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Commitments and Contingencies | 12 Months Ended
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Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Note 6 – Commitments and Contingencies Commitments As of December 31, 2023, the Company had entered into various types of agreements as discussed below. The following table presents the annual minimum payments related to these agreements for the next five years, and the total minimum payments thereafter as of December 31, 2023:
For the Years Ending December 31, |  | Amount
|  | (in thousands)
2024 |  | $ | 74,992 |
2025 |  | 52,175 |
2026 |  | 28,133 |
2027 |  | 13,791 |
2028 |  | 12,461 |
Thereafter |  | 14,655 |
Total |  | $ | 196,207 |
Drilling Rig Contracts. The Company has drilling rig contracts in place to facilitate its drilling plans. As of December 31, 2023, the Company’s drilling rig commitments totaled $19.1 million under contract terms extending through the third quarter of 2024. If all of these contracts were terminated as of December 31, 2023, the Company would avoid a portion of the contractual service commitments; however, the Company would be required to pay $12.3 million in early termination fees. Subsequent to December 31, 2023, the Company entered into a new drilling rig contract, and as of the filing of this report, the Company’s drilling rig commitments totaled $14.5 million under contract terms extending through the third quarter of 2024. If all of these contracts were terminated as of the filing of this report, the Company would avoid a portion of the contractual service commitments; however, the Company would be required to pay $8.9 million in early termination fees. No material expenses related to early termination or standby fees were incurred by the Company during the year ended December 31, 2023, and the Company does not expect to incur material penalties with regard to its drilling rig contracts during 2024. Delivery Commitments. The Company has gathering, processing, transportation throughput, and delivery commitments with various third-parties that require delivery of a minimum amount of oil and produced water. As of December 31, 2023, the Company had commitments to deliver a minimum of 5 MMBbl of oil through July of 2026 and 11 MMBbl of produced water through June of 2027. The Company would be required to make periodic deficiency payments for any shortfalls in delivering the minimum volume commitments under certain agreements. As of December 31, 2023, if the Company failed to deliver any product, as applicable, the aggregate undiscounted deficiency payments would total approximately $11.5 million. This amount does not include deficiency payment estimates associated with approximately 1 MMBbl of future oil delivery commitments where the Company cannot predict with accuracy the amount and timing of these payments, as such payments are dependent upon the price of oil in effect at the time of settlement. The Company expects to fulfill the delivery commitments from a combination of production from existing productive wells, future development of proved undeveloped reserves, and future development of resources not yet characterized as proved reserves. Under certain of the Company’s commitments, if the Company is unable to deliver the minimum quantity from its production, it may deliver production acquired from third-parties to satisfy its minimum volume commitments. As of the filing of this report, the Company does not expect to incur material shortfalls with regard to these commitments. Office Leases. The Company leases office space under various operating leases totaling $33.3 million, including maintenance, with certain terms extending into 2033. Rent expense for the years ended December 31, 2023, 2022, and 2021, was $2.5 million, $3.5 million, and $4.8 million, respectively. Electrical Power Purchase Contracts. As of December 31, 2023, the Company had fixed price contracts for the purchase of electrical power through March of 2029 with a total remaining obligation of $41.8 million. Sand Purchase Commitment. As of December 31, 2023, the Company had a sand purchase agreement with a minimum commitment of $46.8 million through March of 2026. As of December 31, 2023, if the Company failed to purchase the minimum amount required by the contract, it would be subject to penalties of up to $10.0 million. As of the filing of this report, the Company does not expect to incur penalties with regard to this agreement. Compression Service Contracts. As of December 31, 2023, the Company had compression service contracts with terms extending through 2027 for equipment being used in field operations with a total remaining obligation of $19.5 million. Miscellaneous Contracts and Leases. As of December 31, 2023, the Company had miscellaneous contracts and leases totaling $24.2 million, primarily related to IT contracts, water purchase agreements, and vehicle leases, with terms extending through 2027. Drilling and Completion Commitments. As of December 31, 2023, the Company had an agreement that includes minimum drilling and completion footage requirements on certain existing leases. If these minimum requirements are not satisfied by March 31, 2024, the Company will be required to pay liquidated damages based on the difference between the actual footage drilled and completed and the minimum requirements. As of December 31, 2023, the liquidated damages could range from zero to a maximum of $8.3 million, with the maximum exposure assuming no additional development activity occurred prior to March 31, 2024. As of the filing of this report, the Company does not expect to incur material liquidated damages with regard to this agreement. Contingencies The Company is subject to litigation and claims arising in the ordinary course of business. The Company accrues for such items when a liability is both probable and the amount can be reasonably estimated. In the opinion of management, the anticipated results of any pending litigation and claims are not expected to have a material effect on the results of operations, the financial position, or the cash flows of the Company.

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