse effect on our financial condition and results of operations; ● the fact that our officers and directors beneficially own a majority of our common stock and that their interests may be different from other stockholders; ● our dependence on the continued involvement of our present management; ● economic downturns and possible recessions caused thereby (including as a result of changes in supply or demand, inflation and interest rates or global conflicts, such as the current conflicts in Ukraine and Israel); ● the effects of global pandemics on our operations, properties, the market for our industrial gas, oil and natural gas; ● future litigation or governmental proceedings which could result in material adverse consequences, including judgments or settlements; ● anti-takeover effects of our governing documents and Delaware law; and ● Other risks disclosed below under “ Risk Factors ”. 17 Table of Contents Risk Factors The following risk factors should be carefully considered in evaluating the information in this annual report on Form 10-K.
These risks include, but are not limited to, the following: ● our ability to obtain sufficient cash flow from operations, borrowing, equity issuances, or other sources to fully develop our undeveloped acreage positions; ● volatility in industrial gas and oil and natural gas prices, including declines in prices, which would have a negative impact on operating cash flow and could require further ceiling test write-downs or impairments on our oil and natural gas assets; ● the possibility that our business may be subject to new adverse regulatory or legislative actions (including changes to existing tax rules and regulations and changes in environmental regulation); ● the general risks of exploration and development activities, including the failure to find sufficient commercial quantities of industrial gas, oil and natural gas to provide a reasonable return on investment; ● future production rates, and/or the ultimate recoverability of reserves, falling below estimates; ● the ability to replace oil and natural gas reserves and industrial gas resources as they deplete from production; ● environmental risks; ● risks associated with our plan to develop additional operating capabilities, including the potential inability to recruit and retain personnel with the requisite skills and experience and liabilities we could assume or incur as an operator or to acquire operated properties or obtain operatorship of existing properties; 17 Table of Contents ● availability of pipeline capacity and other means of transporting production, and related midstream infrastructure and services; ● competition in leasing new acreage and for drilling programs with operating companies, resulting in less favorable terms or fewer opportunities being available; ● higher drilling and completion costs related to competition for drilling and completion services and shortages of labor and materials; ● disruptions resulting from unanticipated weather events, natural disasters, and public health crises and pandemics, such as the coronavirus, resulting in possible delays of drilling and completions and the interruption of anticipated production streams of hydrocarbons, which could impact expenses and revenues; ● our lack of effective disclosure controls and procedures and internal control over financial reporting; ● our ability to maintain the listing of our common stock on The Nasdaq Capital Market; ● dilution caused by new equity and/or debt offerings, including from sales under the purchase agreement with Roth Principal Investments; ● our need for additional capital to complete future acquisitions, conduct our operations and fund our business, and our ability to obtain such necessary funding on favorable terms, if at all and dilution caused by new equity and/or debt offerings; ● the speculative nature of our industrial gas, oil and gas operations, and general risks associated with the exploration for, and production; including accidents, equipment failures or unanticipated mechanical problems which may occur while drilling or completing wells or in production activities; operational hazards and unforeseen interruptions for which we may not be adequately insured; the threat and impact of terrorist attacks, cyber-attacks or similar hostilities; declining reserves and production; and losses or costs we may incur as a result of title deficiencies or environmental issues in the properties in which we invest, any one of which may adversely impact our operations; ● changes in the legal and regulatory environment, including new or amended environmental legislation or regulatory initiatives which could result in increased costs, additional operating restrictions, or delays, or have other adverse effects on us; ● improvements in, or new discoveries of alternative energy technologies that could have a material adverse effect on our financial condition and results of operations; ● our need to construct a processing facility, gathering and transportation system and power infrastructure in order to process and sell industrial gases which we plan to produce; ● the fact that our officers and directors beneficially own approximately 38 percent of our common stock and that their interests may be different from other stockholders; ● our dependence on the continued involvement of our present management; ● economic downturns and possible recessions caused thereby (including as a result of changes in supply or demand, inflation and interest rates or global conflicts, such as the current conflicts in the Ukraine and Israel); ● the effects of global pandemics on our operations, properties, the market for our industrial gas, oil and natural gas; ● future litigation or governmental proceedings which could result in material adverse consequences, including judgments or settlements; ● anti-takeover effects of our governing documents and Delaware law; and ● Other risks disclosed below under “ Risk Factors ”. 18 Table of Contents Risk Factors The following risk factors should be carefully considered in evaluating the information in this annual report on Form 10-K.
The assumptions underlying our estimates of our proved reserves could prove to be inaccurate, and any significant inaccuracy could materially affect, among other things, future estimates of the reserves, the economically recoverable quantities of oil and natural gas attributable to the properties, the classifications of reserves based on risk of recovery, and estimates of our future net cash flows. 29 Table of Contents At December 31, 2024, 100% of our estimated proved reserves were developed producing.
The assumptions underlying our estimates of our proved reserves could prove to be inaccurate, and any significant inaccuracy could materially affect, among other things, future estimates of the reserves, the economically recoverable quantities of oil and natural gas attributable to the properties, the classifications of reserves based on risk of recovery, and estimates of our future net cash flows. 30 Table of Contents At December 31, 2025, 100% of our estimated proved reserves were developed producing.
Our Certificate of Incorporation and Amended and Restated Bylaws and Delaware law contain provisions that may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares of our common stock.
Additionally, our Certificate of Incorporation and Amended and Restated Bylaws also contain provisions that may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares of our common stock.
The Dodd-Frank Act requires the Commodities Futures and Trading Commission (the “CFTC”), the SEC and other regulators to promulgate rules and regulations implementing the Dodd-Frank Act.
The Dodd-Frank Act requires the Commodity Futures and Trading Commission (the “CFTC”), the SEC and other regulators to promulgate rules and regulations implementing the Dodd-Frank Act.
If we are delisted from The Nasdaq Capital Market, your ability to sell your shares of our common stock could also be limited by the penny stock restrictions, which could further limit the marketability of your shares.
If our common stock is delisted from The Nasdaq Capital Market, your ability to sell your shares of our common stock could also be limited by the penny stock restrictions, which could further limit the marketability of your shares.
Declines in industrial gas, oil, NGL, or natural gas prices will reduce not only our revenue but also the quantity of production that can be produced economically.
A decline in industrial gas, oil, NGL, or natural gas prices will reduce not only our revenue but also the quantity of production that can be produced economically.
Concerns over global economic conditions, the threat of pandemic diseases and the results thereof, energy costs, geopolitical issues, tariffs, changing inflation and interest rates, the availability and cost of credit have contributed to increased economic uncertainty and diminished expectations for the global economy.
Concerns over global economic conditions, the threat of pandemic diseases and the results thereof, energy costs, geopolitical issues, tariffs, trade wars, wars, the value of the U.S. dollar, changing inflation and interest rates, the availability and cost of credit have contributed to increased economic uncertainty and diminished expectations for the global economy.
If that were to happen, any investment in the Company could become worthless. Our Credit Agreement expires January 5, 2026, and there can be no assurance that we can renew or extend the Credit Agreement with the same terms or conditions.
If that were to happen, any investment in the Company could become worthless. Our Credit Agreement expires May 31, 2029, and there can be no assurance that we can renew or extend the Credit Agreement with the same terms or conditions.
These conditions remain unpredictable and create uncertainties about our ability to raise capital in the future.
These conditions remain unpredictable and create uncertainties about our ability to raise capital in the future at commercially acceptable terms.
Consequently, our dividend levels may fluctuate. On August 9, 2023, the Board of Directors determined it appropriate to suspend dividend payments, with the associated future capital resources being allocated towards the Company’s share repurchase program and repayments of the outstanding balance on our credit facility.
Our Board of Directors has determined to suspend our quarterly cash dividend. On August 9, 2023, the Board of Directors determined it appropriate to suspend dividend payments, with the associated future capital resources being allocated towards the Company’s share repurchase program, repayments of the outstanding balance on our credit facility and other Company initiatives.
The below table highlights the recent volatility in oil and gas prices by summarizing the high and low daily NYMEX WTI oil spot price and daily NYMEX natural gas Henry Hub spot price for the periods presented: Daily NYMEX WTI Daily NYMEX natural oil spot price (per Bbl) gas Henry Hub spot price (per Mmbtu) High Low High Low Year ended December 31, 2020 $ 63.27 $ (36.98 ) $ 3.14 $ 1.33 Year ended December 31, 2021 $ 85.64 $ 47.47 $ 23.86 $ 2.43 Year ended December 31, 2022 $ 123.64 $ 71.05 $ 9.85 $ 3.46 Year ended December 31, 2023 $ 93.67 $ 66.61 $ 3.78 $ 1.74 Year ended December 31, 2024 $ 87.69 $ 66.73 $ 13.20 $ 1.21 Quarter ended March 31, 2025 (through February 24, 2025) $ 80.73 $ 70.72 $ 9.86 $ 2.93 18 Table of Contents Declines in the prices we receive for our oil and natural gas can also adversely affect our ability to finance capital expenditures, make acquisitions, raise capital and satisfy our financial obligations.
The below table highlights the recent volatility in oil and gas prices by summarizing the high and low daily NYMEX WTI oil spot price and daily NYMEX natural gas Henry Hub spot price for the periods presented: Daily NYMEX WTI Daily NYMEX natural oil spot price (per Bbl) gas Henry Hub spot price (per Mmbtu) High Low High Low Year ended December 31, 2023 $ 93.67 $ 66.61 $ 3.78 $ 1.74 Year ended December 31, 2024 $ 87.69 $ 66.73 $ 13.20 $ 1.21 Year ended December 31, 2025 $ 80.73 $ 55.44 $ 9.86 $ 2.65 19 Table of Contents Decline in the prices we receive for our oil and natural gas can also adversely affect our ability to finance capital expenditures, make acquisitions, raise capital and satisfy our financial obligations.
King and Joshua Batchelor, each a member of the Board of Directors of the Company, may hold various other management positions with privately-held companies, some of which are involved in the oil and gas industry, and together such persons control or have joint control, over a majority of our common stock.
John A. Weinzierl and Duane H. King, each a member of the Board of Directors of the Company, may hold various other management positions with privately-held companies, some of which are involved in the oil and gas industry, and together such persons own more than 30 percent of our common stock.
Our stock price has historically been and is likely to continue to be volatile. Our stock is traded on The Nasdaq Capital Market under the symbol “USEG”. For the twelve-month period ending March 10, 2025, our common stock has traded as high as $6.40 per share and as low as $0.81 per share.
Our stock price has historically been and is likely to continue to be volatile. Our stock is traded on The Nasdaq Capital Market under the symbol “USEG”. For the year ended December 31, 2025, our common stock has traded as high as $3.79 per share and as low as $0.92 per share.
In such a case, adequate funds may not be available when needed or may not be available on favorable terms. If we need to raise additional funds in the future by issuing equity securities, dilution to existing stockholders will result, and such securities may have rights, preferences, and privileges senior to those of our common stock.
If we need to raise additional funds in the future by issuing equity securities, (including pursuant to our purchase agreement with Roth Principal Investments), dilution to existing stockholders will result, and such securities may have rights, preferences, and privileges senior to those of our common stock.
To the extent that the dividend is not reinstated in the future, only appreciation of the price of our common stock, which may not occur, will provide a return to our stockholders. Our stock repurchases are discretionary and even if effected, they may not achieve the desired objectives.
To the extent that the dividend is not reinstated in the future, only appreciation of the price of our common stock, which may not occur, will provide a return to our stockholders. The determination to pay dividends on our common stock is at the discretion of our Board of Directors.
The registered shares represent a significant number of shares of our common stock, and if sold in the market all at once or at about the same time, could significantly depress the market price of our common stock during the period the registration statement remains effective and could also affect our ability to raise equity capital in the future at a time and price that we deem reasonable or appropriate. 44 Table of Contents Risks Relating to Our Governing Documents and Delaware Law Our Certificate of Incorporation provides for indemnification of officers and directors at our expense and limits their liability, which may result in a major cost to us and hurt the interests of our stockholders because corporate resources may be expended for the benefit of officers or directors.
The registered shares represent a significant number of shares of our common stock, and if sold in the market all at once or at about the same time, could significantly depress the market price of our common stock during the period the registration statement remains effective and could also affect our ability to raise equity capital in the future at a time and price that we deem reasonable or appropriate.
Because neither party provided the other notice of termination prior to January 1, 2024, the agreement renewed for an additional one year, and currently had a term through January 1, 2025 (subject to additional one year renewals thereafter). On August 14, 2024, effective July 1, 2024, the Company entered into a new amended and restated employment agreement with Mr.
The Company entered into an agreement with Mr. Smith on May 5, 2022. The term of Mr. Smith’s Employment Agreement commenced on May 5, 2022, and had an initial term expiring January 1, 2024, subject to automatic one-year renewals. On August 14, 2024, effective July 1, 2024, the Company entered into a new amended and restated employment agreement with Mr.
Any such volatility and disruptions may also magnify the impact of other risks described herein. Risks Related to Management, Employees and Directors Potential conflicts of interest could arise for certain members of our Board of Directors that hold management positions with other entities and also represent our majority stockholders. John A. Weinzierl, Duane H.
Accordingly, continued or heightened global trade tensions or changes in tariff regimes, or the imposition of new trade restrictions could have a material adverse effect on our business, financial condition, results of operations, and cash flows. 39 Table of Contents Risks Related to Management, Employees and Directors Potential conflicts of interest could arise for certain members of our Board of Directors that hold management positions with other entities and also represent our majority stockholders.
We have registered the resale of 19,905,736 shares of common stock pursuant to a Form S-3 Registration Statement, which shares of common stock represent approximately 58.9% of our currently outstanding shares of common stock. Such shares of common stock may be resold in the public market immediately without restriction.
We have registered the resale of a significant number of shares of common stock pursuant to a Form S-3 Registration Statement and a Form S-1 Registration Statement.
Removed
The success of the Company will also depend upon the Company having access to sufficient development capital, being able to maintain title to its properties and obtain all required approvals for its activities.
Added
In such a case, adequate funds may not be available when needed or may not be available on favorable terms.
Removed
In the event that exploration programs prove to be unsuccessful this could lead to a diminution in the value of the Company’s properties, a reduction in the cash reserves of the Company and possible relinquishment of the Company’s properties. 22 Table of Contents The exploration costs of the Company are based on certain assumptions with respect to the method and timing of exploration.
Added
The construction of our planned processing facility, gathering and transportation system, and power infrastructure is subject to significant risks that could increase costs, delay operations, or prevent completion. Our ability to execute our business plan depends on the successful construction and commissioning of new processing, gathering, transportation, and power infrastructure.
Removed
We have identified material weaknesses in our internal control over financial reporting, and our management has concluded that our disclosure controls and procedures were not effective for periods since 2017. We cannot assure you that additional material weaknesses or significant deficiencies do not exist or that they will not occur in the future.
Added
These projects are complex and subject to risks beyond our control, including permitting and regulatory approvals, supply chain disruptions, labor availability and productivity, contractor performance, design or engineering changes, adverse weather conditions, utility interconnection delays, equipment delivery delays, and unanticipated site or subsurface conditions.
Removed
If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results or prevent fraud, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price.
Added
Inflationary pressures, changes in interest rates, or increases in material, labor, or energy costs could materially increase capital expenditures beyond current estimates.
Removed
Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud.
Added
Delays or cost overruns could defer the commencement of commercial operations, reduce expected returns, require additional financing on unfavorable terms, or result in the impairment of capitalized costs. 23 Table of Contents The exploration costs of the Company are based on certain assumptions with respect to the method and timing of exploration.
Removed
We maintain a system of internal control over financial reporting, which is defined as a process designed by, or under the supervision of, our principal executive officer and principal financial officer, or persons performing similar functions, and effected by our board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America ("GAAP").
Added
Any such volatility and disruptions may also magnify the impact of other risks described herein. Risks Related to U.S. Government Operations A U.S. federal government shutdown could adversely affect our business, results of operations, and financial condition. The U.S. federal government periodically experiences funding gaps that result in partial or complete shutdowns of government operations.
Removed
A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.
Added
A prolonged shutdown could adversely impact the U.S. economy, financial markets, and our business directly and indirectly. During a shutdown, many federal agencies suspend or delay regulatory approvals, contract awards, payments, and other routine functions.
Removed
A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.
Added
To the extent that our business depends on U.S. government contracts, grants, permits, licenses, or other approvals, a shutdown could result in the delay, suspension, or cancellation of such activities, which could materially impact our operations and development activities.
Removed
Based on the results of management’s assessment and evaluation of our internal controls, our principal executive officer and principal financial officer concluded that our internal control over financial reporting was not effective as of December 31, 2024 due to a material weakness related to the ineffective design of our accounting system.
Added
Additionally, even though the Company does not contract directly with the federal government, a shutdown could have broader negative effects on consumer and business confidence, supply chains, access to financing, and the overall economy. In addition, uncertainty regarding the duration or frequency of government shutdowns may contribute to market volatility and reduced customer spending.
Removed
Specifically, reliance could not be placed on some of the control elements of the accounting system. These control elements include a lack of certain functionality related to system-based account reconciliations, missing systematic controls in areas such as segregation of duties enforcement and data input validation, and an absence of independent evaluation of third-party information technology general controls (“ITGCs”).
Added
Any of these events, individually or in the aggregate, could have a material adverse effect on our business, financial condition, results of operations, and stock price. Our business is subject to risks associated with imposition of tariffs or other trade barriers by the United States or foreign governments.
Removed
The Company's manual review controls partially compensate for the system design limitations, but this material weakness cannot be remediated without the implementation of a system-based solution.
Added
Recently there has been increasing uncertainty regarding international trade policies, including the ongoing implementation of tariffs and trade wars on a wide range of goods and materials, as well as retaliatory measures by other countries.
Removed
As a result, our management also concluded that our disclosure controls and procedures were not effective as of December 31, 2024, such that the information relating to us required to be disclosed in the reports we file with the SEC (a) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) is accumulated and communicated to our management to allow timely decisions regarding required disclosures and such disclosure controls and procedures have not been deemed effective since approximately December 31, 2016. 36 Table of Contents Maintaining effective disclosure controls and procedures and effective internal control over financial reporting are necessary for us to produce reliable financial statements and the Company is committed to remediating its material weaknesses in such controls as promptly as possible.
Added
These developments may result in higher costs for certain raw materials, components, and finished products, and may adversely impact our supply chain, including pricing, delivery timeline and general availability of products needed for our operations. The Company may be unable to fully mitigate any cost increases through price adjustments, supplier diversification, or other measures.
Removed
However, there can be no assurance as to when these material weaknesses will be remediated or that additional material weaknesses will not arise in the future.
Added
Our stock repurchases are discretionary and even if effected, they may not achieve the desired objectives.

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Item 2. Properties

Properties — owned and leased real estate

13 edited+4 added−16 removed6 unchanged
Biggest changeThe Company drilled one industrial gas well during the fourth quarter of 2024. 2024 2023 2022 Gross Net Gross Net Gross Net Development wells: Productive - - 1 0.01 8.0 0.24 Non-productive - - - - - - Sub-total - - 1 0.01 8.0 0.24 Exploratory wells: Productive - - - - - - Non-productive - - - - - - Sub-total - - - - - - Total - - 1 0.01 8.0 0.24 The number of gross oil and gas wells is the total number of wells we participated in, regardless of our ownership interest in the wells.
Biggest changeThe number of gross oil and gas wells is the total number of wells we participated in, regardless of our ownership interest in the wells.
Item 2. Properties. Our oil and gas properties are described below and under Item 8, Notes 5 and 16 of the Notes to Consolidated Financial Statements under the captions “Oil and Natural Gas Producing Activities” and “Supplemental Oil and Natural Gas Information (Unaudited)”, respectively.
Item 2. Properties. Our oil and gas properties are described below and under Item 8, Notes to Consolidated Financial Statements under the captions “Oil and Natural Gas Producing Activities” and “Supplemental Oil and Natural Gas Information (Unaudited)”, respectively.
The information above should not be considered indicative of future drilling performance, nor should it be assumed that there is any correlation between the number of productive wells drilled and the amount of oil and natural gas that may ultimately be recovered. Present Activities.
The information above should not be considered indicative of future drilling performance, nor should it be assumed that there is any correlation between the number of productive wells drilled and the amount of oil and natural gas that may ultimately be recovered. See Item 7.
The Audit Committee reviews a summary of the final reserves estimate and meets independently with Mr. Jacks separate from our management to discuss processes and findings in the reserve report. The Audit Committee can and does request reports and information from Mr. Jacks to independently verify values reported by the management team.
The Audit Committee reviews a summary of the final reserves estimate and meets independently with Mr. Jacks separate from our management to discuss processes and findings in the reserve report. The Audit Committee can and does request reports and information from Mr.
We encourage you to read this information in conjunction with the information contained in our financial statements and related notes included in this annual report on Form 10-K.
We encourage you to read this information in conjunction with the information contained in our financial statements and related notes included in this annual report on Form 10-K, at the end of Part III hereof.
The following table sets forth certain information regarding our net production volumes, average sales prices realized and certain expenses associated with sales of oil and natural gas for the years ended December 31, 2024, 2023 and 2022. 2024 2023 2022 Production Volume Oil (Bbls) 256,166 391,645 396,456 Natural gas (Mcfe) 958,325 1,396,650 1,344,735 BOE 415,887 624,420 620,579 Daily Average Production Volume Oil (Bbls per day) 700 1,073 1,086 Natural gas (Mcfe per day) 2,618 3,826 3,684 BOE per day 1,136 1,711 1,700 Net prices realized (1) Oil per Bbl $ 70.91 $ 72.39 $ 91.54 Natural gas per Mcfe 2.56 2.84 6.14 Oil and natural gas per BOE 49.58 51.75 71.79 Operating Expenses per BOE Lease operating expenses, gathering, transportation, and treating, and production taxes $ 30.40 $ 28.70 $ 32.63 Depreciation, depletion, accretion, and amortization 19.85 17.99 15.48 (1) Net prices realized represent actual prices realized without regard to the effects of commodity derivatives.
The following table sets forth certain information regarding our net production volumes, average sales prices realized and certain expenses associated with sales of oil and natural gas for the years ended December 31, 2025, 2024, and 2023. 2025 2024 2023 Production Volume Oil (Bbls) 112,797 256,166 391,645 Natural gas (Mcfe) 311,729 958,325 1,396,650 BOE 164,752 415,887 624,420 Daily Average Production Volume Oil (Bbls per day) 309 700 1,073 Natural gas (Mcfe per day) 854 2,618 3,826 BOE per day 451 1,136 1,711 Net prices realized(1) Oil per Bbl $ 56.54 $ 70.91 $ 72.39 Natural gas per Mcfe 3.13 2.56 2.84 Oil and natural gas per BOE 44.63 49.58 51.75 Operating Expenses per BOE Lease operating expenses, gathering, transportation, and treating, and production taxes $ 35.03 $ 30.24 $ 28.70 Depreciation, depletion, accretion, and amortization 21.89 19.85 17.99 (1) Net prices realized represent actual prices realized without regard to the effects of commodity derivatives.
The following table provides a regional summary of our production for the years ended December 31, 2024, 2023 and 2022 2024 2023 2022 Oil Natural Gas Total Oil Natural Gas Total Oil Natural Gas Total (Bbl) (Mcfe) (BOE) (Bbl) (Mcfe) (BOE) (Bbl) (Mcfe) (BOE) Rockies 112,191 37,829 118,496 146,199 84,431 160,271 161,655 223,394 198,887 South Texas, West Texas, and Gulf Coast 69,367 39,677 75,980 143,825 168,884 171,972 163,532 244,935 204,355 Mid-continent 74,608 880,819 221,411 101,621 1,143,335 292,177 71,269 876,407 217,337 Total 256,166 958,325 415,887 391,645 1,396,650 624,420 396,456 1,344,736 620,579 55 Table of Contents Drilling and Other Exploratory and Development Activities - Oil and Natural Gas.
The following table provides a regional summary of our production for the years ended December 31, 2025, 2024, and 2023: 2025 2024 2023 Oil Natural Gas Total Oil Natural Gas Total Oil Natural Gas Total (Bbl) (Mcfe) (BOE) (Bbl) (Mcfe) (BOE) (Bbl) (Mcfe) (BOE) Rockies 92,343 33,555 97,936 112,191 37,829 118,496 146,199 84,431 160,271 South Texas, West Texas, and Gulf Coast 12,125 19,539 15,381 69,367 39,677 75,980 143,825 168,884 171,972 Mid-continent 8,328 258,635 51,434 74,608 880,819 221,411 101,621 1,143,335 292,177 Total 112,797 311,729 164,752 256,166 958,325 415,887 391,645 1,396,650 624,420 53 Table of Contents Drilling and Other Exploratory and Development Activities - Oil and Natural Gas.
Reserve estimates as of December 31, 2024, 2023 and 2022 are based on the following average prices, in each case as adjusted for transportation, quality, and basis differentials applicable to our properties on a weighted average basis: Average Price During 2024 2023 2022 Oil (per Bbl) $ 75.48 $ 78.22 $ 93.67 Gas (per Mmbtu) $ 2.13 $ 2.64 $ 6.36 Presented below is a summary of our proved oil and natural gas reserve quantities, all of which are located in the United States, as of the end of each of our last three fiscal years: As of December 31, 2024 (1) 2023 (1) 2022 (1) Oil Natural Gas Total Oil Natural Gas Total Oil Natural Gas Total (MBbl) (MMcf) (MBOE) (MBbl) (MMcf) (MBOE) (MBbl) (MMcf) (MBOE) Proved developed 1,592 2,307 1,977 3,155 10,054 4,830 5,109 16,317 7,828 Proved non-producing - - - 28 28 33 31 31 36 Proved undeveloped - - - - - - - - - Total proved reserves 1,592 2,307 1,977 3,183 10,082 4,863 5,140 16,348 7,864 (1) Our reserve estimates as of December 31, 2024, 2023 and 2022 are based on reserve reports prepared by Don Jacks of On Point Resources, Inc.
Reserve estimates as of December 31, 2025, 2024, and 2023 are based on the following average prices, in each case as adjusted for transportation, quality, and basis differentials applicable to our properties on a weighted average basis: Average Price During 2025 2024 2023 Oil (per Bbl) $ 65.34 $ 75.48 $ 78.22 Gas (per Mmbtu) $ 3.39 $ 2.13 $ 2.64 Presented below is a summary of our proved oil and natural gas reserve quantities, all of which are located in the United States, as of the December 31, 2025, 2024, and 2023: As of December 31, 2025 2024 2023 Oil Natural Gas Total Oil Natural Gas Total Oil Natural Gas Total (MBbl) (MMcf) (MBOE) (MBbl) (MMcf) (MBOE) (MBbl) (MMcf) (MBOE) Proved developed 1,087 2,188 1,452 1,592 2,307 1,977 3,155 10,054 4,831 Proved non-producing - - - - - - 28 28 33 Proved undeveloped - - - - - - - - - Total proved reserves 1,087 2,188 1,452 1,592 2,307 1,977 3,183 10,082 4,864 Internal Controls Over Proved Reserve Estimates Our internal controls over the recording of proved reserves are structured to objectively and accurately estimate our reserve quantities and values in compliance with the SEC’s regulations.
Since April 12, 2023, we have not drilled or participated in the drilling of any oil and gas wells, however, we are in the process of returning to production idle wells we acquired in 2022. The table above does not include industrial gas wells.
Management ’ s Discussion and Analysis of Financial Condition and Results of Operations in this annual report on Form 10-K. Present Activities. Since April 12, 2023, we have not drilled or participated in the drilling of any oil and natural gas wells, however, we are in the process of returning to production idle wells we acquired in 2022.
The Company drilled one industrial gas well during the fourth quarter of 2024 and is expected to be completed in the first half of 2025. Oil and Natural Gas Properties, Wells, Operations and Acreage. The following table summarizes information about our gross and net productive wells as of December 31, 2024.
The table above does not include industrial gas wells. The Company drilled one industrial gas well during the fourth quarter of 2024 and two in 2025. Oil and Natural Gas Properties, Acreage. The table below presents our leasehold acreage for oil and natural gas) as of December 31, 2025.
Through two acquisitions, one occurring on June 26, 2024, and another on January 7, 2025, we acquired approximately 168,000 acres on the Kevin Dome in Toole County, Montana.
Resulting from two acquisitions, one occurring on June 26, 2024, and another on January 7, 2025, as of December 31, 2025 we have approximately 116,384 and 80,695 gross and net acres, respectively, of leasehold on the Kevin Dome in Toole County, Montana. 54 Table of Contents Office Space As of December 31, 2025, we have leased office space for our Company headquarters in Houston, Texas of 11,000 square feet.
The Company believes its existing facilities and equipment are in good operating condition and are suitable for the conduct of its business.
The lease is described in greater detail in “ Note 4. Leases ”, to the footnotes to the financial statements included herein. We also own a 1,200 square-foot office building in Cutbank, Montana. The Company believes its existing facilities and equipment are in good operating condition and are suitable for the conduct of its business.
Gross Producing Wells Net Producing Wells Average Working Interest Oil Gas Total Oil Gas Total Oil Gas Total Rockies 264 3 267 259 3 261.8 98.0 % 100.0 % 98.1 % West Texas, South Texas, and Gulf Coast 48 8 56 46 7 52.9 96.7 % 81.3 % 94.5 % Mid-continent 11 3 14 10 2 12.5 91.8 % 81.3 % 89.6 % Total 323 14 337 315.3 11.9 327.3 97.6 % 85.3 % 97.1 % Wells are classified as oil or natural gas wells according to the predominant production stream.
As of December 31, 2025, the Company had the following gross and net productive wells by region for our oil and natural gas activities: Gross Producing Wells Net Producing Wells Average Working Interest Oil Gas Total Oil Gas Total Oil Gas Total Rockies 187 1 188 187 1 188.0 100.0 % 100.0 % 100.0 % West Texas, South Texas, and Gulf Coast 5 10 15 4 9 12.9 88.0 % 85.0 % 86.0 % Mid-continent 10 18 28 5 3 8.0 48.0 % 17.8 % 28.6 % Total 202 29 231 196 13 209 97.1 % 43.8 % 90.4 % Industrial Gas Assets Excluded from tables above are our assets related to our industrial gas project.
Removed
A copy of On Point Resources, Inc.’s latest report is filed as Exhibit 99.1 to this annual report on Form 10-K. 53 Table of Contents Internal Controls Over Proved Reserve Estimates Our internal controls over the recording of proved reserves are structured to objectively and accurately estimate our reserve quantities and values in compliance with the SEC’s regulations.
Added
Jacks to independently verify values reported by the management team. 52 Table of Contents Oil and Natural Gas Production, Production Prices, and Production Costs.
Removed
You should not place undue reliance on estimates of proved reserves. See “ Risk Factors - Our estimated reserves are based on many assumptions that may turn out to be inaccurate.
Added
The Company had no oil and natural gas development or exploratory drilling activity for the year ending December 31, 2025. For the years ending December 31, 2024 and 2023, the Company participated in 1 gross, productive well, 0.8 and 0.01 net to the Company.
Removed
Any material inaccuracies in these reserve estimates or the relevant underlying assumptions will materially affect the quantity and present value of our reserves. ” A variety of methodologies are used to determine our proved reserve estimates. The principal methodologies employed are reservoir simulation, decline curve analysis, volumetrics, material balance, advance production type curve matching, petrophysics/log analysis and analogy.
Added
The Company does not have any undeveloped oil and natural gas leasehold acreage. As of December 31, 2025, all of our acreage is held by production.
Removed
Some combination of these methods is used to determine reserve estimates in substantially all of our fields. The primary inputs to the reserve estimation process are comprised of technical information, financial data, ownership interests and production data.
Added
Developed Undeveloped Total Area Gross Net Gross Net Gross Net Rockies 155,019 128,976 - - 155,019 128,976 West Texas, South Texas, and Gulf Coast 400 282 - - 400 282 Mid-Continent 5,294 4,766 - - 5,294 4,766 Total 160,714 134,025 - - 160,714 134,025 Productive Wells.
Removed
All field and reservoir technical information is assessed for validity when meetings are held with management, land personnel and third-party operators to discuss field performance and to validate future development plans. Current revenue and expense information is obtained from our accounting records, which are subject to their own set of internal controls over financial reporting.
Removed
All current financial data such as commodity prices, lease operating expenses, production taxes and field commodity price differentials are updated in the reserve database and then analyzed to ensure that they have been entered accurately and that all updates are complete.
Removed
Our current ownership in mineral interests and well production data are also subject to the aforementioned internal controls over financial reporting, and they are incorporated into the reserve database as well and verified to ensure their accuracy and completeness. Our reserve database is currently maintained by Don Jacks of On Point Resources, Inc. Mr.
Removed
Jacks works with our personnel to review field performance, future development plans, current revenues and expense information. Following these reviews, the reserve database and supporting data is updated so that Mr. Jacks can prepare his independent reserve estimates and final report. Proved Undeveloped Reserves.
Removed
As of December 31, 2024, 2023 and 2022, we did not record any proved undeveloped (“PUD”) reserves due to the lack of an approved development plan for development of potential PUD reserves and uncertainty regarding the deployment of such capital that would be required to develop any PUD reserves. 54 Table of Contents Oil and Natural Gas Production, Production Prices, and Production Costs.
Removed
The following table sets forth information with respect to development and exploratory activity on oil and natural gas wells in which we own an interest during the periods ended December 31, 2024, 2023 and 2022.The table below does not include industrial gas wells.
Removed
The following table summarizes our estimated developed and undeveloped leasehold acreage for oil and natural gas (does not include industrial gas acreage) as of December 31, 2024: Developed Undeveloped Total Area Gross Net Gross Net Gross Net Rockies 156,459 130,019 - - 156,459 130,019 West Texas, South Texas, and Gulf Coast 13,256 12,997 - - 13,256 12,997 Mid-Continent 5,294 4,766 - - 5,294 4,766 Total 175,010 147,782 - - 175,010 147,782 For our non-operated properties, we are subject to lease expiration if the operator does not commence the development of operations within the agreed terms of our leases.
Removed
In addition, our leases typically provide that the lease does not expire at the end of the primary term if drilling operations have commenced. As of December 31, 2024, all of our acreage is held by production. Industrial Gas Assets Excluded from tables above are our assets related to our industrial gas project.
Removed
During the fourth quarter of 2024, we drilled and completed portions of our first well – Big Rose, which is currently being evaluated with additional completion procedures expected in first half of 2025.
Removed
We also acquired a shut-in industrial gas well in connection with the Synergy acquisition and plan to complete and test that well in the first half of 2025. Additionally, we are planning to drill two new wells during the first half of 2025.
Removed
We have not recorded any proven industrial gas reserves or resources attributable to our acquired acreage. 56 Table of Contents Real Estate In April 2024, we sold three city lots covering 13.84 acres in Riverton, Wyoming. The proceeds from the sale, net of closing costs amounted to $139 thousand.
Removed
Office Space As of March 13, 2025, we have leased office space for our Company headquarters in Houston, Texas of 11,000 square feet. The lease is described in greater detail in “ Note 4. Leases ”, to the footnotes to the financial statements included herein.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−3 removed4 unchanged
Biggest changePurchases of Equity Securities by The Issuer and Affiliated Purchasers The following table sets forth share repurchase activity for the respective periods: Total Number Approximate of Shares Dollar Value of Purchased as Shares that Part of May Yet Be Publicly Purchased Total Number Average Announced Under the of Shares Price Paid Per Plans or Plans or Period Purchased Share Programs (1) Programs (1) Three Months Ended, March 31, 2024 318,200 $ 1.06 318,200 $ 4,229,203 Three Months Ended, June 30, 2024 145,300 $ 1.16 145,300 $ 4,058,047 Three Months Ended, September 30, 2024 19,000 $ 1.05 19,000 $ 4,037,713 Three Months Ended December 31, 2024 134,100 $ 1.53 134,100 $ 3,830,436 Total 616,600 $ 1.18 616,600 $ 3,830,436 (1) On April 26, 2023, the Board of Directors of the Company authorized and approved a share repurchase program for up to $5.0 million of the currently outstanding shares of the Company’s common stock, which was originally extended on March 19, 2024 and more recently extended on January 29, 2025.
Biggest changePurchases of Equity Securities by The Issuer and Affiliated Purchasers The following table sets forth share repurchase activity for the respective periods: Total Number Approximate of Shares Dollar Value of Purchased as Shares that Part of May Yet Be Publicly Purchased Total Number Average Announced Under the of Shares Price Paid Per Plans or Plans or Period Purchased Share Programs (1) Programs (1) October 1st to October 31st, 2025 — $ — — $ 3,514,370 November 1st to November 30th, 2025 — $ — — $ 3,514,370 December 1st to December 31st, 2025 — $ — — $ 3,514,370 Total — $ — — $ 3,514,370 (1) On April 26, 2023, the Board of Directors of the Company authorized and approved a share repurchase program for up to $5.0 million of the currently outstanding shares of the Company’s common stock, which was originally extended on March 19, 2024 and more recently extended on January 29, 2025.
The program does not obligate the Company to acquire a minimum amount of shares. (2) See our Consolidated Statements of Changes in Shareholders' Equity for a full roll forward of share activity during the year ended December 31, 2024. Item 6. [Reserved]
The program does not obligate the Company to acquire a minimum amount of shares. (2) See our Consolidated Statements of Changes in Shareholders' Equity for a full roll forward of share activity during the year ended December 31, 2025. Item 6. [Reserved]
The Board of Directors may or may not reinstate future dividend payments in the future, the amount and frequency of which will be determined at the sole discretion of the Board.
The Board of Directors may or may not reinstate future payments in the future, the amount and frequency of which will be determined at the sole discretion of the Board. Recent Sales of Unregistered Securities There were no sales of unregistered securities during the year ended December 31, 2025.
Recent Sales of Unregistered Securities There were no sales of unregistered securities during the quarter ended December 31, 2024, or for the period from January 1, 2024 to the filing date of this report, which have not previously been reported in a Current Report on Form 8-K.
For the period from January 1, 2025 to the filing date of this report, we sold approximately 8.5 million shares which have previously been reported in a Current Report on Form 8-K.
Consequently, our dividend levels may fluctuate. On August 9, 2023, the Board of Directors determined it appropriate to suspend dividend payments, with the associated future capital resources being allocated towards the Company’s share repurchase program and repayments of the outstanding balance on our credit facility.
Holders As of March 6, 2026, we had 44,269,192 shares of common stock issued and outstanding held by approximately 261 stockholders of record . 55 Table of Contents Dividends On August 9, 2023, the Board of Directors determined it appropriate to suspend dividend or distribution payments, with the associated future capital resources being allocated towards the Company’s share repurchase program, repayments of the outstanding balance on our credit facility and other Company initiatives.
Removed
Holders As of March 10, 2025, we had 33,821,019 shares of common stock issued and outstanding held by 325 stockholders of record . 57 Table of Contents Dividends On April 13, 2022, August 5, 2022, November 7, 2022, February 9, 2023 and May 18, 2023, the Company’s Board of Directors approved the declaration and payment of quarterly cash dividends of $0.0225 per share of common stock.
Removed
Our Board of Directors, at its sole discretion, determines the amount of the quarterly dividends to be distributed to our shareholders, if any, based on consideration of a number of factors including, but not limited to, our results of operations, cash flow and capital requirements, economic conditions, tax considerations, borrowing capacity and other factors, including future acquisitions and divestitures.
Removed
To the extent that the dividend is not reinstated in the future, only appreciation of the price of our common stock, which may not occur, will provide a return to our stockholders. The determination to pay dividends on our common stock is at the discretion of our Board of Directors.

Item 7. Management's Discussion & Analysis

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

52 edited+15 added−65 removed29 unchanged
Biggest changePresented below is a comparison of our oil and natural gas production costs for the years ended December 31, 2024 and 2023 (in thousands): Change 2024 2023 Amount Percent Lease operating expenses $ 11,160 $ 15,254 $ (4,094 ) -27 % Gathering, transportation, and treating 205 557 (352 ) -63 % Production taxes 1,276 2,107 (831 ) -39 % Total $ 12,641 $ 17,918 $ (5,277 ) -29 % Lease operating expense per BOE $ 26.83 $ 24.43 2.41 10 % Gathering, transportation, and treating per BOE $ 0.49 $ 0.89 (0.40 ) -45 % For the year ended December 31, 2024, lease operating expenses were $11.2 million or $26.83 per BOE, a decrease of $4.1 million when compared to the $15.3 million or $24.43 per BOE for the year ended December 31, 2023.
Biggest changePresented below is a comparison of our oil and natural gas production costs for the years ended December 31, 2025 and 2024 (in thousands): Change 2025 2024 Amount Percent Lease operating expenses $ 5,174 $ 11,160 $ (5,986 ) -54 % Gathering, transportation, and treating 59 205 (146 ) -71 % Production taxes 539 1,213 (674 ) -56 % Total $ 5,772 $ 12,578 $ (6,806 ) -54 % Lease operating expense per BOE $ 31.40 $ 26.83 4.57 17 % 59 Table of Contents For the year ended December 31, 2025, aggregate lease operating expenses decreased as a result of divestitures in 2025 and 2024.
Key elements of our business strategy include: ● Deploy our Capital in a Conservative and Strategic Manner and Review Opportunities to Bolster our Liquidity . In the current industry environment, maintaining liquidity is critical.
Business Strategy Key elements of our business strategy include: ● Deploy our Capital in a Conservative and Strategic Manner and Review Opportunities to Bolster our Liquidity . In the current industry environment, maintaining liquidity is critical.
The amount and allocation of our future capital expenditures will depend upon a number of factors, including our cash flows from operating, investing, and financing activities, our ability to execute our development program, and the number and size of acquisitions that we complete.
The amount, timing and allocation of our future capital expenditures will depend upon a number of factors, including our cash flows from operating, investing, and financing activities, our ability to execute our development program, and the number and size of acquisitions that we complete.
Our depreciation, depletion, and amortization ("DD&A") includes depletion expense on our oil and gas properties, accretion expense from our asset retirement obligations, and depreciation expense on our fixed assets.
Our depreciation, depletion, and amortization ("DD&A") includes depletion expense on our oil and gas properties, accretion expense on our asset retirement obligations, and depreciation expense on our fixed assets.
In addition, the Credit Agreement contains financial covenants, tested quarterly, that limit our ratio of total debt to EBITDAX (as defined in the Credit Agreement) to 3:1 and require our ratio of consolidated current assets to consolidated current liabilities (as each is described in the Credit Agreement) to remain at 1:1 or higher.
In addition, the Credit Agreement contains financial covenants that limit our ratio of total debt to EBITDAX (as defined in the Credit Agreement) to 3:1 and require our ratio of consolidated current assets to consolidated current liabilities (as each is described in the Credit Agreement) to remain at 1:1 or higher.
Accounting estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts. ● Results of Operations . An analysis of our financial results comparing the years ended December 31, 2024 and 2023. ● Liquidity and Capital Resources .
Accounting estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts. ● Results of Operations . An analysis of our financial results comparing the years ended December 31, 2025 and 2024. ● Liquidity and Capital Resources .
Changing economic conditions also may affect our estimates of proved reserves due to changes in developmental costs and changes in commodity prices that may impact reservoir economics. We utilize independent reserve engineers to estimate our proved reserves at the end of each fiscal quarter during the year. Oil and Natural Gas Properties.
Changing economic conditions also may affect our estimates of proved reserves due to changes in developmental costs and changes in commodity prices that may impact reservoir economics. We utilize independent reserve engineers to estimate our proved reserves at the end of each fiscal quarter during the year. 57 Table of Contents Oil and Natural Gas Properties.
We periodically review our capital expenditure budget to assess if changes are necessary based on current and projected cash flows, acquisition and divestiture activities, and other factors. We will continue to monitor the economic environment through the remainder of the year and adjust our activity level as warranted. As described above under “Item 1.
We periodically review our capital expenditure budget to assess if changes are necessary based on current and projected cash flows, acquisition and divestiture activities, and other factors. We will continue to monitor the economic environment through the remainder of the year and adjust our activity level as warranted.
The decrease in cash provided by operating activities is mainly attributable to a reduction in cash receipts for revenues as a result of divestments and a decrease in prices we received for our oil and natural gas production partially offset by decreases in operating expenses. Investing Activities.
The decrease in cash provided by operating activities is mainly attributable to a reduction in cash receipts for revenues as a result of divestments and a decrease in prices we received for our oil and natural gas production. Investing Activities.
If we have needs for financing in 2025, alternatives that we will consider would potentially include borrowing amounts on our Credit Agreement, selling all or a partial interest in certain of our oil and natural gas assets, selling our marketable equity securities, issuing additional shares of our common stock for cash or as consideration for acquisitions in public or private offerings, and other alternatives, as we determine how to best fund our capital programs and meet our financial obligations.
If we have needs for financing in 2026, alternatives that we will consider would include borrowing amounts on our Credit Agreement, selling shares under the purchase agreement, selling all or a partial interest in certain of our oil and natural gas assets, issuing additional shares of our common stock for cash or as consideration for acquisitions in public or private offerings, and other alternatives, as we determine how to best fund our capital programs and meet our financial obligations.
MD&A is organized as follows: ● Recent Developments . Discussion of recent developments affecting the Company and our operations. ● Plan of Operations and Strategy . Discussion of our strategy moving forward and how we plan to seek to increase stockholder value. ● Critical Accounting Policies and Estimates .
MD&A is organized as follows: ● Plan of Operations and Strategy . Discussion of our strategy moving forward and how we plan to seek to increase stockholder value. ● Critical Accounting Policies and Estimates .
Depletion expenses on our oil and gas properties are the primary driver of DD&A expense making up 87% and 89% of DD&A expense for the years ended December 31, 2024 and 2023, respectively. Our depletion rate for the year ended December 31, 2024, was $19.64 per BOE, compared to $17.99 per BOE for the year ended December 31, 2023.
Depletion expenses on our oil and gas properties are the primary driver of DD&A expense making up 63% and 78% of DD&A expense for the years ended December 31, 2025 and 2024, respectively. Our depletion rate for the year ended December 31, 2025, was $21.89 per BOE, compared to $19.64 per BOE for the year ended December 31, 2024.
Therefore, we plan to be highly selective in the projects we evaluate and to review opportunities to bolster our liquidity and financial position through various means. ● Evaluate and Pursue Value-Enhancing Transactions .
Therefore, we plan to be highly selective in the projects we evaluate and to review opportunities to bolster our liquidity and financial position through various means. ● Evaluate and Pursue Value-Enhancing Transactions . We plan to continuously evaluate strategic alternative opportunities with the goal of enhancing stockholder value.
However, when including the available borrowing capacity under the credit facility of $20.0 million as of December 31, 2024, we have a working capital surplus of $17.4 million, not including the cash proceeds received from the equity offering noted above. 65 Table of Contents As of December 31, 2024, we had cash and cash equivalents of $7.7 million and accounts payable and accrued liabilities of $5.5 million.
However, when including the available borrowing capacity under the credit facility of $7.5 million as of December 31, 2025, we have a working capital surplus of $3.5 million, not including the cash proceeds received from the equity offering noted above. 62 Table of Contents As of December 31, 2025, we had cash and cash equivalents of $429 thousand and accounts payable and accrued liabilities of $1.5 million.
For the year ended December 31, 2024, we produced 415,887 BOE, or an average of 1,136 BOE per day, as compared to 624,420 BOE or 1,711 BOE per day, during the comparable period in 2023. Our oil production decreased 35% and our natural gas production decreased 31% compared to the prior year period.
For the year ended December 31, 2025, we produced 164,752 BOE, or an average of 451 BOE per day, as compared to 415,887 BOE or 1,136 BOE per day, during the comparable period in 2024. Our oil production decreased 56% and our natural gas production decreased 67% compared to the prior year period.
During the year ended December 31, 2024, we spent approximately $6.5 million on the acquisition and development of our industrial gas properties.
During the year ended December 31, 2025, we spent approximately $12.0 million on the acquisition and development of our industrial gas properties.
Cash used in financing activities for the year ended December 31, 2024, was $6.0 million as compared to cash used in financing activities of $9.4 million for the comparable period in 2023.
Cash provided by financing activities for the year ended December 31, 2025, was $11.7 million as compared to cash used in financing activities of $6.0 million for the comparable period in 2024.
We plan to continuously evaluate strategic alternative opportunities with the goal of enhancing stockholder value. 59 Table of Contents Critical Accounting Policies and Estimates The preparation of our consolidated financial statements in conformity with GAAP requires us to make assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the disclosure of contingent assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period.
Critical Accounting Policies and Estimates The preparation of our consolidated financial statements in conformity with GAAP requires us to make assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the disclosure of contingent assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period.
The realized price received for our oil production decreased 2% and the realized price received for our natural gas production decreased 10% for the year ended December 31, 2024, compared to the year ended December 31, 2023.
The realized price received for our oil production decreased 20% and the realized price received for our natural gas production increased 22% for the year ended December 31, 2025, compared to the year ended December 31, 2024.
The balance outstanding on the Credit Facility as of December 31, 2024 was $0.0 million. Other income (expense), net is primarily impacted from changes in the fair value of our investment in Anfield Energy.
As of December 31, 2025, we had borrowed $2.5 million on the credit facility as compared to zero outstanding as of December 31, 2024. Other income (expense), net is primarily impacted from changes in the fair value of our investment in Anfield Energy.
Cash provided by operating activities for the year ended December 31, 2024, was $4.6 million as compared to cash provided by operating activities of $5.5 million for 2023, a decrease of $0.9 million.
Cash used in operating activities for the year ended December 31, 2025, was $7.1 million as compared to cash provided by operating activities of $4.6 million for 2024, a decrease of $11.7 million.
As of December 31, 2024, we had a working capital deficit of $2.6 million compared to a working capital deficit of $2.7 million as of December 31, 2023, an increase in working capital deficit of $0.1 million.
As of December 31, 2025, we had a working capital deficit of $4.0 million compared to a working capital deficit of $2.2 million as of December 31, 2024, a decrease in working capital deficit of $1.8 million.
Presented below is a comparison of our non-operating income (expense) for the years ended December 31, 2024 and 2023 (in thousands): Change 2024 2023 Amount Percent Commodity derivative gain (loss), net $ 537 $ 2,882 (2,345 ) -81 % Interest income (expense), net (530 ) (1,114 ) 584 -52 % Other income (expense) (33 ) 25 (58 ) -232 % Total non-operating expense $ (26 ) $ 1,793 $ (1,819 ) -101 % Commodity derivative gain (loss), net is the result of changes in derivative fair values associated with fluctuations in forward price curves for the commodities underlying our outstanding derivative contracts and the monthly cash settlements of our derivative positions during the period.
Presented below is a comparison of our non-operating income (expense) for the years ended December 31, 2025 and 2024 (in thousands): Change 2025 2024 Amount Percent Commodity derivative gain (loss), net $ - $ 537 (537 ) -100 % Interest income (expense), net (208 ) (442 ) 234 -53 % Other income (expense) 199 (33 ) 232 -703 % Total non-operating expense $ (9 ) $ 62 $ (71 ) -115 % Commodity derivative gain (loss), net is the result of changes in derivative fair values associated with fluctuations in forward price curves for the commodities underlying our outstanding derivative contracts and the monthly cash settlements of our derivative positions during the period.
The impairment test incorporates several assumptions involving expectations of future cash flows which can change significantly over time. These assumptions include estimates of future production, future contracted industrial gas prices, estimates of future operating and development costs. Joint Interest Operations. Until the January 2022 acquisition, the majority of our properties were operated by other companies.
The impairment test incorporates several assumptions involving expectations of future cash flows which can change significantly over time. These assumptions include estimates of future production, future contracted industrial gas prices, estimates of future operating and development costs. Divestitures.
During the year ended December 31, 2023 we recorded a net loss of $32.4 million. In the following sections we discuss our revenue, operating expenses, and non-operating income (expense) for the year ended December 31, 2024 compared to the year ended December 31, 2023. 61 Table of Contents Revenue.
During the year ended December 31, 2024, we recorded a net loss of $25.6 million including an $11.9 million ceiling test impairment. In the following sections we discuss our revenue, operating expenses, and non-operating income (expense) for the year ended December 31, 2025 compared to the year ended December 31, 2024. Revenue.
On September 10, 2024, the Company settled all of its then outstanding commodity derivative contracts and received proceeds of $1.8 million. For the year ended December 31, 2024, we recognized gains on the settlement of commodity derivative contracts of $0.5 million. Interest expense, net, represents the interest related to our Credit Facility.
During 2024, the Company settled all of its then outstanding commodity derivative contracts and received proceeds of $1.8 million. As of and for the year ended December 31, 2025, the Company had no derivative positions. 60 Table of Contents Interest expense, net, represents the interest related to our Credit Facility.
Presented below is a comparison of our general and administrative expenses for the years ended December 31, 2024 and 2023 (in thousands): Change 2024 2023 Amount Percent Compensation and benefits, including directors $ 3,871 $ 5,335 $ (1,464 ) -27 % Stock-based compensation 1,268 2,293 (1,025 ) -45 % Professional fees, insurance and other 3,057 3,895 (838 ) -22 % Total $ 8,196 $ 11,523 $ (3,327 ) -29 % General and administrative expenses decreased by $3.3 million during the year ended December 31, 2024, as compared to the prior year period.
Presented below is a comparison of our general and administrative expenses for the years ended December 31, 2025 and 2024 (in thousands): Change 2025 2024 Amount Percent Compensation and benefits, including directors $ 2,596 $ 3,871 $ (1,275 ) -33 % Stock-based compensation 1,854 1,268 586 46 % Professional fees, insurance and other 3,614 3,057 557 18 % Total $ 8,064 $ 8,196 $ (132 ) -2 % General and administrative expenses decreased by $132 thousand during the year ended December 31, 2025, as compared to the prior year period.
We recognized a net gain of $33 thousand on these items for the year ended December 31, 2024, but recognized a loss of $25 thousand for the comparable period of 2023. 63 Table of Contents Income Tax Benefit (Expense). Income tax benefit decreased $0.9 million during the year ended December 31, 2024, as compared to December 31, 2023.
We recognized a net gain of $199 thousand on these items for the year ended December 31, 2025, but recognized a loss of $33 thousand for the comparable period of 2024. Income Tax Benefit (Expense).
In the event we sell equity, such sales may cause dilution to existing stockholders. Sources of Cash For the year ended December 31, 2024, we funded our capital expenditures with cash on hand, cash flows from operating activities, proceeds from the divestitures of oil and gas producing properties and borrowings under our credit facility.
Sources of Cash For the year ended December 31, 2025, we funded our capital expenditures with cash on hand, proceeds from the divestitures of oil and gas producing properties and borrowings under our credit facility.
As of December 31, 2023, we had cash and cash equivalents of $3.4 million and accounts payable and accrued liabilities of approximately $4.1 million. Revenue and royalties payable were nearly unchanged year over year.
As of December 31, 2024, we had cash and cash equivalents of $7.7 million and accounts payable and accrued liabilities of approximately $5.1 million. Revenue and royalties payable decreased $915 thousand year over year.
Cash provided by investing activities for the year ended December 31, 2024, was $5.8 million compared to cash provided by investing activities of $2.8 million for 2023, an increase of $2.9 million.
Cash used in investing activities for the year ended December 31, 2025, was $11.9 million compared to cash provided by investing activities of $5.8 million for 2024, a decrease of $17.7 million.
We anticipate our expenditures will be funded primarily by cash on hand, operating cash flows, proceeds from divestitures of oil and gas properties, and if necessary, borrowings under our credit facility. In the event that readily available sources of cash flow are insufficient to fund our capital needs, we may utilize equity and credit markets as a funding mechanism.
We anticipate funding our day-to-day expenditures primarily with cash on hand, operating or investing cash inflows, and if necessary, borrowings under our credit facility or purchase agreement. If readily available sources of cash flow are insufficient to fund our capital needs, we may utilize equity and credit markets as a funding mechanism.
Impairment of $11.9 million during the year ended December 31, 2024 was driven by ceiling test write-downs of oil and gas properties as a result of a decrease in crude oil and natural gas prices, divestments and other reserves revisions since December 31, 2023 For the year ended December 31, 2023, the Company recorded ceiling test write-downs of its oil and natural gas properties of $26.7 million as a result of a decrease in crude oil and natural gas prices, divestments and other reserves revisions since December 31, 2022.
For the year ended December 31, 2024, the Company recorded ceiling test impairment of its oil and natural gas properties of $11.9 million as a result of a decrease in crude oil and natural gas prices and the reduction in reserves from divestitures. Exploration expense.
In January 2025, we raised $12.1 million ($10.5 million after the Related Party Share Repurchase – see Note 16 Subsequent Events ) in an underwritten offering of 4,236,000 shares of our common stock.
In January 2025, we raised net proceeds of $10.3 million after the related party share Repurchase in an underwritten offering of 4,236,000 shares of our common stock discussed in greater detail above under "Item 1.
During the year ended December 31, 2024, our BOE production mix was 62% oil and 38% natural gas and liquids, consistent with 63% oil and 37% natural gas and liquids in the comparable period of 2023. Oil and Natural Gas Production Costs.
Production declines were primarily the result of property sales during 2025 and 2024. During the year ended December 31, 2025, our BOE production mix was 68% oil and 32% natural gas and liquids, consistent with 62% oil and 38% natural gas and liquids during 2024. Oil and Natural Gas Production Costs.
Plan of Operations and Strategy In 2025 and beyond, we intend to seek additional opportunities in the oil, natural gas and industrial gas sectors, including but not limited to further acquisition of assets, participation with industry partners in exploration and development projects, acquisition of existing companies, and the purchase of other industrial gas assets.
A discussion of our financial condition, including descriptions of balance sheet information and cash flows. 56 Table of Contents Plan of Operations and Strategy In 2026 and beyond, we intend to seek additional opportunities in the oil, natural gas and industrial gas sectors, including but not limited to further acquisition of assets, participation with industry partners, and the acquisition of existing companies.
Recent Accounting Standards Please refer to the section entitled Recent Accounting Pronouncements under Note 1 – Organization, Operations and Significant Accounting Policies to our consolidated financial statements, for additional information on recently issued accounting standards and our plans for adoption of those standards.
Recent Accounting Standards Please refer to the section entitled Recent Accounting Pronouncements under Note 1 – Organization, Operations and Significant Accounting Policies to our consolidated financial statements, for additional information on recently issued accounting standards and our plans for adoption of those standards. 58 Table of Contents Results of Operations Comparison of our Statements of Operations for the Years Ended December 31, 2025 and 2024 During the year ended December 31, 2025, we recorded a net loss of $14.4 million.
Cash Flows The following table summarizes our cash flows for the years ended December 31, 2024 and 2023 (in thousands): 2024 2023 Change Net cash provided by (used in): Operating activities $ 4,587 $ 5,472 $ (885 ) Investing activities 5,768 2,826 2,942 Financing activities (5,983 ) (9,358 ) 3,375 Operating Activities.
Cash Flows The following table summarizes our cash flows for the years ended December 31, 2025 and 2024 (in thousands): 2025 2024 Change Net cash provided by (used in): Operating activities $ (7,138 ) $ 4,587 $ (11,725 ) Investing activities (11,882 ) 5,768 (17,650 ) Financing activities 11,726 (5,983 ) 17,709 Operating Activities.
The following table sets forth certain measures about our liquidity as of December 31, 2024 and 2023, in thousands: 2024 2023 Change Cash and equivalents $ 7,723 $ 3,351 $ 4,372 Working capital deficit (1) (2,624 ) (2,706 ) 82 Total assets 49,667 80,444 (30,777 ) Outstanding debt - 5,000 (5,000 ) Total shareholders’ equity 23,821 46,522 (22,701 ) Select Ratios: Current ratio (2) 0.79 to 1.00 0.76 to 1.00 Debt-to-equity ratio (3) 0 to 1.00 0.11 to 1.00 (1) Working capital is computed by subtracting total current liabilities from total current assets.
The following table sets forth certain measures about our liquidity as of December 31, 2025 and 2024 ($ in thousands): 2025 2024 Change Cash and equivalents $ 429 $ 7,723 $ (7,294 ) Working capital deficit (1) (4,038 ) (2,244 ) (1,794 ) Total assets 40,630 49,667 (9,037 ) Outstanding debt 2,500 - 2,500 Total shareholders’ equity 24,195 24,201 (6 ) Select Ratios: Current ratio (2) 0.33 to 1.00 0.81 to 1.00 Debt-to-equity ratio (3) 0.1 to 1.00 0 to 1.00 (1) Working capital is computed by subtracting total current liabilities from total current assets.
Presented below is a comparison of our oil and natural gas sales, production quantities and average sales prices for the years ended December 31, 2024 and 2023 (dollars in thousands, except average sales prices): Change 2024 2023 Amount Percent Revenue: Oil $ 18,165 $ 28,352 $ (10,187 ) -36 % Gas 2,454 3,964 (1,510 ) -38 % Total $ 20,619 $ 32,316 $ (11,697 ) -36 % Production quantities: Oil (Bbls) 256,166 391,645 (135,479 ) -35 % Gas (Mcfe) 958,325 1,396,650 (438,325 ) -31 % BOE 415,887 624,420 (208,533 ) -33 % BOE per day 1,136 1,711 (574 ) -34 % Average sales prices: Oil (Bbls) $ 70.91 $ 72.39 $ (1.48 ) -2 % Gas (Mcfe) 2.56 2.84 (0.28 ) -10 % BOE 49.58 51.75 (2.18 ) -4 % The decrease in our oil and gas revenue of $11.7 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023, was due to decreases in both production quantities and commodity prices.
Presented below is a comparison of our oil and natural gas sales, production quantities and average sales prices for the years ended December 31, 2025 and 2024 (dollars in thousands, except average sales prices): Change 2025 2024 Amount Percent Revenue: Oil $ 6,378 $ 18,165 $ (11,787 ) -65 % Gas 975 2,454 (1,479 ) -60 % Total $ 7,353 $ 20,619 $ (13,266 ) -64 % Production quantities: Oil (Bbls) 112,797 256,166 (143,369 ) -56 % Gas (Mcfe) 311,729 958,325 (646,596 ) -67 % BOE 164,752 415,887 (251,135 ) -60 % BOE per day 451 1,136 (685 ) -60 % Average sales prices: Oil (Bbls) $ 56.54 $ 70.91 $ (14.37 ) -20 % Gas (Mcfe) 3.13 2.56 0.57 22 % BOE 44.63 49.58 (4.95 ) -10 % The decrease in our oil and gas revenue of $13.3 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024, was due to decreases in both production quantities and commodity prices.
All of our sources of liquidity can be affected by the changes in economic conditions, rising interest rates, changes in debt and equity markets, force majeure events, fluctuations in commodity prices, operating costs, tax law changes, and volumes produced, all of which would affect us and our industry. 23 64 Table of Contents Credit Agreement On January 5, 2022, we entered into a four-year credit agreement with FirstBank Southwest as administrative agent, which provides for a revolving line of credit with a borrowing base of $20 million, and a maximum credit amount of $100 million.
All of our sources of liquidity can be affected by the changes in economic conditions, rising interest rates, changes in debt and equity markets, force majeure events, fluctuations in commodity prices, operating costs, tax law changes, and volumes produced, all of which would affect us and our industry.
The cash used in financing activities during the year ended December 31, 2024 was primarily attributable to net payments of debt under our credit facility of $5.0 million and amounts paid to repurchase our common stock of $0.8 million The comparable number in 2023 mainly represents net payments of borrowings on our credit facility of $7.0 million and dividends paid on our common stock of $1.2 million.
The cash provided by financing activities during the year ended December 31, 2025 was primarily attributable to proceeds from equity issuances under our January 2025 underwritten offering and borrowing under our credit facility. The use of cash in 2024 mainly represents net payments of borrowings on our credit facility of $5.0 million.
We were in compliance with all financial covenants as of December 31, 2024. The borrowing base is subject to redetermination semi-annually, commencing on or about April 1 and October 1 of each year during the four-year term of the Credit Agreement.
The borrowing base is subject to redetermination semi-annually, commencing on or about April 1 and October 1 of each year during the four-year term of the Credit Agreement. Our borrowing base can be adjusted as a result of changes in commodity prices, acquisitions or divestitures of proved properties, or financing activities, all as provided for in the Credit Agreement.
The increase of cash provided by our investing activities for the year ended December 31, 2024 was primarily due to $13.5 million of net proceeds from the sale of non-operated oil and natural gas properties, which were partially offset by capital expenditures related to oil and natural gas properties of $1.4 million. and acquisition and development of industrial gas properties of $6.8 million.
The use of cash in our investing activities for the year ended December 31, 2025 was due primarily to capital expenditures to acquire and develop our industrial gas project. In 2024 cash provided by investing activities consisted of proceeds from divestitures offset by capital expenditures on our oil and gas and industrial gas properties. Financing Activities.
Our depletion rate can fluctuate because of acquisitions, changes in drilling and completion costs, impairments, revisions in asset retirement obligation cost estimates or timing, divestitures, changes in the mix of our production, the underlying proved reserve volumes and estimated costs to drill and complete proved undeveloped reserves.
Our depletion rate fluctuates because of the impact of divestitures, impairments on the full cost pool, but other factors such as acquisitions, revisions in asset retirement obligation cost estimates or timing, and underlying proved reserve volumes can also impact the rate. Impairment of oil and natural gas properties.
Gathering, transportation, and treating costs decreased $352 thousand or 63%, for the year ended December 31, 2024 compared to 2023.
Gathering, transportation, and treating costs decreased $146 thousand or 71%, for the year ended December 31, 2025 compared to 2024. The decrease was attributable to the divestitures of operated properties in 2025 and 2024. Production taxes for our properties typically average 7% of revenue.
As of December 31, 2024, the Company was in compliance with all financial covenants related to the credit facility.
We were in compliance with our financial covenants as of December 31, 2025. The amount outstanding on the Credit Agreement as of December 31, 2025, was $2.5 million.
Unproved oil and natural gas properties are assessed quarterly for impairment to determine whether we are still actively pursuing the project and whether the project has been proven either to have economic quantities of reserves or that economic quantities of reserves do not exist. 60 Table of Contents Under the full cost method of accounting, capitalized oil and natural gas property costs less accumulated DD&A and net of deferred income taxes may not exceed the Full Cost Ceiling.
Costs associated with production and general corporate activities are expensed in the period incurred. Under the full cost method of accounting, capitalized oil and natural gas property costs less accumulated DD&A and net of deferred income taxes may not exceed the Full Cost Ceiling.
In addition, we had lower workover activity on our properties and improved operating efficiencies from integrating and optimizing our oil and natural gas assets acquired in 2022. The increase in lease operating expense on a per BOE basis is due to certain fixed cost components of our lease operating expense which remain for a period after divesting of a property.
The increase in lease operating expense on a per BOE basis is in part due to inflation and due to the fixed cost components of our lease operating expense becoming a larger portion of total costs as we have divested of lower cost properties and a result of natural production declines.
DD&A was $8.3 million for the year ended December 31, 2024, compared to $11.2 million for the year ended December 31, 2023. Impairment of oil and natural gas properties.
Ceiling test impairment of $3.6 million during the year ended December 31, 2025 was incurred as a result of a decrease in crude oil and natural gas prices.
The net loss is primarily due to a reduction in revenue of $11.7 million (discussed below), ceiling test write downs of $11.9 million of the Company's oil and gas properties as a result of divestments, lower crude oil and natural gas prices and other reserves revisions since December 31, 2023 and a loss on sale of our East Texas properties of $5.0 million.
The net loss is primarily due to a reduction in revenue of $13.3 million (discussed below), ceiling test impairment of $3.6 million of the Company's oil and gas properties, lower production volumes resulting from cumulative divestments, lower realized sales price for our production and increasing lease operating expense on a BOE basis.
Liquidity and Capital Resources Based on the current commodity price environment and our current working capital, we believe we have sufficient liquidity and capital resources to execute our business plan while continuing to meet our current financial obligations. We continue to manage our commitments in order to maintain flexibility with regard to our activity level and capital expenditures.
The Company generated losses for income tax purposes in 2025 and 2024, and any additional net deferred income tax assets were offset by a corresponding valuation allowance. Liquidity and Capital Resources Based on the current commodity price environment and our current working capital, we believe we have sufficient liquidity and capital resources to meet our current financial obligations.
Removed
A discussion of our financial condition, including descriptions of balance sheet information and cash flows. 58 Table of Contents Recent Developments Acquisition of Properties Wavetech On June 26, 2024, we entered into and closed the transactions contemplated by, a purchase and sale agreement with Wavetech Helium (“Wavetech” and the “Purchase Agreement”).
Added
We also plan to finalize the detailed engineering of our processing facility and related activities necessary to bring the plant online. These activities include but are not limited to acquiring surface acreage, negotiating rights of way and offtake agreements, designing power infrastructure, and raise capital to fully fund development.
Removed
Pursuant to the Purchase Agreement, effective June 1, 2024, we acquired 82.5% of Wavetech's rights under a farmout agreement for approximately 144,000 net acres located across the Kevin Dome Structure in Toole County, Montana (“the Assigned Rights”). The Assigned Rights vest upon the drilling of two wells on the property.
Added
See Note 3- Revenue From Contracts With Customers to our consolidated financial statements.
Removed
In consideration for the Assigned Rights, the Company paid Wavetech $2.0 million in cash and 2.6 million shares of restricted common stock, which were valued at $2.7 million on June 26, 2024. In addition, prior to the closing of the Purchase Agreement, the Company incurred $0.4 million of transaction costs related to the acquisition of the Assigned Rights.
Added
On a per BOE basis, lease operating expense increased $4.57 per BOE produced relative to 2024.
Removed
Additionally, we agreed to be responsible for 100% of capital costs, including costs related to project exploration, appraisal, development drilling and completion until $20 million has been incurred related to Wavetech's 17.5% interest. The Company accounted for the acquisition of the Assigned Rights as an asset acquisition.
Added
Any change in the production taxes is attributable to revenue changes resulting from changes in production volumes and realized prices year to year. Depreciation, Depletion, Accretion and Amortization. DD&A was $3.6 million for the year ended December 31, 2025, compared to $8.3 million for the year ended December 31, 2024.
Removed
As of March 10, 2025, we had drilled one of the two wells required to vest the Assigned Rights, and we expect this to be completed in the first half of 2025. Synergy On January 7, 2025, we entered and simultaneously closed the transactions contemplated by, a purchase and sale agreement, with Synergy Offshore LLC (“Synergy”).
Added
For the years ended December 31, 2025 and 2024, exploration expense consisted primarily of professional fees and other costs associated with evaluating potential acquisitions, including land title review, regulatory consultations and geological assessments. These costs do not qualify for capitalization under the full cost method and are therefore expensed as incurred.
Removed
Synergy is controlled by Mr. Duane H. King, a member of the Board of Directors of the Company, who serves as the Chief Executive Officer and Manager of Synergy, and John A. Weinzierl, the Company’s Chairman, who is an approximate sixty percent beneficial owner of Synergy.
Added
Exploration expense decreased by $139 thousand in 2025 compared to 2024, primarily due to a higher level of acquisition evaluation activity during 2024. General and Administrative Expenses.
Removed
We acquired approximately 24,000 net operated acres located across the Kevin Dome structure in Toole County, Montana, including all leases, wells, rights and interests in, under or derived from the acquired acreage subject to Synergy retaining an undivided twenty percent (20%) of Synergy’s right title and interest in the property.
Added
Compensation and benefits decreased $1.3 million due to decreased headcount as the Company focused on the development of the industrial gas business. Stock-based compensation increased $586 thousand primarily due to grant prices used in prior employee and director stock-based compensation awards that amortized during 2025.
Removed
Consideration for the transaction consisted of the following: (a) $2.0 million in cash, subject to customary adjustments; (b) 1,400,000 shares of the Company’s common stock; (c) a carried working interest whereby the Company agreed to cover and pay for 100% of Synergy’s costs attributable to the Synergy acreage, until the earlier of (i) 78 months from the closing date; or (ii) the date the total costs associated therewith total $20 million; (d) our agreement to pay Synergy 18% of the cash amounts we actually realize from any law or regulation from our sequestration of carbon oxides or similar substances derived directly from an agreed area of mutual interest including Synergy’s acreage; and (e) our agreement to pay Synergy 18% of the gain we may receive in connection with the sale of the future, first, gas processing plant located on Synergy’s acreage.
Added
Professional fees, insurance and other expenses increased $557 thousand, primarily due to professional fees associated with outsourcing a portion of our accounting function. Loss on sale of assets. During the year ended December 31, 2025, we recognized a $411 thousand related to the final settlement on our sale of our East Texas properties. Non-Operating Income (Expense).
Removed
Divestiture of Properties During the year ended December 31, 2024, the Company closed on a series of individual divestitures for a total of $14.0 million in net proceeds before transaction costs of $0.4 million. The Company was also relieved of associated asset retirement obligations of $5.4 million.
Added
We continue to manage our commitments in order to maintain flexibility with regard to our activity level and capital expenditures. During 2026, the Company expects to seek financing in the equity and credit markets to fund the construction of its gas processing plant, production gathering and related utility infrastructure.
Removed
The divestitures included primarily operated properties in Texas and Mid-Continent ("Mid-con") and encompassed 408 gross wells, with two prior dispositions, one relating to our South Texas properties and one relating to our East Texas properties, each discussed in greater detail below, accounting for the majority of the proceeds.
Added
The estimated cost of this next development phase is approximately $35.0 million. The Company may sell equity under its existing Form S-3 registration statement, and/or sell equity under the purchase agreement with Roth Principal; however, no financing commitments have been secured to date, other than the purchase agreement.
Removed
In South Texas, the Company divested its assets in Karnes County, Texas, for approximately $5.2 million in net cash proceeds after customary purchase price adjustments, effective April 1, 2024, with the transaction closing on July 31, 2024.
Added
Such funding may not be available on favorable terms, or at all, and any equity funding raised may be dilutive to existing stockholders. If the Company is unable to obtain sufficient financing on acceptable terms, the timing or scope of this development phase may be delayed or modified.
Removed
These primarily operated properties, consisting of 8 gross wells, which averaged 155 barrels of oil equivalent per day (85% oil) during the first quarter of 2024, representing 13% of our total production over that period.
Added
In the event we sell equity, such sales may cause dilution to existing stockholders.
Removed
In East Texas, the Company sold the majority of its assets across Anderson, Chambers, Henderson, and Liberty Counties, Texas, for $6.8 million in net cash proceeds, effective November 1, 2024, with the transaction closing on December 31, 2024.
Added
Business—Material Events—Underwritten Offering" and "—Related Party Shares Repurchase" . 61 Table of Contents Credit Agreement On January 5, 2022, we entered into a four-year credit agreement with FirstBank Southwest as administrative agent, which provides for a revolving line of credit with a borrowing base of $20 million, and a maximum credit amount of $100 million.
Removed
This package, comprising 122 gross wells, averaged approximately 1.1 million cubic feet per day of natural gas and 168 barrels of oil per day (48% oil) for the quarter ending September 30, 2024.
Added
On September 16, 2025, effective August 1, 2025, the Company entered into a First Amendment to Credit Agreement and Limited Waiver ("Amendment") with FirstBank, as administrative agent for the lenders party thereto, and such lenders.

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