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Supplemental Information on Oil and Natural Gas Producing Activities (Unaudited) | 12 Months Ended
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Dec. 31, 2023
Extractive Industries [Abstract] |
Supplemental Information on Oil and Natural Gas Producing Activities (Unaudited) | Supplemental Information on Oil and Natural Gas Producing Activities (Unaudited) The supplemental information below includes capitalized costs related to oil and natural gas producing activities; costs incurred in oil and natural gas property acquisition, exploration and development; and the results of operations for oil and natural gas producing activities. Supplemental information is also provided for oil, natural gas and NGL production and average sales prices; the estimated quantities of proved oil, natural gas and NGL reserves; the standardized measure of discounted future net cash flows associated with proved oil, natural gas and NGL reserves; and a summary of the changes in the standardized measure of discounted future net cash flows associated with proved oil, natural gas and NGL reserves. Capitalized Costs Related to Oil and Natural Gas Producing Activities The Company’s capitalized costs for oil and natural gas activities consisted of the following (in thousands):
| December 31,
| 2023 |  | 2022
Oil and natural gas properties |  |  |
Proved | $ | 1,538,724 |  |  | $ | 1,507,690 |
Unproved | 11,197 |  |  | 11,516 |
Total oil and natural gas properties | 1,549,921 |  |  | 1,519,206 |
Less accumulated depreciation, depletion and impairment | (1,393,801) |  |  | (1,380,574) |
Net oil and natural gas properties capitalized costs | $ | 156,120 |  |  | $ | 138,632 |
Costs Incurred in Oil and Natural Gas Property Acquisition, Exploration and Development Costs incurred in oil and natural gas property acquisition, exploration and development activities which have been capitalized are summarized as follows (in thousands):
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Acquisitions of properties |  |  |  |  |
Proved | $ | 11,232 |  |  | $ | 1,431 |  |  | $ | 3,545 |
Unproved | — |  |  | — |  |  | — |
Exploration (1) | (46) |  |  | 809 |  |  | 905 |
Development | 22,478 |  |  | 48,399 |  |  | 10,045 |
Total cost incurred | $ | 33,664 |  |  | $ | 50,639 |  |  | $ | 14,495 |
____________________ (1) Includes land, geological, geophysical and leasehold costs. Results of Operations for Oil and Natural Gas Producing Activities The following table presents the Company’s results of operations from oil and natural gas producing activities (in thousands), which exclude any interest costs or indirect general and administrative costs and, therefore, are not necessarily indicative of the impact the Company’s operations have on actual net earnings.
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Revenues | $ | 148,641 |  |  | $ | 254,258 |  |  | $ | 168,882 |
Expenses |  |  |  |  |
Production costs | 53,099 |  |  | 57,221 |  |  | 46,309 |
Depreciation and depletion | 15,657 |  |  | 11,542 |  |  | 9,372 |
Total expenses | 68,756 |  |  | 68,763 |  |  | 55,681 |
Income (loss) before income taxes | 79,885 |  |  | 185,495 |  |  | 113,201 |
Income tax expense (benefit) (1) | 19,374 |  |  | 45,055 |  |  | 26,734 |
Results of operations for oil and natural gas producing activities (excluding corporate overhead and interest costs) | $ | 60,511 |  |  | $ | 140,440 |  |  | $ | 86,467 |
____________________ (1) Income tax (benefit) expense is hypothetical and is calculated by applying the Company’s statutory tax rate to (loss) income before income taxes attributable to our oil and natural gas producing activities, after giving effect to permanent differences and tax credits. Oil, Natural Gas and NGL Reserve Quantities Proved oil, natural gas and NGL reserves are those quantities, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible, based on oil, natural gas and NGL prices used to estimate reserves, from a given date forward from known reservoirs, and under existing economic conditions, operating methods, and government regulation prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain. The term “reasonable certainty” implies a high degree of confidence that the quantities of oil, natural gas and NGLs actually recovered will equal or exceed the estimate. To achieve reasonable certainty, the Company’s engineers and independent petroleum consultants relied on technologies that have been demonstrated to yield results with consistency and repeatability. The technologies and economic data used to estimate the Company’s proved reserves include, but are not limited to, well logs, geologic maps, seismic data, well test data, production data, historical price and cost information and property ownership interests. The accuracy of the reserve estimates is dependent on many factors, including the following: •the quality and quantity of available data and the engineering and geological interpretation of that data; •estimates regarding the amount and timing of future costs, which could vary considerably from actual costs; •the accuracy of mandated economic assumptions; and •the judgment of the personnel preparing the estimates. Proved developed reserves are proved reserves expected to be recovered through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared with the cost of a new well. Proved undeveloped reserves are reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively large major expenditure is required for recompletion. Approximately 95% of the Company’s proved reserves estimates have been prepared by independent reservoir engineers and geoscience professionals and the remaining 5% of proved reserves are estimated internally and are reviewed by members of the Company’s senior management to ensure that the Company consistently applies rigorous professional standards and the reserve definitions prescribed by the SEC. Cawley, Gillespie & Associates, independent oil and natural gas consultants, prepared the estimates of proved reserves of oil, natural gas and NGLs for approximately 95% of the Company’s net interest in oil and natural gas properties as of the years ended December 31, 2023 and 2022. Cawley, Gillespie & Associates are independent petroleum engineers, geologists, geophysicists and petrophysicists and do not own an interest in the Company or its properties and are not employed on a contingent basis. The remaining proved reserves were based on Company estimates. The Company believes the geoscience and engineering data examined provides reasonable assurance that the proved reserves are economically producible in future years from known reservoirs, and under recent, past or historical economic conditions, operating methods and governmental regulations. Estimates of proved reserves are subject to change, either positively or negatively, as additional information is available and contractual and economic conditions change. 2023 Activity. Proved reserves decreased from 74.3 MMBoe at December 31, 2022 to 55.7 MMBoe at December 31, 2023, primarily due to a decrease in year-end SEC commodity prices for oil and natural gas, price realizations and NGL yield which resulted in a decrease of 17.5 MMBoe, as well as 6.2 MMBoe from the Company's production during 2023, 1.4 MMBoe attributable to well shut-ins and other revisions, and 0.1 MMBoe in sales. The Company also had positive revisions including purchases of 1.8 MMBoe, extensions of 1.2 MMBoe, 1.9 MMBoe associated with well positive performance revisions, and 1.7 MMBoe associated with other commercial improvements. 2022 Activity. Proved reserves increased from 71.3 MMBoe at December 31, 2021 to 74.3 MMBoe at December 31, 2022, primarily as a result of positive revisions of 9.1 MMBoe associated with the increase in year-end SEC commodity prices for oil and natural gas, 1.8 MMBoe related to the Company's well reactivation program, and 1.0 MMBoe associated with other commercial improvements. Further, extensions added 1.2 MMBoe and purchases added 0.2 MMBoe of proved reserves. These increases were offset by 2022 production totaling 6.5 MMBoe, a decrease of 1.0 MMBoe due to higher operating expenses in the trailing twelve month period used in the projections, and a decrease of 2.8 MMBoe attributable to other revisions. 2021 Activity. Proved reserves increased from 36.9 MMBoe at December 31, 2020 to 71.3 MMBoe at December 31, 2021, primarily as a result of positive revisions of 27.3 MMBoe associated with the increase in year-end SEC commodity prices for oil and natural gas, 13.6 MMBoe associated with reduction in expenses and other commercial improvements, 3.7 MMBoe related to a well reactivation program, and purchases of 1.4 MMBoe of proved reserves. The Company also recorded 2021 production totaling 6.8 MMBoe and a decrease of 3.6 MMBoe due to sales and 1.2 MMBoe attributable to well shut-ins, and other revisions. The summary below presents changes in the Company’s estimated reserves. NPB is included in 2021 and 2020.
| Oil |  | NGL |  | Natural Gas |  | Total
| (MBbls) |  | (MBbls) |  | (MMcf) (1) |  | MBoe
Proved developed and undeveloped reserves |  |  |  |  |  |  |
As of December 31, 2020 | 8,485 |  |  | 11,245 |  |  | 102,893 |  |  | 36,879 |
Revisions of previous estimates (2) | 3,627 |  |  | 14,924 |  |  | 148,736 |  |  | 43,340 |
Acquisitions of new reserves | 135 |  |  | 438 |  |  | 5,235 |  |  | 1,446 |
Sales of reserves in place | (3,440) |  |  | (28) |  |  | (716) |  |  | (3,587) |
Production | (957) |  |  | (2,266) |  |  | (21,417) |  |  | (6,793) |
As of December 31, 2021 | 7,850 |  |  | 24,313 |  |  | 234,731 |  |  | 71,285 |
Revisions of previous estimates (2) | 971 |  |  | 2,825 |  |  | 25,841 |  |  | 8,102 |
Acquisitions of new reserves | 39 |  |  | 65 |  |  | 528 |  |  | 192 |
Extensions and discoveries | 510 |  |  | 227 |  |  | 2,823 |  |  | 1,208 |
Production | (949) |  |  | (1,997) |  |  | (21,101) |  |  | (6,463) |
As of December 31, 2022 | 8,421 |  |  | 25,433 |  |  | 242,822 |  |  | 74,324 |
Revisions of previous estimates (2) | (1,027) |  |  | (8,200) |  |  | (36,464) |  |  | (15,304) |
Acquisitions of new reserves | 453 |  |  | 379 |  |  | 5,474 |  |  | 1,745 |
Extensions and discoveries | 283 |  |  | 357 |  |  | 3,431 |  |  | 1,211 |
Sales of reserves in place | (26) |  |  | (49) |  |  | (427) |  |  | (147) |
Production | (1,047) |  |  | (1,705) |  |  | (20,403) |  |  | (6,152) |
As of December 31, 2023 | 7,057 |  |  | 16,215 |  |  | 194,433 |  |  | 55,677 |
Proved developed reserves |  |  |  |  |  |  |
As of December 31, 2020 | 8,485 |  |  | 11,245 |  |  | 102,893 |  |  | 36,879 |
As of December 31, 2021 | 7,850 |  |  | 24,313 |  |  | 234,731 |  |  | 71,285 |
As of December 31, 2022 | 8,421 |  |  | 25,433 |  |  | 242,822 |  |  | 74,324 |
As of December 31, 2023 | 7,057 |  |  | 16,215 |  |  | 194,433 |  |  | 55,677 |
Proved undeveloped reserves |  |  |  |  |  |  |
As of December 31, 2020 | — |  |  | — |  |  | — |  |  | — |
As of December 31, 2021 | — |  |  | — |  |  | — |  |  | — |
As of December 31, 2022 | — |  |  | — |  |  | — |  |  | — |
As of December 31, 2023 | — |  |  | — |  |  | — |  |  | — |
Totals may not sum or recalculate due to rounding |  |  |  |  |  |  |
_________________ (1) Natural gas reserves are computed at 14.65 pounds per square inch absolute and 60 degrees Fahrenheit. (2) Revisions include changes due to commodity prices, production costs, previous quantity estimates, and other commercial factors. Primary factor for revisions in years ended 2023, 2022 and 2021 were changes in SEC prices, among other factors. See Proved Reserves discussion in Part I, Item 1 of this Form 10-K for additional detail. Standardized Measure of Discounted Future Net Cash Flows (Unaudited) The standardized measure of discounted cash flows and summary of the changes in the standardized measure computation from year to year are prepared in accordance with ASC Topic 932, Extractive Activities—Oil and Gas, ("ASC Topic 932"). The assumptions underlying the computation of the standardized measure of discounted cash flows may be summarized as follows: •the standardized measure includes the Company’s estimate of proved oil, natural gas and NGL reserves and projected future production volumes based upon economic conditions; •pricing is applied based upon SEC prices at December 31, 2023, 2022 and 2021, adjusted for fixed or determinable contracts that are in existence at year-end. The calculated weighted average per unit prices for the Company’s proved reserves and future net revenues were as follows:
| At December 31,
| 2023 |  | 2022 |  | 2021
Oil (per Bbl) | $ | 76.65 |  |  | $ | 93.73 |  |  | $ | 64.95 |
Natural gas (per Mcf) | $ | 1.62 |  |  | $ | 4.76 |  |  | $ | 2.56 |
NGL (per Bbl) | $ | 21.53 |  |  | $ | 33.42 |  |  | $ | 19.26 |
•future development and production costs are determined based on trailing 12 month average cost at year-end; •the standardized measure includes projections of future abandonment costs based upon actual costs at year-end; and •a discount factor of 10% per year is applied annually to the future net cash flows. The summary below presents the Company’s future net cash flows relating to proved oil, natural gas and NGL reserves based on the standardized measure in ASC Topic 932 (in thousands).
| December 31,
| 2023 |  | 2022 |  | 2021
Future cash inflows from production | $ | 1,204,568 |  |  | $ | 2,795,762 |  |  | $ | 1,579,734 |
Future production costs (1) | (627,715) |  |  | (1,131,145) |  |  | (735,904) |
Future development costs (2) | (39,288) |  |  | (36,730) |  |  | (66,732) |
Future income tax expenses (3) | — |  |  | (17,780) |  |  | — |
Undiscounted future net cash flows | 537,565 |  |  | 1,610,107 |  |  | 777,098 |
10% annual discount | (241,272) |  |  | (803,242) |  |  | (344,184) |
Standardized measure of discounted future net cash flows | $ | 296,293 |  |  | $ | 806,865 |  |  | $ | 432,914 |
____________________ (1) Consists of severance taxes, ad valorem taxes, and lease operating expenses. (2) Includes abandonment costs. (3) The future income tax expenses have been computed using statutory tax rates, giving effect to allowable tax deductions and tax credits under current laws, including expected tax benefits to be realized from the utilization of net operating loss carryforwards. The following table represents the Company’s estimate of changes in the standardized measure of discounted future net cash flows from proved reserves (in thousands):
| Year Ended December 31,
| 2023 |  | 2022 |  | 2021
Beginning present value | $ | 806,865 |  |  | $ | 432,914 |  |  | $ | 104,986 |
Changes during the year |  |  |  |  |
Revenues less production | (95,909) |  |  | (197,419) |  |  | (122,964) |
Net changes in prices, production and other costs | (372,897) |  |  | 465,116 |  |  | 380,026 |
Development costs incurred | 645 |  |  | 846 |  |  | 83 |
Net changes in future development costs | (1,307) |  |  | 3,028 |  |  | 446 |
Extensions and discoveries | 18,422 |  |  | 36,984 |  |  | — |
Revisions of previous quantity estimates (1) | (171,758) |  |  | 98,579 |  |  | 112,926 |
Accretion of discount | 81,066 |  |  | 34,138 |  |  | 6,016 |
Net change in income taxes | 3,798 |  |  | (3,798) |  |  | — |
Purchases of reserves in-place | 14,450 |  |  | 3,039 |  |  | 15,541 |
Sales of reserves in-place | (1,394) |  |  | — |  |  | (29,792) |
Timing differences and other (2) | 14,312 |  |  | (66,562) |  |  | (34,354) |
Net change for the year | (510,572) |  |  | 373,951 |  |  | 327,928 |
Ending present value (3) | $ | 296,293 |  |  | $ | 806,865 |  |  | $ | 432,914 |
____________________ (1) A significant portion of the revisions of previous quantity estimates is related to the decrease in pricing which affects well life and other economic factors. Performance revisions were positive. See Proved Reserves discussion. (2) The change in timing differences and other are related to revisions in the Company's estimated time of production and development. (3) Standardized Measure was determined using SEC prices, and does not reflect actual prices received or current market prices.

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