NORTHERN OIL & GAS, INC. 10-K

Item 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures We maintain a system of disclosure controls and procedures that is designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosures. As of December 31, 2023, our management, including our principal executive officer and principal financial officer, had evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) pursuant to Rule 13a-15(b) under the Exchange Act. Based upon and as of the date of the evaluation, our principal executive officer and principal financial officer concluded that information required to be disclosed is recorded, processed, summarized and reported within the specified periods and is accumulated and communicated to management, including our principal executive officer and principal financial officer, to allow for timely decisions regarding required disclosure of material information required to be included in our periodic SEC reports. Based on the foregoing, our management determined that our disclosure controls and procedures were effective as of December 31, 2023. Changes in Internal Control over Financial Reporting No change in our Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter ended December 31, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Management’s Annual Report on Internal Control over Financial Reporting The Company's management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company's internal control over financial reporting is a process designed by or under the supervision of the Company's principal executive officer and principal financial officer and effected by the board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external purposes in accordance with generally accepted accounting principles. The Company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework (2013). Based on our evaluation under the framework in Internal Control-Integrated Framework, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2023. 65 Table of Contents The effectiveness of our Company’s internal control over financial reporting as of December 31, 2023, has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report. 66 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Northern Oil & Gas, Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Northern Oil & Gas, Inc. (the “Company”) as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the financial statements as of and for the year ended December 31, 2023, of the Company and our report dated February 23, 2024, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte & Touche LLP Minneapolis, Minnesota February 23, 2024 67 Table of Contents Item 9B. Other Information (a) None. (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. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. PART III Certain information required by this Part III is incorporated by reference from our definitive Proxy Statement for the Annual Meeting of Stockholders to be held in 2024, which we intend to file with the SEC pursuant to Regulation 14A within 120 days after December 31, 2023. Except for those portions specifically incorporated into this Annual Report on Form 10-K by reference to the Proxy Statement, no other portions of the Proxy Statement are deemed to be filed as part of this Annual Report on Form 10-K. Item 10. Directors, Executive Officers and Corporate Governance The information appearing under the headings “Proposal 1: Election of Directors,” “Corporate Governance” and “Delinquent Section 16(a) Reports” in the Proxy Statement is incorporated herein by reference. 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.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. Information About Our Executive Officers Our executive officers, their ages and offices held are as follows: Name Age Positions Nicholas O’Grady 45 Chief Executive Officer Chad Allen 42 Chief Financial Officer Adam Dirlam 40 President Erik Romslo 46 Chief Legal Officer & Secretary James Evans 40 Chief Technical Officer Nicholas O’Grady has served as our Chief Executive Officer since January 2020. Prior to that, he served as our Chief Financial Officer from June 2018 to September 2019, and as our Chief Financial Officer & President from September 2019 to December 2019. Mr. O’Grady has nearly two decades of finance experience, both as an investment banker and as a principal investor. Mr. O’Grady began his career in the Natural Resources investment banking group at Bank of America. Later moving to the hedge fund industry, he worked at firms such as Highbridge Capital Management. Prior to joining our company, he worked as a senior credit analyst and portfolio manager at Hudson Bay Capital Management from September 2014 to May 2018, where he focused on energy-related equities, public credit, private and direct investments. 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. Mr. 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 68 Table of Contents since joining NOG in August of 2013. Mr. Allen served as the company’s Interim Chief Financial Officer from January-May 2018. Prior to joining our company, Mr. Allen was in the audit practice with Grant Thornton LLP from 2010 to 2013, and in the audit practice at RSM US LLP (formerly McGladrey & Pullen, LLP) from 2004 to 2010. Mr. Allen holds a bachelor’s degree in accounting from Minnesota State University, Mankato and is a Certified Public Accountant. Adam Dirlam has served as our 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 joining our company, Mr. Dirlam served in various finance and accounting roles for Honeywell International. Mr. Dirlam holds a bachelor’s degree from the University of St. Thomas and a master’s degree from the University of Minnesota - Carlson School of Management. Erik Romslo has served as our Chief Legal Officer and Secretary since January 2020. Prior to that, he served as our General Counsel and Secretary from October 2011 to December 2019 and as an Executive Vice President from January 2013 to December 2019. Prior to joining our company, Mr. Romslo practiced law in the Minneapolis office of our outside counsel, Faegre Drinker Biddle & Reath LLP (formerly Faegre & Benson LLP), from 2005 until 2011, where he was a member of the Corporate group. Prior to joining Faegre, Mr. Romslo practiced law in the New York City office of Fried, Frank, Harris, Shriver & Jacobson LLP. Mr. Romslo holds a bachelor’s degree from St. Olaf College and a law degree from the New York University School of Law. 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. Mr. 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. Mr. Evans holds a bachelor’s degree in Petroleum Engineering from Montana Tech. Item 11. Executive Compensation The information appearing under the headings “Executive Compensation” and “Compensation Committee Report,” and the information regarding compensation committee interlocks and insider participation under the heading “Corporate Governance,” in the Proxy Statement is incorporated herein by reference. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Securities Authorized for Issuance under Equity Compensation Plans The following table provides information with respect to our common shares issuable under our equity compensation plans as of December 31, 2023: Plan Category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans Equity compensation plans approved by security holders Amended and Restated 2018 Equity Incentive Plan 138,629 (1) — 2,866,087 Equity compensation plans not approved by security holders — — — Total 138,629 $ — 2,866,087 _____________ (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 69 Table of Contents the RSUs. 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. Item 13. Certain Relationships and Related Transactions, and Director Independence The information appearing under the headings “Certain Relationships and Related Transactions” and “Corporate Governance” in the Proxy Statement is incorporated herein by reference. Item 14. Principal Accountant Fees and Services The information appearing under the headings “Registered Public Accountant Fees” and “Pre-Approval Policies and Procedures of Audit Committee” in the Proxy Statement is incorporated herein by reference. 70 Table of Contents PART IV Item 15. Exhibits and Financial Statement Schedules (a) Documents filed as part of this Report: 1 Financial Statements See Index to Financial Statements on page F-1. 2 Financial Statement Schedules All schedules have been omitted because they are either not applicable, not required or the information called for therein appears in the consolidated financial statements or notes thereto. (b) Exhibits: Exhibit No. Description Reference 2.1 Purchase and Sale Agreement between Northern Oil and Gas, Inc., Veritas TM Resources, LLC, Veritas Permian Resources, LLC, Veritas Lone Star Resources, LLC, and Veritas MOC Resources, LLC, dated November 16, 2021 Incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 16, 2021 2.2 Purchase and Sale Agreement between Northern Oil and Gas, Inc., Midland-Petro D.C. Partners, LLC, and Collegiate Midstream LLC, dated as of October 18, 2022 Incorporated by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 19, 2022 2.3 First Amendment to Purchase and Sale Agreement between Northern Oil and Gas, Inc., Midland-Petro D.C. Partners, LLC, and Collegiate Midstream LLC, dated as of December 13, 2022 Incorporated by reference to Exhibit 2.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 9, 2023 2.4 Second Amendment to Purchase and Sale Agreement between Northern Oil and Gas, Inc., Midland-Petro D.C. Partners, LLC, and Collegiate Midstream LLC, dated as of January 5, 2023 Incorporated by reference to Exhibit 2.3 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 9, 2023 2.5 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 3.1 Restated Certificate of Incorporation of Northern Oil and Gas, Inc. dated August 24, 2018 Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on August 27, 2018 3.2 Certificate of Amendment to the Restated Certificate of Incorporation of Northern Oil and Gas, Inc. dated September 18, 2020 Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on September 24, 2020 3.3 Amended and Restated Bylaws of Northern Oil and Gas, Inc. Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 20, 2023 4.1 Description of Northern Oil and Gas, Inc. Capital Stock Filed herewith 4.2 Indenture, dated February 18, 2021, between Northern Oil and Gas, Inc. and Wilmington Trust, National Association, as trustee (including Form of 8.125% Senior Note due 2028) Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on February 23, 2021 4.3 First Supplemental Indenture, dated November 15, 2021, between Northern Oil and Gas, Inc. and Wilmington Trust, National Association, as trustee Incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on Form 8-K filed with the SEC on November 15, 2021 4.4 Indenture, dated October 14, 2022, between Northern Oil and Gas, Inc. and Wilmington Trust, National Association, as trustee (including Form of 3.625% Convertible Senior Note due 2029) Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on October 17, 2022 4.5 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 71 Table of Contents 4.6 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 10.1 Letter Agreement, dated July 21, 2017, by and between Northern Oil and Gas, Inc. and Bahram Akradi Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on July 24, 2017 10.2 Registration Rights Agreement, dated as of May 15, 2018, among Northern Oil and Gas, Inc. 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 10.3 Registration Rights Agreement, dated September 17, 2018, between Pivotal Williston Basin, LP, Pivotal Williston Basin II, LP, 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 September 18, 2018 10.4 Registration Rights Agreement, dated October 1, 2018, by and between WR Operating LLC and Northern Oil and Gas, Inc. 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 10.5* 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 10.6* 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 10.7* 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 10.8* 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 10.9* 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 10.10* 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 10.11* Northern Oil and Gas, Inc. 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 10.12* Form of Restricted Stock Award Agreement (Time-Based Single Trigger) under the Northern Oil and Gas, Inc. 2018 Equity Incentive Plan Incorporated by reference to Exhibit 10.34 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 18, 2019 10.13* Form of Restricted Stock Award Agreement (Time-Based Double Trigger) under the Northern Oil and Gas, Inc. 2018 Equity Incentive Plan Incorporated by reference to Exhibit 10.35 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 18, 2019 10.14* Form of Restricted Stock Award Agreement (Performance-Based Employees) under the Northern Oil and Gas, Inc. 2018 Equity Incentive Plan Incorporated by reference to Exhibit 10.36 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 18, 2019 10.15* Form of Restricted Stock Award Agreement (Performance-Based Directors) under the Northern Oil and Gas, Inc. 2018 Equity Incentive Plan Incorporated by reference to Exhibit 10.37 to the Registrant’s Annual Report on Form 10-K filed with the SEC on March 18, 2019 10.16* Form of 2022 Performance Equity Award Agreement under the Northern Oil and Gas, Inc. 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 10.17* 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 10.18* 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 72 Table of Contents 10.19* Form of Performance-Based Share Appreciation Award Agreement under the Northern Oil and Gas, Inc. Amended and Restated 2018 Equity Incentive Plan Filed herewith 10.20* Form of Time-Based Restricted Stock Award Agreement under the Northern Oil and Gas, Inc. Amended and Restated 2018 Equity Incentive Plan Filed herewith 10.21 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 10.22 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 10.23 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 10.24 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 10.25 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 10.26 Registration Rights Agreement, dated January 27, 2022, by and between Northern Oil and Gas, Inc. and Veritas Permian II, LLC and Veritas MOC Holdings, LLC Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on January 31, 2022 23.1 Consent of Independent Registered Public Accounting Firm Deloitte & Touche LLP Filed herewith 23.2 Consent of Cawley, Gillespie & Associates, Inc. Filed herewith 24.1 Powers of Attorney Filed herewith 31.1 Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith 31.2 Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 Filed herewith 32.1 Certification of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Filed herewith 97 Northern Oil and Gas, Inc. Clawback Policy Filed herewith 99.1 Report of Cawley, Gillespie & Associates Filed herewith 101.INS XBRL Instance Document Filed herewith 101.SCH XBRL Taxonomy Extension Schema Document Filed herewith 101.CAL XBRL Taxonomy Extension Calculation Linkbase Document Filed herewith 101.DEF XBRL Taxonomy Extension Definition Linkbase Document Filed herewith 101.LAB XBRL Taxonomy Extension Label Linkbase Document Filed herewith 73 Table of Contents 101.PRE XBRL Taxonomy Extension Presentation Linkbase Document Filed herewith 104 The cover page from Northern Oil and Gas, Inc. Annual Report on Form 10-K for the year ended December 31, 2022, formatted in Inline XBRL Filed herewith * Management contract or compensatory plan or arrangement required to be filed as an exhibit to this report. Item 16. Form 10-K Summary None. 74 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NORTHERN OIL AND GAS, INC. Date: February 23, 2024 By: /s/ Nicholas O’Grady Nicholas O’Grady, Chief Executive Officer; Principal Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity and on the dates indicated: Signature Title Date /s/ Nicholas O’Grady Chief Executive Officer, Principal Executive Officer February 23, 2024 Nicholas O’Grady /s/ Chad Allen Chief Financial Officer, Principal Financial & Accounting Officer February 23, 2024 Chad Allen * Director February 23, 2024 Bahram Akradi * Director February 23, 2024 Lisa Bromiley * Director February 23, 2024 Ernie Easley * Director February 23, 2024 Michael Frantz * Director February 23, 2024 William Kimble * Director February 23, 2024 Jack King * Director February 23, 2024 Stuart Lasher * Director February 23, 2024 Jennifer Pomerantz * Nicholas O’Grady, by signing his name hereto, does hereby sign this document on behalf of each of the above-named directors of the registrant pursuant to Powers of Attorney duly executed by such persons. By /s/ Nicholas O’Grady Nicholas O’Grady Attorney-in-fact 75 Table of Contents NORTHERN OIL AND GAS, INC. INDEX TO FINANCIAL STATEMENTS Page Report of Deloitte & Touche LLP, Independent Registered Public Accounting Firm (PCAOB ID No. 34 ) F- 2 Balance Sheets as of December 31, 2023 and 2022 F- 4 Statements of Operations for the Years Ended December 31, 2023, 2022 and 2021 F- 5 Statements of Cash Flows for the Years Ended December 31, 2023, 2022 and 2021 F- 6 Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2023, 2022 and 2021 F- 7 Notes to the Financial Statements F- 8 F-1 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of Northern Oil & Gas, Inc. Opinion on the Financial Statements We have audited the accompanying balance sheets of Northern Oil & Gas, Inc. (the "Company") as of December 31, 2023 and 2022, the related statements of operations, stockholders' equity (deficit), and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 23, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates. Proved Oil and Natural Gas Properties – Oil and Natural Gas Reserves – Refer to Note 2 to the financial statements Critical Audit Matter Description The Company follows the full cost method of accounting for crude oil and natural gas operations. Therefore, the Company’s proved oil and natural gas properties are depleted using the units-of-production method based upon production and estimates of proved reserves volumes and are evaluated for impairment by performing a ceiling test each quarter. The ceiling test involves a comparison of net capitalized costs to the sum of the present value of the estimated future net cash flows from the Company’s oil and natural gas properties. The estimation of the Company’s oil and natural gas reserves quantities and the related future net cash flows requires management to make significant estimates and assumptions since, as a non-operator, the Company has limited visibility into the timing of future production quantities associated with the five-year development plan. The Company’s oil and natural gas reserve quantities and the related future net cash flows are audited by its third-party independent reserve engineers. Changes in these estimates, assumptions, or engineering data involve judgments which could have significant impact on the depletion calculation and proved oil and natural gas properties impairment evaluation. F-2 Table of Contents 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 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, • We evaluated the reasonableness of the future production quantities associated with management’s five-year development plan by comparing to: – Historical conversions of proved undeveloped oil and natural gas reserves into proved developed oil and natural gas reserves. – Internal communications to management and the Board of Directors. – Authorization and approval for expenditures. – External information regarding the ability of the operators of the oil and natural gas properties to develop proved undeveloped reserves considering current and forecasted liquidity of the operators obtained from publicly available information, level of drilling activity by operators in areas where the Company holds leasehold interests, and length of time required to drill and complete groups of wells. • We evaluated the Company’s estimates of future production volumes by completing a retrospective comparison to historical production. • We evaluated the experience, qualifications, and objectivity of the Company's engineers responsible for the preparation of the reserve estimates and assumptions and engineering data, and the third-party independent reserve engineering firm engaged to audit management's oil and natural gas reserve quantities. /s/ Deloitte & Touche LLP Minneapolis, Minnesota February 23, 2024 We have served as the Company’s auditor since 2018. F-3 Table of Contents NORTHERN OIL AND GAS, INC. BALANCE SHEETS (In thousands, except par value and share data) December 31, 2023 December 31, 2022 Assets Current Assets: Cash and Cash Equivalents $ 8,195 $ 2,528 Accounts Receivable, Net 370,531 271,336 Advances to Operators 49,210 8,976 Prepaid Expenses and Other 2,489 2,014 Derivative Instruments 75,733 35,293 Income Tax Receivable 3,249 338 Total Current Assets 509,407 320,485 Property and Equipment: Oil and Natural Gas Properties, Full Cost Method of Accounting Proved 8,428,518 6,492,683 Unproved 36,785 41,565 Other Property and Equipment 8,069 6,858 Total Property and Equipment 8,473,372 6,541,106 Less – Accumulated Depreciation, Depletion and Impairment ( 4,541,808 ) ( 4,058,180 ) Total Property and Equipment, Net 3,931,563 2,482,926 Derivative Instruments 10,725 12,547 Acquisition Deposit 17,094 43,000 Other Noncurrent Assets, Net 15,466 16,220 Total Assets $ 4,484,255 $ 2,875,178 Liabilities and Stockholders’ Equity Current Liabilities: Accounts Payable $ 192,672 $ 128,582 Accrued Liabilities 147,943 121,737 Accrued Interest 26,219 24,347 Derivative Instruments 16,797 58,418 Contingent Consideration — 10,107 Other Current Liabilities 2,130 1,781 Total Current Liabilities 385,761 344,972 Long-term Debt, Net 1,835,554 1,525,413 Derivative Instruments 105,831 225,905 Deferred Tax Liability 68,488 — Asset Retirement Obligations 38,203 31,582 Other Noncurrent Liabilities 2,741 2,045 Total Liabilities $ 2,436,578 $ 2,129,917 Commitments and Contingencies Stockholders’ Equity Common Stock, par value $ 0.001 ; 135,000,000 authorized; 100,761,148 shares outstanding at 12/31/2023 85,165,807 shares outstanding at 12/31/2022 503 487 Additional Paid-In Capital 2,124,963 1,745,532 Retained Deficit ( 77,790 ) ( 1,000,759 ) Total Stockholders’ Equity 2,047,676 745,260 Total Liabilities and Stockholders’ Equity $ 4,484,255 $ 2,875,178 ___________ The accompanying notes are an integral part of these financial statements. F-4 Table of Contents NORTHERN OIL AND GAS, INC. STATEMENTS OF OPERATIONS FOR THE YEARS ENDED DECEMBER 31, 2023, 2022, AND 2021 December 31, (In thousands, except share and per share data) 2023 2022 2021 Revenues Oil and Gas Sales $ 1,897,779 $ 1,985,798 $ 975,089 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 Operating Expenses Production Expenses 347,006 260,676 170,817 Production Taxes 160,118 158,194 76,954 General and Administrative Expenses 46,801 47,201 30,341 Depletion, Depreciation, Amortization and Accretion 486,024 251,272 140,828 Other Expenses 4,448 — — Total Operating Expenses 1,044,397 717,343 418,940 Income From Operations 1,121,862 853,192 77,959 Other Income (Expense) Interest Expense, Net of Capitalization ( 135,664 ) ( 80,331 ) ( 59,020 ) Gain (Loss) on Interest Rate Derivatives, Net ( 1,017 ) 993 1,043 Gain (Loss) on the Extinguishment of Debt, Net 659 810 ( 13,087 ) Contingent Consideration Gain (Loss) 10,107 1,859 ( 292 ) Other Income (Expense) 4,795 ( 185 ) ( 9 ) Total Other Income (Expense) ( 121,120 ) ( 76,854 ) ( 71,365 ) 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 ) Premium on Repurchase of Preferred Stock — ( 35,731 ) — Net Income (Loss) Attributable to Common Stockholders $ 922,969 $ 727,703 $ ( 8,400 ) Net Income (Loss) Per Common Share – Basic $ 10.09 $ 9.26 $ ( 0.13 ) Net Income (Loss) Per Common Share – Diluted $ 10.03 $ 8.92 $ ( 0.13 ) Weighted Average Common Shares Outstanding – Basic 91,483,687 78,557,216 62,989,543 Weighted Average Common Shares Outstanding – Diluted 92,060,947 86,675,365 62,989,543 _________ The accompanying notes are an integral part of these financial statements. F-5 Table of Contents NORTHERN OIL AND GAS, INC. STATEMENTS OF CASH FLOWS FOR THE YEARS ENDED DECEMBER 31, 2023, 2022, AND 2021 December 31, (In thousands) 2023 2022 2021 Cash Flows From 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 (Gain) Loss on Extinguishment of Debt ( 659 ) ( 810 ) 13,087 Amortization of Bond Premium on Long-term Debt ( 1,475 ) ( 2,125 ) ( 413 ) Loss on the Sale of Other Property & Equipment — 185 17 Deferred Income Taxes 76,858 ( 571 ) 233 Unrealized (Gain) Loss on Derivative Instruments ( 200,314 ) ( 41,180 ) 311,328 (Gain) Loss on Contingent Consideration ( 10,107 ) ( 1,859 ) 292 Share-Based Compensation Expense 5,660 5,656 3,621 Other 2,404 2,038 3,162 Changes in Working Capital and Other Items: Accounts Receivable, Net ( 101,317 ) ( 74,904 ) ( 122,160 ) Prepaid and Other Expenses ( 474 ) ( 720 ) ( 1,999 ) Accounts Payable ( 15,236 ) ( 338 ) 14,091 Accrued Liabilities 9,154 9,955 12,318 Accrued Interest 1,738 3,607 11,937 Net Cash Provided By Operating Activities 1,183,321 928,418 396,467 Cash Flows From Investing Activities Acquisitions of and Capital Expenditures on Oil and Natural Gas Properties ( 1,844,040 ) ( 1,355,197 ) ( 593,228 ) Acquisition Deposit ( 17,094 ) ( 43,000 ) ( 40,650 ) Purchases of Other Property and Equipment ( 1,212 ) ( 4,579 ) ( 556 ) Net Cash Used For Investing Activities ( 1,862,346 ) ( 1,402,777 ) ( 634,434 ) Cash Flows From Financing Activities Advances on Revolving Credit Facility 998,224 1,260,000 554,000 Repayments on Revolving Credit Facility ( 1,156,224 ) ( 996,000 ) ( 1,031,000 ) Purchase of Capped Call — ( 36,100 ) — Issuance of Convertible Notes — 482,971 — Repayments of Second Lien Notes — — ( 295,918 ) Repayments of Senior Unsecured Promissory Note — — ( 130,000 ) Issuance of Senior Notes 492,840 — 763,500 Repurchase of Senior Notes ( 18,436 ) ( 24,907 ) — Debt Issuance Costs Paid ( 11,896 ) ( 7,388 ) ( 17,611 ) Issuance of Common Stock 514,749 — 438,077 Common Stock Dividends Paid ( 123,945 ) ( 51,602 ) ( 4,938 ) Repurchases of Common Stock ( 8,004 ) ( 54,502 ) — Repurchase of Preferred Stock — ( 81,236 ) — Preferred Stock Dividends Paid — ( 21,664 ) ( 29,212 ) Restricted Stock Surrenders - Tax Obligations ( 2,616 ) ( 2,206 ) ( 839 ) 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 Cash and Cash Equivalents – Beginning of Period 2,528 9,519 1,428 Cash and Cash Equivalents – End of Period $ 8,195 $ 2,528 $ 9,519 ______________ The accompanying notes are an integral part of these financial statements. F-6 Table of Contents NORTHERN OIL AND GAS, INC. STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE YEARS ENDED DECEMBER 31, 2023, 2022, AND 2021 (In thousands, except share data) Common Stock Preferred Stock Additional Paid-In Retained Earnings Total Stockholders’ Equity Shares Amount Shares Amount Capital (Deficit) (Deficit) December 31, 2020 45,908,779 $ 448 2,218,732 $ 2 $ 1,556,602 $ ( 1,780,357 ) $ ( 223,304 ) Issuance of Common Stock 339,653 — — — — — — Restricted Stock Forfeitures ( 14,355 ) — — — 1 — 1 Share Based Compensation — — — — 3,903 — 3,903 Restricted Stock Surrenders - Tax Obligations ( 60,611 ) — — — ( 839 ) — ( 839 ) Equity Offerings, Net of Issuance Costs 31,125,000 31 — — 438,045 — 438,077 Issuance of Common Stock Warrants — — — — 30,512 — 30,512 Contingent Consideration Settlements 43,455 — — — 785 — 785 Preferred Stock Dividends — — — — ( 29,212 ) — ( 29,212 ) Common Stock Dividends Declared — — — — ( 11,149 ) — ( 11,149 ) Net Income — — — — — 6,361 6,361 December 31, 2021 77,341,921 $ 479 2,218,732 $ 2 $ 1,988,649 $ ( 1,773,996 ) $ 215,135 Issuance of Common Stock 125,789 — — — — — — Restricted Stock Forfeitures ( 2,615 ) — — — — — — Share Based Compensation — — — — 5,873 — 5,873 Restricted Stock Surrenders - Tax Obligations ( 89,620 ) — — — ( 2,206 ) — ( 2,206 ) Issuance of Common Stock Warrants - Acquisitions of Oil and Natural Gas Properties — — — — 17,870 — 17,870 Preferred Conversion 7,376,739 7 ( 1,643,732 ) ( 2 ) ( 6 ) — — Repurchases of Common Stock ( 1,909,097 ) ( 2 ) — — ( 54,500 ) — ( 54,502 ) Purchase of Capped Calls — — — — ( 36,100 ) — ( 36,100 ) Repurchases of Preferred Stock — — ( 575,000 ) ( 1 ) ( 81,236 ) — ( 81,236 ) Preferred Stock Dividends — — — — ( 21,664 ) — ( 21,664 ) Common Stock Warrant Exchange Agreement - Reliance Warrants 2,322,690 2 — — ( 2 ) — — Common Stock Dividends Declared — — — — ( 71,148 ) — ( 71,148 ) Net Income — — — — — 773,237 773,237 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. F-7 Table of Contents NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2023 NOTE 1 ORGANIZATION AND NATURE OF BUSINESS 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, 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, with a core area of focus in three premier basins within the United States. NOTE 2 SIGNIFICANT ACCOUNTING POLICIES These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In connection with preparing the financial statements for the year ended December 31, 2023, the Company has evaluated subsequent events through the date of this filing and determined (i) that there were no subsequent events which required recognition in the financial statements through the date of this filing and (ii) to include the disclosure in Note 14 regarding subsequent events. Use of Estimates The preparation of financial statements under GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to proved crude oil and natural gas reserves, which includes limited control over future development plans as a non-operator, estimates relating to certain crude oil and natural gas revenues and expenses, fair value of derivative instruments, fair value of contingent consideration, acquisition date fair values of assets acquired and liabilities assumed, impairment of crude oil and natural gas properties, asset retirement obligations and deferred income taxes. Management’s estimates and assumptions were based on historical data and consideration of future market conditions. Given the uncertainty inherent in any projection, actual results may differ from the estimates and assumptions used, and conditions may change, which could materially affect amounts reported in the financial statements. Reclassifications Certain prior period balances in the statements of cash flows have been reclassified to conform to the current year presentation. Such reclassifications had no impact on net income (loss), cash flows or stockholders’ equity (deficit) previously reported. Cash and Cash Equivalents The Company considers highly liquid investments with insignificant interest rate risk and original maturities to the Company of three months or less to be cash equivalents. Cash equivalents consist primarily of interest-bearing bank accounts. The Company’s cash positions represent assets held in checking and money market accounts. Cash and cash equivalents are generally available on a daily or weekly basis and are highly liquid in nature. Accounts Receivable Accounts receivable are carried on a gross basis, with no discounting. The Company regularly reviews all aged accounts receivable for collectability and establishes an allowance as necessary for individual balances. Accounts receivable not expected to be collected within the next twelve months are included within Other Noncurrent Assets, Net in the balance sheets. The allowance for doubtful accounts was $ 4.0 million and $ 4.9 million as of December 31, 2023 and 2022, respectively. F-8 Table of Contents As of December 31, 2023 and 2022, the Company included accounts receivable of $ 2.4 million and $ 3.2 million, respectively, in Other Noncurrent Assets, Net due to their long-term nature. Advances to Operators The Company participates in the drilling of crude oil and natural gas wells with other working interest partners. Due to the capital intensive nature of crude oil and natural gas drilling activities, the working interest partner responsible for conducting the drilling operations may request advance payments from other working interest partners for their share of the costs. The Company expects such advances to be applied by working interest partners against joint interest billings for its share of drilling operations within 90 days from when the advance is paid. Other Property and Equipment Property and equipment that are not crude oil and natural gas properties are recorded at cost and depreciated using the straight-line method over their estimated useful lives of three to seven years . Expenditures for replacements, renewals, and betterments are capitalized. Maintenance and repairs are charged to operations as incurred. Long-lived assets, other than crude oil and natural gas properties, are evaluated for impairment to determine if current circumstances and market conditions indicate the carrying amount may not be recoverable. The Company has no t recognized any impairment losses on non-crude oil and natural gas long-lived assets. Oil and Gas Properties The Company follows the full cost method of accounting for crude oil and natural gas operations whereby all costs related to the exploration and development of crude oil and natural gas properties are capitalized into a single cost center (“full cost pool”). Such costs include land acquisition costs, geological and geophysical expenses, carrying charges on non-producing properties, costs of drilling directly related to acquisition, and exploration activities. Internal costs that are capitalized are directly attributable to acquisition, exploration and development activities and do not include costs related to production, general corporate overhead or similar activities. Costs associated with production and general corporate activities are expensed in the period incurred. Capitalized costs are summarized as follows for the years ended December 31, 2023, 2022 and 2021, respectively: December 31, (In thousands) 2023 2022 2021 Capitalized Certain Payroll and Other Internal Costs $ 1,036 $ 1,045 $ 1,353 Capitalized Interest Costs 2,999 3,365 1,103 Total $ 4,036 $ 4,410 $ 2,456 As of December 31, 2023, the Company held leasehold and other oil and gas interests in the United States in the Williston Basin, Permian Basin and Appalachian Basin. Proceeds from property sales will generally be credited to the full cost pool, with no gain or loss recognized, unless such a sale would significantly alter the relationship between capitalized costs and the proved reserves attributable to these costs. A significant alteration would typically involve a sale of 25 % or more of the proved reserves related to a single full cost pool. In the years ended December 31, 2023, 2022 and 2021, there were no property sales that resulted in a significant alteration. Under the full cost method of accounting, the Company is required to perform a ceiling test each quarter. The test determines a limit, or ceiling, on the net book value of the proved oil and gas properties. Net capitalized costs are limited to the lower of unamortized cost net of deferred income taxes, or the cost center ceiling. The proved oil and natural gas properties, net balance was $ 3.9 billion as of December 31, 2023. The cost center ceiling is defined as the sum of (a) estimated future net revenues, discounted at 10 % per annum, from proved reserves, based on the trailing twelve-month unweighted average of the first-day-of-the-month price, adjusted for any contract provisions or financial derivatives designated as hedges for accounting purposes, if any, that hedge the Company’s oil and natural gas revenue, and excluding the estimated abandonment costs for properties with asset retirement obligations recorded in the balance sheet, (b) the cost of properties not being amortized, if any, and (c) the lower of cost or market value of unproved properties included in the cost being amortized, including related deferred taxes for differences between the book and tax basis of the oil and natural gas properties. If the net book value, including related deferred taxes, exceeds the ceiling, an impairment or non-cash writedown is required. The Company did no t have any ceiling test impairment for the years ended December 31, 2023, 2022 and 2021. Impairment charges affect the Company’s reported net income but do not reduce the Company’s cash flow. F-9 Table of Contents The Company computes the provision for depletion of oil and natural gas properties using the unit-of-production method based upon production and estimates of proved reserve quantities. Unproved costs and related carrying costs are excluded from the depletion base until the properties associated with these costs are considered proved or impaired. The following table presents depletion and depletion per BOE sold of the Company’s proved oil and natural gas properties for the periods presented: Year Ended December 31, (In thousands) 2023 2022 2021 Depletion of Proved Oil and Natural Gas Properties $ 482,306 $ 248,252 $ 138,759 Depletion per BOE Produced $ 13.37 $ 9.01 $ 7.07 The Company believes that the majority of its unproved costs will become subject to depletion within the next five years by proving up reserves relating to the acreage through exploration and development activities, by impairing the acreage that will expire before the Company can explore or develop it further or by determining that further exploration and development activity will not occur. The timing by which all other properties will become subject to depletion will be dependent upon the timing of future drilling activities and delineation of its reserves. Capitalized costs associated with impaired unproved properties, which includes leases that have expired or have been deemed uneconomic, and capitalized costs related to properties having proved reserves, plus the estimated future development costs and asset retirement costs, are included in the depletion calculation. Under this method, depletion is calculated at the end of each period by multiplying total production for the period by a depletion rate. The depletion rate is determined by dividing the total unamortized cost base plus future development costs by net equivalent proved reserves at the beginning of the period. The costs of unproved properties are withheld from the depletion base until such time as they are either 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. For the years ended December 31, 2023, 2022 and 2021, unproved properties of $ 5.2 million, $ 8.7 million, and $ 3.0 million, respectively, were impaired. Asset Retirement Obligations 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. 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 proved properties. Upon settlement of the liability or the sale of the well, the liability is relieved. These liability amounts may change because of changes in asset lives, estimated costs of abandonment or legal or statutory remediation requirements. Business Combinations The Company accounts for its acquisitions that qualify as a business using the acquisition method. Under the acquisition method, assets acquired and liabilities assumed are recognized and measured at their fair values. The use of fair value accounting requires the use of significant judgment since some transaction components do not have fair values that are readily determinable. The excess, if any, of the purchase price over the net fair value amounts assigned to assets acquired and liabilities assumed is recognized as goodwill. Conversely, if the fair value of assets acquired exceeds the purchase price, including liabilities assumed, the excess is immediately recognized in earnings as a bargain purchase gain. Financial Instruments 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 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. The fair values of the Company’s contingent consideration liabilities are determined by a third-party valuation specialist using Monte Carlo simulations that include observable market data. F-10 Table of Contents The carrying amount of long-term debt associated with borrowings outstanding under the Company’s Revolving Credit Facility approximates fair value as borrowings bear interest at variable rates. The carrying amounts of the Company’s Senior Notes and Convertible Notes (see Note 4 below) may not approximate fair value because carrying amounts are net of unamortized premiums and debt issuance costs, and the Senior Notes and Convertible Notes bear interest at fixed rates. See Note 11 for additional discussion. Debt Issuance Costs Debt issuance costs related to our Senior Notes and Convertible Notes are included as a deduction from the carrying amount of long-term debt in the balance sheets and are amortized to interest expense using the effective interest method over the term of the related debt. Debt issuance costs related to the Revolving Credit Facility are included in other noncurrent assets and are amortized to interest expense on a straight-line basis over the term of the agreement. Debt Premiums Debt premiums related to the Company’s Senior Notes are included as an addition to the carrying amount of the long-term debt in the balance sheets and are amortized to interest expense using the effective interest method over the term of the related notes. Revenue Recognition The Company’s revenues are primarily derived from its interests in the sale of oil and natural gas production. The Company recognizes revenue from its interests in the sales of crude oil and natural gas in the period that its performance obligations are satisfied. Performance obligations are satisfied when the customer obtains control of the product, when the Company has no further obligations to perform related to the sale, when the transaction price has been determined and when collectability is probable. The sales of oil and natural gas are made under contracts which the third-party operators of the wells have negotiated with customers, which typically include variable consideration that is based on pricing tied to local indices and volumes delivered in the current month. The Company receives payment from the sale of oil and natural gas production from one to three months after delivery. At the end of each month when the performance obligation is satisfied, the variable consideration can be reasonably estimated and amounts due from customers are accrued in trade receivables, net in the balance sheets. Variances between the Company’s estimated revenue and actual payments are recorded in the month the payment is received, however, differences have been and are insignificant. Accordingly, the variable consideration is not constrained. The Company does not disclose the value of unsatisfied performance obligations under its contracts with customers as it applies the practical exemption, which applies to variable consideration that is recognized as control of the product is transferred to the customer. Since each unit of product represents a separate performance obligation, future volumes are wholly unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is not required. 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. Regardless of the contract type, the terms of these contracts compensate the well operators for the value of the oil and natural gas at specified prices, and then the well operators will remit payment to the Company for its share in the value of the oil and natural gas sold. A wellhead imbalance liability equal to the Company’s share is recorded to the extent that the Company’s well operators have sold volumes in excess of its share of remaining reserves in an underlying property. However, for the years ended December 31, 2023, 2022 and 2021, the Company’s natural gas production was in balance, meaning its cumulative portion of natural gas production taken and sold from wells in which it has an interest equaled its entitled interest in natural gas production from those wells. The Company’s disaggregated revenue has two primary sources: oil sales and natural gas and NGL sales. Substantially all of the Company’s oil and natural gas sales come from three geographic areas in the United States: the Williston Basin (North Dakota and Montana), the 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. F-11 Table of Contents Twelve Months Ended December 31, 2023 (In thousands) Williston Permian Appalachian Total Oil Revenues $ 925,852 $ 720,245 $ — $ 1,646,096 Natural Gas and NGL Revenues 114,497 101,386 35,800 251,682 Total $ 1,040,348 $ 821,631 $ 35,800 $ 1,897,779 Twelve Months Ended December 31, 2022 (In thousands) Williston Permian Appalachian Total Oil Revenues $ 1,058,878 $ 415,732 $ — $ 1,474,610 Natural Gas and NGL Revenues 260,462 116,034 134,692 511,188 Total $ 1,319,340 $ 531,766 $ 134,692 $ 1,985,798 Twelve Months Ended December 31, 2021 (In thousands) Williston Permian Appalachian Total Oil Revenues $ 730,982 $ 42,488 $ — $ 773,470 Natural Gas and NGL Revenues 141,425 7,386 52,808 201,619 Total $ 872,408 $ 49,874 $ 52,808 $ 975,089 Concentrations of Market, Credit Risk and Other Risks The future results of the Company’s crude oil and natural gas operations will be affected by the market prices of crude oil and natural gas. The availability of a ready market for crude oil and natural gas products in the future will depend on numerous factors beyond the control of the Company, including weather, imports, marketing of competitive fuels, proximity and capacity of crude oil and natural gas pipelines and other transportation facilities, any oversupply or undersupply of crude oil, natural gas and liquid products, the regulatory environment, the economic environment, and other regional and political events, none of which can be predicted with certainty. The Company operates in the exploration, development and production sector of the crude oil and natural gas industry. The Company’s receivables include amounts due, indirectly via the third-party operators of the wells, from purchasers of its crude oil and natural gas production. While certain of these customers, as well as third-party operators of the wells, are affected by periodic downturns in the economy in general or in their specific segment of the crude oil or natural gas industry, the Company believes that its level of credit-related losses due to such economic fluctuations have been immaterial. As a non-operator, 100% of the Company’s wells are operated by third-party operating partners. As a result, the Company is highly dependent on the success of these third-party operators. 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. The Company’s third-party operators will make decisions in connection with their operations that may not be in the Company’s best interests, and the Company may have little or no ability to exercise influence over the operational decisions of its third-party operators. For the years ended December 31, 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 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 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 F-12 Table of Contents institution or company. The Company believes the credit quality of its counterparties is generally high. In the normal course of business, letters of credit or parent guarantees may be required for counterparties which management perceives to have a higher credit risk. Stock-Based Compensation The Company records expense associated with the fair value of stock-based compensation. For fully vested stock and restricted stock grants, the Company calculates the stock-based compensation expense based upon estimated fair value on the date of grant. In determining the fair value of performance-based share awards subject to market conditions, the Company utilizes a Monte Carlo simulation prepared by an independent third-party. For stock options, the Company uses the Black-Scholes option valuation model to calculate stock-based compensation at the date of grant. Option pricing models require the input of highly subjective assumptions, including the expected price volatility. Changes in these assumptions can materially affect the fair value estimate. Treasury Stock Treasury stock is recorded at cost, which includes incremental direct transaction costs, and is retired upon acquisition as a result of share repurchases under the share repurchase program or from the withholding of shares of stock to satisfy employee tax withholding obligations that arise upon the lapse of restrictions on their stock-based awards at the employees’ election. Income Taxes The Company’s income tax expense, deferred tax assets and deferred tax liabilities reflect management’s best assessment of estimated current and future taxes to be paid. The Company estimates for each interim reporting period the effective tax rate expected for the full fiscal year and uses that estimated rate in providing for income taxes on a current year-to-date basis. The Company’s only taxing jurisdictions are the United States and the US states in which we operate. Deferred income taxes arise from temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements, which will result in taxable or deductible amounts in the future. In evaluating the Company’s ability to recover its deferred tax assets, the Company considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax-planning strategies, and results of recent operations. In projecting future taxable income, the Company begins with historical results and incorporates assumptions about the amount of future state and federal pretax operating income adjusted for items that do not have tax consequences. The assumptions about future taxable income require significant judgment and are consistent with the plans and estimates the Company is using to manage the underlying businesses. 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 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 The Company uses derivative instruments to manage market risks resulting from fluctuations in the prices of crude oil and natural gas commodities. The Company enters into derivative contracts, including price swaps, caps and floors, which require payments to (or receipts from) counterparties based on the differential between a fixed price and a variable price for a fixed quantity of the applicable commodity without the exchange of underlying volumes. The notional amounts of these financial instruments are based on expected production from existing wells. The Company may also use exchange traded futures contracts and option contracts to hedge the delivery price of commodities at a future date. F-13 Table of Contents The Company recognizes derivative instruments as assets or liabilities in the balance sheet, measured at fair value and marked-to-market at the end of each period. Any realized gains and losses on settled derivatives, as well as mark-to-market gains or losses, are aggregated and recorded to gain (loss) on derivative instruments, net on the statements of operations. See Note 12 for a description of the derivative contracts into which the Company has entered. Employee Benefit Plans The Company sponsors a 401(k) defined contribution plan for the benefit of substantially all employees at the date of hire. The plan allows eligible employees to make pre-tax contributions up to 100 % of their annual compensation, not to exceed annual limits established by the federal government. Employees are 100 % vested in the employer contributions upon receipt. Net Income (Loss) Per Common Share Basic earnings per share (“EPS”) are computed by dividing net income (loss) attributable to common stockholders (the numerator) by the weighted average number of common shares outstanding for the period (the denominator). 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 (as defined below) or Convertible Notes (see Note 4). The number of potential common shares outstanding are calculated using the treasury stock or if-converted method. In those reporting periods in which the Company has reported net income available to common stockholders, anti-dilutive shares generally are comprised of the restricted stock that has average unrecognized stock compensation expense greater than the average stock price. In those reporting periods in which the Company has a net loss, anti-dilutive shares are comprised of the impact of those number of shares that would have been dilutive had the Company had net income plus the number of common stock equivalents that would be anti-dilutive had the company had net income. Restricted stock awards are excluded from the calculation of basic weighted average common shares outstanding until they vest. For restricted stock awards that vest based on achievement of performance and/or market conditions, the number of contingently issuable common shares included in diluted weighted-average common shares outstanding is based on the number of common shares, if any, that would be issuable under the terms of the arrangement if the end of the reporting period were the end of the contingency period, assuming the result would be dilutive. F-14 Table of Contents Supplemental Cash Flow Information The following reflects the Company’s supplemental cash flow information for the years ended December 31, 2023, 2022 and 2021: December 31, (In thousands) 2023 2022 2021 Supplemental Cash Items: Cash Paid During the Period for Interest, Net of Amount Capitalized $ 128,943 $ 74,933 $ 46,951 Cash Paid During the Period for Income Taxes 3,826 3,672 — Non-cash Investing Activities: 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 Contingent Consideration — 11,966 785 Compensation Capitalized on Oil and Gas Properties 280 218 282 Issuance of Common Stock Warrants - Acquisitions of Oil and Natural Gas Properties — 17,870 30,512 Accrued Liabilities From Acquisitions of Oil and Natural Gas Properties 5,168 — — Other Property and Equipment Included in Accounts Payable — — 578 Non-cash Financing Activities: Common Stock Dividends Declared, but not paid 40,496 19,546 6,210 Issuance of Common Stock for Preferred Stock Exchange — 36,627 — Issuance of Common Stock Warrants - Acquisitions of Oil and Natural Gas Properties — 17,870 — Issuance of Common Stock in Exchange for Warrants 13,328 76,904 — Adopted and Recently Issued Accounting Pronouncements From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company’s financial statements upon adoption. 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 F-15 Table of Contents 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 The book value of the Company’s crude oil and natural gas properties consists of all acquisition costs (including cash expenditures and the value of stock consideration), drilling costs and other associated capitalized costs. Acquisitions are accounted for as purchases and, accordingly, the results of operations are included in the accompanying statements of operations from the closing date of the acquisition. Acquired assets and liabilities assumed are recorded based on their estimated fair value at the time of the acquisition. 2023 Acquisitions During 2023, the Company completed the following larger bolt-on acquisitions (each as defined and described below): 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. F-16 Table of Contents 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 F-17 Table of Contents 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 On January 27, 2022, the Company completed the acquisition of certain non-operated oil and gas properties, interests and related assets in the Permian Basin from Veritas TM Resources, LLC, Veritas Permian Resources, LLC, Veritas Lone Star Resources, LLC, and Veritas MOC Resources, LLC, effective as of October 1, 2021 (the “Veritas Acquisition”). The total consideration was $ 408.8 million, which included $ 390.9 million in cash and warrants to purchase 1,939,998 shares of the Company’s common stock, par value $ 0.001 per share, at an exercise price equal to $ 28.30 per share. The warrants had a total estimated fair value of $ 17.9 million. As a result of customary post-closing adjustments, the Company further decreased its proved oil and natural gas properties and total consideration by $ 3.1 million subsequent to closing. The results of operations from the acquisition from the January 27, 2022 closing date through December 31, 2022, represented approximately $ 244.1 million of revenue and $ 168.0 million of income from operations. The Company incurred $ 7.3 million of transaction costs in connection with the acquisition, which are included in general and administrative expense in the 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) Fair value of net assets: Proved oil and natural gas properties $ 383,755 Unproved oil and natural gas properties 26,262 Total assets acquired 410,017 Asset retirement obligations ( 1,219 ) Net assets acquired $ 408,798 Fair value of consideration paid for net assets: Cash consideration $ 390,928 Issuance of Common Stock Warrants ( 1.9 million shares at $ 28.30 per share) 17,870 Total fair value of consideration transferred $ 408,798 Incline Acquisition On August 15, 2022, the Company completed the acquisition of certain non-operated oil and gas properties, interests and related assets in the Williston Basin from Incline Bakken, LLC, effective as of April 1, 2022 (the “Incline Acquisition”). The total consideration at closing was $ 159.8 million, which includes $ 158.0 million in cash and $ 1.8 million in value attributable to potential additional contingent consideration (described in more detail below). As a result of customary post-closing adjustments, the Company reduced its proved oil and natural gas properties and total consideration by $ 7.5 million subsequent to closing. The results of operations from the acquisition from the August 15, 2022 closing date through December 31, 2022, represented approximately $ 25.3 million of revenue and $ 17.0 million of income from operations. The Company incurred $ 1.1 million of transaction costs in connection with the acquisition, which are included in general and administrative expense in the 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: F-18 Table of Contents (In thousands) Fair value of net assets: Proved oil and natural gas properties $ 160,155 Total assets acquired 160,155 Asset retirement obligations ( 319 ) Net assets acquired $ 159,836 Fair value of consideration paid for net assets: Cash consideration $ 157,977 Contingent consideration 1,850 Total fair value of consideration transferred $ 159,827 A contingent consideration liability arising from potential additional consideration in connection with the Incline Acquisition was recognized at its fair value. The seller had the potential to earn up to $ 5.0 million of additional cash consideration dependent upon NYMEX WTI oil pricing at the end of 2022. 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 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: (In thousands) Fair value of net assets: Proved oil and natural gas properties $ 110,258 Total assets acquired 110,258 Asset retirement obligations ( 187 ) Net assets acquired $ 110,071 Fair value of consideration paid for net assets: Cash consideration $ 110,071 Total fair value of consideration transferred $ 110,071 Alpha Acquisition On December 1, 2022, the Company completed the acquisition of certain non-operated oil and gas properties, interests and related assets in the Permian Delaware Basin from Alpha Energy Partners, effective as of September 1, 2022 (the “Alpha Acquisition”). F-19 Table of Contents The total consideration at closing was $ 164.0 million, which includes $ 153.9 million in cash and $ 10.1 million in value attributable to potential additional contingent consideration (described in more detail below). As a result of customary post-closing adjustments, the Company may adjust its proved oil and natural gas properties and total consideration subsequent to closing. The results of operations from the acquisition from the December 1, 2022 closing date through December 31, 2022, represented approximately $ 2.6 million of revenue and $ 1.5 million of income from operations. The Company incurred $ 1.3 million of transaction costs in connection with the acquisition, which are included in general and administrative expense in the 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 $ 164,300 Total assets acquired 164,300 Asset retirement obligations ( 278 ) Net assets acquired $ 164,023 Fair value of consideration paid for net assets: Cash consideration $ 153,916 Contingent consideration 10,107 Total fair value of consideration transferred $ 164,023 A contingent consideration liability arising from potential additional consideration in connection with the Alpha Acquisition was recognized at its fair value. The seller 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 On December 16, 2022, the Company completed the acquisition of certain non-operated oil and gas properties, interests and related assets in the Permian Delaware Basin from a private seller, effective as of November 1, 2022 (the “Delaware Acquisition”). The total consideration at closing was $ 131.6 million in cash. As a result of customary post-closing adjustments, the Company 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 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: F-20 Table of Contents (In thousands) Fair value of net assets: Proved oil and natural gas properties $ 131,773 Total assets acquired 131,773 Asset retirement obligations ( 155 ) Net assets acquired $ 131,618 Fair value of consideration paid for net assets: Cash consideration $ 131,618 Total fair value of consideration transferred $ 131,618 Pro Forma Information 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. The summarized unaudited pro forma information may not be indicative of the results that would have occurred had the Company completed the acquisitions as of January 1, 2022, or that would be attained in the future. Year Ended December 31, Year Ended December 31, (In thousands) 2023 2022 Total Revenues $ 2,474,121 $ 2,376,913 Net Income $ 1,177,068 $ 1,414,369 Divestitures From time-to-time the Company may divest assets. In addition, the Company may trade leasehold interests with operators to balance working interests in spacing units to facilitate and encourage a more expedited development of the Company’s acreage. Unproved Properties Unproved properties not being amortized comprise approximately 25,880 net acres and 27,663 net acres of undeveloped leasehold interests at December 31, 2023 and 2022, respectively. The Company believes that the majority of its unproved costs will become subject to depletion within the next five years by proving up reserves relating to the acreage through exploration and development activities, by impairing the acreage that will expire before the Company can explore or develop it further or by determining that further exploration and development activity will not occur. The timing by which all other properties will become subject to depletion will be dependent upon the timing of future drilling activities and delineation of its reserves. Excluded costs for unproved properties are accumulated by year. Costs are reflected in the full cost pool as the drilling costs are incurred or as costs are evaluated and deemed impaired and transferred into the full cost pool. The Company anticipates these excluded costs will be included in the depletion computation over the next five years . The Company is unable to predict the future impact on depletion rates. The following is a summary of capitalized costs excluded from depletion at December 31, 2023 by year incurred. December 31, (In thousands) 2023 2022 2021 Prior Years Property Acquisition $ 2,064 $ 12,865 $ 12,097 $ 9,759 Development — — — — 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 F-21 Table of Contents 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. The Company assesses all items classified as unproved property on an annual basis, or if certain circumstances exist, more frequently, for possible impairment or reduction in value. The assessment includes consideration of the following factors, among others: intent to drill, remaining lease term, geological and geophysical evaluations, drilling results and activity, the assignment of proved reserves, and the economic viability of development if proved reserves are assigned. During any period in which these factors indicate an impairment, the cumulative costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and are then subject to depletion and amortization. NOTE 4 LONG-TERM DEBT The Company’s long-term debt consists of the following: December 31, 2023 (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 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 December 31, 2022 Principal Balance Unamortized Net Premium Debt Issuance Costs, Net Long-term Debt, Net Revolving Credit Facility (1) $ 319,000 $ — $ — $ 319,000 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 _______________ (1) Debt issuance costs related to the Company’s Revolving Credit Facility of $ 10.6 million and $ 10.9 million as of December 31, 2023 and 2022, are recorded in “Other Noncurrent Assets, Net” in the balance sheets. Revolving Credit Facility 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. The Revolving Credit Facility is comprised of revolving loans and letters of credit and is subject to a borrowing base with maximum loan value to be assigned to the proved reserves attributable to the Company and its subsidiaries’ (if any) oil and gas properties. As of December 31, 2023, the borrowing base was $ 1.8 billion and the aggregate elected commitment amount was $ 1.25 billion. 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 F-22 Table of Contents 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. Base rate loans bear interest at a rate per annum equal to the greatest of: (i) the Agent bank’s prime rate; (ii) the federal funds effective rate plus 50 basis points; 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, 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 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. The Company’s obligations under the Revolving Credit Facility may be accelerated, subject to customary grace and cure periods, upon the occurrence of certain Events of Default (as defined in the Revolving Credit Facility). Such Events of Default include customary events for a financing agreement of this type, including, without limitation, payment defaults, the inaccuracy of representations and warranties, defaults in the performance of affirmative or negative covenants, defaults on other indebtedness of the Company or its subsidiaries, defaults related to judgments and the occurrence of a Change in Control (as defined in the Revolving Credit Facility). The Company’s obligations under the Revolving Credit Facility are secured by mortgages on not less than 90 % of the value of proven reserves associated with the oil and gas properties included in the determination of the borrowing base. Additionally, the Company entered into a Guaranty and Collateral Agreement in favor of the Agent for the secured parties, pursuant to which the Company’s obligations under the Revolving Credit Facility are secured by a first priority security interest in substantially all of the Company’s assets. 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”). 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 due 2028”). 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 F-23 Table of Contents 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; (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 2028 achieve an investment grade rating from either Moody’s Investors Services, Inc. or S&P Global Ratings. The 2028 Notes Indenture contains customary events of default, including, but not limited to: (i) default for 30 days in the payment when due of interest on the 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 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 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. The Company will have the right to elect to settle conversions either entirely in cash or in a combination of cash and shares of its common stock. However, upon conversion of any Convertible Notes, the conversion value, which will be determined over a period of 40 trading days, will be paid in cash up to at least the principal amount of the Convertible Notes being converted. The initial conversion rate 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 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 F-24 Table of Contents and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (ii) the trading day immediately before the date the Company sends such notice. In addition, calling any Convertible Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Convertible Note, in which case the conversion rate applicable to the conversion of that Convertible Note will be increased in certain circumstances if it is converted after it is called for redemption. If certain corporate events that constitute a “Fundamental Change” (as defined in the Convertible Notes Indenture) occur, then, subject to a limited exception for certain cash mergers, noteholders may require the Company to repurchase their Convertible Notes at a cash repurchase price equal to the principal amount of the Convertible Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date. The definition of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s common stock. The Convertible Notes have customary provisions relating to the occurrence of “Events of Default” (as defined in the Convertible Notes Indenture), which include the following: (i) certain payment defaults on the Convertible Notes (which, in the case of a default in the payment of interest on the Convertible Notes, will be subject to a 30 -day cure period); (ii) the Company’s failure to send certain notices under the Convertible Notes Indenture within specified periods of time; (iii) the Company’s failure to comply with certain covenants in the Convertible Notes Indenture relating to the Company’s ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of the Company and any subsidiaries that the Company may form or acquire in the future, taken as a whole, to another person; (iv) a default by the Company in certain of its other obligations or agreements under the Convertible Notes Indenture or the Convertible Notes if such default is not cured or waived within 60 days after notice is given in accordance with the Convertible Notes Indenture; (v) certain defaults by the Company or any subsidiaries that the Company may form or acquire in the future with respect to indebtedness for borrowed money of at least $ 50.0 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; and (vii) certain events of bankruptcy, insolvency and reorganization involving the Company or any of the Company’s significant subsidiaries that the Company may form or acquire in the future. If an Event of Default involving bankruptcy, insolvency or reorganization events with respect to the Company (and not solely with respect to any significant subsidiary that the Company may form or acquire in the future) occurs, then the principal amount of, and all accrued and unpaid interest on, all of the Convertible Notes then outstanding will immediately become due and payable without any further action or notice by any person. If any other Event of Default occurs and is continuing, then, the Trustee, by notice to the Company, or noteholders of at least 25 % of the aggregate principal amount of Convertible Notes then outstanding, by notice to the Company and the Trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the Convertible Notes then outstanding to become due and payable immediately. However, notwithstanding the foregoing, the Company may elect, at its option, that the sole remedy for an Event of Default relating to certain failures by the Company to comply with certain reporting covenants in the Convertible Notes Indenture consists exclusively of the right of the noteholders to receive special interest on the Convertible Notes for up to 365 days at a specified rate per annum not exceeding 0.25 % on the principal amount of the Convertible Notes for the first 180 days and, thereafter, at a specified rate per annum not exceeding 0.50 % on the principal amount of the Convertible Notes. Capped Call Transactions In October 2022, in connection with the Convertible Notes offering described above, the Company entered into privately negotiated capped call transactions (the “Capped Call Transactions”) with certain of the initial purchasers of the Convertible Notes and/or their respective affiliates and/or other financial institutions. The Company paid $ 36.1 million in total consideration to enter into the Capped Call Transactions. The Capped Call Transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the conversion rate of the Convertible Notes, the number of shares of common stock initially underlying the Convertible Notes. The Capped Call Transactions are expected generally to reduce potential dilution to the common stock upon any conversion of Convertible Notes and/or offset any potential cash payments the Company is required to make in excess of the principal amount of such converted Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap. The cap price of the Capped Call Transactions 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. F-25 Table of Contents 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; (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 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 F-26 Table of Contents 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 Common Stock The Company is authorized to issue up to 135,000,000 shares of common stock, par value $ 0.001 per share. As of December 31, 2023 and 2022, the Company had 100,761,148 and 85,165,807 shares of common stock issued and outstanding, respectively. 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. Conversion 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 Common Stock 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. Dividends 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. In May 2023, the Company’s board of directors declared a cash dividend on the Company’s common stock in the amount of $ 0.37 per share. The dividend was paid on July 31, 2023 to stockholders of record as of the close of business on June 29, 2023. F-27 Table of Contents In August 2023, the Company’s board of directors declared a cash dividend on the Company’s common stock in the amount of $ 0.38 per share. The dividend was paid on October 31, 2023 to stockholders of record as of the close of business on September 28, 2023. 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. On February 5, 2024, 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 is payable on April 30, 2024 to stockholders of record as of the close of business on March 28, 2024. 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 In May 2022, the Company’s board of directors approved a stock repurchase program to acquire up to $ 150.0 million of the Company’s outstanding common stock. The stock repurchase program allows the Company to repurchase its shares from time to time in the open market, block transactions and in negotiated transactions. During the 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, 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 included in the Company’s pool of authorized but unissued shares. NOTE 6 STOCK-BASED COMPENSATION AND WARRANTS 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. The Company’s stock-based compensation awards are accounted for as equity instruments and are included in the “General and administrative expenses” line item in the statements of operations. The Company capitalizes a portion of stock-based compensation for employees who are directly involved in the acquisition of oil and natural gas properties into the full cost pool. Capitalized stock-based compensation is included in the “Oil and natural gas properties” line item in the balance sheet. 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. F-28 Table of Contents 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 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. For awards subject to a market condition, the grant-date fair value is estimated using a Monte Carlo valuation model. The Company recognizes stock-based compensation expense for awards subject to market-based vesting conditions regardless of whether it becomes probable that these conditions will be achieved or not, and stock-based compensation expense for any such awards is not reversed if vesting does not actually occur. The Monte Carlo model is based on random projections of stock price paths and must be repeated numerous times to achieve a probabilistic assessment. Expected volatility is calculated based on the historical volatility and implied volatility of the Company’s common stock, and the risk-free interest rate is based on U.S. 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 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 Shares granted 468,268 35.19 Shares forfeited ( 13,404 ) 19.06 Shares vested ( 273,475 ) 10.16 Outstanding at December 31, 2023 497,722 $ 27.45 At December 31, 2023, there was $ 11.3 million of total unrecognized compensation expense related to unvested RSAs. That cost is expected to be recognized over a weighted average period of 1.8 years. For the years ended December 31, 2023, 2022 and 2021, the total fair value of the Company’s restricted stock awards vested was $ 6.2 million, $ 4.6 million and $ 1.8 million, respectively. Performance Equity Awards In April 2022, the Company granted performance equity awards under its 2022 executive compensation program to certain executive officers. The awards 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 F-29 Table of Contents 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: 2022 2023 TSR Awards TSR Awards SAR Awards Risk-free interest rate 1.69 % 4.23 % 3.92 % Dividend yield 2.40 % — % 4.30 % Expected volatility 56.94 % 56.40 % 72.30 % Company’s closing stock price on grant date $ 24.98 $ 37.07 $ 37.07 Warrants 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 %. 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. 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: F-30 Table of Contents Warrants Number of Warrants Weighted-average Exercise Price Outstanding at December 31, 2022 1,996,829 $ 27.49 Issued — — Anti-Dilution Adjustments for Common Stock Dividends 51,736 27.05 Exercised — — Cancelled ( 824,602 ) 27.49 Expired — — Outstanding at December 31, 2023 1,223,963 $ 26.33 NOTE 7 RELATED PARTY TRANSACTIONS Preferred Stock Repurchase 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 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. NOTE 8 COMMITMENTS & CONTINGENCIES Litigation The Company is engaged in various proceedings incidental to the normal course of business. Due to their nature, such legal proceedings involve inherent uncertainties, including but not limited to, court rulings, negotiations between affected parties and governmental intervention. Based upon the information available to the Company and discussions with legal counsel, it is the Company’s opinion that the outcome of the various legal actions and claims that are incidental to its business will not have a material impact on the Company’s financial position, results of operations or cash flows. Such matters, however, are subject to many uncertainties, and the outcome of any matter is not predictable with assurance. The Company’s interests in certain crude oil and natural gas leases from the State of North Dakota are subject to an ongoing dispute over the ownership of minerals underlying the bed of the Missouri River within the boundaries of the Fort Berthold Reservation. The ongoing dispute is between the State of North Dakota and three affiliated tribes, both of whom have purported to lease mineral rights in tracts of riverbed within the reservation boundaries. In the event the ongoing dispute results in a final judgment that is adverse to the Company’s interests, the Company would be required to reverse approximately $ 2.4 million in revenue (net of accrued taxes) that has been accrued since the first quarter of 2013 based on the Company’s purported interest in the crude oil and natural gas leases at issue. Due to the long-term nature of this title dispute, the $ 2.4 million in accounts receivable is included in “Other Noncurrent Assets, Net” in the balance sheets. The Company fully maintains the validity of its interests in the crude oil and natural gas leases. Delivery Commitments As of December 31, 2023, the Company had certain agreements associated with the Company’s Appalachian Basin properties which require the Company to deliver firm quantities of natural gas to certain third parties, which we seek to fulfill with products from existing reserves. In the event we are not able to meet these firm commitments, we are subject to deficiency payments. The estimable future commitments under these volume commitment agreements as of December 31, 2023 are as follows: F-31 Table of Contents (in Bcf) Commitment Volumes 2024 18.4 2025 3.2 Total 21.6 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, 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. The amount and timing of any such deficiency payments that may be incurred in the future cannot be accurately estimated. NOTE 9 ASSET RETIREMENT OBLIGATIONS The Company has asset retirement obligations associated with the future plugging and abandonment of proved properties and related facilities. Initially, the fair value of a liability for an asset retirement obligation (“ARO”) is recorded in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. The liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. If the liability is settled for an amount other than the recorded amount, an adjustment to the full cost pool is recognized. The Company has no assets that are legally restricted for purposes of settling asset retirement obligations. Inherent in the fair value calculation are numerous assumptions and judgments including the ultimate retirement costs, inflation factors, credit-adjusted risk-free discount rates, timing of retirement, and changes in the legal, regulatory, environmental and political environments. To the extent future revisions to these assumptions impact the present value of the existing ARO, a corresponding adjustment is made to the oil and gas property balance. 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. The following table summarizes the Company’s asset retirement obligation transactions recorded during the years ended December 31, 2023 and 2022. December 31, (in thousands) 2023 2022 Beginning Asset Retirement Obligations $ 33,082 $ 28,012 Liabilities Acquired During the Period 2,203 2,158 Liabilities Incurred During the Period 2,191 1,014 Revision of Estimates 1,019 276 Accretion of Discount on Asset Retirement Obligations 2,395 1,980 Liabilities Settled During the Period ( 1,001 ) ( 359 ) Ending Asset Retirement Obligations $ 39,889 $ 33,082 NOTE 10 INCOME TAXES Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating losses and tax credit carry-forwards. Under this method, deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income (loss) in the period that includes the enactment date. The income tax provision (benefit) for the years ended December 31, 2023, 2022, and 2021 consists of the following: F-32 Table of Contents (In thousands) 2023 2022 2021 Current Federal $ — $ — $ — State 915 3,101 233 Deferred Federal 209,168 164,453 130 State 22,035 20,627 ( 3,984 ) Valuation Allowance ( 154,345 ) ( 185,080 ) 3,854 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). (In thousands) 2023 2022 2021 Income (Loss) Before Taxes and NOL $ 1,000,742 $ 776,338 $ 6,594 Federal Statutory Rate 21.00 % 21.00 % 21.00 % Taxes Computed at Federal Statutory Rates 210,156 163,031 1,385 State Tax (Benefit), Net of Federal Taxes 24,769 20,270 ( 3,752 ) Deferred Tax Adjustment ( 3,527 ) 3,532 ( 1,488 ) Perm Differences 720 1,347 234 Valuation Allowance ( 154,345 ) ( 185,080 ) 3,854 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 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. If unutilized, all of the state net operating losses will expire from 2023 to 2043, except for $ 193.7 million of state net operating losses that have an indefinite life. The significant components of the Company’s deferred tax assets (liabilities) were as follows: F-33 Table of Contents Year Ended December 31, (in thousands) 2023 2022 Net Operating Loss (NOLs) and Tax Credit Carryforwards $ 146,039 $ 134,103 Share Based Compensation 864 901 Accrued Interest 1,006 1,019 Allowance for Doubtful Accounts 927 1,143 Crude Oil and Natural Gas Properties and Other Properties ( 278,993 ) ( 43,415 ) Interest Carryforwards 43,328 10,050 Derivative Instruments 8,386 52,891 Other 11,836 ( 424 ) Total Net Deferred Tax Assets (Liabilities) Before Valuation Allowance ( 66,607 ) 156,269 Valuation Allowance ( 1,881 ) ( 156,269 ) 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. The amount recognized is measured as the largest amount of benefit that is greater than 50% likely to be realized upon ultimate settlement. Unrecognized tax benefits are tax benefits claimed in the Company’s tax returns that do not meet these recognition and measurement standards. The Company has no liabilities for unrecognized tax benefits. The Company’s policy is to recognize potential interest and penalties accrued related to unrecognized tax benefits within income tax expense. For the years ended December 31, 2023, 2022 and 2021, the Company did no t recognize any interest or penalties in its statements of operations, no r did it have any interest or penalties accrued in its balance sheet at December 31, 2023 and 2022 relating to unrecognized benefits. The tax years 2023, 2022, 2021 and 2020 remain open to examination for federal income tax purposes and by the other major taxing jurisdictions to which the Company is subject. Additionally, NOLs from 2011-2023 could be adjusted in the future when such NOLs are utilized. NOTE 11 FAIR VALUE Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The Company uses a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Financial Assets and Liabilities As required, financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. 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 F-34 Table of Contents 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 December 31, 2023 Using (In thousands) Quoted Prices In Active Markets for Identical Assets (Liabilities) (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Commodity Derivatives – Current Assets $ — $ 75,733 $ — Commodity Derivatives – Noncurrent Assets — 10,725 — Commodity Derivatives – Current Liabilities — ( 16,797 ) — Commodity Derivatives – Noncurrent Liabilities — ( 105,831 ) — Total $ — $ ( 36,169 ) $ — Fair Value Measurements at December 31, 2022 Using (In thousands) Quoted Prices In Active Markets for Identical Assets (Liabilities) (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Commodity Derivatives – Current Assets $ — $ 34,276 $ — Commodity Derivatives – Noncurrent Assets — 12,547 — Commodity Derivatives – Current Liabilities — ( 58,418 ) — Commodity Derivatives – Noncurrent Liabilities — ( 225,905 ) — Interest Rate Derivatives – Noncurrent Assets — 1,017 — 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. The Level 2 instruments presented in the tables above consist of commodity derivative instruments (see Note 12). The fair value of the Company’s commodity derivative instruments is determined based upon future prices, volatility and time to maturity, among other things. Counterparty statements are utilized to determine the value of the commodity 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 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. Interest Rate Derivatives. The Level 2 instruments presented in the tables above consist of interest rate derivative instruments (see Note 12). The fair value of the Company’s interest rate derivative instruments is determined based upon contracted notional amounts, active market-quoted interest yield curves, and time to maturity, among other things. Counterparty statements are utilized to determine the value of the interest rate derivative instruments and are reviewed and corroborated using various methodologies and significant observable inputs. The Company’s and the counterparties’ nonperformance risk is F-35 Table of Contents evaluated. The fair value of interest rate derivative contracts is reflected in the balance sheets. The current derivative asset and liability amounts represent the fair values expected to be settled in the subsequent twelve months. Contingent Consideration. These Level 2 instruments presented in the tables above consist of contingent consideration liabilities 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 are recorded in other income (expense) in the Company’s statement of operations. Fair Value of Other Financial Instruments The carrying amounts of cash equivalents, receivables and payables approximate fair value due to the highly liquid or short-term nature of these instruments. Long-term debt is not presented at fair value in the balance sheets, as it is recorded at carrying value, net of unamortized debt issuance costs and unamortized premium (see Note 4). 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. The recorded value of the Revolving Credit Facility approximates its fair value because of its floating rate structure based on the SOFR spread, secured interest, and the Company’s borrowing base utilization. The fair value measurement for the Revolving Credit Facility represents Level 2 inputs. Non-Financial Assets and Liabilities The Company estimates 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. Given the unobservable nature of the inputs, including plugging costs and reserve lives, the initial measurement of the AROs liability is deemed to use Level 3 inputs. AROs incurred and acquired during the year ended December 31, 2023 were approximately $ 4.4 million. The Company issued common stock warrants as a part of the Veritas Acquisition as purchase consideration. The common stock warrants issued grant holders the right to purchase 1,939,998 shares of the Company’s common stock at an exercise price equal to $ 28.30 per share (subject to certain adjustments), which are generally exercisable from April 27, 2022 until January 27, 2029. 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. These non-recurring fair value measurements are primarily determined using inputs that are observable or can be corroborated by observable market data (Level 2 inputs). The Company accounts for acquisitions of oil and natural gas properties under the acquisition method of accounting. Accordingly, the Company conducts assessments of net assets acquired and recognizes amounts for identifiable assets acquired and liabilities assumed at the estimated acquisition date fair values, while transaction costs associated with the acquisitions are expensed as incurred. The Company makes various assumptions in estimating the fair values of assets acquired and liabilities assumed. The most significant assumptions relate to the estimated fair value of oil and natural gas properties. The fair value of these properties is measured using a discounted cash flow model that converts future cash flows to a single discounted amount. These assumptions represent Level 3 inputs under the fair value hierarchy. See Note 3 for additional discussion of the Company’s acquisitions of oil and natural gas properties during the year ended December 31, 2023 and discussion of the significant inputs to the valuations. Though the Company believes the methods used to estimate fair value are consistent with those used by other market participants, the use of other methods or assumptions could result in a different estimate of fair value. There were no transfers of financial assets or liabilities between Level 1, Level 2 or Level 3 inputs for the years ended December 31, 2023 and 2022. NOTE 12 DERIVATIVE INSTRUMENTS AND PRICE RISK MANAGEMENT The Company utilizes various commodity price derivative instruments to (i) reduce the effects of volatility in price changes on the crude oil and natural gas commodities it produces and sells, (ii) reduce commodity price risk and (iii) provide a base level of cash flow in order to assure it can execute at least a portion of its capital spending. In addition, from time to time the Company utilizes interest rate swaps to mitigate exposure to changes in interest rates on the Company’s variable-rate indebtedness. F-36 Table of Contents All derivative instruments are recorded in the Company’s balance sheet as either assets or liabilities measured at their fair value (see Note 11). The Company has not designated any derivative instruments as hedges for accounting purposes and does not enter into such instruments for speculative trading purposes. If a derivative does not qualify as a hedge or is not designated as a hedge, the changes in the fair value are recognized in the Company’s statements of operations as a gain or loss on derivative instruments. Mark-to-market gains and losses represent changes in fair values of derivatives that have not been settled. The Company’s cash flow is only impacted when the actual settlements under the derivative contracts result in making or receiving a payment to or from the counterparty. These cash settlements represent the cumulative gains and losses on the Company’s derivative instruments for the periods presented and do not include a recovery of costs that were paid to acquire or modify the derivative instruments that were settled. The Company has master netting agreements on individual derivative instruments with certain counterparties and therefore the current asset and liability are netted in the balance sheet and the non-current asset and liability are netted in the balance sheet for contracts with these counterparties. Commodity Derivative Instruments The following table presents settlements on commodity derivative instruments and unsettled gains and losses on open commodity derivative instruments for the periods presented which is recorded in the revenue section of our financial statements: Year ended December 31, (In thousands) 2023 2022 2021 Cash Received (Paid) on Settled Derivatives $ 57,919 $ ( 455,450 ) $ ( 165,823 ) Non-Cash Mark-to-Market Gain (Loss) on Derivatives 201,331 40,187 ( 312,370 ) Gain (Loss) on Commodity Derivatives, Net $ 259,250 $ ( 415,262 ) $ ( 478,193 ) The following table summarizes open commodity derivative positions as of December 31, 2023, for commodity derivatives that were entered into through December 31, 2023, for the settlement period presented: F-37 Table of Contents 2024 2025 2026 2027 Oil: WTI NYMEX - Swaps: Volume (Bbl) 7,958,865 2,223,187 1,069,557 — Weighted-Average Price ($/Bbl) $ 74.13 $ 71.91 $ 68.94 $ — WTI NYMEX - Swaptions (1)(2) : Volume (Bbl) — 1,426,075 3,052,495 — Weighted-Average Price ($/Bbl) $ — $ 66.41 $ 65.01 $ — WTI NYMEX - Call Options (1)(2) : Volume (Bbl) 1,806,210 5,096,640 3,102,500 2,190,000 Weighted-Average Price ($/Bbl) $ 71.57 $ 75.96 $ 72.59 $ 80.00 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 $ — Natural Gas: Henry Hub NYMEX - Swaps: Volume (MMBtu) 38,440,787 2,260,000 — — Weighted-Average Price ($/MMBtu) $ 3.52 $ 3.90 $ — $ — Henry Hub NYMEX - Swaptions: Volume (MMBtu) — 7,300,000 — — Weighted-Average Price ($/MMBtu) $ — $ 3.88 $ — $ — Waha Swaps: 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: Volume (MMBtu) 19,032,000 16,728,000 10,950,000 — Weighted-Average Differential ($/MMBtu) $ ( 0.80 ) $ ( 0.86 ) $ ( 0.78 ) $ — Henry Hub NYMEX - Call Options: Volume (MMBtu) 6,158,050 12,207,700 — — Weighted-Average Price ($/MMBtu) $ 3.85 $ 3.73 $ — $ — Henry Hub NYMEX - Collars: 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 $ — Weighted-average ceiling price ($/MMBtu) $ 4.91 $ 5.37 $ 5.66 $ — NE - TETCO M2 - Basis Swaps: Volume (MMBtu) 15,550,000 3,650,000 1,825,000 — Weighted-Average Differential ($/MMBtu) $ ( 0.99 ) $ ( 1.01 ) $ ( 1.14 ) $ — F-38 Table of Contents ______________ (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 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. The mark-to-market component of these derivative instruments is recognized in gain (loss) on unsettled interest rate derivatives, net in the statements of operations. Other Information Regarding Derivative Instruments The following table sets forth the amounts, on a gross basis, and classification of the Company’s outstanding derivative financial instruments at December 31, 2023 and 2022, respectively. Certain amounts may be presented on a net basis in the financial statements when such amounts are with the same counterparty and subject to a master netting arrangement: (In thousands) December 31, Estimated Fair Value Type of Commodity Balance Sheet Location 2023 2022 Derivative Assets: Commodity Price Swap Contracts Current Assets $ 61,323 $ 30,513 Commodity Basis Swap Contracts Current Assets 4,487 5,620 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 Commodity Basis Swap Contracts Noncurrent Assets 1,874 547 Commodity Price Collar Contracts Noncurrent Assets 26,841 29,538 Commodity Price Call Option Contracts Noncurrent Assets 3,635 — Total Derivative Assets $ 170,029 $ 119,377 Derivative Liabilities: Commodity Price Swap Contracts Current Liabilities $ ( 8,079 ) $ ( 53,386 ) Commodity Basis Swap Contracts Current Liabilities ( 6,796 ) ( 4,407 ) Commodity Price Swaptions Contracts Current Liabilities ( 1,496 ) — Commodity Price Collar Contracts Current Liabilities ( 14,370 ) ( 29,218 ) Commodity Price Call Option Contracts Current Liabilities ( 31,380 ) ( 13,916 ) Commodity Price Swap Contracts Noncurrent Liabilities ( 2,288 ) ( 8,343 ) Commodity Basis Swap Contracts Noncurrent Liabilities ( 8,922 ) ( 3,071 ) Commodity Price Collar Contracts Noncurrent Liabilities ( 18,849 ) ( 33,210 ) Commodity Price Call Option Contracts Noncurrent Liabilities ( 78,123 ) ( 132,794 ) Commodity Price Swaptions Contracts Noncurrent Liabilities ( 35,896 ) ( 77,515 ) Total Derivative Liabilities $ ( 206,198 ) $ ( 355,860 ) F-39 Table of Contents The use of derivative transactions involves the risk that the counterparties will be unable to meet the financial terms of such transactions. When the Company has netting arrangements with its counterparties that provide for offsetting payables against receivables from separate derivative instruments these assets and liabilities are netted in the balance sheet. The tables presented below provide reconciliation between the gross assets and liabilities and the amounts reflected in the balance sheet. The amounts presented exclude derivative settlement receivables and payables as of the balance sheet dates. Estimated Fair Value at December 31, 2023 (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: Current Assets $ 121,057 $ ( 45,324 ) $ 75,733 Non-Current Assets 48,971 ( 38,246 ) 10,725 Total Derivative Assets $ 170,029 $ ( 83,570 ) $ 86,459 Offsetting of Derivative Liabilities: Current Liabilities $ ( 62,120 ) $ 45,324 $ ( 16,797 ) Non-Current Liabilities ( 144,077 ) 38,246 ( 105,831 ) Total Derivative Liabilities $ ( 206,198 ) $ 83,570 $ ( 122,628 ) Estimated Fair Value at December 31, 2022 (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: Current Assets $ 77,802 $ ( 42,509 ) $ 35,293 Non-Current Assets 41,575 ( 29,028 ) 12,547 Total Derivative Assets $ 119,377 $ ( 71,537 ) $ 47,840 Offsetting of Derivative Liabilities: Current Liabilities $ ( 100,927 ) $ 42,509 $ ( 58,418 ) Non-Current Liabilities ( 254,933 ) 29,028 ( 225,905 ) Total Derivative Liabilities $ ( 355,860 ) $ 71,537 $ ( 284,324 ) All of the Company’s outstanding derivative instruments are covered by International Swap Dealers Association Master Agreements (“ISDAs”) entered into with parties that are also lenders under the Company’s Revolving Credit Facility. The Company’s obligations under the derivative instruments are secured pursuant to the Revolving Credit Facility, and no additional collateral had been posted by the Company as of December 31, 2023. The ISDAs may provide that as a result of certain circumstances, such as cross-defaults, a counterparty may require all outstanding derivative instruments under an ISDA to be settled immediately. See Note 11 for the aggregate fair value of all derivative instruments that were in a net liability position at December 31, 2023 and 2022. NOTE 13 EARNINGS PER SHARE The reconciliation of the numerators and denominators used to calculate basic EPS and diluted EPS for the years ended December 31, 2023, 2022 and 2021 are as follows: F-40 Table of Contents December 31, (In thousands, except share and per share data) 2023 2022 2021 Net Income $ 922,969 $ 773,237 $ 6,361 Less: Cumulative Dividends on Preferred Stock — 9,803 14,761 Less: Premium on Repurchase of Preferred Stock — 35,731 — Net Income (Loss) Attributable to Common Stock $ 922,969 $ 727,703 $ ( 8,400 ) Weighted Average Common Shares Outstanding: Weighted Average Common Shares Outstanding – Basic 91,483,687 78,557,216 62,989,543 Plus: 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 Net Income (Loss) per Common Share: Basic $ 10.09 $ 9.26 $ ( 0.13 ) Diluted $ 10.03 $ 8.92 $ ( 0.13 ) 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. 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: December 31, 2023 2022 2021 Restricted Stock Awards — — 150,011 Convertible Notes — — — Series A Preferred Stock (if converted) — — 9,758,871 Warrants — — 468,325 Total — — 10,377,207 NOTE 14 SUBSEQUENT EVENTS 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. F-41 Table of Contents SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) Oil and Natural Gas Exploration and Production Activities Oil and natural gas sales reflect the market prices of net production sold or transferred with appropriate adjustments for royalties, net profits interest, and other contractual provisions. Production expenses include lifting costs incurred to operate and maintain productive wells and related equipment including such costs as operating labor, repairs and maintenance, materials, supplies and fuel consumed. Production taxes include production and severance taxes. Depletion of crude oil and natural gas properties relates to capitalized costs incurred in acquisition, exploration, and development activities. Results of operations do not include interest expense and general corporate amounts. The results of operations for the Company’s crude oil and natural gas production activities are provided in the Company’s related statements of income. Costs Incurred and Capitalized Costs The costs incurred in crude oil and natural gas acquisition, exploration and development activities are highlighted in the table below. December 31, (In thousands) 2023 2022 2021 Costs Incurred for the Year: Proved Property Acquisition and Other $ 1,288,437 $ 1,036,412 $ 434,519 Unproved Property Acquisition 3,414 $ 51,097 $ 19,358 Development 639,203 386,972 202,325 Total $ 1,931,054 $ 1,474,482 $ 656,202 Excluded costs for unproved properties are accumulated by year. Costs are reflected in the full cost pool as the drilling costs are incurred or as costs are evaluated and deemed impaired. The Company anticipates these excluded costs will be included in the depletion computation over the next five years. The Company is unable to predict the future impact on depletion rates. The following is a summary of capitalized costs excluded from depletion at December 31, 2023 by year incurred. December 31, (In thousands) 2023 2022 2021 Prior Years Property Acquisition $ 2,064 $ 12,865 $ 12,097 $ 9,759 Development — — — — Total $ 2,064 $ 12,865 $ 12,097 $ 9,759 Oil and Natural Gas Reserves and Related Financial Data Information with respect to the Company’s crude oil and natural gas producing activities is presented in the following tables. Reserve quantities, as well as certain information regarding future production and discounted cash flows, were determined by the Company and audited by Cawley, Gillespie & Associates, Inc., our third-party independent reserve engineers. F-42 Table of Contents Oil and Natural Gas Reserve Data The following tables present the Company’s estimates of its proved crude oil and natural gas reserves. The Company emphasizes that reserves are approximations and are expected to change as additional information becomes available. Reservoir engineering is a subjective process of estimating underground accumulations of crude oil and natural gas that cannot be measured in an exact way, and the accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. (In thousands) Natural Gas (MCF) Oil (BBLS) BOE Proved Developed and Undeveloped Reserves at December 31, 2020 159,641 96,025 122,632 Revisions of Previous Estimates 89,115 19,914 34,766 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 ) Proved Developed and Undeveloped Reserves at December 31, 2021 937,724 131,395 287,682 Revisions of Previous Estimates ( 14,678 ) ( 2,787 ) ( 5,233 ) Extensions, Discoveries and Other Additions 54,431 22,563 31,635 Purchases of Minerals in Place 99,760 27,660 44,286 Production ( 68,829 ) ( 16,090 ) ( 27,562 ) Proved Developed and Undeveloped Reserves at December 31, 2022 1,008,407 162,741 330,808 Revisions of Previous Estimates ( 166,121 ) ( 33,954 ) ( 61,641 ) Extensions, Discoveries and Other Additions 67,796 28,123 39,422 Purchases of Minerals in Place 190,376 35,446 67,176 Production ( 84,342 ) ( 22,013 ) ( 36,070 ) Proved Developed and Undeveloped Reserves at December 31, 2023 1,016,116 170,342 339,695 Proved Developed Reserves: December 31, 2021 498,558 87,505 170,598 December 31, 2022 611,856 112,626 214,602 December 31, 2023 677,979 121,865 234,861 Proved Undeveloped Reserves: December 31, 2021 439,165 43,890 117,084 December 31, 2022 396,551 50,115 116,207 December 31, 2023 338,138 48,477 104,833 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. Proved developed reserves are proved reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. Proved undeveloped reserves are included for reserves for which there is a high degree of confidence in their recoverability and they are scheduled to be drilled within the next five years. F-43 Table of Contents Notable changes in proved reserves for the year ended December 31, 2023 included the following: • Extensions and discoveries . In 2023, total extensions and discoveries of 39.4 MMBoe were primarily attributable to successful drilling operations as well as the addition of proved undeveloped locations. Included in these extensions and discoveries were 14.8 MMBoe as a result of successful drilling operations and 24.6 MMBoe as a result of additional proved undeveloped locations. • Purchases of minerals in place . In 2023, total purchases of minerals in place of 67.2 MMBoe were primarily attributable to acquisitions of oil and natural gas properties (see Note 3). • Revisions to previous estimates . 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 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: • Extensions and discoveries . In 2022, total extensions and discoveries of 31.6 MMBoe were primarily attributable to successful drilling operations as well as the addition of proved undeveloped locations. Included in these extensions and discoveries were 13.3 MMBoe as a result of successful drilling operations and 18.3 MMBoe as a result of additional proved undeveloped locations. • Purchases of minerals in place . In 2022, total purchases of minerals in place of 44.3 MMBoe were primarily attributable to acquisitions of oil and natural gas properties (see Note 3). • Revisions to previous estimates . In 2022, revisions to previous estimates decreased proved developed and undeveloped reserves by a net amount of 5.2 MMBoe. Included in these revisions were 10.2 MMBoe of upward adjustments caused by higher crude oil and natural gas prices, a 1.0 MMBoe downward adjustment attributable to increased operating costs and 14.4 MMBoe of downward adjustments related to the removal of undeveloped drilling locations related to the 5-year rule and other adjustments. Notable changes in proved reserves for the year ended December 31, 2021 included the following: • Extensions and discoveries . In 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 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. F-44 Table of Contents Standardized Measure of Discounted Future Net Cash Inflows and Changes Therein The following table presents a standardized measure of discounted future net cash flows relating to proved crude oil and natural gas reserves, and the changes in standardized measure of discounted future net cash flows relating to proved crude oil and natural gas were prepared in accordance with the provisions of ASC 932 Extractive Activities - Oil and Gas . Future cash inflows were computed by applying average prices of crude oil and natural gas for the last 12 months to estimated future production. Future production and development costs were computed by estimating the expenditures to be incurred in developing and producing the proved crude oil and natural gas reserves at the end of the year, based on year-end costs and assuming continuation of existing economic conditions. Future income tax expenses were calculated by applying appropriate year-end tax rates to future pretax cash flows relating to proved crude oil and natural gas reserves, less the tax basis of properties involved and tax credits and loss carry forwards relating to crude oil and natural gas producing activities. Future net cash flows are discounted at the rate of 10% annually to derive the standardized measure of discounted future cash flows. 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. December 31, (In thousands) 2023 2022 2021 Future Cash Inflows $ 16,008,048 $ 22,452,776 $ 11,339,861 Future Production Costs ( 6,627,373 ) ( 6,820,784 ) ( 4,213,186 ) Future Development Costs ( 1,358,405 ) ( 1,145,225 ) ( 932,480 ) Future Income Tax Expense ( 1,380,854 ) ( 2,764,111 ) ( 947,303 ) Future Net Cash Inflows $ 6,641,417 $ 11,722,656 $ 5,246,892 10% Annual Discount for Estimated Timing of Cash Flows ( 2,485,180 ) ( 5,285,758 ) ( 2,356,783 ) Standardized Measure of Discounted Future Net Cash Flows $ 4,156,237 $ 6,436,898 $ 2,890,109 The twelve-month average prices were adjusted to reflect applicable transportation and quality differentials on a well-by-well basis to arrive at realized sales prices used to estimate the Company’s reserves. The price of other liquids is included in natural gas. The prices for the Company’s reserve estimates were as follows: Natural Gas MCF Oil Bbl December 31, 2023 $ 3.10 $ 75.51 December 31, 2022 $ 7.43 $ 91.95 December 31, 2021 $ 3.37 $ 62.25 The expected tax benefits to be realized from utilization of the net operating loss and tax credit carryforwards are used in the computation of future income tax cash flows. As a result of available net operating loss carryforwards and the remaining tax basis of its assets at December 31, 2023, the Company’s future income taxes were significantly reduced. F-45 Table of Contents Changes in the Standardized Measure of Discounted Future Net Cash Flows at 10% per annum follow: December 31, (In thousands) 2023 2022 2021 Beginning of Period $ 6,436,898 $ 2,890,109 $ 712,011 Sales of Oil and Natural Gas Produced, Net of Production Costs ( 1,390,656 ) ( 1,566,927 ) ( 727,317 ) Extensions and Discoveries 683,258 888,067 258,399 Previously Estimated Development Cost Incurred During the Period 327,768 147,439 85,526 Net Change of Prices and Production Costs ( 3,241,176 ) 3,424,794 1,366,197 Change in Future Development Costs ( 237,627 ) 141,884 ( 103,806 ) Revisions of Quantity and Timing Estimates ( 1,061,840 ) ( 134,880 ) 607,774 Accretion of Discount 790,216 334,109 71,254 Change in Income Taxes 617,405 ( 1,014,277 ) ( 450,455 ) Purchases of Minerals in Place 1,200,155 1,157,060 940,910 Other 31,835 169,521 129,615 End of Period $ 4,156,237 $ 6,436,898 $ 2,890,109 F-46