What changed in this filing

/stocks — the workspaceLOADING

Item 2. Properties

2024-02-23 compared with 2023-02-24 · 42 added, 23 removed, 271 unchanged (19% of the section changed)

75 unchanged sentences

Estimated Proved Undeveloped Reserves at 12/31/2023 104.8

Our future development drilling program includes the drilling of approximately 138.2 proved undeveloped net wells before the end of 2027 at an estimated cost of $1,026 million.

Our development plan for drilling proved undeveloped wells calls for the drilling of 85.2 net wells during 2023 (includes 47.0 net wells drilled at December 31, 2022, but classified as proved undeveloped due to Cawley’s internal guidelines which require greater than 50% of total costs to be incurred to be classified as developed), 25.4 net wells during 2024, 16.3 net wells during 2025, 7.0 net wells during 2026, and 4.3 net wells during 2027 for a total of 138.2 net wells.

Our proved undeveloped locations were increased from 126.5 net wells at December 31, 2021 to 138.2 net wells at December 31, 2022 due to our 2022 acquisitions, higher commodity prices, and increased development activity.

We expect that our proved undeveloped reserves will continue to be converted to proved developed producing reserves as additional wells are drilled including our acreage.

Our future development drilling program includes the drilling of approximately 146.0 proved undeveloped net wells before the end of 2028 at an estimated cost of $1.2 billion.

Our development plan for drilling proved undeveloped wells calls for the drilling of 90.9 net wells during 2024 (includes 55.8 net wells spud at December 31, 2023, but classified as proved undeveloped due to Cawley’s internal guidelines which require greater than 50% of total costs to be incurred to be classified as developed), 19.4 net wells during 2025, 18.7 net wells during 2026, 11.6 net wells during 2027, and 5.4 net wells during 2028 for a total of 146.0 net wells.

Our proved undeveloped locations were increased from 138.2 net wells at December 31, 2022 to 146.0 net wells at December 31, 2023 due to our 2023 acquisitions and increased development activity.

We expect that our proved undeveloped reserves will continue to be converted to proved developed producing reserves as additional wells are drilled under our acreage.

All locations comprising our remaining proved undeveloped reserves are forecast to be drilled within five years from initially being recorded in accordance with our development plan.

2 unchanged sentences

The development of these reserves is dependent upon a number of factors which include, but are not limited to:

financial targets such as drilling within cash flow or reducing debt, drilling of obligatory wells, satisfactory

rates of return on proposed drilling projects, and the levels of drilling activities by operators in areas where we hold leasehold interests.

During 2022, we increased our development capital spending by 100% compared to 2021.

financial targets such as drilling within cash flow or reducing debt, drilling of obligatory wells, satisfactory rates of return on proposed drilling projects, and the levels of drilling activities by operators in areas where we hold leasehold

During 2023, we increased our capital spending by 31% compared to 2022.

With 78% of the PV-10 value of our total proved reserves supported by producing wells, we believe we will have sufficient cash flows and adequate liquidity to execute our development plan.

2 unchanged sentences

Additionally, our proved undeveloped reserves at December 31, 2023 included 58.6 MMBoe for net wells that had commenced drilling activities but remained classified as undeveloped reserves due to Cawley’s internal guidelines which require greater than 50% of the total costs to have been incurred in order to be classified as proved developed (the related development costs incurred at December 31, 2023 were $175.7 million).

In 2022, we also added 18.5 MMBoe of proved undeveloped reserves as a result of our acquisition and development activity.

The SEC-prescribed commodity prices (after adjustment for transportation, quality and basis differentials) were $29.70 higher per barrel of oil and $4.06 higher per Mcf of natural gas at year-end 2022 as compared to year-end 2021.

Additionally, we had positive revisions of 0.3 MMBoe primarily due to the aforementioned higher pricing.

In 2023, we also added 24.6 MMBoe of proved undeveloped reserves as a result of our development activity.

We added an additional 23.4 MMBoe from our acquisitions.

The SEC-prescribed commodity prices (after adjustment for transportation, quality and basis differentials) were $16.44 lower per barrel of oil and $4.33 lower per Mcf of natural gas at year-end 2023 as compared to year-end 2022.

Additionally, we had negative revisions of 6.6 MMBoe primarily due to the aforementioned lower pricing.

We also removed 24.9 MMBoe of proved undeveloped reserves due to the SEC-prescribed 5-year rule.

1 unchanged sentence

The SEC disclosure rules allow for optional reserves sensitivity analysis, such as the sensitivity that oil and natural gas reserves have to price fluctuations.

We have chosen to compare our proved reserves from the 2022 SEC case to one alternate pricing case, which uses a flat pricing deck of $70.00 per Bbl for oil and $3.00 per MMbtu for natural gas (the “$70 Flat Case”).

We have chosen to compare our proved reserves calculated using SEC Pricing (the “2023 SEC Case”) to one alternate pricing case, which uses a flat pricing deck of $70.00 per Bbl for oil and $3.00 per MMbtu for natural gas (the “$70 Flat Case”).

The sensitivity scenario was not audited by a third-party.

In this sensitivity scenario, all operating cost assumptions and other factors, other than the commodity price assumptions, have been held constant with the 2023 SEC Case.

However, the lower pricing in the sensitivity scenario did result in fewer future drilling locations that were economic at the $70 Flat Case compared to the 2022 SEC case.

However, the change in pricing in the sensitivity scenario did result in fewer future drilling locations that were economic at the $70 Flat Case compared to the 2023 SEC Case.

As a result, the $70 Flat Case included 7.9 fewer proved undeveloped net wells compared to the 146.0 proved undeveloped net wells included in the 2023 SEC Case.

27 unchanged sentences

Cawley is a reservoir-evaluation consulting firm who evaluates oil and natural gas properties and independently certifies petroleum reserves quantities for various clients throughout the United States.

Cawley has substantial experience calculating the reserves of various other companies and, as such, we believe Cawley has sufficient experience to appropriately audit our reserves.

Cawley utilizes proprietary technology, systems and data to calculate our reserves commensurate with this experience.

Cawley has substantial experience auditing and calculating the reserves of various other companies and, as such, we believe Cawley has sufficient experience to appropriately audit our reserves.

Cawley utilizes proprietary technology, systems and data to audit our reserves commensurate with this experience.

Cawley is a Texas Registered Engineering Firm (F-693).

3 unchanged sentences

In accordance with applicable requirements of the SEC, estimates of our net proved reserves and future net revenues are made using average prices at the beginning of each month in the 12-month period prior to the date of such reserve estimates and are held constant throughout the life of the properties (except to the extent a contract specifically provides for escalation).

The reserves set forth in the Cawley report for the properties are estimated by performance methods or analogy.

The reserves set forth in the Company report audited by Cawley for the properties are estimated by performance methods or analogy.

In general, reserves attributable to producing wells and/or reservoirs are estimated by performance methods such as decline curve analysis which utilizes extrapolations of historical production data.

4 unchanged sentences

With respect to the property interests we own, production and well tests from examined wells, normal direct costs of operating the wells or leases, other costs such as transportation and/or processing fees, production taxes, recompletion and development costs and product prices are based on the SEC regulations, geological maps, well logs, core analyses, and pressure measurements.

The reserve data set forth in the Cawley report represents only estimates, and should not be construed as being exact quantities.

The reserve data set forth in the Company report represents only estimates, and should not be construed as being exact quantities.

They may or may not be actually recovered, and if recovered, the actual revenues and costs could be more or less than the estimated amounts.

12 unchanged sentences

Internal Controls Over Reserves Estimation Process

We utilize a third-party reservoir engineering firm as our independent reserves auditor for 100% of our reserves base.

In addition, we employ an internal reserve engineering department which is led by our Executive Vice President and Chief Engineer, who is responsible for overseeing the preparation of our reserves estimates.

We employ an internal reserve engineering department which is led by our Chief Technical Officer, who is responsible for overseeing the preparation of our reserves estimates.

Our executive internal reserve engineer has a B.S.

in petroleum engineering from Montana Tech, has over seventeen years of oil and gas experience on the reservoir side, and has experience working for large independents on projects and acquisitions.

in petroleum engineering from Montana Tech, has over eighteen years of oil and gas experience on the reservoir side, and has experience working for large independents on projects and acquisitions.

In addition, we utilize a third-party reservoir engineering firm as our independent reserves auditor for 100% of our reserves base.

Our technical team meets with our independent third-party engineering firm to review properties and discuss evaluation methods and assumptions used in the proved reserves estimates, in accordance with our prescribed internal control procedures.

17 unchanged sentences

Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Years Ended December 31,

Year Ended December 31,

2023 2022 2021

8 unchanged sentences

Oil (per Bbl) $ 74.78 $ 91.65 $ 62.94

Effect of Gain (Loss) on Settled Oil Derivatives on Average Price (per Bbl) (22.05) (10.17) 20.08

Effect of Loss on Settled Oil Derivatives on Average Price (per Bbl) (0.90) (21.48) (10.19)

Oil Net of Settled Oil Derivatives (per Bbl) 73.88 70.17 52.75

7 unchanged sentences

Production Expenses (per Boe) $ 9.62 $ 9.46 $ 8.70

The following table sets forth our production results for the years ended December 31, 2023, 2022 and 2021 in total and for each of our basins of operations.

Year Ended December 31,

2023 2022 2021

Net Production:

Williston Basin 12,746,957 11,651,938 11,683,218

Permian Basin 9,266,029 4,438,134 605,140

Appalachian Basin — — —

Total 22,012,986 16,090,072 12,288,358

Natural Gas and NGLs (Mcf)

Williston Basin 31,102,642 27,027,761 23,186,806

Permian Basin 28,594,041 14,255,738 1,111,673

Appalachian Basin 24,645,175 27,545,643 19,775,462

Total 84,341,858 68,829,142 44,073,941

Crude Oil Equivalents (Boe)

Williston Basin 17,930,730 16,156,565 15,547,686

Permian Basin 14,031,702 6,814,090 790,419

Appalachian Basin 4,107,529 4,590,941 3,295,910

Total 36,069,961 27,561,596 19,634,015

Drilling and Development Activity

44 unchanged sentences

In those instances, we still review each lease on a lease-by-lease basis to ensure that the package as a whole meets our acquisition criteria and drilling expectations.

See Note 3 and Note 14 to our financial statements regarding our recent acquisition activity.

See Note 3 to our financial statements regarding our recent acquisition activity.

Acreage Expirations

15 unchanged sentences

We believe that the expired acreage was not material to our capital deployed.

As of December 31, 2023, we estimate that less than 1% of our proved undeveloped reserves were attributable to locations scheduled to be drilled after lease expiration.

Unproved Properties

10 unchanged sentences

The following table presents our depletion expenses during 2023, 2022 and 2021.

Years Ended December 31,

Year Ended December 31,

(In thousands, except per Boe data) 2023 2022 2021

13 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 2. Properties