What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-02-23 compared with 2023-02-24 · 406 added, 349 removed, 1247 unchanged (38% of the section changed)

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Other Information

(b) During the quarter ended December 31, 2023, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

During the quarter ended December 31, 2023, the Company did not adopt or terminate a “Rule 10b5-1 trading arrangement” as that term is defined in Item 408(a) of Regulation S-K.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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We have adopted a Code of Business Conduct and Ethics that applies to our chief executive officer, chief financial officer and persons performing similar functions.

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

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

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

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Erik Romslo 46 Chief Legal Officer & Secretary

James Evans 39 Executive Vice President and Chief Engineer

James Evans 40 Chief Technical Officer

Nicholas O’Grady has served as our Chief Executive Officer since January 2020.

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Previously, he worked as a portfolio manager at Bluecrest Capital Management from November 2013 to June 2014, and at Sigma Capital Management from April 2012 to October 2013.

O’Grady holds a bachelor’s degree in both history and economics from Bowdoin College in Brunswick, Maine.

O’Grady holds a bachelor’s degree in both history and economics from Bowdoin College.

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 NOG 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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Olaf College and a law degree from the New York University School of Law.

James Evans has served as our Executive Vice President and Chief Engineer since February 2021.

Prior to that, he served as our Senior Vice President of Engineering since January 2020 and as Vice President of Engineering since June 2018, prior to which he had served as the company’s Reservoir Engineering Manager since 2015.

Evans began his career as a Reservoir Engineer with Cabot Oil & Gas.

Between 2009 and 2012 he worked for Cornerstone Natural Resources.

More recently Mr.

Evans worked for Fidelity Exploration.

James Evans has served as our Chief Technical Officer since April 2023.

Prior to that, he served as our Executive Vice President and Chief Engineer since February 2021, our Senior Vice President of Engineering since January 2020 and as Vice President of Engineering since June 2018, prior to which he had served as the company’s Reservoir Engineering Manager since 2015.

Evans began his career as a Reservoir Engineer with Cabot Oil & Gas, and also worked for Cornerstone Natural Resources and Fidelity Exploration before joining our company.

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

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Equity compensation plans approved by security holders

2018 Equity Incentive Plan 77,060 — 382,520

Amended and Restated 2018 Equity Incentive Plan 138,629 (1) — 2,866,087

Equity compensation plans not approved by security holders — — —

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_____________

(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.

(1) Represents shares issuable pursuant to performance-based restricted stock units (“RSUs”) granted under the Company’s Amended and Restated 2018 Equity Incentive Plan (the “2018 Plan”), assuming maximum performance under the terms of

This figure does not include the shares potentially issuable in settlement of appreciation rights (“SARs”) issued pursuant to the 2018 Plan, as the awards are not denominated in securities and the number of securities that may be issued in settlement of the SARs is not known.

See Note 6 to our financial statements for additional information on these 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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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

Acquisition and Cooperation Agreement, dated as of June 14, 2023, by and between Earthstone Energy Holdings, LLC and Northern Oil and Gas, Inc.

Incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on June 16, 2023

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

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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.

Rowling, Cresta Investments, LLC, Cresta Greenwood, LLC, TRT Holdings, Inc.

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 January 5, 2015

Letter Agreement, dated January 25, 2017 by and among TRT Holdings, Inc., Cresta Investments, LLC, Cresta Greenwood, LLC, Robert Rowling, Michael Popejoy, Michael Frantz 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 January 27, 2017

Amended and Restated Letter Agreement, dated as of May 15, 2018, by and among Robert B.

Rowling, Cresta Investments, LLC, Cresta Greenwood, LLC, TRT Holdings, Inc., 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 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

Indenture, dated May 15, 2023, between Northern Oil and Gas, Inc.

and Wilmington Trust, National Association, as trustee (including Form of 8.750% Senior Note due 2031) Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 19, 2023

Amended and Restated Warrant to Purchase Common Shares, dated December 2, 2023, by and between Northern Oil and Gas, Inc.

and Riverview Group, LLC Filed herewith

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

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and the holders party thereto Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 18, 2018

Registration Rights Agreement, dated as of May 15, 2018, among Northern Oil and Gas, Inc.

and TRT Holdings, Inc., Cresta Investments, LLC and Cresta Greenwood, LLC Incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 18, 2018

Registration Rights Agreement, dated as of May 15, 2018, among Northern Oil and Gas, Inc.

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 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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Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 1, 2018

Employment Agreement, dated May 24, 2018, between Northern Oil and Gas, Inc.

and Nicholas O’Grady Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on May 31, 2018

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

and Erik Romslo Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on June 7, 2018

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

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

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

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

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

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

Amended and Restated Employment Agreement, dated December 29, 2023, between Northern Oil and Gas, Inc.

and Nicholas O’Grady Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 5, 2024

Second Amended and Restated Employment Agreement, dated December 29, 2023, between Northern Oil and Gas, Inc.

and Adam Dirlam Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 5, 2024

Second Amended and Restated Employment Agreement, dated December 29, 2023, between Northern Oil and Gas, Inc.

and Erik Romslo Incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 5, 2024

Second Amended and Restated Employment Agreement, dated December 29, 2023, between Northern Oil and Gas, Inc.

and Chad Allen Incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 5, 2024

Second Amended and Restated Employment Agreement, dated December 29, 2023, between Northern Oil and Gas, Inc.

and James Evans Incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 5, 2024

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.

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

Northern Oil and Gas, Inc.

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

Amended and Restated 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 May 26, 2023

Form of Restricted Stock Award Agreement (Time-Based Single Trigger) under the Northern Oil and Gas, Inc.

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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

First Amendment to the Second Amended and Restated Credit Agreement, dated July 8, 2020, by and among Northern Oil and Gas, Inc., 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 July 13, 2020

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

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

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

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

2018 Equity Incentive Plan Incorporated by reference to Exhibit 10.23 to the Registrant’s Annual Report on Form 10-K filed with the SEC on February 24, 2023

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

Amended and Restated 2018 Equity Incentive Plan Filed herewith

Form of Performance-Based Restricted Stock Unit Award Agreement (Compound Annualized TSR) under the Northern Oil and Gas, Inc.

Amended and Restated 2018 Equity Incentive Plan Filed herewith

Form of Performance-Based Share Appreciation Award Agreement under the Northern Oil and Gas, Inc.

Amended and Restated 2018 Equity Incentive Plan Filed herewith

Form of Time-Based Restricted Stock Award Agreement under the Northern Oil and Gas, Inc.

Amended and Restated 2018 Equity Incentive Plan Filed herewith

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

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

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

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

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

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

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

Second 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 August 2, 2023 Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 4, 2023

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

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Filed herewith

Northern Oil and Gas, Inc.

Clawback Policy Filed herewith

Report of Cawley, Gillespie & Associates Filed herewith

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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 $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.

Given the significant judgments made by management relating to the estimates and assumptions required within the five-year development plan 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:

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 associated with the five-year development plan 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,

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Derivative Instruments 105,831 225,905

Deferred Tax Liability 68,488 —

Asset Retirement Obligations 38,203 31,582

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Stockholders’ Equity

Preferred Stock, par value $ 0.001 ;

5,000,000 authorized;

zero shares outstanding at 12/31/2022

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

Common Stock, par value $ 0.001 ;

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Gain (Loss) on Commodity Derivatives, Net 259,250 ( 415,262 ) ( 478,193 )

Other Revenue 9,230 — 3

Total Revenues 2,166,259 1,570,535 496,899

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Depletion, Depreciation, Amortization and Accretion 486,024 251,272 140,828

Impairment Expense — — 1,066,668

Other Expenses 4,448 — —

Total Operating Expenses 1,044,397 717,343 418,940

Income (Loss) From Operations 853,192 77,959 ( 841,243 )

Income From Operations 1,121,862 853,192 77,959

Other Income (Expense)

Interest Expense, Net of Capitalization ( 135,664 ) ( 80,331 ) ( 59,020 )

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

Gain (Loss) on Interest Rate Derivatives, Net ( 1,017 ) 993 1,043

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Total Other Income (Expense) ( 121,120 ) ( 76,854 ) ( 71,365 )

Income (Loss) Before Income Taxes 776,338 6,594 ( 906,207 )

Income Tax Expense (Benefit) 3,101 233 ( 166 )

Net Income (Loss) $ 773,237 $ 6,361 $ ( 906,041 )

Income Before Income Taxes 1,000,742 776,338 6,594

Income Tax Expense 77,773 3,101 233

Net Income $ 922,969 $ 773,237 $ 6,361

Cumulative Preferred Stock Dividend — ( 9,803 ) ( 14,761 )

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Cash Flows From Operating Activities

Net Income (Loss) $ 773,237 $ 6,361 $ ( 906,041 )

Adjustments to Reconcile Net Income (Loss) to Net Cash Provided by Operating Activities:

Net Income $ 922,969 $ 773,237 $ 6,361

Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:

Depletion, Depreciation, Amortization and Accretion 486,024 251,272 140,828

Amortization of Debt Issuance Costs 8,096 4,975 3,764

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

(Gain) Loss on Extinguishment of Debt ( 659 ) ( 810 ) 13,087

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

Amortization of Bond Premium on Long-term Debt ( 1,475 ) ( 2,125 ) ( 413 )

Loss on the Sale of Other Property & Equipment — 185 17

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Unrealized (Gain) Loss on Derivative Instruments ( 200,314 ) ( 41,180 ) 311,328

Loss on Contingent Consideration ( 1,859 ) 292 169

(Gain) Loss on Contingent Consideration ( 10,107 ) ( 1,859 ) 292

Share-Based Compensation Expense 5,660 5,656 3,621

Impairment Expense — — 1,066,668

Other 2,404 2,038 3,162

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Restricted Stock Surrenders - Tax Obligations ( 2,616 ) ( 2,206 ) ( 839 )

Net Cash Provided (Used) By Financing Activities 467,367 246,059 ( 62,399 )

Net Cash Provided By Financing Activities 684,692 467,367 246,059

Net Increase (Decrease) in Cash and Cash Equivalents 5,667 ( 6,992 ) 8,092

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Shares Amount Shares Amount Capital (Deficit) (Deficit)

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

Restricted Stock Forfeitures ( 107,071 ) — — — — — —

Share Based Compensation — — — — 4,612 — 4,612

Restricted Stock Surrenders - Tax Obligations ( 39,686 ) — — — ( 438 ) — ( 439 )

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 )

December 31, 2020 45,908,779 $ 448 2,218,732 $ 2 $ 1,556,602 $ ( 1,780,357 ) $ ( 223,304 )

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December 31, 2022 85,165,807 $ 487 — $ — $ 1,745,532 $ ( 1,000,759 ) $ 745,260

Issuance of Common Stock 468,268 — — — — — —

Share Based Compensation — — — — 5,994 — 5,994

Equity Offerings, net of Issuance Costs 15,122,500 15 — — 514,734 — 514,749

Restricted Stock Surrenders - Tax Obligations ( 98,052 ) — — — ( 2,616 ) — ( 2,616 )

Repurchases of Common Stock ( 287,751 ) — — — ( 8,004 ) — ( 8,004 )

Restricted Stock Forfeitures ( 13,404 ) — — — ( 54 ) ( 54 )

Common Stock Warrant Exchange Agreement - Veritas Warrants 403,780 — — — — — —

Deferred Taxes Related to Capped Calls — — — — 8,370 — 8,370

Common Stock Dividends Declared — — — — ( 138,992 ) — ( 138,992 )

Net Income — — — — — 922,969 922,969

December 31, 2023 100,761,148 $ 503 — $ — $ 2,124,963 $ ( 77,790 ) $ 2,047,676

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

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Northern Oil and Gas, Inc.

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

(the “Company,” “Northern,” “our” and words of similar import), a Delaware corporation, is an independent energy company engaged in the acquisition, exploration, development and production of oil and natural gas properties in the United States, primarily in the Williston Basin, the Permian Basin and the Appalachian Basin.

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

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.

The Company’s primary strategy is investing in non-operated minority working and mineral interests in oil and gas properties, with a core area of focus in three premier basins within the United States.

NOTE 2 SIGNIFICANT ACCOUNTING POLICIES

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The Company did no t have any ceiling test impairment for the years ended December 31, 2023, 2022 and 2021.

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

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

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

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

The costs of unproved properties are withheld from the depletion base until such time as they are either developed or otherwise transferred to the full cost pool.

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

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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.

The asset retirement liability is recorded in the period in which the obligation meets the definition of a liability.

When the liability is initially recorded, the Company increases the carrying amount of oil and natural gas properties by an amount equal to the original liability.

The liability is accreted to its present value each period, and the capitalized cost is depreciated consistent with depletion of reserves.

The liability is accreted to its present value each period, and the capitalized cost is depreciated consistent with depletion of proved properties.

Upon settlement of the liability or the sale of the well, the liability is relieved.

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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 carrying amounts of cash and 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.

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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.

The Company’s oil is typically sold at delivery points under contracts terms that are common in our industry.

The Company’s oil is typically sold at delivery points under contract terms that are common in our industry.

The Company’s natural gas produced is delivered by the well operators to various purchasers at agreed upon delivery points under a limited number of contract types that are also common in our industry.

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

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

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

The following tables present the disaggregation of the Company’s oil revenues and natural gas and NGL revenues by basin for the years ended December 31, 2023, 2022 and 2021.

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As a result, the Company is highly dependent on the success of these third-party operators.

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

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

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

1 unchanged sentence

For the years ended December 31, 2023, 2022 and 2021, the Company’s top four operators made up 38 %, 39 % and 50 %, respectively, of total oil and natural gas sales.

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 faces concentration risk due to the fact that substantially all of its oil and natural gas revenue is sourced from a limited number of geographic areas of operations.

As a result, the Company is disproportionately exposed to risks that affect one or more of those areas in the Williston Basin (North Dakota and Montana), the Permian Basin (New Mexico and Texas), and the Appalachian Basin (Pennsylvania and Ohio).

The Company manages and controls market and counterparty credit risk.

In the normal course of business, collateral is not required for financial instruments with credit risk.

Financial instruments which potentially subject the Company to credit risk consist principally of temporary cash balances and derivative financial instruments.

Financial instruments which potentially subject the Company to credit risk consist principally of cash balances and derivative financial instruments.

The Company maintains cash and cash equivalents in bank deposit accounts which, at times, may exceed the federally insured limits.

The Company has not experienced any significant losses from such investments.

The Company attempts to limit the amount of credit exposure to any one financial institution or company.

The Company attempts to limit the amount of credit exposure to any one financial

institution or company.

The Company believes the credit quality of its counterparties is generally high.

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

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.

Stock-Based Compensation

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

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

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

The markets for these commodities continue to be volatile.

Changes in oil and natural gas prices have a significant impact on the value of the Company’s reserves and on its cash flows.

Due to these factors, management has placed a lower weight on the prospect of future earnings in its overall analysis of the valuation allowance.

Accordingly, the valuation allowance against the Company’s deferred tax asset at December 31, 2022 and 2021 was $ 156.3 million and $ 341.3 million, respectively.

In assessing the need for a valuation allowance for the Company’s deferred tax assets, a significant item of positive evidence considered was the cumulative book income in recent years.

The Company had historically been in a cumulative book loss position, driven primarily by full cost ceiling test impairments during the prior periods.

Additionally, at December 31, 2023, the Company had a net deferred tax liability (prior to consideration of valuation allowance) and estimates the deferred tax liabilities will reverse and create taxable income against which the deferred tax assets may be realized.

The Company also considered negative evidence including the fact that the Company’s revenue, profitability and future growth are dependent upon prevailing and future prices for oil and natural gas, which continue to be volatile.

Based on all factors considered, management released the valuation allowance against the Company’s federal and the majority of its state deferred tax assets at December 31, 2023.

Accordingly, the valuation allowance against certain of the Company’s deferred tax assets at December 31, 2023 and 2022 was $ 1.9 million and $ 156.3 million, respectively.

Derivative Instruments and Price Risk Management

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

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

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

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Non-cash Investing Activities:

Oil and Natural Gas Properties Included in Accounts Payable and Accrued Liabilities 163,059 111,897 88,564

Capital Expenditures on Oil and Natural Gas Properties Included in Accounts Payable and Accrued Liabilities 236,314 163,059 111,897

Capitalized Asset Retirement Obligations 5,413 3,917 6,950

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Issuance of Common Stock Warrants - Acquisitions of Oil and Natural Gas Properties — 17,870 30,512

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

Accrued Liabilities From Acquisitions of Oil and Natural Gas Properties 5,168 — —

Other Property and Equipment Included in Accounts Payable — — 578

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Common Stock Dividends Declared, but not paid 40,496 19,546 6,210

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

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

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

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

In March 2020, the FASB issued ASU No.

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

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

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

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

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

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

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

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.

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740):

Improvements to Income Tax Disclosures, which requires the Company to disclose disaggregated jurisdictional and categorical information for the tax rate reconciliation, income taxes paid and other income tax related amounts.

This guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted.

The adoption is expected to enhance the Company's Notes to the Consolidated Financial Statements.

The Company is currently evaluating the impact the new standard will have on its financial statements and related disclosure.

In November 2023, the FASB issued ASU 2023-07 Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which requires the Company to expand the breadth and frequency of segment disclosures to include additional information about significant segment expenses, the chief operating decision maker (CODM) and other items, and also require the annual disclosures on an interim basis.

This guidance is effective for annual periods beginning after December 15, 2023, with early adoption permitted.

The Company is currently evaluating the impact the new standard will have on its financial statements and related disclosure.

In October 2023, the FASB issued ASU 2023-06 Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative, which amends GAAP to include 14 disclosure requirements that are currently required under SEC

Regulation S-X or Regulation S-K.

Each amendment will be effective on the date on which the SEC removes the related disclosure requirement from SEC Regulation S-X or Regulation S-K.

The Company is currently evaluating the impact the new standard will have on its financial statements and related disclosure.

NOTE 3 CRUDE OIL AND NATURAL GAS PROPERTIES

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During 2023, 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”).

the MPDC Acquisition, the Forge Acquisition and the Novo Acquisition (collectively, the “2023 Bolt-on Acquisitions”).

During 2023, in addition to the 2023 Bolt-on Acquisitions, the Company acquired oil and natural gas properties through a number of smaller independent transactions for a total of $ 277.9 million.

MPDC Acquisition

On January 5, 2023, the Company completed its acquisition (the “MPDC 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, which includes an interest in gathering assets associated with the project.

The total consideration at closing was $ 319.9 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 $ 8.2 million subsequent to closing.

The results of operations from the acquisition from the January 5, 2023 closing date through December 31, 2023, represented approximately $ 157.0 million of revenue and $ 102.3 million of income from operations.

The Company incurred $ 3.5 million of transaction costs in connection with the acquisition, which are included in general and administrative expense in the Company’s 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 $ 320,395

Total assets acquired 320,395

Asset retirement obligations ( 451 )

Net assets acquired $ 319,944

Fair value of consideration paid for net assets:

Cash consideration $ 319,944

Total fair value of consideration transferred $ 319,944

Forge Acquisition

On June 30, 2023, the Company completed its acquisition (the “Forge Acquisition”) of Permian Delaware Basin assets from Forge Energy II Delaware, LLC (“Forge”), effective as of March 1, 2023.

At closing, the Company acquired a 30 % undivided stake in the assets sold by Forge, with Vital Energy, Inc., an unaffiliated third party, acquiring the other 70 % and becoming the operator of the assets.

The total consideration at closing, net to the Company, was $ 167.9 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 $ 0.7 million subsequent to closing.

The results of operations from the acquisition from the June 30, 2023, closing date through December 31, 2023, represented approximately $ 46.0 million of revenue and $ 29.3 million of income from operations.

The Company incurred $ 2.3 million of transaction costs in connection with the acquisition, which are included in general and administrative expense in the Company’s 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 $ 164,925

Unproved oil and natural gas properties 3,892

Total assets acquired 168,817

Asset retirement obligations ( 889 )

Net assets acquired $ 167,928

Fair value of consideration paid for net assets:

Cash consideration $ 167,928

Total fair value of consideration transferred $ 167,928

Novo Acquisition

On August 15, 2023, the Company completed its acquisition (the “Novo Acquisition”) of certain Permian Delaware Basin assets of Novo Oil & Gas Holdings, LLC (“Novo”), effective as of May 1, 2023.

At closing, the Company acquired a 33.33 % undivided stake in the assets sold by Novo to Earthstone Energy Holdings, LLC (“Earthstone”), an unaffiliated third party, with Earthstone retaining the other 66.67 % and becoming operator of the acquired assets.

The total consideration at closing, net to the Company, was $ 468.4 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 $ 1.2 million subsequent to closing.

The results of operations from the acquisition from the August 15, 2023 closing date through December 31, 2023, represented approximately $ 78.5 million of revenue and $ 40.9 million of income from operations.

The Company incurred $ 4.6 million of transaction costs in connection with the acquisition, which are included in general and administrative expense in the Company’s 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 $ 474,417

Total assets acquired 474,417

Asset retirement obligations ( 813 )

Accrued Liabilities ( 5,168 )

Net assets acquired $ 468,436

Fair value of consideration paid for net assets:

Cash consideration $ 468,436

Total fair value of consideration transferred $ 468,436

2022 Acquisitions

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

the Veritas Acquisition, the Incline Acquisition, the Vital 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

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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:

The Company incurred $ 7.3 million of transaction costs in connection with the acquisition, which are included in general and administrative expense in the Company’s statement of operations.

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

(In thousands)

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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 Company incurred $ 1.1 million of transaction costs in connection with the acquisition, which are included in general and administrative expense in the Company’s statement of operations.

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

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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”).

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

Vital 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 Vital Energy, Inc.

(formerly Laredo Petroleum, Inc.), effective as of August 1, 2022 (the “Vital 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 results of operations from the acquisition from the October 3, 2022 closing date through December 31, 2022, represented approximately $ 9.4 million of 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 Company’s statement of operations.

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

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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”).

On December 1, 2022, the Company completed the acquisition of certain non-operated oil and gas properties, interests and related assets in the Permian Delaware 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).

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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 Company incurred $ 1.3 million of transaction costs in connection with the acquisition, which are included in general and administrative expense in the Company’s statement of operations.

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

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

This contingent consideration was not earned, and there was no remaining associated liability as of December 31, 2023.

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.

Changes in the fair value of the liability are recorded in other income (expense) on the Company’s statement of operations.

Delaware Acquisition

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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.

As a result of customary post-closing adjustments, the Company increased its proved oil and natural gas properties and total consideration by $ 0.1 million 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 Company incurred $ 1.3 million of transaction costs in connection with the acquisition, which are included in general and administrative expense in the Company’s statement of operations.

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

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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.

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

(In thousands)

Fair value of net assets:

Proved oil and natural gas properties $ 139,644

Unproved oil and natural gas properties 10,912

Total assets acquired $ 150,556

Asset retirement obligations ( 6,549 )

Minimum volume commitment liability ( 3,443 )

Net assets acquired $ 140,564

Fair value of consideration paid for net assets:

Cash consideration $ 110,052

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

Total fair value of consideration transferred $ 140,564

CM Resources Acquisition

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

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

(In thousands)

Fair value of net assets:

Proved oil and natural gas properties $ 101,869

Total assets acquired $ 101,869

Asset retirement obligations ( 179 )

Net assets acquired $ 101,691

Fair value of consideration paid for net assets:

Cash consideration $ 101,691

Total fair value of consideration transferred $ 101,691

Pro Forma Information

The following summarized unaudited pro forma statement of operations information for the 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 following summarized unaudited pro forma statement of operations information for the years ended December 31, 2023 and December 31, 2022 assumes that each of the 2023 Bolt-on Acquisitions and 2022 Bolt-on Acquisitions occurred as of January 1, 2022.

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

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Net Income $ 1,177,068 $ 1,414,369

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 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.

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

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Total $ 2,064 $ 12,865 $ 12,097 $ 9,759

The Company historically has acquired unproved properties by purchasing individual or small groups of leases directly from mineral owners, landmen or lease brokers, which leases historically have not been subject to specified drilling projects, and by purchasing lease packages in identified project areas controlled by specific operators.

purchasing lease packages in identified project areas controlled by specific operators.

The Company generally participates in drilling activities on a heads up basis by electing whether to participate in each well on a well-by-well basis at the time wells are proposed for drilling.

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December 31, 2023

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

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

Revolving Credit Facility (1) $ 161,000 $ — $ — $ 161,000

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

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

Senior Notes due 2028 705,108 8,376 ( 9,366 ) 704,117

Convertible Notes due 2029 500,000 — ( 14,214 ) 485,786

Senior Notes due 2031 500,000 ( 6,600 ) ( 8,749 ) 484,651

Total $ 1,866,108 $ 1,776 $ ( 32,330 ) $ 1,835,554

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

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

Senior Notes due 2028 724,235 10,682 ( 11,946 ) 722,972

Convertible Notes due 2029 500,000 — ( 16,558 ) 483,442

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

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Revolving Credit Facility

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.

On June 7, 2022, the Company entered into a Third Amended and Restated Credit Agreement (as amended, modified, or supplemented through the date of this filing, 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.

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As of December 31, 2023, the borrowing base was $ 1.8 billion and the aggregate elected commitment amount was $ 1.25 billion.

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

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.

The Company’s borrowing availability under the Revolving Credit Facility 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 (acting at the direction of the lenders holding at least two-thirds of commitments and loans outstanding under the Revolving Credit Facility) between scheduled redeterminations.

Upon an acquisition of oil and gas properties with an aggregate value exceeding 5 % of the borrowing base, the Company may request an additional redetermination.

The scheduled redeterminations are based on a

December 31st or June 30th reserve report, as applicable, prepared under the supervision of the Company’s chief engineer and, in the case of the December 31st reserve report, audited by an approved petroleum engineer (reasonably acceptable to the Agent).

The Company has the option to seek commitments for term loans, which such term loans (if obtained) are capped at the least of (i) the borrowing base minus the aggregate elected commitment amount minus the then-outstanding principal amount of term loans, (ii) the aggregate elected commitment amount minus the then-outstanding principal amount of term loans and (iii) $ 500.0 million.

Such term loans are subject to certain 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.

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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 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, 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 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 .

(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 Accounting Standards Codification (“ASC”) Topic 815, Derivatives and Hedging (“ASC 815”), divided by consolidated current liabilities excluding current non-cash obligations under 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, 2023.

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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.

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”).

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 “Senior 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:

Senior 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”).

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

During 2023, the Company repurchased and retired $ 19.1 million in aggregate principal amount of the Senior Notes due 2028 in open market transactions for a total of $ 18.4 million in cash, plus accrued interest.

During 2022, the Company repurchased and retired $ 25.8 million in aggregate principal amount of the Senior Notes due 2028 in open market transactions for a total of $ 24.9 million in cash, plus accrued interest.

The Senior Notes due 2028 will mature on March 1, 2028.

Interest is payable semi-annually in arrears on each March 1 and September 1 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 due 2028 at a redemption price equal to 100 % of the principal amount of the Senior Notes due 2028 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 due 2028 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.

If a Change of Control Triggering Event (as defined in the 2028 Notes Indenture) occurs, each holder of Senior Notes due 2028 may require the Company to repurchase all or any part of that holder’s the Senior Notes due 2028 for cash at a price equal to 101 % of the aggregate principal amount of the Senior Notes due 2028 repurchased, plus any accrued and unpaid interest on the Senior Notes due 2028 repurchased to, but excluding, the date of purchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date on or prior to the date of purchase).

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

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

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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 Senior 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 due 2028 achieve an investment grade rating from either Moody’s Investors Services, Inc.

or S&P Global Ratings.

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;

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 Senior Notes due 2028;

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

(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 due 2028 or the 2028 Notes Indenture, subject to certain notice and grace periods;

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

(v) failure by the Company or any of its restricted subsidiaries that is a Significant Subsidiary (as defined in the 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

(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 Senior Notes due 2028 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.

Convertible Notes due 2029

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.

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

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

Before October 16, 2028, noteholders 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.

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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.

The initial conversion rate was 26.3104 shares of common stock per $1,000 principal amount of Convertible Notes, which represented an initial conversion price of approximately $ 38.01 per share of common stock.

The conversion rate and conversion price are subject to customary anti-dilution and other adjustments upon the occurrence of certain events.

As of December 31, 2023, the conversion rate was 26.5253 shares of common stock per $1,000 principal amount of Convertible Notes, which represented a conversion price of approximately $ 37.70 per share of common stock.

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;

The Convertible Notes are 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.

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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);

(i) certain payment defaults on the Convertible Notes (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;

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(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;

(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 $ 50.0 million;

(vi) the rendering of certain judgments against the Company or any of its subsidiaries for the payment of at least $ 50.0 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;

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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.

The cap price of the Capped Call Transactions was initially 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.

As of December 31, 2023, the cap price of the Capped Call Transactions was approximately $ 51.74 per share of common stock.

Senior Notes due 2031

On May 15, 2023, the Company and Wilmington Trust, National Association, as trustee, entered into an indenture (the “2031 Notes Indenture” and, together with the 2028 Notes Indenture, the “Senior Notes Indentures”) pursuant to which the Company issued $ 500.0 million in aggregate principal amount of the Company’s 8.750 % senior notes due 2031 (the “Senior Notes due 2031” and, collectively with the Senior Notes Due 2028, the “Senior Notes”).

The proceeds of the Senior Notes due 2031 were used primarily to refinance existing indebtedness, and for general corporate purposes.

The Senior Notes due 2031 will mature on June 15, 2031.

Interest is payable semi-annually in arrears on each June 15 and December 15, commencing December 15, 2023, to holders of record on the June 1 and December 1 immediately preceding the related interest payment date, at a rate of 8.750 % per annum.

Prior to June 15, 2026, the Company may redeem up to 35 % of the aggregate principal amount of Senior Notes due 2031, upon not less than 10 or more than 60 days’ notice, at a redemption price of 108.750 % of the principal amount of the Senior Notes due 2031 redeemed, plus accrued and unpaid interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the redemption date), in an amount not greater than the net cash proceeds of one or more equity offerings by the Company, provided that (i) at least 65 % of the aggregate principal amount of Senior Notes due 2031 issued under the 2031 Notes Indenture (including any Additional Notes (as defined in the 2031 Notes Indenture) but excluding the Senior Notes due 2031 held by the Company and its Subsidiaries (as defined in the 2031 Notes Indenture)) remains outstanding immediately after the occurrence of such redemption (unless all Senior Notes due 2031 are redeemed substantially concurrently) and (ii) the redemption occurs within 180 days of the date of the closing of each such equity offering.

In addition, prior to June 15, 2026, the Company may redeem all or a part of the Senior Notes due 2031, on any one or more occasions, upon not less than 10 or more than 60 days’ notice, at a redemption price equal to 100 % of the principal amount of the Senior Notes due 2031 redeemed, plus an applicable make-whole premium and accrued and unpaid interest, if any, to, but excluding, the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the redemption date).

On or after June 15, 2026, the Company may redeem all or a part of the Senior Notes due 2031, at redemption prices (expressed as percentages of principal amount) equal to 104.375 % for the twelve-month period beginning on June 15, 2026, 102.188 % for the twelve-month period beginning on June 15, 2027, and 100 % beginning on June 15, 2028, plus accrued and unpaid interest to the redemption date.

If a Change of Control Triggering Event (as defined in the 2031 Notes Indenture) occurs, each holder of Senior Notes due 2031 may require the Company to repurchase all or any part of that holder’s Senior Notes due 2031 for cash at a price equal to 101 % of the aggregate principal amount of the Senior Notes due 2031 repurchased, plus any accrued and unpaid interest on the Senior Notes due 2031 repurchased to, but excluding, the date of purchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date on or prior to the date of purchase).

The 2031 Notes Indenture contains covenants that, among other things, limit the Company’s ability and the ability of its restricted subsidiaries, if any, to:

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

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

(iii) transfer or sell certain assets;

(iv) make investments;

(v) create liens to secure indebtedness;

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

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

(viii) enter into transactions with affiliates;

and (ix) create unrestricted subsidiaries.

These covenants are subject to a number of important exceptions and qualifications, and many of these covenants will be terminated if the Senior Notes due 2031 achieve an investment grade rating from either Moody’s Investors Service, Inc.

or S&P Global Ratings.

The 2031 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 due 2031;

(ii) default in payment when due of the principal of, or premium, if any, on the Senior Notes due 2031;

(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 due 2031 or the 2031 Notes Indenture, subject to certain notice and grace periods;

(v) failure by the Company or any of its restricted subsidiaries that is a Significant Subsidiary (as defined in the 2031 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 2031 Notes Indenture, any guarantee of the Senior Notes due 2031 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 2031 Notes Indenture);

and (vii) certain events of

bankruptcy or insolvency described in the 2031 Notes Indenture with respect to the Company and its restricted subsidiaries that are Significant Subsidiaries.

NOTE 5 COMMON AND PREFERRED STOCK

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As of December 31, 2023 and 2022, the Company had 100,761,148 and 85,165,807 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.

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 Company’s board of directors.

As of December 31, 2023 and 2022, the Company had zero shares of preferred stock issued and outstanding.

On November 8, 2022, the Company exercised in full its mandatory conversion rights (the “Mandatory Conversion Exercise”) on its 6.500 % Series A Perpetual Cumulative Convertible Preferred Stock (“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”).

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, 2023 and 2022.

2023 Activity

During the year ended December 31, 2023, 98,052 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 $ 2.6 million, which is based on the market prices on the dates the shares were surrendered.

In March 2023, the Company issued 403,780 shares of common stock in exchange for the surrender and cancellation of a portion of the warrants originally issued by the Company at closing of the Veritas Acquisition, which immediately prior to their cancellation were exercisable for an aggregate of approximately 824,602 shares of common stock at an exercise price of $ 27.4946 per share.

In May 2023, the Company closed an underwritten public offering of 7,647,500 shares of its common stock at a price of $ 29.40 per share, after deducting underwriting discounts.

This offering resulted in net proceeds of approximately $ 224.7 million, after deducting underwriting discounts and commissions.

In October 2023, the Company closed an underwritten public offering of 7,475,000 shares of its common stock at a price of $ 38.88 per share, after deducting underwriting discounts.

This offering resulted in net proceeds of approximately $ 290.6 million, after deducting underwriting discounts and commissions.

In February 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 was paid on April 28, 2023 to stockholders of record as of the close of business on March 30, 2023.

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The dividend was paid on October 31, 2023 to stockholders of record as of the close of business on September 28, 2023.

In November 2022, the Company’s Board of Directors declared a cash dividend on the Company’s common stock in the amount of $ 0.30 per share.

In October 2023, the Company’s board of directors declared a cash dividend on the Company’s common stock in the amount of $ 0.40 per share.

The dividend was paid on January 31, 2024 to stockholders of record as of the close of business on December 28, 2023.

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The dividend is payable on April 30, 2024 to stockholders of record as of the close of business on March 28, 2024.

Preferred Stock

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

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.

During the years ended December 31, 2023 and 2022, the Company paid zero and $ 21.7 million respectively, in aggregate dividends on the Series A Preferred Stock.

Stock Repurchase Program

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During the year ended December 31, 2023 the Company repurchased 287,751 shares of its common stock under the stock repurchase program at a total cost of $ 8.0 million.

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

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.

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.

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

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.

Stock-Based Compensation

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

As of December 31, 2023, there were 3,004,716 shares available for future awards or settlement of awards under the 2018 Plan.

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

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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

The Company issues restricted stock awards (“RSAs”) subject to various vesting conditions as compensation to executive officers, employees and directors of the Company.

RSAs issued to employees and executive officers generally vest over three years, provided that any performance and/or market conditions are also met.

RSAs issued to directors generally vest over one year , provided that any performance and/or market conditions are also met.

For RSAs subject to service and/or performance vesting conditions, the grant-date fair value is established based on the closing price of the Company’s common stock on such date.

Issuances made pursuant to the 2018 Plan are summarized as follows:

The Company issues share-based awards in the form of restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and share appreciation awards (“SARs”), subject to various vesting conditions as compensation to executive officers, employees and directors of the Company.

Typically, RSAs issued to employees and executive officers contain a service condition only and generally vest over three or four years .

Typically, RSUs and SARs contain both a service and market condition.

Market conditions can be an absolute total shareholder return (“TSR”), the Company’s TSR ranking among its peer companies or the Company’s market capitalization growth measured over a defined performance period.

Grantees’ continued employment through the end of the performance period is required for such RSUs and SARs to vest.

RSAs issued to directors generally vest either immediately or over one year , subject to continued service and provided that any performance and/or market conditions are also met.

For awards subject to service and/or performance vesting conditions, the grant-date fair value is established based on the closing price of the Company’s common stock on such date.

Stock-based compensation expense for awards subject to only service conditions is recognized on a straight-line basis over the service period.

Stock-based compensation expense for awards with both service and performance conditions is recognized on a graded basis only if it is probable that the performance condition will be achieved.

Stock-based compensation expense for awards subject to both service and performance conditions are recognized on a graded basis if it is probable that the performance condition will be achieved.

The Company accounts for forfeitures of awards granted under these plans as they occur in determining stock-based compensation expense.

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

Service-Based RSAs

During 2023, 2022 and 2021, 468,268 , 125,789 and 339,653 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 $ 35.19 per share, $ 26.34 per share and $ 16.45 per share for the years ended December 31, 2023, 2022, and 2021, respectively.

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

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

The following table reflects the outstanding service-based RSAs and activity related thereto for the year ended December 31, 2023:

Service-based Awards

Number of Shares Weighted-average Grant Date Fair Value

Outstanding at December 31, 2022 316,333 $ 16.39

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

Depending on the Company’s TSR relative to the defined peer group, the award recipients in the aggregate could 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 .

In January 2023, the Company issued 74,220 restricted shares of common stock in settlement of these awards, with service-based vesting over three years .

The shares are included in the table above.

In December 2023, the Company granted performance equity awards, in the form of RSUs, that are subject to the achievement of either an absolute TSR or a comparison of the Company’s TSR versus a defined peer group based on the last 20 trading days of 2025 compared to the same period of 2022 (“2023 TSR Awards”).

The number of RSUs issued as a target amount on the grant date was 83,710 .

Depending on the Company’s stock performance, the number of common shares grantees shall be entitled to receive following the end of the performance period on December 31, 2025, can range from zero to 166 % of the target amount.

The grant-date fair value for these awards ranges from $ 35.73 per share to $ 52.41 per share.

For the year ended

December 31, 2023, the compensation expenses associated with these awards were immaterial.

As of December 31, 2023, the unrecognized compensation expenses were $ 3.7 million, which will be amortized over the remaining performance period.

The following table reflects the outstanding 2023 TSR Awards and activity related thereto for the year ended December 31, 2023:

2023 TSR Awards

Number of Units Weighted-average Grant Date Fair Value

Outstanding at December 31, 2022 — $ —

Units granted 83,710 44.49

Units forfeited — —

Units vested — —

Outstanding at December 31, 2023 83,710 $ 44.49

In December 2023, the Company also granted performance equity awards, in the form of appreciation rights (“SARs”), that are subject to the achievement of an annualized adjusted market capitalization appreciation rate measured based on the last 20 trading days of 2027 compared to the same period of 2022 (“2023 SARs Awards”).

The final payout will be a dollar amount, settleable in cash, shares or a combination of both at the Company’s option.

The Company plans to settle the 2023 SARs Awards by issuing a number of common shares equal to the payout amount divided by the trailing 20 -day average price as of the last trading day of 2027.

In 2023, the Company issued SARs with an aggregate grant-date fair value of $ 6.0 million.

For the year ended December 31, 2023, the compensation expenses associated with these awards were immaterial.

As of December 31, 2023, the unrecognized compensation expenses for these awards were $ 6.0 million, which will be amortized over the remaining performance period.

The Company used Monte Carlo simulation models, described above, to estimate (i) the fair value of the 2022 TSR Awards and 2023 TSR Awards based on the expected outcome of the Company’s absolute TSR as well as TSR relative to the defined peer group and (ii) the fair value of the SARs based on the expected outcome of the Company’s market capitalization appreciation rate.

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

TSR Awards TSR Awards SAR Awards

Risk-free interest rate 1.69 % 4.23 % 3.92 %

2 unchanged sentences

Company’s closing stock price on grant date $ 24.98 $ 37.07 $ 37.07

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 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 %.

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

The following table reflects the outstanding warrants and activity related thereto for the year ended December 31, 2023:

Reliance Veritas

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

Number of Warrants Weighted-average Exercise Price

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

Issued — — 1,939,998 28.30

Anti-Dilution Adjustments for Common Stock Dividends 51,736 27.05

1 unchanged sentence

Cancelled ( 824,602 ) 27.49

Expired — — — —

Outstanding at December 31, 2023 1,223,963 $ 26.33

1 unchanged sentence

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.

During February 2022, the Company entered into and closed three separate stock repurchase agreements pursuant to which the Company 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.

Two of the Company’s directors were 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.

For the years ended December 31, 2023, 2022 and 2021, the Company made deficiency payments totaling $ 8.9 million, $ 8.5 million and $ 0.7 million, respectively.

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

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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 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, 2023 and 2022.

19 unchanged sentences

Valuation Allowance ( 154,345 ) ( 185,080 ) 3,854

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

Total Tax Expense $ 77,773 $ 3,101 $ 233

The following is a reconciliation of the reported amount of income tax benefit for the years ended December 31, 2023, 2022, and 2021 to the amount of income tax expenses that would result from applying the statutory rate to pretax income (loss).

5 unchanged sentences

Deferred Tax Adjustment ( 3,527 ) 3,532 ( 1,488 )

Share Based Compensation Tax Deficiency — — —

Net Operating Loss Adjustment — — 12,494

Other 1,347 234 1,541

Perm Differences 720 1,347 234

Valuation Allowance ( 154,345 ) ( 185,080 ) 3,854

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

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

Reported Tax Expense $ 77,773 $ 3,101 $ 233

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

On a quarterly basis, management evaluates the need for and adequacy of valuation allowances based on the expected realizability of the deferred tax assets and adjusts the amount of such allowances, if necessary.

During 2022, in evaluating whether it was more likely than not that the Company’s net deferred tax assets were realized through future net income, management considered all available positive and negative evidence, including (i) its earnings history, (ii) its ability to recover net operating loss carry-forwards, (iii) the projected future income and results of operations, and (iv) its ability to use tax planning strategies.

Based on all the evidence available, management determined it was more likely than not that the net deferred tax assets, other than the deferred tax asset related to the Company’s alternative minimum tax credit, were not realizable.

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.

The determination of the state NOL carryforwards is dependent upon apportionment percentages and state laws that can change from year to year and that can thereby impact the amount of such carryforwards.

During 2023, in evaluating whether it was more likely than not that the Company’s net deferred tax assets were realized through future net income, management considered all available positive and negative evidence, including (i) its earnings history, (ii) its future reversal of existing temporary differences, including the ability to recover net operating loss carry-forwards against future taxable income from deferred tax liabilities, (iii) the projected future income and results of operations, and (iv) its ability to use tax planning strategies.

Based on all the evidence available, management determined it was more likely than not that the net deferred tax assets, other than the deferred tax asset related to certain of the Company’s state net operating loss carryforward, were realizable.

The Company’s valuation allowance at December 31, 2023 and December 31, 2022 was $ 1.9 million and $ 156.3 million, respectively.

At December 31, 2023, the Company had a net operating loss carryforward for federal income tax purposes of $ 573.0 million, which is net of the IRC Section 382 limitation, and gross state NOL carryforwards of $ 712.9 million.

The determination of the state NOL carryforwards is dependent upon apportionment percentages, state income tax rates, and state laws that can change from year to year and that can thereby impact the amount of the deferred tax asset related to such carryforwards.

If unutilized, all of the federal net operating losses will expire from 2031 to 2037, except for $ 326.7 million of federal net operating losses that have an indefinite life.

13 unchanged sentences

Valuation Allowance ( 1,881 ) ( 156,269 )

Total Net Deferred Tax Assets $ — $ —

Total Net Deferred Tax Assets (Liabilities) $ ( 68,488 ) $ —

Tax benefits are recognized only for tax positions that are more likely than not to be sustained upon examination by tax authorities.

18 unchanged sentences

The Company’s assessment of the significance of a particular input requires judgment and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

The following tables set forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2022 and 2021.

The following

tables set forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2023 and 2022.

Fair Value Measurements at

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Commodity Derivatives – Noncurrent Liabilities — ( 105,831 ) —

Interest Rate Derivatives – Current Assets — 1,017 —

Contingent Consideration – Current Liabilities — 10,107 —

Total $ — $ ( 36,169 ) $ —

10 unchanged sentences

Interest Rate Derivatives – Noncurrent Assets — 1,017 —

Interest Rate Derivatives – Current Liabilities — ( 100 ) —

Contingent Consideration - Current Liabilities — ( 10,107 ) —

Total $ — $ ( 246,590 ) $ —

Subsequent to the issuance of the Company’s financial statements as of and for the period ended December 31, 2022, the Company identified an immaterial error in the presentation of the Fair Value footnote disclosure in which the line item “Contingent Consideration – Current Liabilities” was improperly presented as a positive value as opposed to a negative value.

Accordingly, within the “Contingent Consideration – Current Liabilities” line included in the table above, the Company has corrected the amount in the line item and total for the table as of December 31, 2022.

Management evaluated the materiality of this error from quantitative and qualitative perspectives and concluded the error was immaterial to the prior period.

The error did not impact the balance sheet, statement of operations, statement of cash flows, or statement of stockholder’s equity.

Commodity Derivatives.

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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.

3 unchanged sentences

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.

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

The Company’s and the counterparties’ nonperformance risk is

The fair value of interest rate derivative contracts is reflected in the balance sheets.

1 unchanged sentence

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).

These Level 2 instruments presented in the tables above consist of contingent consideration liabilities that were potentially payable by the Company in connection with 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.

Changes in the fair value of the liability are recorded in other income (expense) in the Company’s statement of operations.

Fair Value of Other Financial Instruments

1 unchanged sentence

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 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.

The fair value of the Company’s Senior Notes due 2028, Senior Notes due 2031 and Convertible Notes was $ 735.1 million, $ 508.8 million and $ 587.5 million, respectively, at December 31, 2023.

These fair values are based on market quotes that represent Level 2 inputs.

There is no active market for the Revolving Credit Facility.

2 unchanged sentences

Non-Financial Assets and Liabilities

The Company estimates asset retirement obligations pursuant to the provisions of FASB ASC Topic 410, Asset Retirement and Environmental Obligations.

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.

3 unchanged sentences

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.

See Note 6 for additional information regarding these warrants.

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

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Weighted-Average Price ($/Bbl) $ 71.57 $ 75.96 $ 72.59 $ 80.00

WTI NYMEX - Collars:

WTI NYMEX - Put Options:

Volume (Bbl) 136,500 — — —

Weighted-Average Price ($/Bbl) $ 75.00 $ — $ — $ —

WTI NYMEX - Collars:

Collar Put Volume (Bbl) 5,470,001 811,539 159,342 —

Collar Call Volume (Bbl) 7,089,089 1,129,962 175,307

Weighted-average floor price (Bbl) $ 69.83 $ 67.76 $ 62.50 $ —

Weighted-average ceiling price (Bbl) $ 83.31 $ 77.16 $ 70.25 $ —

Argus American Crude WTI Midland to WTI NYMEX - Basis Swaps:

Volume (Bbl) 6,211,786 4,106,276 2,094,291 —

Weighted-Average Differential ($/Bbl) $ 1.15 $ 1.04 $ 1.06 $ —

Henry Hub NYMEX - Swaps:

1 unchanged sentence

Weighted-Average Price ($/MMBtu) $ 3.52 $ 3.90 $ — $ —

Henry Hub NYMEX - Swaptions:

Volume (MMBtu) — 7,300,000 — —

Weighted-Average Price ($/MMBtu) $ — $ 3.88 $ — $ —

Volume (MMBtu) 1,830,000 1,825,000 1,825,000 —

Weighted-Average Price ($/MMBtu) $ 3.20 $ 3.20 $ 3.20 $ —

Waha Inside FERC to Henry Hub - Basis Swaps:

5 unchanged sentences

Henry Hub NYMEX - Collars:

Volume (MMBtu) 18,187,500 1,820,000

Collar Put Volume (MMBtu) 21,644,086 26,694,006 15,192,303 —

Collar Call Volume (MMBtu) 21,644,086 26,694,006 15,192,303 —

Weighted-average floor price ($/MMBtu) $ 3.12 $ 3.16 $ 3.13 $ —

4 unchanged sentences

______________

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

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

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

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

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

(2) In 2028, NOG has 366,000 Bbl open call option contracts at a weighted average price of $ 80.00 per Bbl.

Interest Rate Derivative Instruments

The Company uses interest rate swaps to effectively convert a portion of its variable rate indebtedness to fixed rate indebtedness.

As of December 31, 2022, the Company had interest rate swaps with a total notional amount of $ 100.0 million.

At times, the Company uses interest rate swaps to effectively convert a portion of its variable rate indebtedness to fixed rate indebtedness.

As of December 31, 2023, the Company had no interest rate swaps.

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

2 unchanged sentences

The following table sets forth the amounts, on a gross basis, and classification of the Company’s outstanding derivative financial instruments at December 31, 2023 and 2022, respectively.

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

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

(In thousands) December 31,

4 unchanged sentences

Commodity Basis Swap Contracts Current Assets 4,487 5,620

Interest Rate Swap Contracts Current Assets 1,017 89

Commodity Price Swaptions Contracts Current Assets — 3,020

Commodity Price Collar Contracts Current Assets 36,619 40,652

Commodity Price Call Option Contracts Current Assets 17,964 —

Commodity Price Put Option Contracts Current Assets 664 —

Interest Rate Swap Contracts Current Assets — 1,017

Commodity Price Swap Contracts Noncurrent Assets 16,621 11,490

1 unchanged sentence

Commodity Price Collar Contracts Noncurrent Assets 26,841 29,538

Interest Rate Swap Contracts Noncurrent Assets — 123

Commodity Price Call Option Contracts Noncurrent Assets 3,635 —

Total Derivative Assets $ 170,029 $ 119,377

3 unchanged sentences

Commodity Price Swaptions Contracts Current Liabilities ( 1,496 ) —

Interest Rate Swap Contracts Current Liabilities — ( 189 )

Commodity Price Collar Contracts Current Liabilities ( 14,370 ) ( 29,218 )

11 unchanged sentences

Estimated Fair Value at December 31, 2023

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

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

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

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

Offsetting of Derivative Assets:

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Estimated Fair Value at December 31, 2022

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

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

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

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

Offsetting of Derivative Assets:

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(In thousands, except share and per share data) 2023 2022 2021

Net Income (Loss) $ 773,237 $ 6,361 $ ( 906,041 )

Net Income $ 922,969 $ 773,237 $ 6,361

Cumulative Dividends on Preferred Stock

4 unchanged sentences

Weighted Average Common Shares Outstanding – Basic 91,483,687 78,557,216 62,989,543

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

Dilutive Effect of Restricted Stock, Preferred Stock, Convertible Notes, and Common Stock Warrants 577,260 8,118,149 —

Weighted Average Common Shares Outstanding – Diluted 92,060,947 86,675,365 62,989,543

2 unchanged sentences

Diluted $ 10.03 $ 8.92 $ ( 0.13 )

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.

For the year ended December 31, 2021, 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:

1 unchanged sentence

Restricted Stock Awards — — 150,011

Convertible Notes — — —

Series A Preferred Stock (if converted) — — 9,758,871

2 unchanged sentences

NOTE 14 SUBSEQUENT EVENTS

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.

In January 2024, the Company completed its acquisition of certain oil and gas properties, interests and related assets in the Delaware Basin from a private seller, effective as of November 1, 2023.

The total consideration paid to the seller at closing included 107,657 shares of common stock and $ 147.0 million in cash, a portion of which was funded by a $ 17.1 million deposit paid at signing in November 2023.

The cash closing consideration remains subject to customary post-closing adjustments.

SUPPLEMENTAL OIL AND GAS INFORMATION

34 unchanged sentences

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 )

14 unchanged sentences

December 31, 2023 677,979 121,865 234,861

December 31, 2022 611,856 112,626 214,602

Proved Undeveloped Reserves:

2 unchanged sentences

December 31, 2023 338,138 48,477 104,833

December 31, 2022 396,551 50,115 116,207

Proved reserves are estimated quantities of crude oil and natural gas, which geological and engineering data indicate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions.

9 unchanged sentences

In 2023, revisions to previous estimates decreased proved developed and undeveloped reserves by a net amount of 61.6 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.

Included in these revisions were 28.3 MMBoe of downward adjustments caused by lower crude oil and natural gas prices, a 2.7 MMBoe downward adjustment attributable to increased operating costs, a 3.9 MMBoe downward adjustment attributable to well performance when comparing the Company’s reserve estimates at December 31, 2023 to December 31, 2022 and 26.7 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, 2022 included the following:

5 unchanged sentences

• 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.

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.

Standardized Measure of Discounted Future Net Cash Inflows and Changes Therein

5 unchanged sentences

Actual future cash inflows may vary considerably, and the standardized measure does not necessarily represent the fair value of the Company’s crude oil and natural gas reserves.

All estimated future costs to settle the Company’s asset retirement obligations have been included in our calculation of the standardized measure for each period presented.

(In thousands) 2023 2022 2021

30 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 9A. Controls and Procedures