What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-06 compared with 2024-08-07 · 107 added, 100 removed, 252 unchanged (45% of the section changed)

21 unchanged sentences

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.

Recent Developments

Credit Agreement Amendment

On October 25, 2024, OLLC entered into the Credit Agreement Amendment, which among other things, (i) reduced the borrowing base under the Revolving Credit Facility from $150.0 million to $145.0 million, (ii) increased the aggregate elected commitments under the Revolving Credit Facility from $135.0 million to $145.0 million and (iii) amended certain interest rates applicable to loans under the Revolving Credit Facility.

The next redetermination is expected in the spring of 2025.

Business Environment and Operational Focus

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As resolutions occur, obligations related to revenue payables in suspense are released.

For the three and six months ended June 30, 2024, we released $7.0 million and $8.4 million, respectively, of net revenues in suspense as a result of these efforts.

The following table presents the impact of releases of revenue payables in suspense to our statements of operations for the three and six months ended June 30, 2024:

For the Three Months Ended

For the Six Months Ended

For the nine months ended September 30, 2024, we released $8.4 million, respectively, of net revenues in suspense as a result of these efforts.

The following table presents the impact of releases of revenue payables in suspense to our statements of operations for the nine months ended September 30, 2024:

For the Nine Months Ended

September 30,

(In thousands)

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Results of Operations

The results of operations for the three and six months ended June 30, 2024 and 2023 have been derived from our unaudited condensed consolidated financial statements.

The results of operations for the three and nine months ended September 30, 2024 and 2023 have been derived from our unaudited condensed consolidated financial statements.

The comparability of the results of operations among the periods presented below is impacted by the Incident and suspension of operations at our Beta properties during 2023.

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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, 2024 Compared to the Three Months Ended June 30, 2023

We reported a net income of $7.1 million compared to net income of $9.8 million for the three months ended June 30, 2024 and 2023, respectively.

Oil, natural gas and NGL revenues were $72.3 million and $67.4 million for the three months ended June 30, 2024 and 2023, respectively.

Average net production volumes were approximately 20.3 MBoe/d and 21.2 MBoe/d for the three months ended June 30, 2024 and 2023, respectively.

The change in production volumes was driven by natural decline in Eagle Ford and the impact of adverse weather events during May and June 2024.

The average realized sales prices were $39.25 per Boe and $34.97 per Boe for the three months ended June 30, 2024 and 2023, respectively.

The change in average realized sales prices was primarily due to higher commodity prices and the release of revenue suspense of $2.6 million partially offset by lower production volumes.

Other revenues were $7.2 million and $4.6 million for the three months ended June 30, 2024 and 2023, respectively.

For the three months ended June 30, 2024, other revenues consisted of iodine sales, rental income with respect to our wholly owned subsidiary, Magnify Energy Services (“Magnify”), and interest income earned on our sinking fund escrow accounts.

Additionally, for the three months ended June 30, 2024, we recorded a revenue suspense release of $4.8 million.

For the three months ended June 30, 2023, other revenues were primarily related to our receipt of LOPI insurance proceeds of $4.5 million.

We have not received LOPI insurance proceeds since payments under the LOPI policy terminated on March 31, 2023.

Lease operating expenses were $36.3 million and $34.9 million for the three months ended June 30, 2024 and 2023, respectively.

On a per Boe basis, lease operating expenses were $19.70 and $18.10 for the three months ended June 30, 2024 and 2023, respectively.

The change in lease operating expense is primarily from Beta being offline and fully returning to production at the end of April 2023.

Gathering, processing and transportation expenses were $4.9 million and $5.1 million for the three months ended June 30, 2024 and 2023, respectively.

On a per Boe basis, gathering, processing and transportation expenses were $2.66 and $2.67 for the three months ended June 30, 2024 and 2023, respectively.

The change in gathering processing and transportation expense was primarily due to lower gas volumes and the expiration of minimum volume commitments for our Oklahoma properties.

Taxes other than income were $4.6 million and $5.2 million for the three months ended June 30, 2024 and 2023, respectively.

On a per Boe basis, taxes other than income were $2.51 and $2.70 for the three months ended June 30, 2024 and 2023, respectively.

The decrease was primarily related to a reduction in our ad valorem taxes for 2024 based on lower natural gas prices.

DD&A expenses were $7.8 million and $7.1 million for the three months ended June 30, 2024 and 2023, respectively.

The increase in DD&A expense was primarily driven by operations restarting at Beta.

General and administrative expenses were $8.4 million and $7.8 million for the three months ended June 30, 2024 and 2023, respectively.

The change in general and administrative expenses was primarily related to (i) an increase of $0.4 million in stock compensation expense and (ii) an increase of $0.6 million in legal expense partially offset by a decrease of $0.2 million in salaries and other payroll benefits.

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

Net gain on commodity derivative instruments of $3.8 million was recognized for the three months ended June 30, 2023, consisting of $1.5 million of cash settlements received on expired positions and an increase of $2.3 million in the fair value of open position.

Pipeline incident loss was $0.5 million and $6.8 million for the three months ended June 30, 2024 and 2023, respectively.

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

For the Three Months Ended September 30, 2024 Compared to the Three Months Ended September 30, 2023

We reported net income of $22.7 million compared to a net loss of $13.4 million for the three months ended September 30, 2024 and 2023, respectively.

Oil, natural gas and NGL revenues were $68.1 million and $76.4 million for the three months ended September 30, 2024 and 2023, respectively.

Average net production volumes were approximately 19.0 MBoe/d and 20.6 MBoe/d for the three months ended September 30, 2024 and 2023, respectively.

The change in production volumes was driven by several days shut-in for the electrification and emissions reduction project at Beta and natural decline in well productivity over time.

The average realized sales prices were $38.88 per Boe and $40.28 per Boe for the three months ended September 30, 2024 and 2023, respectively.

The change in average realized sales prices was primarily due to lower commodity prices.

Other revenues were $1.7 million and $0.4 million for the three months ended September 30, 2024 and 2023, respectively.

For the three months ended September 30, 2024, other revenues consisted of iodine sales, rental income with respect to our wholly owned subsidiary, Magnify Energy Services (“Magnify”), and interest income earned on our sinking fund escrow accounts.

Lease operating expenses were $33.3 million and $36.5 million for the three months ended September 30, 2024 and 2023, respectively.

On a per Boe basis, lease operating expenses were $18.98 and $19.23 for the three months ended September 30, 2024 and 2023, respectively.

The change in lease operating expenses was primarily due to a decrease of $1.5 million in lease operating cost and a decrease of $1.7 million in workover expense.

Gathering, processing and transportation expenses were $4.3 million and $5.0 million for the three months ended September 30, 2024 and 2023, respectively.

On a per Boe basis, gathering, processing and transportation expenses were $2.45 and $2.63 for the three months ended September 30, 2024 and 2023, respectively.

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

Taxes other than income were $6.0 million and $5.5 million for the three months ended September 30, 2024 and 2023, respectively.

On a per Boe basis, taxes other than income were $3.42 and $2.92 for the three months ended September 30, 2024 and 2023, respectively.

The change was primarily related to waste emissions charges and air quality management district fees in California.

DD&A expenses were $8.1 million and $7.5 million for the three months ended September 30, 2024 and 2023, respectively.

The increase in DD&A expense was primarily driven by increased production at Beta.

General and administrative expenses were $8.3 million for each of the three months ended September 30, 2024 and 2023.

General and administrative expenses were previously forecasted to remain flat compared to the prior year.

Net gain on commodity derivative instruments of $25.0 million were recognized for the three months ended September 30, 2024, consisting of $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.

Net loss on commodity derivative instruments of $23.3 million was recognized for the three months ended September 30, 2023, consisting of $3.9 million of cash settlements paid on expired positions and an increase of $20.1 million in the fair value of open position, partially offset by $0.7 million of cash settlements received on terminated derivative instruments.

Pipeline incident loss was $0.2 million and $0.6 million for the three months ended September 30, 2024 and 2023, respectively.

These 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.

Interest expense, net was $3.6 million and $3.7 million for the three months ended June 30, 2024 and 2023, respectively.

The change in interest expense was primarily driven by lower outstanding borrowings.

Average outstanding borrowings under our Revolving Credit Facility were $121.8 million and $123.8 million for the three months ended June 30, 2024 and 2023, respectively.

Litigation settlement was not recorded for the three months ended June 30, 2024 and 2023.

Current income tax benefit (expense) was ($0.6) million and $6.9 million for the three months ended June 30, 2024 and 2023, respectively.

Interest expense, net was $3.8 million and $4.5 million for the three months ended September 30, 2024 and 2023, respectively.

The change in interest expense was primarily attributable to the write-off of deferred financing costs in connection with the refinancing of the Revolving Credit Facility in July 2023.

Average outstanding borrowings under our Revolving Credit Facility were $122.5 million and $121.8 million for the three months ended September 30, 2024 and 2023, respectively.

Litigation settlement was not recorded for the three months ended September 30, 2024 and 2023.

Current income tax benefit (expense) was ($0.4) million and ($1.4) million for the three months ended September 30, 2024 and 2023, respectively.

See additional information discussed in Note 15 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 ($2.1) million and less than ($0.1) million for the three months ended June 30, 2024 and 2023, respectively.

Starting in the first quarter of 2023, we achieved three years of cumulative income which resulted in the release of the valuation allowance.

Deferred income tax benefit (expense) was ($5.7) million and $4.7 million for the three months ended September 30, 2024 and 2023, respectively.

Starting in the first quarter of 2023, we achieved three years of cumulative book income which resulted in the release of the valuation allowance.

See additional information discussed in Note 15 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, 2024 Compared to the Six Months Ended June 30, 2023

We reported a net loss of $2.3 million compared to net income of $362.6 million for the six months ended June 30, 2024 and 2023, respectively.

Oil, natural gas and NGL revenues were $147.7 million and $133.7 million for the six months ended June 30, 2024 and 2023, respectively.

Average net production volumes were approximately 20.2 MBoe/d and 20.3 MBoe/d for the six months ended June 30, 2024 and 2023, respectively.

The average realized sales prices were $40.07 per Boe and $36.40 per Boe for the six months ended June 30, 2024 and 2023, respectively.

The change in realized sales prices is primarily due to higher commodity prices, Beta returning to production after being offline for the first quarter of 2023 and the release of revenue suspense of $4.0 million.

Other revenues were $8.1 million and $18.2 million for the six months ended June 30, 2024 and 2023, respectively.

For the six months ended June 30, 2024, other revenues consisted of iodine sales, Magnify rental income, and interest income earned on our sinking fund escrow accounts.

Additionally, for the six months ended June 30, 2024, we recorded a revenue suspense release of $4.8 million.

For the six months ended June 30, 2023, other revenues were primarily related to our receipt of LOPI insurance proceeds of $17.9 million.

For the Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023

We reported net income of $20.4 million compared to net income of $349.2 million for the nine months ended September 30, 2024 and 2023, respectively.

Oil, natural gas and NGL revenues were $215.8 million and $210.1 million for the nine months ended September 30, 2024 and 2023, respectively.

Average net production volumes were approximately 19.8 MBoe/d and 20.4 MBoe/d for the nine months ended September 30, 2024 and 2023, respectively.

The average realized sales prices were $39.69 per Boe and $37.72 per Boe for the nine months ended September 30, 2024 and 2023, respectively.

The change in realized sales prices was primarily due to higher commodity prices, Beta returning to production after being offline for the first quarter of 2023 and the release of revenue suspense of $4.0 million.

Other revenues were $9.9 million and $18.5 million for the nine months ended September 30, 2024 and 2023, respectively.

For the nine months ended September 30, 2024, other revenues consisted of iodine sales, Magnify rental income, and interest income earned on our sinking fund escrow accounts.

Additionally, for the nine months ended September 30, 2024, we recorded a revenue suspense release of $4.8 million.

For the nine months ended September 30, 2023, other revenues were primarily related to our receipt of LOPI insurance proceeds of $17.9 million.

We have not received LOPI insurance proceeds since payments under the LOPI policy terminated on March 31, 2023.

Lease operating expenses were $74.6 million and $67.9 million for the six months ended June 30, 2024 and 2023, respectively.

On a per Boe basis, lease operating expenses were $20.24 and $18.48 for the six months ended June 30, 2024 and 2023, respectively.

Lease operating expenses were $107.9 million and $104.0 million for the nine months ended September 30, 2024 and 2023, respectively.

On a per Boe basis, lease operating expenses were $19.83 and $18.67 for the nine months ended September 30, 2024 and 2023, respectively.

The change in lease operating expense was primarily related to operating costs associated with Beta returning to production after being offline for the first quarter of 2023.

Gathering, processing and transportation expenses were $9.7 million and $10.8 million for the six months ended June 30, 2024 and 2023, respectively.

On a per Boe basis, gathering, processing and transportation expenses were $2.62 and $2.93 for the six months ended June 30, 2024 and 2023, respectively.

The change in gathering, processing and transportation expense was primarily due to lower gas volumes, lower commodity prices and the expiration of minimum volume commitments for our Oklahoma properties.

Taxes other than income were $9.5 million and $10.5 million for the six months ended June 30, 2024 and 2023, respectively.

On a per Boe basis, taxes other than income were $2.59 and $2.86 for the six months ended June 30, 2024 and 2023, respectively.

The decrease was primarily related to a reduction in ad valorem taxes for 2024 based on lower natural gas prices.

DD&A expenses were $16.1 million and $12.9 million for the six months ended June 30, 2024 and 2023, respectively.

Gathering, processing and transportation expenses were $14.0 million and $15.7 million for the nine months ended September 30, 2024 and 2023, respectively.

On a per Boe basis, gathering, processing and transportation expenses were $2.57 and $2.83 for the nine months ended September 30, 2024 and 2023, respectively.

The change in gathering, processing and transportation expense was primarily due to lower gas volumes, lower natural gas prices and the expiration of minimum volume commitments for our Oklahoma properties.

Taxes other than income were $15.5 million and $16.4 million for the nine months ended September 30, 2024 and 2023, respectively.

On a per Boe basis, taxes other than income were $2.86 and $2.95 for the nine months ended September 30, 2024 and 2023, respectively.

The decrease was primarily related to a reduction in production taxes and ad valorem taxes for 2024 due to lower natural gas prices, partially offset by an increase in emissions charges.

DD&A expenses were $24.2 million and $20.4 million for the nine months ended September 30, 2024 and 2023, respectively.

The increase in DD&A expense was primarily driven by operations restarting at Beta.

General and administrative expenses were $18.2 million and $16.3 million for the six months ended June 30, 2024 and 2023, respectively.

The change in general and administrative expenses was primarily related to (i) an increase of $1.0 million in stock compensation expense, (ii) an increase of $0.2 million in severance payments, (iii) and an increase of $0.6 million in office lease expense related to the early termination of our Oklahoma office lease.

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

Net gain on commodity derivative instruments of $19.0 million was recognized for the six months ended June 30, 2023, consisting of a $20.1 million increase in the fair value of open positions, partially offset by $1.2 million of cash settlements paid on expired positions.

Pipeline incident loss was $1.2 million and $15.1 million for the six months ended June 30, 2024 and 2023, respectively.

General and administrative expenses were $26.4 million and $24.5 million for the nine months ended September 30, 2024 and 2023, respectively.

The change in general and administrative expenses was primarily related to an increase of $1.5 million in stock compensation expense, an increase of $0.5 million in legal expense, and an increase of $0.5 million in office lease expense related to the early termination of our Oklahoma office lease, partially offset by a $0.2 million decrease in professional services.

Net gain on commodity derivative instruments of $7.3 million were recognized for the nine months ended September 30, 2024, consisting of $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.

Net loss on commodity derivative instruments of $4.4 million was recognized for the nine months ended September 30, 2023, consisting of $5.1 million of cash settlements paid on expired positions, partially offset by $0.7 million of cash settlement received on terminated derivative instruments and a less than $0.1 million increase in the fair value of open positions.

Pipeline incident loss was $1.5 million and $15.7 million for the nine months ended September 30, 2024 and 2023, 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.

Interest expense, net was $7.2 million and $9.4 million for the six months ended June 30, 2024 and 2023, respectively.

Interest expense, net was $10.9 million and $13.9 million for the nine months ended September 30, 2024 and 2023, respectively.

The change in interest expense was primarily driven by lower outstanding borrowings and amortization and write-off of deferred issuance costs.

Average outstanding borrowings under our Revolving Credit Facility were $118.5 million and $157.9 million for the six months ended June 30, 2024 and 2023, respectively.

Litigation settlement was $84.9 million for the six months ended June 30, 2023, related to the settlement with the shipping companies and the containerships whose anchors struck the Company’s pipeline.

Average outstanding borrowings under our Revolving Credit Facility were $119.8 million and $145.8 million for the nine months ended September 30, 2024 and 2023, respectively.

Litigation settlement was not recorded for the nine months ended September 30, 2024 and $84.9 million was recorded for the nine months ended September 30, 2023, related to the settlement with the shipping companies and the containerships whose anchors struck the Company’s pipeline.

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

Financial Statements” of this quarterly report.

No litigation settlement was recorded for the six months ended June 30, 2024.

Current income tax benefit (expense) was ($2.0) million and ($5.7) million for the six months ended June 30, 2024 and 2023, respectively.

Current income tax benefit (expense) was ($2.4) million and ($7.1) million for the nine months ended September 30, 2024 and 2023, respectively.

See additional information discussed in Note 15 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 $2.6 million and $259.4 million for the six months ended June 30, 2024 and 2023, respectively.

Starting in the first quarter of 2023, we achieved six years of cumulative income which resulted in the release of the valuation allowance.

Deferred income tax benefit (expense) was ($3.1) million and $264.1 million for the nine months ended September 30, 2024 and 2023, respectively.

Starting in the first quarter of 2023, we achieved three years of cumulative book income which resulted in the release of the valuation allowance.

See additional information discussed in Note 15 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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Adjusted EBITDA (1)

(1) Net income (loss) includes a revenue suspense release of $7.0 million and $8.4 million for the three and six months ended June 30, 2024.

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

See “Revenue Payables in Suspense” discussion noted above for additional information.

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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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Exploration costs

Cash settlements paid (received) on terminated derivatives

Plugging and abandonment cost

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Adjusted EBITDA (1)

(1) Adjusted EBITDA includes a non-cash revenue suspense release of $7.0 million and $8.4 million for the three and six months ended June 30, 2024.

(1) Adjusted EBITDA includes a non-cash revenue suspense release of $8.4 million for the nine months ended September 30, 2024.

See “Revenue Payables in Suspense” discussion noted above for additional information.

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Capital Expenditures.

Total capital expenditures were approximately $37.1 million for the six months ended June 30, 2024, which were primarily related to the development program at Beta, capital workovers and facilities upgrade projects at Beta and in Oklahoma and non-operated drilling and completion activities in the Eagle Ford.

Total capital expenditures were approximately $55.3 million for the nine months ended September 30, 2024, which were primarily related to the development program at Beta, capital workovers and facilities upgrade projects at Beta and in Oklahoma and non-operated drilling and completion activities in East Texas and the Eagle Ford.

Working Capital.

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We expect that our future working capital requirements will be impacted by these same factors.

As of June 30, 2024, we had a working capital deficit (excluding commodity derivatives) of $13.3 million primarily due to accrued liabilities of $35.8 million, revenues payable of $12.6 million, and accounts payable of $25.1 million partially offset by accounts receivable of $36.3 million, prepaid expenses of $23.4 million and cash on hand of $0.5 million.

As of September 30, 2024, we had a working capital deficit (excluding commodity derivatives) of $11.6 million primarily due to accrued liabilities of $36.7 million, revenues payable of $11.4 million, and accounts payable of $18.1 million partially offset by accounts receivable of $32.3 million and prepaid expenses of $22.3 million.

Debt Agreement

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The Revolving Credit Facility is a replacement in full of the Prior Revolving Credit Facility.

The aggregate principal amount of loans outstanding under the Revolving Credit Facility as of June 30, 2024, was $118.0 million.

As of June 30, 2024, we had approximately $17.0 million of available borrowings under our Revolving Credit Facility.

As of June 30, 2024, we were in compliance with all the financial (current ratio and total leverage ratio) and non-financial covenants associated with the Revolving Credit Facility.

The aggregate principal amount of loans outstanding under the Revolving Credit Facility as of September 30, 2024, was $120.0 million.

As of September 30, 2024, we had approximately $15.0 million of available borrowings under our Revolving Credit Facility.

As of September 30, 2024, we were in compliance with all the financial (current ratio and total leverage ratio) and non-financial covenants associated with the Revolving Credit Facility.

On October 25, 2024, we entered into the Credit Agreement Amendment, which among other things, (i) reduced the borrowing base under the Revolving Credit Facility from $150.0 million to $145.0 million, (ii) increased the aggregate elected commitments under the Revolving Credit Facility from $135.0 million to $145.0 million and (iii) amended certain interest rates applicable to loans under the Revolving Credit Facility.

For additional information regarding our Revolving Credit Facility, see Note 7 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, 2024, our future commitments under these agreements were $4.5 million for the remainder of 2024 and $9.0 million per year until the escrow accounts are fully funded.

As of September 30, 2024, our future commitments under these agreements were $2.3 million for the remainder of 2024 and $9.0 million per year until the escrow accounts are fully funded.

See Note 14 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, 2024 and 2023 have been derived from our Unaudited Condensed Consolidated Financial Statements.

The cash flows for the nine months ended September 30, 2024 and 2023 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 $23.1 million and $95.2 million for the six months ended June 30, 2024 and 2023, respectively.

For the six months ended June 30, 2023, we received $84.9 million in connection with the settlement between the Company and the vessels that struck and damaged the pipeline and their respective owners and operators.

Production volumes were approximately 20.2 MBoe/d and 20.3 MBoe/d for the six months ended June 30, 2024 and 2023, respectively.

The average realized sales price was $40.07 per Boe and $36.40 per Boe for the six months ended June 30, 2024 and 2023, respectively.

The change in average realized sales price was primarily due to higher commodity prices and Beta returning to production after being offline for the first quarter of 2023.

The six months ended June 30, 2024 included a revenue suspense release of $8.4 million.

Net cash provided by operating activities for the six months ended June 30, 2024 included $8.0 million of cash received on expired commodity derivative instruments compared to $1.2 million of cash paid on expired commodity derivatives for the six months ended June 30, 2023.

For the six months ended June 30, 2024, we had net losses on commodity derivative instruments of $17.8 million compared to a net gain of $19.0 million for the six months ended June 30, 2023.

Net cash provided by operating activities was $38.8 million and $113.2 million for the nine months ended September 30, 2024 and 2023, respectively.

For the nine months ended September 30, 2023, we received $84.9 million in connection with the settlement between the Company and the vessels that struck and damaged the pipeline and their respective owners and operators.

Production volumes were approximately 19.8 MBoe/d and 20.4 MBoe/d for the nine months ended September 30, 2024 and 2023, respectively.

The average realized sales price was $39.69 per Boe and $37.72 per Boe for the nine months ended September 30, 2024 and 2023, respectively.

Net cash provided by operating activities for the nine months ended September 30, 2024 included $13.6 million of cash received on expired commodity derivative instruments compared to $5.1 million of cash paid on expired commodity derivatives for the nine months ended September 30, 2023.

For the nine months ended September 30, 2024, we had a net gain on commodity derivative instruments of $7.3 million compared to a net loss of $4.4 million for the nine months ended September 30, 2023.

Investing Activities.

Net cash used in investing activities for the six months ended June 30, 2024 was $44.6 million, of which $37.1 million was used for additions to oil and natural gas properties and $1.0 million for additions to other property and equipment.

In addition, we had a decrease of $1.6 million in our capital expenditures payable account.

Net cash used in investing activities for the six months ended June 30, 2023 was $21.1 million, of which $16.8 million was used for additions to oil and natural gas properties and $0.2 million for additions to other property and equipment.

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.

Net cash used in investing activities for the nine months ended September 30, 2023 was $30.0 million, of which $23.1 million was used for additions to oil and natural gas properties and $0.5 million for additions to other property and equipment.

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 $5.0 million and $4.2 million during the six months ended June 30, 2024 and 2023, respectively.

Additions to restricted investments were $7.5 million and $6.4 million during the nine months ended September 30, 2024 and 2023, respectively.

Financing Activities .

We had net borrowings of $3.0 million for the six months ended June 30, 2024 related to our Revolving Credit Facility compared to net repayments of $70.0 million for the six months ended June 30, 2023.

Shares withheld for taxes was $1.8 million and $2.1 million for the six months ended June 30, 2024 and 2023, respectively.

We had net borrowings of $5.0 million for the nine months ended September 30, 2024 related to our Revolving Credit Facility compared to net repayments of $70.0 million for the nine months ended September 30, 2023.

Shares withheld for taxes was $1.9 million and $2.2 million for the nine months ended September 30, 2024 and 2023, respectively.

Off–Balance Sheet Arrangements

As of June 30, 2024, we had no off–balance sheet arrangements.

As of September 30, 2024, we had no off–balance sheet arrangements.

Recently Issued Accounting Pronouncements

4 unchanged sentences

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