DISCLOSURES ABOUT OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)

12 Months Ended

Dec. 31, 2021

Results of Operations, Revenue from Oil and Gas Producing Activities [Abstract]

DISCLOSURES ABOUT OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)

The Company’s oil and natural gas activities are located entirely within the United States. Costs incurred in oil and natural gas producing activities are as follows (in thousands):


	Year Ended December 31,
	2021		2020		2019
Acquisition(1)	$	4,861,619	$	11,296	$	12,901
Development(2)(3)	315,746		55,934		209,535
Exploration	7,937		595		796
Total	$	5,185,302	$	67,825	$	223,232

_________________________

(1)Acquisition costs for unproved properties for the years ended December 31, 2021, 2020, and 2019 were $648.0 million, $2.3 million, and $4.2 million, respectively. There were $4.2 billion, $9.0 million, and $8.7 million in acquisition costs for proved properties for the years ended December 31, 2021, 2020, and 2019, respectively.

(2)Development costs include workover costs of $2.2 million, $1.2 million, and $1.4 million charged to lease operating expense for the years ended December 31, 2021, 2020, and 2019, respectively.

(3)Includes amounts relating to asset retirement obligations of $13.8 million, $(1.0) million, and $(0.9) million, for the years ended December 31, 2021, 2020, and 2019, respectively.

Suspended Well Costs

The Company did not incur any exploratory well costs during the years ended December 31, 2021, 2020, and 2019.

Reserves

The proved reserve estimates were prepared by our third party independent reserve engineers, which were Ryder Scott at December 31, 2021 and 2020 and NSAI for the estimates at December 31, 2019. The estimates of proved reserves are inherently imprecise and are continually subject to revision based on production history, results of additional exploration and development, price changes, and other factors.

All of the Company’s oil, natural gas liquids, and natural gas reserves are attributable to properties within the United States. A summary of the Company's changes in quantities of proved oil, natural gas liquids, and natural gas reserves for the years ended December 31, 2021, 2020, and 2019 are as follows:


		Natural	Natural
	Oil	Gas	Gas Liquids
	(MBbl)	(MMcf)	(MBbl)
Balance-December 31, 2018	64,354	165,012	24,930
Extensions, discoveries and infills(1)	8,825	20,604	3,123
Production	(5,136)	(11,967)	(1,431)
Sales of minerals in place	(52)	(110)	(18)
Removed from capital program(2)	(4,926)	(11,508)	(1,862)
Purchases of minerals in place	303	627	102
Revisions to previous estimates(3)	1,045	49,542	(2,683)
Balance-December 31, 2019	64,413	212,200	22,161
Extensions, discoveries and infills(1)	9,376	32,172	3,269
Production	(5,019)	(14,166)	(1,858)

Removed from capital program(2)	(14,120)	(33,886)	(3,141)
Purchases of minerals in place	1,430	5,457	570
Revisions to previous estimates(3)	(3,287)	33,951	5,110
Balance-December 31, 2020	52,793	235,728	26,111
Extensions, discoveries and infills(1)	19	103	—
Production	(4,523)	(13,852)	(1,763)

Removed from capital program(2)	(12,249)	(43,918)	(4,485)
Purchases of minerals in place	114,379	767,504	89,797
Revisions to previous estimates(3)	(6,840)	(57,066)	(3,632)
Balance-December 31, 2021	143,579	888,499	106,028

Proved developed reserves:
December 31, 2019	25,397	105,840	11,566
December 31, 2020	24,320	123,220	14,315
December 31, 2021	104,078	748,762	88,967
Proved undeveloped reserves:
December 31, 2019	39,016	106,360	10,595
December 31, 2020	28,473	112,508	11,796
December 31, 2021	39,501	139,737	17,061

________________________

(1)During the years ended December 31, 2021, 2020, and 2019, horizontal development in the Wattenberg Field resulted in additions in extensions, discoveries, and infills of nominal MMBoe, 18.0 MMBoe, and 15.4 MMBoe, respectively.

(2) During the years ended December 31, 2021, 2020, and 2019, proved undeveloped reserves were reduced by 24.1 MMBoe, 22.9 MMBoe, and 8.7 MMBoe respectively, primarily due to the removal of proved undeveloped locations from our five-year drilling program.

(3) As of December 31, 2021, the Company revised its proved reserves downward by 20.0 MMBoe primarily driven by 13.1 MMBoe in negative revisions due to changes in well operating cost methodology, 6.9 MMBoe in negative engineering revisions, and 7.1 MMBoe in negative revisions for fuel gas, interest, shrink, and other minor revisions. The commodity prices at December 31, 2021 increased to $66.56 per Bbl WTI and $3.60 per MMBtu HH from $39.57 per Bbl WTI and $1.99 per MMBtu HH at December 31, 2020, resulting in a partially offsetting positive revision of 7.1 MMBoe.

As of December 31, 2020, the Company revised its proved reserves upward by 7.5 MMBoe primarily driven by 12.3 MMBoe in positive engineering revisions. The commodity prices at December 31, 2020 decreased to $39.57 per Bbl WTI and $1.99 per MMBtu HH from $55.85 per Bbl WTI and $2.58 per MMBtu HH at December 31, 2019, resulting in a partially offsetting negative revision of 4.8 MMBoe.

As of December 31, 2019, the Company revised its proved reserves upward by 6.6 MMBoe. The commodity prices at December 31, 2019 decreased to $55.85 per Bbl WTI and $2.58 per MMBtu HH from $65.56 per Bbl WTI and $3.10 per MMBtu HH at December 31, 2018, resulting in a negative revision of 1.4 MMBoe, offset by 8.1 MMBoe in positive engineering revision.

The standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves were prepared in accordance with accounting authoritative guidance. Future cash inflows were computed by applying prices to estimated future production. Future production and development costs are computed by estimating the expenditures to be incurred in developing and producing the proved oil and natural gas reserves at year-end, based on current costs and assuming continuation of existing economic conditions.

Future income tax expenses are calculated by applying appropriate year-end tax rates to future pretax net cash flows relating to proved oil and natural gas reserves. Future income tax expenses give effect to permanent differences, tax credits, and loss carryforwards relating to the proved oil and natural gas reserves. Future net cash flows are discounted at a rate of 10% annually to derive the standardized measure of discounted future net cash flows. This calculation procedure does not necessarily result in an estimate of the fair market value or the present value of the Company's oil and natural gas properties.

The standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves are as follows (in thousands):


	Year Ended December 31,
	2021		2020		2019
Future cash flows	$	14,401,814	$	2,230,012	$	3,827,009
Future production costs	(5,054,695)		(675,755)		(1,029,140)
Future development costs	(1,107,576)		(530,970)		(850,327)
Future income tax expense	(1,465,949)		—		—
Future net cash flows	6,773,594		1,023,287		1,947,542
10% annual discount for estimated timing of cash flows	(2,361,490)		(586,233)		(1,089,395)
Standardized measure of discounted future net cash flows	$	4,412,104	$	437,054	$	858,147

Future cash flows as shown above were reported without consideration for the effects of derivative transactions outstanding at period end.

The changes in the standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves are as follows (in thousands):


	Year Ended December 31,
	2021		2020		2019
Beginning of period	$	437,054	$	858,147	$	954,980
Sale of oil and gas produced, net of production costs	(773,711)		(160,466)		(233,677)
Net changes in prices and production costs	874,155		(641,137)		(372,233)
Net changes in extensions, discoveries and improved recoveries	855		(54,269)		45,728
Development costs incurred	108,113		42,325		185,086
Changes in estimated development cost	106,788		220,964		81,358
Purchases of minerals in place	4,484,125		12,372		10,135
Sales of minerals in place	—		—		(309)
Revisions of previous quantity estimates	(84,126)		60,754		79,637
Net change in income taxes	(915,053)		—		—
Accretion of discount	43,705		85,815		95,498
Changes in production rates and other	130,199		12,549		11,944
End of period	$	4,412,104	$	437,054	$	858,147

The average wellhead prices used in determining future net revenues related to the standardized measure calculation as of December 31, 2021, 2020, and 2019 were calculated using the twelve-month arithmetic average of first-day-of-the-month prices inclusive of adjustments for quality and location.


	Year Ended December 31,
	2021		2020		2019
Oil (per Bbl)	$	61.60	$	34.96	$	51.22
Gas (per Mcf)	$	2.60	$	0.95	$	1.44
Natural gas liquids (per Bbl)	$	30.60	$	6.12	$	10.07