What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-06 compared with 2025-05-12 · 157 added, 69 removed, 238 unchanged (49% 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 consist 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).

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).

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.

Most recently, in early 2025, there has been a decline of oil, natural gas and NGL prices that continued into April 2025 resulting from (i) trade tariff uncertainties driving concerns over an increase in inflation and (ii) OPEC+’s decision to increase production starting in May, creating additional global supply and further downward pressure on oil prices.

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

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.

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.

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Recent Developments

East Texas Haynesville Monetization

On May 1, 2025, the Company sold certain rights, title and interest in assets located in East Texas to a third party.

The Company received net proceeds of $1.5 million.

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.

As a result of the Termination Agreement, the Merger Agreement is of no further force and effect.

For additional information regarding the Termination, see Notes 4 and 18 of the Notes to Unaudited Condensed Consolidated Financial Statements included under “Item 1.

Financial Statements” of this quarterly report.

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.

Business Environment and Operational Focus

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Results of Operations

The results of operations for the three months ended March 31, 2025 and 2024 have been derived from our unaudited condensed consolidated financial statements.

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

For the Three Months Ended

For the Six Months Ended

($ 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 March 31, 2025 Compared to the Three Months Ended March 31, 2024

We reported a net loss of $5.9 million compared to a net loss of $9.4 million for the three months ended March 31, 2025 and 2024, respectively.

Oil, natural gas and NGL revenues were $70.3 million and $75.3 million for the three months ended March 31, 2025 and 2024, respectively.

Average net production volumes were approximately 17.9 MBoe/d and 20.2 MBoe/d for the three months ended March 31, 2025 and 2024, respectively.

The average realized sales prices were $43.76 per Boe and $40.89 per Boe for the three months ended March 31, 2025 and 2024, respectively.

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.

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.

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.

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 ($1.5) 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.

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.

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.

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 quarter of 2025 when compared to the first quarter of 2024.

Other revenues were $1.7 million and $1.0 million for the three months ended March 31, 2025 and 2024, respectively.

The increase primarily related to an increase of $0.7 million for iodine sales from the renegotiation of our sales contract in 2024.

Lease operating expenses were $37.4 million and $38.3 million for the three months ended March 31, 2025 and 2024, respectively.

On a per Boe basis, lease operating expenses were $23.28 and $20.78 for the three months ended March 31, 2025 and 2024, respectively.

The change in lease operating expense on a per Boe basis was primarily due to a decrease in volumes.

Gathering, processing and transportation expenses were $4.3 million and $4.8 million for the three months ended March 31, 2025 and 2024, respectively.

On a per Boe basis, gathering, processing and transportation expenses were $2.67 and $2.59 for the three months ended March 31, 2025 and 2024, respectively.

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.

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

Taxes other than income were $4.4 million and $4.9 million for the three months ended March 31, 2025 and 2024, respectively.

On a per Boe basis, taxes other than income were $2.73 and $2.67 for the three months ended March 31, 2025 and 2024, respectively.

The decrease was primarily related to a reduction in production taxes due to lower volumes and a decrease in emissions charges.

DD&A expenses were $8.5 million and $8.2 million for the three months ended March 31, 2025 and 2024, respectively.

General and administrative expenses were $10.8 million and $9.8 million for the three months ended March 31, 2025 and 2024, respectively.

The change in general and administrative expenses was primarily related to (i) an increase of $1.5 million in legal expenses, (ii) an increase of $0.4 million in stock compensation expense and (iii) an increase of $0.2 million in professional services, partially offset by a decrease of $0.4 million in office lease expense related to the early termination of our Oklahoma office lease in 2024 and a decrease of $0.6 million in salaries and wages.

Net loss (gain) 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.

A net loss on commodity derivative instruments of $16.6 million was recognized for the three months ended March 31, 2024, consisting of a $20.8 million decrease in the fair value of open positions, partially offset by $4.3 million of cash settlements received on expired positions.

Pipeline incident loss was $0.4 million and $0.7 million for the three months ended March 31, 2025 and 2024, respectively.

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.

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.

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 $3.5 million and $3.5 million for the three months ended March 31, 2025 and 2024, respectively.

Average outstanding borrowings under our Revolving Credit Facility were $127.3 million and $115.2 million for the three months ended March 31, 2025 and 2024, respectively.

Current income tax benefit (expense) was less than ($0.1) million and was ($1.4) million for the three months ended March 31, 2025 and 2024, respectively.

(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.

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.

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 $1.5 million and $4.7 million for the three months ended March 31, 2025 and 2024, respectively.

Deferred income tax benefit (expense) was $0.1 million and $2.6 million for the six months ended June 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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Adjusted Net Income (Loss)

We define Adjusted Net Income (Loss) as net income (loss) adjusted for unrealized loss (gain) on commodity derivative instruments, acquisition and divestiture-related expenses, unusual and infrequent items, and the income tax expense or benefit of these adjustments using our federal statutory tax rate.

We define Adjusted Net Income (Loss) as net income (loss) adjusted for unrealized loss (gain) on commodity derivative instruments, acquisition and divestiture-related expenses, impairment expense, unusual and infrequent items, and the income tax expense or benefit of these adjustments using our federal statutory tax rate.

This measure is not meant to disassociate these items from management’s performance but rather is intended to provide helpful information to investors interested in comparing our performance between periods.

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For the Three Months Ended

For the Six Months Ended

(In thousands)

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Acquisition and divestiture-related expenses

Impairment expense

Non-recurring costs:

Income tax expense (benefit) - deferred

Gain on sale of properties

(Gain) loss on sale of properties

Tax effect of adjustments (1)

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For the Three Months Ended

For the Six Months Ended

(In thousands)

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Income tax expense (benefit) - deferred

Impairment expense

Accretion of AROs

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For the Three Months Ended

For the Six Months Ended

(In thousands)

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Interest expense, net

Pipeline incident loss

(Gain) loss on sale of property

Income tax expense (benefit) - current

Acquisition and divestiture related expenses

Pipeline incident loss

Plugging and abandonment cost

Amortization and write-off of deferred financing fees

Exploration costs

Amortization of gain associated with terminated commodity derivatives

Income tax expense (benefit) - current

Exploration costs

Adjusted EBITDA

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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.

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.

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.

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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 expects to incur professional fees and expenses of approximately $3.0 million in connection with the Contemplated Mergers and the Termination.

The Company incurred professional fees and expenses of approximately $3.4 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.

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Additionally, we may take advantage of opportunities to modify our commodity derivative portfolio to change the percentage of our hedged production volumes when circumstances suggest that it is prudent to do so.

The current market conditions may also impact our ability to enter into future commodity derivative contracts.

Market conditions may also impact our ability to enter into future commodity derivative contracts.

We evaluate counterparty risks related to our commodity derivative contracts and trade credit.

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Capital Expenditures.

Our total capital expenditures were approximately $23.1 million for the three months ended March 31, 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 $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.

Working Capital.

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This fluctuation is not unusual.

As of March 31, 2025, we had a working capital deficit (excluding commodity derivatives) of $12.5 million primarily due to accrued liabilities of $40.3 million, revenues payable of $12.5 million, and accounts payable of $19.9 million, partially offset by accounts receivable of $35.9 million and prepaid expenses of $24.3 million.

As of March 31, 2025, although we had a working capital deficit, we had $20.0 million of available borrowings as of such date under our Revolving Credit Facility that provides additional liquidity, and therefore we have met all debt covenant ratio requirements as of March 31, 2025.

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.

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 March 31, 2025, was $125.0 million.

As of March 31, 2025, we had approximately $20.0 million of available borrowings under our Revolving Credit Facility.

As of March 31, 2025, 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 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.

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 March 31, 2025, our future commitments under these agreements were $6.8 million for the remainder of 2025 and $9.0 million per year until the escrow accounts are fully funded.

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.

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 three months ended March 31, 2025 and 2024 have been derived from our Unaudited Condensed Consolidated Financial Statements.

The cash flows for the six months ended June 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 Three Months Ended

For the Six 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 $25.5 million and $7.7 million for the three months ended March 31, 2025 and 2024, respectively.

Production volumes were approximately 17.9 MBoe/d and 20.2 MBoe/d for the three months ended March 31, 2025 and 2024, respectively.

The average realized sales price was $43.76 per Boe and $40.89 per Boe for the three months ended March 31, 2025 and 2024, respectively.

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 quarter of 2025 when compared to the first quarter of 2024.

Net cash provided by operating activities for the three months ended March 31, 2025 included $0.5 million of cash received on expired commodity derivative instruments compared to $4.3 million of cash received on expired commodity derivatives for the three months ended March 31, 2024.

For the three months ended March 31, 2025, we had a net loss on commodity derivative instruments of $14.3 million compared to a net loss of $16.6 million for the three months ended March 31, 2024.

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.

Investing Activities.

Net cash used in investing activities for the three months ended March 31, 2025 was $21.5 million, of which $24.9 million was used for additions to oil and natural gas properties and $0.3 million for additions to other property and equipment.

Net cash used in investing activities for the three months ended March 31, 2024 was $23.7 million, of which $19.1 million was used for additions to oil and natural gas properties.

In addition, we had a decrease of $1.5 million in our capital expenditures payable account.

In January 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 $6.3 million.

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.

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 $2.5 million for the three months ended March 31, 2025 and 2024, respectively.

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

Financing Activities .

We had net repayments of $2.0 million for the three months ended March 31, 2025 related to our Revolving Credit Facility compared to repayments of $25.0 million for the three months ended March 31, 2024.

Shares withheld for taxes was $2.0 million and $1.7 million for the three months ended March 31, 2025 and 2024, respectively.

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.

Off–Balance Sheet Arrangements

As of March 31, 2025, we had no off–balance sheet arrangements.

As of June 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