What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-11 compared with 2025-11-05 · 118 added, 168 removed, 222 unchanged (56% of the section changed)

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Our business activities are conducted through OLLC, our wholly owned subsidiary, and its wholly owned subsidiaries.

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.

The Company’s 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).

The Company divested its assets in Oklahoma, East Texas/North Louisiana and the Eagle Ford (non-op) during the year ended December 31, 2025.

As of March 31, 2026, the Company properties consist of its Bairoil and Beta oil and NGL producing properties.

The oil and NGL properties are located in mature oil reservoirs.

As of March 31, 2026, the Company is the operator of record for properties containing 100% of its total estimated proved reserves.

Industry Trends

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 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.

Thus, we cannot predict with reasonable certainty the extent to which these factors may impact our business, results of operations, financial condition and cash flows.

We continue to monitor the impact of the actions of the Organization of the Petroleum Exporting Countries and other large producing nations;

the Russia-Ukraine conflict;

conflicts or entanglements in the Middle East or South America;

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.

The Russia-Ukraine conflict and conflicts or entanglements in the Middle East and South America continue to evolve, and the extent to which these events may impact our business, results of operations, financial condition and cash flows will depend on future developments, which are highly uncertain and cannot be predicted with confidence.

Divestiture Summary

In 2025, the Company worked to simplify its portfolio and strengthen its balance sheet.

The Company made significant progress towards this goal throughout 2025, with the first transaction occurring in the first quarter of 2025 with the East Texas Haynesville monetization.

Throughout the remainder of 2025, the Company completed additional divestiture transactions, including monetization and asset sales.

These transactions continued management’s efforts to simplify the Company’s asset base.

Management believes the divestiture transactions strengthened liquidity and further streamlined the Company’s asset portfolio.

None of the asset dispositions qualified as discontinued operations.

Recent Developments

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.

Beta Royalty Relief

On, April 30, 2026, the Bureau of Safety and Environmental Enforcement (“BSEE”) informed the Company that it had been approved for End-of-Life Royalty Relief for the Company’s interests in three Pacific Outer Continental Shelf blocks (P-300, P-0301, and P-0306), referred to as the Beta unit in the Beta Field located in federal waters approximately 11 miles offshore from the Port of Long Beach, California.

The royalty relief is effective beginning May 1, 2026 for the Beta leases.

On the Company’s two primary producing leases, the royalty rate was reduced from approximately 25% to 12.5%, and on the third lease, the royalty rate was reduced from 16.67% to 8.33%.

Royalty relief rates will be suspended in months in which the rolling 12-month weighted average NYMEX oil and Henry Hub gas price exceeds $79.65 per BOE, which represents a 25% premium to the average realized price recognized by the Company during the qualification period.

Royalty relief will end in the event that the rolling 12-month weighted average commodity prices exceed $79.65 per BOE, or if monthly production doubles the qualifying months’ average for 12 consecutive months.

Business Environment and Operational Focus

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Sources of Revenues

Our revenues are derived from the sale of natural gas and oil production, as well as the sale of NGLs that are extracted from natural gas during processing.

Our revenues are derived from the sale of oil production, as well as the sale of NGLs that are extracted from natural gas during processing.

Production revenues are derived entirely from the continental United States.

Natural gas, NGL and oil prices are inherently volatile and are influenced by many factors outside our control.

In order to reduce the impact of fluctuations in natural gas and oil prices on revenues, we intend to periodically enter into derivative contracts that fix the future prices received.

Oil and NGL prices are inherently volatile and are influenced by many factors outside our control.

In order to reduce the impact of fluctuations in oil prices on revenues, we intend to periodically enter into derivative contracts that fix the future prices received.

At the end of each period, the fair value of these commodity derivative instruments is estimated and because hedge accounting is not elected, the changes in the fair value of unsettled commodity derivative instruments are recognized in earnings at the end of each accounting period.

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Results of Operations

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 results of operations for the three months ended March 31, 2026 and 2025 have been derived from our unaudited condensed consolidated financial statements.

Factors Affecting the Comparability of the Historical Financial Results

● The sale of our non-operated Eagle Ford assets in July 2025 for $23.0 million, excluding $1.9 million of final post-closing adjustments, resulting in a final adjusted purchase price of $21.1 million.

● The sale of all of our assets located in East Texas/North Louisiana in December 2025 for $122.0 million, subject to estimated post-closing adjustments.

● The sale of all of our assets located in Oklahoma in December 2025 for $92.5 million, subject to estimated post-closing adjustments.

● Other sales of interest in certain units with rights in the Cotton Valley and Haynesville basins during 2025 for $13.6 million.

As a result of the factors listed above, the historical results of operations and period-to-period comparisons of these results and certain financial data may not be comparable or indicative of future results.

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

For the Three Months Ended

For the Nine Months Ended

September 30,

($ In thousands except per unit amounts)

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Depreciation, depletion and amortization

Impairment expense

General and administrative expense

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Depletion, depreciation and amortization

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 $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 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.

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

Financial Statements” of this quarterly report for additional information.

(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 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 $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 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 $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 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 average realized sales price for the three months ended March 31, 2026, was negatively impacted by post-divestiture accrual estimate adjustments related to the Company’s East Texas and Oklahoma assets sales completed during the fourth quarter of 2025.

For the Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025

We reported a net loss of $38.1 million compared to a net loss of $5.9 million for the three months ended March 31, 2026 and 2025, respectively.

Oil, natural gas and NGL revenues were $37.3 million and $70.3 million for the three months ended March 31, 2026 and 2025, respectively.

Average net production volumes were approximately 6.4 MBoe/d and 17.9 MBoe/d for the three months ended March 31, 2026 and 2025, respectively.

The average realized sales prices were $64.26 per Boe and $43.76 per Boe for the three months ended March 31, 2026 and 2025, respectively.

The decrease of $33.0 million in oil, natural gas and NGL revenue was primarily driven by the divestiture of our East Texas, Oklahoma and our non-operated Eagle Ford assets in 2025.

Oil revenues for our Beta and Bairoil assets were $37.4 million and $39.9 million for the three months ended March 31, 2026 and 2025, respectively.

The change in oil revenue at Beta and Bairoil was primarily due to lower realized oil commodity prices.

Other revenues were $0.2 million and $1.7 million for the three months ended March 31, 2026 and 2025, respectively.

The decrease of $1.5 million in other revenue was primarily driven by the divestiture of our East Texas, Oklahoma and our non-operated Eagle Ford assets in 2025.

For the three months ended March 31, 2026, other revenues primarily consisted of $0.1 million for pipeline transportation income.

For the three months ended March 31, 2025, other revenues consisted of service revenues of $0.9 million with respect to our wholly owned subsidiary, Magnify Energy Services, and iodine sales of $0.7 million.

Lease operating expenses were $22.2 million and $37.4 million for the three months ended March 31, 2026 and 2025, respectively.

On a per Boe basis, lease operating expenses were $38.20 and $23.28 for the three months ended March 31, 2026 and 2025, respectively.

The decrease of $15.2 million in lease operating expense was primarily driven by the divestiture of our East Texas, Oklahoma and our non-operated Eagle Ford assets in 2025.

Lease operating expenses for Beta and Bairoil were $22.0 million and $27.0 million for the three months ended March 31, 2026 and 2025, respectively.

The decrease in lease operating expenses at Beta and Bairoil was primarily driven by lower CO 2 costs and electricity at Bairoil and lower base costs at Beta.

Gathering, processing and transportation expenses were $0.8 million and $4.3 million for the three months ended March 31, 2026 and 2025, respectively.

On a per Boe basis, gathering, processing and transportation expenses were $1.31 and $2.67 for the three months ended March 31, 2026 and 2025, respectively.

The decrease of $3.5 million in gathering, processing and transportation expenses was primarily driven by the divestiture of our East Texas, Oklahoma and our non-operated Eagle Ford assets in 2025.

Gathering, processing and transportation expenses for Beta were $0.7 million and $0.6 million for the three months ended March 31, 2026 and 2025, respectively.

Taxes other than income were $2.3 million and $4.4 million for the three months ended March 31, 2026 and 2025, respectively.

On a per Boe basis, taxes other than income were $4.03 and $2.73 for the three months ended March 31, 2026 and 2025, respectively.

The decrease of $2.0 million in taxes other than income was primarily driven by the divestiture of our East Texas, Oklahoma and our non-operated Eagle Ford assets in 2025.

Taxes other than income at Beta and Bairoil were $2.3 million and $3.0 million for the three months ended March 31, 2026 and 2025, respectively.

The decrease in taxes other than income was primarily driven by lower production taxes and lower NOx credits purchased.

Depreciation, depletion & amortization (“DD&A”) expenses were $5.7 million and $8.5 million for the three months ended March 31, 2026 and 2025, respectively.

The decrease of $2.8 million in DD&A expense was primarily driven by the divestiture of our East Texas, Oklahoma and our non-operated Eagle Ford assets in 2025.

DD&A expenses for Beta and Bairoil were $5.6 million and $4.0 million for the three months ended March 31, 2026 and 2025, respectively.

General and administrative expenses were $8.9 million and $10.8 million for the three months ended March 31, 2026 and 2025, respectively.

The change in general and administrative expenses was primarily related to (i) a decrease of $1.6 million in acquisition and divestiture costs;

(ii) a decrease of $0.5 million for salaries and other payroll benefits, (iii) a decrease of $0.1 million in legal expense, partially offset by (i) an increase of $0.3 million in severance expense, (ii) an increase of $0.6 million due to the elimination of COPAS overhead charges and (iii) an increase of $0.2 million in stock compensation expense.

In addition, general and administrative expenses for the three months ended March 31, 2026 included a credit of $0.5 million for the management fees received for the transition services related to the divestiture of our East Texas and Oklahoma assets.

Acquisition and divestiture related expenses included the following for the periods indicated below (in thousands):

For the Three Months Ended

Cost incurred related to the contemplated merger with Juniper Capital

Cost incurred related to the East Texas and Oklahoma divestitures

Other acquisition and divestitures expenses

Net loss (gain) on commodity derivative instruments of $45.8 million was recognized for the three months ended March 31, 2026, consisting of a $43.4 million decrease in the fair value of open positions and $2.6 million of cash settlements paid on expired positions, partially offset by $0.2 million of cash settlement received on terminated derivative instruments.

Net loss on commodity derivative instruments of $14.3 million was recognized for the three months ended March 31, 2025, consisting of a $14.8 million decrease in the fair value of open positions, partially offset by $0.5 million of cash settlements received on expired positions.

Pipeline incident loss was less than $0.1 million and $0.4 million for the three months ended March 31, 2026 and 2025, 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 ($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.

Gain on sale of properties was $0.2 million and $6.3 million for the three months ended March 31, 2026 and 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 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.

Interest expense, net was $1.0 million for the three months ended March 31, 2026 and $3.5 million for the three months ended March 31, 2025.

The change was primarily related to the Company paying off all outstanding debt as of December 31, 2025.

In 2026, the Company will continue to have interest expense associated with its surety bonds.

Current income tax benefit (expense) was $0.0 million and was less than ($0.1) million for the three months ended March 31, 2026 and 2025, 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 $9.3 million and ($3.1) million for the nine months ended September 30, 2025 and 2024, respectively.

Deferred income tax benefit (expense) was $11.6 million and $1.5 million for the three months ended March 31, 2026 and 2025, 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 Nine Months Ended

September 30,

(In thousands)

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Acquisition and divestiture-related expenses

Impairment expense

Non-recurring costs:

Income tax expense (benefit) - deferred

(Gain) loss on sale of properties

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For the Three Months Ended

For the Nine Months Ended

September 30,

(In thousands)

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Income tax expense (benefit) - deferred

Impairment expense

Accretion of AROs

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Exploration costs

Bad debt expense

Adjusted EBITDA

(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 Nine Months Ended

September 30,

(In thousands)

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Adjusted EBITDA

(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

The divestitures reduced our ongoing capital requirements and streamlined our operating profile, which we believe positions us with greater financial flexibility.

Following the payoff of the debt facility, we no longer have any outstanding borrowings.

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 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.

Based on our current oil and natural gas price expectations, we believe our cash flows provided by operating activities and availability under our Revolving Credit Facility will provide us with the financial flexibility necessary to meet our cash requirements, including normal operating needs, and to pursue our currently planned 2025 development activities.

However, future cash flows are subject to a number of variables, including the level of our oil and natural gas production and the prices we receive for our oil and natural gas production, and significant additional capital expenditures will be required to more fully develop our properties.

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

However, future cash flows are subject to a number of variables, including the level of our oil and NGL production and the prices we receive for our oil production, and significant additional capital expenditures will be required to more fully develop our properties.

We cannot assure you that operations and other needed capital will be available on acceptable terms, or at all.

For the remainder of 2025, we anticipate funding our 2025 capital program from internally generated cash flow but retain the flexibility to utilize borrowings under our Revolving Credit Facility, to access the debt and equity capital markets and continue to evaluate opportunities to optimize our portfolio to reduce debt and accelerate Beta development.

We believe that existing cash and cash equivalents, any positive cash flows from operations and available borrowings under our Revolving Credit Facility will be sufficient to support working capital, capital expenditures and other cash requirements for at least the next 12 months and, based on our current expectations, for the foreseeable future thereafter.

Termination of Contemplated Merger with Juniper Capital .

In connection with the Contemplated Mergers, on April 25, 2025, pursuant to Section 8.1(a) of the Merger Agreement, the Company and the Acquired Companies entered into the Termination Agreement to terminate the Merger Agreement, effective immediately.

In accordance with the terms of the Termination Agreement, the Company made a cash payment to the Acquired Companies in lieu of any termination fee which might have otherwise been payable pursuant to the Merger Agreement in the amount of $800,000 as payment for certain of the Acquired Companies’ expenses.

The Company incurred professional fees and expenses of approximately $3.5 million in connection with the Contemplated Mergers and the Termination.

For additional information regarding the Termination, see Notes 4 and 16 of the Notes to Unaudited Condensed Consolidated Financial Statements included under “Item 1.

Financial Statements” of this quarterly report.

We anticipate funding our 2026 capital program from cash on hand and internally generated cash flow but retain the flexibility to utilize borrowings under debt facilities available to us, and/or to access the debt and equity capital markets.

As we pursue reserve and production growth, 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.

Based on our current oil price expectations, we believe existing cash and cash equivalents, any positive cash flows from operations and available borrowings under our Revolving Credit Facility will be sufficient to support working capital, capital expenditures and other cash requirements for at least the next 12 months and, based on our current expectations, for the foreseeable future thereafter.

Capital Markets.

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Commodity hedging has been and remains an important part of our strategy to reduce cash flow volatility.

Our hedging activities are intended to support oil, NGL and natural gas prices at targeted levels and to manage our exposure to commodity price fluctuations.

We intend to enter into commodity derivative contracts at times and on terms desired to maintain a portfolio of commodity derivative contracts covering at least 50% - 75% of our estimated production from total proved developed producing reserves over a one-to-three-year period at any given point of time.

Our hedging activities are intended to support oil and NGL prices at targeted levels and to manage our exposure to commodity price fluctuations.

We intend to enter into commodity derivative contracts at times and on terms desired to maintain a portfolio of commodity derivative contracts covering at least 25% - 75%, depending on availability under the Revolving Credit Facility, of our estimated production from total proved developed producing reserves over a one-year period at any given point of time.

We may, however, from time to time, hedge more or less than this approximate amount.

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Should any of these financial counterparties not perform, we may not realize the benefit of some of our hedges under lower commodity prices.

We sell our oil and natural gas to a variety of purchasers.

We sell our oil to a small number of purchasers.

Non-performance by a customer could also result in a loss.

Capital Expenditures.

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.

Our total capital expenditures were approximately $21.0 million for the three months ended March 31, 2026, which were primarily related to the development program at Beta.

Working Capital.

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This fluctuation is not unusual.

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.

As of March 31, 2026, we had working capital (excluding commodity derivatives) of $34.6 million primarily from cash on hand of $41.5 million, accounts receivable of $19.9 million and prepaid expenses of $23.9 million partially offset by accrued liabilities of $20.7 million, revenues payable of $7.5 million, and accounts payable of $22.5 million.

Debt Agreement

Revolving Credit Facility.

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

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.

On December 31, 2025, we amended the Revolving Credit Facility with Citizens Bank, as administrative agent.

As of March 31, 2026, the borrowing base under the facility was $25.0 million with elected commitments of $15.0 million.

At March 31, 2026, the Company had no loans outstanding under the Revolving Credit Facility.

As of March 31, 2026, we had approximately $15.0 million of available borrowings under our Revolving Credit Facility.

As of March 31, 2026, 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 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.

As of March 31, 2026, our future commitments under these agreements were $6.8 million for the remainder of 2026 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 nine months ended September 30, 2025 and 2024 have been derived from our Unaudited Condensed Consolidated Financial Statements.

The cash flows for the three months ended March 31, 2026 and 2025 have been derived from our Unaudited Condensed Consolidated Financial Statements.

As a result of the divestiture activity in 2025, the period-to-period comparisons of these results and certain financial data may not be comparable or indicative of future results.

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 Nine Months Ended

September 30,

For the Three Months Ended

(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 $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.

Net cash provided by operating activities was $4.5 million and $25.5 million for the three months ended March 31, 2026 and 2025, respectively.

Production volumes were approximately 6.4 MBoe/d and 17.9 MBoe/d for the three months ended March 31, 2026 and 2025, respectively.

The average realized sales price was $64.26 per Boe and $43.76 per Boe for the three months ended March 31, 2026 and 2025, respectively.

Net cash provided by operating activities for the three months ended March 31, 2026 included $2.6 million of cash paid on expired commodity derivative instruments compared to $0.5 million of cash received on expired commodity derivatives for the three months ended March 31, 2025.

For the three months ended March 31, 2026, we had a net loss on commodity derivative instruments of $45.8 million compared to a net loss on commodity derivative instruments of $14.3 million for the three months ended March 31, 2025.

Investing Activities.

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.

Net cash used in investing activities for the three months ended March 31, 2026 was $21.6 million, of which $19.0 million was used for additions to oil and natural gas properties.

Net cash used in investing activities for the three months ended March 31, 2025 was $21.5 million.

Additions to oil and natural gas properties were $24.9 million for the three months ended March 31, 2025 and $0.3 million for additions to other property and equipment for the three months ended March 31, 2025.

In January 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 $6.3 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 $7.7 million and $7.5 million for the nine months ended September 30, 2025 and 2024, respectively.

Additions to restricted investments were $2.5 million for the three months ended March 31, 2026 and 2025, respectively.

Financing Activities .

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.

Shares withheld for taxes were $2.1 million and $2.0 million for the three months ended March 31, 2026 and 2025, respectively.

The Company had no debt outstanding for the three months ended March 31, 2026.

For the three months ended March 31, 2025 we had net repayments of $2.0 million related to our Revolving Credit Facility.

Off–Balance Sheet Arrangements

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

As of March 31, 2026, 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