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Property and Equipment

12 Months Ended

Jun. 30, 2024

Property and Equipment

Property and Equipment

Note 4. Property and Equipment

Property and equipment as of June 30, 2024 and 2023 consisted of the following (in thousands):


		June 30, 2024			June 30, 2023
Oil and natural gas properties
Property costs subject to amortization		$	249,559		$	197,049
Less: Accumulated depletion, depreciation, and impairment			(109,874)			(91,268)
Oil and natural gas properties, net		$	139,685		$	105,781

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 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 would be charged to expense as a write-down of oil and natural gas properties.

Additionally, the Company assesses all properties classified as unevaluated property on a quarterly basis for possible impairment. The Company assesses properties on an individual basis or as a group, if properties are individually insignificant. The assessment includes consideration of the following factors, among others: intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; the assignment of proved reserves; and the economic viability of development if proved reserves are assigned. During any period in which these factors indicate impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and are then subject to depletion and the full cost ceiling test limitation.

As of June 30, 2024 and 2023, all oil and natural gas property costs were subject to amortization. Depletion on oil and natural gas properties was $18.6 million and $13.1 million for the years ended June 30, 2024 and 2023, respectively. During the years ended June 30, 2024 and 2023, the Company incurred development capital expenditures of $12.3 million and $6.2 million, respectively.

At June 30, 2024, 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 June 30, 2024 of the West Texas Intermediate (“WTI”) crude oil spot price of $79.45 per barrel and Henry Hub natural gas spot price of $2.32 per MMBtu, adjusted by market differentials by field. The net price per barrel of NGLs was $23.86, which was based on historical differentials to WTI as NGLs do not have any single comparable reference index price. Using these prices at June 30, 2024, the cost center ceiling was higher than the capitalized costs of oil and natural gas properties and, as a result, no write-down was applicable.

At June 30, 2023, 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 June 30, 2023 of the WTI crude oil spot price of $83.23 per barrel and Henry Hub natural gas spot price of $4.78 per MMBtu, adjusted by market differentials by field. The net price per barrel of NGLs was $33.71, which was based on historical differentials to WTI as NGLs do not have any single comparable reference index price. Using these prices at June 30, 2023, the cost center ceiling was higher than the capitalized costs of oil and natural gas properties and, as a result, no write-down was applicable.