What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-03-05 compared with 2025-03-11 · 54 added, 76 removed, 223 unchanged (37% of the section changed)

14 unchanged sentences

Operational Activities

For the year ended December 31, 2024, there were no operated wells drilled, with three operated and one non-operated wells completed.

For the year ended December 31, 2023 there were two operated wells drilled and four wells completed.

During the year ended December 31, 2025, the Company operated one drilling rig and drilled seven operated wells, and completed six wells.

As of December 31, 2025, one operated well was being drilled and another operated well was awaiting completion.

Additionally, four non-operated wells were drilled and completed during 2025.

For the year ended December 31, 2024 there were no operated wells drilled, while three operated and one non-operated wells were completed.

The charts below show production and percent revenues by product for the years ended December 31, 2025 and 2024:

The Company's production last year benefited from our previous drilling program that concluded in 2023.

Production in 2024 decreased slightly due to the natural decline of our producing assets, but benefited by our newly acquired wells beginning in September 2024, as well as periods of ethane recovery.

Total production by volume on a Boe basis for the years ended December 31, 2024 and 2023 was composed of the following:

Total production by volume on a Boe basis was composed of the following:

Year Ended December 31,

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Highlighted Events

• On August 30, 2024, the Company closed on its previously announced acquisition of certain producing oil and natural gas properties in the Cherokee Play of the Western Anadarko Basin for $121.9 million, after customary post-closing adjustments.

On December 13, 2024, the Company closed a subsequent acquisition that exchanged and increased its ownership interest in certain proved and unproved oil and gas properties within the same area for $5.2 million, before customary post-closing adjustments of $0.5 million, paid in January 2025, and terminated the previously announced joint development agreement.

The Company will operate the majority of its planned development in 2025.

• On September 30, 2024, and effective October 1, 2024, the Company announced the following changes (i) Jonathan Frates was appointed to serve as the Company's Executive Vice President and Chief Financial Officer and resigned as Chairman of the Board, (ii) the Board appointed Mr.

Vincent Intrieri to serve as a Board member and as the Company’s Chairman of the Board to fill the vacancy following Jonathan Frates’ resignation from the Board;

Intrieri also joined the Board’s Compensation and Nominating and Governance Committees, and (iii) Mr.

Brandon Brown to serve as the Company’s Senior Vice President and Chief Accounting Officer, effective October 21, 2024.

Brown no longer serves as Chief Financial Officer upon the commencement of Mr.

Frates’ role as Chief Financial Officer on October 21, 2024.

• On April 3, 2024, the Company announced that the Board had appointed Mr.

Dean Parrish, Senior Vice President, Operations, to serve as the Company’s Senior Vice President and Chief Operating Officer, effective April 1, 2024.

We remain committed to growing the value of our asset base in a safe, responsible and efficient manner, while prudently allocating capital to high-return, organic growth projects.

Currently, these projects include (1) One rig development in the Cherokee Shale Play, which consists of 9 wells to be spud, 8 wells to be drilled and 6 wells to be completed in 2025 (2) Production Optimization program through artificial lift conversions to more efficient and cost-effective systems and high-graded recompletions (3) leasing program that will bolster future development and extend development in our Cherokee assets.

Our legacy non-Cherokee leasehold remains approximately 99% held by production, which cost-effectively maintains our development option over a reasonable tenor.

We will continue to monitor forward-looking commodity prices, project results, costs and other factors that could influence returns and adjust capital allocations accordingly.

These and other factors, to include reasonable reinvestment rates, sustaining our cash flows and prioritizing our regular-way dividend, will continue to shape our development decisions for the remainder of the year and beyond.

We also remain vigilant in evaluating further merger and acquisition opportunities, with consideration of our strong balance sheet and commitment to our capital return program.

• On August 5, 2025, the Board approved a dividend reinvestment plan (the “Dividend Reinvestment Plan”), pursuant to which the shareholders of the Company may, at their election, reinvest any dividends declared by the Board.

During 2025, we issued 92,733 shares of common stock in lieu of cash dividends under the Dividend Reinvestment Plan.

• On July 18, 2025, the Board increased its size from five members to six members and appointed Mr.

Brett Icahn to serve as a member of the Board, effective as of August 1, 2025.

Icahn's current term as a member of the Board will run until the 2026 annual meeting of stockholders.

• Under our ongoing one-rig Cherokee development program we drilled seven operated wells, completed six operated wells during the year and turned six wells to sales during 2025.

• We paid cash dividends to stockholders totaling $15.9 million or $0.46 per share in 2025, excluding stockholders who elected to take shares in lieu of cash under the Dividend Reinvestment Plan.

• For the year ended December 31, 2025, we repurchased 595,635 shares of common stock for $6.4 million with a weighted average price of $10.72, under our share repurchase program.

We remain committed to growing the value of our asset base in a safe, responsible and efficient manner, while prudently allocating capital to high-return, growth projects.

Currently, these projects include:

(1) one-rig development in the Cherokee Shale Play (2) evaluation of accretive merger and acquisition opportunities, with consideration of our strong balance sheet and commitment to our capital return program (3) production optimization program through artificial lift conversions to more efficient and cost-effective systems and (4) a leasing program that will bolster future development and extend development in our Cherokee assets.

We are developing our term acreage in the Cherokee Play, and our total leasehold position, inclusive of the Cherokee, NW Stack and legacy assets, is approximately 95% held by production, which cost-effectively maintains our development option over a reasonable tenor.

We will continue to monitor forward-looking commodity prices, project results, costs, impacts of tariffs and other factors that could influence returns and cash flows, and will adjust our program accordingly, to include curtailment of capital activity and wells, if needed, or conversely, well reactivations in higher commodity price environments.

These and other factors, including reasonable reinvestment rates, maintaining our cash flows and prioritizing our regular-way dividend, will continue to shape our development decisions for the remainder of the year and beyond.

Consolidated Results of Operations

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Oil, Natural Gas and NGL Production and Pricing

The table below presents production and pricing information for the years ended December 31, 2024 and 2023.

The table below presents production and pricing information.

Year Ended December 31,

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(1) Prices represent actual average realized prices for the periods presented and do not include the impact of derivative transactions.

Consolidated revenues for the years ended December 31, 2024 and 2023 are presented in the table below (in

Consolidated revenues are presented in the table below (in thousands):

Year Ended December 31,

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2024 oil, natural gas and NGL revenues $ 125,290

Change due to production volumes in 2024

Change due to average prices in 2024

Change due to production volumes 2025 25,556

Change due to average prices 2025 5,511

2025 oil, natural gas and NGL revenues $ 156,357

Oil, natural gas and NGL revenues decreased primarily due to lower commodity prices.

The Company's production benefited from its prior drilling program, concluded in 2023, as well as production from our newly acquired wells beginning in September 2024, offset by the natural decline of our producing assets.

Oil, natural gas and NGL revenues increased during 2025 primarily due to new production volumes from our Cherokee play development program and higher natural gas price realizations partially offset by lower oil and NGL price realizations.

Operating Expenses

Operating expenses for the years ended December 31, 2024 and 2023 consisted of the following (in thousands):

Operating expenses consisted of the following (in thousands):

Year Ended December 31,

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Production, ad valorem, and other taxes (% of oil, natural gas, and NGL revenue) 6.3 % 5.4 % 0.9 %

The decrease in lease operating expenses was primarily due to a decrease in workover expense.

Production, ad valorem, and other taxes decreased primarily due to a $1.4 million ad valorem tax refund received in the fourth quarter of 2024 combined with a decrease in production taxes due to lower commodity prices and related revenues.

The increase in depreciation and depletion for oil and natural gas properties was primarily the result of our acquisition in the Cherokee Play of the Western Anadarko Basin in the third quarter of 2024, which increased the book value of our proved properties and subsequently our depletion rate.

Lease operating expenses decreased in total and per Boe versus the same period in 2024 primarily due to $4.3 million of out of period corrections which are non-recurring, non-cash, adjustments of operating accruals dating as far back as the Company’s emergence from bankruptcy (see “Note 1—Summary of Significant Accounting Policies” to the accompanying consolidated financial statements included in Item 8 of this Form 10-K for further information), of which $2.1 million and $2.2 million were recorded in the second and fourth quarter of 2025, respectively.

The removal of the operating accruals was partially offset by an increase in water hauling costs associated with increased activity from our 2025 development program.

Production, ad valorem, and other taxes increased due to higher average commodity prices, sales volumes, and related revenues.

The increase in sales volumes was primarily the result of our one rig development program in the Cherokee Play of the Mid-Con.

Production, ad valorem, and other taxes per Boe increased primarily due to higher average commodity prices.

The increase in depreciation and depletion for oil and natural gas properties was primarily the result of an increase in our depletion rate and higher production volumes.

Full cost pool impairment.

We did not record a full cost ceiling limitation impairment for the years ended December 31, 2024 or 2023.

We did not record a full cost ceiling limitation impairment for the years ended December 31, 2025 and 2024.

Calculation of the full cost ceiling test is based on, among other factors, trailing twelve-month SEC prices as adjusted for price differentials and other contractual arrangements.

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Other Operating Expenses

Other operating expenses for the years ended December 31, 2024 and 2023 consisted of the following (in thousands):

Other operating expenses consisted of the following (in thousands):

Year Ended December 31,

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Restructuring expenses 1,060 474 586

Employee termination benefits — 19 (19)

(Gain) loss on derivative contracts (7,763) (748) (7,015)

1 unchanged sentence

Total other operating expenses $ 6,498 $ 12,793 $ (6,295)

General and administrative expenses increased for the year ended December 31, 2024 primarily due to higher personnel and other costs.

Restructuring expenses represent fees and costs associated with our predecessor company's 2016 bankruptcy filing and our exit from NPB in Colorado.

Other operating expense (income) increased for the year ended December 31, 2024 primarily due to a $1.3 million impairment on our equipment inventory.

The following table summarizes derivative activity for the years ended December 31, 2024 and 2023 (in thousands):

General and administrative expenses increased for the year ended December 31, 2025 primarily due to higher personnel costs and professional fees.

Restructuring expenses represent fees and costs associated with our predecessor company's 2016 bankruptcy filing, the outsourcing of corporate functions and our exit from North Park Basin in Colorado.

Other operating expense (income) decreased for the year ended December 31, 2025 primarily due to an impairment in 2024 on our non-full cost pool inventory.

The following table summarizes derivative activity (in thousands):

Year Ended December 31,

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“Quantitative and Qualitative Disclosures about Market Risk” of this report for additional discussion of our commodity derivatives.

Interest (income) expense, net for the years ended December 31, 2024 and 2023 consisted of the following (in thousands):

Interest income (expense), net consisted of the following (in thousands):

Year Ended December 31,

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Interest expense

Interest expense on letters of credit $ (40) $ (37)

Interest expense on right of use assets (90) (84)

Interest expense on letters of credit (30) (40)

Interest expense - other (342) (7)

2 unchanged sentences

Interest income (expense), net during the years ended December 31, 2025 and 2024 is primarily comprised of interest income received from cash deposits.

The decrease in interest income, net is due to the Company’s lower cash balance primarily as a result of our acquisitions, and to a lesser extent, capital expenditures and dividend payments.

The decrease in interest income, net is due to the Company’s lower cash balance primarily as a result of our capital expenditures, dividend payments, acquisitions and share repurchases as well as lower interest rates.

Income tax (benefit)

We recorded income tax benefit and expense of $22.2 million and $14.0 million for the years ended December 31, 2024 and 2023, respectively, which directly relates to movement in our valuation allowance against our deferred tax assets.

We recorded income tax benefit of $5.5 million and $22.2 million for the years ended December 31, 2025 and 2024, respectively, which directly relates to movement in our valuation allowance against our deferred tax assets.

As the partial valuation allowance release as of December 31, 2025 was higher than the partial valuation allowance release as of December 31, 2024 of $72.8 million, we recognized $5.5 million of deferred federal and state income tax benefit for the year ended December 31, 2025.

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We expect our cash on hand and cash from operations to be adequate to meet our short and long-term liquidity needs.

As of March 4, 2025 , the Company had no outstanding term or revolving debt obligations.

As of February 26, 2026, the Company had no outstanding term or revolving debt obligations.

Working Capital and Sources and Uses of Cash

Our principal sources of liquidity for 2026 include cash flow from operations and cash on hand.

Our working capital decreased to $67.1 million at December 31, 2024, compared to $228.5 million at December 31, 2023.

Cash paid for oil and gas property acquisitions of $129.7 million, dividend payments to shareholders of $72.3 million, and $26.4 million in capital expenditures were the primary drivers in the reduction of working capital.

These cash outflows were offset by $73.9 million in cash provided by operating activities.

In January 2024, the Board approved a one-time cash dividend of $1.50 per share of the Company's common stock, which was paid on February 20, 2024 to shareholders of record as of the close of business on February 5, 2024.

The aggregate total payout was approximately $55.6 million.

Additionally, in March 2024, the Board increased the on-going quarterly dividend to $0.11 per share which was paid in March, May, August, and November 2024.

The aggregate total payout was $16.3 million.

The $0.11 per share dividend is subject to quarterly approval by the Board.

Dividend payments for the year ended December 31, 2024 totaled $72.3 million, which included $0.5 million of dividends on vested stock awards.

Our working capital increased to $79.8 million at December 31, 2025, compared to $67.1 million at December 31, 2024.

The increase in working capital was primarily driven by cash flows provided by operating activities of $100.1 million and partially offset by $58.6 million in capital expenditures, dividend payments to stockholders of $15.9 million, $8.5 million in acquisitions and $6.4 million in share repurchases.

Dividend payments, excluding shares issued in lieu of cash dividends, for the year ended December 31, 2025 totaled $15.9 million, which included $0.2 million of dividends on vested stock awards.

See Note 13 for further discussion of the Company’s dividends.

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Cash flows from operations are also affected by timing of cash receipts and disbursements and changes in other working capital assets and liabilities.

Cash flows for the years ended December 31, 2024, and 2023 are presented in the following table and discussed below (in thousands):

Cash flows are presented in the following table and discussed below (in thousands):

Year Ended December 31,

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(23,295) (73,670)

Net (decrease) increase in cash, cash equivalents and restricted cash $ (154,433) $ (3,524)

Net increase (decrease) in cash, cash equivalents and restricted cash $ 12,834 $ (154,433)

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Cash Flows from Operating Activities

The $41.6 million decrease in operating cash flows for the year ended December 31, 2024 compared to 2023, is primarily due to a decrease in revenues from lower commodity prices.

The changes in operating assets and liabilities do not include changes in accounts payable or accrued expenses attributable to capital expenditures noted in the capital expenditure table below.

The increase in cash flows from operations for the year ended December 31, 2025 compared to the same period in 2024 is primarily due to an increase in revenues from higher sales volumes from our 2025 development program in the Cherokee Play of the Mid-Continent region with our base production also benefiting from our 2024 acquisition and higher natural gas price realizations.

See “Consolidated Results of Operations” for further analysis of the changes in revenues and operating expenses.

Cash Flows from Investing Activities

During the year ended December 31, 2024, cash flows used in investing activities primarily reflects $129.7 million in cash paid for oil and gas property acquisitions and capital expenditures of $26.4 million.

Cash outflows were partially offset by $1.4 million of proceeds from the sale of equipment related to our oil and gas assets.

During the year ended December 31, 2023, cash flows used in investing activities primarily reflects capital expenditures of $26.4 million made for drilling and completions, capital workovers, and well reactivations and $11.2 million related to an acquisition of proved reserves, which increased ownership interests in properties operated by the Company.

Cash outflows were partially offset by $1.5 million of proceeds from the sale of equipment related to our oil and gas assets.

See "Note 3 — Acquisitions of Assets and Oil and Gas Properties" to the accompanying consolidated financial statements included in Item 8 of this report for additional information.

Capital Expenditures.

Our capital expenditures for the years ended December 31, 2024 and 2023, are summarized below (in thousands):

Our capital expenditures and acquisitions of oil and gas properties are summarized below (in thousands):

Year Ended December 31,

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Cash Flows from Financing Activities

Our financing activities used $73.7 million of cash for the year ended December 31, 2024, consisting primarily of $72.3 million in cash dividends, finance lease payments of $0.7 million, $0.4 million of cash used for tax withholdings paid in exchange for shares withheld on employee vested stock awards that were settled by net exercise, and $0.2 million in common stock repurchases.

Our financing activities used $23.3 million of cash for the year ended December 31, 2025, consisting primarily of $15.9 million in cash dividends, $6.4 million in common stock repurchases, finance lease payments of $0.7 million, $0.3 million of cash used for tax withholdings paid in exchange for shares withheld on employee vested stock awards that were settled by net exercise.

Net exercises of stock awards allows the holder of a stock award to tender back to us a number of shares at fair value upon the vesting of such stock award, that equals the employee payroll tax obligation due.

We then remit a cash payment to the relevant taxing authority on behalf of the employee for their payroll tax obligations resulting from the vesting of their stock award.

Our financing activities used $82.9 million of cash for the year ended December 31, 2023, consisting primarily of $81.5 million in cash dividends, $0.9 million of cash used for tax withholdings paid in exchange for shares withheld on employee vested stock awards that were settled by net exercise, and finance lease payments of $0.6 million offset by $0.1 million of proceeds from the exercise of stock options.

See discussion in above paragraph for additional information on net exercises of stock awards.

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The Program does not require any specific number of shares to be acquired, and can be modified or discontinued by the Board at any time.

For the year ended December 31, 2025, the Company repurchased 595,635 shares for $6.4 million, or $10.72 per share.

For the year ended December 31, 2024, the Company repurchased 21,308 shares for $0.2 million

The Company did not repurchase any common stock under the existing or prior Program during the year ended December 31, 2023.

Contractual Obligations and Off-Balance Sheet Arrangements

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See Proved Reserves discussion in Part I, Item 1 of this Form 10-K for additional detail.

Depreciation and Depletion of Oil and Natural Gas Properties.

In accordance with full cost accounting rules, capitalized costs are amortized using the unit-of-production method.

Under this method, depreciation and depletion is computed at the end of each quarter by multiplying total production for the quarter by a depletion rate.

The depletion rate is determined by dividing the total unamortized cost base plus future development costs by net equivalent proved reserves at the beginning of the quarter.

See above discussion on the uncertainty of proved reserves estimates.

If we maintain the same level of production year over year, the depreciation and depletion of oil and natural gas properties may be significantly different if our estimate of remaining reserves or future development costs changes significantly.

The average rates used for depreciation and depletion of oil and natural gas properties were $3.52 per Boe in 2024 and $1.82 per Boe in 2023.

Impairment of Oil and Natural Gas Properties.

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Once incurred, a write-down cannot be reversed at a later date.

The Company did not record any impairment for the years ended December 31, 2024 or 2023.

The Company did not record any impairment for the years ended December 31, 2025 and 2024.

Asset Retirement Obligations.

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Changes in timing or to the original estimate of cash flows will result in changes to the carrying amount of the liability.

The Company did not have significant revisions to its asset retirement obligations for the years ended December 31, 2024 or 2023.

The Company did not have significant revisions to its asset retirement obligations for the years ended December 31, 2025 and 2024.

Income Taxes.

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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 7. Management’s Discussion and Analysis