Supplemental Oil and Gas Reserve Information - Unaudited

12 Months Ended

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