DISCLOSURES ABOUT OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)

12 Months Ended

Dec. 31, 2022

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 the acquisition, development, and exploration of oil and natural gas properties, whether capitalized or expensed, are summarized below (in thousands):


	Year Ended December 31,
	2022		2021		2020
Acquisition(1)	$	437,100	$	4,861,619	$	11,296
Development(2)(3)	1,044,392		315,746		55,934
Exploration	6,981		7,937		595
Total	$	1,488,473	$	5,185,302	$	67,825

_________________________

(1)Acquisition costs for unproved properties for the years ended December 31, 2022, 2021, and 2020 were $16.8 million, $648.0 million, and $2.3 million, respectively. There were $420.3 million, $4.2 billion, and $9.0 million in acquisition costs for proved properties for the years ended December 31, 2022, 2021, and 2020, respectively.

(2)Development costs include workover costs of $8.6 million, $2.2 million, and $1.2 million charged to lease operating expense for the years ended December 31, 2022, 2021, and 2020, respectively.

(3)Includes amounts relating to asset retirement obligations of $64.7 million, $13.8 million, and $(1.0) million for the years ended December 31, 2022, 2021, and 2020, respectively.

Suspended Well Costs

The Company did not incur any exploratory well costs during the years ended December 31, 2022, 2021, and 2020.

Reserves

The proved reserve estimates at December 31, 2022, 2021, and 2020 were prepared by Ryder Scott, our third-party independent reserve engineers. 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, and natural gas liquids reserves are attributable to properties within the United States. A summary of the Company’s changes in quantities of proved oil, natural gas, and natural gas liquids reserves for the years ended December 31, 2022, 2021, and 2020 are as follows:


		Natural	Natural
	Oil	Gas	Gas Liquids
	(MBbl)	(MMcf)	(MBbl)
Balance-December 31, 2019	64,413	212,200	22,161
Extensions, discoveries, and other additions(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 other additions(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
Extensions, discoveries, and other additions(1)	12,408	51,358	6,936
Production	(27,651)	(112,478)	(15,666)

Removed from capital program(2)	(105)	(459)	(46)
Purchases of minerals in place	17,479	31,872	4,478
Revisions to previous estimates(3)	6,892	8,708	17,104
Balance-December 31, 2022	152,602	867,500	118,834

Proved developed reserves:
December 31, 2020	24,320	123,220	14,315
December 31, 2021	104,078	748,762	88,967
December 31, 2022	117,768	750,793	102,004
Proved undeveloped reserves:
December 31, 2020	28,473	112,508	11,796
December 31, 2021	39,501	139,737	17,061
December 31, 2022	34,834	116,707	16,830

________________________

(1)During the years ended December 31, 2022, 2021, and 2020, horizontal development resulted in extensions, discoveries, and other additions of 27.9 MMBoe, nominal MMBoe, and 18.0 MMBoe, respectively.

(2)During the years ended December 31, 2022, 2021, and 2020, proved undeveloped reserves were reduced by 0.2 MMBoe, 24.1 MMBoe, and 22.9 MMBoe respectively, primarily due to the removal of proved undeveloped locations from our five-year drilling program.

(3)As of December 31, 2022, the Company revised its proved reserves upward by 25.4 MMBoe. Price-related revisions of 11.8 MMBoe resulted from the increase to SEC prices of $27.11 to $93.67 per Bbl WTI for oil and $2.76 to $6.36 per MMBtu HH for natural gas. The remaining positive revisions of 13.6 MMBoe are primarily driven by updates to well performance forecasts and NGL yields.

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.

The standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves were prepared in accordance with authoritative accounting 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,
	2022		2021		2020
Future cash flows	$	23,225,188	$	14,401,814	$	2,230,012
Future production costs	(6,490,522)		(5,054,695)		(675,755)
Future development costs	(1,337,494)		(1,107,576)		(530,970)
Future income tax expense	(2,870,178)		(1,465,949)		—
Future net cash flows	12,526,994		6,773,594		1,023,287
10% annual discount for estimated timing of cash flows	(4,599,504)		(2,361,490)		(586,233)
Standardized measure of discounted future net cash flows	$	7,927,490	$	4,412,104	$	437,054

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,
	2022		2021		2020
Beginning of period	$	4,412,104	$	437,054	$	858,147
Sale of oil and gas produced, net of production costs	(2,980,527)		(773,711)		(160,466)
Net changes in prices and production costs	5,016,678		874,155		(641,137)
Net changes in extensions, discoveries, and other additions	638,537		855		(54,269)
Development costs incurred	411,138		108,113		42,325
Changes in estimated development cost	(87,466)		106,788		220,964
Purchases of minerals in place	627,833		4,484,125		12,372

Revisions of previous quantity estimates	619,800		(84,126)		60,754
Net change in income taxes	(991,734)		(915,053)		—
Accretion of discount	532,716		43,705		85,815
Changes in production rates and other	(271,589)		130,199		12,549
End of period	$	7,927,490	$	4,412,104	$	437,054

The average wellhead prices used in determining future net revenues related to the standardized measure calculation as of December 31, 2022, 2021, and 2020 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,
	2022		2021		2020
Oil (per Bbl)	$	90.28	$	61.60	$	34.96
Gas (per Mcf)	$	5.54	$	2.60	$	0.95
Natural gas liquids (per Bbl)	$	39.05	$	30.60	$	6.12