What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-19 compared with 2022-05-20 · 111 added, 85 removed, 269 unchanged (42% of the section changed)

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properties located primarily in Texas, and Oklahoma.

In addition, we own a substantial amount of well servicing equipment.

We also own a 12.5% over-riding royalty interest in over 30,000 acres in the state of West Virginia.

In addition, we own a substantial amount of well-servicing equipment and, through a wholly owned offshore company, a 60-mile-long

pipeline offshore on the shallow shelf of Texas.

We also hold a 30% interest in a limited partnership which owns a 138,000 square foot retail shopping center on ten acres in Prattville, Alabama.

All of our oil and gas properties and interests are located in the United States.

Assets in our principal focus areas include mature properties with long-lived reserves and significant development opportunities as well as newer properties with development and exploration potential.

We believe our balanced portfolio of assets and our ongoing hedging program position us well for both the current commodity price environment and future potential upside as we develop our attractive resource opportunities.

We believe our balanced portfolio of assets position us well for both the current commodity price environment and future potential upside as we develop our attractive resource opportunities.

Our primary sources of liquidity are cash generated from our operations and our credit facility.

We attempt to assume the position of operator in all acquisitions of producing properties and will continue to evaluate prospects for leasehold acquisitions and for exploration and development operations in areas in which we own interests.

We continue to actively pursue the acquisition of producing properties.

To diversify and broaden our asset base, we will consider acquiring the assets or stock in other entities and companies in the oil and gas business.

Our main objective in making any such acquisitions will be to acquire income producing assets to build stockholder value through consistent growth in our oil and gas reserve base on a cost-efficient basis.

In addition to developing our oil and natural gas reserves, we continue to actively pursue the acquisition of producing properties.

We attempt to assume the position of operator in all acquisitions of producing properties and will continue to evaluate properties for leasehold acquisition and for exploration and development operations in areas in which we own interests.

To diversify and broaden our asset base, we will consider acquiring the assets or stock in other entities in the oil and gas business.

Our main objective in making any such acquisitions will be to acquire income-producing assets or developable leasehold acreage to build stockholder value through consistent growth and development of our oil and gas reserve base on a cost-effective basis.

Our cash flows depend on many factors, including the price of oil and gas, the success of our acquisition and drilling activities, and the operational performance of our producing properties.

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We are the operator of the majority of our developed and undeveloped acreage which is nearly all held by production.

In the Permian Basin of West Texas and eastern New Mexico the Company maintains an acreage position of approximately 17,148 gross (10,640 net) acres, 97% of which is located in Reagan, Upton, Martin, and Midland counties of Texas where our current horizontal drilling activity is focused.

In the Permian Basin of West Texas and eastern New Mexico the Company maintains an acreage position of approximately 17,228 gross (10,720 net) acres, 97% of which is located in Reagan, Upton, Martin, and Midland counties of Texas where our current West Texas horizontal drilling activities are focused.

We believe this acreage has significant resource potential in the Spraberry and Wolfcamp intervals for additional horizontal drilling that could support the drilling of as many as 250 additional horizontal wells.

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Our Oklahoma horizontal development is focused primarily in Canadian, Kingfisher, Grady, and Garvin counties.

We believe approximately 6,200 net acres in these counties hold significant additional resource potential that could support the drilling of as many as 5 new horizontal wells based on an estimate of four wells per section, two in the Mississippian and two in the Woodford Shale.

We believe approximately 5,800 net acres in these counties hold significant additional resource potential that could support the drilling of as many as 50 new horizontal wells based on an estimate of four wells per multi-section drilling unit, two in the Mississippian and two in the Woodford Shale.

Should we choose to participate with a working interest in future development, our share of these future capital expenditures would be approximately $34.6 million at an average 10% ownership level.

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As of December 31, 2021, we had 207 producing wells (105 net) in the Gulf Coast region, of which 137 wells are operated by us.

Average net daily production in our Gulf Coast Region in 2021 was 336 Boe.

The Average net daily production in our Gulf Coast Region in 2021 was 336 Boe.

At December 31, 2021, we had 906 MBoe of proved reserves in the Gulf Coast region, which represented 7% of our total proved reserves.

We maintain an acreage position of over 11,000 gross (3,447 net) acres in this region, primarily in Dimmit and Polk counties.

We operate a field service group in this region from a field office in Carrizo Springs, Texas utilizing four workover rigs, nineteen water transport trucks, two saltwater disposal wells and several trucks and excavating equipment.

We operate a field service group in this region from a field office in Carrizo Springs, Texas utilizing four workover rigs, twenty-three water transport trucks, two saltwater disposal wells and several trucks and excavating equipment.

Services including well service support, site preparation and construction services for drilling and workover operations are provided to third-party operators as well as utilized in our own operated wells and locations.

As of March 31, 2022, the Gulf Coast region has no operated wells in the process of being drilled, no waterfloods in the process of being installed and no other related activities of material importance.

The Company also owns, through its wholly owned offshore company, a 60-mile-long

pipeline on the shallow shelf of Texas that is currently idle, but may someday have value.

As of June 30, 2022, the Gulf Coast region has no operated wells in the process of being drilled, no waterfloods in the process of being installed and no other related activities of material importance.

Mid-Continent

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region is actively participating with third-party operators in the horizontal development of lands that include Company owned interests in several counties in the Stack and Scoop plays of Oklahoma where drilling primarily targets reservoirs of the Mississippian and Woodford formations.

In the first quarter of 2022, in the Mid-Continent

region the Company committed to participate with 9.38% interest in the drilling of four horizontal wells in Canadian County, Oklahoma operated by Ovintiv Mid-Continent

The first of these was spud April 2, and the fourth on May 1,

All four wells are expected to be completed and online in July of this year.

These proved undeveloped drilling plans and their reserves were not included in the 2021 year-end

reserve report.

In the first half of 2022, in the Mid-Continent

region, the Company participated with 9.38% interest in the drilling of four horizontal wells in Canadian County, Oklahoma operated by Ovintiv Mid-Continent

All four wells have been completed and are online as of August 1 st

The resulting reserves of this new drilling will be an addition to our 2021 year-end

reserve base.

West Texas Region

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Services, including well service support, site preparation, and construction services for drilling and workover operations, are provided to third-party operators as well as utilized in our own operated wells and locations.

In the first quarter of 2022, the Company participated with 10.3% interest in the drilling of four 1.5-mile

long horizontal wells in Irion County, Texas operated by SEM Operating Company, LLC.

All four wells have finished drilling and are awaiting completion which is expected to occur in the second quarter of 2022.

In addition, the Company has received proposals for 13 new horizontal wells in West Texas planned for the third quarter.

We intend to participate for 50% interest in the drilling of nine horizontal wells in Reagan County, Texas with BTA Oil Producers, Inc and to participate for 38% in the drilling of four horizontal wells in Martin County, Texas with ConocoPhilips.

We also anticipate to begin development of ten new horizontal wells with Hibernia Energy III, LLC, in Reagan County, Texas, in the fourth quarter of 2022.

The Company will own approximately 25% of these ten wells expected to be completed in 2023.

These proved undeveloped drilling plans were added in 2022, and are therefore not represented in the year-end

In the first half of 2022, the Company participated with 10.3% interest in the drilling of four 1.5-mile-long

horizontal wells in Irion County, Texas operated by SEM Operating Company, LLC.

All four wells have been drilled and completed and are expected to start production in August of 2022.

In addition to the eight wells drilled in the first half of 2022, the Company has received proposals for 24 new horizontal wells in West Texas:

fifteen planned for the second half of 2022 and eleven for the first quarter of 2023.

In the fourth quarter of this year, we expect to participate with 27% interest in the drilling of five 2.5-mile-long

horizontal wells in Martin County, Texas with ConocoPhillips and to participate with 25% interest in the drilling of ten 2-mile-long

horizontals with Hibernia Energy III, LLC.

In the first quarter of 2023, we anticipate the start of nine 2.5-mile-long

horizontals with BTA Oil Producers, LLC in Reagan County, and two 3-mile-long

horizontals with Apache Corporation in Upton County.

The Company will participate with an average of approximately 42% interest in the BTA wells and 47% in the Apache wells.

These proved undeveloped drilling plans were added in 2022 and therefore are not represented in the year-end

2021 reserves report.

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Three of the four wells were successfully completed and online in January, 2022, while one well had completion issues and has been temporarily abandoned.

In regard to the four drilled but uncompleted PUD wells in Grady County, Oklahoma, noted in the paragraph above, reserves previously attributed to these wells were not included in the 2021 year-end

Regarding the four drilled but uncompleted PUD wells in Grady County, Oklahoma noted in the paragraph above, reserves previously attributed to these wells were not included in the 2021 year-end

reserve report as the operator has no near-term plans for their completion.

In the first quarter of 2022, in our West Texas horizontal drilling program, the Company participated with 10.3% interest in the drilling of four horizontal wells with SEM Operating Company and has received proposals for an additional 23 horizontal wells to begin this year.

In the first half of 2022, in our West Texas horizontal drilling program, we participated with 10.3% interest in the drilling of four horizontal wells with SEM Operating Company and have received proposals for an additional 24 horizontal wells, 15 of those to begin in the fourth quarter of this year.

In total, the Company is likely to invest approximately $75 million in these 28 wells.

In Oklahoma, thus far in 2022, the Company is participating for 9.38% interest with Ovintiv Mid-Continent

in the drilling of four wells in Canadian County, Oklahoma.

These four wells and the four SEM wells are anticipated to be online in July of this year.

in the drilling of four wells on our Bohlman tract in Canadian County, Oklahoma.

These four wells and the four SEM wells in West Texas are anticipated to be online in August of this year.

In the first quarter of 2023, we intent to participate with Apache in the drilling of two 3-mile-long

horizontals in Upton County, Texas and with BTA Oil Producers in the drilling of nine 2.5 mile-long horizontals in Reagan County, Texas.

Additional drilling and future development plans will be established based on an expectation of available cash flows from operations and availability of funds under our revolving credit facility.

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The Company has an average of 47.5% interest in the nine wells completed with Apache and 11.25% interest in the three wells completed with Ovintiv.

To date in 2022, the Company has participated with SEM Operating Company LLC in the drilling of four 7,900’ horizontal wells in Irion County, Texas with 10.3% interest, and participated with Ovintiv Mid-Continent

Through the second quarter of 2022, the Company has participated with SEM Operating Company LLC in the drilling of four 7,900’ horizontal wells in Irion County, Texas with 10.3% interest, and participated with Ovintiv Mid-Continent

Inc in the drilling of four 10,000’-long horizontal wells in Canadian County, Oklahoma with 9.38% interest.

We expect all eight of these wells to be completed soon and online in July of this year.

An additional 23 wells are planned to begin development in the second half of 2022;

nine with BTA Oil Producers, four with ConocoPhilips, and ten with Hibernia Energy III>

All eight of these wells are in the process of being completed and are expected to be producing in August of this year.

An additional 15 wells are planned to begin development in the fourth quarter of 2022;

five with ConocoPhillips, and ten with Hibernia Energy III.

In the first quarter of 2023, we are planning the drilling of two horizontals in Upton County, Texas, with Apache Corporation and nine horizontals with BTA Oil Producers in Reagan County, Texas.

Since the start of our West Texas horizontal drilling program in 2015, we have participated in 81 wells and invested approximately $130 million in horizontal drilling in the Permian Basin.

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This development is estimated to cost approximately $370.6 million, with the Company’s share being approximately $170.8 million.

Two 3-mile-long

horizontals have been slated for the first quarter of 2023.

In addition to the 54 prospective wells to be drilled for these three reservoirs, a fourth target reservoir, the Middle Spraberry, is also prospective for future development.

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The actual number of wells that are eventually drilled as well as the cost and the timing of drilling will vary based upon many factors, including commodity market conditions.

In addition to the 3,260 acre block being developed, as described above, the Company is also developing an offsetting 1,300 acre block in Upton County, Texas, with Apache Corporation as operator.

In addition to the 3,260 acre block being developed, as described above, the Company has also been developing an offsetting 1,300 acre block in Upton County, Texas, with Apache Corporation as operator.

In the second quarter of 2019 three horizontal wells were completed and brought on production from reservoirs above the Middle Wolfcamp:

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In 2016 and 2017, four horizontal wells were drilled, completed, and put on production.

The Company owns 35% to 38% interest in this joint venture acreage and we have received drilling plans from ConocoPhilips for the drilling of four wells in the third quarter of 2022 that are likely to be 2.5-mile

The Company’s investment in these wells is expected to be $15 million.

In 2022, in West Texas, the Company is currently participating for 10.3% interest with SEM Operating Company in the drilling of four 7,900’-long horizontal wells in Irion County, Texas.

We anticipate an investment of $2.55 million in these wells.

We have also received proposals from BTA Oil Producers for the drilling of nine 2.5-mile-long

horizontals in Reagan County, Texas to begin in the third quarter of this year.

The Company intends to participate for its 50% interest in six wells and 31% interest in three wells.

The Company owns 35% to 38% interest in this joint venture acreage where we have potential to drill as many as 36 additional wells.

As mentioned above, in West Texas, the Company is participating for 10.3% interest with SEM Operating Company in four 7,900’-long horizontal wells in Irion County, Texas.

We anticipate an investment of $2.55 million in these wells and for them to begin production in August.

Also planned for this year is the drilling of ten 2-mile-long

horizontals in Hibernia Energy, III, LLC, in Reagan County, Texas and the drilling of five 2.5 mile long horizontal wells with ConocoPhillips in Martin County.

The Company intends to participate for approximately 25% interest in the ten wells with Hibernia and for 27% interest in the five wells with Connoco Phillips.

Our expected investment in the drilling and completion of these wells is $32 million.

In addition, we received a proposal from ConocoPhilips for the drilling of four horizontal wells in Marting Couty, and a proposal from Hibernia Energy III for the drilling of ten horizontal wells in Reagan County.

We expect the development of these projects to begin in the fourth quarter of 2022.

PrimeEnergy will have approximately 38% interest in the four ConocoPhilips wells and 25% interest in the Hibernia Energy wells.

In Oklahoma, we are focused on development of our reserves in Canadian, Grady, Kingfisher, Garfield, Major, and Garvin counties where we have approximately 5,800 net leasehold acres in the Scoop/Stack Play.

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Three of these wells were successfully completed in December 2021 and online in January 2022, while one well had completion issues and has been temporarily abandoned.

At today’s product prices, payout of the Company’s $2.2 million investment in these four wells is expected to be in approximately six months.

In April 2022.

in Oklahoma, the Company and Ovintiv Mid-Continent

At today’s product prices, payout of the Company’s $2.3 million investment in these four wells occurred in four months.

In April 2022, in Oklahoma, the Company and Ovintiv Mid-Continent

began drilling four horizontal wells on our Bohlman tract in the same area as the successful Peters wells.

All four of the Bohlman wells have been spud and the first is in the process of being drilled at the time of this writing.

The Company is participating with 9.38% interest for approximately $1.8 million through completion which is expected to occur in June and July.

We believe our 6,200 net leasehold acres in Oklahoma have the resource potential to support the drilling of as many as 54 new horizontal wells based on an estimate of four wells per section:

All four of the Bohlman wells have been drilled, completed, and are flowing back.

The Company is participating with 9.38% interest with an approximate investment $2.2 million

We believe our 5,800 net leasehold acres in Oklahoma have the resource potential to support the drilling of as many as 50 new horizontal wells based on an estimate of four wells per multi-section drilling unit:

two in the Mississippian and two in the Woodford Shale.

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RESULTS OF OPERATIONS

We reported net income of $11.1 million, $5.62 per share, for the three months ended March 2022 compared with a net loss of $1.5 million, $0.73 per share, for the same period of 2021.

The current year net income reflects changes in oil, gas and NGLs sales related to increased production combined with higher commodity prices offset by losses on derivative contracts.

2022 and 2021 Compared

We reported net income of $22.1 million, or $11.18 per share and $11 million, or $5.57 per share for the six and three months ended June 30, 2022, respectively, as compared to net losses of $3.9 million, or $1.93 per share and $2.4 million, or $1.20 per share for the six and three months ended June 30, 2021, respectively.

Current year net income reflects increases in production and commodity price increases over the three and six months ended June 30, 2021, fluctuations in gains related to the sale of assets and changes related to the valuation of derivative instruments.

The significant components of income and expense are discussed below.

Oil, gas and NGLs sales

increased 166.9% to $33.9 million for the three months ended March 2022 from $12.7 million in the same period of 2021.

Sales vary due to changes in volumes of production sold and realized commodity prices.

Our production across all three products increased substantially reflecting the production from our West Texas wells added in the fourth quarter of 2021 and our Oklahoma wells which were placed in production in January 2022.

The changes in volumes and prices are presented in the table below.

The following table summarizes the primary components of production volumes and average sales prices realized for the three months ended March 31, 2022 and 2021 (excluding realized gains and losses from derivatives).

Three Months Ended March 31,

increased $19.6 million, or 127.3% from $15.4 million for the three months ended June 30, 2021 to $34.9 million for the three months ended June 30, 2022, and $40.8 million, or 145.5% from $28.0 million for the six months ended June 30, 2021 to $68.8 million for the six months ended June 30, 2022.

The following tables summarizes the primary components of production volumes and average sales prices realized for the three and six months ended June 30, 2022 and 2021 (excluding realized gains and losses from derivatives).

Six months ended June 30,

Barrels of Oil Produced

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Total Oil & Gas Revenue (In 000’s)

Losses on derivative instruments

Three months ended June 30,

Barrels of Oil Produced

Average Price Received

Oil Revenue (In 000’s)

Mcf of Gas Sold

Average Price Received

Gas Revenue (In 000’s)

Barrels of Natural Gas Liquids Sold

Average Price Received

Natural Gas Liquids Revenue (In 000’s)

Total Oil & Gas Revenue (In 000’s)

Oil, Natural Gas and NGL Derivatives

We do not apply hedge accounting to any of our commodity based derivatives, thus changes in the fair market value of commodity contracts held at the end of a reported period, referred to as mark-to-market

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accounting treatment creates volatility in our revenues.

Unrealized and realized losses by product are presented in the table below.

Unrealized (loss) on natural gas derivative instruments

Unrealized (loss) on crude oil derivative instruments

Realized (loss) on natural gas derivative instruments

Realized (loss) on crude oil derivative instruments

Average oil and gas prices received for the three months ended March 31, including the impact of derivatives were:

Average sales prices per barrel of oil

Average sales price per MCF of natural gas

The following table summarizes the results of our derivative instruments for the three and six months ended June 2022 and 2021:

Three Months Ended

Six Months Ended

($ in thousand)

Oil derivatives – realized losses

Oil derivatives – unrealized gains (losses)

Total losses on oil derivatives

Natural gas derivatives – realized losses

Natural gas derivatives – unrealized gains (losses)

Total losses on natural gas derivatives

Total losses on oil and natural gas derivatives

Prices received for the six months ended June 30, 2022 and 2021, respectively, including the impact of derivatives were:

Field service income

increased $1.8 million or 128.6% for the first quarter 2022 to $3.2 million from $1.4 million for the first quarter 2021.

This increase is a combined result of increased utilization and rates charged to customers during the current quarter compared to the same quarter in 2021.

Workover rig services, hot oil treatments, salt water hauling and disposal represent the bulk of our field service operations.

increased $1.3 million or 54.2% from $2.4 million for the second quarter 2021 to $3.7 million for the second quarter 2022 and increased $3.2 million, or 84.2% from $3.8 million for the six months ended June 30, 2021 to $7.0 million for the six months ended June 30, 2022.

These changes reflect the increase in utilization and rates resulting from the oil and gas price increases during these periods.

Workover rig services, hot oil treatments, saltwater hauling and disposal represent the bulk of our field service operations.

Lease operating expense

increased $4.2 million or 93.3% from $4.5 million for the first quarter 2021 to $8.7 million for the first quarter 2022.

This increase reflects the increased production taxes related to the increased oil, gas and NGL revenue, and the additional operating expenses related to the wells added in the fourth quarter of 2021 and the first quarter of 2022.

increased $4.8 million or 109.1% from $4.4 million for the second quarter 2021 to $9.2 million for the second quarter 2022 and increased $9.0 million or 101.1% from $8.9 million for the six months ended June 30, 2021 to $17.9 million for the six months ended June 30, 2022.

This increase is primarily due to higher production taxes related to higher commodity prices during 2022 combined with workover expenses and lease operating expense related to higher lifting cost properties returned to production.

Field service expense

increased $1.6 million or 114.3% to $3.0 million for the first quarter 2022 from $1.4 million for the first quarter 2021.

Field service expenses primarily consist of wages and equipment operating expenses which have increased during the three months ended March 31, 2022 over the same period of 2021 related to increased utilization of the equipment during the current quarter compared to the same quarter in 2021.

increased $1.7 million or 94.4% from $1.8 million for the second quarter 2021 to $3.5 million for the second quarter 2022 and increased $3.2 million, or 97.0% from $3.3 million for the six months ended June 30, 2021 to $6.5 million for the six months ended June 30, 2022.

Field service expenses primarily consist of wages and vehicle operating expenses which have fluctuated during the three and six months ended June 30, 2022 compared with the same periods of 2021.

These changes reflect the increase in utilization and rates resulting from the oil and gas price increases during these periods.

Depreciation, depletion, amortization and accretion on discounted liabilities

increased $0.7 million or 10.8% from $6.5 million for the first quarter 2021 to $7.2 million for the first quarter 2022 reflecting the increased production in the first quarter of 2022.

increased $0.4 million, or 6.1% from $6.6 million for the second quarter 2021 to $7.0 million for the second quarter 2022 and $1.1 million, or 8.4% from $13.1 million for the six months ended June 30, 2021 to $14.2 million for the six months ended June 30, 2022.

These increases reflect the change in the property basis combined with production increases in 2022.

General and administrative expense

increased $4.7 million or 235% from $2.0 million for the three months ended March 31, 2021 to $6.7 million for the three months ended March 31, 2022.

increased $4.9 million, or 116.7% from $4.2 million for the six months ended June 30, 2021 to $9.1 million for the six months ended June 30, 2022, and increased $0.2 million, or 9.1% from $2.2 million for the three months ended June 30, 2021 to $2.4 million for the three months ended June 30, 2022.

This increase in 2022 is primarily due to increased employee compensation and benefits.

Interest expense

decreased $0.2 million or 40% from $0.5 million for the first quarter 2021 to $0.3 million for the first quarter 2022.

This decrease reflects the decrease in current borrowings under our revolving credit agreement.

Income tax expense and benefit

for the March 31, 2022 and 2021 quarters varied due to the change in net income and loss for those periods.

decreased from $500 thousand for the second quarter 2021 to $150 thousand for the second quarter 2022 and from $1.0 million for the six months ended June 30, 2021 to $499 thousand for the six months ended June 30, 2022.

This decrease reflects the increase in rates and lower current borrowings under our revolving credit agreement.

Income tax benefit

for the June 30, 2022 and 2021 periods varied due to the change in net income or loss for those periods.

LIQUIDITY AND CAPITAL RESOURCES

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Our primary sources of liquidity are cash generated from our operations, through our producing oil and gas properties, field services business and sales of acreage.

Net cash provided by operating activities and proceeds from the sale of properties for the quarter ended March 31, 2022 was $23.3 million, compared to $4.7 million in the prior year.

Net cash provided by operating activities and proceeds from the sale of properties for the six months ended June 30, 2022 was $42.3 million, compared to $11.5 million in the prior year.

Excluding the effects of significant unforeseen expenses or other income, our cash flow from operations fluctuates primarily because of variations in oil and gas production and prices or changes in working capital accounts.

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in four wells in Canadian County, Oklahoma with 9.38% interest.

In addition, the Company has received drilling proposals for an additional 23 horizontal wells to be drilled in West Texas this year.

These eight wells have been completed and are expected to be on production in August of this year.

In addition, the Company has received drilling proposals for an additional 24 horizontal wells to be drilled in West Texas with 15 of these slated to begin drilling this year.

In total the Company is likely to invest approximately $77 million in these 32 wells.

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The Company maintains a Credit Agreement providing for a reserves-based line of credit totaling $300 million, with a current borrowing base of $75 million.

As of May 20, 2022, the Company has no outstanding borrowings under this line.

As of August 15, 2022, the Company has no outstanding borrowings under this line.

The bank reviews the borrowing base semi-annually and, at their discretion, may decrease or propose an increase to the borrowing base relative to a re-determined

estimate of proved oil and gas reserves.

The next borrowing base review is scheduled for June 2022, at this time we expect the borrowing base to be increased approximately 50%.

The next borrowing base review is scheduled for December 2022.

Our oil and gas properties are pledged as collateral for the line of credit and we are subject to certain financial and operational covenants defined in the agreement.

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In the first quarter of 2022, the Company sold 1,809 net leasehold acres in Regan and Midland Counties, Texas through two transactions receiving gross proceeds of $14.0 million and retaining certain over-riding royalty interests.

In the second quarter of 2022, the Company sold 241 net acres in Canadian County, Oklahoma for proceeds of $845,000 and a retained over-riding royalty interest.

The majority of our capital spending is discretionary, and the ultimate level of expenditures will be dependent on our assessment of the oil and gas business environment, the number and quality of oil and gas prospects available, the market for oilfield services, and oil and gas business opportunities in general.

The Company has a stock repurchase program in place, spending under this program during the first quarter of 2022 was $833 thousand.

The Company has a stock repurchase program in place, spending under this program during the first six months of 2022 was $3.2 million.

The Company expects continued spending under the stock repurchase program in 2022.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis