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Supplemental Oil and Gas Reserve Information - Unaudited | 12 Months Ended
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Dec. 31, 2022
Oil and Gas Exploration and Production Industries Disclosures [Abstract] |
Supplemental Oil and Gas Reserve Information - Unaudited | Supplemental Oil and Gas Reserve Information — Unaudited The reserve estimates presented below at December 31, 2022 are based on reports prepared by Netherland, Sewell & Associates, Inc., the Company’s independent reserve engineers. The reserve estimates at December 31, 2021 and 2020 were based on reports prepared by DeGolyer and MacNaughton, the Company’s previous independent reserve engineers. All of the Company’s oil and gas reserves are attributable to properties within the United States. Proved oil and gas reserves are the estimated quantities of crude oil, NGLs and natural gas that geological and engineering data demonstrate, with reasonable certainty, to be recoverable in future years from known reservoirs under economic and operating conditions (i.e., prices and costs) existing at the time the estimate is made. Proved developed oil and gas reserves are proved reserves that can be expected to be recovered through existing wells and equipment in place and under operating methods being utilized at the time the estimates were made. The Company emphasizes that reserve estimates are inherently imprecise and that estimates of new discoveries and undeveloped locations are more imprecise than estimates of established proved producing oil and gas properties. Accordingly, these estimates are expected to change as future information becomes available. Estimated Quantities of Proved Reserves The following table summarizes changes in quantities of the Company’s estimated net proved reserves by product for the periods presented:
| Crude Oil (MBbl) |  | NGLs(1) (MBbl) |  | Natural Gas (MMcf) |  | MBoe(2)
2020 |  |  |  |  |  |  |
Proved reserves |  |  |  |  |  |  |
Beginning balance (Predecessor) | 200,787 |  |  | — |  |  | 513,533 |  |  | 286,376 |
Revisions of previous estimates | (69,782) |  |  | — |  |  | (98,815) |  |  | (86,251) |
Extensions, discoveries and other additions | 4,578 |  |  | — |  |  | 8,659 |  |  | 6,021 |
Production | (15,818) |  |  | — |  |  | (47,207) |  |  | (23,686) |
Net proved reserves at December 31, 2020 | 119,765 |  |  | — |  |  | 376,170 |  |  | 182,460 |
Proved developed reserves, December 31, 2020 | 85,428 |  |  | — |  |  | 262,676 |  |  | 129,207 |
Proved undeveloped reserves, December 31, 2020 | 34,337 |  |  | — |  |  | 113,494 |  |  | 53,253 |
2021 |  |  |  |  |  |  |
Proved reserves |  |  |  |  |  |  |
Beginning balance | 119,765 |  |  | — |  |  | 376,170 |  |  | 182,460 |
Revisions of previous estimates | 42,411 |  |  | — |  |  | 68,768 |  |  | 53,871 |
Extensions, discoveries and other additions | 7,734 |  |  | — |  |  | 14,539 |  |  | 10,157 |
Sales of reserves in place | (24,760) |  |  | — |  |  | (40,211) |  |  | (31,461) |
Purchases of reserves in place | 42,656 |  |  | — |  |  | 86,153 |  |  | 57,015 |
Production | (13,489) |  |  | — |  |  | (46,157) |  |  | (21,182) |
Net proved reserves at December 31, 2021 | 174,317 |  |  | — |  |  | 459,262 |  |  | 250,860 |
Proved developed reserves, December 31, 2021 | 114,041 |  |  | — |  |  | 361,836 |  |  | 174,347 |
Proved undeveloped reserves, December 31, 2021 | 60,276 |  |  | — |  |  | 97,426 |  |  | 76,513 |
2022 |  |  |  |  |  |  |
Proved reserves |  |  |  |  |  |  |
Beginning balance | 174,317 |  |  | — |  |  | 459,262 |  |  | 250,860 |
Revisions of previous estimates | (8,032) |  |  | 64,557 |  |  | (56,500) |  |  | 47,110 |
Extensions, discoveries and other additions | 38,144 |  |  | 7,452 |  |  | 35,689 |  |  | 51,544 |
Sales of reserves in place | — |  |  | — |  |  | — |  |  | — |
Purchases of reserves in place | 202,316 |  |  | 73,468 |  |  | 443,903 |  |  | 349,768 |
Production | (25,457) |  |  | (7,026) |  |  | (67,428) |  |  | (43,722) |
Net proved reserves at December 31, 2022 | 381,288 |  |  | 138,451 |  |  | 814,926 |  |  | 655,560 |
Proved developed reserves, December 31, 2022 | 272,529 |  |  | 115,227 |  |  | 689,651 |  |  | 502,698 |
Proved undeveloped reserves, December 31, 2022 | 108,759 |  |  | 23,224 |  |  | 125,275 |  |  | 152,862 |
__________________ (1)For periods prior to July 1, 2022, we reported crude oil and natural gas on a two-stream basis, and NGLs were combined with the natural gas stream when reporting reserves. As of July 1, 2022, NGLs are reported separately from the natural gas stream on a three-stream basis. This prospective change impacts the comparability of the periods presented. (2)Natural gas is converted to barrel of oil equivalents at the rate of six thousand cubic feet of natural gas to one barrel of oil. 2022 Proved reserves increased by 404.7 MMBoe during the year ended December 31, 2022 due to the following: Purchases of reserves in place. The Company added 349.8 MMBoe of proved reserves from the purchase of reserves in place as a result of the Merger. Extensions, discoveries and other additions. The Company added 51.5 MMBoe of proved reserves associated with extensions and discoveries primarily attributable to successful drilling in the Williston Basin. New wells drilled in this area, as well as proved undeveloped (“PUD”) locations added as a result of offset drilling, increased proved reserves. Revisions of previous estimates. The Company had net positive revisions of 47.1 MMBoe attributable to the following: Increases: •30.3 MMBoe associated with the change to reporting reserves on a three-stream basis in 2022 •26.1 MMBoe associated with higher crude oil, NGL and natural gas prices •2.6 MMBoe associated with tighter differentials and stronger NGL yields Decreases: •6.7 MMBoe associated with reservoir and engineering analysis and well performance across the Company’s Williston Basin assets •5.2 MMBoe primarily associated with lower working interests as a result of well payouts associated with higher commodity pricing Production. Production decreased proved reserves by 43.7 MMBoe. Sales of reserves in place. There were no impacts to proved reserves as a result of the sale of reserves in place. 2021 Proved reserves increased by 68.4 MMBoe during the year ended December 31, 2021 due to the following: Purchases of reserves in place. The Company added 57.0 MMBoe of proved reserves from the purchase of reserves in place as a result of the 2021 Williston Basin Acquisition. Revisions of previous estimates. The Company had net positive revisions of 53.9 MMBoe attributable to the following: Increases: •38.6 MMBoe associated with alignment to the anticipated five-year development plan •37.2 MMBoe associated with higher realized prices •6.2 MMBoe associated with lower operating expenses Decreases: •22.9 MMBoe associated with reservoir analysis and well performance across the Company’s Williston Basin assets •5.2 MMBoe associated with the impact of removing the benefits of midstream operations from operating expenses Extensions, discoveries and other additions. The Company added 10.2 MMBoe of proved reserves associated with extensions and discoveries. Of these additions, 7.6 MMBoe were associated with the Company’s anticipated five-year development plan and 2.6 MMBoe were associated with new producing wells. Sales of reserves in place. Proved reserves decreased 31.5 MMBoe as a result of the Permian Basin Sale in June 2021. Production. Production decreased proved reserves by 21.2 MMBoe. 2020 Proved reserves decreased by 103.9 MMBoe during the year ended December 31, 2020 due to the following: Revisions of previous estimates. The Company had net negative revisions of 86.3 MMBoe attributable to the following: Decreases: •60.1 MMBoe associated with alignment to the anticipated five-year development plan •31.9 MMBoe associated with lower realized prices Increases: •5.6 MMBoe associated with the addition of PUD reserves that were previously removed from the anticipated five-year development plan Production. Production decreased proved reserves by 23.7 MMBoe. Extensions, discoveries and other additions. The Company added 6.0 MMBoe of proved reserves associated with extensions and discoveries. Of these additions, 3.2 MMBoe were associated with new producing wells and 2.8 MMBoe were associated with the Company’s anticipated five-year development plan. Purchases of reserves in place. The Company added no proved reserves from the purchase of reserves in place. Sales of reserves in place. There were no impacts to proved reserves as a result of the sale of reserves in place. Changes in Proved Undeveloped Reserves The following table summarizes the changes in the Company’s estimates of PUD reserves during 2022:
| Year Ended December 31, 2022
| (MBoe)
Proved undeveloped reserves, beginning of period | 76,513 |
Purchases of minerals in place | 68,097 |
Extensions, discoveries and other additions | 50,250 |
Revisions of previous estimates | 1,060 |
Conversion to proved developed reserves | (43,058) |
Proved undeveloped reserves, end of period | 152,862 |
Proved undeveloped reserves increased by 76.4 MMBoe during the year ended December 31, 2022 due to the following: Purchases of minerals in place. The Company added 68.1 MMBoe of PUD reserves from the purchase of minerals in place as a result of the Merger. Extensions, discoveries and other additions. The Company added 50.3 MMBoe of PUD reserves associated with extensions and discoveries primarily attributable to successful drilling in the Williston Basin. Revisions of previous estimates. The Company had net positive revisions of 1.1 MMBoe attributable to the following: Increases: •6.7 MMBoe associated with the change to reporting reserves on a three-stream basis in 2022 •1.9 MMBoe associated with higher crude oil, NGL and natural gas prices Decreases: •7.5 MMBoe primarily associated with reservoir and engineering analysis and well performance across the Company’s Williston Basin assets Conversions to proved developed reserves. The Company incurred $270.8 million in capital expenditures to convert 43.1 MMBoe of PUD reserves to proved developed reserves during 2022. The PUD conversions represented 56% of the Company’s PUD reserves balance at the beginning of 2022. The conversions to proved developed reserves included 28.0 MMBoe of PUD reserves attributable to Whiting that were converted to proved developed reserves subsequent to the Merger and therefore were not included in the PUD reserves balance at the beginning of 2022. Whiting incurred an additional $147.9 million prior to the Merger associated with the 28.0 MMBoe of PUD reserves that were converted during the period subsequent to the Merger. The Company expects to develop all of its PUD reserves, including all wells drilled but not yet completed, as of December 31, 2022 within five years after the initial year booked. Substantially all PUD locations are located on properties where the leases are held by existing production or continuous drilling operations. Approximately 11% of the Company’s PUD reserves at December 31, 2022 are attributable to wells that have been drilled but not yet completed, and substantially all of the Company’s PUD reserves are within its core acreage in the Williston Basin. Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Natural Gas Reserves The Standardized Measure represents the present value of estimated future net cash flows from estimated net proved oil and natural gas reserves, less future development, production, plugging and abandonment costs and income tax expenses, discounted at 10% per annum to reflect timing of future cash flows. Production costs do not include DD&A of capitalized acquisition, exploration and development costs. The Company’s estimated net proved reserves and related future net revenues and Standardized Measure were determined using index prices for crude oil and natural gas, without giving effect to derivative transactions, and were held constant throughout the life of the properties. The unweighted arithmetic average first-day-of-the-month prices for the prior 12 months were $93.67 per Bbl for crude oil and $6.36 per MMBtu for natural gas, $66.55 per Bbl for crude oil and $3.64 per MMBtu for natural gas and $39.54 per Bbl for crude oil and $2.03 per MMBtu for natural gas for the years ended December 31, 2022, 2021 and 2020, respectively. These prices were adjusted by lease for quality, energy content, transportation fees and marketing differentials. Future operating costs, production taxes and capital costs were based on current costs as of each year end. The following table sets forth the Standardized Measure of discounted future net cash flows from projected production of the Company’s estimated net proved reserves at December 31, 2022, 2021 and 2020:
| At December 31,
| 2022 |  | 2021 |  | 2020
| (In thousands)
Future cash inflows | $ | 44,544,247 |  |  | $ | 13,366,064 |  |  | $ | 5,197,220 |
Future production costs | (15,879,712) |  |  | (6,548,794) |  |  | (2,792,921) |
Future development costs | (2,553,605) |  |  | (1,322,207) |  |  | (610,658) |
Future income tax expense | (5,283,201) |  |  | (717,721) |  |  | (232,849) |
Future net cash flows | 20,827,729 |  |  | 4,777,342 |  |  | 1,560,792 |
10% annual discount for estimated timing of cash flows | (9,333,254) |  |  | (2,080,404) |  |  | (611,915) |
Standardized measure of discounted future net cash flows | $ | 11,494,475 |  |  | $ | 2,696,938 |  |  | $ | 948,877 |
The following table sets forth the changes in the Standardized Measure of discounted future net cash flows applicable to estimated net proved reserves for the periods presented:
| 2022 |  | 2021 |  | 2020
| (In thousands)
January 1 | $ | 2,696,938 |  |  | $ | 948,877 |  |  | $ | 2,844,369 |
Net changes in prices and production costs | 3,148,745 |  |  | 1,617,331 |  |  | (1,088,936) |
Net changes in future development costs | 35,427 |  |  | (36,645) |  |  | 4,640 |
Sales of crude oil and natural gas, net | (2,161,708) |  |  | (796,874) |  |  | (407,417) |
Extensions | 958,924 |  |  | 98,125 |  |  | 47,693 |
Purchases of reserves in place | 7,441,750 |  |  | 780,442 |  |  | — |
Sales of reserves in place | — |  |  | (204,153) |  |  | — |
Revisions of previous quantity estimates | 1,434,357 |  |  | 639,320 |  |  | (694,320) |
Previously estimated development costs incurred | 137,534 |  |  | 102,519 |  |  | 87,640 |
Accretion of discount | 683,631 |  |  | 94,090 |  |  | 293,445 |
Net change in income taxes | (2,539,182) |  |  | (252,347) |  |  | (76,066) |
Changes in timing and other | (341,941) |  |  | (293,747) |  |  | (62,171) |
December 31 | $ | 11,494,475 |  |  | $ | 2,696,938 |  |  | $ | 948,877 |

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