What changed in this filing

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Item 1. Business

2025-03-11 compared with 2024-03-07 · 77 added, 37 removed, 479 unchanged (19% of the section changed)

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As of December 31, 2024, we had no active drilling rigs.

Total estimated proved reserves as of December 31, 2023, were 55.7 MMBoe, all of which were proved developed.

Total estimated proved reserves as of December 31, 2024, were 63.1 MMBoe.

Our principal executive offices are located at 1 E.

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Our Business Strategy

The Company’s primary strategic focus is to grow the value and cash generation capability of our asset base in a safe, responsible and efficient manner, and will seek to use our net operating loss carry forwards to minimize income taxes and maximize cash flow.

We will continue to exercise financial discipline and prudent capital allocation to projects we believe provide a high rate of return in the current commodity price environment, and will remain vigilant and maintain optionality for opportunistic, value-accretive acquisitions and business combinations.

The Company’s primary strategic focus is to grow the value of our asset base in a safe, responsible and efficient manner, while utilizing our net operating loss carry forwards to maximize cash flow.

We will continue to exercise financial discipline and prudent capital allocation to projects we believe provide a high rate of return in the current commodity price environment, to include executing our planned development within the Cherokee play.

We will also remain vigilant for opportunistic, value-accretive acquisitions and business combinations, with consideration of our balance sheet and commitment to our planned return of capital program.

PRIMARY BUSINESS OPERATIONS

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Mid-Continent

We held interests in 548,895 gross (364,201 net) leasehold acres located primarily in Oklahoma and Kansas at December 31, 2023.

Associated proved reserves at December 31, 2023 totaled 55.7 MMBoe, all of which were proved developed reserves.

We held interests in 561,831 gross (371,748 net) leasehold acres located primarily in Oklahoma, Kansas, and Texas at December 31, 2024.

Associated proved reserves at December 31, 2024 totaled 63.1 MMBoe.

Our interests in the Mid-Continent as of December 31, 2024 included 1,465 gross (848 net) producing wells with an average working interest of 57.9%.

The interests are largely aggregated across the Mississippian Lime, Meramec and Osage formations.

The interests are largely aggregated across the Mississippian Lime, Meramec and Cherokee formations.

The Mississippian Lime formation is an expansive carbonate hydrocarbon system located on the Anadarko Shelf in northern Oklahoma and southern Kansas.

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The Mississippian formation is approximately 350 to 650 feet in gross thickness across our lease position and has targeted porosity zone(s) ranging between 20 and 150 feet in thickness.

The Meramec and Osage Formations are Mississippian in age, lying above the Woodford Shale and below Chester formations.

The Meramec is composed of interbedded shales, sands, and carbonates while the Osage is composed of low porosity, fractured limestone and chert.

The top of these target formations ranges in depth from about 5,800 feet at the northern edge of the basin to greater than 14,000 feet toward the interior of the basin.

Meramec formation thickness ranges from about 50 feet to over 400 feet and the Osage formation thickness ranges from about 450 to 1,400 feet.

The Woodford Shale is the primary hydrocarbon source for both the Meramec and Osage.

The Meramec Formation is Mississippian in age, lying above the Woodford Shale and below Chester formations.

The Meramec is composed of interbedded shales, sands, and carbonates.

The top of this target formation ranges in depth from about 5,800 feet at the northern edge of the basin to greater than 14,000 feet toward the interior of the basin.

Meramec formation thickness ranges from about 50 feet to over 400 feet.

The Woodford Shale is the primary hydrocarbon source for the Meramec.

The Cherokee Formation of the Western Anadarko Basin has become a prolific hydrocarbon producer with increased horizontal activity over the last few years.

Pennsylvanian in age, the Cherokee overlies the Atoka and is overlain by the Marmaton Group.

The Cherokee Formation is comprised of mostly self-sourcing shales with interbedded high porosity sands.

Depths of the top of the Cherokee within the Western Anadarko Basin range from approximately 8,500 feet north of the basin to greater than 13,000 feet basinward, with a thickness ranging from 400 feet to greater than 2,500 feet.

Proved Reserves

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A copy of the report issued by our independent reserve consultant with respect to our oil, natural gas and NGL reserves as of December 31, 2024 is filed with this report as Exhibit 99.1.

Cawley, Gillespie & Associates prepared reserves for our Mid-Continent properties located in Kansas and Oklahoma as of December 31, 2023.

Cawley, Gillespie & Associates prepared reserves for our Mid-Continent properties located in Kansas, Oklahoma, and Texas as of December 31, 2024.

Reporting of Natural Gas Liquids

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Reserve Quantities, PV-10 and Standardized Measure

The following estimates of proved oil, natural gas and NGL reserves are based on reserve reports as of December 31, 2023 and 2022, of which approximately 95% for each year were prepared by independent reserve engineers.

The following estimates of proved oil, natural gas and NGL reserves are based on reserve reports as of December 31, 2024 and 2023, of which approximately 97.5% and 95.2%, respectively, were prepared by independent reserve engineers.

See “Critical Accounting Policies and Estimates” in Item 7 of this report for further discussion of uncertainties inherent to the reserves estimates.

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Proved Reserves - Mid-Continent .

Proved reserves decreased from 74.3 MMBoe at December 31, 2022 to 55.7 MMBoe at December 31, 2023, primarily due to a decrease in year-end SEC commodity prices for oil and natural gas, price realizations and NGL yield which resulted in a decrease of 17.5 MMBoe, as well as 6.2 MMBoe from the Company's production during 2023, 1.4 MMBoe attributable to well shut-ins and other revisions, and 0.1 MMBoe in sales.

The Company also had positive revisions including purchases of 1.8 MMBoe, extensions of 1.2 MMBoe, 1.9 MMBoe associated with well positive performance revisions, and 1.7 MMBoe associated with other commercial improvements.

Proved Undeveloped Reserves.

There were no proved undeveloped reserves at December 31, 2023 and 2022.

Proved reserves increased from 55.7 MMBoe at December 31, 2023 to 63.1 MMBoe at December 31, 2024, primarily due to purchases of 16.0 MMBoe, 3.5 MMBoe associated with other commercial improvements, and positive revisions of 2.3 MMBoe related to NGL Yield.

These were partially offset by negative revisions including 6.6 MMBoe due to a decrease in year-end SEC commodity prices for oil and natural gas and price realizations, as well as 6.1 MMBoe from the Company’s production during 2024, and 1.7 MMboe attributable to well performance, well shut-ins and other revisions.

Proved developed Reserves - Proved Developed reserves increased from 55.7 MMBoe at December 31, 2023 to 57.0 MMBoe at December 31, 2024, primarily due to purchases of 9.9 MMBoe, 3.5 MMBoe associated with other commercial improvements.

and positive revisions of 2.3 MMBoe related to NGL Yield.

Proved Undeveloped Reserves - Proved undeveloped reserves increased from 0.0 MMBoe at December 31,2023 to 6.1 MMBoe at December 31, 2024 due to purchases.

For additional information regarding changes in proved reserves during each of the three years ended December 31, 2024, 2023 and 2022 see “Note 20—Supplemental Information on Oil and Natural Gas Producing Activities” to the accompanying consolidated financial statements in Item 8 of this report.

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Year Ended December 31,

2024 2023 2022

Production data (in thousands)

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Drilling Activity

During the year ended December 31, 2024 there were no operated wells drilled, three operated wells and one non-operated well completed with zero wells awaiting completion at year end 2024.

During the year ended December 31, 2023 there were two operated wells drilled and four wells completed, with zero wells awaiting completion at year end 2023.

During the year ended December 31, 2022, there were eight operated wells drilled, with one third-party rig actively drilling on our operated acreage and two wells awaiting completion.

Additionally, we participated in one non-operated well that was drilled during the year ended December 31, 2022, and was completed during year ended December 31, 2023.

Developed and Undeveloped Acreage

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Mid-Continent 485,789 334,479 76,042 37,269

Less than 5% of the leases included in the undeveloped acreage above will expire at the end of their respective primary terms.

43% of leases that expire included in the net undeveloped acreage above will expire at the end of their respective primary terms.

To prevent expiration, we may exercise our contractual rights to extend the terms of leases we value or may establish production from the leasehold acreage prior to expiration, which would keep the lease from expiring until production has ceased.

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On August 21, 2023, the EPA announced a new review of the ozone National Ambient Air Quality Standards and stated that it will incorporate the ongoing reconsideration into this review.

EPA also announced that it will consider the advice and recommendation of the ozone review panel of the Clean Air Scientific Advisory Committee in its review.

EPA also announced that it will consider the advice and recommendation of the ozone review panel of the Clean Air Scientific Advisory Committee ("CASAC") in its review.

This review is ongoing.

We note that in January 2025, EPA dismissed all of the members of the CASAC and announced it is working to update the committee membership.

Further reductions in the ozone National Ambient Air Quality Standards could affect our operations and result in the need to install new emissions controls, longer permitting timelines and significant increases in our capital or operating expenditures.

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This final rule is discussed in the Climate Change subsection below.

Compliance with this new rule, and any future air pollution control and permitting requirements, has the potential to delay the development of oil and natural gas projects and increase our costs of development and production, which could be significant.

Compliance with this rule, and any future air pollution control and permitting requirements, has the potential to delay the development of oil and natural gas projects and increase our costs of development and production, which could be significant.

Water Discharges

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Moreover, any future changes to regulations concerning the definition of WOTUS may result in an expansion of the scope of the CWA’s jurisdiction, and we could face increased costs and delays with respect to obtaining permits for dredge and fill activities in wetland areas or other WOTUS in connection with our operations.

President Trump issued a series of executive orders on January 20, 2025.

Among these executive orders was the Declaring a National Energy Emergency, an order which seeks to stimulate the development of domestic energy resources, including oil and gas.

With this order, President Trump grants federal agencies the authority to use various emergency powers to facilitate the “identification, leasing, siting, production, transportation, refining, and generation of domestic energy resources.” One provision of this order directs the EPA and Corps to use the emergency Army Corps permitting provisions under the Clean Water Act and the Rivers and Harbos Act to streamline permitting reviews.

Also, in June 2016, the EPA issued a final rule implementing wastewater pretreatment standards that prohibit onshore unconventional oil and natural gas extraction facilities from sending wastewater to publicly owned treatment works.

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On November 8, 2022, EPA issued a supplemental notice of proposed rulemaking that would impose standards for certain sources that were not addressed in the November 2021 proposal, revise the previously proposed emissions standards, and establish a “super emitter response program” allowing local regulatory agencies and EPA-certified third parties to issue notices to owners and operators of regulated facilities when they detect a so-called “super-emitting event.”

After considering comments on the November 2021 and November 2022 proposed rulemakings, on December 2, 2023, the EPA announced its final rule under the CAA to reduce methane emissions from the oil and natural gas industry.

On December 2, 2023, the EPA announced its final rule under the CAA to reduce methane emissions from the oil and natural gas industry.

The final New Source Performance Standards and Emission Guidelines for Existing Sources for the Crude Oil and Natural Gas Source Category rule was published on March 8, 2024.

The final rule includes several actions including finalizing revisions to the New Source Performance Standards in 40 C.F.R Part 60, Subpart OOOOb regulating GHGs (in the form of methane) and volatile organic compound emissions from new, modified and existing sources within the Crude Oil and Natural Gas source category, including sources located in the production, processing, and transmission and storage segments;

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The Company does not currently conduct routine flaring.

This new rule and any future revisions thereto will continue to require oil and gas operators to expend material sums.

States will have two years to review and develop an implementation plan and they must set compliance dates within three years of that.

After the rule was issued, EPA issued an interim final rule effective in August 2024 to make technical, non-substantive corrections to the rule.

In addition, in May 2024, EPA granted industry petitioners’ request for reconsideration on two aspects of the rule related to monitoring and emergency operations for flares.

On December 20, 2024, EPA proposed discrete technical revisions to these two provisions.

The proposed revisions were published to the Federal Register on January 15, 2025.

The proposed amendments only address petitions for reconsideration and do not propose changes to other aspects of the final rule.

This rule and any future revisions thereto will continue to require oil and gas operators to expend material sums.

Furthermore, on January 12, 2024, EPA announced a proposed rulemaking to reduce methane emissions from the oil and gas sector pursuant to the Inflation Reduction Act.

If finalized, the rule will assess a charge on larger emitters of waste methane that exceed emissions intensity levels set by Congress in the Inflation Reduction Act.

The rule was finalized on November 12, 2024.

The rule assesses a charge called a Waste Emissions Charge on larger emitters of waste methane if their emissions exceed specific performance levels set by Congress in the Inflation Reduction Act.

Specifically, the Inflation Reduction Act provides that the Waste Emissions Charge applies to methane from certain oil and gas facilities that report emissions of more than 25,000 metric tons of carbon dioxide equivalent per year to the Greenhouse Gas Reporting Program, beginning with methane emissions reported in calendar year 2024.

Also, as directed by Congress, the Waste Emissions Charge starts at $900 per metric ton of wasteful emissions in CY 2024, increasing to $1,200 for CY 2025, and $1,500 for CY 2026 and beyond, and only applies to emissions that exceed statutorily specified methane intensity levels.

On February 4, 2025, members of the U.S.

House and Senate introduced a joint resolution pursuant to the Congressional Review Act seeking to overturn the EPA’s November 2024 rule implementing the Waste Emissions Charge.

Given the EPA rule was finalized within the last 60 working days of the previous Congress, it may be modified or repealed under the Congressional Review Act with a simple majority vote in the House and Senate and approval by the President.

Accordingly, the EPA rulemaking implementing the Waste Emissions Charge could be overturned.

However, the Congressional Review Act does not provide a means to rescind the Waste Emissions Charge Congressional mandate that was passed as part of the Inflation Reduction Act.

If Congress is not successful in repealing the Waste Emissions Charge, then it could result in an increased expense to the Company, which could begin in 2025.

In addition, in November 2016, the U.S.

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On November 28, 2022, the BLM announced a new proposed rule regulating emissions of methane in connection with the production of oil and gas on federal and Tribal lands.

If finalized, the proposed rule would require various technology upgrades, impose limits related to flaring, and require LDAR plans.

The final rule was not issued in 2023 as initially expected but is expected to be announced later this year.

Notably, several states where we operated as of December 31, 2023, have already adopted rules requiring operators of both new and existing sources to develop and implement an LDAR program and to install devices on certain equipment to capture 95 percent of methane emissions.

The final Methane Waste Prevention Rule was issued in March 2024 and became effective on June 10, 2024.

The final Methane Waste Prevention Rule requires operators to use all reasonable precautions to prevent waste, mandates that either a Self-Certification Statement or a Waste Minimization Plan to be submitted with the Application for Permit to Drill, imposes limits related to flaring, and requires LDAR plans, among other provisions.

The Methane Waste Prevention Rule was promptly challenged by plaintiff states of North Dakota, Texas, Montana, Wyoming and Utah in North Dakota v.

Department of Interior, No.

24-cv-00066 (D.N.D.) , filed in the District of North Dakota .

In September 2024, the United States District Court for the District of North Dakota granted the plaintiff states’ motion for preliminary injunction, thereby prohibiting BLM from enforcing the Methane Waste Prevention Rule against the plaintiff states pending the outcome of the litigation.

Notably, several states where we operate have adopted similar rules requiring operators of both new and existing sources to develop and implement an LDAR program and to install devices on certain equipment to capture 95 percent of methane emissions.

We have the necessary equipment (pollution control equipment and optical gas imaging equipment for LDAR inspections) and personnel trained to assist with the inspection and reporting requirements to maintain compliance with these rules.

Moreover, a number of state and regional efforts are aimed at tracking and/or reducing GHG emissions by means of cap and trade programs that typically require major sources of GHG emissions to acquire and surrender emission allowances in return for emitting those GHGs.

On an international level, the United States is one of almost 200 nations that agreed in December 2015 to an international climate change agreement in Paris, France that calls for countries to set their own GHG emissions targets and be transparent about the measure each country will use to achieve its GHG emissions targets, (the “Paris Agreement”).

On an international level, the United States agreed in December 2015 to an international climate change agreement in Paris, France that calls for countries to set their own GHG emissions targets and be transparent about the measure each country will use to achieve its GHG emissions targets, (the “Paris Agreement”).

However, the Paris Agreement does not impose any binding obligations on the United States.

In June 2017, the United States announced it would withdraw from the Paris Agreement, which became effective November 4, 2020.

The United States has rejoined the Paris Agreement as of February 19, 2021.

Further, several states and local governments remain committed to the principles of the Paris Agreement in their effectuation of policy and regulations.

The United States later rejoined the Paris Agreement as of February 19, 2021.

However, on January 20, 2025, President Trump issued an executive order entitled Putting America First In International Environmental Agreements.

This executive order directed the United States Ambassador to the United Nations to submit formal notification of the United States’ withdrawal from the Paris Agreement.

Although the terms of the Paris Agreement states that withdrawal is effective one year after notification, the executive order states that the United States will consider its withdrawal to be effective immediately upon submittal of the notification.

The executive order also orders the United States’ withdrawal from any agreement, pact, accord, or similar commitment made under the United Nations Framework Convention on Climate Change.

Although some states and local governments remain committed to the principles of the Paris Agreement, the executive order could serve as a catalyst for potential agency action relevant to our business.

At the 26th Conference of the Parties to the United Nations Framework Convention of Climate Change (“COP26”) in Glasgow in November 2021, the United States and the European Union launched the Global Methane Pledge, an initiative to reduce global methane emissions by at least 30% from 2020 levels by 2030.

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Methane Emissions Reduction Action Plan, building upon the first plan released at COP26.

Most recently, at COP28, the Biden Administration announced the new technology standards pursuant to the CAA for reduced methane emissions, as discussed above in this disclosure.

It is not possible at this time to predict how or when the United States might impose further restrictions on GHGs as a result of the Paris Agreement, and the full impact of actions at COP28 remain uncertain at this time.

At COP28, the Biden Administration announced the new technology standards pursuant to the CAA for reduced methane emissions, as discussed above in this disclosure.

Most recently, at COP29, governments including the U.S.

and philanthropies announced nearly $500 million in new grant funding in 2024 for methane abatement.

Finally, in November 2024, the Biden Administration released its Updated Methane Emissions Reduction Action Plan, describing actions taken since December 2023 to address U.S.

methane emissions.

The Putting America First In International Environmental Agreements executive order is likely to impact these actions, though the full impact of the executive order remains uncertain at this time.

In addition to ordering the United States’ withdrawal as described above, the executive order directs the United States Ambassador to the United Nations, the Secretary of State, and the Secretary of the Treasury to cease or revoke any financial commitment made by the United States under the United Nations Framework Convention on Climate Change.

It is not possible at this time to predict how or if the United States or states might impose further restrictions on GHGs.

The future adoption and implementation of any laws or regulations imposing reporting obligations on, or limiting emissions of GHG from, our equipment and operations could require additional expenditures to reduce emissions of GHGs associated with its operations or could adversely affect demand for the oil and natural gas we produce, and thus possibly have a material adverse effect on our revenues, as well as having the potential effect of lowering the value of our reserves.

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Notwithstanding potential risks related to climate change, the International Energy Agency estimates that global energy demand will continue to rise and will not peak until after 2040 and that oil and gas will continue to represent a substantial percentage of global energy use over that time.

Further, recent executive orders issued by the Trump Administration in January 2025 including the Declaring a National Energy Emergency order and the Unleashing American Energy order demonstrate the Administration's commitment to facilitating the development of domestic oil and gas resources.

Finally, to the extent increasing concentrations of GHGs in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, floods and other climatic events, such events could have a material adverse effect on the Company and potentially subject the Company to further regulation.

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Similar protections are offered to migratory birds under the federal Migratory Bird Treaty Act (“MBTA”) and to bald and golden eagles under the Bald and Golden Eagle Protection Act (“BGEPA”).

measures and also may delay, restrict or preclude drilling activities in those areas or during certain seasons, such as breeding and nesting seasons.

While compliance with the ESA, MBTA and BGEPA has not had an adverse effect on our exploration, development and production operations in areas where threatened or endangered or other protected species or their habitat are known to exist, it may require us to incur increased costs to implement mitigation or protective measures and also may delay, restrict or preclude drilling activities in those areas or during certain seasons, such as breeding and nesting seasons.

In addition, certain of our federal and state leases may contain stipulations that require us to take mitigation measures to safeguard certain species.

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Moreover, each state generally imposes a production or severance tax with respect to the production and sale of oil, natural gas, and NGLs within its jurisdiction.

State agencies in Kansas and Oklahoma impose financial assurance requirements on operators.

State agencies in Kansas, Oklahoma, and Texas impose financial assurance requirements on operators.

The Corps and many other state and local authorities also have regulations for plugging and abandonment, decommissioning and site restoration.

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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-K

Item 1. Business