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Commitments and Contingencies | 9 Months Ended
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Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Note 12—Commitments and Contingencies Commitments In connection with the Bolt-On Acquisition, the Company assumed a NGL purchase agreement during the nine months ended September 30, 2024. The purchase agreement includes a commitment to deliver a minimum of 9,000 Bbls/d of NGLs to the purchaser over the next 3.5 years or be subject to under-delivery fees that would result in a financial obligation equal to $3.36 per barrel of NGL under the required minimum volumes, subject to inflation factors. The Company currently expects its future production will satisfy all minimum volume commitments under this agreement. During the nine months ended September 30, 2024, the Company also entered into a multi-year energy purchase agreement to buy electricity utilized in the Company’s operations. Under the contract, the Company is obligated to purchase a minimum amount of electricity at a fixed price. If the Company does not utilize the minimum amounts of electricity on a monthly basis and the supplier is unable to sell the unutilized quantity, the Company is liable for the full cost of the underutilization at the fixed price per the agreement. The total remaining obligation is $45.2 million, which represents the gross minimum financial commitments pursuant to this agreement as of September 30, 2024. The Company routinely enters into, extends or amends operating agreements in the ordinary course of business. There has been no other material, non-routine changes in commitments during the nine months ended September 30, 2024. Please refer to Note 14—Commitments and Contingencies included in Part II, Item 8 in the Company’s 2023 Annual Report. Contingencies The Company may at times be subject to various commercial or regulatory claims, prior period adjustments from service providers, litigation or other legal proceedings that arise in the ordinary course of business. While the outcome of these lawsuits and claims cannot be predicted with certainty, management believes it is remote that the impact of such matters, other than those discussed below, that are reasonably possible to occur will have a material adverse effect on the Company’s financial position, results of operations, or cash flows. In February 2021, the Permian Basin was impacted by record-low temperatures and a severe winter storm (“Winter Storm Uri”) that resulted in multi-day electrical outages and shortages, pipeline and infrastructure freezes, transportation disruptions, and regulatory actions in Texas, which led to significant increases in gas prices, gathering, processing and transportation fees and electrical rates during this time. As a result, many oil and gas operators, including upstream producers like the Company, gas processors and purchasers, and transportation providers experienced operational disruptions. During this time, the Company was unable to utilize the entire volume of its reserved capacity on pipelines and as a result has made certain force majeure declarations. One third-party transportation provider filed a lawsuit against the Company claiming compensation for the full amount of the reserved capacity, both utilized and unutilized. The Company paid for the utilized capacity and filed a separate lawsuit against the transportation provider requesting declaratory relief for the purpose of construing the provisions of the transportation agreement relating to the unutilized capacity. At this time, a loss in relation to these matters is certain and in accordance with ASC Topic 450-20, Loss Contingencies, the Company has recorded a net estimated liability of $7.6 million, inclusive of estimated interest penalties, as of September 30, 2024, which was paid during the fourth quarter of 2024. Other than the matter above, management is unaware of any pending litigation brought against the Company requiring a contingent liability to be recognized as of the date of these consolidated financial statements.

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