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Item 2. Management’s Discussion and Analysis

2025-11-05 compared with 2025-08-06 · 129 added, 134 removed, 261 unchanged (50% of the section changed)

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Our assets have historically consisted primarily of producing oil and natural gas properties located in Oklahoma, the Rockies (“Bairoil”), federal waters offshore Southern California (“Beta”), East Texas/North Louisiana and the Eagle Ford (non-op).

Amplify’s current operations are focused at Oklahoma, Bairoil and Beta.

Most of our oil and natural gas properties are located in large, mature oil and natural gas reservoirs.

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We continue to monitor the impact of the actions of OPEC+ and other large producing nations, the Russia-Ukraine conflict, conflicts in the Middle East, the imposition of tariffs or other economic sanctions, global inventories of oil and natural gas and the uncertainty associated with recovering oil demand, inflation and future monetary policy and governmental policies aimed at transitioning towards lower carbon energy.

In the first half of 2025, there has been continued volatility in oil, natural gas and NGL prices resulting from (i) trade tariff uncertainties driving concerns over an increase in inflation and (ii) OPEC+’s decision to increase production in May through July 2025, creating additional global supply and further downward pressure on oil prices.

In July 2025, OPEC+ announced an additional production increase for August, which is expected to exacerbate these supply-side pressures on oil prices.

inflation rates during the first half of 2025 have remained relatively stable, they continued to be slightly higher than historical averages.

In 2025, there has been continued volatility in oil, natural gas and NGL prices resulting from (i) trade tariff uncertainties driving concerns over an increase in inflation and (ii) OPEC+’s decision to increase production in May through September 2025, creating additional global supply and further downward pressure on oil prices.

In October 2025, OPEC+ announced an additional production increase for November, which is expected to exacerbate these supply-side pressures on oil prices.

inflation rates during 2025 have remained relatively stable, they continued to be slightly higher than historical averages.

Such inflation, along with the effects of economic pressures from international military and trade conflicts, could, as a result, continue to raise the cost of borrowing, impact the demand for and price of oil and natural gas, increase the price of crucial supplies and raw materials and impact interest rates.

In both September and October, the Federal Reserve reduced interest rates, and may lower rates further, though it remains uncertain at this time.

Due to these factors, among others, we expect prices for some or all commodities to remain volatile.

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Recent Developments

Strategic Initiatives

On July 22, 2025, we announced the engagement of a third-party advisor to explore market interest for the complete divestiture of Amplify’s assets in East Texas and Oklahoma.

Separation of Chief Executive Officer and Director

On July 21, 2025, the Company, and Mr.

Martyn Willsher, the Company’s former President, Chief Executive Officer and member of the Company’s board of directors (the “Board”), agreed that (i) Mr.

Willsher’s roles as President and Chief Executive Officer of the Company and a member of the Board terminated effective July 22, 2025 (the “Transition Date”), and (ii) Mr.

Willsher assumed the non-executive employee role of Special Advisor to the Company on the Transition Date.

In connection with the transition of Mr.

Willsher’s role, the Company and Mr.

Willsher entered into a Transition and Separation Agreement (the “Transition Agreement”), effective as of the Transition Date.

Pursuant to the terms of the Transition Agreement, Mr.

Willsher will serve as Special Advisor to the Company until December 31, 2025, unless earlier terminated in accordance with the terms of the Transition Agreement.

The Transition Agreement is filed as Exhibit 10.4 to this Current Report on Form 10-Q.

Appointment of Chief Executive Officer and Director

On July 21, 2025, the Board appointed Mr.

Daniel Furbee, previously the Company’s Senior Vice President and Chief Operating Officer, to Chief Executive Officer and as a member of the Board, effective as of the Transition Date.

In connection with Mr.

Furbee’s appointment as Chief Executive Officer, Mr.

Furbee and the Company entered into a performance-based restricted stock units award agreement (the “Award Agreement”).

The Award Agreement is filed as Exhibit 10.5 to this Current Report on Form 10-Q.

Appointment of President and Chief Financial Officer

On July 21, 2025, the Board appointed Mr.

James Frew, previously the Company’s Senior Vice President and Chief Financial Officer, to President and Chief Financial Officer, effective as of the Transition Date.

Sale of Non-Operated Eagle Ford Assets and Borrowing Base Redetermination

On July 1, 2025, OLLC entered into a purchase and sale agreement with Buyer, the existing operator of the majority of OLLC’s Assets, pursuant to which OLLC sold to Buyer all of OLLC’s Assets, which include, among other things, OLLC’s right, title and interest in and to certain specified oil and gas Properties, Contracts, Equipment and Production within or related to certain designated lands in Karnes County, Texas, for an aggregate cash purchase price of $23.0 million, subject to certain post-closing adjustments, as further described in the Purchase and Sale Agreement.

The Asset Sale closed simultaneously with the execution and delivery of the Purchase and Sale Agreement on July 1, 2025.

The Purchase and Sale Agreement became effective as of June 15, 2025.

On July 2, 2025, subsequent to the Asset Sale, our borrowing base was reduced to $135.0 million.

East Texas Haynesville Monetization

On October 2, 2025, the Company entered into a purchase and sale agreement to sell its remaining interest in certain units with rights in the Cotton Valley and Haynesville basins in Harrison County, Texas, generating $5.5 million in net proceeds from the transactions.

The sale closed on October 24, 2025 and has an effective date of October 1, 2025.

EQV Purchase and Sale Agreement

On October 28, 2025, OLLC and Magnify Energy Services LLC, a Delaware limited liability company and indirect, wholly owned subsidiary of the Company (“Magnify” and together with OLLC, the “EQV Sellers”), entered into a purchase and sale agreement (the “EQV Purchase and Sale Agreement”) with EQV Alpha LLC, a Delaware limited liability company (“Alpha”), pursuant to which the EQV Sellers sold to Alpha certain assets of the EQV Sellers, which include, among other things, the EQV Sellers’ right, title and interest in and to certain specified oil and gas Properties and Equipment (each as defined in the EQV Purchase and Sale Agreement) within or related to certain designated lands in East Texas and Louisiana (the “EQV Asset Sale”) for a cash purchase price of $122.0 million, which remains subject to customary adjustments under the EQV Purchase and Sale Agreement.

The EQV Asset Sale contemplated by the EQV Purchase and Sale Agreement is expected to close in December 2025 with an effective date of October 1, 2025.

Revolution Purchase and Sale Agreement

On November 4, 2025, Amplify Oklahoma Operating LLC, a Delaware limited liability company and indirect, wholly owned subsidiary of the Company (“Amplify Oklahoma”), Magnify (together with Amplify Oklahoma, the “Revolution Sellers”) and OLLC, for certain limited purposes, entered into a purchase and sale agreement (the “Revolution Purchase and Sale Agreement”) with Revolution Resources III, LLC, a Delaware limited liability company (“Revolution”), pursuant to which the Revolution Sellers sold to Revolution certain assets of the Revolution Sellers, which include, among other things, the Revolution Sellers’ right, title and interest in and to certain specified oil and gas Properties and Equipment (each as defined in the Revolution Purchase and Sale Agreement) within or related to certain designated lands in Oklahoma (the “Revolution Asset Sale”) for a cash purchase price of $92.5 million, which remains subject to customary adjustments under the Revolution Purchase and Sale Agreement.

The Revolution Asset Sale contemplated by the Revolution Purchase and Sale Agreement is expected to close in December 2025 with an effective date of October 1, 2025.

Business Environment and Operational Focus

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Results of Operations

The results of operations for the three and six months ended June 30, 2025 and 2024 have been derived from our unaudited condensed consolidated financial statements.

The results of operations for the three and nine months ended September 30, 2025 and 2024 have been derived from our unaudited condensed consolidated financial statements.

The following table summarizes certain of the results of operations for the periods indicated.

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

($ In thousands except per unit amounts)

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Depletion, depreciation and amortization

For the Three Months Ended June 30, 2025 Compared to the Three Months Ended June 30, 2024

We reported net income of $6.4 million compared to net income of $7.1 million for the three months ended June 30, 2025 and 2024, respectively.

Oil, natural gas and NGL revenues were $66.8 million and $72.3 million for the three months ended June 30, 2025 and 2024, respectively.

Average net production volumes were approximately 19.1 MBoe/d and 20.3 MBoe/d for the three months ended June 30, 2025 and 2024, respectively.

The average realized sales prices were $38.38 per Boe and $39.25 per Boe for the three months ended June 30, 2025 and 2024, respectively.

For the Three Months Ended September 30, 2025 Compared to the Three Months Ended September 30, 2024

We reported a net loss of $21.0 million compared to net income of $22.7 million for the three months ended September 30, 2025 and 2024, respectively.

Oil, natural gas and NGL revenues were $64.2 million and $68.1 million for the three months ended September 30, 2025 and 2024, respectively.

Average net production volumes were approximately 19.7 MBoe/d and 19.0 MBoe/d for the three months ended September 30, 2025 and 2024, respectively.

The average realized sales prices were $35.47 per Boe and $38.88 per Boe for the three months ended September 30, 2025 and 2024, respectively.

The change in realized sales price was due to lower realized sales prices for oil, partially offset by higher realized sales prices for natural gas.

Other revenues were $1.6 million and $7.2 million for the three months ended June 30, 2025 and 2024, respectively.

The decrease primarily related to the revenue suspense release of $4.8 million for the three months ended June 30, 2024.

Lease operating expenses were $38.6 million and $36.3 million for the three months ended June 30, 2025 and 2024, respectively.

On a per Boe basis, lease operating expenses were $22.20 and $19.70 for the three months ended June 30, 2025 and 2024, respectively.

The change in lease operating expense is primarily due to increased electricity costs for Bairoil.

Gathering, processing and transportation expenses were $4.7 million and $4.9 million for the three months ended June 30, 2025 and 2024, respectively.

On a per Boe basis, gathering, processing and transportation expenses were $2.71 and $2.66 for the three months ended June 30, 2025 and 2024, respectively.

The change in gathering processing and transportation expenses was primarily due to lower gas volumes.

Taxes other than income were $4.3 million and $4.6 million for the three months ended June 30, 2025 and 2024, respectively.

On a per Boe basis, taxes other than income were $2.47 and $2.51 for the three months ended June 30, 2025 and 2024, respectively.

The decrease was primarily related to a reduction in production taxes based on lower volumes partially offset by an increase in emission charges and ad valorem taxes.

DD&A expenses were $9.8 million and $7.8 million for the three months ended June 30, 2025 and 2024, respectively.

The change was primarily driven by increased production at Beta and Eagle Ford.

Impairment expense was $8.4 million for the three months ended June 30, 2025.

The Company recognized an impairment expense to reduce the net book value of our non-operated Eagle Ford assets to fair value less costs to sell.

See Note 4 and Note 18 of the Notes to Unaudited Condensed Consolidated Financial Statements included under “Item 1.

Other revenues were $2.2 million and $1.7 million for the three months ended September 30, 2025 and 2024, respectively.

The increase was primarily related to an increase of $0.3 million in rental income with respect to Magnify and interest income earned on our sinking fund escrow accounts.

Lease operating expenses were $35.6 million and $33.3 million for the three months ended September 30, 2025 and 2024, respectively.

On a per Boe basis, lease operating expenses were $19.67 and $18.98 for the three months ended September 30, 2025 and 2024, respectively.

The change in lease operating expense was primarily due to increased workover activity at Beta and Bairoil, partially offset by a decrease in costs associated with the divestiture of our non-operated Eagle Ford assets.

Gathering, processing and transportation expenses were $5.2 million and $4.3 million for the three months ended September 30, 2025 and 2024, respectively.

On a per Boe basis, gathering, processing and transportation expenses were $2.89 and $2.45 for the three months ended September 30, 2025 and 2024, respectively.

The change in gathering, processing and transportation expenses was primarily due to higher gas volumes during the quarter.

Taxes other than income were $3.7 million and $6.0 million for the three months ended September 30, 2025 and 2024, respectively.

On a per Boe basis, taxes other than income were $2.02 and $3.42 for the three months ended September 30, 2025 and 2024, respectively.

The reduction in taxes other than income was primarily related to a decrease in both emission charges and production taxes.

DD&A expenses were $9.0 million and $8.1 million for the three months ended September 30, 2025 and 2024, respectively.

The change in DD&A expenses was primarily driven by increased production, partially offset by the divestiture of our non-operated Eagle Ford assets.

Impairment expense was $34.0 million for the three months ended September 30, 2025.

The Company recognized an impairment charge due to the carrying value of the assets exceeding the fair market value of the assets.

See Note 5 of the Notes to Unaudited Condensed Consolidated Financial Statements included under “Item 1.

Financial Statements” of this quarterly report for additional information.

No impairment expense was recorded for the three months ended June 30, 2024.

General and administrative expenses were $11.2 million and $8.4 million for the three months ended June 30, 2025 and 2024, respectively.

The change in general and administrative expenses was primarily related to an increase of $2.3 million in acquisition and divestiture costs incurred during the second quarter and an increase of $0.2 million in stock compensation expense.

Net loss (gain) on commodity derivative instruments of ($22.2) million were recognized for the three months ended June 30, 2025, consisting of a $17.4 million increase in the fair value of open positions and $4.8 million of cash settlements received on expired positions.

Net loss on commodity derivative instruments of $1.2 million was recognized for the three months ended June 30, 2024, consisting of a $4.9 million decrease in the fair value of open positions, partially offset by $3.7 million of cash settlements received on expired positions.

Pipeline incident loss was $0.2 million and $0.5 million for the three months ended June 30, 2025 and 2024, respectively.

No impairment expense was recorded for the three months ended September 30, 2024.

General and administrative expenses were $11.8 million and $8.3 million for the three months ended September 30, 2025 and 2024, respectively.

The change in general and administrative expenses was primarily related to (i) an increase of $0.8 million in acquisition and divestiture costs incurred during the second quarter, (ii) an increase of $0.8 million in stock compensation expense and (iii) an increase in severance expense of $1.5 million.

Net loss (gain) on commodity derivative instruments of ($6.9) million was recognized for the three months ended September 30, 2025, consisting of a $2.1 million increase in the fair value of open positions and $4.8 million of cash settlements received on expired positions.

Net gain on commodity derivative instruments of $25.0 million was recognized for the three months ended September 30, 2024, consisting of a $18.7 million increase in the fair value of open positions, $5.6 million of cash settlements received on expired positions and $0.8 million of cash settlements received on terminated derivative instruments.

Pipeline incident loss was less than $0.1 million and $0.2 million for the three months ended September 30, 2025 and 2024, respectively.

The costs reflect certain expenses not expected to be recovered under an insurance policy.

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Financial Statements” of this quarterly report for additional information.

(Gain) loss on sale of properties was ($1.5) million for the six months ended June 30, 2025.

This primarily related to the sale of certain units with rights in the Haynesville basin in Panola and Shelby Counties, Texas.

(Gain) loss on sale of properties was ($1.7) million for the three months ended September 30, 2025.

See Note 4 of the Notes to Unaudited Condensed Consolidated Financial Statements under “Item 1.

Financial Statements” of this quarterly report for additional information.

There was no (gain) loss on sale of properties for the three months ended June 30, 2024.

Interest expense, net was $3.6 million for both the three months ended June 30, 2025 and 2024, respectively.

Average outstanding borrowings under our Revolving Credit Facility were $130.5 million and $121.8 million for the three months ended June 30, 2025 and 2024, respectively.

Current income tax benefit (expense) was ($0.5) million and ($0.6) million for the three months ended June 30, 2025 and 2024, respectively.

There was no (gain) loss on sale of properties for the three months ended September 30, 2024.

Interest expense, net was $3.9 million for the three months ended September 30, 2025 and $3.8 million for the three months ended September 30, 2024.

Average outstanding borrowings under our Revolving Credit Facility were $124.9 million and $122.5 million for the three months ended September 30, 2025 and 2024, respectively.

Current income tax benefit (expense) was $0.1 million and ($0.4) million for the three months ended September 30, 2025 and 2024, respectively.

See additional information discussed in Note 17 of the Notes to Unaudited Condensed Consolidated Financial Statements included under “Item 1.

Financial Statements” of this quarterly report.

Deferred income tax benefit (expense) was ($1.4) million and ($2.1) million for the three months ended June 30, 2025 and 2024, respectively.

Deferred income tax benefit (expense) was $9.2 million and ($5.7) million for the three months ended September 30, 2025 and 2024, respectively.

See additional information discussed in Note 17 of the Notes to Unaudited Condensed Consolidated Financial Statements included under “Item 1.

Financial Statements” of this quarterly report.

For the Six Months Ended June 30, 2025 Compared to the Six Months Ended June 30, 2024

We reported net income of $0.5 million compared to a net loss of $2.3 million for the six months ended June 30, 2025 and 2024, respectively.

Oil, natural gas and NGL revenues were $137.1 million and $147.7 million for the six months ended June 30, 2025 and 2024, respectively.

Average net production volumes were approximately 18.5 MBoe/d and 20.2 MBoe/d for the six months ended June 30, 2025 and 2024, respectively.

The average realized sales prices were $40.96 per Boe and $40.07 per Boe for the six months ended June 30, 2025 and 2024, respectively.

The change in realized sales prices was due to higher natural gas and NGL prices, partially offset by lower realized sales prices for oil.

In addition, oil production had a higher percentage of total production in the first half of 2025 when compared to the first half of 2024.

Other revenues were $3.3 million and $8.1 million for the six months ended June 30, 2025 and 2024, respectively.

The decrease primarily related to the revenue suspense release of $4.8 million for the six months ended June 30, 2024.

Lease operating expenses were $76.0 million and $74.6 million for the six months ended June 30, 2025 and 2024, respectively.

On a per Boe basis, lease operating expenses were $22.72 and $20.24 for the six months ended June 30, 2025 and 2024, respectively.

The change in lease operating expense on a per Boe basis was primarily due to increased electricity costs for Bairoil.

Gathering, processing and transportation expenses were $9.0 million and $9.7 million for the six months ended June 30, 2025 and 2024, respectively.

On a per Boe basis, gathering, processing and transportation expenses were $2.69 and $2.62 for the six months ended June 30, 2025 and 2024, respectively.

For the Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024

We reported a net loss of $20.4 million compared to a net income of $20.4 million for the nine months ended September 30, 2025 and 2024, respectively.

Oil, natural gas and NGL revenues were $201.4 million and $215.8 million for the nine months ended September 30, 2025 and 2024, respectively.

Average net production volumes were approximately 18.9 MBoe/d and 19.8 MBoe/d for the nine months ended September 30, 2025 and 2024, respectively.

The average realized sales prices were $39.03 per Boe and $39.69 per Boe for the nine months ended September 30, 2025 and 2024, respectively.

The change in realized sales price was due to lower realized sales prices for oil, partially offset by higher realized sales prices for natural gas.

Other revenues were $5.5 million and $9.9 million for the nine months ended September 30, 2025 and 2024, respectively.

The change was primarily related to the revenue suspense release of $4.8 million for the nine months ended September 30, 2024.

Lease operating expenses were $111.7 million and $107.9 million for the nine months ended September 30, 2025 and 2024, respectively.

On a per Boe basis, lease operating expenses were $21.65 and $19.83 for the nine months ended September 30, 2025 and 2024, respectively.

The change in lease operating expense was primarily due to increased workover activity at Beta and an increase in electricity cost at Bairoil, partially offset by the decrease in cost associated with the divestiture of our non-operated Eagle Ford assets.

Gathering, processing and transportation expenses were $14.2 million and $14.0 million for the nine months ended September 30, 2025 and 2024, respectively.

On a per Boe basis, gathering, processing and transportation expenses were $2.76 and $2.57 for the nine months ended September 30, 2025 and 2024, respectively.

The change in gathering, processing and transportation expense was primarily due to lower gas volumes.

Taxes other than income were $8.7 million and $9.5 million for the six months ended June 30, 2025 and 2024, respectively.

On a per Boe basis, taxes other than income were $2.59 for each of the six months ended June 30, 2025 and 2024.

The decrease was primarily related to a reduction in production taxes due to lower volumes partially offset by an increase in emissions charges and ad valorem tax.

DD&A expenses were $18.3 million and $16.1 million for the six months ended June 30, 2025 and 2024, respectively.

The change is primarily due to an increase in our DD&A rate.

Impairment expense was $8.4 million for the six months ended June 30, 2025.

The Company recognized an impairment expense to reduce the net book value of our non-operated Eagle Ford assets to fair value less costs to sell.

See Note 4 and Note 18 of the Notes to Unaudited Condensed Consolidated Financial Statements included under “Item 1.

Taxes other than income were $12.3 million and $15.5 million for the nine months ended September 30, 2025 and 2024, respectively.

On a per Boe basis, taxes other than income were $2.39 and $2.86 for the nine months ended September 30, 2025 and 2024.

The change in taxes other than income was primarily related to a reduction in production taxes due to lower volumes and a decrease in emission charges.

DD&A expenses were $27.3 million and $24.2 million for the nine months ended September 30, 2025 and 2024, respectively.

The change was primarily due to an increase in our depletion rate of $4.4 million, partially offset by a decrease of $1.2 million due to lower volumes of production.

Impairment expense was $42.5 million for the nine months ended September 30, 2025.

The Company recognized an impairment charge due to the carrying value of the assets exceeding the fair market value of the assets.

See Note 5 of the Notes to Unaudited Condensed Consolidated Financial Statements included under “Item 1.

Financial Statements” of this quarterly report for additional information.

No impairment expense was recorded for the six months ended June 30, 2024.

General and administrative expenses were $22.0 million and $18.2 million for the six months ended June 30, 2025 and 2024, respectively.

The change in general and administrative expenses was primarily related to (i) an increase of $4.0 million in acquisition and divestiture costs and (ii) an increase of $0.6 million in stock compensation expense, partially offset by (i) a decrease of $0.5 million in office lease expense related to the early termination of our Oklahoma office lease in 2024 and (ii) a decrease of $0.3 million for salaries and other payroll benefits.

Net loss (gain) on commodity derivative instruments of ($7.8) million was recognized for the six months ended June 30, 2025, consisting of a $2.6 million increase in the fair value of open positions and $5.3 million of cash settlements received on expired positions.

A net loss on commodity derivative instruments of $17.8 million was recognized for the six months ended June 30, 2024, consisting of a $25.8 million decrease in the fair value of open positions, partially offset by $8.0 million of cash settlements received on expired positions.

Pipeline incident loss was $0.6 million and $1.2 million for the six months ended June 30, 2025 and 2024, respectively.

No impairment expense was recorded for the nine months ended September 30, 2024.

General and administrative expenses were $33.8 million and $26.4 million for the nine months ended September 30, 2025 and 2024, respectively.

The change in general and administrative expenses was primarily related to (i) an increase of $4.7 million in acquisition and divestiture costs, (ii) an increase of $1.4 million in stock compensation expense and (iii) an increase in severance expense of $1.2 million.

Net loss (gain) on commodity derivative instruments of ($14.8) million was recognized for the nine months ended September 30, 2025, consisting of a $4.6 million increase in the fair value of open positions and $10.1 million of cash settlements received on expired positions.

A net gain on commodity derivative instruments of $7.3 million was recognized for the nine months ended September 30, 2024, consisting of a $13.6 million of cash settlements received on expired positions and $0.8 million of cash settlements received on terminated derivative instruments, partially offset by a decrease of $7.1 million in the fair value of open positions.

Pipeline incident loss was $0.6 million and $1.5 million for the nine months ended September 30, 2025 and 2024, respectively.

The costs reflect certain expenses not expected to be recovered under an insurance policy.

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Financial Statements” of this quarterly report for additional information.

(Gain) loss on sale of properties was ($7.8) million for the six months ended June 30, 2025.

This primarily related to the sale of certain units with rights in the Haynesville basin in Harrison County, Texas.

(Gain) loss on sale of properties was ($9.5) million for the nine months ended September 30, 2025.

This primarily related to the sale of certain units with rights in the Cotton Valley and Haynesville basins in Harrison County, Texas.

See Note 4 of the Notes to Unaudited Condensed Consolidated Financial Statements under “Item 1.

Financial Statements” of this quarterly report for additional information.

There was no (gain) loss on sale of properties for the six months ended June 30, 2024.

Interest expense, net was $7.1 million and $7.2 million for the six months ended June 30, 2025 and 2024, respectively.

Average outstanding borrowings under our Revolving Credit Facility were $128.9 million and $118.5 million for the six months ended June 30, 2025 and 2024, respectively.

Current income tax benefit (expense) was ($0.5) million and ($2.0) million for the six months ended June 30, 2025 and 2024, respectively.

There was no (gain) loss on sale of properties for the nine months ended September 30, 2024.

Interest expense, net was $11.0 million and $10.9 million for the nine months ended September 30, 2025 and 2024, respectively.

For the nine months ended September 30, 2025, we recognized a write-off of deferred financing cost of $0.2 million in connection with the decrease in our borrowing base.

Average outstanding borrowings under our Revolving Credit Facility were $127.5 million and $119.8 million for the nine months ended September 30, 2025 and 2024, respectively.

Current income tax benefit (expense) was ($0.4) million and ($2.4) million for the nine months ended September 30, 2025 and 2024, respectively.

See additional information discussed in Note 17 of the Notes to Unaudited Condensed Consolidated Financial Statements included under “Item 1.

Financial Statements” of this quarterly report.

Deferred income tax benefit (expense) was $0.1 million and $2.6 million for the six months ended June 30, 2025 and 2024, respectively.

Deferred income tax benefit (expense) was $9.3 million and ($3.1) million for the nine months ended September 30, 2025 and 2024, respectively.

See additional information discussed in Note 17 of the Notes to Unaudited Condensed Consolidated Financial Statements included under “Item 1.

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For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

(In thousands)

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For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

(In thousands)

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Acquisition and divestiture related expenses

Severance payments

Amortization of gain associated with terminated commodity derivatives

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Adjusted EBITDA (1)

(1) Adjusted EBITDA includes a revenue suspense release of $0.4 million and $8.4 million for the nine months ended September 30, 2025 and 2024, respectively.

Reconciliation of Net Cash from Operating Activities to Adjusted EBITDA

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

(In thousands)

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Pipeline incident loss

Severance payments

Plugging and abandonment cost

Amortization and write-off of deferred financing fees

Cash settlements paid (received) on terminated derivatives

Amortization of gain associated with terminated commodity derivatives

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Adjusted EBITDA (1)

(1) Adjusted EBITDA includes a revenue suspense release of $0.4 million and $8.4 million for the nine months ended September 30, 2025 and 2024, respectively.

Liquidity and Capital Resources

Our ability to finance our operations, including funding capital expenditures and acquisitions, to meet our indebtedness obligations, to refinance our indebtedness or to meet our collateral requirements will depend on our ability to generate cash in the future.

Our primary sources of liquidity and capital resources have historically been cash flows generated by operating activities, borrowings under our Revolving Credit Facility and equity and debt capital markets.

Our primary sources of liquidity and capital resources are cash flows generated by operating activities, borrowings under our Revolving Credit Facility, equity and debt capital markets and potential proceeds from sales of assets.

We plan to monitor which capital resources, including equity and debt financings, are available to us to meet our future financial obligations, planned capital expenditure activities and liquidity requirements.

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Capital Expenditures.

Our total capital expenditures were approximately $48.6 million for the six months ended June 30, 2025, which were primarily related to the development program at Beta and non-operated drilling and completion activities in East Texas and the Eagle Ford.

Our total capital expenditures were approximately $66.1 million for the nine months ended September 30, 2025, which were primarily related to the development program at Beta and non-operated drilling and completion activities in East Texas and the Eagle Ford.

Working Capital.

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This fluctuation is not unusual.

As of June 30, 2025, we had a working capital deficit (excluding commodity derivatives) of $23.2 million primarily due to accrued liabilities of $41.2 million, revenues payable of $11.7 million, and accounts payable of $30.3 million, partially offset by accounts receivable of $34.7 million and prepaid expenses of $25.4 million.

As of September 30, 2025, we had a working capital deficit (excluding commodity derivatives) of $9.6 million primarily due to accrued liabilities of $29.7 million, revenues payable of $10.1 million, and accounts payable of $29.2 million, partially offset by accounts receivable of $33.2 million and prepaid expenses of $26.2 million.

As of September 30, 2025, although we had a working capital deficit, we had $12.0 million of available borrowings as of such date under our Revolving Credit Facility which provided additional liquidity.

As such, we have met all debt covenant ratio requirements as of September 30, 2025.

Debt Agreement

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On July 31, 2023, OLLC and Acquisitionco entered into the Revolving Credit Facility.

The aggregate principal amount of loans outstanding under the Revolving Credit Facility as of June 30, 2025, was $130.0 million.

As of June 30, 2025, we had approximately $15.0 million of available borrowings under our Revolving Credit Facility.

The Company is required to maintain a minimum current ratio of 1.00 to 1.00, which is measured on the last day of each quarter.

On June 30, 2025, the Company’s current ratio was 0.90 to 1.00.

On July 31, 2025, the Company received a letter agreement from its lenders waiving any default or event of default as a result of such noncompliance related to the minimum current ratio requirement for the quarter ended June 30, 2025.

As a result, the Company was in compliance with all financial covenants as of June 30, 2025.

The Company expects to maintain a current ratio of 1.0 to 1.0 in future quarters.

On July 2, 2025, subsequent to the divestiture of our non-op Eagle Ford assets, our borrowing base was reduced to $135.0 million.

As of September 30, 2025, the borrowing base under the facility was $135.0 million with elected commitments of $135.0 million.

The aggregate principal amount of loans outstanding under the Revolving Credit Facility as of September 30, 2025, was $123.0 million.

As of September 30, 2025, we had approximately $12.0 million of available borrowings under our Revolving Credit Facility.

As of September 30, 2025, we were in compliance with all the financial covenants (current ratio and total leverage ratio) and non-financial covenants associated with the Revolving Credit Facility.

For additional information regarding our Revolving Credit Facility, see Note 8 of the Notes to Unaudited Condensed Consolidated Financial Statements included under “Item 1.

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We have a funding requirement to fund two trust accounts to comply with supplemental regulatory bonding requirements related to our decommissioning obligations for the Beta production facilities.

As of June 30, 2025, our future commitments under these agreements were $4.5 million for the remainder of 2025 and $9.0 million per year until the escrow accounts are fully funded.

As of September 30, 2025, our future commitments under these agreements were $2.3 million for the remainder of 2025 and $9.0 million per year until the escrow accounts are fully funded.

See Note 16 of the Notes to Unaudited Condensed Consolidated Financial Statements included under “Item 1.

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The following table summarizes our cash flows from operating, investing and financing activities for the periods indicated.

The cash flows for the six months ended June 30, 2025 and 2024 have been derived from our Unaudited Condensed Consolidated Financial Statements.

The cash flows for the nine months ended September 30, 2025 and 2024 have been derived from our Unaudited Condensed Consolidated Financial Statements.

For information regarding the individual components of our cash flow amounts, see our Unaudited Condensed Consolidated Statements of Cash Flows included under “Item 1.

Financial Statements” of this quarterly report.

For the Six Months Ended

For the Nine Months Ended

September 30,

(In thousands)

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Key drivers of net operating cash flows are commodity prices, production volumes and operating costs.

Net cash provided by operating activities was $49.2 million and $23.1 million for the six months ended June 30, 2025 and 2024, respectively.

Production volumes were approximately 18.5 MBoe/d and 20.2 MBoe/d for the six months ended June 30, 2025 and 2024, respectively.

The average realized sales price was $40.96 per Boe and $40.07 per Boe for the six months ended June 30, 2025 and 2024, respectively.

The change in realized sales prices was due to higher natural gas and NGL prices, partially offset by lower realized sales prices for oil.

In addition, oil production had a higher percentage of total production in the first half of 2025 when compared to the first half of 2024.

Net cash provided by operating activities for the six months ended June 30, 2025 included $5.3 million of cash received on expired commodity derivative instruments compared to $8.0 million of cash received on expired commodity derivatives for the six months ended June 30, 2024.

For the six months ended June 30, 2025, we had a net gain on commodity derivative instruments of $7.8 million compared to a net loss of $17.8 million for the six months ended June 30, 2024.

In addition, the six months ended June 30, 2025 included an impairment expense of $8.4 million for the loss on assets held for sale.

Net cash provided by operating activities was $62.6 million and $38.8 million for the nine months ended September 30, 2025 and 2024, respectively.

Production volumes were approximately 18.9 MBoe/d and 19.8 MBoe/d for the nine months ended September 30, 2025 and 2024, respectively.

The average realized sales price was $39.03 per Boe and $39.69 per Boe for the nine months ended September 30, 2025 and 2024, respectively.

The change in realized sales price was due to lower realized sales prices for oil, partially offset by higher realized sales prices for natural gas.

Net cash provided by operating activities for the nine months ended September 30, 2025 included $10.1 million of cash received on expired commodity derivative instruments compared to $13.6 million of cash received on expired commodity derivatives for the nine months ended September 30, 2024.

For the nine months ended September 30, 2025, we had a net gain on commodity derivative instruments of $14.8 million compared to a net gain on commodity derivative instruments of $7.3 million for the nine months ended September 30, 2024.

The Company recognized an impairment charge of $42.5 million for the nine months ended September 30, 2025, due to marketing its assets and reassessing the fair market value less costs to sell.

Investing Activities.

Net cash used in investing activities for the six months ended June 30, 2025 was $50.2 million, of which $52.2 million was used for additions to oil and natural gas properties and $0.6 million for additions to other property and equipment.

Net cash used in investing activities for the six months ended June 30, 2024 was $44.6 million, of which $38.6 million was used for additions to oil and natural gas properties and $1.0 million for additions to other property and equipment.

During 2025, we purchased and sold certain rights, title and interest in assets in East Texas from a third party, whereby we received net proceeds of $7.8 million.

Net cash used in investing activities for the nine months ended September 30, 2025 was $56.6 million, of which $65.2 million (on an accrual basis) was used for additions to oil and natural gas properties and $0.9 million for additions to other property and equipment.

In addition, we had changes in our accounts payable and accrued expenses of $5.5 million for the nine months ended September 30, 2025.

Net cash used in investing activities for the nine months ended September 30, 2024 was $62.7 million, of which $54.1 million was used for additions to oil and natural gas properties and $1.0 million for additions to other property and equipment.

During 2025, we purchased and sold certain rights, title and interest in assets in East Texas to a third party, whereby we received net proceeds of $7.8 million.

In addition, we divested all of our non-operated working interests in the Eagle Ford for a contract price of $23.0 million.

See additional information discussed in Note 4 of the Notes to Unaudited Condensed Consolidated Financial Statements included under “Item 1.

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Various restricted investment accounts fund certain long-term contractual and regulatory asset retirement obligations and collateralize certain regulatory bonds associated with our Beta properties.

Additions to restricted investments were $5.1 million and $5.0 million for the six months ended June 30, 2025 and 2024, respectively.

Additions to restricted investments were $7.7 million and $7.5 million for the nine months ended September 30, 2025 and 2024, respectively.

Financing Activities .

We had net borrowings of $3.0 million for the six months ended June 30, 2025 related to our Revolving Credit Facility compared to net borrowings of $3.0 million for the six months ended June 30, 2024.

Shares withheld for taxes were $2.0 million and $1.8 million for the six months ended June 30, 2025 and 2024, respectively.

We had net repayments of $4.0 million for the nine months ended September 30, 2025 related to our Revolving Credit Facility compared to net borrowings of $5.0 million for the nine months ended September 30, 2024.

Shares withheld for taxes were $2.0 million and $1.9 million for the nine months ended September 30, 2025 and 2024, respectively.

Off–Balance Sheet Arrangements

As of June 30, 2025, we had no off–balance sheet arrangements.

As of September 30, 2025, we had no off–balance sheet arrangements.

Recently Issued Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis