Property, Plant, and Equipment

3 Months Ended

Mar. 31, 2025

Property, Plant and Equipment [Abstract]

Oil and Natural Gas Properties

We utilize the full cost method of accounting for costs related to the exploration, development, and acquisition of oil and natural gas properties. Our capitalized costs of oil and natural gas properties and the related accumulated depreciation, depletion, and amortization as of March 31, 2025 and December 31, 2024 are as follows:


	March 31, 2025		December 31, 2024
(in thousands)
Oil and natural gas properties:
Proved properties	$	930,402	$	846,738
Unproved properties	86,787		86,490
Gross oil and natural gas properties	1,017,189		933,228
Less: accumulated depreciation, depletion, and amortization	(169,215)		(148,638)
Oil and natural gas properties, net	$	847,974	$	784,590

Under the full cost method of accounting, the Company is required to perform a ceiling test each quarter which determines a limit, or ceiling, on the book value of proved oil and natural gas properties. No impairment expense was recorded for the three months ended March 31, 2025 based on the results of the respective quarterly ceiling tests.

Capitalized costs of oil and natural gas properties are subject to a ceiling test that limits such pooled costs, net of applicable deferred taxes, to the aggregate of the present value of future net revenues attributable to proved oil, natural gas, and NGL reserves discounted at 10%. Any costs in excess of the ceiling are written off as a non-cash expense. The expense may not be reversed in future periods, despite commodity price increases which subsequently increase the ceiling. Companies using the full cost method are required to use the average quoted price from the first day of each month from the previous 12 months, including the impact of derivatives designated for hedge accounting, to calculate the ceiling value of reserves. Historically, we have not designated any of our derivative contracts as cash flow hedges.

Capitalized costs of proved properties are computed on a units-of-production basis based on estimated proved reserves, whereby the depletion rate is determined by dividing the total unamortized cost base plus future development costs by estimated proved reserves on a net equivalent basis at the beginning of the period. The depletion rate is multiplied by total production for the period to compute depletion expense. The following table shows our depletion expense for the three months ended March 31, 2025 and 2024 related to oil and gas properties and average depletion rate per Boe:


	For the Three Months Ended March 31,
(in thousands, except per Boe amounts)	2025		2024
Depletion of Proved Oil and Natural Gas Properties	$	20,577	$	15,049
Average Depletion Rate per Boe	$	8.68	$	7.83

Costs associated with unproved properties are excluded from the amortization base until the properties are evaluated or impairment is indicated. The costs associated with unproved leasehold acreage and related seismic data, wells currently drilling and related capitalized interest are initially excluded from the amortization base. Leasehold costs are either transferred to the amortization base with the costs of drilling a well on the lease or are assessed at least annually for possible impairment or reduction in value.

Our decision to exclude costs from amortization and the timing of the transfer of those costs into the amortization base involves judgment and may be subject to changes over time based on numerous factors, including drilling plans, availability of capital, project economics, and drilling results from adjacent acreage.

Costs of unproved properties excluded from amortization consist of leasehold acreage and relate to properties which are not individually significant for which the evaluation process has not been completed. The timing and amount of property acquisition and seismic costs included in the amortization computation will depend on the location and timing of drilling wells, results of drilling, and other assessments. Therefore, we are unable to estimate when these costs will be included in the amortization computation.

Other Property and Equipment

Our other property and equipment consists of the following assets that are recorded at cost and depreciated on a straight-line basis over the respective estimated useful lives.


	March 31, 2025		December 31, 2024
(in thousands)
Midstream assets	$	40,334	$	36,880
Vehicles	1,878		1,815
Furniture, fixtures, and office equipment	770		751
Leasehold improvements	607		607
Gross midstream and other property and equipment	43,589		40,053
Less: Accumulated depreciation	(5,214)		(4,595)
Total midstream and other property and equipment, net	$	38,375	$	35,458

The estimated useful lives of other property and equipment depreciated on a straight-line basis are as follows:


Midstream assets			5 – 25 years
Vehicles			5 years
Furniture, fixtures, and office equipment			3 – 10 years
Leasehold improvements			5 years

The carrying value of long-lived assets that are not part of the Company’s full cost pool are evaluated for recoverability whenever events or changes in circumstances indicate that such carrying values may not be recoverable. Should an impairment exist, the impairment loss would be measured as the amount that the asset’s carrying value exceeds its fair value. We did not recognize any impairment during the three months ended March 31, 2025 and 2024. Total depreciation expense for the three months ended March 31, 2025 and 2024 totaled approximately $0.6 million and $0.5 million, respectively.