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Summary of Significant Accounting Policies
 9 Months Ended
Sep. 30, 2022
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies Summary of Significant Accounting Policies
Significant Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. These estimates and assumptions may also affect disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
The Company evaluates these estimates on an ongoing basis, using historical experience, consultation with experts and other methods the Company considers reasonable in the particular circumstances. Actual results may differ significantly from the Company’s estimates. Any effects on the Company’s business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known. Significant items subject to such estimates and assumptions include, but are not limited to, estimates of proved oil and natural gas reserves and related present value estimates of future net cash flows therefrom, the carrying value of oil and natural gas properties, accounts receivable, accrued capital expenditures and operating expenses, ARO, the fair value determination of acquired assets and assumed liabilities, certain tax accruals and the fair value of derivatives.
Accounts Receivable
Accounts receivable is summarized below:
September 30, 2022December 31, 2021
(In thousands)
Oil, natural gas and NGL sales$26,380 $17,562 
Joint interest accounts receivable500 409 
Other accounts receivable583 31 
Total accounts receivable$27,463 $18,002 
The Company had no allowance for credit losses at September 30, 2022 and December 31, 2021.
Other Non-Current Assets, Net
Other non-current assets consisted of the following:
September 30, 2022December 31, 2021
(In thousands)
Deferred financing costs, net$2,519 $1,345 
Prepayments to outside operators248 690 
Right of use assets1,477 208 
Other deposits63 50 
Total other non-current assets, net$4,307 $2,293 
The Company incurred $1.7 million in financing costs related to the amendment of its revolving credit facility in April 2022. The Company extended certain existing leases and entered into a new lease during the nine months ended September 30, 2022, which resulted in additions to the right of use assets.
Accrued Liabilities
Accrued liabilities consisted of the following:
September 30, 2022December 31, 2021
(In thousands)
Accrued capital expenditures$14,966 $5,618 
Accrued lease operating expenses4,315 2,534 
Accrued general and administrative costs4,750 3,404 
Other accrued expenditures4,754 1,318 
Total accrued liabilities$28,785 $12,874 
Asset Retirement Obligations
Components of the changes in ARO for the nine months ended September 30, 2022 and the year ended December 31, 2021 are shown below:
September 30, 2022December 31, 2021
(In thousands)
ARO, beginning balance$2,453 $2,434 
Liabilities incurred348 56 
Revision of estimated obligations326 — 
Liability settlements and disposals(178)(58)
Accretion54 21 
ARO, ending balance3,003 2,453 
Less: current ARO(1)
(314)(192)
ARO, long-term$2,689 $2,261 
_____________________
(1)Current ARO is included within other current liabilities on the accompanying condensed consolidated balance sheets.

Goodwill
At the closing of the Merger, the Company determined it had two reporting units, and the entire goodwill balance was included in the reporting unit acquired in the Merger (the "Kansas Reporting Unit"). The Company did not fully integrate the Kansas Reporting Unit in the Company's operations as it was deemed to be held for sale upon acquisition. The Company assessed the goodwill balance for impairment since the Company entered into a purchase and sale agreement ("PSA") in March 2021 for $3.5 million before closing adjustments. As the carrying value exceeded the implied fair value at the time of the closing of the Merger, the Company concluded the goodwill balance associated with the Kansas Reporting Unit was impaired and recognized a goodwill impairment loss, included within loss from discontinued operations on the condensed consolidated statement of operations, of $18.5 million for the nine months ended September 30, 2021. See further discussion in Note 12 - Discontinued Operations and Assets Held for Sale.
Revenue Recognition
The following table presents oil and natural gas sales disaggregated by product:
Three Months Ended September 30,Nine Months Ended September 30,
2022202120222021
(In thousands)
Oil and natural gas sales:
Oil$80,017 $44,026 $224,895 $114,314 
Natural gas4,216 1,908 8,855 7,381 
Natural gas liquids3,238 2,080 8,147 4,527 
Total oil and natural gas sales, net$87,471 $48,014 $241,897 $126,222 
Recent Accounting Pronouncements
Recently Adopted Accounting Pronouncements
In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes." This update is intended to simplify the accounting for income taxes by removing certain exceptions and by clarifying and amending existing guidance and is effective for public business entities beginning after December 15, 2020 with early adoption permitted. The Company adopted this ASU effective October 1, 2021. The adoption of this ASU did not have a material impact on the Company's condensed consolidated financial statements.
In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”), which provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates (e.g., LIBOR) that are expected to be discontinued. ASU 2020-04 allows, among other things, certain contract modifications, such as those within the scope of Topic 470 on debt, to be accounted for as a continuation of the existing contract. The Company adopted this ASU effective concurrent with the amendment of the Company's revolving credit facility in April 2022. See Note 9 - Revolving Credit Facility for additional information on the amendment of the revolving credit facility. The adoption of this ASU did not have a material impact on the Company's condensed consolidated financial statements.