Property and Equipment

9 Months Ended

Mar. 31, 2022

Property, Plant and Equipment [Abstract]

Property and equipment as of March 31, 2022 and June 30, 2021 consisted of the following:


	March 31, 2022		June 30, 2021
Oil and natural gas properties:
Property costs subject to amortization	$	157,312,262	$	129,123,227
Less: Accumulated depletion, depreciation, amortization and impairment	(74,752,924)		(70,607,367)
Oil and natural gas properties, net	$	82,559,338	$	58,515,860
Other property and equipment:
Furniture, fixtures, and office equipment, at cost	$	154,731	$	154,731
Less: Accumulated depreciation	(147,994)		(144,092)
Other property and equipment, net	$	6,737	$	10,639

As of March 31, 2022, all oil and natural gas property costs were subject to amortization. Depletion on oil and natural gas properties was $4.1 million and $3.7 million for the nine months ended March 31, 2022 and 2021, respectively. Depreciation on other properties and equipment was less than $0.1 million for both the nine months ended March 31, 2022 and 2021.

During the nine months ended March 31, 2022 and 2021, the Company incurred development capital expenditures of $0.8 million and $0.3 million, respectively. In addition, during the nine months ended March 31, 2022, the Company recorded a downward $0.9 million purchase adjustment related to its acquisition of the Barnett Shale properties.

The Company uses the full cost method of accounting for its investments 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 March 31, 2022, 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 March 31, 2022 of the West Texas Intermediate (WTI) crude oil spot price of $75.28 per barrel and Henry Hub natural gas spot price of $4.15 per MMBtu, adjusted by market differentials by field. The net price per barrel of NGLs was $40.07, which was based on historical differentials to WTI 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 March 31, 2022 did not exceed the current ceiling. There was no impairment on oil and natural gas properties for the nine months ended March 31, 2022.

The Company recorded a ceiling test impairment of $24.8 million for the nine months ended March 31, 2021 as the Company's net book value of oil and natural gas properties exceeded the ceiling by $15.2 million at December 31, 2020 and $9.6 million at September 30, 2020. The ceiling test impairment in these periods was driven by a decrease in the first-day-of-the-month average for crude oil used in the ceiling test calculation for these periods together with adverse changes in differentials received in the Delhi field for the three months ended September 30, 2020. The impairments were recorded in "Impairment of proved property" on the unaudited consolidated condensed statements of operations.