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OIL AND GAS PROPERTIES

9 Months Ended

Sep. 30, 2023

NOTE 6 – OIL AND GAS PROPERTIES

The following table summarizes the Company’s oil and gas activities by classification for the nine months ended September 30, 2023 (in thousands):

	Balance at December 31, 2022			Additions			Disposals			Transfers		Balance at September 30, 2023
Oil and gas properties, subject to amortization	$	176,253		$	10,221		$	(366	)	$	-	$	186,108
Oil and gas properties, not subject to amortization		775			5,206			-			-		5,981
Asset retirement costs		1,407			131			-			-		1,538
Accumulated depreciation, depletion and impairment		(98,288	)		(7,753	)		-			-		(106,041	)
Total oil and gas assets	$	80,147		$	7,805		$	(366	)	$	-	$	87,586

For the nine-month period ended September 30, 2023, the Company incurred $9,985,000 of capital costs primarily related to non-operated drilling and completion costs related to the Company’s participation in eight new non-operated wells in the D-J Basin Asset in which the Company participated, together with costs related to certain workovers for lift conversions and cleanouts in the Company’s Permian Basin Asset.

The Company also acquired approximately 282 net mineral acres, and 6,305 net lease acres, in and around its existing footprint in the D-J Basin through multiple transactions with total acquisition and due diligence costs of $493,000 for the net mineral acres and $4,946,000 for the net lease acres.

On September 12, 2023, the Company and Evolution Petroleum Corporation (“Evolution”) entered into a Participation Agreement for the joint development of approximately 16,000 gross leasehold acres divided into twelve “Development Blocks” within the Company’s Permian Basin Asset, in which the parties may jointly develop by drilling and completion of up to nine horizontal San Andres wells in each Development Block. The Company received net proceeds of $366,000 and will serve as the operator. Evolution acquired a 50% working interest share in existing leases, covering the initial two Development Blocks (which equals Evolution’s share of the acreage portion for nine drilling locations therein), and upon completion of the wells in each Development Block, Evolution will have the right, but not the obligation, to acquire a 50% working interest share in the next Development Block in exchange for the payment of $450 per net acre of existing leases held by the Company in such block, and participate on a 50% working interest share basis in the drilling and completion of up to nine horizontal San Andres wells in such Development Block.

The depletion recorded for production on proved properties for the three and nine months ended September 30, 2023 and 2022, amounted to $2,616,000, compared to $2,084,000, and $7,753,000, compared to $5,956,000, respectively.