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Item 9A. Controls and Procedures

2023-02-24 compared with 2022-02-25 · 449 added, 344 removed, 1147 unchanged (41% of the section changed)

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Management’s Annual Report on Internal Control over Financial Reporting

The management of Northern Oil and Gas, Inc.

is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934.

The Company’s internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our Company’s financial statements for external purposes in accordance with generally accepted accounting principles in the United States of America.

The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

The Company's internal control over financial reporting is a process designed by or under the supervision of the Company's principal executive officer and principal financial officer and effected by the board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external purposes in accordance with generally accepted accounting principles.

The Company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.

All internal control systems, no matter how well designed, have inherent limitations.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Northern Oil and Gas, Inc.

To the shareholders and the Board of Directors of Northern Oil & Gas, Inc.

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Northern Oil and Gas, Inc.

We have audited the internal control over financial reporting of Northern Oil & Gas, Inc.

(the “Company”) as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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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.

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 2023, which we intend to file with the SEC pursuant to Regulation 14A within 120 days after December 31, 2022.

Except for those portions specifically incorporated into this Annual Report on Form 10-K by reference to the Proxy Statement, no other portions of the Proxy Statement are deemed to be filed as part of this Annual Report on Form 10-K.

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Adam Dirlam 39 President

Michael Kelly 40 Chief Strategy Officer

Erik Romslo 45 Chief Legal Officer & Secretary

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Chad Allen has served as our as our Chief Financial Officer since January 2020.

Prior to that, he served as our Chief Accounting Officer from August 2016 to December 2019, prior to which he served as the company’s Corporate Controller since joining Northern in August of 2013.

Prior to that, he served as our Chief Accounting Officer from August 2016 to December 2019, prior to which he served as the company’s Corporate Controller since joining NOG in August of 2013.

Allen served as the company’s Interim Chief Financial Officer from January-May 2018.

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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.

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.

Prior to joining our company, Mr.

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Thomas and a master’s degree from the University of Minnesota - Carlson School of Management.

Michael Kelly has served as our Chief Strategy Officer since February 2021.

Prior to that, he served as our Executive Vice President of Finance since January 2020.

Prior to joining our company, Mr.

Kelly was a Partner at Seaport Global Securities, where he had worked since 2011.

Most recently, Mr.

Kelly was the Head of E&P Research at Seaport, covering over 30 companies in the exploration and production sector.

Prior to Seaport, Mr.

Kelly spent over five years working as an energy analyst for Kennedy Capital Management in St.

Kelly earned his MBA at Washington University’s Olin School of Business and his undergraduate degree from Trinity University in San Antonio and is a CFA charterholder.

Erik Romslo has served as our Chief Legal Counsel and Secretary since January 2020.

Erik Romslo has served as our Chief Legal Officer and Secretary since January 2020.

Prior to that, he served as our General Counsel and Secretary from October 2011 to December 2019 and as an Executive Vice President from January 2013 to December 2019.

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Evans worked for Fidelity Exploration.

Evans holds a BS degree in Petroleum Engineering from Montana Tech.

Evans holds a bachelor’s degree in Petroleum Engineering from Montana Tech.

Executive Compensation

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Total 77,060 $ — 382,520

_____________

(1) The shares in this column reflect estimated restricted shares expected to be issued pursuant to the 2022 performance equity awards, assuming maximum performance under the terms of the awards and assuming the closing price of our common stock as of December 31, 2022, for purposes of the conversion of the awards into restricted shares.

See Note 6 to our financial statements for additional information on the 2022 performance equity awards.

The information appearing under the heading “Security Ownership of Certain Beneficial Owners and Management” in the Proxy Statement is incorporated herein by reference.

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Description Reference

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

Purchase and Sale Agreement between Northern Oil and Gas, Inc., Midland-Petro D.C.

Partners, LLC, and Collegiate Midstream LLC, dated as of October 18, 2022 Incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 19, 2022

First Amendment to Purchase and Sale Agreement between Northern Oil and Gas, Inc., Midland-Petro D.C.

Partners, LLC, and Collegiate Midstream LLC, dated as of December 13, 2022 Incorporated by reference to Exhibit 2.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 9, 2023

Second Amendment to Purchase and Sale Agreement between Northern Oil and Gas, Inc., Midland-Petro D.C.

Partners, LLC, and Collegiate Midstream LLC, dated as of January 5, 2023 Incorporated by reference to Exhibit 2.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 9, 2023

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

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dated September 18, 2020 Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on September 24, 2020

By-Laws of Northern Oil and Gas, Inc.

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., 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

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 17, 2020 Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 22, 2020

Amended and Restated Bylaws 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 January 20, 2023

Description of Northern Oil and Gas, Inc.

Capital Stock Filed herewith

Form of certificate for the 6.500% Series A Perpetual Cumulative Convertible Preferred Stock 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

Indenture, dated May 15, 2018, between Northern Oil and Gas, Inc.

and Wilmington Trust, National Association, as trustee (including Form of 8.50% Senior Secured Second Lien Notes due 2023) Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 18, 2018

First Supplemental Indenture, dated September 18, 2018, between Northern Oil and Gas, Inc.

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 September 18, 2018

Second Supplemental Indenture, dated October 5, 2018, between Northern Oil and Gas, Inc.

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 October 9, 2018

Third Supplemental Indenture, dated November 22, 2019, between Northern Oil and Gas, Inc.

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

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.

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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

Indenture, dated October 14, 2022, between Northern Oil and Gas, Inc.

and Wilmington Trust, National Association, as trustee (including Form of 3.625% Convertible Senior Note due 2029) Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 17, 2022

Amended and Restated Warrant to Purchase Common Shares, dated November 10, 2022, by and between Northern Oil and Gas, Inc.

and Veritas MOC Holdings, LLC Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 14, 2022

Amended and Restated Warrant to Purchase Common Shares, dated November 10, 2022, by and between Northern Oil and Gas, Inc.

and Veritas Permian II, LLC Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 14, 2022

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

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Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 18, 2018

Amended and Restated Letter Agreement, dated February 18, 2022, by and among Robert B.

Rowling, Cresta Investments, LLC, Cresta Greenwood, LLC, TRT Holdings, Inc., Michael Frantz, Mike Popejoy, Ernie Easley, Bahram Akradi and Northern Oil and Gas, Inc.

Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on February 23, 2022

Letter Agreement, dated July 21, 2017, by and between Northern Oil and Gas, Inc.

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and TPG Specialty Lending, Inc., TOP III Finance 1, LLC and TAO Finance 1, LLC Incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 18, 2018

Registration Right Agreement, dated October 5, 2018, between Northern Oil and Gas, Inc.

and RBC Capital, LLC, as representative of the Initial Purchasers Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 9, 2018

Registration Rights Agreement, dated September 17, 2018, between Pivotal Williston Basin, LP, Pivotal Williston Basin II, LP, and Northern Oil and Gas, Inc.

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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

Separation and Release Agreement, dated as of July 13, 2022, by and between Northern Oil and Gas, Inc.

and Mike Kelly Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 13, 2022

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

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Northern Oil and Gas, Inc.

2013 Incentive Plan (as amended May 26, 2016)

Incorporated by reference to Appendix B to the Registrant’s Definitive Proxy Statement filed with the SEC on April 22, 2016

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

2013 Incentive Plan

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 Quarterly Report on Form 10-Q filed with the SEC on August 9, 2018

Northern Oil and Gas, Inc.

2018 Equity Incentive Plan Incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 27, 2018

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Incorporated by reference to Exhibit 10.37 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 18, 2019

Senior Unsecured Promissory Note, dated July 1, 2019, by and among Northern Oil and Gas, Inc.

and VEN Bakken, LLC Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 2, 2019

Form of 2022 Performance Equity Award Agreement under the Northern Oil and Gas, Inc.

2018 Equity Incentive Plan Filed herewith

Second Amended and Restated Credit Agreement, dated November 22, 2019, by and among Northern Oil and Gas, Inc., Wells Fargo Bank, National Association, as administrative agent, and the Lenders party thereto Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 26, 2019

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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 February 3, 2021

Purchase Agreement, dated February 8, 2021, between Northern Oil and Gas, Inc.

and BofA Securities, Inc., as representative of the several initial purchasers listed in Schedule I thereto Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on February 11, 2021

Exchange Agreement, dated as of February 20, 2020 among Northern Oil and Gas, Inc., TRT Holdings, Inc.

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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.

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Third Amended and Restated Credit Agreement, dated as of June 7, 2022, among Northern Oil and Gas, Inc., Wells Fargo Bank, National Association, as administrative agent and collateral agent, and the lenders from time to time 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 8, 2022

First Amendment to the Third Amended and Restated Credit Agreement among Northern Oil and Gas, Inc., Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto, dated November 10, 2022 Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 14, 2022

Purchase Agreement, dated October 11, 2022, by and between Northern Oil and Gas, Inc.

and Citigroup Global Markets Inc., as representative of the several other initial purchasers named 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 October 17, 2022

Form of Capped Call Confirmation Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 17, 2022

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

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* Director February 24, 2023

* Director February 25, 2022

Lisa Bromiley

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* Director February 24, 2023

Michael Popejoy

William Kimble

* Director February 24, 2023

Stuart Lasher

* February 25, 2022

Jennifer Pomerantz Director

* Director February 24, 2023

Jennifer Pomerantz

* 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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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of Northern Oil and Gas, Inc.

To the shareholders and the Board of Directors of Northern Oil & Gas, Inc.

Opinion on the Financial Statements

We have audited the accompanying balance sheets of Northern Oil and Gas, Inc.

We have audited the accompanying balance sheets of Northern Oil & Gas, Inc.

(the "Company") as of December 31, 2022 and 2021, the related statements of operations, stockholders' equity (deficit), and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements").

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

Critical Audit Matters

Critical Audit Matter

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.

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 separate opinions 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 – Refer to Note 2 to the financial statements

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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 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.

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 volumes 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 properties.

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.

The Company’s oil and natural gas reserve quantities and the related future net cash flows are audited by its third-party independent reserve engineers.

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 $2,482.9 million as of December 31, 2022.

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.

Depletion, depreciation, amortization, and accretion expense was $251.3 million, and there was no impairment expense recorded for the year ended December 31, 2022.

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, 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.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s significant judgments and assumptions regarding oil and natural gas reserve quantities and the related future net cash flows included the following, among others:

• We tested the operating effectiveness of controls related to the Company’s estimation of oil and natural gas reserve quantities and the related future net cash flows, including controls associated with the five-year development plan.

• We tested the operating effectiveness of controls related to the Company’s estimation of oil and natural gas reserve quantities and the related future net cash flows,

• We evaluated the reasonableness of the future production quantities associated with management’s five-year development plan by comparing to:

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• 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.

• We evaluated the experience, qualifications, and objectivity of the Company’s engineers responsible for the preparation of the reserve estimates and assumptions and engineering data, and the third-party independent reserve engineering firm engaged to audit management’s oil and natural gas reserve quantities.

/s/ Deloitte & Touche LLP

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Derivative Instruments 35,293 2,519

Income Tax Receivable 338 —

Total Current Assets 320,485 215,328

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Other Current Liabilities 1,781 1,722

Current Portion of Long-term Debt — 65,000

Total Current Liabilities 344,972 327,557

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Commitments and Contingencies

Stockholders' Equity (Deficit)

Stockholders’ Equity

Preferred Stock, par value $ 0.001 ;

5,000,000 authorized;

2,218,732 Shares Outstanding at 12/31/2021

zero shares outstanding at 12/31/2022

2,218,732 shares outstanding at 12/31/2021

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Retained Deficit ( 1,000,759 ) ( 1,773,996 )

Total Stockholders’ Equity (Deficit) 215,135 ( 223,304 )

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

Total Stockholders’ Equity 745,260 215,135

Total Liabilities and Stockholders’ Equity $ 2,875,178 $ 1,522,866

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

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(In thousands, except share and per share data) 2022 2021 2020

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

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

Other Revenue 3 17 21

Oil and Gas Sales $ 1,985,798 $ 975,093 $ 324,069

Gain (Loss) on Commodity Derivatives, Net ( 415,262 ) ( 478,193 ) 228,141

Total Revenues 1,570,535 496,899 552,210

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Depletion, Depreciation, Amortization and Accretion 251,272 140,828 162,120

Impairment of Other Current Assets — — 6,398

Impairment Expense — — 1,066,668

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

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

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

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

Contingent Consideration Loss ( 292 ) ( 169 ) ( 29,512 )

Financing Expense — — ( 1,447 )

Gain (Loss) on Interest Rate Derivatives, Net 993 1,043 ( 1,019 )

Gain (Loss) on the Extinguishment of Debt, Net 810 ( 13,087 ) ( 3,718 )

Contingent Consideration Gain (Loss) 1,859 ( 292 ) ( 169 )

Other Income (Expense) ( 185 ) ( 9 ) ( 12 )

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Cumulative Preferred Stock Dividend ( 9,803 ) ( 14,761 ) ( 15,266 )

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

Premium on Repurchase of Preferred Stock ( 35,731 ) — —

Net Income (Loss) Attributable to Common Stockholders $ 727,703 $ ( 8,400 ) $ ( 921,307 )

Net Income (Loss) Per Common Share – Basic $ 9.26 $ ( 0.13 ) $ ( 21.55 )

Net Income (Loss) Per Common Share – Diluted $ 8.92 $ ( 0.13 ) $ ( 21.55 )

Weighted Average Common Shares Outstanding – Basic 78,557,216 62,989,543 42,744,639

Weighted Average Common Shares Outstanding – Diluted 86,675,365 62,989,543 42,744,639

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

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

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

(Gain) Loss on Extinguishment of Debt ( 810 ) 13,087 3,718

Amortization of Bond (Premium) Discount on Long-term Debt ( 2,125 ) ( 413 ) ( 1,037 )

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Unrealized (Gain) Loss on Derivative Instruments ( 41,180 ) 311,328 ( 38,858 )

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

Loss on Contingent Consideration ( 1,859 ) 292 169

PIK Interest on Second Lien Notes — — 1,742

Share-Based Compensation Expense 5,656 3,621 4,119

Impairment of Other Current Assets — — 6,398

Impairment Expense — — 1,066,668

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Accrued Interest 3,607 11,937 ( 3,300 )

Payment of Contingent Consideration — — ( 37,131 )

Net Cash Provided By Operating Activities 928,418 396,467 331,685

Cash Flows From Investing Activities

Drilling and Development Capital Expenditures ( 182,798 ) ( 236,691 ) ( 338,788 )

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

Acquisitions of and Capital Expenditures on Oil and Natural Gas Properties ( 1,355,197 ) ( 593,228 ) ( 283,632 )

Acquisition Deposit ( 43,000 ) ( 40,650 ) —

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Repayments on Revolving Credit Facility ( 996,000 ) ( 1,031,000 ) ( 126,000 )

Purchase of Capped Call ( 36,100 ) — —

Issuance of Convertible Notes 482,971 — —

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

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

Issuance of Unsecured Notes due 2028 763,500 — —

Repayments of Senior Unsecured Promissory Note — ( 130,000 ) —

Issuance of Senior Notes — 763,500 —

Repurchase of Senior Notes ( 24,907 ) — —

Debt Issuance Costs Paid ( 7,388 ) ( 17,611 ) ( 446 )

Debt Derivative Exchange Settlements — — ( 1,044 )

Contingent Consideration Settlements — — ( 11,278 )

Issuance of Common Stock — 438,077 —

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Repurchases of Common Stock ( 54,502 ) — —

Issuance of Preferred Stock — — 70,868

Repurchase of Preferred Stock ( 81,236 ) — —

Preferred Stock Dividends Paid ( 21,664 ) ( 29,212 ) —

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Shares Amount Shares Amount Capital (Deficit) (Deficit)

December 31, 2018 37,833,307 378 — — 1,226,371 ( 796,884 ) 429,865

January 1, 2020 40,608,518 $ 406 1,500,000 $ 2 $ 1,431,438 $ ( 873,203 ) $ 558,643

Issuance of Common Stock 460,382 2 — — — — 2

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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

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Restricted Stock Surrenders - Tax Obligations ( 89,620 ) — — — ( 2,206 ) — ( 2,206 )

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

Issuance of Common Stock Warrants - Acquisitions of Oil and Natural Gas Properties — — — — 17,870 — 17,870

Preferred Conversion 7,376,739 7 ( 1,643,732 ) ( 2 ) ( 6 ) — —

Repurchases of Common Stock ( 1,909,097 ) ( 2 ) — — ( 54,500 ) — ( 54,502 )

Purchase of Capped Calls — — — — ( 36,100 ) — ( 36,100 )

Repurchases of Preferred Stock — — ( 575,000 ) ( 1 ) ( 81,236 ) — ( 81,236 )

Preferred Stock Dividends — — — — ( 21,664 ) — ( 21,664 )

Common Stock Warrant Exchange Agreement - Reliance Warrants 2,322,690 2 — — ( 2 ) — —

Common Stock Dividends Declared — — — — ( 71,148 ) — ( 71,148 )

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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 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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These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

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.

In connection with preparing the financial statements for the year ended December 31, 2022, the Company has evaluated subsequent events through the date of this filing and determined (i) that there were no subsequent events which required recognition in the financial statements through the date of this filing and (ii) to include the disclosure in Note 14 regarding subsequent events.

Use of Estimates

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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.

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

Given the uncertainty inherent in any projection, which is heightened by the possibility of unforeseen additional impacts from the COVID-19 pandemic, actual results may differ from the estimates and assumptions used, and conditions may change, which could materially affect amounts reported in the financial statements in the near term.

Given the uncertainty inherent in any projection, actual results may differ from the estimates and assumptions used, and conditions may change, which could materially affect amounts reported in the financial statements.

Reclassifications

Certain prior period balances in the statements of cash flows have been reclassified to conform to the current year presentation.

Such reclassifications had no impact on net income (loss), cash flows or stockholders’ equity (deficit) previously reported.

Cash and Cash Equivalents

Northern considers highly liquid investments with insignificant interest rate risk and original maturities to the Company of three months or less to be cash equivalents.

The Company considers highly liquid investments with insignificant interest rate risk and original maturities to the Company of three months or less to be cash equivalents.

Cash equivalents consist primarily of interest-bearing bank accounts.

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Cash and cash equivalents are generally available on a daily or weekly basis and are highly liquid in nature.

Due to the balances being greater than $250,000, the Company does not have FDIC coverage on the entire amount of bank deposits.

The Company believes this risk is minimal.

In addition, the Company is subject to Security Investor Protection Corporation (“SIPC”) protection on a vast majority of its financial assets.

Accounts Receivable

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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, 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.

The allowance for doubtful accounts was $ 4.9 million and $ 3.9 million as of December 31, 2022 and 2021, respectively.

As of December 31, 2022 and 2021, the Company included accounts receivable of $ 3.2 million and $ 4.0 million, respectively, in Other Noncurrent Assets, Net due to their long-term nature.

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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 proved oil and natural gas properties, net balance was $ 2.5 billion as of December 31, 2022.

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 did no t have any ceiling test impairment for the years ended December 31, 2022 and 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 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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Depletion of Proved Oil and Natural Gas Properties $ 248,252 $ 138,759 $ 160,643

Depletion per BOE Sold $ 7.07 $ 13.27 $ 14.84

Depletion per BOE Produced $ 9.01 $ 7.07 $ 13.27

The Company believes that the majority of its unproved costs will become subject to depletion within the next five years by proving up reserves relating to the acreage through exploration and development activities, by impairing the acreage that will expire before the Company can explore or develop it further or by determining that further exploration and development activity will not occur.

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, 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.

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Asset Retirement Obligations

The Company accounts for its abandonment and restoration liabilities under Financial Accounting Standards Board (“FASB”) ASC Topic 410, “Asset Retirement and Environmental Obligations” (“FASB ASC 410”), which requires the Company to record a liability equal to the fair value of the estimated cost to retire an asset upon initial recognition.

The Company records a liability equal to the fair value of the estimated cost to retire an asset upon initial recognition.

The asset retirement liability is recorded in the period in which the obligation meets the definition of a liability, which is generally when the asset is placed into service.

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Business Combinations

The Company accounts for its acquisitions that qualify as a business using the acquisition method under FASB ASC Topic 805, “Business Combinations.” Under the acquisition method, assets acquired and liabilities assumed are recognized and measured at their fair values.

The Company accounts for its acquisitions that qualify as a business using the acquisition method.

Under the acquisition method, assets acquired and liabilities assumed are recognized and measured at their fair values.

The use of fair value accounting requires the use of significant judgment since some transaction components do not have fair values that are readily determinable.

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Financial Instruments

The Company’s financial instruments consist of cash and cash equivalents, receivables, payables, commodity derivative assets and liabilities, contingent consideration, debt exchange derivative liability, and long-term debt.

The Company’s financial instruments consist of cash and cash equivalents, receivables, payables, commodity derivative assets and liabilities, contingent consideration, and long-term debt.

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

The fair values of the Company’s derivative instruments assets and liabilities are based on a third-party industry-standard pricing model using contract terms and prices and assumptions and inputs that are substantially observable in active markets throughout the full term of the instruments, including forward oil price curves, discount rates, volatility factors and credit risk adjustments.

The fair values of the Company’s contingent consideration and debt exchange derivative liabilities are determined by a third-party valuation specialist using Monte Carlo simulations including significant inputs such as (i) the Company’s common stock price, (ii) risk-free rates based on U.S.

Treasury rates, (iii) volatility of the Company’s common stock, and (iv) expected average daily trading volumes.

The fair values of the Company’s contingent consideration liabilities are determined by a third-party valuation specialist using Monte Carlo simulations that include observable market data.

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 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.

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

See Note 11 for additional discussion.

Debt Issuance Costs

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 our Senior Notes and Convertible Notes 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

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.

Debt premiums related to the Company’s Senior Notes 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

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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.

Performance obligations are satisfied when the customer obtains control of the 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.

The sales of oil and natural gas are made under contracts which the third-party operators of the wells have negotiated with customers, which typically include variable consideration that is based on pricing tied to local indices and volumes delivered in the current month.

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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 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.

The Company does not disclose the value of unsatisfied performance obligations under its contracts with customers as it applies the practical exemption, which applies to variable consideration that is recognized as control of the product is transferred to the customer.

Since each unit of product represents a separate performance obligation, future volumes are wholly unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is not required.

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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, 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.

However, for the years ended December 31, 2022, 2021 and 2020, 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:

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The future results of the Company’s crude oil and natural gas operations will be affected by the market prices of crude oil and natural gas.

The availability of a ready market for crude oil and natural gas products in the future will depend on numerous factors beyond the control of the Company, including weather, imports, marketing of competitive fuels, proximity and capacity of crude oil and natural gas pipelines and other transportation facilities, any oversupply or undersupply of crude oil, natural gas and liquid products, economic disruptions resulting from the COVID-19 pandemic, the regulatory environment, the economic environment, and other regional and political events, none of which can be predicted with certainty.

The availability of a ready market for crude oil and natural gas products in the future will depend on numerous factors beyond the control of the Company, including weather, imports, marketing of competitive fuels, proximity and capacity of crude oil and natural gas pipelines and other transportation facilities, any oversupply or undersupply of crude oil, natural gas and liquid products, the regulatory environment, the economic environment, and other regional and political events, none of which can be predicted with certainty.

The Company operates in the exploration, development and production sector of the crude oil and natural gas industry.

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For the years ended December 31, 2022, 2021 and 2020, the Company’s top four operators made up 39 %, 50 % and 49 %, 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 faces concentration risk due to the fact that a majority of its oil and natural gas revenue is sourced from North Dakota.

Acquisitions since 2021 have diversified the Company’s portfolio to include New Mexico, Pennsylvania, 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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The Company believes the credit quality of its counterparties is generally high.

In the normal course of business, letters of credit or parent guarantees may be required for counterparties which management perceives to have a higher credit risk.

normal course of business, letters of credit or parent guarantees may be required for counterparties which management perceives to have a higher credit risk.

Stock-Based Compensation

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Derivative Instruments and Price Risk Management

The Company uses derivative instruments to manage market risks resulting from fluctuations in the prices of crude oil.

The Company enters into derivative contracts, including price swaps, caps and floors, which require payments to (or receipts from) counterparties based on the differential between a fixed price and a variable price for a fixed quantity of crude oil without the exchange of underlying volumes.

The Company uses derivative instruments to manage market risks resulting from fluctuations in the prices of crude oil and natural gas commodities.

The Company enters into derivative contracts, including price swaps, caps and floors, which require payments to (or receipts from) counterparties based on the differential between a fixed price and a variable price for a fixed quantity of the applicable commodity without the exchange of underlying volumes.

The notional amounts of these financial instruments are based on expected production from existing wells.

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 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.

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

The Company recognizes derivative instruments as assets or liabilities in the balance sheet, measured at fair value and marked-to-market at the end of each period.

Any realized gains and losses on settled derivatives, as well as mark-to-market gains or losses, are aggregated and recorded to gain (loss) on derivative instruments, net on the statements of operations.

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Cash Paid During the Period for Interest, Net of Amount Capitalized $ 74,933 $ 46,951 $ 55,109

Non-cash Operating Activities:

Contingent Consideration Settlements in Excess of Acquisition-date Liabilities — — 21,349

Cash Paid During the Period for Income Taxes 3,672 — —

Non-cash Investing Activities:

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Other Property and Equipment Included in Accounts Payable — 578 —

Issuance of Unsecured VEN Bakken Note — — 128,660

Non-cash Financing Activities:

Common Stock Dividends Declared 6,210 — —

Common Stock Dividends Declared, but not paid 19,546 6,210 —

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

— 81,212 75,000

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

Issuance of Common Stock for 2L Notes Repurchase — — 37,169

Issuance of Common Stock for Preferred Stock Exchange 36,627 — 1,113

Debt Exchange Derivative Liability Settlements — — 15,749

Contingent Consideration Settlements — — 17,822

New Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB that are adopted by the Company as of the specified effective date.

Issuance of Common Stock Warrants - Acquisitions of Oil and Natural Gas Properties 17,870 — —

Issuance of Common Stock in Exchange for Warrants 76,904 — —

Adopted and Recently Issued Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that are adopted by the Company as of the specified effective date.

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.

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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.

The Company 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.

In March 2020, the FASB issued ASU No.

2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which is intended to simplify the accounting for certain financial instruments with characteristics of liabilities and equity.

ASU 2020-06 reduces the number of models used to account for convertible instruments (specifically removing the beneficial conversion feature and cash conversion models), amends the diluted earnings per share calculation for convertible instruments (now requiring the “if-converted” method), and amends the requirements for contracts settled in an entity’s own shares to be classified as equity.

The Company adopted the revised accounting guidance included in ASU 2020-06 on January 1, 2022.

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.

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.

2022 Acquisitions

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.

During 2022, the Company completed the following larger bolt-on acquisitions (each as defined and described below):

the Veritas Acquisition, the Incline Acquisition, the Laredo Acquisition, the Alpha Acquisition, and the Delaware Acquisition (collectively, the “2022 Bolt-on Acquisitions”).

During 2022, in addition to the 2022 Bolt-on Acquisitions, the Company acquired oil and natural gas properties through a number of smaller independent transactions for a total of $ 100.0 million.

Veritas Acquisition

On January 27, 2022, the Company completed the acquisition of certain non-operated oil and gas properties, interests and related assets in the Permian Basin from Veritas TM Resources, LLC, Veritas Permian Resources, LLC, Veritas Lone Star Resources, LLC, and Veritas MOC Resources, LLC, effective as of October 1, 2021 (the “Veritas Acquisition”).

The total consideration was $ 408.8 million, which included $ 390.9 million in cash 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 had a total estimated fair value of $ 17.9 million.

As a result of customary post-closing adjustments, the Company further decreased its proved oil and natural gas properties and total consideration by $ 3.1 million subsequent to closing.

The results of operations from the acquisition from the January 27, 2022 closing date through December 31, 2022, represented approximately $ 244.1 million of revenue and $ 168.0 million of income from operations.

The Company incurred $ 7.3 million of 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 initial fair values of the net assets and liabilities:

(In thousands)

Fair value of net assets:

Proved oil and natural gas properties $ 383,755

Unproved oil and natural gas properties 26,262

Total assets acquired 410,017

Asset retirement obligations ( 1,219 )

Net assets acquired $ 408,798

Fair value of consideration paid for net assets:

Cash consideration $ 390,928

Issuance of Common Stock Warrants ( 1.9 million shares at $ 28.30 per share)

Total fair value of consideration transferred $ 408,798

Incline Acquisition

On August 15, 2022, the Company completed the acquisition of certain non-operated oil and gas properties, interests and related assets in the Williston Basin from Incline Bakken, LLC, effective as of April 1, 2022 (the “Incline Acquisition”).

The total consideration at closing was $ 159.8 million, which includes $ 158.0 million in cash and $ 1.8 million in value attributable to potential additional contingent consideration (described in more detail below).

As a result of customary post-closing adjustments, the Company reduced its proved oil and natural gas properties and total consideration by $ 7.5 million subsequent to closing.

The results of operations from the acquisition from the August 15, 2022 closing date through December 31, 2022, represented approximately $ 25.3 million of revenue and $ 17.0 million of income from operations.

The Company incurred $ 1.1 million of 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 closing date of the acquisition:

(In thousands)

Fair value of net assets:

Proved oil and natural gas properties $ 160,155

Total assets acquired 160,155

Asset retirement obligations ( 319 )

Net assets acquired $ 159,836

Fair value of consideration paid for net assets:

Cash consideration $ 157,977

Contingent consideration 1,850

Total fair value of consideration transferred $ 159,827

A contingent consideration liability arising from potential additional consideration in connection with the Incline Acquisition was recognized at its fair value.

The seller had the potential to earn up to $ 5.0 million of additional cash consideration dependent upon NYMEX WTI oil pricing at the end of 2022.

The acquisition date fair value of the potential additional consideration, totaling $ 1.8 million, was recorded within contingent consideration liabilities on the Company’s balance sheets.

Changes in the fair value of the liability (that were not accounted for as revisions of the acquisition date fair value) are recorded in other income (expense) on the Company’s statement of operations.

This contingent consideration was not earned, and there was no remaining associated liability as of December 31, 2022.

Laredo Acquisition

On October 3, 2022, the Company completed the acquisition of certain non-operated oil and gas properties, interests and related assets in the Permian Midland Basin from Laredo Petroleum, Inc., effective as of August 1, 2022 (the “Laredo Acquisition”).

The total consideration at closing was $ 110.1 million in cash.

As a result of customary post-closing adjustments, the Company reduced its proved oil and natural gas properties and total consideration by $ 6.0 million subsequent to closing.

The results of operations from the acquisition from the October 3, 2022 closing date through December 31, 2022, represented approximately $ 9.4 million revenue and $ 6.8 million of income from operations.

The Company incurred $ 0.8 million of 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 closing date of the acquisition:

(In thousands)

Fair value of net assets:

Proved oil and natural gas properties $ 110,258

Total assets acquired 110,258

Asset retirement obligations ( 187 )

Net assets acquired $ 110,071

Fair value of consideration paid for net assets:

Cash consideration $ 110,071

Total fair value of consideration transferred $ 110,071

Alpha Acquisition

On December 1, 2022, the Company completed the acquisition of certain non-operated oil and gas properties, interests and related assets in the Permian Midland Basin from Alpha Energy Partners, effective as of September 1, 2022 (the “Alpha Acquisition”).

The total consideration at closing was $ 164.0 million, which includes $ 153.9 million in cash and $ 10.1 million in value attributable to potential additional contingent consideration (described in more detail below).

As a result of customary post-closing adjustments, the Company may adjust its proved oil and natural gas properties and total consideration subsequent to closing.

The results of operations from the acquisition from the December 1, 2022 closing date through December 31, 2022, represented approximately $ 2.6 million of revenue and $ 1.5 million of income from operations.

The Company incurred $ 1.3 million of 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 closing date of the acquisition:

(In thousands)

Fair value of net assets:

Proved oil and natural gas properties $ 164,300

Total assets acquired 164,300

Asset retirement obligations ( 278 )

Net assets acquired $ 164,023

Fair value of consideration paid for net assets:

Cash consideration $ 153,916

Contingent consideration 10,107

Total fair value of consideration transferred $ 164,023

A contingent consideration liability arising from potential additional consideration in connection with the Alpha Acquisition was recognized at its fair value.

The seller has the potential to earn additional cash consideration dependent upon average front month NYMEX WTI oil pricing during the first six months of 2023.

The amount will be determined on a sliding scale from zero additional consideration if such pricing is below $ 75.00 per barrel, up to $ 22.5 million of additional consideration if such pricing is at least $ 87.85 per barrel.

The acquisition date fair value of the potential additional consideration, totaling $ 10.1 million, was recorded within contingent consideration liabilities on the Company’s balance sheets.

Delaware Acquisition

On December 16, 2022, the Company completed the acquisition of certain non-operated oil and gas properties, interests and related assets in the Permian Delaware Basin from a private seller, effective as of November 1, 2022 (the “Delaware Acquisition”).

The total consideration at closing was $ 131.6 million in cash.

As a result of customary post-closing adjustments, the Company may adjust its proved oil and natural gas properties and total consideration subsequent to closing.

The results of operations from the acquisition from the December 16, 2022 closing date through December 31, 2022, represented approximately $ 1.2 million of revenue and $ 0.7 million of income from operations.

The Company incurred $ 1.3 million of 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 closing date of the acquisition:

(In thousands)

Fair value of net assets:

Proved oil and natural gas properties $ 131,773

Total assets acquired 131,773

Asset retirement obligations ( 155 )

Net assets acquired $ 131,618

Fair value of consideration paid for net assets:

Cash consideration $ 131,618

Total fair value of consideration transferred $ 131,618

2021 Acquisitions

During 2021, in addition to the Reliance Acquisition, CM Resources Acquisition and the Comstock Acquisition (each 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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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:

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Proved oil and natural gas properties $ 101,869

Unproved oil and natural gas properties —

Total assets acquired $ 101,869

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Pro Forma Information

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 following summarized unaudited pro forma statement of operations information for the years ended December 31, 2022 and December 31, 2021 assumes that each of the Reliance, CM Resources, Veritas, Incline, Laredo, Alpha, and Delaware Acquisitions occurred as of January 1, 2021.

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

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Total Revenues $ 1,747,105 $ 729,487

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

Net Income $ 904,583 $ 124,294

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.

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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Excluded costs for unproved properties are accumulated by year.

Costs are reflected in the full cost pool as the drilling costs are incurred or as costs are evaluated and deemed impaired.

Costs are reflected in the full cost pool as the drilling costs are incurred or as costs are evaluated and deemed impaired and transferred into the full cost pool.

The Company anticipates these excluded costs will be included in the depletion computation over the next five years .

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The Company’s long-term debt consists of the following:

(In thousands) December 31, 2021 December 31, 2020

December 31, 2022

(In thousands) Principal Balance Unamortized Net Premium Debt Issuance Costs, Net Long-term Debt, Net

Revolving Credit Facility (1) $ 319,000 $ — $ — $ 319,000

Unsecured Notes due 2028 750,000 —

Second Lien Notes due 2023 — 287,755

Unsecured VEN Bakken Note — 130,000

Total principal 805,000 949,755

Unamortized debt discounts and premiums 13,217 2,041

Unamortized debt issuance costs (1) ( 14,780 ) ( 6,953 )

Total debt 803,437 944,843

Less current portion of long-term debt — ( 65,000 )

Total long-term debt $ 803,437 $ 879,843

Senior Notes 724,235 10,682 ( 11,946 ) 722,972

Convertible Notes 500,000 — ( 16,558 ) 483,442

Total $ 1,543,235 $ 10,682 $ ( 28,504 ) $ 1,525,413

December 31, 2021

Principal Balance Unamortized Net Premium Debt Issuance Costs, Net Long-term Debt, Net

Revolving Credit Facility (1) $ 55,000 $ — $ — $ 55,000

Senior Notes 750,000 13,217 ( 14,780 ) 748,437

Total $ 805,000 $ 13,217 $ ( 14,780 ) $ 803,437

_______________

(1) Debt issuance costs related to the Company’s Revolving Credit Facility of $ 10.9 million and $ 5.7 million as of December 31, 2022 and 2021, are recorded in “Other Noncurrent Assets, Net” in the balance sheets.

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 (“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.

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.

On June 7, 2022, the Company entered into a Third Amended and Restated Credit Agreement (the “Revolving Credit Facility”) with Wells Fargo Bank, National Association, as administrative agent and collateral 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 November 22, 2019.

The Revolving Credit Facility is scheduled to mature on June 7, 2027.

The Revolving Credit Facility is comprised of revolving loans and letters of credit and 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.

As of December 31, 2022, the borrowing base was $ 1.6 billion and the aggregate elected commitment amount was $ 1.0 billion.

The Company’s borrowing availability is set at the lesser of the borrowing base and the elected commitment amount.

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

The first scheduled redetermination each year is based on a December 31st engineering report audited by a third party (reasonably acceptable to the Agent).

The Company has the option to seek commitments for term loans, which such term loans (if obtained) are to be subject to the borrowing base and the other terms of the Revolving Credit Facility.

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

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

(i) the Agents’s prime rate;

(i) the Agent bank’s prime rate;

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

and (iii) the adjusted LIBOR rate for a one-month interest period plus 100 basis points.

The applicable margin for base rate loans ranges from 100 to 200 basis points, and the applicable margin for LIBOR loans ranges from 200 to 300 basis points, in each case depending on the percentage of the borrowing base utilized.

The Revolving Credit Facility contains negative covenants that limit the Company’s ability, among other things, to pay dividends, incur additional indebtedness, maintain excess cash liquidity, sell assets, enter into certain derivatives contracts, change the nature of its business or operations, merge, consolidate, or make certain types of investments.

and (iii) the adjusted SOFR rate for a one-month interest period plus 100 basis points.

The applicable margin for base rate loans ranges from 125 to 225 basis points, and the applicable margin for SOFR loans ranges from 225 to 325 basis points basis points, in each case depending on the percentage of the borrowing base utilized.

The Revolving Credit Facility contains negative covenants that limit the Company’s ability, among other things, to pay dividends, incur additional indebtedness, sell assets, enter into certain derivatives contracts, change the nature of its business or operations, merge, consolidate, or make certain types of investments.

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) shall not be less than 1.00 to 1.00 .

(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 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, current maturities under the Revolving Credit Facility and current maturities of any long-term debt) shall not be less than 1.00 to 1.00 .

The Company is in compliance with these financial covenants as of December 31, 2022.

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).

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.

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 the Company or its 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.

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:

On February 18, 2021, the Company and Wilmington Trust, National Association, as trustee, entered into an indenture (the “Senior 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”).

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

During 2022, the Company repurchased and retired $ 25.8 million in aggregate principal amount of the Senior Notes in open market transactions for a total of $ 24.9 million in cash, plus accrued interest.

The Senior Notes will mature on March 1, 2028.

Interest on the Senior 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 Senior Notes at a redemption price equal to 100 % of the principal amount of the Senior 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 Senior 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 Senior 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;

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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.

These covenants are subject to a number of important exceptions and qualifications, and many of these covenants will be terminated if the Senior 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;

The Senior 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 Senior Notes;

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

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.

(v) failure by the Company or any of its restricted subsidiaries that is a Significant Subsidiary (as defined in the Senior 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 Senior Notes Indenture, any guarantee of the Senior 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 Senior Notes Indenture);

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

Convertible Notes

On October 14, 2022, the Company and Wilmington Trust, National Association, as trustee, entered into an indenture (the “Convertible Notes Indenture”), pursuant to which the Company issued $ 500.0 million in aggregate principal amount of 3.625 % convertible senior notes due 2029 (the “Convertible Notes”).

The proceeds of the Convertible Notes were used to refinance existing indebtedness and for other general corporate purposes.

The Convertible Notes will mature on April 15, 2029, unless earlier repurchased, redeemed or converted.

The Convertible Notes will accrue interest at a rate of 3.625 % per annum, payable semi-annually in arrears on April 15 and October 15 of each year, beginning on April 15, 2023.

Before October 16, 2028, noteholders will have the right to convert their Convertible Notes only upon the occurrence of certain events.

From and after October 16, 2028, noteholders may convert their Convertible Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date.

The Company will have the right to elect to settle conversions either entirely in cash or in a combination of cash and shares of its common stock.

However, upon conversion of any Convertible Notes, the conversion value, which will be determined over a period of 40 trading days, will be paid in cash up to at least the principal amount of the Convertible Notes being converted.

The initial conversion rate is 26.3104 shares of common stock per $1,000.0 principal amount of Convertible Notes, which represents an initial conversion price of approximately $ 38.01 per share of common stock.

The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events.

In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Convertible Notes Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time.

The Convertible Notes will be redeemable, in whole or in part (subject to certain limitations), at the Company’s option at any time, and from time to time, on or after April 15, 2026 and on or before the 40 th scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice;

and (ii) the trading day immediately before the date the Company sends such notice.

In addition, calling any Convertible Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Convertible Note, in which case the conversion rate applicable to the conversion of that Convertible Note will be increased in certain circumstances if it is converted after it is called for redemption.

If certain corporate events that constitute a “Fundamental Change” (as defined in the Convertible Notes Indenture) occur, then, subject to a limited exception for certain cash mergers, noteholders may require the Company to repurchase their Convertible Notes at a cash repurchase price equal to the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date.

The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s common stock.

The Convertible Notes have customary provisions relating to the occurrence of “Events of Default” (as defined in the Convertible Notes Indenture), which include the following:

(i) certain payment defaults on the Convertible Notes due 2029 (which, in the case of a default in the payment of interest on the Convertible Notes, will be subject to a 30-day cure period);

(ii) the Company’s failure to send certain notices under the Convertible Notes Indenture within specified periods of time;

(iii) the Company’s failure to comply with certain covenants in the Convertible Notes Indenture relating to the Company’s ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of the Company and any subsidiaries that the Company may form or acquire in the future, taken as a whole, to another person;

(iv) a default by the Company in certain of its other obligations or agreements under the Convertible Notes Indenture or the Convertible Notes if such default is not cured or waived within 60 days after notice is given in accordance with the Convertible Notes Indenture;

(v) certain defaults by the Company or any subsidiaries that the Company

may form or acquire in the future with respect to indebtedness for borrowed money of at least $ 50.00 million;

(vi) the rendering of certain judgments against the Company or any of its subsidiaries for the payment of at least $ 50.00 million, where such judgments are not paid, discharged or stayed within 60 days after the date on which the right to appeal has expired or on which all rights to appeal have been extinguished;

and (vii) certain events of bankruptcy, insolvency and reorganization involving the Company or any of the Company’s significant subsidiaries that the Company may form or acquire in the future.

If an Event of Default involving bankruptcy, insolvency or reorganization events with respect to the Company (and not solely with respect to any significant subsidiary that the Company may form or acquire in the future) occurs, then the principal amount of, and all accrued and unpaid interest on, all of the Convertible Notes then outstanding will immediately become due and payable without any further action or notice by any person.

If any other Event of Default occurs and is continuing, then, the Trustee, by notice to the Company, or noteholders of at least 25 % of the aggregate principal amount of Convertible Notes then outstanding, by notice to the Company and the Trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the Convertible Notes then outstanding to become due and payable immediately.

However, notwithstanding the foregoing, the Company may elect, at its option, that the sole remedy for an Event of Default relating to certain failures by the Company to comply with certain reporting covenants in the Convertible Notes Indenture consists exclusively of the right of the noteholders to receive special interest on the Convertible Notes for up to 365 days at a specified rate per annum not exceeding 0.25 % on the principal amount of the Convertible Notes for the first 180 days and, thereafter, at a specified rate per annum not exceeding 0.50 % on the principal amount of the Convertible Notes.

Capped Call Transactions

In October 2022, in connection with the Convertible Notes offering described above, the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain of the initial purchasers of the Convertible Notes and/or their respective affiliates and/or other financial institutions.

The Company paid $ 36.1 million in total consideration to enter into the Capped Call Transactions.

The Capped Call Transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the Convertible Notes, the number of shares of common stock initially underlying the Convertible Notes.

The Capped Call Transactions are expected generally to reduce potential dilution to the common stock upon any conversion of Convertible Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of such converted Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap.

The cap price of the Capped Call Transactions will initially be approximately $ 52.17 per share of common stock, which represents a premium of 75 % over the last reported sale price of the common stock of $ 29.81 per share on October 11, 2022, and is subject to certain customary adjustments under the terms of the Capped Call Transactions.

NOTE 5 COMMON AND PREFERRED STOCK

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As of December 31, 2022 and 2021, the Company had 85,165,807 and 77,341,921 shares of common stock issued and outstanding, respectively.

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 was paid on April 29, 2022 to stockholders of record as of the close of business on March 30, 2022.

In May 2022, the Company’s Board of Directors declared a cash dividend on the Company’s common stock in the amount of $ 0.19 per share.

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The dividend was paid on January 31, 2023 to stockholders of record as of the close of business on December 29, 2022.

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.

On February 6, 2023, the Company’s Board of Directors declared a cash dividend on the Company’s common stock in the amount of $ 0.34 per share.

The dividend is payable on April 28, 2023 to stockholders of record as of the close of business on March 30, 2023.

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, 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.

The Series A Preferred Stock ranks senior to the Company’s common stock with respect to the payment of dividends and distribution of assets upon liquidation, dissolution or winding-up.

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.

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.

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 (including anti-dilution) as provided for therein.

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).

The Series A Preferred Stock is convertible at the Company’s option (a “Mandatory Conversion”) if the closing sale price of the Company’s common stock equals or exceeds 145 % of the conversion price for at least 20 trading days (whether or not consecutive) in a period of 30 consecutive trading days.

A Mandatory Conversion would also entitle the holder to a cash payment equal to eight semi-annual dividend payments, less an amount equal to all cash dividend payments made in respect of such holder’s shares of Series A Preferred Stock prior to such Mandatory Conversion.

The occurrence of any Optional Conversion or Mandatory Conversion is subject to various terms and limitations set forth in the Certificate of Designations.

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.

As of December 31, 2022 and 2021, the Company had zero and 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 were 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.

During the years ended December 31, 2022 and 2021, the Company paid $ 21.7 million and $ 29.2 million respectively, in aggregate dividends on the Series A Preferred Stock.

The Company was current in the payment of dividends as of the Mandatory Conversion Date (defined below).

On November 8, 2022, the Company exercised in full its mandatory conversion rights (the “Mandatory Conversion Exercise”) on its Series A Preferred Stock to convert such shares of Series A Preferred Stock into shares of the Company’s common stock.

The outstanding shares of Series A Preferred Stock automatically converted to shares of common stock on November 15, 2022 (the “Mandatory Conversion Date”).

Pursuant to the Certificate of Designations, holders of Series A Preferred Stock received 4.4878 shares of common stock and a cash payment of $ 6.3337 for each share of Series A Preferred Stock converted on the Mandatory Conversion Date.

On the Mandatory Conversion Date, 1,643,732 outstanding shares of Series A Preferred Stock converted into an aggregate of 7,376,739 shares of common stock.

Cash was paid in lieu of fractional shares of common stock.

As a result, there were no remaining shares of Series A Preferred Stock outstanding as of December 31, 2022.

2022 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.

During the year ended December 31, 2022, 89,620 shares of common stock were surrendered by certain employees of the Company to cover tax obligations in connection with their restricted stock awards.

The total value of these shares was approximately $ 2.2 million, which is based on the market prices on the dates the shares were surrendered.

In June 2022, the Company issued 2,322,690 shares of common stock in exchange for the surrender and cancellation of all warrants originally issued by the Company at closing of the Reliance Acquisition, which immediately prior to their cancellation were exercisable for an aggregate of 3,294,092 shares of common stock at an exercise price of $ 13.81 per share.

Preferred Stock

During the year ended December 31, 2022, the Company repurchased 575,000 shares of Series A Preferred Stock in a number of independent transactions for an aggregate of $ 81.2 million in cash.

On November 15, 2022, all 1,643,732 outstanding shares of Series A Preferred Stock converted into an aggregate of 7,376,739 shares of common stock, pursuant to the Mandatory Conversion Exercise described above.

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.

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.

Of the shares repurchased in 2019, $ 1.2 million was recorded as a settlement of contingent consideration liabilities in connection with a prior acquisition.

During the year ended December 31, 2022 the Company repurchased 1,909,097 shares of its common stock under the stock repurchase program at a total cost of $ 54.5 million.

During the year ended December 31, 2021 the Company did no t repurchase shares of its common stock under any stock repurchase program.

The Company’s accounting policy upon the repurchase of shares is to deduct its par value from common stock and to reflect any excess of cost over par value as a deduction from Additional Paid-in Capital.

All repurchased shares are now included in the Company’s pool of authorized but unissued shares.

NOTE 6 STOCK-BASED COMPENSATION

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.

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

NOTE 6 STOCK-BASED COMPENSATION AND WARRANTS

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

As of December 31, 2022, there were 459,580 shares available for future awards under the 2018 Plan.

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The Company capitalizes a portion of stock-based compensation for employees who are directly involved in the acquisition of oil and natural gas properties into the full cost pool.

Capitalized stock-based compensation is included in the “Oil and natural gas properties” line item in the balance sheets.

The 2018 Plan and 2013 Plan award types are summarized as follows:

Capitalized stock-based compensation is included in the “Oil and natural gas properties” line item in the balance sheet.

The 2018 Plan award types are summarized as follows:

Restricted Stock Awards

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Treasury yield curve rates with maturities consistent with the three-year vesting period.

The key assumptions used in valuing these market-based awards were as follows:

Risk-free interest rate 2.57 %

Dividend yield — %

Expected volatility 85.00 %

During 2021, 2020 and 2019, 339,653 , 460,382 and 174,720 shares, respectively, of service-based RSAs were granted to executive officers, employees and directors under the 2013 and 2018 Equity Plans.

During 2022, 2021 and 2020, 125,789 , 339,653 and 460,382 shares, respectively, of service-based RSAs were granted to executive officers, employees and directors under the 2018 Equity Plan.

The weighted average grant date fair value of service-based RSAs was $ 26.34 per share, $ 16.45 per share and $ 9.15 per share for the years ended December 31, 2022, 2021, and 2020, respectively.

During 2019, RSAs subject to service, market, and performance-based vesting conditions were granted to employees and executive officers under the 2018 Plan.

Vesting of these awards is contingent on the Company’s debt-adjusted cash flow per share as compared to specified targets (“2019 Performance Award I”).

The weighted average grant date fair value of these service, performance, and market-based RSAs was $ 9.80 per share.

Also during 2019, RSAs subject to service and market-based vesting conditions were granted to employees, executive officers, and directors under the 2018 Plan.

Vesting of these awards is contingent on the Company’s stock price performance relative to specified targets (“2019 Performance Award II”).

The weighted average grant date fair value of these service and market-based RSAs was $ 18.20 per share.

The following table reflects the outstanding RSAs and activity related thereto for the year ended December 31, 2022:

Service-based Awards Service and Performance-based Awards Service and Market-based Awards Service, Performance, and Market-based Awards

Number of Shares Weighted-average Grant Date Fair Value Number of Shares Weighted-average Grant Date Fair Value Number of Shares Weighted-average Grant Date Fair Value Number of Shares Weighted-average Grant Date Fair Value

Service-based Awards Service, Performance, and Market-based Awards

Number of Shares Weighted-average Grant Date Fair Value Number of Shares Weighted-average Grant Date Fair Value

Outstanding at December 31, 2021 420,122 $ 13.68 18,600 $ 9.80

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For the years ended December 31, 2022, 2021 and 2020, the total fair value of the Company’s restricted stock awards vested was $ 4.6 million, $ 1.8 million and $ 2.7 million, respectively.

Performance Equity Awards

In April 2022, the Company granted performance equity awards under its 2022 executive compensation program to certain executive officers.

The awards are subject to a market condition, which is based on a comparison of the Company versus a defined peer group with respect to total shareholder return (“TSR”) based on the last 20 trading days of 2022 compared to the same period of 2021.

Depending on the Company’s TSR relative to the defined peer group, the award recipients in the aggregate will earn between zero and $ 2.4 million in the form of awards expected to be settled in restricted shares of the Company’s common stock with service-based vesting over three years beginning in 2023.

The Company used a Monte Carlo simulation model, described above, to estimate the fair value of the awards based on the expected outcome of the Company’s TSR relative to the defined peer group using key valuation assumptions.

The assumptions used for the Monte Carlo model were as follows:

Risk-free interest rate 1.69 %

Dividend yield 2.40 %

Expected volatility 56.94 %

Company’s closing stock price on grant date $ 24.98

The maximum value of the awards issuable if all participants earned the maximum award would total $ 2.4 million.

For the year ended December 31, 2022, the Company recorded $ 0.5 million of compensation expense in connection with these performance awards.

In April 2021, the Company issued common stock warrants as a part of the Reliance Acquisition as purchase consideration.

These warrants gave holders the right 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 anti-dilution adjustments), had a total fair value of $ 30.5 million at issuance , and were generally exercisable from June 30, 2021 until April 1, 2028.

The fair value of the warrants at issuance was determined by utilizing an Option Pricing Model, which used the market value of the Company’s common stock on the issue date, an exercise price of $ 14.00 , an implied volatility of 80 % and a risk-free rate of 1.34 %.

In June 2022, the Company issued 2,322,690 shares of common stock in exchange for the surrender and cancellation of all such warrants originally issued by the Company at closing of the Reliance Acquisition, which immediately prior to their cancellation were exercisable (due to anti-dilution adjustments) for an aggregate of 3,294,092 shares of common stock at an exercise price of $ 13.81 per share.

Neither the Company nor the holder paid any cash consideration in the transaction.

In January 2022, the Company issued common stock warrants as a part of the Veritas Acquisition as purchase consideration.

These warrants gave holders the right to purchase 1,939,998 shares of the Company’s common stock at an exercise price equal to $ 28.30 per share (subject to certain anti-dilution adjustments), had a total fair value of $ 17.9 million at issuance, and are generally exercisable from April 27, 2022 until January 27, 2029.

The fair value of the warrants at issuance was determined by

utilizing an Option Pricing Model, which used the market value of the Company’s common stock on the issue date, an exercise price of $ 28.30 , an implied volatility of 60 %, a risk-free rate of 2.14 % and an implied dividend yield of 3.00 %.

The following table reflects the outstanding warrants and activity related thereto for the year ended December 31, 2022:

Reliance Veritas

Warrants Weighted-average Exercise Price Warrants Weighted-average Exercise Price

Outstanding at December 31, 2021 3,276,582 $ 13.89 — $ —

Issued — — 1,939,998 28.30

Anti-Dilution Adjustments for Common Stock Dividends 17,510 13.81 56,831 27.49

Exercised — — — —

Cancelled ( 3,294,092 ) — — —

Expired — — — —

Outstanding at December 31, 2022 — $ — 1,996,829 $ 27.49

NOTE 7 RELATED PARTY TRANSACTIONS

Preferred Stock Repurchase

During February 2022, we entered into and closed three separate stock repurchase agreements pursuant to which we repurchased an aggregate of 71,894 shares of the Company’s Series A Preferred Stock, on identical financial terms from each party for an aggregate purchase price of approximately $ 9.5 million in cash.

Of the total amount, 21,894 shares were repurchased from affiliates of TRT Holdings, Inc., for $ 2.9 million in cash.

Two of our directors at the time, Mr.

Frantz and Mr.

Popejoy, are employed by TRT Holdings, Inc., which together with its affiliates beneficially owned more than 10% of our outstanding common stock at the time of the transactions described in this paragraph.

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

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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.

For the years ended December 31, 2022, 2021 and 2020, the Company made deficiency payments totaling $ 8.5 million, $ 0.7 million and zero , respectively.

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.

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

NOTE 9 ASSET RETIREMENT OBLIGATIONS

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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 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.

During 2021, the Company adjusted the assumed productive lives of certain of its wells and during 2022, 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, 2022 and 2021.

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Valuation Allowance ( 185,080 ) 3,854 193,297

Total Tax Benefit $ 233 $ ( 166 ) $ —

Total Tax Benefit (Expense) $ 3,101 $ 233 $ ( 166 )

The following is a reconciliation of the reported amount of income tax benefit for the years ended December 31, 2022, 2021, and 2020 to the amount of income tax expenses that would result from applying the statutory rate to pretax income (loss).

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The Company’s valuation allowance at December 31, 2022 was $ 156.3 million.

We intend to continue maintaining a full valuation allowance on our deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances.

Release of any portion of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded.

It is reasonably possible that sufficient positive evidence will exist within the next 12 months to release our current valuation allowance position which would be indicative of our ability to utilize deferred tax assets in the future.

The exact timing and

amount of the valuation allowance release are subject to change based on the evaluation of all evidence and actual results, including, but not limited to, the level of profitability that we are forecasted to achieve in future periods.

At December 31, 2022 and December 31, 2021, the Company maintains a full valuation allowance on its net DTAs.

At December 31, 2022, the Company had a net operating loss carryforward for federal income tax purposes of $ 520.7 million, which is net of the IRC Section 382 limitation, and state NOL carryforwards of $ 686.3 million.

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Crude Oil and Natural Gas Properties and Other Properties ( 43,415 ) 124,531

Interest Carryforwards 10,050 —

Derivative Instruments 52,891 63,739

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Commodity Derivatives – Noncurrent Liabilities — ( 225,905 ) —

Interest Rate Derivatives – Noncurrent Assets — 123 —

Interest Rate Derivatives – Current Liabilities — ( 100 ) —

Interest Rate Derivatives – Current Assets — 1,017 —

Contingent Consideration – Current Liabilities — 10,107 —

Total $ — $ ( 226,376 ) $ —

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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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The Company’s and the counterparties’ nonperformance risk is evaluated.

The fair value of commodity derivative contracts is reflected in the balance sheet.

The fair value of commodity derivative

contracts is reflected in the balance sheet.

The current derivative asset and liability amounts represent the fair values expected to be settled in the subsequent twelve months.

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The Level 2 instruments presented in the tables above consist of interest rate derivative instruments (see Note 12).

The fair value of the Company’s interest rate derivative instruments is determined based upon contracted notional amounts, active market-quoted LIBOR yield curves, and time to maturity, among other things.

The fair value of the Company’s interest rate derivative instruments is determined based upon contracted notional amounts, active market-quoted interest yield curves, and time to maturity, among other things.

Counterparty statements are utilized to determine the value of the interest rate derivative instruments and are reviewed and corroborated using various methodologies and significant observable inputs.

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The current derivative asset and liability amounts represent the fair values expected to be settled in the subsequent twelve months.

Contingent Consideration.

These Level 2 instruments presented in the tables above consist of contingent consideration liabilities potentially payable by the Company in connection with both the Incline Acquisition and the Alpha Acquisition (see Note 3).

The fair value of these liabilities was estimated using observable market data (NYMEX WTI forward price curve) and Monte Carlo simulation models.

The acquisition date fair values were recorded within contingent consideration liabilities on the Company’s balance sheets.

Changes in the fair value of the liability (that are not accounted for as revisions of the acquisition date fair value) are recorded in other income (expense) on the Company’s statement of operations.

Fair Value of Other Financial Instruments

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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.

The fair value of the Company’s Senior Notes and Convertible Notes was $ 695.3 million and $ 543.1 million, respectively, at December 31, 2022.

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

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

Non-Financial Assets and Liabilities

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.

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AROs incurred and acquired during the year ended December 31, 2022 were approximately $ 3.2 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 Company issued common stock warrants as a part of the Veritas Acquisition as purchase consideration.

The common stock warrants issued grant holders the right to purchase 1,939,998 shares of the Company’s common stock at an exercise price equal to $ 28.30 per share (subject to certain adjustments), which are generally exercisable from April 27, 2022 until January 27, 2029.

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).

These non-recurring fair value measurements are primarily determined using inputs that are 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.

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Weighted-Average Price ($/Bbl) $ 75.30 $ 75.98 $ — $ —

Brent ICE - Swaps:

Volume (Bbl) 365,000 — — —

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

WTI NYMEX - Swaptions (1) :

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Weighted-Average Price ($/Bbl) $ 63.48 $ 62.71 $ 71.54 $ —

WTI NYMEX - Collars:

Volume (Bbl) 3,816,000 1,989,250 478,500 —

Weighted-average floor price (Bbl) $ 74.45 $ 69.91 $ 70.00 $ —

Weighted-average ceiling price (Bbl) $ 89.43 $ 86.15 $ 78.62 $ —

Henry Hub NYMEX - Swaps:

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Weighted-Average Differential ($/MMBtu) $ ( 1.52 ) $ ( 1.53 ) $ ( 1.53 ) $ —

Henry Hub NYMEX - Call Options:

Volume (MMBtu) — 5,490,000 5,475,000 —

Weighted-Average Price ($/MMBtu) $ — $ 3.87 $ 3.87

Henry Hub NYMEX - Collars:

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Weighted-average ceiling price ($/MMBtu) $ 6.76 $ 8.02 $ — $ —

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:

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Commodity Price Collar Contracts Current Liabilities ( 29,218 ) ( 119 )

Commodity Price Call Option Contracts Current Liabilities ( 13,916 ) —

Commodity Price Swap Contracts Noncurrent Liabilities ( 8,343 ) ( 8,465 )

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Commodity Price Collar Contracts Noncurrent Liabilities ( 33,210 ) ( 275 )

Interest Rate Swap Contracts Noncurrent Liabilities — ( 445 )

Commodity Price Call Option Contracts Noncurrent Liabilities ( 132,794 ) ( 71,815 )

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9,803 14,761 15,266

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

Premium on Repurchase of Preferred Stock 35,731 — —

Net Income (Loss) Attributable to Common Stock $ 727,703 $ ( 8,400 ) $ ( 921,307 )

Weighted Average Common Shares Outstanding:

Weighted Average Common Shares Outstanding – Basic 78,557,216 62,989,543 42,744,639

Dilutive Effect of Stock Options, Restricted Stock and Preferred Shares

Dilutive Effect of Restricted Stock, Preferred Stock, and Common Stock Warrants 8,118,149 — —

Weighted Average Common Shares Outstanding – Diluted 86,675,365 62,989,543 42,744,639

Net Loss per Common Share:

Net Income (Loss) per Common Share:

Basic $ 9.26 $ ( 0.13 ) $ ( 21.55 )

Diluted $ 8.92 $ ( 0.13 ) $ ( 21.55 )

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.

Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common shareholders is the same.

For the years ended December 31, 2021 and 2020, the Company’s potentially dilutive securities, which include 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.

Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.

As of December 31, 2022, the conversion spread for the Convertible Notes were anti-dilutive as the average market price of the Company’s common stock for a given period did not exceed the conversion price.

The following securities have been excluded from the calculation of diluted weighted average common shares outstanding as the inclusion of these securities would have an anti-dilutive effect:

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NOTE 14 SUBSEQUENT EVENTS

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.

MPDC Acquisition

On January 5, 2023, the Company completed its previously announced acquisition of certain oil and gas properties, interests and related assets from Midland Petro D.C.

Partners, LLC and Collegiate Midstream LLC (collectively, “MPDC”), effective as of August 1, 2022.

At closing, the Company acquired a 39.958 % working interest in MPDC’s four-unit development project in the Permian Midland Basin.

The total estimated closing consideration consisted of $ 320.0 million in cash (which included a $ 43.0 million cash deposit previously paid by the Company into escrow in October 2022).

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

The Company has considered the disclosure requirements of ASC 805-10-50-2 and ASC 805-10-50-4 but has not included the required disclosures due to the timing of the transaction relative to the date of the report containing these financial statements.

SUPPLEMENTAL OIL AND GAS INFORMATION

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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., our 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 the Company and audited by Cawley, Gillespie & Associates, Inc., our third-party independent reserve engineers.

Oil and Natural Gas Reserve Data

The following tables present the Company’s third-party independent reserve engineers estimates of its proved crude oil and natural gas reserves.

The following tables present the Company’s estimates of its proved crude oil and natural gas reserves.

The Company emphasizes that reserves are approximations and are expected to change as additional information becomes available.

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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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• Extensions and discoveries .

In 2021, total extensions and discoveries of 18.2 MMBoe were primarily attributable to successful drilling in the Williston Basin as well as the addition of proved undeveloped locations.

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.

In 2022, total extensions and discoveries of 31.6 MMBoe were primarily attributable to successful drilling operations as well as the addition of proved undeveloped locations.

Included in these extensions and discoveries were 13.3 MMBoe as a result of successful drilling operations and 18.3 MMBoe as a result of additional proved undeveloped locations.

• Purchases of minerals in place .

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• Revisions to previous estimates .

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.

In 2022, revisions to previous estimates decreased proved developed and undeveloped reserves by a net amount of 5.2 MMBoe.

Included in these revisions were 10.2 MMBoe of upward adjustments caused by higher crude oil and natural gas prices, a 1.0 MMBoe downward adjustment attributable to increased operating costs and 14.4 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, 2021 included the following:

• Extensions and discoveries .

In 2020, total extensions and discoveries of 8.3 MMBoe were primarily attributable to successful drilling in the Williston Basin as well as the addition of proved undeveloped locations.

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.

In 2021, total extensions and discoveries of 18.2 MMBoe were primarily attributable to successful drilling operations as well as the addition of proved undeveloped locations.

Included in these extensions and discoveries were 4.9 MMBoe as a result of successful drilling operations 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.

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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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