10q10k10q10k.net

What changed in Vitesse Energy, Inc.'s 10-K — 2024 vs 2025

vs

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

+251 added−306 removedSource: 10-K (2026-03-02) vs 10-K (2025-03-12)

Top changes in Vitesse Energy, Inc.'s 2025 10-K

251 paragraphs added · 306 removed · 203 edited across 5 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

95 edited+25 added−68 removed270 unchanged
Biggest changeRisks Relating to Tax Matters ■ If the Distribution does not qualify as a transaction that is tax-free for U.S. federal income tax purposes, Jefferies and holders of Jefferies common stock who received shares of our common stock in connection with the Spin-Off could be subject to significant tax liability. ■ Taxable gain or loss on the sale of our common stock could be more or less than expected. ■ The IRS Forms 1099-DIV that our stockholders receive from their brokers may over-report dividend income with respect to our common stock for U.S. federal income tax purposes, which may result in a stockholder’s overpayment of tax.
Biggest changeRisks Relating to Tax Matters ■ We could have an indemnification obligation to Jefferies in certain circumstances if the Distribution were determined not to qualify for tax-free treatment for U.S. federal tax purposes. ■ Taxable gain or loss on the sale of our common stock could be more or less than expected. ■ The IRS Forms 1099-DIV that our stockholders receive from their brokers may over-report dividend income, which may result in a stockholder’s overpayment of tax by U.S. holders of our common stock and over withholding on non-U.S. holders of our common stock.
Stockholders percentage ownership in Vitesse may be diluted in the future because of the settlement or exercise of equity-based awards that have been granted and that we expect will continue to be granted to our directors, officers and other employees under our equity incentive plan.
Stockholders percentage ownership in Vitesse may be diluted in the future. Stockholders percentage ownership in Vitesse may be diluted in the future because of the settlement or exercise of equity-based awards that have been granted and that we expect will continue to be granted to our directors, officers and other employees under our equity incentive plan.
In situations where cost inflation exceeds oil and natural gas price inflation, our profitability and cash flow, and our operators’ ability to complete development activities as scheduled and on budget, may be negatively impacted. Any delay in drilling or significant increase in drilling costs could reduce our revenues and profitability.
In situations where cost inflation exceeds oil and natural gas price inflation, our profitability and cash flow, our and our operators’ ability to complete development activities as scheduled and on budget, may be negatively impacted. Any delay in drilling or significant increase in drilling costs could reduce our revenues and profitability.
Therefore, these undeveloped reserves may not be ultimately developed or produced. ■ Our business plan requires the expenditure of significant capital, which we may be unable to obtain on favorable terms or at all. ■ Our acquisition strategy will subject us to certain risks associated with the inherent uncertainty in evaluating properties for which we have limited information. ■ The majority of our producing properties are located in the Williston Basin, making us vulnerable to risks associated with operating in one major geographic area. ■ The loss of any member of our management team, upon whose knowledge, relationships with industry participants, leadership and technical expertise we rely, could diminish our ability to conduct our operations and harm our ability to execute our business plan. ■ Deficiencies of title to our interests could significantly affect our financial condition. ■ Inflation could adversely impact our ability to control our costs, including the operating expenses and capital costs of our operators. ■ Our derivatives activities could adversely affect our profitability, cash flow, results of operations and financial condition. 27 Table of Contents ■ Asset retirement costs are difficult to predict and may be substantial.
Therefore, these undeveloped reserves may not be ultimately developed or produced. ■ Our business plan requires the expenditure of significant capital, which we may be unable to obtain on favorable terms or at all. ■ Our acquisition strategy will subject us to certain risks associated with the inherent uncertainty in evaluating properties for which we have limited information. ■ The majority of our producing properties are located in the Williston Basin, making us vulnerable to risks associated with operating in one major geographic area. ■ The loss of any member of our management team, upon whose knowledge, relationships with industry participants, leadership and technical expertise we rely, could diminish our ability to conduct our operations and harm our ability to execute our business plan. ■ Deficiencies of title to our interests could significantly affect our financial condition. ■ Inflation could adversely impact our ability to control our costs, including the operating expenses and capital costs of our operators. ■ Our derivatives activities could adversely affect our profitability, cash flow, results of operations and financial condition. 26 Table of Contents ■ Asset retirement costs are difficult to predict and may be substantial.
Such sentiment may focus on the Company’s environmental or social commitments (such as reducing GHG emissions) or its pursuit of certain employment practices or social initiatives that are alleged to be political or polarizing in nature or are alleged to violate laws based, in part, on changing priorities of, or interpretations by, federal agencies or state governments.
Such sentiment may focus on the Company’s environmental or social commitments (such as reducing GHG emissions) or its pursuit of certain employment or business practices or social initiatives that are alleged to be political or polarizing in nature or are alleged to violate laws based, in part, on changing priorities of, or interpretations by, federal agencies or state governments.
Any acquisition involves other potential risks, including, among other things: ■ the validity of our assumptions about reserves, future production, revenues and costs; ■ a decrease in our liquidity by using a significant portion of our cash from operations or borrowing capacity to finance acquisitions; ■ a significant increase in our interest expense or financial leverage if we incur additional debt to finance acquisitions; ■ the ultimate value of any contingent consideration agreed to be paid in an acquisition; ■ dilution to stockholders if we use equity as consideration for, or to finance, acquisitions; 36 Table of Contents ■ the assumption of unknown liabilities, losses or costs for which we are not indemnified or for which our indemnity is inadequate; ■ geological risk, which refers to the risk that hydrocarbons may not be present or, if present, may not be recoverable economically; ■ an inability to hire, train or retain qualified personnel to manage and operate our growing business and assets; and ■ an increase in our costs or a decrease in our revenues associated with any potential royalty owner or landowner claims or disputes, or other litigation encountered in connection with an acquisition.
Any acquisition involves other potential risks, including, among other things: ■ the validity of our assumptions about reserves, future production, revenues and costs; ■ a decrease in our liquidity by using a significant portion of our cash from operations or borrowing capacity to finance acquisitions; ■ a significant increase in our interest expense or financial leverage if we incur additional debt to finance acquisitions; ■ the ultimate value of any contingent consideration agreed to be paid in an acquisition; ■ dilution to stockholders if we use equity as consideration for, or to finance, acquisitions; ■ the assumption of unknown liabilities, losses or costs for which we are not indemnified or for which our indemnity is inadequate; ■ geological risk, which refers to the risk that hydrocarbons may not be present or, if present, may not be recoverable economically; ■ an inability to hire, train or retain qualified personnel to manage and operate our growing business and assets; and ■ an increase in our costs or a decrease in our revenues associated with any potential royalty owner or landowner claims or disputes, or other litigation encountered in connection with an acquisition.
In addition, there is currently significant uncertainty about the future relationship between the United States and various other countries, with respect to trade policies, treaties, tariffs, taxes, and other limitations on cross-border operations.
In addition, there is significant uncertainty about the future relationship between the United States and various other countries, with respect to trade policies, treaties, tariffs, taxes, and other limitations on cross-border operations.
Department of Energy; 31 Table of Contents ■ the actions of OPEC and other major oil producing countries; ■ worldwide and regional economic, political and social conditions impacting the global supply and demand for oil and natural gas, which may be driven by various risks including war, terrorism, political unrest, or health epidemics; ■ the price and quantity of imports of foreign oil and natural gas; ■ political and economic conditions, including embargoes, in oil-producing countries or affecting other oil-producing activity; ■ the outbreak or escalation of military hostilities, including between Russia and Ukraine and in the Middle East, and the potential destabilizing effect such conflicts may pose for the global oil and natural gas markets; ■ inflation and changes in U.S. trade policy, including the imposition of tariffs and resulting consequences; ■ the level of global oil and natural gas exploration, production activity and inventories; ■ changes in U.S. energy policy; ■ weather conditions; ■ outbreak of disease; ■ technological advances affecting energy consumption; ■ domestic and foreign governmental taxes, tariffs or regulations; ■ proximity and capacity of processing, gathering, and storage facilities, oil and natural gas pipelines and other transportation facilities; ■ the price and availability of competitors’ supplies of oil and natural gas in captive market areas; and ■ the price and availability of alternative fuels.
Department of Energy; ■ the actions of OPEC and other major oil producing countries; ■ worldwide and regional economic, political and social conditions impacting the global supply and demand for oil and natural gas, which may be driven by various risks including war, terrorism, political unrest, or health epidemics; ■ the price and quantity of imports of foreign oil and natural gas; ■ political and economic conditions, including embargoes, in oil-producing countries such as Venezuela or affecting other oil-producing activity; 30 Table of Contents ■ the outbreak or escalation of military hostilities, including between Russia and Ukraine and in the Middle East, and the potential destabilizing effect such conflicts may pose for the global oil and natural gas markets; ■ inflation and changes in U.S. trade policy, including the imposition of tariffs and resulting consequences; ■ the level of global oil and natural gas exploration, production activity and inventories; ■ changes in U.S. energy policy; ■ weather conditions; ■ outbreak of disease; ■ technological advances affecting energy consumption; ■ domestic and foreign governmental taxes, tariffs or regulations; ■ proximity and capacity of processing, gathering, and storage facilities, oil and natural gas pipelines and other transportation facilities; ■ the price and availability of competitors’ supplies of oil and natural gas in captive market areas; and ■ the price and availability of alternative fuels.
Our Revolving Credit Facility contains a number of restrictive covenants that impose operating and financial restrictions on us, including restrictions on our ability to, among other things: declare or pay any dividend or make any other distributions on, purchase or redeem our equity interests; make loans or certain investments; make certain acquisitions; incur or guarantee additional indebtedness or issue certain types of equity securities; incur liens; transfer or sell assets; create subsidiaries; consolidate, merge or transfer all or substantially all of our assets; and engage in transactions with our affiliates.
Our Revolving Credit Facility contains a number of restrictive covenants that impose operating and financial restrictions on us, including restrictions on our ability to, among other things: declare or pay any dividend or make any other distributions on, purchase or redeem our equity interests; make loans or certain investments; make certain acquisitions; incur or guarantee additional indebtedness or issue certain 40 Table of Contents types of equity securities; incur liens; transfer or sell assets; create subsidiaries; consolidate, merge or transfer all or substantially all of our assets; and engage in transactions with our affiliates.
For example, in prior periods we have experienced increases to our unit-based compensation expense primarily due to increased oil and natural gas prices causing the estimated fair value of the liabilities associated with such unit-based compensation to increase, which contributed to net losses recorded during such periods.
For example, in prior periods we have experienced increases to our equity-based compensation expense primarily due to increased oil and natural gas prices causing the estimated fair value of the liabilities associated with such equity-based compensation to increase, which contributed to net losses recorded during such periods.
Certain employment practices and social initiatives are the subject of scrutiny by both those calling for the continued advancement of such policies, as well as those who believe they should be curbed, including government actors, and the complex regulatory and legal frameworks applicable to such initiatives continue to evolve.
Certain employment or business practices and social initiatives are the subject of scrutiny by both those calling for the continued advancement of such policies, as well as those who believe they should be curbed, including government actors, and the complex regulatory and legal frameworks applicable to such initiatives continue to evolve.
Under our Revolving Credit Facility, we are permitted to make cash distributions without limit to our equity holders if (i) no event of default or borrowing base deficiency (i.e., outstanding debt (including loans and letters of credit) exceeds the borrowing base) then exists or would result from such distribution and (ii) after giving effect to such distribution, (a) our total outstanding credit usage does not exceed 80% of the least of (the following collectively referred to as “Commitments”): (1) $500 million, (2) our then-effective borrowing base, and (3) the then-effective aggregate amount of our lenders’ commitments and (b) as of the date of such distribution, the EBITDAX Ratio does not exceed 1.50 to 1.00.
Under the Revolving Credit Facility, we are permitted to make cash distributions without limit to our equity holders if (i) no event of default or borrowing base deficiency (i.e., outstanding debt (including loans and letters of credit) exceeds the borrowing base) then exists or would result from such distribution and (ii) after giving effect to such distribution, (a) total outstanding credit usage does not exceed 80% of the least of (the following collectively referred to as “Commitments”): (1) $500.0 million (2) then-effective borrowing base, and (3) the then-effective aggregate elected commitments and (b) as of the date of such distribution, the EBITDAX Ratio does not exceed 1.50 to 1.00.
We describe these and other risks in much greater detail below. 28 Table of Contents Risks Relating to Our Common Stock An active, liquid trading market for our common stock may not continue, which may limit your ability to sell your shares.
We describe these and other risks in much greater detail below. 27 Table of Contents Risks Relating to Our Common Stock An active, liquid trading market for our common stock may not continue, which may limit your ability to sell your shares.
The success and timing of development activities by our operators will depend on a number of factors that will largely be outside of our control, including oil and natural gas prices 35 Table of Contents and other factors generally affecting the oil and natural gas industry’s operating environment; the timing and amount of capital expenditures; their expertise and financial resources; approval of other participants in drilling wells; selection of technology; and the rate of production of reserves, if any.
The success and timing of development activities by our operators will depend on a number of factors that will largely be outside of our control, including oil and natural gas prices and other factors generally affecting the oil and natural gas industry’s operating environment; the timing and amount of capital expenditures; their expertise and financial resources; approval of other participants in drilling wells; selection of technology; and the rate of production of reserves, if any.
We believe that we have positive relations with our related vendors and maintain adequate anti-virus and malware software and controls; however, any interruptions to our arrangements with third parties for our computing and communications infrastructure or any other interruptions to, or breaches of, our information systems could lead to data corruption, communication interruption, loss of sensitive or confidential information or otherwise significantly disrupt our business operations.
We believe that we have positive relations with our related vendors and maintain adequate anti-virus and malware software and controls; however, any interruptions to our arrangements with third parties for our computing and communications infrastructure or any other interruptions to, or breaches of, our information systems could lead to data corruption, communication interruption, loss of sensitive or confidential information 38 Table of Contents or otherwise significantly disrupt our business operations.
Such legislation and regulations could significantly increase the cost of derivative contracts (including from swap recordkeeping and reporting requirements and through requirements to post collateral which could adversely affect our 45 Table of Contents available liquidity), materially alter the terms of derivative contracts, reduce the availability of derivatives to protect against risks we encounter, reduce our ability to monetize or restructure our existing derivative contracts, and increase our exposure to less creditworthy counterparties.
Such legislation and regulations could significantly increase the cost of derivative contracts (including from swap recordkeeping and reporting requirements and through requirements to post collateral which could adversely affect our available liquidity), materially alter the terms of derivative contracts, reduce the availability of derivatives to protect against risks we encounter, reduce our ability to monetize or restructure our existing derivative contracts, and increase our exposure to less creditworthy counterparties.
Consideration of ESG-related factors in the Company’s decision-making could be subject to increasing scrutiny and objection from such anti-ESG parties. 41 Table of Contents Risks Relating to Our Indebtedness Any significant reduction in the borrowing base under our Revolving Credit Facility may negatively impact our liquidity and could adversely affect our business and financial results.
Consideration of ESG-related factors in the Company’s decision-making could be subject to increasing scrutiny and objection from such anti-ESG parties. Risks Relating to Our Indebtedness Any significant reduction in the borrowing base under our Revolving Credit Facility may negatively impact our liquidity and could adversely affect our business and financial results.
The impact of the changing demand for oil and natural gas services and products, together with a change in investor sentiment, may have a material adverse effect on our business, financial condition, results of operations and cash flows. 40 Table of Contents Increased attention to ESG matters, including climate change, may impact our business and access to capital.
The impact of the changing demand for oil and natural gas services and products, together with a change in investor sentiment, may have a material adverse effect on our business, financial condition, results of operations and cash flows. Increased attention to ESG matters, including climate change, may impact our business and access to capital.
Regulations issued under the Dodd-Frank Act (including any further regulations implemented thereunder) and any new legislation also may require certain counterparties to our derivative instruments to spin off some of their derivative activities to a separate entity, which may not be as creditworthy as the current counterparty.
Regulations issued under the Dodd-Frank Act (including any further regulations implemented thereunder) and any new legislation also may require certain counterparties to our derivative instruments to spin off some of their derivative activities to a separate entity, which may not be 43 Table of Contents as creditworthy as the current counterparty.
For as long as we are an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to: ■ not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act of 2002; ■ exemption from new or revised financial accounting standards applicable to public companies until such standards are also applicable to private companies; ■ reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and 29 Table of Contents ■ exemptions from the requirement of holding a nonbinding advisory vote on executive compensation and stockholder approval on golden parachute compensation not previously approved.
For as long as we are an emerging growth company, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to: ■ not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act of 2002; ■ exemption from new or revised financial accounting standards applicable to public companies until such standards are also applicable to private companies; ■ reduced disclosure obligations regarding executive compensation in our periodic reports, proxy statements and registration statements; and ■ exemptions from the requirement of holding a nonbinding advisory vote on executive compensation and stockholder approval on golden parachute compensation not previously approved. 28 Table of Contents We may choose to take advantage of some or all of these reduced burdens.
While we may elect to pursue certain ESG strategies in the future, any such goals are aspirational and may not have the intended impact on our business.
While we may elect to pursue certain ESG strategies in the future, any such goals or commitments are aspirational and may not have the intended impact on our business.
Unrealized hedging losses on commodity derivatives attributable to significant increases in oil prices may also cause a net loss for a given period. In addition, fluctuations in oil and natural gas prices have impacted unit-based compensation expense for our Predecessor for prior periods and may impact our stock-based compensation expense.
Unrealized hedging losses on commodity derivatives attributable to significant increases in oil prices may also cause a net loss for a given period. In addition, fluctuations in oil and natural gas prices have impacted equity-based compensation expense for prior periods and may impact our stock-based compensation expense.
The use of other funds to satisfy such asset retirement costs could impair our ability to dedicate our capital to other areas of our business. 39 Table of Contents We depend on computer and telecommunications systems, and failures in our systems or cybersecurity threats, attacks or other disruptions could significantly disrupt our business operations.
The use of other funds to satisfy such asset retirement costs could impair our ability to dedicate our capital to other areas of our business. We depend on computer and telecommunications systems, and failures in our systems or cybersecurity threats, attacks or other disruptions could significantly disrupt our business operations.
We may also receive pressure from investors, lenders or other groups to adopt more aggressive climate or other ESG-related goals, but we cannot guarantee that we will be able to pursue or implement such goals because of potential costs or technical or operational obstacles.
We may also receive pressure from investors, lenders or other groups to adopt more aggressive climate or other ESG-related goals or commitments, but we cannot guarantee that we will be able to pursue or implement such goals or commitments because of potential costs, inaccurate assumptions or technical or operational obstacles.
A low oil and natural gas price environment may strain our operators, which could heighten this risk. The inability or failure of our operators to meet their obligations to us or their insolvency or liquidation may adversely affect our financial results.
A low oil and natural gas price environment may 34 Table of Contents strain our operators, which could heighten this risk. The inability or failure of our operators to meet their obligations to us or their insolvency or liquidation may adversely affect our financial results.
Additional regulation could impact rates charged by our operators and impact their ability to enter into gathering and transportation agreements, which costs could be passed through to us. 34 Table of Contents The DAPL, a major pipeline transporting oil from the Williston Basin, is subject to ongoing litigation that could threaten its continued operation.
Additional regulation could impact rates charged by our operators and impact their ability to enter into gathering and transportation agreements, which costs could be passed through to us. The DAPL, a major pipeline transporting oil from the Williston Basin, is subject to ongoing litigation that could threaten its continued operation.
We may be unable to successfully integrate any assets we may acquire in the future into our business or achieve the anticipated benefits of such acquisitions. We may not be able to integrate the acquired assets into our existing business in an efficient and effective manner or achieve the anticipated benefits of acquisitions such as the Lucero Acquisition.
We may be unable to successfully integrate any assets we may acquire in the future into our business or achieve the anticipated benefits of such acquisitions. We may not be able to integrate the acquired assets into our existing business in an efficient and effective manner or achieve the anticipated benefits of acquisitions.
Numerous changes over time to the assumptions on which our reserve estimates are based result in the actual quantities of oil and natural gas our operators ultimately recover being different from our reserve 33 Table of Contents estimates.
Numerous changes over time to the assumptions on which our reserve estimates are based result in the actual quantities of oil and natural gas our operators ultimately recover being different from our reserve estimates.
The development of our proved undeveloped reserves may take longer and may require higher levels of capital expenditures than we anticipate. Therefore, these undeveloped reserves may not be ultimately developed or produced. Approximately 32% of our estimated net proved reserves volumes were classified as proved undeveloped as of December 31, 2024.
The development of our proved undeveloped reserves may take longer and may require higher levels of capital expenditures than we anticipate. Therefore, these undeveloped reserves may not be ultimately developed or produced. Approximately 29% of our estimated net proved reserves volumes were classified as proved undeveloped as of December 31, 2025.
To the extent that societal pressures or political or other factors are involved, it is possible that the Company could be subject to additional governmental investigations, private litigation or activist campaigns as stockholders may attempt to effect changes to the Company’s business or governance practices.
To the extent that societal pressures or political or other factors are involved, it is possible that the Company could be subject to additional governmental investigations, 39 Table of Contents private litigation or activist campaigns as stockholders may attempt to effect changes to the Company’s business or governance practices.
Although these provisions were largely unchanged in the most recent federal tax legislation, Congress could consider, and could include, some or all of these proposals as part of future tax reform legislation.
Although these provisions were largely unchanged in the most recent federal tax 42 Table of Contents legislation, Congress could consider, and could include, some or all of these proposals as part of future tax reform legislation.
Although we expect to continue to pay dividends, we cannot provide assurance that we will pay dividends on our common stock, and our indebtedness may limit our ability to pay dividends on our common stock. Variable rate indebtedness could subject us to interest rate risk, which could cause our debt service obligations to increase significantly.
Although we expect to continue to pay dividends, we cannot provide assurance that we will pay dividends on our common stock, and our indebtedness may limit our ability to pay dividends on our common stock. 41 Table of Contents Variable rate indebtedness could subject us to interest rate risk, which could cause our debt service obligations to increase significantly.
We are often not entitled to contractual indemnification for environmental liabilities and acquire properties on an “as is” basis, and, as is the case with certain liabilities 37 Table of Contents associated with the assets acquired in our recent acquisitions, we are entitled to indemnification for only certain operational liabilities.
We are often not entitled to contractual indemnification for environmental liabilities and acquire properties on an “as is” basis, and, as is the case with certain liabilities associated with the assets acquired in our recent acquisitions, we are entitled to indemnification for only certain operational liabilities.
We cannot assure you that we will pay dividends in the future. Any future determination relating to the payment of dividends will be dependent on a variety of factors, including any limitations imposed by covenants in the Revolving Credit Facility and any debt agreements that we may enter into in the future.
Any future determination relating to the payment of dividends will be dependent on a variety of factors, including any limitations imposed by covenants in the Revolving Credit Facility and any debt agreements that we may enter into in the future.
Except to the extent that we acquire additional properties containing proved reserves, conduct successful development activities or, through engineering studies, identify additional behind-pipe zones or secondary recovery reserves, our proved reserves will decline as our reserves are produced.
Except to the extent that we acquire additional properties containing proved reserves, conduct successful development activities or, through engineering studies, identify 32 Table of Contents additional behind-pipe zones or secondary recovery reserves, our proved reserves will decline as our reserves are produced.
It is possible that we, or these third parties, could incur interruptions from cybersecurity attacks, computer viruses or malware, or that third-party service providers could cause a breach of our data.
We, or these third parties, could incur interruptions from cybersecurity attacks, computer viruses or malware, or that third-party service providers could cause a breach of our data.
The market price of our common stock may fluctuate widely, depending on many factors, some of which may be beyond our control, including: ■ actual or anticipated fluctuations in our business, financial condition and results of operations due to factors related to our business; ■ competition in the oil and natural gas industry and our ability to compete successfully; ■ success or failure of our business strategies; ■ whether the Lucero Acquisition is accretive and may be dilutive to our earnings per share; ■ the ultimate timing, outcome and results of integrating and executing on Lucero’s operations; ■ our ability to retain and recruit qualified personnel; ■ our quarterly or annual earnings, or those of other companies in our industry; ■ our level of indebtedness, our ability to make payments on or service our indebtedness and our ability to obtain financing as needed; ■ announcements by us or our competitors of significant acquisitions or dispositions; ■ changes in accounting standards, policies, guidance, interpretations or principles; ■ the failure of securities analysts to continue to cover our common stock; ■ changes in earnings estimates by securities analysts or our ability to meet those estimates; ■ the operating and stock price performance of other comparable companies; ■ investor perception of our company and the oil and natural gas industry; ■ overall market fluctuations, including the cyclical nature of the oil and natural gas market; ■ results from any material litigation or government investigation; ■ changes in laws and regulations (including tax laws and regulations) affecting our business; and ■ general economic conditions, credit and capital market conditions and other external factors.
The market price of our common stock may fluctuate widely, depending on many factors, some of which may be beyond our control, including: ■ actual or anticipated fluctuations in our business, financial condition and results of operations due to factors related to our business; ■ competition in the oil and natural gas industry and our ability to compete successfully; ■ success or failure of our business strategies; ■ our ability to retain and recruit qualified personnel; ■ our quarterly or annual earnings, or those of other companies in our industry; ■ our level of indebtedness, our ability to make payments on or service our indebtedness and our ability to obtain financing as needed; ■ announcements by us or our competitors of significant acquisitions or dispositions; ■ changes in accounting standards, policies, guidance, interpretations or principles; ■ the failure of securities analysts to continue to cover our common stock; ■ changes in earnings estimates by securities analysts or our ability to meet those estimates; ■ the operating and stock price performance of other comparable companies; ■ investor perception of our company and the oil and natural gas industry; ■ overall market fluctuations, including the cyclical nature of the oil and natural gas market; ■ results from any material litigation or government investigation; ■ changes in laws and regulations (including tax laws and regulations) affecting our business; and ■ general economic conditions, credit and capital market conditions and other external factors.
If our EBITDAX Ratio does not exceed 2.25 to 1.00, and if our total outstanding credit usage does not exceed 80% of the Commitments, we may also make distributions if our distributable free cash flow (as defined under the Revolving Credit Facility) is greater than $0 and we have delivered a certificate to our lenders attesting to the foregoing.
If the EBITDAX Ratio exceeds 1.50 to 1.00, but does not exceed 2.25 to 1.00, and if total outstanding credit usage does not exceed 80% of the Commitments, we may make distributions if free cash flow (as defined under the Revolving Credit Facility) is greater than $0 and we have delivered a certificate to lenders attesting to the foregoing.
Because our oil and natural gas properties are not as diversified geographically as some of our competitors, our profitability may be disproportionately exposed to the effect of any regional events, including fluctuations in prices of oil and natural gas produced from the wells in the region, natural disasters, restrictive governmental regulations, transportation capacity constraints, weather, curtailment of production or interruption of transportation and processing, and any resulting delays or interruptions of production from existing or planned new wells.
Because our oil and natural gas properties are not widely diversified geographically, our profitability may be disproportionately exposed to the effect of any regional events, including fluctuations in prices of oil 36 Table of Contents and natural gas produced from the wells in the region, natural disasters, restrictive governmental regulations, transportation capacity constraints, weather, curtailment of production or interruption of transportation and processing, and any resulting delays or interruptions of production from existing or planned new wells.
The NDIC requires operators to develop gas capture plans that describe how much natural gas is expected to be produced, how it will be delivered to a processor and where it will be processed. As of November 1, 2020, the enforceable gas capture percentage goal is 91%.
The NDIC, North Dakota’s chief energy regulator, requires operators to develop gas capture plans that describe how much natural gas is expected to be produced, how it will be delivered to a processor and where it will be processed. As of November 1, 2020, the enforceable gas capture percentage goal is 91%.
These and other provisions of our Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws and Delaware law may discourage, delay or prevent certain types of transactions involving an actual or a threatened acquisition or change in control of us including unsolicited takeover attempts, even though the transaction may offer our stockholders the opportunity to sell their shares of our common stock at a price above the prevailing market price. 30 Table of Contents Stockholders percentage ownership in Vitesse may be diluted in the future.
These and other provisions of our Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws and Delaware law may discourage, delay or prevent certain types of transactions involving an actual or a threatened acquisition or change in control of us including unsolicited takeover attempts, even though the transaction may offer our stockholders the opportunity to sell their shares of our common stock at a price above the prevailing market price.
In the Williston Basin, drilling and other oil and natural gas activities on our properties can be adversely affected during the winter months by severe winter weather and drilling on our properties is generally performed during the summer and fall months.
In the Williston Basin, and in other areas in which our interests are located, drilling and other oil and natural gas activities on our properties can be adversely affected during the winter months by severe winter weather and drilling on our properties is generally performed during the summer and fall months.
In addition, drilling and producing operations on our acreage may be curtailed, delayed or canceled by our operators as a result of other factors, including: ■ declines in oil or natural gas prices; ■ infrastructure limitations, such as the natural gas gathering and processing constraints experienced in the Williston Basin in 2019; ■ the high cost, shortages or delays of equipment, materials and services; ■ unexpected operational events, pipeline ruptures or spills, adverse weather conditions and natural disasters, facility or equipment malfunctions, and equipment failures or accidents; ■ title problems; ■ pipe or cement failures and casing collapses; ■ lost or damaged oilfield development and services tools; ■ laws, regulations, and other initiatives related to environmental matters, including those addressing alternative energy sources, the phase-out of fossil fuel vehicles and the risks of global climate change; ■ compliance with environmental and other governmental requirements; ■ increases in severance taxes; ■ regulations, restrictions, moratoria and bans on hydraulic fracturing; ■ unusual or unexpected geological formations, and pressure or irregularities in formations; ■ loss of drilling fluid circulations; ■ environmental hazards, such as oil, natural gas or well fluids spills or releases, pipeline or tank ruptures and discharges of toxic gas; ■ fires, blowouts, craterings and explosions; ■ uncontrollable flows of oil, natural gas or well fluids; and ■ pipeline capacity curtailments. 32 Table of Contents In addition to causing curtailments, delays and cancellations of drilling and producing operations, many of these events can cause substantial losses, including personal injury or loss of life, damage to or destruction of property, natural resources and equipment, pollution, environmental contamination, loss of wells and regulatory penalties.
In addition, drilling and producing operations on our acreage may be curtailed, delayed or canceled by our operators as a result of other factors, including: ■ declines in oil or natural gas prices; ■ infrastructure limitations, such as the natural gas gathering and processing constraints experienced in the Williston Basin in 2019; ■ the high cost, shortages or delays of equipment, materials and services; ■ unexpected operational events, pipeline ruptures or spills, adverse weather conditions and natural disasters, facility or equipment malfunctions, and equipment failures or accidents; ■ title problems; ■ pipe or cement failures and casing collapses; ■ lost or damaged oilfield development and services tools; ■ laws, regulations, and other initiatives related to environmental matters, including those addressing alternative energy sources, the phase-out of fossil fuel vehicles and the risks of global climate change; ■ compliance with environmental and other governmental requirements; ■ increases in severance taxes; ■ regulations, restrictions, moratoria and bans on hydraulic fracturing; ■ unusual or unexpected geological formations, and pressure or irregularities in formations; ■ loss of drilling fluid circulations; ■ environmental hazards, such as oil, natural gas or well fluids spills or releases, pipeline or tank ruptures and discharges of toxic gas; ■ fires, blowouts, craterings and explosions; ■ uncontrollable flows of oil, natural gas or well fluids; and ■ pipeline capacity curtailments.
For example, our estimated proved reserves as of December 31, 2024 were calculated under SEC rules by applying year-end SEC prices based on the twelve-month unweighted arithmetic average of the first day of the month oil and natural gas prices for such year end of $76.32 per Bbl and $2.13 per MMBtu, which for certain periods during this time were substantially different from the available market prices.
For example, our estimated proved reserves as of December 31, 2025 were calculated under SEC rules by applying year-end SEC prices based on the twelve-month unweighted arithmetic average of the first day of the month oil and natural gas prices for such year end of $66.01 per Bbl and $3.39 per MMBtu, which for certain periods during this time were substantially different from the available market prices.
A substantial or extended decline in oil or natural gas prices, such as the significant and rapid decline that occurred in 2020, has resulted in and could result in future impairments of our proved oil and natural gas properties and may materially and adversely affect our future business, financial condition, results of operations, liquidity or ability to finance planned capital expenditures.
A substantial or extended decline in oil or natural gas prices has in the past resulted in and could result in future impairments of our proved oil and natural gas properties and may materially and adversely affect our future business, financial condition, results of operations, liquidity or ability to finance planned capital expenditures.
Competition in our markets is intense and depends, among other things, on the number of competitors in the market, their financial resources, their degree of geological, geophysical, engineering and management expertise and capabilities, their pricing policies, their ability to develop properties on time and on budget, their ability to select, acquire and develop reserves and their ability to foster and maintain relationships. 38 Table of Contents Our competitors include entities with greater technical, physical and financial resources.
Competition in our markets is intense and depends, among other things, on the number of competitors in the market, their financial resources, their degree of geological, geophysical, engineering and management expertise and capabilities, their pricing policies, their ability to develop properties on time and on budget, their ability to select, acquire and develop reserves and their ability to foster and maintain relationships.
In addition, companies and certain private equity firms not previously investing in oil and natural gas may choose to acquire reserves to establish a firm supply or simply as an investment. Any such companies will also increase market competition which may directly affect us.
Our competitors include entities with greater technical, physical and financial resources. In addition, companies and certain private equity firms not previously investing in oil and natural gas may choose to acquire reserves to establish a firm supply or simply as an investment. Any such companies will also increase market competition which may directly affect us.
In the course of such evaluations, an agency will prepare an environmental assessment that assesses the potential direct, indirect and cumulative impacts of a proposed project and, if necessary, will prepare a more detailed environmental impact statement that may be made available for public review and comment.
In the course of such evaluations, an agency will prepare an environmental assessment that assesses the potential direct, indirect and cumulative impacts of a proposed project and, if necessary, will prepare a more detailed environmental impact statement that may be made available for public review and comment. For many years, the NEPA process has followed regulations issued by the CEQ.
We may choose to take advantage of some or all of these reduced burdens. To the extent we take advantage of the reduced reporting obligations, the information we provide stockholders may be different from information provided by other public companies.
To the extent we take advantage of the reduced reporting obligations, the information we provide stockholders may be different from information provided by other public companies.
Moreover, the EIS or the Corps’ decision with respect to an easement may subsequently be challenged in court. In the interim, the Standing Rock Sioux Tribe has filed suit challenging the continued operation of the DAPL without the easement.
However, the EIS or the Corps’ decision with respect to an easement may subsequently be challenged in court. In the interim, the Standing Rock Sioux Tribe has challenged the continued operation of the DAPL without the 33 Table of Contents easement in federal court.
We review our oil and natural gas properties for impairment whenever events and circumstances indicate a decline in the recoverability of their carrying value.
We may be required to record further writedowns of our oil and natural gas properties in the future. We review our oil and natural gas properties for impairment whenever events and circumstances indicate a decline in the recoverability of their carrying value.
To our knowledge we have not experienced any material losses relating to cyber-attacks; however, there can be no assurance that we will not suffer material losses in the future.
As of the date of this Annual Report on Form 10-K, to our knowledge we have not experienced any material losses relating to cyber-attacks; however, there can be no assurance that we will not suffer material losses in the future.
For example, in April 2023 an environmental organization filed suit against the DOI, seeking to force the agency to develop and promulgate a regulation that would phase out all oil and gas development on federal lands by 2035.
Historically, such challenges have sought the cancellation or pause of lease sales and obligations to redo environmental assessments. For example, in April 2023 an environmental organization filed suit against the DOI, seeking to force the agency to develop and promulgate a regulation that would phase out all oil and gas development on federal lands by 2035.
As a result, if liability were asserted against us based upon such properties, we may have to pay substantial sums to dispute or remedy the matter, which could adversely affect our profitability.
Further, we may acquire properties subject to known or unknown liabilities and with limited or no recourse to the former owners or operators. As a result, if liability were asserted against us based upon such properties, we may have to pay substantial sums to dispute or remedy the matter, which could adversely affect our profitability.
These initiatives or similar state or federal initiatives to reduce energy consumption or encourage a shift away from fossil fuels could reduce demand for hydrocarbons and have a material adverse effect on our earnings, cash flows and financial condition.
While the OBBBA eliminated the funding for the majority of the IRA’s incentive programs, any new federal or state initiatives to reduce energy consumption or encourage a shift away from fossil fuels could reduce demand for hydrocarbons and have a material adverse effect on our earnings, cash flows and financial condition.
NEPA requires federal agencies, including the BLM and the federal Bureau of Indian Affairs (“BIA”), to evaluate major agency actions, such as the issuance of permits that have the potential to significantly impact the environment.
Additionally, oil and natural gas operations and related infrastructure projects on federal lands are also subject to NEPA. NEPA requires federal agencies, including the BLM and the federal Bureau of Indian Affairs (“BIA”), to evaluate major agency actions, such as the issuance of permits that have the potential to significantly impact the environment.
In addition, our Amended and Restated Certificate of Incorporation authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designation, powers, preferences and relative, participating, optional and other special rights, including preferences over our common stock with respect to dividends and distributions, as our Board of Directors may generally determine.
In addition, we may issue equity as all or part of the consideration paid for acquisitions and strategic investments that we may make in the future, as we did with the Lucero Acquisition, or as necessary to finance our ongoing operations. 29 Table of Contents In addition, our Amended and Restated Certificate of Incorporation authorizes us to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designation, powers, preferences and relative, participating, optional and other special rights, including preferences over our common stock with respect to dividends and distributions, as our Board of Directors may generally determine.
While such ratings do not impact all investors’ investment or voting decisions, unfavorable ESG ratings and recent activism directed at shifting funding away from companies with energy-related assets could lead to increased negative investor sentiment toward us and our industry and to the diversion of investment to other industries.
Activism directed at shifting funding away from companies with energy-related assets could also lead to increased negative investor sentiment toward us and our industry and to the diversion of investment to other industries.
The successful development and operation of our non-operated assets relies extensively on third parties, which could have an adverse effect on our financial condition and results of operations. Prior to the Lucero Acquisition, we have only participated in wells operated by third parties and following the Lucero Acquisition, our business continues to be a predominantly non-operated business model.
The successful development and operation of our non-operated assets relies extensively on third parties, which could have an adverse effect on our financial condition and results of operations. Our business continues to be a predominantly non-operated business model. The success of our business operations depends on the timing of drilling activities and success of our third-party operators.
In such a case, a stockholder generally would have to timely file a U.S. tax return or an appropriate claim for refund in order to obtain a refund of the overwithheld tax. Some stockholders might be deemed to have received a taxable distribution as a result of our repurchase of our own stock.
In such a case, a stockholder generally would have to timely file a U.S. tax return or an appropriate claim for refund in order to obtain a refund of the overwithheld tax.
Increased regulatory scrutiny on emissions and related climate change matters has also led to increased litigation risks for fossil fuel companies.
Business and Properties—Regulation and Environmental Matters, for additional discussion of regulatory matters affecting and resulting from risks related to climate change and GHGs. Increased regulatory scrutiny on emissions and related climate change matters has also led to increased litigation risks for fossil fuel companies.
Although the length and impact of these ongoing conflicts are highly unpredictable, the conflicts in Ukraine and in the Middle East have led to market disruptions, including significant volatility in oil and natural gas prices, credit and capital markets, as well as supply chain disruptions.
Although the length and impact 37 Table of Contents of such conditions are highly unpredictable, these geopolitical tensions have, and such conditions may continue to, lead to market disruptions, including significant volatility in oil and natural gas prices, credit and capital markets, as well as supply chain disruptions.
From time to time, legal challenges have been filed relating to federal leasing decisions, such as for failure to adequately assess the impact of any increase of GHG emissions resulting from increased production on federal lands. Historically, such challenges have sought the cancellation or pause of lease sales and obligations to redo environmental assessments.
Operations on federal lands also face litigation risks. From time to time, legal challenges have been filed relating to federal leasing decisions, such as for failure to adequately assess the impact of any increase of GHG emissions resulting from increased production on federal lands.
Hydraulic fracturing involves the injection of water, sand and chemicals under pressure into formations to fracture the surrounding rock and stimulate production. Hydraulic fracturing is used extensively by our third-party operators.
Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays. Hydraulic fracturing involves the injection of water, sand and chemicals under pressure into formations to fracture the surrounding rock and stimulate production. Hydraulic fracturing is used extensively by our third-party operators.
Any material reduction in the capital available to the fossil fuel industry could make it more difficult to secure funding for exploration, development, production, transportation, and processing activities, which could impact our business and results of operations. Separately, existing public and governmental authorities, as well as other parties, have also heightened scrutiny around climate-change related disclosures in public filings.
Any material reduction in the capital available to the fossil fuel industry could make it more difficult to secure funding for exploration, development, production, transportation, and processing activities, which could impact our business and results of operations.
In July 2020, a federal district court vacated the DAPL’s easement to cross the Missouri River at Lake Oahe and ordered the pipeline be shut down pending the completion of an EIS to determine whether the DAPL poses a threat to the Missouri River and drinking water supply of the Standing Rock Sioux Reservation.
In July 2020, a federal district court vacated the DAPL’s easement to cross the Missouri River at Lake Oahe and ordered the pipeline be shut down pending the completion of an EIS to determine whether to grant the DAPL an easement to cross the Missouri River at Lake Oahe or to require the abandonment, removal, or reroute of that section, effectively shutting down the pipeline.
As a consequence of these various limitations and restrictions, we may not be able to make, or may have to reduce or eliminate at any time, the payment of dividends on our common stock.
The summaries above do not purport to be complete. The Revolving Credit Facility is filed as an exhibit to this Annual Report on Form 10-K. As a consequence of these various limitations and restrictions, we may not be able to make, or may have to reduce or eliminate at any time, the payment of dividends on our common stock.
To achieve more predictable cash flows and reduce our exposure to adverse fluctuations in the price of oil and natural gas, we enter into derivative instrument contracts for a portion of our expected production, which may include swaps, collars, puts and other structures. See Part II. Item 7A. Quantitative and Qualitative Disclosure About Market Risk - Commodity Price Risk.
Our derivatives activities could adversely affect our profitability, cash flow, results of operations and financial condition. To achieve more predictable cash flows and reduce our exposure to adverse fluctuations in the price of oil and natural gas, we enter into derivative instrument contracts for a portion of our expected production, which may include swaps, collars, puts and other structures.
The ultimate impacts of these regulatory 43 Table of Contents initiatives concerning BLM leases and the use of the SC-GHGs metric cannot be predicted at this time, but such could affect the character of new regulations on certain federal oil and gas leases or oil and gas infrastructure on federal lands, which in turn could adversely impact our operators’ and our results of operations.
The ultimate impacts of these regulatory developments concerning BLM leases cannot be predicted at this time, but any changes to existing or new regulations on federal oil and gas leases or oil and gas infrastructure on federal lands could adversely impact our operators’ and our results of operations.
Also, institutional lenders may, of their own accord, decide not to provide funding for fossil fuel energy companies or related infrastructure projects based on climate or other ESG-related concerns, which could affect our access to capital for potential growth projects. In March 2024, the SEC finalized rules mandating extensive disclosure of climate risks for certain registrants.
Also, certain financial institutions may, of their own accord, decide not to provide funding or insurance for fossil fuel energy companies or related infrastructure projects based on climate or other ESG-related concerns, which could affect our access to capital for potential growth projects, though this trend has waned in recent years.
To the extent inflation is elevated, our operators may experience further cost increases for their operations, including oilfield services, labor costs, and equipment if drilling activity in our operators’ areas of operations increases.
Such shortages have resulted in inflationary cost increases for labor, materials and services and could cause future costs to increase as well as scarcity of certain products and raw materials. To the extent inflation is elevated, operators may experience further cost increases for operations, including oilfield services, labor costs, and equipment if drilling activity in operators’ areas of operations increases.
Tariffs, if enacted, and any further legislation or actions taken by the U.S. federal government that restrict trade, such as trade barriers, and other protectionist or retaliatory measures taken could increase the cost of operations. Shortages of, or increasing costs for, experienced drilling crews and equipment, labor or supplies could restrict our operators’ ability to conduct desired or expected operations.
Tariffs, if enacted, and any further legislation or actions taken by the U.S. federal government that restrict trade, such as trade barriers, and other protectionist or retaliatory measures taken and measures taken by other countries in response could increase the cost of operations.
The IRS Forms 1099-DIV that our stockholders receive from their brokers may over-report dividend income with respect to our common stock for U.S. federal income tax purposes, which may result in a stockholder’s overpayment of tax.
Such reduction in basis, to the extent that it shall occur, will result in a corresponding increase in the amount of gain, or a corresponding decrease in the amount of loss, recognized by the stockholder upon the sale of our common stock. 46 Table of Contents The IRS Forms 1099-DIV that our stockholders receive from their brokers may over-report dividend income with respect to our common stock for U.S. federal income tax purposes, which may result in a stockholder’s overpayment of tax.
Moreover, such changes could materially reduce our access to derivative opportunities, which could adversely affect revenues or cash flow during periods of low oil and natural gas prices.
These rules may affect both the size of the positions that we may hold and the ability or willingness of counterparties to trade with us, potentially increasing the costs of transactions. Moreover, such changes could materially reduce our access to derivative opportunities, which could adversely affect revenues or cash flow during periods of low oil and natural gas prices.
The success of our business operations depends on the timing of drilling activities and success of our third-party operators. If our operators are not successful in the development, exploitation, production and exploration activities relating to our leasehold interests, or are unable or unwilling to perform, our financial condition and results of operations would be adversely affected.
If our operators are not successful in the development, exploitation, production and exploration activities relating to our leasehold interests, or are unable or unwilling to perform, our financial condition and results of operations would be adversely affected. These risks are heightened in a low oil and natural gas price environment, which may present significant challenges to our operators.
Moreover, various federal agencies have adopted climate change considerations into their rulemaking and decision-making processes and have promulgated regulations that seek to restrict, monitor or otherwise limit GHG emissions. For example, in December 2023, the EPA finalized rules establishing more stringent methane and volatile organic compound emissions performance standards for oil and gas facilities.
Moreover, various federal agencies have adopted climate change considerations into their rulemaking and decision-making processes and have promulgated regulations that seek to restrict, monitor or otherwise limit GHG emissions.
As a result, a shut-down remains possible, and there is no guarantee that the DAPL will be permitted to continue operations following the completion of the EIS. Any significant curtailment in gathering system or pipeline capacity, or the unavailability of sufficient third-party trucking or rail capacity, could adversely affect our business, results of operations and financial condition.
Any significant curtailment in gathering system or pipeline capacity, or the unavailability of sufficient third-party trucking or rail capacity, could adversely affect our business, results of operations and financial condition.
If we are unsuccessful in competing against other companies, our business, results of operations, financial condition or prospects could be materially adversely affected. The ongoing conflicts in Ukraine and the Middle East have caused unstable market and economic conditions and may have additional global consequences.
If we are unsuccessful in competing against other companies, our business, results of operations, financial condition or prospects could be materially adversely affected. Certain economic and geopolitical conditions, and the negative global and economic impact resulting from such conditions or any other geopolitical tensions, could materially adversely affect our business, financial condition, and results of operations.
These disruptions have caused, and could continue to cause, significant volatility in energy prices, which could have a material effect on our business. Prolonged unfavorable economic conditions or uncertainty as a result of these conflicts may adversely affect our business, financial condition, and results of operations.
Volatility in energy prices resulting from such disruptions could have a material effect on our business. Prolonged unfavorable economic conditions or uncertainty as a result of these conditions may adversely affect our business, financial condition, and results of operations. Any of the foregoing may also magnify the impact of other risks described in this Annual Report on Form 10-K.
In addition, claims for damages to persons, property or natural resources may result from environmental and other impacts of operations on our properties.
In addition, claims for damages to persons, property or natural resources may result from 44 Table of Contents environmental and other impacts of operations on our properties. The application of new or more stringent environmental laws and regulations to our business may cause us to curtail production or increase the costs of our production or development activities.

… 108 more changes not shown on this page.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+1 added−1 removed2 unchanged
Biggest changeThe results of any litigation cannot be predicted with certainty, and an unfavorable resolution in any legal proceedings could materially affect our business, financial condition and results of operations. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors. Item 4.
Biggest changeThe results of any litigation cannot be predicted with certainty, and an unfavorable resolution in any legal proceedings could materially affect our business, financial condition and results of operations. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Removed
Mine Safety Disclosures None. 52 Table of Contents PART II
Added
For additional information regarding our legal proceedings, refer to Note 11 (“Commitments and Contingencies”) to the Consolidated Financial Statements. Item 4. Mine Safety Disclosures None. 48 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

10 edited+0 added−2 removed8 unchanged
Biggest changeThe number of record holders does not necessarily bear any relationship to the number of beneficial owners of our common stock. In conjunction with the Lucero Arrangement, on March 7, 2025, we issued 8,169,368 shares of our common stock to close the transaction. Securities Authorized for Issuance Under Equity Compensation Plans See the information incorporated by reference under Part III.
Biggest changeThe number of record holders does not necessarily bear any relationship to the number of beneficial owners of our common stock. Securities Authorized for Issuance Under Equity Compensation Plans See the information incorporated by reference under Part III. Item 12.
Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs October 1, 2024 to October 31, 2024 — $ — — 59.8 million November 1, 2024 to November 30, 2024 — — — 59.8 million December 1, 2024 to December 31, 2024 — — — 59.8 million Total — $ — — $ 59.8 million (1) In February 2023, our Board approved a Stock Repurchase Program authorizing the repurchase of up to $60 million of the Company’s common stock.
Period Total Number of Shares Purchased (1) Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs October 1, 2025 to October 31, 2025 — $ — — $ 59.8 million November 1, 2025 to November 30, 2025 — — — 59.8 million December 1, 2025 to December 31, 2025 — — — 59.8 million Total — $ — — $ 59.8 million (1) In February 2023, our Board approved a Stock Repurchase Program authorizing the repurchase of up to $60 million of the Company’s common stock.
The table below sets forth the information with respect to purchases made by or on behalf of the Company, or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) of our common stock during the quarter ended December 31, 2024.
The table below sets forth the information with respect to purchases made by or on behalf of the Company, or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Exchange Act) of our common stock during the quarter ended December 31, 2025.
This graph tracks the performance of a $100 investment in our common stock and in each index (including reinvestment of all dividends) from January 17, 2023 to December 31, 2024. The stock price performance included in this graph is not necessarily indicative of future stock price performance.
This graph tracks the performance of a $100 investment in our common stock and in each index (including reinvestment of all dividends) from January 17, 2023 to December 31, 2025. The stock price performance included in this graph is not necessarily indicative of future stock price performance.
While we believe that our future cash flows from operations will be able to sustain the current level of dividends, there can be no guarantee that we will be able to pay dividends at current levels or at all or otherwise return capital to our stockholders in the future.
While we believe that our future cash flows from operations will be able to sustain the ongoing payment of dividends, there can be no guarantee that we will be able to pay dividends at current levels or at all or otherwise return capital to our stockholders in the future.
Item 12. Security Ownership of Certain Beneficial Owners and Management regarding securities authorized for issuance under our equity compensation plans. 53 Table of Contents Recent Sales of Unregistered Securities None.
Security Ownership of Certain Beneficial Owners and Management regarding securities authorized for issuance under our equity compensation plans. 49 Table of Contents Recent Sales of Unregistered Securities None.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the New York Stock Exchange under the symbol “VTS.” The closing price for our common stock on March 10, 2025 was $23.77 per share.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock trades on the New York Stock Exchange under the symbol “VTS.” The closing price for our common stock on February 27, 2026 was $19.31 per share.
During 2024, 852,000 restricted stock units of certain executive officers vested with the Company retaining 354,069 of the vested shares to fund employee tax withholding of $7.5 million with the retained shares subsequently retired by the Company. These retained and retired shares are not included in the above table because they do not constitute a repurchase of equity securities.
During 2025, 815,136 restricted stock units of certain executive officers vested with the Company retaining 345,255 of the vested shares to fund employee tax withholding of $9.2 million with the retained shares subsequently retired by the Company. These retained and retired shares are not included in the above table because they do not constitute a repurchase of equity securities.
We paid cash dividends of $63.6 million to our equity holders during the year ended December 31, 2024.
We paid cash dividends of $92.1 million to our equity holders during the year ended December 31, 2025.
Authorized Capital Stock The Company has authorized 95,000,000 shares of common stock, par value $0.01 per share and 5,000,000 shares of preferred stock, par value $0.01 per share. Shares Outstanding Immediately prior to the closing of the Lucero Acquisition on March 7, 2025, we had 30,409,973 shares of our common stock outstanding, held by approximately 1,141 stockholders of record.
Authorized Capital Stock The Company has authorized 95,000,000 shares of common stock, par value $0.01 per share and 5,000,000 shares of preferred stock, par value $0.01 per share. Shares Outstanding On February 27, 2026, we had 39,776,727 shares of our common stock outstanding, held by approximately 1,119 stockholders of record.
Removed
In January 2025, 792,000 restricted stock units of certain executive officers vested with the Company retaining 335,797 of the vested shares to fund employee tax withholding of $8.9 million with the retained shares subsequently retired by the Company.
Removed
In February 2025, 23,136 restricted stock units of certain executive officers vested with the Company retaining 9,458 of the vested shares to fund employee tax withholding of $0.2 million with the retained shares subsequently retired by the Company.

Item 7. Management's Discussion & Analysis

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

93 edited+19 added−30 removed55 unchanged
Biggest changeYEAR ENDED DECEMBER 31, INCREASE (DECREASE) ($ in thousands, except per unit data) 2024 2023 AMOUNT PERCENT Operating Results: Revenue Oil $ 230,164 $ 218,396 $ 11,768 5 % Natural gas 11,834 15,509 (3,675) (24 %) Total revenue $ 241,998 $ 233,905 $ 8,093 3 % Operating Expenses Lease operating expense $ 47,599 $ 39,514 $ 8,085 20 % Production taxes 21,500 21,625 (125) (1 %) General and administrative 23,510 23,934 (424) (2 %) Depletion, depreciation, amortization, and accretion 100,308 81,745 18,563 23 % Equity-based compensation 8,110 32,233 (24,123) (75 %) Interest Expense $ 9,980 $ 5,276 $ 4,704 89 % Income Tax Expense $ 7,672 $ 61,946 $ (54,274) (88 %) Commodity Derivative (Loss) Gain $ (2,348) $ 12,484 $ (14,832) (119 %) Production Data: Oil (MBbls) 3,291 2,968 323 11 % Natural gas (MMcf) 8,809 8,232 577 7 % Combined volumes (MBoe) 4,759 4,340 419 10 % Daily combined volumes (Boe/d) 13,003 11,889 1,114 9 % Average Realized Prices before Hedging: Oil (per Bbl) $ 69.94 $ 73.59 $ (3.65) (5 %) Natural gas (per Mcf) 1.34 1.88 (0.54) (29 %) Combined (per Boe) 50.85 53.90 (3.05) (6 %) Average Realized Prices with Hedging: Oil (per Bbl) $ 71.48 $ 73.99 $ (2.51) (3 %) Natural gas (per Mcf) 1.34 1.88 (0.54) (29 %) Combined (per Boe) 51.91 54.17 (2.26) (4 %) Average Costs (per Boe): Lease operating expense $ 10.00 $ 9.11 $ 0.89 10 % Production taxes 4.52 4.98 (0.46) (9 %) General and administrative 4.94 5.52 (0.58) (11 %) Depletion, depreciation, amortization, and accretion 21.08 18.84 2.24 12 % Oil and Natural Gas Revenue and Volumes.
Biggest changeYEAR ENDED DECEMBER 31, INCREASE (DECREASE) ($ in thousands, except per unit data) 2025 2024 AMOUNT PERCENT Operating Results: Revenue Oil $ 244,414 $ 230,164 $ 14,250 6 % Natural gas 29,575 11,834 17,741 150 % Total revenue $ 273,989 $ 241,998 $ 31,991 13 % Operating Expenses Lease operating expense $ 69,535 $ 47,599 $ 21,936 46 % Production taxes 23,354 21,500 1,854 9 % General and administrative 24,314 23,510 804 3 % Depletion, depreciation, amortization, and accretion 129,411 100,308 29,103 29 % Equity-based compensation 10,246 8,110 2,136 26 % Interest Expense $ 10,205 $ 9,980 $ 225 2 % Income Tax Expense $ 9,798 $ 7,672 $ 2,126 28 % Commodity Derivative Gain (Loss) $ 27,930 $ (2,348) $ 30,278 * Production Data: Oil (MBbls) 4,133 3,291 842 26 % Natural gas (MMcf) 13,403 8,809 4,594 52 % Combined volumes (MBoe) 6,367 4,759 1,608 34 % Daily combined volumes (Boe/d) 17,444 13,003 4,441 34 % Average Realized Prices before Hedging: Oil (per Bbl) $ 59.14 $ 69.94 $ (10.80) (15 %) Natural gas (per Mcf) 2.21 1.34 0.87 65 % Combined (per Boe) 43.03 50.85 (7.82) (15 %) Average Realized Prices with Hedging: Oil (per Bbl) $ 62.95 $ 71.48 $ (8.53) (12 %) Natural gas (per Mcf) 2.31 1.34 0.97 72 % Combined (per Boe) 45.72 51.91 (6.19) (12 %) Average Costs (per Boe): Lease operating expense $ 10.92 $ 10.00 $ 0.92 9 % Production taxes 3.67 4.52 (0.85) (19 %) General and administrative 3.82 4.94 (1.12) (23 %) Depletion, depreciation, amortization, and accretion 20.33 21.08 (0.75) (4 %) *Not meaningful Oil and Natural Gas Revenue and Volumes.
We expect that our liquidity going forward will be primarily derived from cash flows from our operations, cash on hand and availability under the Revolving Credit Facility and proceeds from equity or debt offerings and that these sources of liquidity will be sufficient to provide us the ability to fund our material cash requirements for the next twelve months, as described below, including our planned capital expenditures program, as well as dividends and our share repurchase program.
We expect that our liquidity going forward will be primarily derived from cash flows from our operations, cash on hand, availability under the Revolving Credit Facility and proceeds from equity or debt offerings and that these sources of liquidity will be sufficient to provide us the ability to fund our material cash requirements for the next twelve months, as described below, including our planned capital expenditures program, as well as dividends and our share repurchase program.
In connection with the Spin-Off, we entered into the secured Revolving Credit Facility with Wells Fargo Bank, N.A., as administrative agent, and a syndicate of banks, as lenders. The Revolving Credit Facility will mature on October 22, 2028.
Revolving Credit Facility. In connection with the Spin-Off, we entered into the secured Revolving Credit Facility with Wells Fargo Bank, N.A., as administrative agent, and a syndicate of banks, as lenders. The Revolving Credit Facility will mature on October 22, 2028.
We cannot provide specific timing for other current and long-term liability obligations where we cannot forecast with certainty the amount and timing of such payments, including asset retirement obligations, as the plugging and abandonment of wells is at the discretion of the operators and any amounts we may be obligated to pay under our derivative contracts, as such payments are dependent on commodity prices in effect at the time of settlement.
We cannot provide specific timing for other current and long-term liability obligations where we cannot forecast with certainty the amount and timing of such payments, including asset retirement obligations, as the plugging and abandonment of wells is primarily at the discretion of the operators and any amounts we may be obligated to pay under our derivative contracts, as such payments are dependent on commodity prices in effect at the time of settlement.
General and administrative expenses. General and administrative expenses include overhead, including payroll and benefits for our corporate staff, costs of maintaining our headquarters, costs of managing our acquisition and development operations, franchise taxes, audit and other professional fees and legal compliance.
General and administrative expenses. General and administrative expenses include overhead, including payroll and benefits for our staff, costs of maintaining our headquarters, costs of managing our acquisition and development operations, franchise taxes, audit and other professional fees and legal compliance.
Under the Revolving Credit Facility, we are permitted to make cash distributions without limit to our equity holders if (i) no event of default or borrowing base deficiency (i.e., outstanding debt (including loans and letters of credit) exceeds the borrowing base) then exists or would result from such distribution and (ii) after giving effect to such distribution, (a) our total outstanding credit usage does not exceed 80% of the least of (the following collectively referred to as “Commitments”): (1) $500 million, (2) our then-effective borrowing base, and (3) the then-effective aggregate amount of the aggregate elected commitments and (b) as of the date of such distribution, the EBITDAX Ratio does not exceed 1.50 to 1.00.
Under the Revolving Credit Facility, we are permitted to make cash distributions without limit to our equity holders if (i) no event of default or borrowing base deficiency (i.e., outstanding debt (including loans and letters of credit) exceeds the borrowing base) then exists or would result from such distribution and (ii) after giving effect to such distribution, (a) our total outstanding credit usage does not exceed 80% of the least of (the following collectively referred to as “Commitments”): (1) $500 million, (2) our then-effective borrowing base, and (3) the then-effective aggregate amount of the aggregate elected commitments and (b) as of the date of such distribution, the EBITDAX Ratio does not 58 Table of Contents exceed 1.50 to 1.00.
We will carefully monitor and may adjust our projected capital expenditures in response to success or lack of success in drilling activities, changes in prices, availability of financing and joint venture opportunities, drilling and acquisition costs, industry conditions, the timing of regulatory approvals, the availability of rigs, change in service costs, contractual obligations, internally generated cash flow and other factors both within and outside our control, including the Lucero Acquisition.
We will carefully monitor and may adjust our projected capital expenditures in response to success or lack of success in drilling activities, changes in prices, availability of financing and joint venture opportunities, drilling and acquisition costs, industry conditions, the timing of regulatory approvals, the availability of rigs, change in service costs, contractual obligations, internally generated cash flow and other factors both within and outside our control.
Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in Part I. Item 1A. Risk Factors and “Cautionary Statement Concerning Forward-Looking Statements.” This section generally discusses certain 2024 and 2023 items and certain year-to-year comparisons between 2024 and 2023.
Our actual results could differ materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in Part I. Item 1A. Risk Factors and “Cautionary Statement Concerning Forward-Looking Statements.” This section generally discusses certain 2025 and 2024 items and certain year-to-year comparisons between 2025 and 2024.
We cannot provide specific timing for repayments of outstanding borrowings on our Revolving Credit Facility, or the associated interest payments, as the timing and amount of borrowings and repayments cannot be forecasted with certainty and are based on working capital requirements, commodity prices and acquisition and divestiture activity (including the Lucero Acquisition), among other factors.
We cannot provide specific timing for repayments of outstanding borrowings on our Revolving Credit Facility, or the associated interest payments, as the timing and amount of borrowings and repayments cannot be forecasted with certainty and are based on working capital requirements, commodity prices and acquisition and divestiture activity, among other factors.
Revenues are a function of the volume produced, the prevailing market price at the time of sale, oil quality, Btu content and transportation costs to market. We use derivative instruments to hedge future sales prices on a substantial, but varying, portion of our oil production.
Revenues are a function of the volume produced, the prevailing market price at the time of sale, oil quality, Btu content and transportation costs to market. We use derivative instruments to hedge future sales prices on a substantial, but varying, portion of our oil and natural gas production.
The factors used to determine fair value may include, but are not limited to, recent sales prices of comparable properties, indications from marketing activities, the present value of future revenues, net of estimated operating and development costs using estimates of reserves, future commodity pricing, future production estimates, anticipated capital expenditures and various discount rates commensurate with the risk and current market conditions associated with realizing the projected cash flows.
The factors used to determine fair value may include, but are not limited to, recent sales prices of comparable properties, indications from marketing activities, the present value of future revenues, net of estimated operating and development costs using estimates of reserves, future commodity pricing, future production estimates, anticipated capital expenditures and various discount rates commensurate 52 Table of Contents with the risk and current market conditions associated with realizing the projected cash flows.
As a result of such commodity price volatility, which we expect to continue throughout 2025, our earnings and operating cash flows can vary substantially. While we do hedge a substantial portion of our production, we are still significantly subject to movements in commodity prices.
As a result of such commodity price volatility, which we expect to continue throughout 2026, our earnings and operating cash flows can vary substantially. While we do hedge a substantial portion of our production, we are still significantly subject to movements in commodity prices.
Whenever we conclude the carrying value may not be recoverable, we estimate the expected undiscounted future net cash flows of our oil and natural gas properties using proved and risked probable and possible reserves based on our development plans and best estimate of future production, commodity pricing, reserve risking, gathering, processing and transportation deductions, production tax rates, lease operating expenses and 56 Table of Contents future development costs.
Whenever we conclude the carrying value may not be recoverable, we estimate the expected undiscounted future net cash flows of our oil and natural gas properties using proved and risked probable and possible reserves based on our development plans and best estimate of future production, commodity pricing, reserve risking, gathering, processing and transportation deductions, production tax rates, lease operating expenses and future development costs.
While we believe that our future cash flows from operations will be able to sustain an increasing level of dividends, future dividends may change based on a variety of factors, including contractual restrictions, legal limitations (the most common of which are limitations set forth in a company’s organizational documents and insolvency), business developments and the judgment of our Board.
While we believe that our future cash flows from operations will be able to sustain future dividends, future dividends may change based on a variety of factors, including contractual restrictions, legal limitations (the most common of which are limitations set forth in a company’s organizational documents and insolvency), business developments and the judgment of our Board.
For additional information on the impact of changing prices and market conditions on our financial position, see Part II. Item 7A Quantitative and Qualitative Disclosures About Market Risk. 63 Table of Contents Effects of Inflation and Pricing.
For additional information on the impact of changing prices and market conditions on our financial position, see Part II. Item 7A Quantitative and Qualitative Disclosures About Market Risk. 59 Table of Contents Effects of Inflation and Pricing.
External petroleum engineers independently estimated all of the proved reserve quantities included in our financial statements for the year ended December 31, 2024, which were prepared in accordance with the rules promulgated by the SEC.
External petroleum engineers independently estimated all of the proved reserve quantities included in our financial statements for the year ended December 31, 2025, which were prepared in accordance with the rules promulgated by the SEC.
There were no proved oil and gas property impairments during the years ended December 31, 2024, 2023 and 2022. Income tax expense. Our provision for taxes includes both federal and state taxes.
There were no proved oil and gas property impairments during the years ended December 31, 2025, 2024 and 2023. Income tax expense. Our provision for taxes includes both federal and state taxes.
In addition, individual components of the cost can vary depending on numerous factors such as the length of the horizontal lateral, the number of fracture stimulation stages, and the type and amount of proppant. 58 Table of Contents Results of Operations Year Ended December 31, 2024 Compared with Year Ended December 31, 2023 The following table sets forth selected operating data for the periods indicated.
In addition, individual components of the cost can vary depending on numerous factors such as the length of the horizontal lateral, the number of fracture stimulation stages, and the type and amount of proppant. 54 Table of Contents Results of Operations Year Ended December 31, 2025 Compared with Year Ended December 31, 2024 The following table sets forth selected operating data for the periods indicated.
The table below reconciles the pre-tax PV-10 value of our proved reserves at SEC prices as of December 31, 2024 to the Standardized Measure.
The table below reconciles the pre-tax PV-10 value of our proved reserves at SEC prices as of December 31, 2025 to the Standardized Measure.
Production taxes as a percentage of oil and natural gas sales before hedging adjustments were 8.9% and 9.2% for the years ended December 31, 2024 and 2023, respectively. The lower production tax rate was driven by the production mix and the relative tax rates on oil and natural gas revenue. General and Administrative Expense.
Production taxes as a percentage of oil and natural gas sales before hedging adjustments were 8.5% and 8.9% for the years ended December 31, 2025 and 2024, respectively. The lower production tax rate was driven by the production mix and the relative tax rates on oil and natural gas revenue. General and Administrative Expense.
In addition, as the prices of oil and natural gas and cost levels change from year to year, the economics of producing our 64 Table of Contents reserves may change and therefore the estimate of proved reserves may also change. Approximately 32% of our proved oil and gas reserve volumes are categorized as proved undeveloped reserves.
In addition, as the prices of oil and natural gas and cost levels change from year to year, the economics of producing our 60 Table of Contents reserves may change and therefore the estimate of proved reserves may also change. Approximately 29% of our proved oil and gas reserve volumes are categorized as proved undeveloped reserves.
Discussions of 2022 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2023, filed on February 24, 2024 which is incorporated herein by reference.
Discussions of 2023 items and year-to-year comparisons between 2024 and 2023 that are not included in this Form 10-K can be found in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2024, filed on March 12, 2025 which is incorporated herein by reference.
Gain (loss) on commodity derivatives, net is comprised of (i) cash gains and losses we recognize on settled commodity derivatives during the period, and (ii) non-cash mark-to-market gains and losses we incur on commodity derivative instruments outstanding at period-end. Lease operating expenses.
Gain (loss) on commodity derivatives, net is comprised of (1) cash gains and losses we recognize on settled commodity derivatives during the period, and (2) non-cash mark-to-market gains and losses we incur on commodity derivative instruments outstanding at period-end. Lease operating expenses.
The exact impact of each of these items is difficult to quantify as each of our operators passes through these costs in a different manner. Lease Operating Expense. Lease operating expense increased to $10.00 per Boe for the year ended December 31, 2024 from $9.11 per Boe for the year ended December 31, 2023.
The exact impact of each of these items is difficult to quantify as each of our operators passes through these costs in a different manner. Lease Operating Expense. Lease operating expense increased to $10.92 per Boe for the year ended December 31, 2025 from $10.00 per Boe for the year ended December 31, 2024.
See Notes to Consolidated Financial Statements—Note 4— Fair Value Measurements for further information on these contracts and their fair values as of December 31, 2024, which fair values represent the estimated cash settlement amount required to terminate such instruments based on forward price curves for commodities as of that date. Dividends.
See Note 4 (“Fair Value Measurements”) to the Consolidated Financial Statements for further information on these contracts and their fair values as of December 31, 2025, which fair values represent the estimated cash settlement amount required to terminate such instruments based on forward price curves for commodities as of that date. Dividends.
For the year ended December 31, 2024, the relationship of capital expenditures, proved reserves and production from certain producing fields yielded a depletion rate (excluding depreciation, amortization and accretion) of $20.92 per Boe compared with $18.68 per Boe for the year ended December 31, 2023.
For the year ended December 31, 2025, the relationship of capital expenditures, proved reserves and production from certain producing fields yielded a depletion rate (excluding depreciation, amortization and accretion) of $20.16 per Boe compared with $20.92 per Boe for the year ended December 31, 2024.
Selected Factors That Affect Our Operating Results Our revenues, cash flows from operations and future growth depend substantially upon: ■ the timing and success of our drilling and production activities and those of our operating partners; ■ the prices and the supply and demand for oil, natural gas and NGLs; ■ the quantity of oil and natural gas production from the wells in which we participate; ■ changes in the fair value of the derivative instruments; ■ our ability to continue to identify and acquire high-quality acreage and drilling opportunities; and ■ the level of our operating expenses.
Selected Factors That Affect Our Operating Results Our revenues, cash flows from operations and future growth depend substantially upon: ■ the timing and success of our drilling and production activities and those of our operating partners; ■ the prices and the supply and demand for oil, natural gas and NGLs; ■ the quantity of oil and natural gas production from the wells in which we participate; ■ the realized gains and losses on our derivative instruments; ■ our ability to continue to identify and acquire producing properties, high-quality acreage and drilling opportunities; and ■ the level of our operating expenses.
Worldwide supply in terms of output, especially production from properties within the United States, the production quotas set by OPEC and certain other oil-producing countries, the conflicts in Ukraine and in the Middle East and the strength of the U.S. dollar can adversely impact oil prices.
Worldwide supply in terms of output, especially production from properties within the United States, the production quotas set by OPEC and certain other oil-producing countries, the conflict in Ukraine, hostilities in the Middle East, the evolving situation in Venezuela and the strength of the U.S. dollar can adversely impact oil prices.
For the year ended December 31, 2024 total capital expenditures was $115.2 million, including development expenditures and our acquisition activity. We expect to fund future capital expenditures with cash generated from operations and, if required, borrowings under our Revolving Credit Facility.
For the year ended December 31, 2025 total capital expenditures was $127.7 million, including development expenditures and our acquisition activity. We expect to fund future capital expenditures with cash generated from operations and, if required, borrowings under our Revolving Credit Facility.
The increase in oil and natural gas revenue was due to a 10% increase in production volumes, and was partially offset by a 6% decrease in the average realized prices per Boe before hedging for the year ended December 31, 2024.
The increase in oil and natural gas revenue was due to a 34% increase in production volumes, and was partially offset by a 15% decrease in the average realized prices per Boe before hedging for the year ended December 31, 2025.
The increase in production volumes increased oil and natural gas revenue by approximately $21.3 million, while the decrease in average realized prices per Boe before hedging decreased oil and natural gas revenue by approximately $13.2 million.
The increase in production volumes increased oil and natural gas revenue by approximately $69.2 million, while the decrease in average realized prices per Boe before hedging decreased oil and natural gas revenue by approximately $37.2 million.
Total production taxes decreased to $21.5 million for the year ended December 31, 2024 from $21.6 million for the year ended December 31, 2023. Production taxes are primarily based on oil revenue and natural gas production, excluding gains and losses associated with hedging activities.
Total production taxes increased to $23.4 million for the year ended December 31, 2025 from $21.5 million for the year ended December 31, 2024. Production taxes are primarily based on oil revenue and natural gas production, excluding gains and losses associated with hedging activities.
YEAR ENDED DECEMBER 31, (in thousands) 2024 2023 Realized gain on commodity derivatives (1) $ 5,065 $ 1,166 Unrealized (loss) gain on commodity derivatives (1) (7,413) 11,318 Total commodity derivative (loss) gain $ (2,348) $ 12,484 (1) Realized and unrealized gains and losses on commodity derivatives are presented herein as separate line items but are combined for a total commodity derivative (loss) gain in the consolidated statements of operations included in this Annual Report on Form 10-K.
YEAR ENDED DECEMBER 31, (in thousands) 2025 2024 Realized gain on commodity derivatives (1) $ 17,116 $ 5,065 Unrealized gain (loss) on commodity derivatives (1) 10,814 (7,413) Total commodity derivative gain (loss) $ 27,930 $ (2,348) (1) Realized and unrealized gains and losses on commodity derivatives are presented herein as separate line items but are combined for a total commodity derivative (loss) gain in the consolidated statements of operations included in this Annual Report on Form 10-K.
Factors that we expect will continue to impact commodity prices include product demand connected with global economic conditions, inflationary factors, industry production and inventory levels, the United States Department of Energy’s planned repurchases (or possible releases) of oil from the strategic petroleum reserve, technology advancements, production quotas or other actions imposed by OPEC and other oil-producing countries, the imposition of tariffs and resulting consequences, actions of regulators, and regional supply interruptions or fears thereof that may be caused by military conflicts, civil unrest or political uncertainty.
Factors that we expect will continue to impact commodity prices include product demand connected with global economic conditions, inflationary factors, industry production and inventory levels, the United States Department of Energy’s planned repurchases (or possible releases) of oil from the strategic petroleum reserve, technology advancements, production quotas or other actions imposed by OPEC and other oil-producing countries, the 51 Table of Contents imposition of and changes in tariffs and other controls on imports and exports and resulting consequences of such, actions of regulators, and regional supply interruptions or fears thereof that may be caused by military conflicts, civil unrest or political uncertainty, including a prolonged U.S. government shutdown.
The effective tax rate of 26.7% for the year ended December 31, 2024 differs from the amount that would be provided by applying the statutory U.S. federal income tax rate of 21% to pre-tax income primarily due to §162(m) limitations on certain covered employee compensation and state income taxes.
The effective tax rates of 27.9% and 26.7% for the years ended December 31, 2025 and 2024, respectively, differs from the amount that would be provided by applying the statutory U.S. federal income tax rate of 21% to pre-tax income primarily due to §162(m) limitations on certain covered employee compensation, state income taxes and non-amortizable transaction costs.
YEAR ENDED DECEMBER 31, Average Daily Prices (1) 2024 2023 2022 WTI Oil (per Bbl) $ 75.69 $ 77.58 $ 94.90 Natural Gas (per MMBtu) 2.19 2.53 6.45 (1) Based on average daily NYMEX WTI and Henry Hub Spot closing prices reported by FactSet and the EIA, respectively.
YEAR ENDED DECEMBER 31, Average Daily Prices (1) 2025 2024 2023 WTI Oil (per Bbl) $ 64.60 $ 75.69 $ 77.58 Natural Gas (per MMBtu) 3.52 2.19 2.53 (1) Based on average daily NYMEX WTI and Henry Hub Spot closing prices reported by FactSet and the EIA, respectively.
For more information on our outstanding derivatives, see Notes to Consolidated Financial Statements—Note 6—Derivative Instruments. Cash used in investing activities during the years ended December 31, 2024, 2023 and 2022 was $115.3 million, $120.7 million, and $84.6 million, respectively. Cash used in investing activities primarily relates to capital expenditures for acquisition and development costs.
For more information on our outstanding derivatives, see Note 6 (“Derivative Instruments”) to the Consolidated Financial Statements. Cash used in investing activities during the years ended December 31, 2025 and 2024 was $127.7 million and $115.3 million, respectively. Cash used in investing activities primarily relates to capital expenditures for acquisition and development costs.
Oil and natural gas revenue increased to $242.0 million for the year ended December 31, 2024 from $233.9 million for the year ended December 31, 2023.
Oil and natural gas revenue increased to $274.0 million for the year ended December 31, 2025 from $242.0 million for the year ended December 31, 2024.
In addition, we had a royalty only interest in 1,180 gross (2.8 net) productive wells.
In addition, we had a royalty only interest in 1,301 gross (3.2 net) productive wells.
Our long-term material cash requirements from currently known obligations include settlements on our outstanding commodity derivative contracts, future obligations to plug, abandon and remediate our oil and gas properties at the end of their productive lives, and operating lease obligations.
Conversely, working capital requirements would be expected to decrease if commodity prices decline. Our long-term material cash requirements from currently known obligations include settlements on our outstanding commodity derivative contracts, future obligations to plug, abandon and remediate our oil and gas properties at the end of their productive lives, and operating lease obligations.
The discount rate is a rate that management believes is representative of current market conditions and includes estimates for a risk premium and other operational risks. For the years ended December 31, 2024, 2023, and 2022 we did not record any impairment expense.
The discount rate is a rate that management believes is representative of current market conditions and includes estimates for a risk premium and other operational risks. For the years ended December 31, 2025 and 2024 we did not record any impairment expense. Business Combinations We account for business combinations using the acquisition method of accounting.
The net commodity derivative loss was $2.3 million for the year ended December 31, 2024 compared with a gain of $12.5 million for the year ended December 31, 2023.
Commodity Derivative Gain (Loss). The net commodity derivative gain was $27.9 million for the year ended December 31, 2025 compared with a loss of $2.3 million for the year ended December 31, 2024.
At December 31, 2024, we had a working capital deficit of $49.4 million, compared to a deficit of $2.1 million at December 31, 2023. Current assets decreased by $7.4 million while current liabilities increased by $39.9 million at December 31, 2024, compared to December 31, 2023.
At December 31, 2025, we had a working capital surplus of $0.9 million, compared to a deficit of $49.4 million at December 31, 2024. Current assets increased by $1.3 million while current liabilities decreased by $49.1 million at December 31, 2025, compared to December 31, 2024.
FOR THE YEAR ENDED DECEMBER 31, (in thousands) 2024 Pre-Tax Present Value of Estimated Future Net Revenues (Pre-Tax PV10%) $ 586,590 Future Income Taxes, Discounted at 10% $ (80,259) Standardized Measure of Discounted Future Net Cash Flows $ 506,331 Uncertainties are inherent in estimating quantities of proved reserves, including many risk factors beyond our control.
FOR THE YEAR ENDED DECEMBER 31, (in thousands) 2025 Pre-Tax Present Value of Estimated Future Net Revenues (Pre-Tax PV10%) $ 472,685 Future Income Taxes, Discounted at 10% (33,709) Standardized Measure of Discounted Future Net Cash Flows $ 438,976 Uncertainties are inherent in estimating quantities of proved reserves, including many risk factors beyond our control.
Our net realized natural gas price during the year ended December 31, 2024 was $1.34 per Mcf, representing a 62% realization relative to the weighted 59 Table of Contents average NYMEX natural gas price, compared to a net realized natural gas price of $1.88 per Mcf during the year ended December 31, 2023, representing a 74% realization relative to the weighted average NYMEX natural gas price.
Our net realized natural gas price during the year ended December 31, 2025 was $2.21 per Mcf, representing a 64% realization relative to the weighted average NYMEX natural gas price, compared to a net realized natural gas price of $1.34 per Mcf during the year ended December 31, 2024, representing a 62% realization relative to the weighted average NYMEX natural gas price.
W e paid cash dividends to our equity holders of $63.6 million during the year ended December 31, 2024.
W e paid cash dividends to our equity holders of $92.1 million during the year ended December 31, 2025.
During the last several years, prices for oil and natural gas have experienced periodic downturns and sustained volatility, impacted by the COVID-19 pandemic and recovery, the ongoing military conflict between 55 Table of Contents Russia and Ukraine, conflict in the Middle East, supply chain constraints, elevated interest rates and costs of capital, and reductions in production by OPEC and its key member, Saudi Arabia, and certain other non-OPEC oil-producing countries.
During the last several years, prices for oil and natural gas have experienced periodic downturns and sustained volatility, impacted by general economic and political conditions, the conflict between Russia and Ukraine, hostilities in the Middle East, the evolving situation in Venezuela, supply chain constraints, elevated interest rates and costs of capital, and changes in production by OPEC and its key member, Saudi Arabia, and certain other non-OPEC oil-producing countries.
Gain (loss) on commodity derivatives, net is comprised of (i) cash gains and losses we recognize on settled commodity derivatives during the period, and (ii) non-cash mark-to-market gains and losses we incur on commodity derivative instruments outstanding at period-end.
Gain (Loss) on Commodity Derivatives is comprised of (1) cash gains and losses we recognize on settled commodity derivative instruments during the period, and (2) unsettled gains and losses we incur on commodity derivative instruments outstanding at period-end.
If our EBITDAX Ratio does not exceed 2.25 to 1.00, and if our total outstanding credit usage does not exceed 80% of the Commitments, we may also make distributions if our free cash flow (as defined under the Revolving Credit Facility) is greater than $0 and we have delivered a certificate to our lenders attesting to the foregoing. 62 Table of Contents As of December 31, 2024, the Company’s borrowing base was $245.0 million with an aggregate elected commitment of $235.0 million of which $117.0 million was outstanding.
If our EBITDAX Ratio does not exceed 2.25 to 1.00, and if our total outstanding credit usage does not exceed 80% of the Commitments, we may also make distributions if our free cash flow (as defined under the Revolving Credit Facility) is greater than $0 and we have delivered a certificate to our lenders attesting to the foregoing.
Our oil price differential to the weighted average benchmark price during the year ended December 31, 2024 was negative $5.90 per Bbl, as compared to a negative $4.19 per Bbl during the year ended December 31, 2023, primarily due to less favorable local market pricing as compared to the benchmark price.
Our oil price differential to the weighted average benchmark price during the year ended December 31, 2025 was negative $5.40 per Bbl, as compared to a negative $5.90 per Bbl during the year ended December 31, 2024, primarily due to the legal settlement increasing the realized price per Bbl in the period, partially offset by less favorable local market pricing as compared to the benchmark price.
The mark-to-market fair value can create non-cash volatility in our reported earnings during periods of commodity price volatility. We have experienced such volatility in the past and are likely to experience it in the future.
The mark-to-market fair value can create non-cash volatility in our reported earnings during periods of commodity price volatility. We have experienced such volatility in the past and 56 Table of Contents are likely to experience it in the future. Gains on our derivatives generally indicate lower oil revenues in the future while losses indicate higher future oil revenues.
The increase in production accounted for a $8.8 million increase in DD&A expense while the increase in the DD&A rate accounted for a $9.7 million increase in DD&A expense.
The increase in production accounted for a $32.7 million increase in DD&A expense while the decrease in the DD&A rate accounted for a $3.6 million decrease in DD&A expense.
The decrease in 2024 and asset increase in 2023 was due to changes to forward commodity prices relative to prices on our open commodity derivative contracts and new contracts entered into in the respective years. Income Tax Expense. We recorded income tax expense of $7.7 million for the year ended December 31, 2024 related to federal and state income taxes.
The increase was primarily due to decreases in forward commodity prices since December 31, 2024 relative to prices on our open commodity derivative contracts. Income Tax Expense. We recorded income tax expense of $9.8 million and $7.7 million for the years ended December 31, 2025 and 2024, respectively, related to federal and state income taxes.
Our financial and operating performance for the year ended December 31, 2024 included the following: ■ Paid $63.6 million in dividends to our equity holders. ■ Production of 13,003 Boe/d with 69% of production from oil. ■ Total revenue of $242.0 million. ■ Net income of $21.1 million. ■ Cash flows from operations of $155.0 million. ■ Invested $115.2 million in capital development and acquisitions. ■ Proved reserves of 40.3 MMBoe and $587 million PV-10 value at December 31, 2024, as estimated by our third-party reserve engineers using SEC guidelines. ■ Total debt of $117.0 million at December 31, 2024.
Our financial and operating performance for the year ended December 31, 2025 included the following: ■ Paid $92.1 million in dividends to our equity holders. ■ Production of 17,444 Boe/d with 65% of production from oil. ■ Total revenue of $274.0 million. ■ Net income of $25.3 million. ■ Cash flows from operations of $170.3 million. ■ Invested $127.7 million in capital development and acquisitions. ■ Proved reserves of 47.8 MMBoe and $473 million PV-10 value at December 31, 2025, as estimated by our third-party reserve engineers using SEC guidelines. ■ Total debt of $124.5 million at December 31, 2025.
Liquidity and Capital Resources Overview. At December 31, 2024 and 2023, we had $3.0 million and $0.6 million of unrestricted cash on hand and $128.0 million and $164.0 million available under our Revolving Credit Facility, respectively.
Liquidity and Capital Resources Overview. At December 31, 2025 and 2024, we had $1.3 million and $3.0 million of unrestricted cash on hand and $125.5 million and $118.0 million available under the elected commitments in our Revolving Credit Facility, respectively.
The average calendar 2024 WTI oil price was $75.69 per Bbl or 2% lower than the average WTI price per Bbl in calendar 2023. Our settled derivatives increased our realized oil price per Bbl by $1.54 in calendar 2024 and increased our realized oil price per Bbl by $0.40 in calendar 2023.
The average calendar 2025 WTI oil price was $64.60 per Bbl or 15% lower than the average WTI price per Bbl in calendar 2024. Our settled derivatives increased our realized oil price per Bbl by $3.81 in calendar 2025 and increased our realized oil price per Bbl by $1.54 in calendar 2024.
As of December 31, 2024, we had a working interest in 6,071 gross (168.2 net) productive wells and 248 gross (9.7 net) wells that were being drilled or completed, and an additional 362 gross (8.0 net) wells that had been permitted for development by our operators.
As of December 31, 2025, we had a working interest in 6,402 gross (226.1 net) productive wells and 283 gross (6.1 net) wells that were being drilled or completed, and an additional 336 gross (15.9 net) wells that had been permitted for development by us or our operators.
At December 31, 2024, all of our derivative contracts were recorded at their fair value, which was a net asset of $3.7 million, a decrease of $7.4 million from the $11.1 million net asset recorded as of December 31, 2023, while a net liability of $0.2 million was recorded as of December 31, 2022.
At December 31, 2025, all of our derivative contracts were recorded at their fair value, which was a net asset of $14.4 million, an increase of $10.7 million from the $3.7 million net asset recorded as of December 31, 2024.
The increase in current liabilities in 2024 as compared to 2023 was primarily due to an increase of $39.8 million in accounts payable and accrued liabilities as a result of increased development activity. Cash Flows.
The decrease in current liabilities in 2025 as compared to 2024 was primarily due to an decrease of $49.1 million in accounts payable and accrued liabilities as a result of decreased development activity. 57 Table of Contents Cash Flows.
Our working capital balance fluctuates as a result of changes in commodity pricing and production volumes, the collection of revenue receivables, expenditures related to our acquisition and development, and production operations and the impact of our outstanding commodity derivative instruments.
We continually monitor potential capital sources for opportunities to enhance liquidity or otherwise improve our financial position. Working Capital. Our working capital balance fluctuates as a result of changes in commodity pricing and production volumes, the collection of accrued revenue, expenditures related to our acquisition and development, and production operations and the impact of our outstanding commodity derivative instruments.
Recently Issued or Adopted Accounting Pronouncements For discussion of recently issued or adopted accounting pronouncements, see Notes to the Consolidated Financial Statements—Note 2—Significant Accounting Policies.” Off Balance Sheet Arrangements We currently do not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Off Balance Sheet Arrangements 61 Table of Contents We currently do not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
As a result, we incur interest expense that is affected by both fluctuations in interest rates and our financing decisions. We do not capitalize any portion of the interest paid on applicable borrowings. We include the amortization of deferred financing costs, commitment fees and annual agency fees as interest expense. Impairment expense.
We finance a portion of our working capital requirements, capital expenditures and acquisitions with borrowings under our Revolving Credit Facility. As a result, we incur interest expense that is affected by both fluctuations in interest rates and our financing decisions. We include the amortization of deferred financing costs, commitment fees and annual agency fees as interest expense. Impairment expense.
The increase of $18.6 million or 23% was the result of a 10% increase in production and a 12% increase in the DD&A rate for the year ended December 31, 2024 compared with the year ended December 31, 2023.
The increase of $29.1 million or 29% was the result of a 34% increase in production and a 4% decrease in the DD&A rate for the year ended December 31, 2025 compared with the year ended December 31, 2024.
Future oil prices will be impacted by varying oil supply and demand both regionally and worldwide. Prices for various quantities of oil, natural gas and NGLs significantly impact our revenues and cash flows. The following table lists average NYMEX prices for oil and natural gas for the periods presented.
Historically, commodity prices have been volatile and we expect the volatility to continue in the future. Future oil prices will be impacted by varying oil supply and demand both regionally and worldwide. Prices for various quantities of oil, natural gas and NGLs significantly impact our revenues and cash flows.
Generally, higher oil prices have led to increased drilling activity, with the increased demand for drilling and completion services driving these costs higher. Lower oil prices have generally had the opposite effect.
The cost of drilling wells can vary significantly, driven in part by volatility in commodity prices that can substantially impact the level of drilling activity. Generally, higher oil prices have led to increased drilling activity, with the increased demand for drilling and completion services driving these costs higher. Lower oil prices have generally had the opposite effect.
Our cash flows for the years ended December 31, 2024, 2023 and 2022 are presented below: FOR THE YEARS ENDED DECEMBER 31, (in thousands) 2024 2023 2022 Cash flows provided by operating activities $ 155,003 $ 141,942 $ 147,041 Cash flows used in investing activities (115,321) (120,666) (84,583) Cash flows used in financing activities (37,267) (30,731) (57,807) Net increase (decrease) in cash $ 2,415 $ (9,455) $ 4,651 During the year ended December 31, 2024, we generated $155.0 million of cash from operations, an increase of 9% from the year ended December 31, 2023 driven by a 3% increase in total revenue.
Our cash flows for the years ended December 31, 2025 and 2024 are presented below: FOR THE YEARS ENDED DECEMBER 31, (in thousands) 2025 2024 Cash flows provided by operating activities $ 170,349 $ 155,003 Cash flows used in investing activities (127,662) (115,321) Cash flows used in financing activities (44,326) (37,267) Net change in cash $ (1,639) $ 2,415 During the year ended December 31, 2025, we generated $170.3 million of cash from operations, an increase of 10% from the year ended December 31, 2024 driven by a 13% increase in total revenue.
In 2023, approximately 49% of our oil volumes and none of our natural gas volumes were covered by financial hedges, which resulted in a realized gain on oil derivatives of $1.2 million.
In 2025, approximately half of our natural gas volume was covered by residue gas and NGL financial hedges, which resulted in a realized gain on gas and NGL derivatives of $1.4 million.
The price differential between our wellhead price for oil and the WTI benchmark price is primarily driven by the cost to transport oil via pipeline, train or truck to refineries. The price differential between our wellhead price for natural gas and the NYMEX benchmark price is primarily driven by Btu content along with gathering, processing and transportation costs.
Principal Components of Our Cost Structure Commodity price differentials. The price differential between our wellhead price for oil and the WTI benchmark price is primarily driven by the cost to transport oil via pipeline, train or truck to refineries.
Lucero shareholders received 0.01239 of a share of Vitesse common stock for each common share of Lucero with 8,169,368 shares of Vitesse common stock issued. Lucero is an oil and natural gas operator with assets in the Bakken and Three Forks formations in the Williston Basin area of North Dakota.
Lucero is an oil and natural gas operator with assets in the Bakken and Three Forks formations in the Williston Basin area of North Dakota.
As commodity prices improve, our working capital requirements may increase as we spend additional capital, increase production and pay larger settlements on our outstanding commodity derivative contracts.
Our material short-term cash requirements include recurring payroll and benefits obligations for our employees, capital and operating expenditures and other working capital needs. If commodity prices improve, our working capital requirements may increase as we spend additional capital, increase production and pay larger settlements on our outstanding commodity derivative contracts.
Management believes the separate presentation of the realized and unrealized commodity derivative gains and losses is useful because the realized cash settlement portion provides a better understanding of our hedge position.
Management believes the separate presentation of the realized and unrealized commodity derivative gains and losses is useful because the realized cash settlement portion provides a better understanding of our hedge position. In 2025, approximately 61% of our oil volumes were covered by financial hedges, which resulted in a realized gain on oil derivatives of $15.8 million.
We have historically invested in non-operated minority working and mineral interests in oil and natural gas properties with our core area of focus currently in the Bakken and Three Forks formations of the Williston Basin of North Dakota and Montana, although we have assumed limited operations in the Williston Basin through the Lucero Acquisition.
We invest in working and mineral interests in oil and natural gas properties with our core area of focus currently in the Bakken and Three Forks formations of the Williston Basin of North Dakota and Montana. We also have interests in wells in the Denver-Julesburg Basin located in Colorado and Wyoming and the Powder River Basin located in Wyoming.
A minimum level of derivative coverage is required by certain debt covenants. See Part II. Item 7A. Quantitative and Qualitative Disclosures about Market Risk. One of the primary sources of variability in our cash provided by operating activities is commodity price volatility, which we partially mitigate through the use of commodity derivative contracts.
One of the primary sources of variability in our cash provided by operating activities is commodity price volatility, which we partially mitigate through the use of commodity derivative contracts.
The use of derivative instruments has in the past, and may in the future, prevent us from realizing the full benefit of upward price movements but also mitigates the effects of declining price movements. Principal Components of Our Cost Structure Commodity price differentials.
We expect our derivative activities will help us achieve more predictable cash flows and reduce our exposure to downward price fluctuations. The use of derivative instruments has in the past, and may in the future, prevent us from realizing the full benefit of upward price movements but also mitigates the effects of declining price movements.
Gains on our derivatives generally indicate lower oil revenues in the future while losses indicate higher future oil revenues. 60 Table of Contents The table below summarizes our commodity derivative gains and losses that were recorded in the periods presented.
The table below summarizes our commodity derivative gains and losses that were recorded in the periods presented.
The increase in the depletion rate was driven by decreased oil and natural gas reserves related to the lower oil and natural gas prices combined with higher operating expenses and the impact of acquisitions and related capital expenditures in the year ended December 31, 2024. Equity-based Compensation.
The lower DD&A rate was driven by the properties acquired in the Lucero Acquisition in 2025 and was partially offset by decreased oil and natural gas reserves related to the lower oil and natural gas prices combined with higher operating expenses. Equity-based Compensation.
The decrease in current assets in 2024 as compared to 2023 was due to a decrease of $6.2 million in our commodity derivative instruments due to forward oil price decreases as compared to hedged oil prices, and a decrease of $5.1 million in revenue receivable primarily due to lower oil and natural gas revenue in the fourth quarter, partially offset by an increase in our cash balance of $2.4 million and an increase in other receivables of $1.5 million primarily related to prepayments and a higher receivable from commodity derivative 61 Table of Contents instruments.
The increase in current assets in 2025 as compared to 2024 was primarily due to an increase of $10.4 million in our commodity derivative instruments due to forward oil price decreases as compared to hedged oil prices, partially offset by a decrease of $9.2 million in accrued revenue driven by improved collections.
Commodity derivatives gain (loss), net. We utilize commodity derivative financial instruments to reduce our exposure to fluctuations in the prices of oil and gas.
The price differential between our wellhead price for natural gas and the NYMEX benchmark price is primarily driven by Btu content along with gathering, processing and transportation costs. Commodity derivatives gain (loss), net. We utilize commodity derivative financial instruments to reduce our exposure to fluctuations in the prices of oil and natural gas.
Our average 2024 realized oil price per Bbl after reflecting settled derivatives was $71.48 compared to $73.99 in 2023. The average calendar 2024 NYMEX natural gas price was $2.19 per MMBtu, or 13% lower than the average NYMEX price per MMBtu in calendar 2023. We had no gas price derivatives in place in calendar 2024 and 2023.
Our average 2025 realized oil price per Bbl after reflecting settled derivatives was $62.95 compared to $71.48 in 2024. The average calendar 2025 NYMEX natural gas price was $3.52 per MMBtu, or 61% higher than the average NYMEX price per MMBtu in calendar 2024. Our settled derivatives increased our realized gas price per Mcf by $0.10 in calendar 2025.
Our cash spending for acquisition activities was $21.1 million, $35.7 million and $28.5 million during the years ended December 31, 2024, 2023 and 2022, respectively. Cash used in financing activities was $37.3 million, $30.7 million, and $57.8 million during the years ended December 31, 2024, 2023 and 2022, respectively.
Cash used in financing activities was $44.3 million and $37.3 million during the years ended December 31, 2025 and 2024, respectively.

… 62 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+3 added−2 removed9 unchanged
Biggest changeWe generally use derivatives to economically hedge a significant, but varying portion of our anticipated future production. Any payments due to counterparties under our derivative contracts are funded by proceeds received from the sale of our production. Production receipts, however, lag payments to the counterparties.
Biggest changeAny payments due to counterparties under our derivative contracts are funded by proceeds received from the sale of our production. Production receipts, however, lag payments to the counterparties. Any interim cash needs are funded by cash from operations or borrowings under our Revolving Credit Facility.
Assuming no change in the amount outstanding, the impact on interest expense of a 1% increase or decrease in the average interest rate would be an approximate $1.0 million increase or decrease in interest expense for the year ended December 31, 2024. 66 Table of Contents Item 8.
Assuming no change in the amount outstanding, the impact on interest expense of a 1% increase or decrease in the average interest rate would be an approximate $1.2 million increase or decrease in interest expense for the year ended December 31, 2025. 63 Table of Contents Item 8.
The prices we receive for our production depend on numerous factors beyond our 65 Table of Contents control.
The prices we receive for our production depend on numerous factors beyond our control.
Based upon our open commodity derivative positions at December 31, 2024, a hypothetical $1 increase or decrease in the NYMEX WTI strip price would increase or decrease our net commodity derivative position by approximately $3.1 million. The hypothetical change in fair value could be a gain or a loss depending on whether commodity prices decrease or increase.
Based upon our open commodity derivative positions at December 31, 2025, a hypothetical 10% increase or decrease in the NYMEX WTI strip price would increase or decrease our net commodity derivative position by approximately $9.0 million.
Removed
Any interim cash needs are funded by cash from operations or borrowings under our Revolving Credit Facility. The following table summarizes our open crude oil swap contracts as of December 31, 2024, by fiscal quarter.
Added
We generally use derivatives to economically hedge a significant, but varying portion of our anticipated future production. We use natural gas basis swaps to complement our natural gas collars, helping mitigate pricing differences between benchmark settlement methods and the local prices we receive for production.
Removed
SETTLEMENT PERIOD OIL (Bbls) WEIGHTED AVERAGE PRICE Swaps-Crude Oil 2025: Q1 526,500 $72.55 Q2 649,503 $71.85 Q3 586,503 $69.99 Q4 541,497 $70.25 2026: Q1 353,997 $66.90 Q2 329,997 $66.90 Q3 119,997 $67.10 Q4 114,003 $67.10 See Notes to the Consolidated Financial Statements—Note 4—Fair Value Measurements and —Note 6—Derivative Instruments for further details regarding our commodity derivatives.
Added
The following tables summarize our open commodity derivative contracts as of December 31, 2025: Crude oil swaps: INDEX SETTLEMENT PERIOD VOLUME HEDGED (Bbls) WEIGHTED AVERAGE FIXED PRICE WTI-NYMEX Q1 2026 478,791 $65.67 WTI-NYMEX Q2 2026 449,509 $65.59 WTI-NYMEX Q3 2026 346,679 $63.04 WTI-NYMEX Q4 2026 333,155 $62.96 Crude oil collars: INDEX SETTLEMENT PERIOD VOLUME HEDGED (Bbls) WEIGHTED AVERAGE FLOOR/CEILING PRICE WTI-NYMEX Q3 2026 33,000 $50.00 / $68.80 WTI-NYMEX Q4 2026 33,000 $50.00 / $68.80 Natural gas collars: INDEX SETTLEMENT PERIOD VOLUME HEDGED (MMbtu) WEIGHTED AVERAGE FLOOR/CEILING PRICE Henry Hub-NYMEX Q1 2026 1,266,700 $3.73 / $5.00 Henry Hub-NYMEX Q2 2026 1,188,700 $3.73 / $5.00 Henry Hub-NYMEX Q3 2026 1,120,800 $3.72 / $4.99 Henry Hub-NYMEX Q4 2026 1,062,700 $3.72 / $4.99 Henry Hub-NYMEX Q1 2027 795,000 $4.00 / $5.68 62 Table of Contents Natural gas basis swaps: INDEX SETTLEMENT PERIOD VOLUME HEDGED (MMbtu) WEIGHTED AVERAGE FIXED PRICE Chicago City Gate to Henry Hub Q1 2026 1,266,700 $(0.121) Chicago City Gate to Henry Hub Q2 2026 1,188,700 $(0.121) Chicago City Gate to Henry Hub Q3 2026 1,120,800 $(0.121) Chicago City Gate to Henry Hub Q4 2026 1,062,700 $(0.121) Chicago City Gate to Henry Hub Q1 2027 795,000 $0.300 Natural gas liquids swaps: INDEX SETTLEMENT PERIOD VOLUME HEDGED (Gallons) WEIGHTED AVERAGE FIXED PRICE Mont Belvieu Ethane 2026 2,176,000 $0.26 Conway Propane 2026 2,153,000 $0.71 Mont Belvieu Iso-Butane 2026 282,000 $0.90 Mont Belvieu Normal Butane 2026 798,000 $0.86 Mont Belvieu Natural Gasoline 2026 1,001,000 $1.29 See Note 4 (“Fair Value Measurements”) and Note 6 (“Derivative Instruments”) to the Consolidated Financial Statements for further details regarding our commodity derivatives.
Added
A hypothetical 10% change in the Henry Hub-NYMEX strip price, related basis swaps and NGL prices would increase or decrease our net commodity derivative position by approximately $2.0 million.The hypothetical change in fair value could be a gain or a loss depending on whether commodity prices decrease or increase.

Other VTS 10-K year-over-year comparisons