Property and Equipment

6 Months Ended

Dec. 31, 2021

Property, Plant and Equipment [Abstract]


	December 31, 2021		June 30, 2021
Oil and natural gas properties:
Property costs subject to amortization	$	128,903,479	$	129,123,227
Less: Accumulated depreciation, depletion, amortization and impairment (a)	(73,151,440)		(70,607,367)
Oil and natural gas properties, net	$	55,752,039	$	58,515,860
Other property and equipment:
Furniture, fixtures, and office equipment, at cost	$	154,732	$	154,731
Less: Accumulated depreciation (b)	(147,995)		(144,092)
Other property and equipment, net	$	6,737	$	10,639

(a) Depletion on oil and natural gas properties was $2,544,072 for the six months ended December 31, 2021, and $2,670,801 for the six months ended December 31, 2020. There was no impairment on oil and natural gas properties for the six months ended December 31, 2021. The Company recorded an impairment of $24.8 million for the six months ended December 31, 2020.

(b) Depreciation was $3,902 for the six months ended December 31, 2021, and $3,620 for the six months ended December 31, 2020.

As of December 31, 2021, all oil and natural gas property costs were subject to amortization.

During the six months ended December 31, 2021 and 2020, the Company incurred development capital expenditures of $0.6 million and $0.2 million, respectively. In addition, during the six months ended December 31, 2021, the Company recorded a downward $0.9 million purchase adjustment related to its acquisition of the Barnett Shale assets.

On May 7, 2021, the Company acquired an approximate 17% working interest and a 14% revenue interest in non-operated oil and natural gas assets in the Barnett Shale from Tokyo Gas Americas for $17.4 million, net of purchase price adjustments, and also recognized $2.8 million in non-cash asset retirement obligations (the “Barnett Shale Acquisition”). As of December 31, 2021, there was $1.8 million in receivables representing expected proceeds from Tokyo Gas related to the final settlement The Company accounted for this transaction as an asset acquisition with an effective date of January 1, 2021.

In accordance with the FASB’s authoritative guidance on asset acquisitions, the Company allocated the costs of the Barnett Shale Acquisition based on a relative fair value basis of the assets acquired and liabilities assumed, with no recognition of goodwill or bargain purchase gain recorded. Incremental legal and professional fees related directly to the acquisition were capitalized as part of the acquisition cost. The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Fair value measurements also utilize market assumptions of market participants.

The Company uses the full cost method of accounting for its investment in oil and natural gas properties. All costs of acquisition, exploration, and development of oil and natural gas reserves are capitalized as the cost of oil and natural gas and properties when incurred. To the extent capitalized costs of evaluated oil and natural gas properties, net of accumulated depletion, exceed the discounted future net revenues of proved oil and natural gas reserves, net of deferred taxes, such excess capitalized costs result in an impairment charge.

At December 31, 2021, the ceiling test value of the Company’s reserves was calculated based on the first-day-of-the-month average for the 12-months ended December 31, 2021 of the West Texas Intermediate (WTI) crude oil spot price of $66.55

per barrel and Henry Hub natural gas spot price of $3.64 per MMBtu, adjusted by market differentials by field. The net price per barrel of NGLs was $26.54, which was based on historical prices received as NGLs do not have any single comparable reference index price. Using these prices, the Company’s net book value of oil and natural gas properties at December 31, 2021 was below the current ceiling.