Oil and Gas Reserves Information (Unaudited)

12 Months Ended

Dec. 31, 2022

Oil and Gas Reserves Information (Unaudited)

Set forth below is a summary of the Company's proved oil and natural gas reserves:


	Year Ended December 31,
	2022		2021		2020
	Oil (MBbls)	Natural Gas (MMcf)	Oil (MBbls)	Natural Gas (MMcf)	Oil (MBbls)	Natural Gas (MMcf)
Proved Reserves:
Beginning of period	627	6,118,083	11,000	5,562,876	16,747	5,341,497
Revisions of previous estimates	(61)	(6,870)	145	88,546	(4,241)	306,552
Extensions and discoveries	137	1,090,420	—	797,198	2	365,663
Acquisitions of minerals in place	6	260	—	202,588	—	—
Sales of minerals in place	(78)	(3,707)	(9,308)	(43,851)	—	—
Production	(82)	(500,616)	(1,210)	(489,274)	(1,508)	(450,836)
End of period	549	6,697,570	627	6,118,083	11,000	5,562,876
Proved Developed Reserves:
Beginning of period	627	2,245,660	11,000	1,967,288	15,104	1,890,357
End of period	480	2,531,462	627	2,245,660	11,000	1,967,288
Proved Undeveloped Reserves:
Beginning of period	—	3,872,423	—	3,595,588	1,643	3,451,140
End of period	69	4,166,108	—	3,872,423	—	3,595,588

Revisions of previous estimates. Revisions of previous natural gas estimates in 2021 and 2020 were primarily attributable to higher production performance from the Company's wells as compared to expected performance from proved undeveloped locations included in proved reserves in the previous year. Revisions of previous estimates for oil in 2020 were primarily related to changes in oil prices. Revisions of previous estimates in other years were insignificant.

Extensions and discoveries. Extensions and discoveries for 2022, 2021 and 2020 were primarily comprised of proved reserve additions attributable to the wells drilled in the current year that were not classified as proved undeveloped in prior years and additional proved undeveloped locations that are planned to be drilled in the Company's current development plan.

The following table sets forth the standardized measure of discounted future net cash flows relating to proved reserves:


	As of December 31,
	2022		2021		2020
	(In thousands)
Cash Flows Relating to Proved Reserves:
Future Cash Flows	$	40,405,829	$	20,396,381	$	9,871,616
Future Costs:
Production	(5,473,650)		(3,954,726)		(3,173,350)
Development and Abandonment	(4,175,721)		(2,752,603)		(2,592,520)
Future Income Taxes	(5,741,914)		(2,065,316)		(154,872)
Future Net Cash Flows	25,014,544		11,623,736		3,950,874
10% Discount Factor	(12,404,908)		(5,848,131)		(2,015,149)
Standardized Measure of Discounted Future Net Cash Flows	$	12,609,636	$	5,775,605	$	1,935,725

The following table sets forth the changes in the standardized measure of discounted future net cash flows relating to proved reserves:


	Year Ended December 31,
	2022		2021		2020
	(In thousands)
Standardized Measure, Beginning of Year	$	5,775,605	$	1,935,725	$	2,913,211
Net change in sales price, net of production costs	8,600,315		5,012,696		(1,858,026)
Development costs incurred during the year which were previously estimated	788,450		502,674		302,135
Revisions of quantity estimates	(42,423)		119,200		215,268
Accretion of discount	680,010		199,124		326,074
Changes in future development and abandonment costs	(869,115)		1,505		313,191
Changes in timing and other	(113,744)		(224,617)		(127,663)
Extensions and discoveries	2,456,124		679,418		180,624
Acquisitions of minerals in place	604		150,065		—
Sales of minerals in place	(3,313)		(64,032)		—
Sales, net of production costs	(2,779,960)		(1,567,182)		(612,194)
Net changes in income taxes	(1,882,917)		(968,971)		283,105
Standardized Measure, End of Year	$	12,609,636	$	5,775,605	$	1,935,725

The standardized measure of discounted future net cash flows was determined based on the simple average of the first of month market prices for oil and natural gas for each year. Prices used in determining quantities of oil and natural gas reserves and future cash inflows from oil and natural gas reserves represent prices received at the Company's sales point. These prices have been adjusted from posted or index prices for both location and quality differences. Prices used in determining oil and natural gas reserves quantities and cash flows are as follows:


	Year Ended December 31,
	2022		2021		2020
Crude Oil: $/barrel	$	91.21	$	62.38	$	32.88
Natural Gas: $/Mcf	$	6.03	$	3.33	$	1.71

Proved reserve information utilized in the preparation of the financial statements were based on estimates prepared by the Company's petroleum engineering staff in accordance with guidelines established by the Securities and Exchange Commission and the Financial Accounting Standards Board, which require that reserve reports be prepared under existing economic and operating conditions with no provision for price and cost escalation except by contractual agreement. All of the Company's reserves are located onshore in the continental United States of America. The Company retained an independent petroleum consultant to conduct an audit of the Company's 2022 reserve estimates. The purpose of this audit was to provide additional assurance on the reasonableness of internally prepared reserve estimates. The engineering firm was selected for their geographic expertise and their historical experience.

Future development and production costs are computed by estimating the expenditures to be incurred in developing and producing proved oil and gas reserves at the end of the year, based on year end costs and assuming continuation of existing economic conditions. Future income tax expenses are computed by applying the appropriate statutory tax rates to the future pre-tax net cash flows relating to proved reserves, net of the tax basis of the properties involved. The future income tax expenses give effect to permanent differences and tax credits, but do not reflect the impact of future operations.