What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2022-02-25 compared with 2021-03-12 · 385 added, 376 removed, 1106 unchanged (41% of the section changed)

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Based on the foregoing, our management determined that our disclosure controls and procedures were effective as of December 31, 2021.

Changes in Internal Control over Financial Reporting

No change in our Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter ended December 31, 2021, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the financial statements as of and for the year ended December 31, 2020, of the Company and our report dated March 12, 2021, expressed an unqualified opinion on those financial statements.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the financial statements as of and for the year ended December 31, 2021, of the Company and our report dated February 25, 2022, expressed an unqualified opinion on those financial statements.

Basis for Opinion

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Minneapolis, Minnesota

March 12, 2021

February 25, 2022

Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

Certain information required by this Part III is incorporated by reference from our definitive Proxy Statement for the Annual Meeting of Stockholders to be held in 2022 (the “Proxy Statement”), which we intend to file with the SEC pursuant to Regulation 14A within 120 days after December 31, 2021.

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A copy is available on our website at www.northernoil.com.

We intend to post on our website any amendments to, or waivers from, our Code of Business Conduct and Ethics pursuant to the rules of the SEC and NYSE American.

We intend to post on our website any amendments to, or waivers from, our Code of Business Conduct and Ethics pursuant to the rules of the SEC and New York Stock Exchange.

Information About Our Executive Officers

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Chad Allen 40 Chief Financial Officer

Adam Dirlam 37 Chief Operating Officer

Adam Dirlam 38 President

Michael Kelly 40 Chief Strategy Officer

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Allen holds a bachelor’s degree in accounting from Minnesota State University, Mankato and is a Certified Public Accountant.

Adam Dirlam has served as our Chief Operating Officer since January 2020.

Adam Dirlam has served as our President since December 2021 prior to which he served as our Chief Operating Officer since January 2020.

Prior to that, he served as our Executive Vice President – Land & Operations since June 2018, prior to which he served as the company’s Senior Vice President of Land & Operations since 2013 and other various roles with the company since 2009.

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Prior to joining our company, Mr.

Romslo practiced law in the Minneapolis office of our outside counsel, Faegre Drinker Biddle & Reath LLP (Faegre & Benson LLP), from 2005 until 2011, where he was a member of the Corporate group.

Romslo practiced law in the Minneapolis office of our outside counsel, Faegre Drinker Biddle & Reath LLP (formerly Faegre & Benson LLP), from 2005 until 2011, where he was a member of the Corporate group.

Prior to joining Faegre, Mr.

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Description Reference

Purchase and Sale Agreement, dated April 18, 2019, by and between VEN Bakken, LLC and Northern Oil and Gas, Inc.

Incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 22, 2019

Purchase and Sale Agreement, dated February 3, 2021, between Northern Oil and Gas, Inc.

and Reliance Marcellus, LLC Incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on February 3, 2021

Asset Purchase Agreement between Northern Oil and Gas, Inc.

and Comstock Oil & Gas, LLC, dated October 6, 2021 Incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 8, 2021

Purchase and Sale Agreement between Northern Oil and Gas, Inc., Veritas TM Resources, LLC, Veritas Permian Resources, LLC, Veritas Lone Star Resources, LLC, and Veritas MOC Resources, LLC, dated November 16, 2021 Incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 16, 2021

Restated Certificate of Incorporation of Northern Oil and Gas, Inc.

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Incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 15, 2018

Certificate of Designations of 6.500% Series A Perpetual Cumulative Convertible Preferred Stock of Northern Oil and Gas, Inc.

Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 26, 2019

Certificate of Designations of 6.500% Series A Perpetual Cumulative Convertible Preferred Stock of Northern Oil and Gas, Inc., dated November 22, 2019 Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 26, 2019

Certificate of Amendment to the Certificate of Designations of 6.500% Series A Perpetual Cumulative Convertible Preferred Stock of Northern Oil and Gas, Inc., dated January 2, 2020 Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 6, 2020

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and Wilmington Trust, National Association, as trustee Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 26, 2019

Indenture, dated February 18, 2021, between the Company and Wilmington Trust, National Association, as trustee (including Form of 8.125% Senior Note due 2028) Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on February 23, 2021

Fourth Supplemental Indenture, dated February 18, 2021, among the Company and Wilmington Trust, National Association, as trustee and collateral agent Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on February 23, 2021

Fourth Supplemental Indenture, dated February 18, 2021, among Northern Oil and Gas, Inc.

and Wilmington Trust, National Association, as trustee and collateral agent Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on February 23, 2021

Indenture, dated February 18, 2021, between Northern Oil and Gas, Inc.

and Wilmington Trust, National Association, as trustee (including Form of 8.125% Senior Note due 2028) Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on February 23, 2021

First Supplemental Indenture, dated November 15, 2021, between Northern Oil and Gas, Inc.

and Wilmington Trust, National Association, as trustee Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 15, 2021

Warrant to Purchase Common Shares, dated April 1, 2021, by and between Northern Oil and Gas, Inc.

and Reliance Marcellus, LLC Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 6, 2021

Form of Warrant to Purchase Common Shares, dated January 27, 2022 Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on January31, 2022

Letter Agreement, dated January 2, 2015 by and among Robert B.

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Amended and Restated Employment Agreement, dated June 1, 2018, between Northern Oil and Gas, Inc.

and Chad Allen Incorporated by reference to Exhibit 10.13 to the Registrant’s Current Report on Form 10-Q filed with the SEC on August 9, 2018

and Chad Allen Incorporated by reference to Exhibit 10.13 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on August 9, 2018

Amended and Restated Employment Agreement, dated June 1, 2018, between Northern Oil and Gas, Inc.

and Adam Dirlam Incorporated by reference to Exhibit 10.14 to the Registrant’s Current Report on Form 10-Q filed with the SEC on August 9, 2018

and Adam Dirlam Incorporated by reference to Exhibit 10.14 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on August 9, 2018

Employment Agreement, dated December 17, 2019, between Northern Oil and Gas, Inc.

and Mike Kelly Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 10-Q filed with the SEC on May 11, 2020

and Mike Kelly Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on May 11, 2020

Amended and Restated Employment Agreement, dated January 27, 2020, between Northern Oil and Gas, Inc.

and James Evans Filed herewith

and James Evans Incorporated by reference to Exhibit 10.16 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 12, 2021

Northern Oil and Gas, Inc.

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2013 Incentive Plan

Incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 10-Q filed with the SEC on August 9, 2013

Incorporated by reference to Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on August 9, 2013

Form of Restricted Stock Award Agreement (Performance Based) under the Northern Oil and Gas, Inc.

2013 Incentive Plan Incorporated by reference to Exhibit 10.15 to the Registrant’s Current Report on Form 10-Q filed with the SEC on August 9, 2018

2013 Incentive Plan Incorporated by reference to Exhibit 10.15 to the Registrant’s Quarterly Report on Form 10-Q filed with the SEC on August 9, 2018

Northern Oil and Gas, Inc.

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and the other signatories thereto Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on February 21, 2021

Registration Rights Agreement, dated April 1, 2021, by and between Northern Oil and Gas, Inc.

and Reliance Marcellus, LLC Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on April 6, 2021

Third Amendment to the Second Amended and Restated Credit Agreement, dated May 27, 2021, by and among Northern Oil and Gas, Inc.

and Wells Fargo Bank, National Association and the Lenders party thereto Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on June 2, 2021

Purchase Agreement, dated November 9, 2021, between Northern Oil and Gas, Inc.

and RBC Capital Markets, LLC, as representative of the several initial purchasers listed in Schedule 1 thereto.

Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 10, 2021

Fourth Amendment to the Second Amended and Restated Credit Agreement, dated November 3, 2021, by and among Northern Oil and Gas, Inc.

and Wells Fargo Bank, National Association and the Lenders party thereto Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 3, 2021

Fifth Amendment to the Second Amended and Restated Credit Agreement, dated November 8, 2021, by and among Northern Oil and Gas, Inc.

Registration Rights Agreement, dated January 27, 2022, by and between Northern Oil and Gas, Inc.

and Veritas Permian II, LLC and Veritas MOC Holdings, LLC Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on January31, 2022

Consent of Independent Registered Public Accounting Firm Deloitte & Touche LLP Filed herewith

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NORTHERN OIL AND GAS, INC.

March 12, 2021 By:

February 25, 2022 By:

/s/ Nicholas O’Grady

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Signature Title Date

/s/ Nicholas O’Grady Chief Executive Officer, Principal Executive Officer March 12, 2021

/s/ Nicholas O’Grady Chief Executive Officer, Principal Executive Officer February 25, 2022

Nicholas O’Grady

/s/ Chad Allen Chief Financial Officer, Principal Financial & Accounting Officer March 12, 2021

* Director March 12, 2021

/s/ Chad Allen Chief Financial Officer, Principal Financial & Accounting Officer February 25, 2022

* Director February 25, 2022

Bahram Akradi

* Director March 12, 2021

* Director February 25, 2022

Lisa Bromiley

* Director March 12, 2021

* Director February 25, 2022

Michael Frantz

* Director March 12, 2021

* Director February 25, 2022

Michael Popejoy

* Director March 12, 2021

* Director February 25, 2022

Stuart Lasher

* February 25, 2022

Jennifer Pomerantz Director

* Nicholas O’Grady, by signing his name hereto, does hereby sign this document on behalf of each of the above-named directors of the registrant pursuant to Powers of Attorney duly executed by such persons.

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INDEX TO FINANCIAL STATEMENTS

Report of Deloitte & Touche LLP, Independent Registered Public Accounting Firm F- 2

Report of Deloitte & Touche LLP, Independent Registered Public Accounting Firm (PCAOB ID No.

Balance Sheets as of December 31, 2021 and 2020 F- 4

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In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 12, 2021, expressed an unqualified opinion on the Company’s internal control over financial reporting.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2022, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

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Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Proved Oil and Natural Gas Properties — Oil and Natural Gas Reserves and Impairment Expense — Refer to Note 2 to the financial statements

Proved Oil and Natural Gas Properties – Oil and Natural Gas Reserves – Refer to Note 2 to the financial statements

Critical Audit Matter Description

The Company follows the full cost method of accounting for crude oil and natural gas operations.

Therefore, the Company’s proved oil and natural gas properties are depleted using the units-of-production method based upon production and estimates of proved reserves and are evaluated for impairment by performing a ceiling test each quarter.

Therefore, the Company’s proved oil and natural gas properties are depleted using the units-of-production method based upon production and estimates of proved reserves quantities and are evaluated for impairment by performing a ceiling test each quarter.

The ceiling test involves a comparison of net capitalized costs to the sum of the present value of the estimated future net cash flows from the Company’s oil and natural gas reserves.

The estimation of the Company’s oil and natural gas reserves and the related future net cash flows requires management to make significant estimates and assumptions since, as a non-operator, the Company has limited visibility into the timing of future production quantities associated with the five-year development plan.

The estimation of the Company’s oil and natural gas reserves quantities and the related future net cash flows requires management to make significant estimates and assumptions since, as a non-operator, the Company has limited visibility into the timing of future production quantities associated with the five-year development plan.

The Company engages a third-party independent reserve engineering firm to fully engineer management’s oil and natural gas reserve quantities using these estimates and assumptions and engineering data.

Changes in these estimates, assumptions, or engineering data could have significant impact on the depletion calculation and proved oil and natural gas properties impairment evaluation.

The proved oil

and natural gas properties balance was $4,393.5 million as of December 31, 2020.

Depletion, depreciation, amortization, and accretion expense was $162.1 million and impairment expense was $1,066.7 million for the year ended December 31, 2020.

Changes in these estimates, assumptions, or engineering data involve judgments which could have significant impact on the depletion calculation and proved oil and natural gas properties impairment evaluation.

The proved oil and natural gas properties, net balance was $1,226.4 million as of December

Depletion, depreciation, amortization, and accretion expense was $140.8 million for the year ended December 31, 2021.

Given the significant judgments made by management, particularly relating to the estimates and assumptions required due to limited visibility as a non-operator regarding future production quantities associated with the five-year development plan, performing audit procedures to evaluate the Company’s oil and natural gas reserve quantities and the related future net cash flows required a high degree of auditor judgment and an increased extent of effort.

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– Authorization and approval for expenditures.

– External information regarding the ability of the operators of the oil and natural gas properties to develop proved undeveloped fields considering current and forecasted liquidity of the operators obtained from publicly available information, level of drilling activity by operators in areas where the Company holds leasehold interests, and length of time required to drill and complete groups of wells.

– External information regarding the ability of the operators of the oil and natural gas properties to develop proved undeveloped reserves considering current and forecasted liquidity of the operators obtained from publicly available information, level of drilling activity by operators in areas where the Company holds leasehold interests, and length of time required to drill and complete groups of wells.

• We evaluated the Company’s estimates of future production volumes by completing a retrospective comparison to historical production.

• We evaluated the experience, qualifications, and objectivity of management’s expert, a third-party independent reserve engineering firm engaged to fully engineer management’s oil and natural gas reserve quantities.

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Minneapolis, Minnesota

March 12, 2021

February 25, 2022

We have served as the Company’s auditor since 2018.

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Derivative Instruments 2,519 51,290

Income Tax Receivable — 210

Total Current Assets 215,328 125,629

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Derivative Instruments 1,863 111

Deferred Income Taxes — 210

Acquisition Deposit 40,650 —

Other Noncurrent Assets, Net 11,683 11,145

Total Assets $ 1,522,866 $ 872,089

Liabilities and Stockholders' Equity (Deficit)

Liabilities and Stockholders' Equity

Current Liabilities:

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Total Liabilities and Stockholders' Equity (Deficit) $ 1,522,866 $ 872,089

* Adjusted for the 1-for-10 reverse stock split effected on September 18, 2020.

The accompanying notes are an integral part of these financial statements.

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(In thousands, except share and per share data) 2021 2020 2019

Oil and Gas Sales $ 324,052 $ 601,218 $ 493,909

Oil and Natural Gas Sales $ 975,089 $ 324,052 $ 601,218

Gain (Loss) on Derivative Instruments, Net ( 478,193 ) 228,141 ( 128,837 )

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Write-off of Debt Issuance Costs — ( 1,543 ) —

Loss on Unsettled Interest Rate Derivatives ( 1,019 ) — —

Gain (Loss) on Unsettled Interest Rate Derivatives 1,043 ( 1,019 ) —

Loss on the Extinguishment of Debt ( 13,087 ) ( 3,718 ) ( 23,187 )

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Income (Loss) Before Income Taxes 6,594 ( 906,207 ) ( 76,318 )

Income Tax Benefit ( 166 ) — ( 55 )

Income Tax Expense (Benefit) 233 ( 166 ) —

Net Income (Loss) $ 6,361 $ ( 906,041 ) $ ( 76,318 )

Cumulative Preferred Stock Dividend ( 14,761 ) ( 15,266 ) ( 1,029 )

Net Income (Loss) Attributable to Common Shareholders $ ( 921,307 ) $ ( 77,347 ) $ 143,689

Net Income (Loss) Per Common Share – Basic* $ ( 21.55 ) $ ( 2.00 ) $ 6.08

Net Income (Loss) Per Common Share – Diluted* $ ( 21.55 ) $ ( 2.00 ) $ 6.07

Net Loss Attributable to Common Shareholders $ ( 8,400 ) $ ( 921,307 ) $ ( 77,347 )

Net Loss Per Common Share – Basic $ ( 0.13 ) $ ( 21.55 ) $ ( 2.00 )

Net Loss Per Common Share – Diluted $ ( 0.13 ) $ ( 21.55 ) $ ( 2.00 )

Weighted Average Shares Outstanding – Basic 62,989,543 42,744,639 38,708,460

Weighted Average Shares Outstanding – Diluted 62,989,543 42,744,639 38,708,460

* Adjusted for the 1-for-10 reverse stock split effected on September 18, 2020.

The accompanying notes are an integral part of these financial statements.

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Write-off of Debt Issuance Costs — 1,543 —

(Gain) Loss on Extinguishment of Debt 3,718 23,187 173,430

Loss on Extinguishment of Debt 13,087 3,718 23,187

Amortization of Bond (Premium) Discount on Long-term Debt ( 413 ) ( 1,037 ) ( 2,705 )

Loss on the Sale of Other Property & Equipment 17 — —

Deferred Income Taxes 233 210 210

Unrealized (Gain) Loss on Derivative Instruments 311,328 ( 38,858 ) 173,214

Loss on Debt Exchange Derivative — ( 1,390 ) 598

Gain on Debt Exchange Derivative — — ( 1,390 )

Loss on Contingent Consideration 292 169 29,512

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Acquisition of Oil and Natural Gas Properties ( 410,430 ) ( 46,940 ) ( 229,182 )

Proceeds from Sale of Oil and Natural Gas Properties — — 22

Proceeds from Sale of Other Property and Equipment — — 46

Acquisition Deposit ( 40,650 ) — —

Purchases of Other Property and Equipment ( 556 ) ( 295 ) ( 1,158 )

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Repayments on Revolving Credit Facility ( 1,031,000 ) ( 126,000 ) ( 513,000 )

Borrowings on Term Loan Credit Agreement — — 60,000

Repayments on Term Loan Credit Agreement — — ( 420,105 )

Issuance of Second Lien Notes — — 364,369

Repayments of Second Lien Notes ( 295,918 ) ( 13,514 ) ( 227,470 )

Repayments of Senior Unsecured Notes ( 130,000 ) — —

Issuance of Unsecured Notes due 2028 763,500 — —

Debt Issuance Costs Paid ( 17,611 ) ( 446 ) ( 12,219 )

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Issuance of Common Stock 438,077 — —

Common Stock Dividends Paid ( 4,938 ) — —

Repurchases of Common Stock — — ( 15,108 )

Issuance of Preferred Stock — — 70,868

Preferred Stock Dividends Paid ( 29,212 ) — —

Restricted Stock Surrenders - Tax Obligations ( 839 ) ( 439 ) ( 660 )

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Cash and Cash Equivalents – End of Period $ 9,519 $ 1,428 $ 16,068

______________

The accompanying notes are an integral part of these financial statements.

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Restricted Stock Surrenders - Tax Obligations ( 27,185 ) — — — ( 660 ) — ( 660 )

Equity Offerings, Net of Issuance Costs 9,692,602 97 — — 141,577 — 141,674

Issuance of Preferred Stock, Net of Issuance Costs — — 1,500,000 2 145,867 — 145,868

Debt Exchange Agreements 724,238 7 — — 15,742 — 15,749

Acquisition of Oil and Natural Gas Properties 560,215 6 — — 11,703 — 11,708

Net Exercise of Stock Options 6,250 — — — — — —

Contingent Consideration Settlements 1,775,837 18 — — 39,154 — 39,171

Repurchases of Common Stock ( 563,500 ) ( 6 ) — — ( 15,102 ) — ( 15,108 )

Net Income — — — — — 143,689 143,689

Net Loss — — — — — ( 76,318 ) ( 76,318 )

December 31, 2019 40,608,518 $ 406 1,500,000 $ 2 $ 1,431,438 $ ( 873,203 ) $ 558,643

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Debt Exchange Agreements 4,164,941 34 — — 37,135 — 37,169

Series A Preferred Exchange 526,695 5 ( 75,970 ) — 1,108 ( 1,113 ) —

Acquisition of Oil and Natural Gas Properties 295,000 — — — 1,537 — 1,537

Contingent Consideration Settlements 1,775,837 18 — — 39,154 — 39,171

Repurchases of Common Stock ( 563,500 ) ( 6 ) — — ( 15,102 ) — ( 15,108 )

Net Loss — — — — — ( 906,041 ) ( 906,041 )

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Restricted Stock Surrenders - Tax Obligations ( 60,611 ) — — — ( 839 ) — ( 839 )

Issuance of Preferred Stock, Net of Issuance Costs — — 794,702 1 81,211 — 81,212

Debt Exchange Agreements 4,164,941 34 — — 37,135 — 37,169

Series A Preferred Exchange 526,695 5 ( 75,970 ) — 1,108 ( 1,113 ) —

Acquisition of Oil and Natural Gas Properties 295,000 — — — 1,537 — 1,537

Net Loss — — — — — ( 906,041 ) ( 906,041 )

Equity Offerings, Net of Issuance Costs 31,125,000 31 — — 438,045 — 438,077

Issuance of Common Stock Warrants — — — — 30,512 — 30,512

Contingent Consideration Settlements 43,455 — — — 785 — 785

Preferred Stock Dividends — — — — ( 29,212 ) — ( 29,212 )

Common Stock Dividends Declared — — — — ( 11,149 ) — ( 11,149 )

Net Income — — — — — 6,361 6,361

December 31, 2021 77,341,921 479 2,218,732 2 $ 1,988,649 $ ( 1,773,996 ) $ 215,135

*Adjusted for the 1-for-10 reverse stock split effected on September 18, 2020.

The accompanying notes are an integral part of these financial statements.

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(the “Company,” “Northern,” “our” and words of similar import), a Delaware corporation, is an independent energy company engaged in the acquisition, exploration, exploitation, development and production of crude oil and natural gas properties.

The Company’s common stock trades on the NYSE American market under the symbol “NOG”.

Northern’s principal business is crude oil and natural gas exploration, development, and production with operations that primarily target the Williston and Permian Basins of the United States.

The Company’s common stock trades on the New York Stock Exchange under the symbol “NOG”.

Northern’s principal business is crude oil and natural gas exploration, development, and production with operations in the United States.

The Company’s primary strategy is investing in non-operated minority working and mineral interests in oil and gas properties in the United States.

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In connection with preparing the financial statements for the year ended December 31, 2021, the Company has evaluated subsequent events for potential recognition and disclosure through the date of this filing and determined that there were no subsequent events which required recognition or disclosure in the financial statements through the date of this filing.

Reverse Stock Split

On September 18, 2020, the Company effected a 1-for-10 reverse stock split of its common stock.

Unless otherwise noted, impacted amounts and share information included in the financial statements and notes thereto, and elsewhere in this Form 10-K, have been retroactively adjusted as if the reverse stock split occurred on the first day of the first period presented.

Certain amounts may be slightly different than previously reported due to the settlement of fractional shares as a result of the reverse stock split and rounding.

See Note 5 below for more information regarding the reverse stock split.

Use of Estimates

The preparation of financial statements under GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

The most significant estimates relate to proved crude oil and natural gas reserves, which includes limited control over future development plans as a non-operator, estimates relating to certain crude oil and natural gas revenues and expenses, fair value of derivative instruments, fair value of contingent consideration, acquisition date fair values of assets acquired and liabilities assumed, impairment of oil and natural gas properties, asset retirement obligations and deferred income taxes.

The most significant estimates relate to proved crude oil and natural gas reserves, which includes limited control over future development plans as a non-operator, estimates relating to certain crude oil and natural gas revenues and expenses, fair value of derivative instruments, fair value of contingent consideration, acquisition date fair values of assets acquired and liabilities assumed, impairment of crude oil and natural gas properties, asset retirement obligations and deferred income taxes.

Actual results may differ from those estimates.

The Company considered the impact of the novel coronavirus 2019 (“COVID-19”) pandemic on the assumptions and estimates used by management in the financial statements for the reporting periods presented.

As a result of significant fluctuations in commodity prices during the year, the Company recognized a material impairment charge during the year ended December 31, 2020 (see Note 3).

Management’s estimates and assumptions were based on historical data and consideration of future market conditions.

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Accounts receivable not expected to be collected within the next twelve months are included within Other Noncurrent Assets, Net in the balance sheets.

As of December 31, 2020 and 2019, the allowance for doubtful accounts was $ 3.9 million and $ 4.6 million, respectively.

The amount charged to operations for doubtful accounts was $ 0.3 million, zero and zero for the years ended December 31, 2020, 2019 and 2018, respectively.

As of December 31, 2021 and 2020, the allowance for doubtful accounts was $ 3.9 million in both years.

The amount charged to operations for doubtful accounts was $ 0.3 million, $ 0.3 million and zero for the years ended December 31, 2021, 2020 and

2019, respectively.

As of December 31, 2021 and 2020, the amount charged against the allowance for doubtful accounts was $ 0.3 million and $ 1.0 million, respectively.

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Oil and Gas Properties

Northern follows the full cost method of accounting for crude oil and natural gas operations whereby all costs related to the exploration and development of crude oil and natural gas properties are capitalized into a single cost center (“full cost pool”).

The Company follows the full cost method of accounting for crude oil and natural gas operations whereby all costs related to the exploration and development of crude oil and natural gas properties are capitalized into a single cost center (“full cost pool”).

Such costs include land acquisition costs, geological and geophysical expenses, carrying charges on non-producing properties, costs of drilling directly related to acquisition, and exploration activities.

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Total $ 2,456 $ 1,716 $ 1,638

As of December 31, 2020, the Company held leasehold interests primarily in the Williston Basin of the United States on acreage targeting the Bakken and Three Forks formations.

As of December 31, 2021, the Company held leasehold and other oil and gas interests in the United States in the Williston Basin, Permian Basin and Appalachian Basin.

Proceeds from property sales will generally be credited to the full cost pool, with no gain or loss recognized, unless such a sale would significantly alter the relationship between capitalized costs and the proved reserves attributable to these costs.

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Under the full cost method of accounting, the Company is required to perform a ceiling test each quarter.

The test determines a limit, or ceiling, on the book value of the proved oil and gas properties.

The test determines a limit, or ceiling, on the net book value of the proved oil and gas properties.

Net capitalized costs are limited to the lower of unamortized cost net of deferred income taxes, or the cost center ceiling.

The proved oil and natural gas properties, net balance was $ 1,226.4 million as of December 31, 2021.

The cost center ceiling is defined as the sum of (a) estimated future net revenues, discounted at 10 % per annum, from proved reserves, based on the trailing twelve-month unweighted average of the first-day-of-the-month price, adjusted for any contract provisions or financial derivatives designated as hedges for accounting purposes, if any, that hedge the Company’s oil and natural gas revenue, and excluding the estimated abandonment costs for properties with asset retirement obligations recorded in the balance sheet, (b) the cost of properties not being amortized, if any, and (c) the lower of cost or market value of unproved properties included in the cost being amortized, including related deferred taxes for differences between the book and tax basis of the oil and natural gas properties.

If the net book value, including related deferred taxes, exceeds the ceiling, an impairment or non-cash writedown is required.

The Company did no t have any ceiling test impairment for the year ended December 31, 2021.

The Company recorded a ceiling test impairment of $ 1,066.7 million for the year ended December 31, 2020.

The Company did no t have any ceiling test impairment for the years ended December 31, 2019 and 2018.

The Company did no t have any ceiling test impairment for the year ended December 31, 2019.

Impairment charges affect the Company’s reported net income but do not reduce the Company’s cash flow.

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The timing by which all other properties will become subject to depletion will be dependent upon the timing of future drilling activities and delineation of its reserves.

Capitalized costs associated with impaired unproved properties and capitalized costs related to properties having proved reserves, plus the estimated future development costs and asset retirement costs, are depleted and amortized on the unit-of-production method.

Capitalized costs associated with impaired unproved properties, which includes leases that have expired or have been deemed uneconomic, and capitalized costs related to properties having proved reserves, plus the estimated future development costs and asset retirement costs, are depleted and amortized on the unit-of-production method.

Under this method, depletion is calculated at the end of each period by multiplying total production for the period by a depletion rate.

The depletion rate is determined by dividing the total unamortized cost base plus future development costs by net equivalent proved reserves at the beginning of the period.

The costs of unproved properties are withheld from the depletion base until such time as they are either proved or impaired.

The costs of unproved properties are withheld from the depletion base until such time as they are either developed or abandoned.

When proved reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion and full cost ceiling calculations.

For the years ended December 31, 2020, 2019 and 2018, the Company expired leases of $ 2.9 million, $ 3.6 million, and $ 9.4 million, respectively.

For the years ended December 31, 2021, 2020 and 2019, unproved properties of $ 3.0 million, $ 2.9 million, and $ 3.6 million, respectively, were impaired.

Asset Retirement Obligations

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The carrying amount of long-term debt associated with borrowings outstanding under the Company’s Revolving Credit Facility approximates fair value as borrowings bear interest at variable rates.

The carrying amounts of the Company’s Second Lien Notes may not approximate fair value because carrying amounts are net of unamortized premiums and debt issuance costs, and the Second Lien Notes bear interest at fixed rates.

The carrying amounts of the Company’s Unsecured Notes due 2028 (see Note 4 below) may not approximate fair value because carrying amounts are net of unamortized premiums and debt issuance costs, and the Unsecured Notes due 2028 bear interest at fixed rates.

See Note 11 for additional discussion.

Debt Issuance Costs

Debt issuance costs related to the Company’s Second Lien Notes and Unsecured VEN Bakken Note (see Note 4 below) are included as a deduction from the carrying amount of long-term debt in the balance sheets and are amortized to interest expense using the effective interest method over the term of the related debt.

Debt issuance costs related to our Unsecured Notes due 2028 are included as a deduction from the carrying amount of long-term debt in the balance sheets and are amortized to interest expense using the effective interest method over the term of the related debt.

Debt issuance costs related to the Revolving Credit Facility are included in other noncurrent assets and are amortized to interest expense on a straight-line basis over the term of the agreement.

Debt Premiums and Discounts

Debt discounts and premiums related to the Company’s Second Lien Notes and Unsecured VEN Bakken Note are included as a deduction from or addition to the carrying amount of the long-term debt in the balance sheets and are amortized to interest expense using the effective interest method over the term of the related notes.

Debt Premiums

Debt premiums related to the Company’s Unsecured Notes due 2028 are included as an addition to the carrying amount of the long-term debt in the balance sheets and are amortized to interest expense using the effective interest method over the term of the related notes.

Revenue Recognition

The Company’s revenues are primarily derived from its interests in the sale of oil and natural gas production.

The Company recognizes revenue from its interests in the sales of oil and natural gas in the period that its performance obligations are satisfied.

The Company recognizes revenue from its interests in the sales of crude oil and natural gas in the period that its performance obligations are satisfied.

Performance obligations are satisfied when the customer obtains control of product, when the Company has no further obligations to perform related to the sale, when the transaction price has been determined and when collectability is probable.

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Accordingly, the variable consideration is not constrained.

The Company does not disclose the value of unsatisfied performance obligations under its contracts with customers as it applies the practical exemption in accordance with ASC 606.

The Company does not disclose the value of unsatisfied performance obligations under its contracts with customers as it applies the practical exemption in accordance with FASB ASC Topic 606.

The exemption, as described in ASC 606-10-50-14(a), applies to variable consideration that is recognized as control of the product is transferred to the customer.

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A wellhead imbalance liability equal to the Company’s share is recorded to the extent that the Company’s well operators have sold volumes in excess of its share of remaining reserves in an underlying property.

However, for the years ended December 31, 2020, 2019 and 2018, the Company’s natural gas production was in balance, meaning its cumulative portion of natural gas production taken and sold from wells in which it has an interest equaled its entitled interest in natural gas production from those wells.

The Company’s disaggregated revenue has two revenue sources, which are oil sales and natural gas and NGL sales, and substantially all of the Company’s revenue comes from one geographic area, the Williston Basin in the United States, primarily in North Dakota and Montana.

Oil sales for the years ended December 31, 2020, 2019 and 2018 were $ 305.2 million, $ 574.6 million and $ 450.1 million, respectively.

Natural gas and NGL sales for the years ended December 31, 2020, 2019 and 2018 were $ 18.8 million, $ 26.6 million and $ 43.8 million, respectively.

However, for the years ended

December 31, 2021, 2020 and 2019, the Company’s natural gas production was in balance, meaning its cumulative portion of natural gas production taken and sold from wells in which it has an interest equaled its entitled interest in natural gas production from those wells.

The Company’s disaggregated revenue has two primary sources:

oil sales and natural gas and NGL sales.

Substantially all of the Company’s oil and natural gas sales come from three geographic areas in the United States:

the Williston Basin (North Dakota and Montana), the Appalachian Basin (Pennsylvania), and the Permian Basin (New Mexico and Texas).

The following tables present the disaggregation of the Company’s oil revenues and natural gas and NGL revenues by basin for the years ended December 31, 2021, 2020 and 2019.

Twelve Months Ended December 31, 2021

(In thousands) Williston Permian Appalachian Total

Oil Revenues $ 730,982 $ 42,488 $ — $ 773,470

Natural Gas and NGL Revenues 141,425 7,386 52,808 201,619

Total $ 872,407 $ 49,874 $ 52,808 $ 975,089

Twelve Months Ended December 31, 2020

(In thousands) Williston Permian Appalachian Total

Oil Revenues $ 304,754 $ 495 $ — $ 305,249

Natural Gas and NGL Revenues 18,773 30 — 18,802

Total $ 323,527 $ 525 $ — $ 324,052

Twelve Months Ended December 31, 2019

(In thousands) Williston Permian Appalachian Total

Oil Revenues $ 574,616 $ — $ — $ 574,616

Natural Gas and NGL Revenues 26,601 — 26,601

Total $ 601,218 $ — $ — $ 601,218

Concentrations of Market, Credit Risk and Other Risks

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If they are not successful in the development, exploitation, production and exploration activities relating to the Company’s leasehold interests, or are unable or unwilling to perform, the Company’s financial condition and results of operation could be adversely affected.

These risks are heightened in the current low commodity price environment, which may present significant challenges to these third-party operators.

The Company’s third-party operators will make decisions in connection with their operations that may not be in the Company’s best interests,

and the Company may have little or no ability to exercise influence over the operational decisions of its third-party operators.

For the years ended December 31, 2020, 2019 and 2018, the Company’s top four operators made up 49 %, 51 % and 55 %, respectively, of total oil and gas sales.

The Company faces concentration risk due to the fact that substantially all of its oil and natural gas properties are located in the Williston Basin, primarily in North Dakota and Montana.

As a result, the Company is disproportionately exposed to risks affecting this geographic area of operations.

These risks are heightened in a low commodity price environment, which may present significant challenges to these third-party operators.

The Company’s third-party operators will make decisions in connection with their operations that may not be in the Company’s best interests, and the Company may have little or no ability to exercise influence over the operational decisions of its third-party operators.

For the years ended December 31, 2021, 2020 and 2019, the Company’s top four operators made up 50 %, 49 % and 51 %, respectively, of total oil and natural gas sales.

The Company faces concentration risk due to the fact that a substantial majority of its oil and natural gas revenue is sourced from North Dakota.

Recent acquisitions have diversified the Company’s portfolio to include Pennsylvania, New Mexico and Texas.

But the Company remains disproportionately exposed to risks affecting a limited number of geographic areas of operations.

The Company manages and controls market and counterparty credit risk.

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Treasury stock is recorded at cost, which includes incremental direct transaction costs, and is retired upon acquisition as a result of share repurchases under the share repurchase program or from the withholding of shares of stock to satisfy employee tax withholding obligations that arise upon the lapse of restrictions on their stock-based awards at the employees’ election.

Stock Issuance

The Company records any stock-based compensation awards issued to non-employees and other external entities for goods and services at either the fair market value of the goods received or services rendered or the instruments issued in exchange for such services, whichever is more readily determinable.

The Company’s income tax expense, deferred tax assets and deferred tax liabilities reflect management’s best assessment of estimated current and future taxes to be paid.

The Company estimates for each interim reporting period the effective tax rate expected for the full fiscal year and uses that estimated rate in providing for income taxes on a current year-to-date basis.

The Company’s only taxing jurisdictions is the United States (federal and state).

The Company’s only taxing jurisdictions are the United States and the US states in which we operate.

Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future.

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Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is “more likely than not” that some component or all of the benefits of deferred tax assets will not be realized.

In assessing the need for a valuation allowance for the Company’s deferred tax assets, a significant item of negative evidence considered was the current year book loss and cumulative book losses in recent years, driven primarily by the full cost ceiling impairments over that period.

In assessing the need for a valuation allowance for the Company’s deferred tax assets, a significant item of negative evidence considered was the cumulative book losses in recent years, driven primarily by the full cost ceiling impairments over that period.

Additionally, the Company’s revenue, profitability and future growth are substantially dependent upon prevailing and future prices for oil and natural gas.

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The Company may also use exchange traded futures contracts and option contracts to hedge the delivery price of crude oil at a future date.

The Company follows the provisions of FASB ASC 815, “Derivatives and Hedging” as amended.

The Company follows the provisions of FASB ASC Topic 815, “Derivatives and Hedging” as amended.

It requires that all derivative instruments be recognized as assets or liabilities in the balance sheet, measured at fair value and marked-to-market at the end of each period.

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See Note 12 for a description of the derivative contracts into which the Company has entered.

Long-lived assets to be held and used are required to be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Proved oil and natural gas properties accounted for using the full cost method of accounting are excluded from this requirement but continue to be subject to the full cost method’s impairment rules.

There was no impairment of other long-lived assets recorded for the years ended December 31, 2020, 2019 and 2018.

Employee Benefit Plans

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Diluted EPS is computed by dividing net income (loss) attributable to common stockholders by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period.

Potential common shares include shares issuable upon exercise of stock options and vesting of restricted stock awards, and shares issuable upon conversion of the Series A Preferred Stock (see Note 5).

Potential common shares include shares issuable upon exercise of stock options or warrants and vesting of restricted stock awards, and shares issuable upon conversion of the Series A Preferred Stock (see Note 5).

The number of potential common shares outstanding are calculated using the treasury stock or if-converted method.

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Supplemental Cash Items:

Cash Paid During the Period for Interest $ 55,109 $ 78,596 $ 78,865

Cash Paid During the Period for Interest, Net of Amount Capitalized $ 46,951 $ 55,109 $ 78,596

Non-cash Operating Activities:

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Compensation Capitalized on Oil and Gas Properties 282 495 412

Issuance of Common Stock Warrants - Acquisitions of Oil and Natural Gas Properties 30,512 — —

Issuance of Common Stock - Acquisitions of Oil and Natural Gas Properties — 1,537 11,708

Other Property and Equipment Included in Accounts Payable 578 — —

Issuance of Unsecured VEN Bakken Note — — 128,660

Non-cash Financing Activities:

Issuance of 8.50 % Second Lien Notes due 2023

Issuance of Common Stock - fair value at issuance date — — 326,783

Common Stock Dividends Declared 6,210 — —

Issuance of Preferred Stock in Exchange for 8.5 % Second Lien Notes due 2023

— 81,212 75,000

Debt Exchange Derivative Liability - fair value at issuance date — — 19,354

Issuance of 8.50 % Second Lien Notes due 2023 - PIK Interest

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Contingent Consideration Settlements — — 17,822

8.00 % Unsecured Senior Notes due 2020 - carrying value

— — ( 590,041 )

New Accounting Pronouncements

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If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments–Credit Losses (Topic 326), Measurement of credit losses on financial instruments, which requires a company immediately recognize management’s current estimated credit losses (“CECL”) for all financial instruments that are not accounted for at fair value through net income.

Previously, credit losses on financial assets were only required to be recognized when they were incurred.

The Company adopted ASU 2016-13 on January 1, 2020.

The guidance did not have a significant impact on the financial statements or notes accompanying the financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement, Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820), to modify disclosure requirements.

The amendments in this ASU remove, modify, and add certain disclosure requirements as a part of the disclosure framework project, which primarily focus on improving the effectiveness of disclosures in the notes to the financial statements.

The Company adopted ASU 2018-13 on January 1, 2020.

The guidance did not have a significant impact on the financial statements or notes accompanying the financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes by removing certain exceptions to the general principles and also simplification of areas such as separate entity financial statements and interim recognition of enactment of tax laws or rate changes.

ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim reporting periods within those years.

The Company adopted the new standard on January 1, 2021 on a prospective basis, which did not have a material impact on its financial position, results of operations, or cash flows.

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”) followed by ASU No.

2021-01, Reference Rate Reform (Topic 848):

Scope (“ASU 2021-01”), issued in January 2021 to provide clarifying guidance regarding the scope of Topic 848.

ASU 2020-04 was issued to provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.

Generally, the guidance is to be applied as of any date from the beginning of an interim period that includes or is subsequent to March 12, 2020, or prospectively from a date within an interim period that includes or is subsequent to March 12, 2020, up to the date that the financial statements are available to be issued.

ASU 2020-04 and ASU 2021-01 are effective for all entities through December 31, 2022.

has not elected to use the optional guidance and continues to evaluate the options provided by ASU 2020-04 and ASU 2021-01 and the impact the new standard will have on its financial statements and related disclosure.

NOTE 3 CRUDE OIL AND NATURAL GAS PROPERTIES

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Acquired assets and liabilities assumed are recorded based on their estimated fair value at the time of the acquisition.

Acquisitions have been funded with internal cash flow, bank borrowings and the issuance of debt and equity securities.

Development capital expenditures and purchases of properties that were in accounts payable and not yet paid in cash at December 31, 2021 and 2020 were approximately $ 111.9 million and $ 88.6 million, respectively.

2021 Acquisitions

During 2020, the Company acquired oil and natural gas properties, through a number of independent transactions, for a total of $ 21.6 million, excluding the associated development costs.

2019 Acquisitions

During 2019, excluding the VEN Bakken Acquisition described below, the Company acquired oil and natural gas properties through a number of independent transactions for a total of $ 53.4 million.

This amount includes $ 22.6 million of development costs that occurred prior to the closings of the acquisitions.

VEN Bakken Acquisition

On July 1, 2019, the Company completed its acquisition (the “VEN Bakken Acquisition”) of certain oil and gas properties and interests from VEN Bakken, LLC (“VEN Bakken”), effective as of July 1, 2019.

VEN Bakken is a wholly-owned subsidiary of Flywheel Bakken, LLC.

At closing the acquired assets consisted of approximately 90.1 net producing wells and 3.3 net wells in process, as well as approximately 18,000 net acres substantially all in North Dakota.

The Company also assumed certain crude oil derivative contracts from VEN Bakken as part of the acquisition.

The VEN Bakken Acquisition was completed pursuant to the purchase and sale agreement between the Company and VEN Bakken, dated as of April 18, 2019.

The total estimated consideration paid by the Company was $ 315.3 million, consisting of (i) $ 174.9 million in cash, (ii) shares of Company common stock valued at $ 11.7 million, and ( iii) $ 128.7 million of value attributable to a 6.0 % unsecured promissory note due July 1, 2022 issued by the Company to VEN Bakken in the aggregate principal amount of $ 130.0 million (the “Unsecured VEN Bakken Note”) .

Th e Company incurred $ 1.8 million o f transactions costs in connection with the acquisition, which are included in general and administrative expense in the statement of operations.

During 2021, in addition to the Reliance Acquisition (defined below), CM Resources Acquisition (defined below) and the Comstock Acquisition (defined below), the Company acquired oil and natural gas properties, through a number of independent transactions, for a total of $ 37.9 million, excluding the associated development costs.

Reliance Acquisition

On April 1, 2021, the Company completed the acquisition of certain oil and gas properties, interests and related net assets from Reliance Marcellus, LLC (the “Reliance Acquisition”), effective July 1, 2020.

At closing, the acquired assets included approximately 95.3 net producing wells and 24.9 net wells in progress, as well as approximately 61,712 net acres in the Appalachian Basin in Pennsylvania.

In addition, the Company assumed minimum volume commitment contracts.

The Reliance Acquisition was completed pursuant to the purchase and sale agreement between the Company and Reliance Marcellus, LLC (“Reliance”), dated February 3, 2021.

The total consideration paid by the Company was $ 140.6 million, consisting of (i) warrants to purchase 3,250,000 shares of the Company’s common stock with an exercise price equal to $ 14.00 per share and a total estimated fair value of $ 30.5 million and (ii) cash purchase consideration of $ 110.1 million.

The Reliance Acquisition was accounted for using the acquisition method under ASC Topic 805, Business Combinations, which requires all assets acquired and liabilities assumed to be recorded at fair value at the acquisition date.

The results of operations from the acquisition from the April 1, 2021 closing date through December 31, 2021, represented approximately $ 52.8 million of revenue and $ 25.0 million of income from operations.

Th e Company incurred $ 6.2 million o f transaction costs in connection with the acquisition, which are included in general and administrative expense in the statement of operations.

The following table reflects the fair values of the net assets and liabilities as of the date of acquisition:

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Proved oil and natural gas properties $ 139,644

Asset retirement cost 2,680

Unproved oil and natural gas properties 10,912

Total assets acquired $ 150,556

Asset retirement obligations ( 6,549 )

Derivative instruments ( 9,694 )

Minimum volume commitment liability ( 3,443 )

Net assets acquired $ 140,564

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Cash consideration $ 110,052

Issuance of common stock ( 5.6 million shares at $ 2.09 per share)

Unsecured VEN Bakken Note 128,660

Issuance of Warrants ( 3.2 million shares at $ 14.00 per share)

Total fair value of consideration transferred $ 140,564

CM Resources Acquisition

On August 2, 2021, the Company completed the acquisition of certain non-operated oil and gas properties from CM Resources, LLC, effective as of April 1, 2021 (the “CM Resources Acquisition”) , for total estimated consideration of $ 101.7 million in cash.

At closing, the acquired assets included approximately 6.5 net producing wells and 3.0 net wells in progress, as well as approximately 2,285 net acres in the Permian Basin.

The CM Resources Acquisition was accounted for using the acquisition method under ASC Topic 805, Business Combinations, which requires all assets acquired and liabilities assumed to be recorded at fair value at the acquisition date.

The results of operations from the acquisition from the August 2, 2021 closing date through December 31, 2021, represented approximately $ 32.5 million of revenue and $ 22.1 million of income from operations.

The following table reflects the fair values of the net assets and liabilities as of the date of acquisition:

(In thousands)

Fair value of net assets:

Proved oil and natural gas properties $ 101,869

Unproved oil and natural gas properties —

Total assets acquired $ 101,869

Asset retirement obligations ( 179 )

Net assets acquired $ 101,691

Fair value of consideration paid for net assets:

Cash consideration $ 101,691

Total fair value of consideration transferred $ 101,691

Pro Forma Information

The following summarized unaudited pro forma statement of operations information for the year ended December 31, 2019 assumes that the VEN Bakken Acquisition occurred as of January 1, 2019.

There is no pro forma information included for the year ended December 31, 2020, because the Company’s actual financial results for such period fully reflect this acquisition.

The following summarized unaudited pro forma statement of operations information for the years ended December 31, 2021 and December 31, 2020 assumes that the Reliance and CM Resources Acquisitions occurred as of January 1, 2020.

The Company prepared the following summarized unaudited pro forma financial results for comparative purposes only.

The summarized unaudited pro forma information may not be indicative of the results that would have occurred had the Company completed this acquisition on the date indicated, or that would be attained in the future.

Year Ended December 31,

The summarized unaudited pro forma information may not be indicative of the results that would have occurred had the Company completed the acquisitions as of January 1, 2020, or that would be attained in the future.

Year Ended December 31, Year Ended December 31,

(In thousands) 2021 2020

Revenues $ 500,728

Net Loss $ ( 95,812 )

Total Revenues $ 526,456 $ 602,951

Net Income (Loss) $ 17,281 $ ( 904,857 )

Comstock Acquisition

On November 16, 2021, the Company completed the acquisition of certain oil and gas properties, interests and related assets from Comstock Oil & Gas, LLC (“Comstock”), effective as of October 1, 2021 (the “Comstock Acquisition”), for total estimated consideration of $ 150.5 million in cash.

The acquisition was accounted for as an asset acquisition under ASC Topic 805 and the acquired assets consisted of approximately 65.9 net producing wells located primarily in Williams, McKenzie, Mountrail and Dunn Counties, North Dakota.

Of the purchase price, 100 % was allocated to proved properties and the Company recognized approximately $ 1.7 million of asset retirement obligations.

The Comstock Acquisition was completed pursuant to the purchase and sale agreement between the Company and Comstock, dated October 6, 2021.

2020 Acquisitions

During 2020, the Company acquired oil and natural gas properties, through a number of independent transactions, for a total of $ 21.6 million, excluding the associated development costs.

From time-to-time the Company may divest assets.

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Revolving Credit Facility $ 55,000 $ 532,000

Unsecured Notes due 2028 750,000 —

Second Lien Notes due 2023 — 287,755

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(1) Debt issuance costs related to the Company’s Revolving Credit Facility of $ 5.7 million and $ 6.5 million as of December 31, 2021 and 2020, are recorded in “Other Noncurrent Assets, Net” in the balance sheets.

During the years ended December 31, 2020 and 2019, the Company recorded a $ 1.5 million and zero write-off of debt issuance costs as a result of the reduction in the borrowing base under the Revolving Credit Facility.

During the years ended December 31, 2021 and 2020, the Company recorded a zero and $ 1.5 million write-off of debt issuance costs as a result of the reduction in the borrowing base under the Revolving Credit Facility.

Revolving Credit Facility

On November 22, 2019, the Company entered into a Second Amended and Restated Credit Agreement (the “Revolving Credit Facility”) with Wells Fargo Bank, National Association, as administrative agent, and the lenders from time to time party thereto, which amended and restated the Company’s prior revolving credit facility that was entered into on October 5, 2018.

The Revolving Credit Facility is scheduled to mature on November 22, 2024, provided that the maturity date shall be 91 days prior to the scheduled maturity date of the earlier of (i) the Second Lien Notes (defined below) if any Second Lien Notes remain

outstanding on such date or (ii) the Unsecured VEN Bakken Note if any principal amount of the Unsecured VEN Bakken Note remains outstanding on such date.

On November 22, 2019, the Company entered into a Second Amended and Restated Credit Agreement (the “Revolving Credit Facility”) with Wells Fargo Bank, National Association, as administrative agent (“Agent”), and the lenders from time to time party thereto, which amended and restated the Company’s prior revolving credit facility that was entered into on October 5, 2018.

The Revolving Credit Facility is scheduled to mature on November 22, 2024.

The Revolving Credit Facility is subject to a borrowing base with maximum loan value to be assigned to the proved reserves attributable to the Company and its subsidiaries’ (if any) oil and gas properties.

The borrowing base as of December 31, 2020 was $ 660.0 million.

As of December 31, 2021, the borrowing base was $ 850.0 million and the aggregate elected commitment amount was $ 750.0 million.

In order to borrow in excess of the elected commitment amount, the Company would need to find new or existing lenders willing to provide the additional commitments.

The borrowing base will be redetermined semiannually on or around April 1st and October 1st, with one interim “wildcard” redetermination available between scheduled redeterminations.

The April 1st scheduled redetermination shall be based on a January 1st engineering report audited by a third-party (reasonably acceptable by the Agent).

The aggregate elected commitment amount may be increased semi-annually upon each scheduled borrowing base redetermination, and up to two times between each scheduled redetermination.

At the Company’s option, borrowings under the Revolving Credit Facility shall bear interest at the base rate or LIBOR plus an applicable margin.

Base rate loans bear interest at a rate per annum equal to the greatest of:

(i) the agent bank’s prime rate;

(i) the Agents’s prime rate;

(ii) the federal funds effective rate plus 50 basis points;

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In addition, the Revolving Credit Facility requires that the Company comply with the following financial covenants:

(i) as of the date of determination, the ratio of total net debt to EBITDAX (as defined in the Revolving Credit Facility) shall be no more than 3.50 to 1.00, measured on a pro forma rolling four quarter basis, and (ii) the current ratio (defined as consolidated current assets including unused amounts of the total commitments, but excluding non-cash assets under FASB ASC 815, divided by consolidated current liabilities excluding current non-cash obligations under FASB ASC 815 and current maturities under the Revolving Credit Facility, the Second Lien Notes and the Unsecured VEN Bakken Note) shall not be less than 1.00 to 1.00 .

The Company is in compliance with these financial covenants as of December 31, 2021.

The Company’s obligations under the Revolving Credit Facility may be accelerated, subject to customary grace and cure periods, upon the occurrence of certain Events of Default (as defined in the Revolving Credit Facility).

Such Events of Default include customary events for a financing agreement of this type, including, without limitation, payment defaults, the inaccuracy of representations and warranties, defaults in the performance of affirmative or negative covenants, defaults on other indebtedness of us or the Company’s subsidiaries, defaults related to judgments and the occurrence of a Change in Control (as defined in the Revolving Credit Facility).

The Company’s obligations under the Revolving Credit Facility are secured by mortgages on not less than 90 % of the value of proven reserves associated with the oil and gas properties included in the determination of the borrowing base.

indebtedness of us or the Company’s subsidiaries, defaults related to judgments and the occurrence of a Change in Control (as defined in the Revolving Credit Facility).

The Company’s obligations under the Revolving Credit Facility are secured by mortgages on not less than 90 % of the value of proved reserves associated with the oil and gas properties included in the determination of the borrowing base.

Additionally, the Company entered into a Guaranty and Collateral Agreement in favor of the Agent for the secured parties, pursuant to which the Company’s obligations under the Revolving Credit Facility are secured by a first priority security interest in substantially all of the Company’s assets.

Unsecured Notes due 2028

On February 18, 2021, the Company and Wilmington Trust, National Association, as trustee, entered into an indenture (the “2028 Notes Indenture”), pursuant to which the Company issued $ 550.0 million in aggregate principal amount of 8.125 % senior unsecured notes due 2028 (the “Original 2028 Notes”).

On November 15, 2021, the Company issued an additional $ 200.0 million aggregate principal amount of 8.125 % senior notes due 2028 (the “Additional 2028 Notes” and, together with the Original 2028 Notes, the “2028 Notes”).

The proceeds of the 2028 Notes were used primarily to refinance existing indebtedness, and for general corporate purposes.

The 2028 Notes will mature on March 1, 2028.

Interest on the 2028 Notes is payable semi-annually in arrears on each March 1 and September 1, commencing September 1, 2021, to holders of record on the February 15 and August 15 immediately preceding the related interest payment date, at a rate of 8.125 % per annum.

Prior to March 1, 2024, the Company may redeem all or a part of the 2028 Notes at a redemption price equal to 100 % of the principal amount of the 2028 Notes redeemed, plus an applicable make-whole premium and accrued and unpaid interest to the redemption date.

On or after March 1, 2024, the Company may redeem all or a part of the 2028 Notes at redemption prices (expressed as percentages of principal amount) equal to 104.063 % for the twelve-month period beginning on March 1, 2024, 102.031 % for the twelve-month period beginning on March 1, 2025, and 100 % beginning on March 1, 2026, plus accrued and unpaid interest to the redemption date.

The 2028 Notes Indenture contains covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries, if any, to:

(i) incur or guarantee additional indebtedness or issue certain types of preferred stock;

(ii) pay dividends or distributions in respect of equity interests or redeem, repurchase or retire equity securities or subordinated indebtedness;

(iii) transfer or sell certain assets;

(iv) make investments;

(v) create liens to secure indebtedness;

(vi) enter into agreements that restrict dividends or other payments from any non-guarantor subsidiary to the Company;

(vii) consolidate with or merge with or into, or sell substantially all of the Company’s assets to, another person;

(viii) enter into transactions with affiliates;

and (ix) create unrestricted subsidiaries.

These covenants are subject to a number of important exceptions and qualifications, and many of these covenants will be terminated if the 2028 Notes achieve an investment grade rating from either Moody’s Investors Services, Inc.

or S&P Global Ratings.

The 2028 Notes Indenture contains customary events of default, including, but not limited to:

(i) default for 30 days in the payment when due of interest on the 2028 Notes;

(ii) default in payment when due of the principal of, or premium, if any, on the 2028 Notes;

(iii) failure by the Company or certain of its subsidiaries, if any, to comply with certain of their respective obligations, covenants or agreements contained in the 2028 Notes or the 2028 Notes Indenture, subject to certain notice and grace periods;

(iv) failure by the Company or any of its restricted subsidiaries to pay indebtedness within any applicable grace period or the acceleration of any such indebtedness if the total amount of such indebtedness exceeds $ 35.0 million;

(v) failure by the Company or any of its restricted subsidiaries that is a Significant Subsidiary (as defined in the 2028 Notes Indenture) to pay final non-appealable judgments aggregating in excess of $ 35.0 million, which judgments are not paid, discharged or stayed for a period of 60 days;

(vi) except as permitted by the 2028 Notes Indenture, any guarantee of the 2028 Notes is held in any judicial proceeding to be unenforceable or invalid, or ceases for any reason to be in full force and effect, or is denied or disaffirmed by a Guarantor (as defined in the 2028 Notes Indenture);

and (vii) certain events of bankruptcy or insolvency described in the 2028 Notes Indenture with respect to the Company and its restricted subsidiaries that are Significant Subsidiaries.

Second Lien Notes due 2023

In May 2018, the Company issued 8.500 % senior secured second lien notes due 2023 (the “Second Lien Notes”) with an aggregate principal amount of $ 344.3 million (the “Original 2L Notes”) in exchange for certain previously outstanding 8.000 % senior unsecured notes due June 1, 2020 (the “Unsecured Notes”).

In October 2018, the Company issued an additional $ 350.0 million aggregate principal amount of Second Lien Notes (the “Additional 2L Notes”), the proceeds of which were used in connection with the retirement of the Company’s prior term loan credit agreement.

In addition, as of and through December 31, 2020, the Company had issued another $ 4.3 million of additional aggregate principal amount of Second Lien Notes pursuant to the interest payment-in-kind provisions thereof.

During 2019, the Company repurchased and retired $ 10.1 million in aggregate principal amount of Second Lien Notes in open market transactions.

In November 2019, the Company completed a cash tender offer to redeem and repay $ 200.0 million principal amount of Second Lien Notes.

Also in November 2019, the Company redeemed and repaid $ 70.8 million principal amount of Second Lien Notes in exchange for shares of Series A Preferred Stock.

During the year ended December 31, 2020, the Company repurchased and retired $ 13.5 million in aggregate principal amount of Second Lien Notes in open market transactions for cash.

During the year ended December 31, 2020, the Company also repurchased and retired $ 116.5 million in aggregate principal amount of Second Lien Notes pursuant to a number of independent, separately negotiated agreements in exchange for aggregate consideration consisting primarily of shares of Series A Preferred Stock and common stock.

The terms of the Second Lien Notes include those stated in the Indenture entered into on May 15, 2018 by the Company and Wilmington Trust, National Association, as trustee (the “Original 2L Indenture”), as amended by the First Supplemental Indenture, dated September 18, 2018 (the “First Supplemental 2L Indenture”), the Second Supplemental Indenture, dated October 5, 2018 (the “Second Supplemental 2L Indenture”), and the Third Supplemental Indenture, dated November 22, 2019 (the “Third Supplemental 2L Indenture” and, together with the Original 2L Indenture, the First Supplemental 2L Indenture, and the Second Supplemental 2L Indenture, the “2L Indenture”).

The Second Lien Notes are the senior secured obligations of the Company and rank equal in right of payment to all existing and future senior indebtedness of the Company and its subsidiaries.

The Second Lien Notes are secured by second priority security interests in substantially all assets of the Company, subject to certain exceptions.

The Second Lien Notes will be guaranteed by all of the Company’s direct and indirect subsidiaries that guarantee indebtedness under any other indebtedness for borrowed money of the Company or any of the Company’s subsidiary guarantors.

As of December 31, 2020, the Company did not have any subsidiaries.

The Second Lien Notes will mature on May 15, 2023.

Interest on the Second Lien Notes accrues at a rate of 8.500 % per annum payable in cash quarterly in arrears on the first day of each calendar quarter.

Additional interest may accrue depending on the Company’s total debt to EBITDAX ratio as of each December 31st and June 30th, provided that any such additional interest would be payable in kind (the “PIK Interest”).

No PIK Interest will accrue so long as the Company’s total debt to EBITDAX ratio remains below 2.50 to 1.00 as of each applicable measurement date.

PIK Interest of 1.00 % per annum will accrue if the Company’s total debt to EBITDAX ratio is less than 2.75 to 1.00 but equal to or greater than 2.50 to 1.00.

PIK Interest of 2.00 % per annum will accrue if the Company’s total debt to EBITDAX ratio is less than 3.00 to 1.00 but equal to or greater than 2.75 to 1.00.

PIK Interest of 3.00 % per annum will accrue if the Company’s total debt to EBITDAX ratio is greater than or equal to 3.00 to 1.00.

No PIK has accrued since March 31, 2019.

Default interest will be payable in cash on demand at the then applicable interest rate plus 3.00 % per annum.

The Company may redeem all or a portion of any of the Second Lien Notes at the following redemption prices during the following time periods (plus accrued and unpaid interest on the Second Lien Notes redeemed):

(i) from and after May 15, 2018 until May 15, 2021, 104 %, (ii) on and after May 15, 2021 until May 15, 2022, 102 %, and (iii) on and after May 15, 2022, 100 %.

Subject to the terms of an intercreditor agreement, the Company is also required to offer to prepay the Second Lien Notes with 100 % of the net cash proceeds of asset sales, casualty events and condemnations in excess of $ 20.0 million not required to be used to pay down the loans under the Revolving Credit Facility, subject to customary exclusions and reinvestment provisions.

Mandatory prepayment offers will be subject to payment of the make whole premium and redemption price set forth above, as applicable.

If a change of control occurs, the Company will be required to offer to repurchase the Second Lien Notes at the repurchase price of 101 % of the principal amount of repurchased Second Lien Notes (subject to the prepayment provisions of the Revolving Credit Facility).

The Second Lien Notes contain negative covenants that limit the Company’s ability, among other things, to pay cash dividends, incur additional indebtedness, sell assets, enter into certain derivatives contracts, change the nature of its business or operations, merge, consolidate, make certain types of investments, amend other debt documents, and incur any additional debt on a subordinated or junior basis to the Revolving Credit Facility and on a senior basis to the Second Lien Notes.

The Second Lien Notes do not include any financial maintenance covenants.

The obligations of the Company under the Second Lien Notes may be accelerated upon the occurrence of an Event of Default (as such term is defined in the 2L Indenture).

Events of Default include customary events for a capital markets debt financing of this type, including, without limitation, payment defaults, the inaccuracy of representations and warranties, defaults in the performance of affirmative or negative covenants, defaults on other indebtedness of the Company or its subsidiaries, bankruptcy or related defaults, defaults related to judgments and the occurrence of a Change of Control (as such term is defined in the 2L Indenture).

See Note 14 below regarding refinancing transactions that occurred subsequent to December 31, 2020.

Unsecured VEN Bakken Note

On July 1, 2019, in connection with the completion of the VEN Bakken Acquisition, the Company issued the Unsecured VEN Bakken Note in the original principal amount of $ 130.0 million (see Note 3 above).

Fifty percent ( 50 %) of the original principal amount of the Unsecured VEN Bakken Note is required to be repaid by the Company on or before January 1, 2021, and the remaining unpaid principal amount is required to be repaid by the Company on or before July 1, 2022, in each case together with all accrued but unpaid interest thereon.

Interest, at a rate of 6.0 % per annum, is due quarterly in arrears on the first day of each calendar quarter, commencing on October 1, 2019.

The Unsecured VEN Bakken Note does not include any financial maintenance covenants and is unsecured.

The obligations of the Company under the Unsecured VEN Bakken Note may be accelerated, subject to certain grace and cure periods, upon the occurrence of an event of default.

Events of default include customary events, including, without limitation, payment defaults, the inaccuracy of representations and warranties, defaults in the performance of certain affirmative or negative covenants, defaults on other indebtedness of the Company, and bankruptcy or insolvency related defaults.

The Unsecured VEN Bakken Note contains negative covenants that limit the Company’s ability, among other things, to pay dividends, repurchase equity, incur additional indebtedness, sell assets, terminate or unwind certain derivatives contracts, change the nature of its business or operations and merge or consolidate.

In addition, the Unsecured VEN Bakken Note is subject to a mandatory prepayment offer in connection with a change of control.

See Note 14 below regarding refinancing transactions that occurred subsequent to December 31, 2020.

During February 2021, the Company completed a cash tender offer pursuant to which it redeemed and retired $ 272.1 million in aggregate principal amount of the Company’s 8.500 % senior secured second lien notes due 2023 (the “Second Lien Notes”).

Immediately thereafter, there was $ 15.7 million in aggregate principal amount of Second Lien Notes remaining outstanding.

In May 2021, the Company redeemed and retired the remaining $ 15.7 million in aggregate principal amount of the Second Lien Notes, and as a result the Second Lien Notes have been retired in full.

Unsecured VEN Bakken Note due 2022

In January 2021, the Company repaid $ 65.0 million in aggregate principal amount under the Company’s 6.0 % senior unsecured promissory note due 2022 (the “Unsecured VEN Bakken Note”), which was a scheduled repayment thereunder.

In February 2021, the Company used a portion of the proceeds from the 2028 Notes to repay the remaining $ 65.0 million in aggregate principal amount outstanding under the Unsecured VEN Bakken Note, and as a result the note has been retired in full.

NOTE 5 COMMON AND PREFERRED STOCK

On September 18, 2020, the Company effected a 1-for-10 reverse stock split of the Company’s issued and outstanding shares of common stock (the “Reverse Stock Split”).

The Company’s common stock began trading on a split‑adjusted basis when the market opened on September 21, 2020.

As a result of the Reverse Stock Split, every ten shares of the Company’s issued and outstanding common stock automatically converted into one share of common stock, without any change in the par value per share.

A total of 44,663,990 shares of common stock were issued and outstanding immediately after the Reverse Stock Split became effective on September 18, 2020.

No fractional shares were outstanding following the Reverse Stock Split.

In connection with the Reverse Stock Split, the number of authorized shares of the Company’s common stock was reduced to 135,000,000 shares of common stock, par value $ 0.001 per share.

The company is authorized to issue up to 135,000,000 shares of common stock, par value $ 0.001 per share.

As of December 31, 2021 and 2020, the Company had 77,341,921 and 45,908,779 shares of common stock issued and outstanding, respectively.

In May 2021, the Company’s Board of Directors declared a cash dividend on the Company’s common stock in the amount of $ 0.03 per share.

The dividend was paid on July 30, 2021 to stockholders of record as of the close of business on June 30, 2021.

In August 2021, the Company’s Board of Directors declared a cash dividend on the Company’s common stock in the amount of $ 0.045 per share.

The dividend was paid on October 29, 2021 to stockholders of record as of the close of business on September 30, 2021.

In November 2021, the Company’s Board of Directors declared a cash dividend on the Company’s common stock in the amount of $ 0.08 per share.

The dividend was paid on January 31, 2022 to stockholders of record as of the close of business on December 30, 2021.

In January 2022, the Company’s Board of Directors declared a cash dividend on the Company’s common stock in the amount of $ 0.14 per share.

The dividend is payable on April 29, 2022 to stockholders of record as of the close of business on March 30, 2022.

In April 2021, in connection with the Reliance Acquisition, the Company issued warrants to purchase 3,250,000 shares of the Company’s common stock at an exercise price equal to $ 14.00 per share (subject to certain adjustments), which are generally exercisable from June 30, 2021 until April 1, 2028.

The grant-date value of the common stock warrants consideration was determined by utilizing an Option Pricing Model.

The common stock warrants are classified as equity on the consolidated balance sheet and therefore are not subject to recurring fair-value adjustments.

The key inputs in applying the Option Pricing Model are as follows:

the market value of the underlying stock which was determined based on the closing market price of the Company’s common shares on the acquisition date, the exercise price of $ 14.00 per share, volatility of 80 % and a risk-free rate of 1.34 %.

As of December 31, 2021, anti-dilution adjustments under the warrants triggered by the Company’s common stock dividends had caused the number of common shares underlying the warrants to increase to 3,276,582 shares and the exercise price to decrease to $ 13.8864 per share.

Preferred Stock

The Company is authorized to issue up to 5,000,000 shares of preferred stock, par value $ 0.001 per share, with such designations, voting and other rights and preferences as may be determined from time to time by the Board of Directors.

As of December 31, 2020 and 2019, the Company had 2,218,732 and 1,500,000 shares of preferred stock issued and outstanding, respectively, all of which were shares of 6.500 % Series A Perpetual Cumulative Convertible Preferred Stock (the “Series A Preferred Stock”).

As of December 31, 2021 and 2020, the Company had 2,218,732 shares of preferred stock issued and outstanding, respectively, all of which were shares of 6.500 % Series A Perpetual Cumulative Convertible Preferred Stock (the “Series A Preferred Stock”).

The terms of the Series A Preferred Stock are set forth in the Certificate of Designations for the Series A Preferred Stock (the “Certificate of Designations”), as originally filed with the Delaware Secretary of State on November 22, 2019, and as amended thereafter.

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Holders of the Series A Preferred Stock are entitled to receive, when, as and if declared by the board of directors of the Company, cumulative dividends in cash, at a rate of 6.500 % per annum on the sum of (i) the $ 100 liquidation preference per share of Series A Preferred Stock (the “Liquidation Preference”) and (ii) all accumulated and unpaid dividends (if any), payable semi-annually in arrears on May 15 and November 15 of each year, commencing on May 15, 2020.

As of December 31, 2020, no dividends had been declared or paid, and there were $ 16.3 million of undeclared accumulated dividends on the Series A Preferred Stock.

The Reverse Stock Split did not affect the number of authorized or issued and outstanding shares of the Company’s preferred stock, nor the liquidation per share preference.

As a result of the Reverse Stock Split and per the terms of the Certificate of Designations, the conversion rate for the Company’s outstanding Series A Preferred Stock was automatically decreased to 4.363 shares of common stock for each share of Series A Preferred Stock (previously it was 43.63 shares of common stock).

The effect of the Reverse Stock Split resulted in the Company recalculating its historical, basic and diluted EPS to reflect the 1-for-10 reverse stock split, effective September 18, 2020.

The Series A Preferred Stock is convertible at the holders’ option (an “Optional Conversion”) into common stock at a conversion rate set forth in the Certificate of Designations, subject to customary adjustments as provided for therein.

As of December 31, 2020, the conversion rate was 4.363 shares of common stock for each share of Series A Preferred Stock (which is equivalent to a conversion price of approximately $ 22.92 per share of common stock).

On May 15, 2021, the Company paid a dividend in the amount of $ 9.9163 per share to the holders of record of the Series A Preferred Stock as of May 1, 2021.

This dividend, which totaled $ 22.0 million in the aggregate, was inclusive of all accrued and

unpaid dividends from the original issue date of the Series A Preferred Stock.

On November 15, 2021, the Company paid a dividend in the amount of $ 3.25 per share to the holders of record of the Series A Preferred Stock as of November 1, 2021.

This dividend, which totaled $ 7.2 million in the aggregate, was inclusive of all accrued and unpaid dividends on the Series A Preferred Stock.

As of December 31, 2021, the Company was current in the payment of dividends and there were $ 1.8 million of undeclared accumulated dividends on the Series A Preferred Stock.

As of December 31, 2021, the conversion rate was 4.3984 shares of common stock for each share of Series A Preferred Stock (which is equivalent to a conversion price of $ 22.7355 .

Holders may be entitled to additional shares of common stock or cash in connection with a conversion that occurs in connection with a Fundamental Change (as defined in the Certificate of Designations).

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The Certificate of Designations also sets forth additional information relating to the payment of dividends, voting, conversion rights, consent rights, liquidation rights, the ranking of the Series A Preferred Stock in comparison with the Company’s other securities, and other matters.

2021 Activity

On February 9, 2021, the Company closed an underwritten public offering of 14,375,000 shares of its common stock at a price to the public of $ 9.75 per share.

This offering resulted in net proceeds of approximately $ 132.9 million, after deducting underwriting discounts and commissions and estimated offering expenses.

On June 21, 2021, the Company closed an underwritten public offering of 5,750,000 shares of its common stock at a price to the public of $ 17.50 per share.

This offering resulted in net proceeds of approximately $ 95.3 million, after deducting underwriting discounts and commissions and estimated offering expenses.

On November 22, 2021, the Company closed an underwritten public offering of 11,000,000 shares of its common stock at a price to the public of $ 20.00 per share.

This offering resulted in net proceeds of approximately $ 209.9 million, after deducting underwriting discounts and commissions and estimated offering expenses.

Stock Repurchase Program

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The stock repurchase program allows the Company to repurchase its shares from time to time in the open market, block transactions and in negotiated transactions.

In 2020, the Company did not repurchase shares of its common stock under the stock repurchase program.

During the years ended December 31, 2021 and 2020, respectively, the Company did not repurchase shares of its common stock under the stock repurchase program.

In 2019, the Company repurchased 0.6 million shares of its common stock under the stock repurchase program at a total cost of $ 16.3 million.

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The Company maintains its 2018 Equity Incentive Plan (the “2018 Plan”), which replaced the Company’s prior 2013 Incentive Plan (the “2013 Plan”), for making equity-based awards to employees, directors and other eligible persons.

No future awards will be made under the 2013 Plan.

No future awards

will be made under the 2013 Plan.

The 2013 Plan continues to govern awards that were made thereunder, which remain in effect pursuant to their terms.

As of December 31, 2021, there were 582,754 shares available for future awards under the 2018 Plan.

In connection with the Reverse Stock Split (see Note 5), the Company reduced the number of shares of common stock available for issuance under the Company’s equity incentive plans in proportion to the Reverse Stock Split ratio of 1-for-10.

The Reverse Stock Split also reduced the number of shares of common stock issuable upon the vesting of its RSAs in proportion to the Reverse Stock Split ratio of 1-for-10 and caused a proportionate increase in share-based performance criteria applicable to such awards.

The Reverse Stock Split has no impact on Net Income (Loss) or total Stockholders’ Equity as of, and for the years ended December 31, 2020, 2019 and 2018.

The Company recognizes the fair value of stock-based compensation awards expected to vest over the requisite service period as a charge against earnings, net of amounts capitalized.

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That cost is expected to be recognized over a weighted average period of 0.91 years.

For the year ended December 31, 2020, 2019 and 2018, the total fair value of the Company’s restricted stock awards vested was $ 2.7 million, $ 6.6 million and $ 3.5 million, respectively.

In December 2019, the compensation committee of the board of directors modified both the 2019 Performance Award I and the 2019 Performance Award II.

The 2019 Performance Award I was modified to deem the debt-adjusted cash flow per share targets as having been achieved, the effect of which was to essentially convert these awards into RSAs having only service-based vesting conditions.

The fair value of the modified 2019 Performance Award I was $ 18.80 per share, resulting in incremental compensation expense of $ 2.0 million as a result of the modification, which will be expensed over the requisite service periods.

The 2019 Performance Award II was modified (solely for executive officers and employees, not for directors) such that the shares subject thereto now vest contingent on the Company’s average closing stock price meeting specified targets for any consecutive twenty trading day period ending on or before December 31, 2020.

The fair value of the modified 2019 Performance Award II was $ 10.40 per share and was estimated using a Monte Carlo simulation.

This resulted in incremental compensation expense of $ 1.1 million as a result of the modification, which will be expensed over the requisite service periods.

The assumptions used to estimate the fair value of the 2019 Performance Award II granted as of the date presented are as follows:

Pre-Modification At Modification

January 4, 2019 December 13, 2019 December 13, 2019

Risk-free interest rate 2.57 % 1.53 % 1.53 %

Dividend yield — % — % — %

Expected volatility 85.00 % 65.00 % 65.00 %

For the years ended December 31, 2021, 2020 and 2019, the total fair value of the Company’s restricted stock awards vested was $ 1.8 million, $ 2.7 million and $ 6.6 million, respectively.

NOTE 7 RELATED PARTY TRANSACTIONS

November 2019 Refinancing Transactions

On October 21, 2019, the Company announced the commencement of (i) a cash tender offer (the “Tender Offer”) to purchase up to $ 200.0 million in aggregate principal amount of the Company’s Second Lien Notes;

(ii) an exchange offer (the “Exchange Offer”) to eligible holders of Second Lien Notes to exchange up to $ 70.8 million in aggregate principal amount of Second Lien Notes for shares of the Company’s newly issued Series A Preferred Stock;

(iii) a related solicitation of consents (the “Consent Solicitation”) to adopt certain proposed amendments to the indenture for the Second Lien Notes, and (iv) an offer to eligible holders of Second Lien Notes to subscribe to purchase for up to $ 75.0 million in cash additional shares of Series A Preferred Stock (the “Subscription Offer”).

Parties affiliated with TRT Holdings, Inc.

(collectively, the “TRT Parties”) held Second Lien Notes and thus had the right to participate in the Tender Offer, Exchange Offer, Consent Solicitation and Subscription Offer on terms identical to the terms generally offered to all holders of Second Lien Notes.

These transactions closed on November 22, 2019, with the TRT Parties (i) exchanging $ 1.0 million aggregate principal amount of Second Lien Notes for 10,947 shares of Series A Preferred Stock pursuant to the Exchange Offer and (ii) acquiring 10,947 additional shares of Series A Preferred Stock for a purchase price of $ 1.1 million pursuant to the Subscription Offer.

On February 20, 2020, the Company entered into an exchange agreement (the “Exchange Agreement”) with the TRT Parties related to the Series A Preferred Stock, as follows.

The certificate of designations of the Series A Preferred Stock, as amended (the “Certificate of Designations”), contains limitations on the ability of the company or holders of Series A Preferred Stock to effect conversions of shares of Series A Preferred Stock for shares of the Company’s common stock if after a conversion a holder would beneficially own shares of common stock in excess of 9.99 % of the aggregate number of shares of the Company’s common stock outstanding immediately after giving pro forma effect to the issuance of shares upon such conversion (the “Conversion Cap”).

As of the date of the Exchange Agreement, the TRT Parties collectively beneficially owned a number of shares of the Company’s common stock in excess of the Conversion Cap.

The Exchange Agreement provides, notwithstanding anything to the contrary in the Certificate of Designations, including the Conversion Cap, for the TRT Parties to be able to exchange shares of Series A Preferred Stock for shares of the Company’s common stock in the manner otherwise contemplated by the Certificate of Designations.

As of the date hereof, the TRT Parties have not exchanged or converted any shares of Series A Preferred Stock into common stock.

Two of our directors, Mr.

Frantz and Mr.

Popejoy, are employed by the TRT Parties and the TRT Parties beneficially owned in excess of 10% of the Company’s outstanding common stock at the time of the transactions described in this paragraph.

In January 2019, the Company repurchased 0.4 million shares of Company common stock from W Energy Partners LLC (“W Energy”) for cash consideration of $ 11.1 million.

The repurchased shares were originally issued by the Company as partial consideration for an acquisition of oil and gas properties from W Energy during 2018.

W Energy beneficially owned in excess of 10% of the Company’s outstanding common stock at the time of the repurchase transactions.

The Company’s Audit Committee is responsible for approving all transactions involving related parties, including each of the transactions identified above.

The Company’s Audit Committee is responsible for approving all transactions involving related parties.

NOTE 8 COMMITMENTS & CONTINGENCIES

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The Company fully maintains the validity of its interests in the crude oil and natural gas leases.

Delivery Commitments

As of December 31, 2021, the Company had certain agreements associated with the Company’s Appalachian basin properties which require the Company to deliver firm quantities of natural gas to certain third parties, which we seek to fulfill with products from existing reserves.

In the event we are not able to meet these firm commitments, we are subject to deficiency payments.

The estimable future commitments under these volume commitment agreements as of December 31, 2021 are as follows:

(in Bcf) Commitment Volumes

The Company recognizes any deficiency payments in the period in which the underdelivery takes place pursuant to the agreements and the related liability has been incurred.

These amounts are recognized in operating expenses in the Company’s Statement of Operations.

The amount and timing of any such deficiency payments that may be incurred in the future can not be accurately estimated.

NOTE 9 ASSET RETIREMENT OBLIGATIONS

The Company has asset retirement obligations associated with the future plugging and abandonment of proved properties and related facilities.

Initially, the fair value of a liability for an ARO is recorded in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset.

Initially, the fair value of a liability for an asset retirement obligation (“ARO”) is recorded in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset.

The liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset.

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For example, as the Company analyzes actual plugging and abandonment information, the Company may revise its estimate of current costs, the assumed annual inflation of the costs and/or the assumed productive lives of its wells.

During 2020 and 2019, there were no adjustments to the aforementioned assumptions requiring revisions of previous estimates.

During 2021, the Company adjusted the assumed productive lives of certain of its wells.

During 2020, there were no adjustments to the aforementioned assumptions requiring revisions of previous estimates.

The following table summarizes the Company’s asset retirement obligation transactions recorded during the years ended December 31, 2021 and 2020.

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The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income (loss) in the period that includes the enactment date.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law making several changes to the Internal Revenue Code.

The changes include, but are not limited to:

increasing the limitation on the amount of deductible interest expense, allowing companies to carryback certain net operating losses, and increasing the amount of net operating loss carryforwards that corporations can use to offset taxable income.

The income tax provision (benefit) for the years ended December 31, 2021, 2020, and 2019 consists of the following:

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Federal $ — $ ( 376 ) $ ( 210 )

State 233 — —

Federal 130 ( 175,309 ) ( 16,676 )

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Taxes Computed at Federal Statutory Rates 1,385 ( 190,303 ) ( 16,027 )

State Taxes, Net of Federal Taxes ( 20,881 ) ( 2,630 ) 9,143

State Tax (Benefit), Net of Federal Taxes ( 3,752 ) ( 20,881 ) ( 2,630 )

Deferred Tax Adjustment ( 1,488 ) 3,686 ( 1,891 )

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Net Operating Loss Adjustment — 12,494 —

Section 382 Limitation — — 63,573

Other 234 1,541 51

Valuation Allowance 3,854 193,297 20,464

Reported Tax Benefit $ ( 166 ) $ — $ ( 55 )

The Company’s May 15, 2018 closing under an exchange agreement and related transactions triggered an ownership change within the meaning of Section 382 of the Internal Revenue Code (“IRC”) due to the share issuances related thereto.

In general, an ownership change, as defined in IRC Section 382, results from a transaction or series of transactions over a three-year period resulting in an ownership change of more than 50% of the outstanding stock of a company by certain stockholders or public groups.

Since the Company has experienced an ownership change, utilization of net operating losses (“NOL”) and other tax carryforward attributes including, but are not limited to, interest expense limitations, are subject to an annual limitation.

Accordingly, the Company reduced its net operating loss deferred tax asset and related valuation allowance by $ 63.6 million during 2018.

In 2020, the Company further reduced its net operating loss deferred tax asset and related valuation allowance by $ 12.5 million due to changes from the CARES Act and the finalized IRC regulations, that increased the limitation on the amount of deductible interest expense.

Reported Tax Expense (Benefit) $ 233 $ ( 166 ) $ —

In 2020, the Company reduced its net operating loss deferred tax asset and related valuation allowance by $ 12.5 million due to changes from the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and the finalized IRC regulations, that increased the limitation on the amount of deductible interest expense.

A valuation allowance is established to reduce deferred tax assets if it is determined that it is more likely than not that the related tax benefit will not be realized.

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Crude Oil and Natural Gas Properties and Other Properties 124,531 222,668

Interest Carryforwards — 49,011

Derivative Instruments 63,739 ( 10,104 )

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The Company’s policy is to recognize potential interest and penalties accrued related to unrecognized tax benefits within income tax expense.

For the years ended December 31, 2020, 2019 and 2018, the Company did no t recognize any interest or

penalties in its statements of operations, no r did it have any interest or penalties accrued in its balance sheet at December 31, 2020 and 2019 relating to unrecognized benefits.

For the years ended December 31, 2021, 2020 and 2019, the Company did no t recognize any interest or penalties in its statements of operations, no r did it have any interest or penalties accrued in its balance sheet at December 31, 2021 and 2020 relating to unrecognized benefits.

The tax years 2021, 2020, 2019, and 2018 remain open to examination for federal income tax purposes and by the other major taxing jurisdictions to which the Company is subject.

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Commodity Derivatives – Noncurrent Liabilities — ( 147,762 ) —

Interest Rate Derivatives – Noncurrent Assets — 123 —

Interest Rate Derivatives – Current Liabilities — ( 100 ) —

Interest Rate Derivatives – Noncurrent Liabilities — ( 445 ) —

Total $ — $ ( 277,664 ) $ —

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Commodity Derivatives – Current Assets $ — $ 51,290 $ —

Commodity Derivatives – Current Liabilities $ — $ ( 11,298 ) $ —

Commodity Derivatives – Noncurrent Assets — 111 —

Commodity Derivatives – Current Liabilities — ( 2,504 ) —

Commodity Derivatives – Noncurrent Liabilities — ( 14,214 ) —

Interest Rate Derivatives – Current Liabilities — ( 574 ) —

Interest Rate Derivatives – Noncurrent Liabilities — ( 445 ) —

Total $ — $ 33,664 $ —

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The carrying amounts of cash equivalents, receivables and payables approximate fair value due to the highly liquid or short-term nature of these instruments.

Long-term debt is not presented at fair value in the balance sheets, as it is recorded at carrying value, net of unamortized debt issuance costs and unamortized premium or discount (see Note 4).

The fair value of the Company’s Second Lien Notes is $ 256.1 million and $ 434.4 million at December 31, 2020 and 2019.

The fair value of the Company’s Second Lien Notes are based on active market quotes, which represent Level 1 inputs.

There is no active market for the Revolving Credit Facility or the Unsecured VEN Bakken Note.

Long-term debt is not presented at fair value in the balance sheets, as it is recorded at carrying value, net of unamortized debt issuance costs and unamortized premium (see Note 4).

The fair value of the Company’s 2028 Notes was $ 796.9 million at December 31, 2021.

The fair value of the Company’s 2028 Notes are based on market quotes that represent Level 2 inputs.

There is no active market for the Revolving Credit Facility.

The recorded value of the Revolving Credit Facility approximates its fair value because of its floating rate structure based on the LIBOR spread, secured interest, and the Company’s borrowing base utilization.

The recorded fair value of the VEN Bakken Note is based primarily on estimated current rates available to us for debt of the same remaining duration and adjusted for nonperformance risk and credit risk (see Note 3).

The fair value of the Unsecured VEN Bakken Note is $ 129.3 million and $ 130.0 million at December 31, 2020 and 2019, respectively.

The fair value measurements for the Revolving Credit Facility and the Unsecured VEN Bakken Note represent Level 2 inputs.

The fair value measurement for the Revolving Credit Facility represents Level 2 inputs.

Non-Financial Assets and Liabilities

The Company estimates asset retirement obligations pursuant to the provisions of ASC 410.

The initial measurement of asset retirement obligations at fair value is calculated using discounted cash flow techniques and based on internal estimates of future retirement costs associated with oil and natural gas properties.

Given the unobservable nature of the inputs, including plugging costs and reserve lives, the initial measurement of the asset retirement obligations liability is deemed to use Level 3 inputs.

Asset retirement obligations incurred and acquired during the year ended December 31, 2020 were approximately $ 0.7 million.

The Company estimates AROs pursuant to the provisions of ASC 410.

The initial measurement of AROs at fair value is calculated using discounted cash flow techniques and based on internal estimates of future retirement costs associated with oil and natural gas properties.

Given the unobservable nature of the inputs, including plugging costs and reserve lives, the initial measurement of the AROs liability is deemed to use Level 3 inputs.

AROs incurred and acquired during the year ended December 31, 2021 were approximately $ 11.5 million.

The Company issued common stock warrants in the Company as a part of the Reliance Acquisition as purchase consideration.

The common stock warrants issued were to purchase 3,250,000 shares of the Company’s common stock at an exercise price equal to $ 14.00 per share (subject to certain adjustments), which are generally exercisable from June 30, 2021 until April 1, 2028.

The fair value of the common stock warrants consideration was determined by utilizing an Option Pricing Model.

These non-recurring fair value measurements are primarily determined using inputs observable or can be corroborated by observable market data (Level 2 inputs).

The Company accounts for acquisitions of oil and natural gas properties under the acquisition method of accounting.

Accordingly, the Company conducts assessments of net assets acquired and recognizes amounts for identifiable assets acquired and liabilities assumed at the estimated acquisition date fair values, while transaction costs associated with the acquisitions are expensed as incurred.

The Company makes various assumptions in estimating the fair values of assets acquired and liabilities assumed.

The most significant assumptions relate to the estimated fair value of oil and natural gas properties.

The fair value of these properties is measured using a discounted cash flow model that converts future cash flows to a single discounted amount.

These assumptions represent Level 3 inputs under the fair value hierarchy.

See Note 3 for additional discussion of the Company’s acquisitions of oil and natural gas properties during the year ended December 31, 2021 and discussion of the significant inputs to the valuations.

Though the Company believes the methods used to estimate fair value are consistent with those used by other market participants, the use of other methods or assumptions could result in a different estimate of fair value.

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NOTE 12 DERIVATIVE INSTRUMENTS AND PRICE RISK MANAGEMENT

The Company utilizes commodity price swaps, basis swaps, swaptions and collars (purchased put options and written call options) to (i) reduce the effects of volatility in price changes on the crude oil and natural gas commodities it produces and sells, (ii) reduce commodity price risk and (iii) provide a base level of cash flow in order to assure it can execute at least a portion of its capital spending.

The Company utilizes various commodity price derivative instruments to (i) reduce the effects of volatility in price changes on the crude oil and natural gas commodities it produces and sells, (ii) reduce commodity price risk and (iii) provide a base level of cash flow in order to assure it can execute at least a portion of its capital spending.

In addition, from time to time the Company utilizes interest rate swaps to mitigate exposure to changes in interest rates on the Company’s variable-rate indebtedness.

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(In thousands) 2021 2020 2019

Gain (Loss) on Settled Commodity Derivatives $ 188,264 $ 44,377 $ ( 22,886 )

Gain (Loss) on Unsettled Commodity Derivatives 39,878 ( 173,214 ) 207,892

Gain (Loss) on Derivative Instruments, Net $ 228,141 $ ( 128,837 ) $ 185,006

Cash Received (Paid) on Settled Derivatives $ ( 165,823 ) $ 188,264 $ 44,377

Non-Cash Mark-to-Market Gain (Loss) on Derivatives ( 312,370 ) 39,878 ( 173,214 )

Gain (Loss) on Commodity Derivatives, Net $ ( 478,193 ) $ 228,141 $ ( 128,837 )

The following table summarizes open commodity derivative positions as of December 31, 2021, for commodity derivatives that were entered into through December 31, 2021, for the settlement period presented:

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Weighted-Average Price ($/Bbl) $ 60.58 $ 64.40 $ 63.82 $ —

Brent ICE - Swaps:

Volume (Bbl) 365,000 — — —

Weighted-Average Price ($/Bbl) $ 55.00 $ — $ — $ —

WTI NYMEX - Swaptions:

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Weighted-Average Price ($/Bbl) $ — $ 54.94 $ 62.25 $ —

Bakken Crude UHC to WTI NYMEX - Basis Swaps:

WTI NYMEX - Call Options:

Volume (Bbl) $ — 730,000 3,264,210 730,000

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Weighted-Average Price ($/MMBtu) $ 3.27 $ 3.67 $ 3.22 $ —

Volume (MMBtu) 1,375,000 900,000 — —

Weighted-Average Price ($/MMBtu) $ 3.18 $ 3.62 $ — $ —

Waha Inside FERC to Henry Hub - Basis Swaps:

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Weighted-Average Differential ($/MMBtu) $ ( 0.26 ) $ — $ — $ —

Henry Hub NYMEX - Collars:

Volume (MMBtu) 6,360,000 900,000 — —

Weighted-average floor price ($/MMBtu) $ 3.64 $ 3.50 $ — $ —

Weighted-average ceiling price ($/MMBtu) $ 7.21 $ 7.50 $ — $ —

Columbia/TCO-POOL - Basis Swaps:

Volume (MMBtu) — — — —

Weighted-Average Differential ($/MMBtu) $ — $ — $ — $ —

Dominion - App - Basis Swaps:

Volume (MMBtu) 355,729 — — —

Weighted-Average Differential ($/MMBtu) $ ( 0.64 ) $ — $ — $ —

NE - TETCO M2 - Basis Swaps:

Volume (MMBtu) 12,496,561 1,350,000 — —

Weighted-Average Differential ($/MMBtu) $ ( 0.83 ) $ ( 0.83 ) $ — $ —

______________

(1) Swaptions are crude oil derivative contracts that give counterparties the option to extend certain derivative contracts for additional periods.

The volumes and prices reflected as Swaptions in this table will only be effective if the options are exercised by the applicable counterparties.

Call Options are crude oil derivative contracts sold by the Company that give counterparties the option to exercise certain derivative contracts.

The volumes and prices reflected as Swaptions and Call Options in this table will only be effective if the options are exercised by the applicable counterparties.

Interest Rate Derivative Instruments

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The settlement of these derivative instruments is recognized as a component of interest expense in the statements of operations.

The mark-to-market component of these derivative instruments is recognized in loss on unsettled interest rate derivatives, net in the statements of operations.

The mark-to-market component of these derivative instruments is recognized in gain (loss) on unsettled interest rate derivatives, net in the statements of operations.

Other Information Regarding Derivative Instruments

The following table sets forth the amounts, on a gross basis, and classification of the Company’s outstanding derivative financial instruments at December 31, 2021 and 2020, respectively.

Certain amounts may be presented on a net basis in the financial statements when such amounts are with the same counterparty and subject to a master netting arrangement:

Certain amounts may be presented on a net basis on the financial statements when such amounts are with the same counterparty and subject to a master netting arrangement:

(In thousands) December 31,

Estimated Fair Value

Type of Commodity Derivative Contract Balance Sheet Location 2020 2019

Type of Commodity Balance Sheet Location 2021 2020

Derivative Assets:

(In thousands)

Commodity Price Swap Contracts Current Assets $ 4,272 $ 52,702

Commodity Basis Swap Contracts Current Assets 1,916 37

Interest Rate Swap Contracts Current Assets 89 —

Commodity Price Swaptions Contracts Current Assets 3,020 —

Commodity Price Collar Contracts Current Assets 1,963 —

Commodity Price Swap Contracts Noncurrent Assets 3,619 3,479

Commodity Basis Swap Contracts Noncurrent Assets 309 —

Commodity Price Collar Contracts Noncurrent Assets 407 —

Interest Rate Swap Contracts Noncurrent Assets 123 —

Total Derivative Assets $ 15,719 $ 56,218

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Commodity Basis Swap Contracts Current Liabilities ( 1,309 ) ( 519 )

Commodity Price Swaptions Contracts Current Liabilities ( 3,020 ) —

Interest Rate Swap Contracts Current Liabilities ( 189 ) ( 574 )

Commodity Price Collar Contracts Current Liabilities ( 119 ) —

Commodity Price Swap Contracts Noncurrent Liabilities ( 8,465 ) ( 399 )

Commodity Basis Swap Contracts Noncurrent Liabilities ( 823 ) —

Commodity Price Collar Contracts Noncurrent Liabilities ( 275 ) —

Interest Rate Swap Contracts Noncurrent Liabilities — ( 445 )

Commodity Price Call Option Contracts Noncurrent Liabilities ( 71,815 ) —

Commodity Price Swaptions Contracts Noncurrent Liabilities ( 68,980 ) ( 17,184 )

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Estimated Fair Value at December 31, 2021

(In thousands) Gross Amounts of Recognized Assets (Liabilities) Gross Amounts Offset in the

Balance Sheet Net Amounts of Assets (Liabilities) Presented in the Balance Sheet

(In thousands) Gross Amounts of Recognized Assets (Liabilities) Gross Amounts Offset on the

Balance Sheet Net Amounts of Assets (Liabilities) Presented on the Balance Sheet

Offsetting of Derivative Assets:

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Estimated Fair Value at December 31, 2020

(In thousands) Gross Amounts of Recognized Assets (Liabilities) Gross Amounts Offset in the

Balance Sheet Net Amounts of Assets (Liabilities) Presented in the Balance Sheet

(In thousands) Gross Amounts of Recognized Assets (Liabilities) Gross Amounts Offset on the

Balance Sheet Net Amounts of Assets (Liabilities) Presented on the Balance Sheet

Offsetting of Derivative Assets:

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14,761 15,266 1,029

Net Income (Loss) Attributable to Common Stock $ ( 921,307 ) $ ( 77,347 ) $ 143,689

Net Loss Attributable to Common Stock $ ( 8,400 ) $ ( 921,307 ) $ ( 77,347 )

Weighted Average Common Shares Outstanding:

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Weighted Average Common Shares Outstanding – Diluted 62,989,543 42,744,639 38,708,460

Net Income (Loss) per Common Share:

Net Loss per Common Share:

Basic $ ( 0.13 ) $ ( 21.55 ) $ ( 2.00 )

Diluted $ ( 0.13 ) $ ( 21.55 ) $ ( 2.00 )

*Adjusted for the 1-for-10 reverse stock split effected on September 18, 2020.

For the years ended December 31, 2021, 2020, and 2019, the Company’s potentially dilutive securities, which include stock options, restricted stock and convertible preferred shares, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share.

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Series A Preferred Stock (if converted) 9,758,871 9,899,376 7,079,907

Warrants 468,325 — —

Total 10,377,207 9,997,971 7,147,211

*Adjusted for the 1-for-10 reverse stock split effected on September 18, 2020.

NOTE 14 SUBSEQUENT EVENTS

Reliance Acquisition

On February 3, 2021, the Company entered into a purchase and sale agreement (the “Reliance PSA”) with Reliance Marcellus, LLC (“Reliance”) pursuant to which the Company agreed to acquire (the “Reliance Acquisition”) certain oil and gas properties, interests and related assets located in the Appalachian Basin (the “PSA Assets”) for an unadjusted aggregate purchase price of $ 250.0 million, plus warrants to purchase 3,250,000 shares of the Company’s common stock at an exercise price equal to $ 14.00 per share (the “Warrants”), subject to certain customary purchase price adjustments.

The Reliance PSA contains customary representations and warranties, covenants and indemnification provisions and has an effective date of July 1, 2020.

The obligations of the parties to complete the transactions contemplated by the Reliance PSA are subject to the satisfaction or waiver of customary closing conditions set forth therein.

The anticipated closing date under the Reliance PSA is April 1, 2021.

In connection with the pending Reliance Acquisition, on February 3, 2021, the Company also entered into a cooperation agreement (the “Cooperation Agreement”) with an unaffiliated third party, Arch Investment Partners, LLC (“Arch”).

Pursuant to the Cooperation Agreement, the Company expects to assign an undivided 30 % interest in and to the Reliance PSA, including the right to acquire an equivalent share of the PSA Assets transferred under the Reliance PSA, to Arch, with Arch assuming the obligation to fund 30 % of the aggregate cash purchase price payable to Reliance under the Reliance PSA.

As a result, if all of the PSA Assets were transferred at closing, the Company would acquire an undivided 70 % interest in those assets for an unadjusted aggregate purchase price payable by the Company comprised of $ 175.0 million in cash and the Warrants.

Certain of the PSA Assets to be purchased in connection with the pending Reliance Acquisition are subject to both preferential purchase and consent rights, which, if exercised or not obtained within certain periods of time designated in the Reliance PSA, would result in the exclusion of such assets from the pending Reliance Acquisition and a reduction of the purchase price thereunder.

Certain of the preferential purchase rights were exercised by third parties prior to the issuance of these financial statements, and as a result the related assets will be excluded from the assets transferred at closing.

The unadjusted cash purchase price payable by the Company will be reduced by an estimated $ 48.6 million to reflect these excluded assets, from $ 175.0 million to $ 126.4 million.

Additional adjustments are possible at or prior to closing.

Financing Transactions

Unsecured VEN Bakken Note Repayment

On January 4, 2021, the Company used borrowings under the Revolving Credit Facility to repay $ 65.0 million in aggregate principal amount under the Unsecured VEN Bakken Note, which was a scheduled repayment thereunder.

On February 18, 2021, the Company used proceeds from the 2028 Notes Offering (described below) to repay the remaining $ 65.0 million in aggregate principal amount outstanding under the Unsecured VEN Bakken Note, and as a result the note has been retired in full.

Amendment to Revolving Credit Facility

On February 3, 2021, in anticipation of the financing transactions described below, the Company entered into a second amendment (the “Amendment”) to its Revolving Credit Facility, which permits the Company to (i) issue unsecured senior debt securities in an aggregate principal amount not to exceed $ 600.0 million (which was used to issue the 2028 Notes described below) and (ii) repay the remaining outstanding balance of the Unsecured VEN Bakken Note and the Second Lien Notes.

The Amendment also amended certain other provisions of the Revolving Credit Facility.

Offering of Common Stock

On February 9, 2021, the Company closed an underwritten public offering (the “Equity Offering”) of 14,375,000 shares of its common stock at a price to the public of $ 9.75 per share.

The Company estimates that the Equity Offering resulted in net proceeds of approximately $ 132.4 million, after deducting underwriting discounts and commissions and estimated offering expenses.

The Company intends to use the net proceeds from the Equity Offering to fund a portion of the cash purchase price for the pending Reliance Acquisition.

Offering of Senior Notes due 2028

On February 18, 2021, the Company closed a private offering (the “2028 Notes Offering”) of $ 550.0 million in aggregate principal amount of new 8.125 % senior unsecured notes due 2028 (the “2028 Notes”), priced at par.

The Company estimates that the 2028 Notes Offering resulted in net proceeds of approximately $ 537.0 million, after deducting the initial purchasers’ discounts and estimated offering expenses.

The Company used a portion of the net proceeds on February 18, 2021, to (i) repay the remaining $ 65.0 million in aggregate principal amount outstanding under the Unsecured VEN Bakken Note, and (ii) redeem $ 272.1 million in aggregate principal amount of Second Lien Notes pursuant to the Tender Offer (defined below).

The Company intends to use the remaining net proceeds to (i) fund a portion of the cash purchase price for the pending Reliance Acquisition, (ii) repay borrowings under the Revolving Credit Facility, (iii) repurchase or redeem all remaining outstanding Second Lien Notes on or before May 15, 2021, and (iv) for general corporate purposes.

See “Indenture — Senior Notes due 2028” below for details regarding the terms of the 2028 Notes.

Second Lien Notes — Tender Offer, Consent Solicitation and Fourth Supplemental Indenture

In connection with the 2028 Notes Offering, the Company commenced a cash tender offer to purchase any and all of its outstanding Second Lien Notes (the “Tender Offer”).

As of February 17, 2021 (the “Early Tender and Consent Date”), an aggregate of $ 272.1 million principal amount (or 94.6 %) of the outstanding Second Lien Notes had been validly tendered pursuant to the Tender Offer and not validly withdrawn (the “Early Tendered Notes”).

On February 18, 2021, the Company purchased all of the Early Tendered Notes for an aggregate cost of approximately $ 283.3 million, including all premiums and accrued interest due in respect of such Early Tendered Notes pursuant to the Tender Offer.

Immediately thereafter, there was $ 15.7 million in aggregate principal amount of Second Lien Notes remaining outstanding.

In connection with the Tender Offer, the Company also solicited consents (the “Consent Solicitation”) to certain proposed amendments (the “Proposed Amendments”) to the 2L Indenture governing the Second Lien Notes.

The requisite consents were obtained as of the Early Tender and Consent Date.

As a result, on February 18, 2021, the Company entered into the Fourth Supplemental Indenture (the “Fourth Supplemental Indenture”) with Wilmington Trust, National Association, as trustee and as collateral agent.

The Fourth Supplemental Indenture implements the Proposed Amendments which, among other things, amends the 2L Indenture to eliminate substantially all restrictive covenants and certain of the default provisions contained therein.

Indenture — Senior Notes due 2028

The 2028 Notes will mature on March 1, 2028.

The 2028 Notes Indenture contains covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries, if any, to:

(i) incur or guarantee additional indebtedness or issue certain types of preferred stock;

(ii) pay dividends or distributions in respect of equity interests or redeem, repurchase or retire equity securities or subordinated indebtedness;

(iii) transfer or sell certain assets;

(iv) make investments;

(v) create liens to secure indebtedness;

(vi) enter into

agreements that restrict dividends or other payments from any non-guarantor subsidiary to the Company;

(vii) consolidate with or merge with or into, or sell substantially all of the Company’s assets to, another person;

(viii) enter into transactions with affiliates;

and (ix) create unrestricted subsidiaries.

or S&P Global Ratings.

The 2028 Notes Indenture contains customary events of default, including, but not limited to:

(i) default for 30 days in the payment when due of interest on the 2028 Notes;

(ii) default in payment when due of the principal of, or premium, if any, on the 2028 Notes;

and (vii) certain events of bankruptcy or insolvency described in the 2028 Notes Indenture with respect to the Company and its restricted subsidiaries that are Significant Subsidiaries.

Veritas Acquisition

On November 16, 2021, the Company entered into a purchase and sale agreement (the “PSA”) with Veritas TM Resources, LLC, Veritas Permian Resources, LLC, Veritas Lone Star Resources, LLC, and Veritas MOC Resources, LLC (collectively, “Veritas”) pursuant to which the Company agreed to acquire (the “Veritas Acquisition”) certain oil and gas properties, interests and related assets.

The Company completed the closing of the Veritas Acquisition pursuant to the PSA on January 27, 2022, with an effective date of October 1, 2021.

In accordance with the PSA, the Company paid closing consideration to Veritas in respect of the acquired assets consisting of $ 419.4 million in cash (which includes a $ 40.7 million cash deposit previously paid by the Company upon the execution of the PSA and held in escrow in accordance with the terms of the PSA) and warrants to purchase 1,939,998 shares of the Company’s common stock, par value $ 0.001 per share, at an exercise price equal to $ 28.30 per share.

The warrants will be exercisable in whole or in part for the Company’s common stock by Veritas at any time beginning 90 days following the date of issuance and ending seven years from the date of issuance.

The cash portion of the consideration is net of preliminary and customary purchase price adjustments and remains subject to final post-closing settlement between the Company and Veritas.

SUPPLEMENTAL OIL AND GAS INFORMATION

Oil and Natural Gas Exploration and Production Activities

Oil and gas sales reflect the market prices of net production sold or transferred with appropriate adjustments for royalties, net profits interest, and other contractual provisions.

Oil and natural gas sales reflect the market prices of net production sold or transferred with appropriate adjustments for royalties, net profits interest, and other contractual provisions.

Production expenses include lifting costs incurred to operate and maintain productive wells and related equipment including such costs as operating labor, repairs and maintenance, materials, supplies and fuel consumed.

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Information with respect to the Company’s crude oil and natural gas producing activities is presented in the following tables.

Reserve quantities, as well as certain information regarding future production and discounted cash flows, were determined by Cawley, Gillespie & Associates, Inc., third-party independent reserve engineers based on information provided by the Company.

Reserve quantities, as well as certain information regarding future production and discounted cash flows, were determined by Cawley, Gillespie & Associates, Inc., our third-party independent reserve engineers, based on information provided by the Company.

Oil and Natural Gas Reserve Data

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Extensions, Discoveries and Other Additions 8,308 6,921 8,306

Purchases of Minerals in Place 53,969 25,611 34,606

Production ( 16,473 ) ( 9,361 ) ( 12,107 )

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Extensions, Discoveries and Other Additions 32,432 12,759 18,164

Purchases of Minerals in Place 700,610 14,985 131,753

Production ( 44,074 ) ( 12,288 ) ( 19,634 )

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Included in these extensions and discoveries were 4.9 MMBoe as a result of successful drilling in the Williston Basin and 13.3 MMBoe as a result of additional proved undeveloped locations.

• Purchases of minerals in place .

In 2021, total purchases of minerals in place of 131.8 MMBoe were primarily attributable to acquisitions of oil and natural gas properties (see Note 3).

• Revisions to previous estimates .

In 2020, revisions to previous estimates decreased proved developed and undeveloped reserves by a net amount of 36.9 MMBOE.

Included in these revisions were 33.8 MMBOE of downward adjustments caused by lower crude oil and natural gas prices, a 0.7 MMBOE downward adjustment attributable to well performance when comparing the Company’s reserve estimates at December 31, 2020 to December 31, 2019 and 2.3 MMBOE of downward adjustments related to the removal of undeveloped drilling locations related to the 5 year rule.

In 2021, revisions to previous estimates increased proved developed and undeveloped reserves by a net amount of 34.8 MMBoe.

Included in these revisions were 50.2 MMBoe of upward adjustments caused by higher crude oil and natural gas prices, a 1.1 MMBoe downward adjustment attributable to well performance when comparing the Company’s reserve estimates at December 31, 2021 to December 31, 2020 and 14.2 MMBoe of downward adjustments related to the removal of undeveloped drilling locations related to the 5-year rule and other adjustments.

Notable changes in proved reserves for the year ended December 31, 2020 included the following:

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Included in these extensions and discoveries were 3.1 MMBoe as a result of successful drilling in the Williston Basin and 5.2 MMBoe as a result of additional proved undeveloped locations.

• Purchases of minerals in place .

In 2019, total purchases of minerals in place of 34.6 MMBOE were primarily attributable to acquisitions of oil and natural gas properties (see Note 3).

• Revisions to previous estimates .

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• Revisions to previous estimates .

In 2018, revisions to previous estimates increased proved developed and undeveloped reserves by a net amount of 3.5 MMBOE.

Included in these revisions were 1.4 MMBOE of upward adjustments caused by higher crude oil and natural gas prices and a 3.9 MMBOE upward adjustment attributable to well performance when comparing the Company’s reserve estimates at December 31, 2018 to December 31, 2017 which was partially offset by 2.8 MMBOE of downward adjustments related to the removal of undeveloped drilling locations related to the 5 year rule.

In 2019, revisions to previous estimates decreased proved developed and undeveloped reserves by a net amount of 16.4 MMBoe.

Included in these revisions were 9.8 MMBoe of downward adjustments caused by lower crude oil and natural gas prices, a 2.0 MMBoe downward adjustment attributable to well performance when comparing the Company’s reserve estimates at December 31, 2019 to December 31, 2018 and 4.6 MMBoe of downward adjustments related to the removal of undeveloped drilling locations related to the 5-year rule.

Standardized Measure of Discounted Future Net Cash Inflows and Changes Therein

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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-K

Item 9A. Controls and Procedures