Item 2. Properties
Item 2. Properties
Estimated Net Proved Reserves
The table below summarizes our estimated net proved reserves at December 31, 2025 based on reports prepared by the Company for the year ended December 31, 2025 and audited by Cawley, our third-party independent reserve engineers. In preparing its reports, the Company evaluated properties representing all of our proved reserves at December 31, 2025 in accordance with the rules and regulations of the SEC applicable to companies involved in oil and natural gas producing activities. Our estimated net proved reserves in the table below do not include probable or possible reserves and do not in any way include or reflect our commodity derivatives.
December 31, 2025 December 31, 2024
Proved Reserves
(MBoe) (1)
% of
Total Proved Reserves
(MBoe) (2)
% of
Total
SEC Proved Reserves:
Developed 282,789 74 % 278,151 73 %
Undeveloped 101,279 26 % 100,333 27 %
Total Proved Properties 384,068 100 % 378,484 100 %
___________________
(1) The table above values oil and natural gas reserve quantities as of December 31, 2025, assuming constant realized prices of $59.72 per barrel of oil and $3.18 per Mcf of natural gas. Under SEC guidelines, these prices represent the average prices per barrel of oil and per Mcf of natural gas at the beginning of each month in the 12-month period prior to the end of the reporting period, after adjustment to reflect applicable transportation and quality differentials.
(2) The table above values oil and natural gas reserve quantities as of December 31, 2024, assuming constant realized prices of $70.60 per barrel of oil and $2.02 per Mcf of natural gas. Under SEC guidelines, these prices represent the average prices per barrel of oil and per Mcf of natural gas at the beginning of each month in the 12-month period prior to the end of the reporting period, after adjustment to reflect applicable transportation and quality differentials.
Estimated net proved reserves at December 31, 2025 were 384,068 MBoe, a 1% increase from estimated net proved reserves of 378,484 MBoe at December 31, 2024. The increase was primarily due to the impact of our 2025 acquisitions, as well as organic drilling activities in 2025. As of December 31, 2025 and 2024, we had 140.8 and 146.4 net proved undeveloped wells, respectively, included in our reserves.
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The following table sets forth summary information by reserve category with respect to estimated proved reserves at December 31, 2025:
SEC Pricing Proved Reserves (1)
Reserve Volumes PV-10 (3)
Reserve Category Oil
(MBbls) Natural Gas
(MMcf) Total
(MBoe) (2)
% Amount
(In thousands) %
PDP Properties 123,102 899,512 273,021 71 % $ 3,498,946 77 %
PDNP Properties 3,952 34,892 9,768 3 % 140,004 3 %
PUD Properties 57,807 260,833 101,279 26 % 891,706 20 %
Total 184,861 1,195,237 384,068 100 % $ 4,530,656 100 %
_____ ___________
(1) The SEC Pricing Proved Reserves table above values oil and natural gas reserve quantities and related discounted future net cash flows as of December 31, 2025, based on average prices of $65.34 per barrel of oil and $3.39 per MMbtu of natural gas. Under SEC guidelines, these prices represent the average prices per barrel of oil and per MMbtu of natural gas at the beginning of each month in the 12-month period prior to the end of the reporting period. The average resulting price used as of December 31, 2025, after adjustment to reflect applicable transportation and quality differentials, was $59.72 per barrel of oil and $3.18 per Mcf of natural gas.
(2) Boe are computed based on a conversion ratio of one Boe for each barrel of oil and one Boe for every 6,000 cubic feet (i.e., 6 Mcf) of natural gas.
(3) Pre-tax PV10%, or PV-10, may be considered a non-GAAP financial measure as defined by the SEC and is derived from the standardized measure of discounted future net cash flows, which is the most directly comparable GAAP measure. See “Reconciliation of PV-10 to Standardized Measure” below.
The table above assumes prices and costs discounted using an annual discount rate of 10% without future escalation, without giving effect to non-property related expenses such as general and administrative expenses, debt service and depreciation, depletion and amortization, or federal income taxes. The information in the table above does not give any effect to or reflect our commodity derivatives.
Reconciliation of PV-10 to Standardized Measure
PV-10 is derived from the Standardized Measure of discounted future net cash flows, which is the most directly comparable GAAP financial measure for proved reserves calculated using SEC pricing. PV-10 is a computation of the Standardized Measure of discounted future net cash flows on a pre-tax basis. PV-10 is equal to the Standardized Measure of discounted future net cash flows at the applicable date, before deducting future income taxes, discounted at 10 percent. We believe that the presentation of PV-10 is relevant and useful to investors because it presents the discounted future net cash flows attributable to our estimated net proved reserves prior to taking into account future corporate income taxes, and it is a useful measure for evaluating the relative monetary significance of our oil and natural gas properties. Further, investors may utilize the measure as a basis for comparison of the relative size and value of our reserves to other companies. Moreover, GAAP does not provide a measure of estimated future net cash flows for reserves other than proved reserves or for reserves calculated using prices other than SEC prices. We use this measure when assessing the potential return on investment related to our oil and natural gas properties. PV-10, however, is not a substitute for the Standardized Measure of discounted future net cash flows. Our PV-10 measure and the Standardized Measure of discounted future net cash flows do not purport to represent the fair value of our oil and natural gas reserves.
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The following table reconciles the pre-tax PV10% value of our SEC Pricing Proved Reserves as of December 31, 2025 to the Standardized Measure of discounted future net cash flows.
SEC Pricing Proved Reserves
(In thousands)
Standardized Measure Reconciliation
Pre-Tax Present Value of Estimated Future Net Revenues (Pre-Tax PV10%) $ 4,530,656
Future Income Taxes, Discounted at 10% (1)
(707,854)
Standardized Measure of Discounted Future Net Cash Flows $ 3,822,802
____________
(1) 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.
Uncertainties are inherent in estimating quantities of proved reserves, including many risk factors beyond our control. Reserve engineering is a subjective process of estimating subsurface accumulations of oil and natural gas that cannot be measured in an exact manner. As a result, estimates of proved reserves may vary depending upon the engineer estimating the reserves. Further, our actual realized price for our oil and natural gas is not likely to average the pricing parameters used to calculate our proved reserves. As such, the oil and natural gas quantities and the value of those commodities ultimately recovered from our properties will vary from reserve estimates.
Additional discussion of our proved reserves is set forth under the heading “Supplemental Oil and Gas Information - Unaudited” to our financial statements included later in this report.
Proved Undeveloped Reserves
At December 31, 2025, we had approximately 101.3 MMBoe of proved undeveloped reserves as compared to 100.3 MMBoe at December 31, 2024. A reconciliation of the change in proved undeveloped reserves during 2025 is as follows:
MBoe
Estimated Proved Undeveloped Reserves at 12/31/2024 100,333
Converted to Proved Developed Through Drilling (19,162)
Added from Extensions and Discoveries 27,432
Purchases of Minerals in Place 1,761
Revisions (9,085)
Estimated Proved Undeveloped Reserves at 12/31/2025 101,279
Our future development drilling program includes the drilling of approximately 140.8 proved undeveloped net wells before the end of 2030 at an estimated cost of $1.1 billion. Our development plan for drilling proved undeveloped wells calls for the drilling of 62.9 net wells during 2026 (includes 31.5 net wells spud at December 31, 2025, but classified as proved undeveloped due to internal guidelines which require greater than 50% of total costs to be incurred to be classified as developed), 33.1 net wells during 2027, 24.4 net wells during 2028, 12.8 net wells during 2029, and 7.6 net wells during 2030 for a total of 140.8 net wells. Our proved undeveloped locations were decreased from 146.4 net wells at December 31, 2024 to 140.8 net wells at December 31, 2025 due to our 2025 development activity. We expect that our proved undeveloped reserves will continue to be converted to proved developed producing reserves as additional wells are drilled under our acreage. All locations comprising our remaining proved undeveloped reserves are forecasted to be drilled within five years from initially being recorded in accordance with our development plan.
At December 31, 2025, the PV-10 value of our proved undeveloped reserves amounted to 20% of the PV-10 value of our total proved reserves. Although our 2025 producing property additions exceeded our 5-year average development plan, there are numerous uncertainties. The development of these reserves is dependent upon a number of factors which include, but are not limited to: financial targets such as drilling within cash flow or reducing debt, drilling of obligatory wells, satisfactory rates of return on proposed drilling projects, and the levels of drilling activities by operators in areas where we hold leasehold interests. During 2025, we decreased our capital spending by 38% compared to 2024. With 77% of the PV-10 value of our
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total proved reserves supported by producing wells, we believe we will have sufficient cash flows and adequate liquidity to execute our development plan.
At December 31, 2025, we had spent a total of $291.0 million related to the development of proved undeveloped reserves, which resulted in the conversion of 19.2 MMBoe of proved undeveloped reserves as of December 31, 2024 to proved developed reserves as of December 31, 2025. Proved developed property additions in 2025 also included 38.3 MMBoe from the conversion of previously undeveloped locations that were not booked in our December 31, 2024 proved undeveloped reserves (the related development costs incurred at December 31, 2025 were $410.8 million). Additionally, our proved undeveloped reserves at December 31, 2025 included 37.9 MMBoe for net wells that had commenced drilling activities but remained classified as undeveloped reserves due to more than half of the capital expenditures that remain to be incurred for completion of the wells (the related development costs incurred at December 31, 2025 were $113.3 million).
In 2025, we also added 27.4 MMBoe of proved undeveloped reserves as a result of our development activity. We added an additional 1.8 MMBoe from our acquisitions. The SEC-prescribed commodity prices (after adjustment for transportation, quality and basis differentials) were $10.88 lower per barrel of oil and $1.16 higher per Mcf of natural gas at year-end 2025 as compared to year-end 2024. Additionally, we had negative revisions of 9.1 MMBoe primarily due to the significant downward trend in oil commodity prices.
Proved Reserves Sensitivity by Price Scenario
The SEC disclosure rules allow for optional reserves sensitivity analysis, such as the sensitivity that oil and natural gas reserves have to price fluctuations. We have chosen to compare our proved reserves calculated using SEC Pricing (the “2025 SEC Case”) to two alternate pricing cases. The first case scenario uses a flat pricing deck of $70.00 per Bbl for oil and $4.50 per MMbtu for natural gas (the “$70 Flat Case”). The second scenario uses a flat pricing deck of $50.00 per Bbl for oil and $3.00 per MMbtu for natural gas (the “$50 Flat Case”). The sensitivity scenarios were not audited by a third-party. In these sensitivity scenarios, all operating cost assumptions and other factors, other than the commodity price assumptions, have been held constant with the 2025 SEC Case. The change in pricing in the $50 Flat Case resulted in fewer future drilling locations that were considered economic compared to the 2025 SEC Case. This sensitivity analysis is only meant to demonstrate the impact that changing commodity prices may have on estimated proved reserves and PV-10 values. There is no assurance that any particular outcome will be realized. The table below shows our proved reserves utilizing the 2025 SEC Case compared with the $70 Flat Case and the $50 Flat Case.
Price Cases
2025 SEC Case (1)
$70 Flat Case (2)
$50 Flat Case (3)
Net Proved Reserves (December 31, 2025)
Oil (MBbl)
Developed 127,054 132,340 112,308
Undeveloped 57,807 60,387 44,777
Total 184,861 192,727 157,085
Natural Gas (MMcf)
Developed 934,404 968,756 876,193
Undeveloped 260,833 268,543 235,511
Total 1,195,237 1,237,299 1,111,704
Total Proved Reserves (MBOE) 384,068 398,944 342,369
Pre-tax PV10% (in thousands) (4)
$ 4,530,656 $ 5,704,714 2,788,331
_________________
(1) Represents reserves based on pricing prescribed by the SEC. The unescalated twelve month arithmetic average of the first day of the month posted prices were adjusted for transportation and quality differentials to arrive at prices of $59.72 per Bbl for oil and $3.18 per Mcf for natural gas. Production costs were held constant for the life of the wells.
(2) Prices based on $70.00 per Bbl for oil and $4.50 per MMbtu for natural gas, which were then adjusted for transportation and quality differentials to arrive at prices of $64.40 per Bbl for oil and $4.30 per Mcf for natural gas.
(3) Prices based on $50.00 per Bbl for oil and $3.00 per MMbtu for natural gas, which were then adjusted for transportation and quality differentials to arrive at prices of $44.53 per Bbl for oil and $2.77 per Mcf for natural gas.
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(4) Pre-tax PV10%, or PV-10, may be considered a non-GAAP financial measure. See “Reconciliation of PV-10 to Standardized Measure” above for a reconciliation of the PV-10 of our 2025 SEC Case proved reserves to the Standardized Measure. GAAP does not prescribe a corresponding measure for PV-10 of proved reserves based on other than SEC prices. As a result, it is not practicable for us to reconcile the PV-10 of our proved reserves based on alternate pricing scenarios.
Independent Petroleum Engineers
We have utilized Cawley, an independent reserve engineering firm, as our third-party engineering firm. The selection of Cawley was approved by our Audit Committee. Cawley is a reservoir-evaluation consulting firm who evaluates oil and natural gas properties and independently certifies petroleum reserves quantities for various clients throughout the United States. Cawley has substantial experience auditing and calculating the reserves of various other companies and, as such, we believe Cawley has sufficient experience to appropriately audit our reserves. Cawley utilizes proprietary technology, systems and data to audit our reserves commensurate with this experience. Cawley is a Texas Registered Engineering Firm (F-693). Our primary contact at Cawley is Todd Brooker, President. Mr. Brooker is a State of Texas Licensed Professional Engineer (License #83462). He is also a member of the Society of Petroleum Engineers.
In accordance with applicable requirements of the SEC, estimates of our net proved reserves and future net revenues are made using average prices at the beginning of each month in the 12-month period prior to the date of such reserve estimates and are held constant throughout the life of the properties (except to the extent a contract specifically provides for escalation).
The reserves set forth in the Company report audited by Cawley for the properties are estimated by performance methods or analogy. In general, reserves attributable to producing wells and/or reservoirs are estimated by performance methods such as decline curve analysis which utilizes extrapolations of historical production data. Reserves attributable to non-producing and undeveloped reserves included in our report are estimated by analogy. The estimates of the reserves, future production, and income attributable to properties are prepared using the economic software package Aries for Windows, a copyrighted program of Halliburton.
To estimate economically recoverable oil and natural gas reserves and related future net cash flows, we consider many factors and assumptions including, but not limited to, the use of reservoir parameters derived from geological, geophysical and engineering data which cannot be measured directly, economic criteria based on current costs and SEC pricing requirements, and forecasts of future production rates. Under the SEC regulations 210.4-10(a)(22)(v) and (26), proved reserves must be demonstrated to be economically producible based on existing economic conditions including the prices and costs at which economic productivity from a reservoir is to be determined as of the effective date of the report. With respect to the property interests we own, production and well tests from examined wells, normal direct costs of operating the wells or leases, other costs such as transportation and/or processing fees, production taxes, recompletion and development costs and product prices are based on the SEC regulations, geological maps, well logs, core analyses, and pressure measurements.
The reserve data set forth in the Company report represents only estimates, and should not be construed as being exact quantities. They may or may not be actually recovered, and if recovered, the actual revenues and costs could be more or less than the estimated amounts. Moreover, estimates of reserves may increase or decrease as a result of future operations.
Reservoir engineering is a subjective process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact manner. There are numerous uncertainties inherent in estimating oil and natural gas reserves and their estimated values, including many factors beyond our control. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geologic interpretation and judgment. As a result, estimates of different engineers, including those used by us, may vary. In addition, estimates of reserves are subject to revision based upon actual production, results of future development and exploration activities, prevailing oil and natural gas prices, operating costs and other factors. The revisions may be material. Accordingly, reserve estimates are often different from the quantities of oil and natural gas that are ultimately recovered and are highly dependent upon the accuracy of the assumptions upon which they are based. Our estimated net proved reserves, included in our SEC filings, have not been filed with or included in reports to any other federal agency. See “Item 1A. Risk Factors – Our estimated reserves are based on many assumptions that may prove to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.”
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Internal Controls Over Reserves Estimation Process
We employ an internal reserve engineering department which is led by our Chief Technical Officer, who is responsible for overseeing the preparation of our reserves estimates. Our executive internal reserve engineer has a B.S. in petroleum engineering from Montana Tech, has over twenty years of oil and gas experience on the reservoir side, and has experience working for large independents on projects and acquisitions. In addition, we utilize a third-party reservoir engineering firm as our independent reserves auditor for 100% of our reserves base.
Our technical team meets with our independent third-party engineering firm to review properties and discuss evaluation methods and assumptions used in the proved reserves estimates, in accordance with our prescribed internal control procedures. Our internal controls over the reserves estimation process include verification of input data into our reserves evaluation software as well as management review, such as, but not limited to the following:
• Comparison of historical expenses from the lease operating statements and workover authorizations for expenditure to the operating costs input in our reserves database;
• Review of working interests and net revenue interests in our reserves database against our well ownership system;
• Review of historical realized prices and differentials from index prices as compared to the differentials used in our reserves database;
• Review of updated capital costs prepared by our operations team;
• Review of internal reserve estimates by well and by area by our internal reservoir engineer;
• Discussion of material reserve variances among our internal reservoir engineer and our executive management; and
• Review of a preliminary copy of the reserve report by executive management.
Production, Price and Production Expense History
The price that we receive for the oil and natural gas we produce is largely a function of market supply and demand. Demand is impacted by general economic conditions, weather and other seasonal conditions, including hurricanes and tropical storms. Over or under supply of oil or natural gas can result in substantial price volatility. Oil supply in the United States has grown dramatically over the past few years, and the supply of oil could impact oil prices in the United States if the supply outstrips domestic demand. Historically, commodity prices have been volatile, and we expect that volatility to continue in the future. A substantial or extended decline in oil or natural gas prices or poor drilling results could have a material adverse effect on our financial position, results of operations, cash flows, quantities of oil and natural gas reserves that may be economically produced and our ability to access capital markets.
The following table sets forth information regarding our oil and natural gas production, realized prices and production costs for the periods indicated. For additional information on price calculations, please see information set forth in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
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Year Ended December 31,
2025 2024 2023
Net Production:
Oil (MBbl) 27,611 26,511 22,013
Natural Gas (MMcf) 130,084 113,476 84,342
Total (MBoe) 49,292 45,423 36,070
Oil (MBbl) per day 76 72 60
Natural Gas (MMcf) per day 356 310 231
Total (MBoe) per day 135 124 99
Average Sales Prices:
Oil (per Bbl) (1)
$ 59.20 $ 71.59 $ 74.78
Effect of Loss on Settled Oil Derivatives on Average Price (per Bbl) 5.15 (0.11) (0.90)
Oil, Net of Settled Oil Derivatives (per Bbl) (1)
64.35 71.48 73.88
Natural Gas and NGLs (per Mcf) (1) (2)
2.87 2.24 2.98
Effect of Gain on Settled Natural Gas Derivatives on Average Price (per Mcf) 0.45 0.76 0.92
Natural Gas and NGLs, Net of Settled Natural Gas and NGL Derivatives (per Mcf) (1) (2)
3.32 3.00 3.90
Realized Price on a Boe Basis Excluding Settled Commodity Derivatives (1) (2)
40.74 47.38 52.61
Effect of Gain on Settled Commodity Derivatives on Average Price (per Boe) 4.08 1.83 1.61
Realized Price on a Boe Basis Including Settled Commodity Derivatives (1) (2)
44.82 49.21 54.22
Average Costs:
Production Expenses (per Boe) $ 9.61 $ 9.46 $ 9.62
_________________
(1) Excludes the impact of certain non-cash adjustments to revenues
(2) Excludes the impact of a legal settlement (See Note 2 to our financial statements)
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The following table sets forth our production results for the years ended December 31, 2025, 2024 and 2023 in total and for each of our basins of operations.
Year Ended December 31,
2025 2024 2023
Net Production:
Oil (MBbl)
Williston Basin 10,607 12,241 12,747
Permian Basin 13,275 13,529 9,266
Appalachian Basin 159 56 —
Uinta Basin 3,570 685 —
Total 27,611 26,511 22,013
Natural Gas and NGLs (MMcf)
Williston Basin 29,187 31,518 31,103
Permian Basin 48,731 44,621 28,594
Appalachian Basin 49,804 36,785 24,645
Uinta Basin 2,362 552 —
Total 130,084 113,476 84,342
Crude Oil Equivalents (MBoe)
Williston Basin 15,471 17,494 17,931
Permian Basin 21,398 20,966 14,032
Appalachian Basin 8,460 6,186 4,108
Uinta Basin 3,963 777 —
Total 49,292 45,423 36,070
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Drilling and Development Activity
The following table sets forth the number of gross and net productive and non-productive wells drilled in the years ended December 31, 2025, 2024 and 2023. The number of wells drilled refers to the number of wells completed at any time during the fiscal year, regardless of when drilling was initiated.
December 31,
2025 2024 2023
Gross Net (1)
Gross Net (1)
Gross Net (1)
Development Wells:
Oil 774 71.0 790 86.9 803 76.1
Natural Gas 90 9.7 29 3.8 16 0.5
Non-Productive — — — — — —
Total Development Wells 864 80.7 819 90.7 819 76.6
______________
(1) Net Well totals in 2025, 2024 and 2023 do not include an additional 18.6, 69.4 and 80.4 net wells, respectively, from acquisitions which were already producing when acquired.
The following table summarizes our cumulative gross and net productive oil and natural gas wells by geographic area within the United States at each of December 31, 2025, 2024 and 2023. Wells are classified as oil or natural gas wells according to the predominant production stream. All of our wells in the Williston, Permian, and Uinta Basins are classified as oil wells, although they also produce natural gas and condensate. All of our wells in the Appalachian Basin are classified as natural gas wells.
December 31,
2025 2024 2023
Gross Net Gross Net Gross Net
Williston Basin 8,573 682.5 8,278 664.0 7,981 643.7
Permian Basin 2,229 349.6 1,895 302.3 1,387 207.6
Appalachian Basin 518 114.2 424 104.3 397 100.3
Uinta Basin 382 49.1 271 37.4 — —
Total 11,702 1,195.4 10,868 1,108.0 9,765 951.6
As of December 31, 2025, we had an additional 441 gross (45.6 net) wells in process, meaning wells that have been spud and are in the process of drilling, completing or waiting on completion.
Leasehold Properties
As of December 31, 2025, our principal assets included approximately 301,797 net acres located in the United States. The following table summarizes our estimated gross and net developed and undeveloped acreage by geographic area at December 31, 2025.
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Developed Acreage Undeveloped Acreage Total Acreage
Gross Net Gross Net Gross Net
Williston Basin 875,662 169,016 43,721 8,640 919,383 177,656
Permian Basin 181,279 39,317 29,050 6,450 210,329 45,767
Appalachian Basin 131,605 27,410 97,337 34,789 228,942 62,198
Uinta Basin 225,422 14,470 56,487 1,706 281,909 16,176
Total 1,413,968 250,213 226,595 51,585 1,640,563 301,797
As of December 31, 2025, approximately 83% of our total acreage was developed. All of our proved reserves are located in the United States.
Recent Acquisitions
We generally assess acreage subject to near-term drilling activities on a lease-by-lease basis because we believe each lease’s contribution to a subject spacing unit is best assessed on that basis if development timing is sufficiently clear. Consistent with that approach, a significant portion of our acreage acquisitions involve properties that are selected by us on a lease-by-lease basis for their participation in a well expected to be spud in the near future, and the subject leases are then aggregated to complete one single closing with the transferor. As such, we generally view each acreage assignment from brokers, landmen and other parties as involving several separate acquisitions combined into one closing with the common transferor for convenience. However, in certain instances an acquisition may involve a larger number of leases presented by the transferors as a single package without negotiation on a lease-by-lease basis. In those instances, we still review each lease on a lease-by-lease basis to ensure that the package as a whole meets our acquisition criteria and drilling expectations. See Note 3 to our financial statements regarding our recent acquisition activities.
Acreage Expirations
As a non-operator, we are subject to lease expirations if an operator does not commence the development of operations within the agreed terms of our leases. All of our leases for undeveloped acreage summarized in the table below will expire at the end of their respective primary terms, unless we renew the existing leases, establish commercial production from the acreage or some other “savings clause” is exercised. In addition, our leases typically provide that the lease does not expire at the end of the primary term if drilling operations have been commenced. While we generally expect to establish production from most of our acreage prior to expiration of the applicable lease terms, there can be no guarantee we can do so. The approximate expiration of our net acres which are subject to expire between 2026 and 2030 and thereafter, are set forth below:
Acreage Subject to Expiration
Year Ended Gross Net
December 31, 2026 8,651 1,899
December 31, 2027 11,161 2,727
December 31, 2028 10,308 3,239
December 31, 2029 4,158 2,676
December 31, 2030 and thereafter 12,463 8,564
Total 46,741 19,105
During 2025, we had leases expire covering approximately 4,206 net acres. The 2025 lease expirations carried a cost of $7.8 million. We believe that the expired acreage was not material to our capital deployed. As of December 31, 2025, we estimate that less than 1% of our proved undeveloped reserves were attributable to locations scheduled to be drilled after lease expiration.
Unproved Properties
All properties that are not classified as proved properties are considered unproved properties and, thus, the costs associated with such properties are not subject to depletion. Once a property is classified as proved, all associated acreage and drilling costs are subject to depletion.
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We assess 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 drilling 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.
We believe that the majority of our unproved costs will become subject to depletion within the next five years by proving up reserves relating to our acreage through exploration and development activities, by impairing the acreage that will expire before we 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 our reserves.
Depletion of Oil and Natural Gas Properties
Our depletion expense is driven by many factors including certain exploration costs involved in the development of producing reserves, production levels and estimates of proved reserve quantities and future developmental costs. The following table presents our depletion expenses during 2025, 2024 and 2023.
Year Ended December 31,
(In thousands, except per Boe data) 2025 2024 2023
Depletion of Oil and Natural Gas Properties $ 810,095 $ 736,600 $ 482,306
Depletion Expense (per Boe) 16.43 16.22 13.37
Research and Development
We do not anticipate performing any significant research and development under our plan of operation.
Delivery Commitments
The Company does not have any outstanding delivery commitments as of December 31, 2025.
Item 3. Legal Proceedings
Our company is subject from time to time to litigation claims and governmental and regulatory proceedings arising in the ordinary course of business.
Item 4. Mine Safety Disclosures
None.
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PART II