What changed in this filing

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Item 1. Financial Statements

2022-11-21 compared with 2022-08-19 · 83 added, 55 removed, 244 unchanged (36% of the section changed)

3 unchanged sentences

(Thousands of dollars)

September 30,

Current Assets

32 unchanged sentences

1,992,077 shares.

Additional paid-in

Retained earnings

1 unchanged sentence

879,300 shares;

817,923 shares

Total Liabilities and Equity

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements

PRIMEENERGY RESOURCES CORPORATION

C ONSOLIDATED

Three and six months ended June 30, 2022 and 2021

Three and nine months ended September 30, 2022 and 2021

(Thousands of dollars, except per share amounts)

Three Months Ended

Six Months Ended

September 30,

Nine Months Ended

September 30,

Natural gas sales

13 unchanged sentences

Other Income (Expense)

Interest Income

Interest Expense

Income (Loss) Before Provision for (Benefit from) Income Taxes

(Benefit) Provision for Income Taxes

Net (Loss) Income

Net (Loss) Attributable to Non-Controlling

Income (Loss) Before Income Taxes

Income Taxes Expense (Benefit)

Net Income (Loss)

Net Income Attributable to Non-Controlling

Net Income (Loss) Attributable to PrimeEnergy

4 unchanged sentences

C ONSOLIDATED

Six months Ended June 30, 2022 and 2021

Nine months Ended September 30, 2022 and 2021

(Thousands of dollars)

2 unchanged sentences

Purchase 61,377 shares of Common stock

Balance at June 30, 2022

Balance at September 30, 2022

Balance at December 31, 2020

Balance at June 30, 2021

Net (Loss) Income

Purchase of non-

controlling interest

Balance at September 30, 2021

The accompanying Notes are an integral part of these Condensed Consolidated Financial Statements

1 unchanged sentence

C ONSOLIDATED

Six Months Ended June 30, 2022 and 2021

Nine months ended September 30, 2022 and 2021

(Thousands of dollars)

3 unchanged sentences

Depreciation, depletion, amortization and accretion on discounted liabilities

Gain on sale and exchange of assets

Unrealized loss on derivative instruments, net

Deferred income taxes

Changes in assets and liabilities:

Gain on sale of properties

Unrealized (gain) loss on derivative instruments, net

Provision for deferred income taxes

Changes in operating assets and liabilities:

Accounts receivable

Due to related parties

Prepaids and other assets

Accounts payable

2 unchanged sentences

Cash Flows from Investing Activities:

Capital expenditures, including exploration expense

Capital expenditures

Proceeds from sale of properties and equipment

2 unchanged sentences

Purchase of stock for treasury

Purchase of non-controlling

Proceeds from long-term bank debt and other long-term obligations

10 unchanged sentences

C ONSOLIDATED

June 30, 2022

September 30, 2022

(1) Basis of Presentation:

2 unchanged sentences

for the year ended December 31, 2021.

In the opinion of management, the accompanying interim condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021, the condensed consolidated results of operations, cash flows and equity for the six

months ended June 30, 2022 and 2021.

As of June 30, 2022, PrimeEnergy’s significant accounting policies are consistent with those discussed in Note 1—Description of Operations and Significant Accounting Policies of its consolidated financial statements contained in PrimeEnergy’s Annual Report on Form 10-K

In the opinion of management, the accompanying interim condensed consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s condensed consolidated balance sheets as of September 30, 2022 and December 31, 2021, and the condensed consolidated statements of operations, equity and cash flows for the nine months ended September 30, 2022 and 2021.

As of September 30, 2022, PrimeEnergy’s significant accounting policies are consistent with those discussed in Note 1—Description of Operations and Significant Accounting Policies of its consolidated financial statements contained in PrimeEnergy’s Annual Report on Form 10-K

for the fiscal year ended December 31, 2021.

1 unchanged sentence

The results for interim periods are not necessarily indicative of annual results.

For purposes of disclosure in the condensed consolidated financial statements, subsequent events have been evaluated through the date the statements were issued.

For purposes of disclosure in the condensed consolidated financial statements, subsequent events have been evaluated through the date the statements were issued and included in Footnote 2.

(2) Acquisitions and Dispositions:

In the first quarter of 2022, the Company sold 1,809 net leasehold acres in Reagan and Midland Counties, Texas through two separate transactions receiving gross proceeds of $ 14.0 million.

In the second quarter of 2022, the Company sold 241 net acres in Canadian County, Oklahoma for $ 845,000 .

the first quarter of 2022, the Company sold

1,809 net leasehold acres in Reagan and Midland Counties, Texas through two separate transactions receiving gross proceeds of $

14.0 million.

the second quarter of 2022, the Company sold

241 net acres in Canadian County, Oklahoma for $

the third quarter of 2022, the Company sold an additional

113 net acres in Canadian County, Oklahoma for $

November 14, 2022, the Company completed an acreage exchange of approximately 725 net acres in the Midland Basin creating a block of

contiguous acres.

The Company entered into an agreement, including this acreage, to create a

AMI for the joint development of horizontal wells.

As part of the agreement, the Company sold a portion of its interest in this acreage to the joint development partner for proceeds of $

(3) Additional Balance Sheet Information:

1 unchanged sentence

(Thousands of dollars)

September 30,

Accounts Receivable:

6 unchanged sentences

Partner advances

(Thousands of dollars)

September 30,

Accrued Liabilities:

12 unchanged sentences

The Company’s borrowings under this credit facility approximates fair value because the interest rates are variable and reflective of market rates.

On June 30, 2022, the Company had no borrowings outstanding under its revolving credit facility and $ 50 million was available for future borrowings.

The combined weighted average interest rate paid on outstanding bank borrowings subject to ABR base rate and SOFR interest was 5.98 % for the six months ended June 30, 2022 as compared to 5.31 % for the six months ended June 30, 2021.

On July 5, 2022 , the Company and its lenders entered into a Fourth Amended and Restated Credit Agreement (the “2022 Credit Agreement”) with a maturity date of June 1, 2026.

3 unchanged sentences

The 2022 Credit Agreement includes terms and covenants that require the Company to maintain a minimum current ratio and total indebtedness to EBITDAX (earnings before depreciation, depletion, amortization, taxes, interest expense and exploration costs) ratio, as defined, and restrictions are placed on the payment of dividends, the amount of treasury stock the Company may purchase, and commodity hedge agreements.

As of August 15, 2022 the Company has no borrowings outstanding under its current revolving credit facility.

As of September 30, 2022 the Company had

no borrowings outstanding under its current revolving credit facility.

(5) Other Long-Term Obligations and Commitments:

1 unchanged sentence

The Company leases office facilities under operating leases and recognizes lease expense on a straight-line basis over the lease term.

Leased assets and liabilities are initially recorded at commencement date based on the present value of lease payments over the lease term .

Leases assets and liabilities are initially recorded at commencement date based on the present value of lease payments over the lease term .

A new finance lease for office equipment is included in property and equipment, other current liabilities and other long-term liabilities this quarter.

6 unchanged sentences

Leases with an initial term of 12 months or less are not recorded on the balance sheet.

Operating lease costs for the six months ended June 30, 2022 was $ 306 thousand.

Cash payments included in the operating lease cost for the six months ended June 30, 2022 was $ 324 thousand.

The weighted-average remaining operating lease terms is 9 months.

The Company amended certain leases for office space in Texas providing for payments of $ 349,000 in 2022, $ 251,000 in 2023, $ 106,000 in 2024 and $ 27,000 in 2025.

Rent expense for office space six months ended June 30, 2022 and 2021 was $ 392,000 and $ 328,000 , respectively.

The payment schedule for the Company’s operating lease obligations as of June 30, 2022 is as follows:

lease costs for the nine months ended September 30, 2022 were $

468 thousand.

Cash payments included in the operating lease costs for the nine months ended September 30, 2022 were $

499 thousand.

The remaining operating lease terms range between

The Company amended certain leases for office space in Texas providing for remaining payments of $ 174,000 in 2022, $ 251,000 in 2023, $ 107,000 in 2024 and $ 27,000 in 2025.

space rent expense for the nine months ended September 30, 2022 and 2021 was $ 563,000 and $ 441,000 , respectively.

The payment schedule for the Company’s operating lease obligations as of September 30, 2022 is as follows:

(Thousands of dollars)

Operating Leases

Total undiscounted lease payments

2 unchanged sentences

Asset Retirement Obligation:

A reconciliation of the liability for plugging and abandonment costs for the six

months ended June 30, 2022 is as follows:

A reconciliation of the liability for plugging and abandonment costs for the nine months ended September 30, 2022 is as follows:

(Thousands of dollars)

September 30,

Asset retirement obligation at December 31, 2021

Liabilities incurred

Liabilities settled

Accretion expense

Asset retirement obligation at June 30, 2022

The Company’s liability is determined using significant assumptions, including current estimates of plugging and abandonment costs, annual inflation of these costs, the productive life of wells and a risk-adjusted interest rate.

Changes in any of these assumptions can result in significant revisions to the estimated asset retirement obligation.

Revisions to the asset retirement obligation are recorded with an offsetting change to producing properties, resulting in prospective changes to depreciation, depletion and amortization expense and accretion of discount.

Because of the subjectivity of assumptions and the relatively long life of most of the Company’s wells, the costs to ultimately retire the wells may vary significantly from previous estimates.

Asset retirement obligation at September 30, 2022

(6) Contingent Liabilities:

7 unchanged sentences

stock options were granted by the Company to four key executive officers for the purchase of shares of common stock.

At June 30, 2022 and 2021, remaining options held by two key executive officers on 767,500 shares were outstanding and exercisable at prices ranging from $ 1.00 to $ 1.25 .

At September 30, 2022 and 2021, remaining options held by two key executive officers on 767,500 shares were outstanding and exercisable at prices ranging from $ 1.00 to $ 1.25 .

According to their terms, the options have no expiration date.

3 unchanged sentences

Fair Value Measurements:

Authoritative guidance on fair value measurements defines fair value, establishes a framework for measuring fair value and stipulates the related disclosure requirements.

Authoritative

guidance on fair value measurements defines fair value, establishes a framework for measuring fair value and stipulates the related disclosure requirements.

The Company follows a three-level hierarchy, prioritizing and defining the types of inputs used to measure fair value.

The fair values of the Company’s interest rate swaps, natural gas and crude oil price collars and swaps are designated as Level 3.

The following fair value hierarchy table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis at June 30, 2022 and December 31, 2021:

June 30, 2022

The following fair value hierarchy table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis at September 30, 2022 and December 31, 2021:

September 30, 2022

Quoted Prices in

4 unchanged sentences

Inputs (Level 3)

September 30,

(Thousands of dollars)

19 unchanged sentences

Consequently, additional disclosures regarding significant Level 3 unobservable inputs were not provided.

The following table sets forth a reconciliation of changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2022.

The following table sets forth a reconciliation of changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy for the nine months ended September 30, 2022.

(Thousands of dollars)

3 unchanged sentences

Purchases, sales, issuances and settlements

Net Liabilities — June 30, 2022

Net Liabilities - September 30, 2022

Derivative instruments are reported in revenues as realized gain/loss and on a separately reported line item captioned unrealized gain/loss on derivative instruments.

4 unchanged sentences

Both realized and unrealized gains and losses associated with commodity derivative instruments are recognized in earnings.

The following table sets forth the effect of derivative instruments on the consolidated balance sheets at June 30, 2022 and December 31, 2021:

The following table sets forth the effect of derivative instruments on the consolidated balance sheets at September 30, 2022 and December 31, 2021:

(Thousands of dollars)

Balance Sheet Location

September 30,

Asset Derivatives:

Derivatives not designated as cash-flow hedging instruments:

Crude oil commodity contracts

Derivative asset short-term

Liability Derivatives:

9 unchanged sentences

Total derivative instruments

The following table sets forth the effect of derivative instruments on the consolidated statements of operations for the six months ended June 30, 2022 and 2021:

Location of gain/loss recognized in income

Total derivative instruments

The following table sets forth the effect of derivative instruments on the consolidated statements of operations for the nine months ended September 30, 2022 and 2021:

Amount of gain/loss

1 unchanged sentence

(Thousands of dollars)

Derivatives not designated as cash-

flow hedge instruments:

Location of gain/loss recognized in income

Derivatives not designated as cash-flow hedge instruments:

Natural gas commodity contracts

1 unchanged sentence

Crude oil commodity contracts

Unrealized (loss) on derivative instruments, net

Unrealized gain (loss) on derivative instruments, net

Natural gas commodity contracts

6 unchanged sentences

The following reconciles amounts reported in the financial statements:

Six Months Ended June 30,

Nine Months Ended September 30,

Effect of dilutive securities:

Three Months Ended June 30,

Three Months Ended September 30,

Effect of dilutive securities:

The effect of the 767,500 outstanding stock options is anti-dilutive for the three and six months ended June 30, 2021 due to the net loss for these periods.

The effect of the 767,500 outstanding stock options is antidilutive for the nine and three months ended September 30, 2021 due to net loss for these periods.

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 1. Financial Statements