Phoenix Energy One, LLC

Third Quarter 2025 Financial and Operational Highlights

Three Months Ended September 30, 2025 Compared to the Three Months Ended September 30, 2024

The following table summarizes our consolidated results of operations for the periods indicated:

The following tables summarize our segment operating profit for the periods indicated:

The following table summarizes our production data and average realized prices for the periods indicated:

Revenues

The following table shows the components of our revenue for the periods presented:

Revenue was $189.0 million for the three months ended September 30, 2025, as compared to $59.0 million for the same period in 2024, an increase of $130.0 million, or 220.2%. The increase was primarily attributable to an $89.8 million increase in product sales generated from our direct drilling, extraction, and related oil and gas operating activities, $40.4 million of purchased crude oil sales derived from the sale of crude oil purchased from working interest owners and royalty interest holders in wells operated by PhoenixOp that did not exist in the prior period, and a $2.6 million increase in revenue from water disposal services, partially offset by a $3.0 million decrease in mineral and royalty revenues generated from our mineral andnon-operating activities.

Mineral andnon-operating segment revenue was $31.4 million for the three months ended September 30, 2025, as compared to $34.4 million for the same period in 2024, a decrease of $3.0 million, or 8.6%. The decrease in segment revenue was driven by a $1.5 million decrease in revenues from NGLs primarily due to a decrease in the average realized price for NGLs from $29.30/Bbl to $19.25/Bbl in 2025 as compared to the same period in 2024, a $0.8 million decrease in revenues from natural gas due to decreased production volumes, and a $0.7 million decrease in revenues from crude oil primarily due to a decrease in the average realized price for crude oil from $72.01/Bbl to $62.97/Bbl.

Operating segment revenue was $157.5 million for the three months ended September 30, 2025, as compared to $24.7 million for the same period in 2024, an increase of $132.9 million, or 539.1%. The increase was primarily attributable to an $89.8 million increase in product sales generated from our direct drilling, extraction, and related operating activities driven by additional wells placed into service, of which there were 78 producing wells in service as of September 30, 2025, as compared to 10 producing wells in service as of September 30, 2024, $40.4 million of purchased crude oil sales derived from the sale of crude oil purchased from working interest owners and royalty interest holders in wells operated by PhoenixOp beginning in April 2025, and a $2.6 million increase in water service revenue driven by higher disposal volumes, with 6.8 million barrels of saltwater disposed by Firebird Services, LLC (“Firebird Services”) during the three months ended September 30, 2025, as compared to 1.4 million barrels during the same period in 2024.

Operating Expenses

The following table shows the components of our cost of sales for the periods presented:

Cost of sales was $42.9 million for the three months ended September 30, 2025, as compared to $17.4 million for the same period in 2024, an increase of $25.5 million, or 146.6%. The increase was primarily driven by increased drilling, extraction and related oil and gas operating activities associated with wells operated by PhoenixOp during the three months ended September 30, 2025 as compared to the same period in 2024.

Mineral andnon-operating segment cost of sales was $6.9 million for the three months ended September 30, 2025, as compared to $7.0 million for the same period in 2024. The decrease was not material to the mineral andnon-operating segment for the periods presented.

Operating segment cost of sales was $36.1 million for the three months ended September 30, 2025, as compared to $10.4 million for the same period in 2024, an increase of $25.7 million, or 246.9%. The increase in segment cost of sales was driven by increased production from PhoenixOp, which commenced operated production in the first quarter of 2024. PhoenixOp had placed into service 78 producing wells as of September 30, 2025, as compared to 10 producing wells as of September 30, 2024, resulting in increased lease operating expenses, production andad valorem taxes, and production costs during the three months ended September 30, 2025 as compared to the same period in 2024.

Depreciation, Depletion, Amortization, and Accretion Expense

The following table shows the components of our depletion, depreciation, amortization, and accretion expense for the periods presented:

Depreciation, depletion, amortization, and accretion expense was $45.6 million for the three months ended September 30, 2025, as compared to $15.5 million for the same period in 2024, an increase of $30.0 million, or 193.1%, primarily due to a $28.3 million increase in depletion expense within the operating segment, driven by increases in our depletable cost bases and a $1.7 million increase in depletion expense within the mineral andnon-operating segment, primarily due to a higher depletion rate driven by increases in our depletable cost bases for capital expenditures.

Depletion for the mineral andnon-operating segment was $10.3 million for the three months ended September 30, 2025, as compared to $8.6 million for the same period in 2024, an increase of $1.7 million, or 20.3%. On a per unit basis, depletion expense was $15.62 per Boe and $11.75 per Boe for the three months ended September 30, 2025 and 2024, respectively, an increase of $3.87 per Boe, driven by a higher depletion rate primarily due to an increase in our depletable cost bases for capital expenditures.

Depletion for the operating segment was $35.3 million for the three months ended September 30, 2025, as compared to $7.0 million for the same period in 2024, an increase of $28.3 million, or 404.6%, primarily due to increases in the depletable cost bases, partially offset by a lower depletion rate during the three months ended September 30, 2025 as compared to the same period in 2024. The lower depletion rate is primarily attributable to significant growth in proved reserves due to drilling activity by PhoenixOp.

Purchased Crude Oil Expense

Purchased crude oil expense was $39.6 million for the three months ended September 30, 2025, with no comparable activity for the same period in 2024. This change is attributable to the commencement of marketing activities in April 2025 through our wholly-owned subsidiary, Firebird Marketing, LLC (“Firebird Marketing”), within the operating segment. Purchased crude oil expense represents the purchase of crude oil from working interest owners and royalty interest holders in properties operated by PhoenixOp.

Selling, general, and administrative expense was $5.5 million for the three months ended September 30, 2025, as compared to $8.9 million for the same period in 2024, a decrease of $3.4 million, or 38.0%. The decrease was primarily due to a $3.4 million decrease in professional legal service fees and a $2.8 million increase in the overhead charged to wells operated by us, which reduced selling, general, and administrative expense. The decrease was partially offset by a $1.1 million increase in financing-related costs, including administrative costs associated with our securities offerings, a $0.8 million increase in fees associated with land acquisition and title work, a $0.4 million increase in office rent expense and a $0.3 million increase in fees charged by purchasers for early revenue payments in the operating segment.

Selling, general, and administrative expense for the mineral andnon-operating segment was $4.7 million for three months ended September 30, 2025, as compared to $4.0 million for the same period in 2024, an increase of $0.7 million, or 17.7%. The increase was primarily due to increased fees associated with land acquisition and title work of $0.8 million.

Selling, general, and administrative expense for the operating segment was less than $0.1 million for the three months ended September 30, 2025 as compared to $2.8 million for the same period in 2024, a decrease of $2.8 million, or 99.1%, primarily due to a $2.8 million increase in the overhead charged to wells operated by us, which reduced selling, general, and administrative expense recognized in the operating segment.

Selling, general, and administrative expense for the securities segment was $0.8 million for the three months ended September 30, 2025, as compared to $2.1 million for the same period in 2024, a decrease of $1.4 million, or 63.7%. The decrease was primarily due to decreased professional legal service fees of $1.7 million associated with our securities offerings.

Payroll and payroll-related expense was $6.4 million for the three months ended September 30, 2025, as compared to $4.9 million for the same period in 2024, an increase of $1.5 million, or 30.6%, primarily as a result of increased employee headcount and compensation. Employee headcount increased from 127 employees at September 30, 2024 to 182 employees at September 30, 2025.

Payroll and payroll-related expense for the mineral andnon-operating segment was $2.3 million for the three months ended September 30, 2025, as compared to $2.2 million for the same period in 2024. The increase was not material to the mineral andnon-operating segment for the periods presented.

Payroll and payroll-related expense for the operating segment was $2.3 million for the three months ended September 30, 2025, as compared to $1.5 million for the same period in 2024, an increase of $0.7 million, or 48.5%, primarily due to the increased number of personnel engaged in our oil and gas operating activities.

Payroll and payroll-related expense for the securities segment was $1.9 million for the three months ended September 30, 2025, as compared to $1.2 million for the same period in 2024, an increase of $0.6 million, or 49.1%, primarily due to the increased number of personnel engaged in the administration and management of our securities offerings.

Advertising and marketing expense was $0.7 million for the three months ended September 30, 2025, as compared to $0.2 million for the same period in 2024, which was not material for the periods presented.

Impairment Expense

Impairment expense was $2.0 million for the three months ended September 30, 2025, as compared to $0.5 million for the same period in 2024, an increase of $1.5 million, or 276.3%, primarily as a result of lease expirations within the mineral andnon-operating segment.

Other Expenses

Interest expense, net, was $38.8 million for the three months ended September 30, 2025, as compared to $26.2 million for the same period in 2024, an increase of $12.6 million, or 48.1%. The increase was primarily due to a $10.1 million increase in interest costs associated with the Fortress Credit Agreement for the three months ended September 30, 2025 and a $9.3 million increase in interest costs associated with sales of our unregistered debt securities and Registered Notes, which increased from $657.1 million outstanding at September 30, 2024 to $1,005.8 million outstanding at September 30, 2025, with no significant changes in interest rates between the periods. The increase was partially offset by a $6.9 million increase in capitalized interest primarily due to increased qualifying asset expenditures.

Gain on Derivatives

Gain on derivatives was $2.1 million for the three months ended September 30, 2025, as compared to $3.7 million for the same period in 2024, a decrease of $1.7 million, or 44.4%. The decrease was primarily due to a $1.8 million reduction in realized gain on derivatives, reflecting higher net payments made under our crude oil commodity derivative contracts during the three months ended September 30, 2025, as compared to the same period in 2024.

Loss on Debt Extinguishment

Loss on debt extinguishment was $1.3 million for the three months ended September 30, 2025, as compared to $0.6 million for the same period in 2024, an increase of $0.8 million, or 135.3%. The increase was primarily due to increased write-offs of debt issuance costs associated with the redemption of bonds issued pursuant to our unregistered debt offerings, of which $7.1 million of bonds were redeemed during the three months ended September 30, 2025, as compared to $6.0 million of bonds redeemed for the same period in 2024.

The following table summarizes the par value of bonds redeemed for the periods indicated:

Nine Months Ended September 30, 2025 Compared to the Nine Months Ended September 30, 2024

The following table summarizes our consolidated results of operations for the periods indicated:

The following tables summarize our segment operating profit for the periods indicated:

The following table summarizes our production data and average realized prices for the periods indicated:

Revenues

The following table shows the components of our revenue for the periods presented:

Revenue was $468.6 million for the nine months ended September 30, 2025, as compared to $179.6 million for the same period in 2024, an increase of $289.1 million, or 161.0%. The increase was primarily attributable to a $237.4 million increase in product sales generated from our direct drilling, extraction, and related oil and gas operating activities, $71.2 million of purchased crude oil sales derived from the sale of crude oil purchased from working interest owners and royalty interest holders in wells operated by PhoenixOp that did not exist in the prior period, and a $6.9 million increase in revenue from water disposal services, partially offset by a $26.8 million decrease in mineral and royalty revenues generated from our mineral andnon-operating activities.

Mineral andnon-operating segment revenue was $93.3 million for the nine months ended September 30, 2025, as compared to $120.0 million for the same period in 2024, a decrease of $26.7 million, or 22.2%. The decrease in segment revenue was primarily driven by decreased revenues from crude oil due to a 14.6% decrease in production volumes primarily due to the Company’s increased focus on acquiring assets with higher long-term anticipated rates of return and an 8.2% decrease in the average realized price from $71.18/Bbl to $65.36/Bbl for crude oil within the mineral andnon-operating segment in 2025 as compared to the same period in 2024.

Operating segment revenue was $375.1 million for the nine months ended September 30, 2025, as compared to $59.5 million for the same period in 2024, an increase of $315.6 million, or 529.9%. The increase was primarily attributable to a $237.4 million increase in product sales generated from our direct drilling, extraction, and related operating activities driven by additional wells placed into service, of which there were 78 producing wells placed into service as of September 30, 2025, as compared to 10 producing wells in service as of September 30, 2024, $71.2 million of purchased crude oil sales derived from the sale of crude oil purchased from working interest owners and royalty interest holders in wells operated by PhoenixOp beginning in April 2025, and a $6.9 million increase in water service revenue driven by higher disposal volumes, with 15.8 million barrels of saltwater disposed by Firebird Services during the nine months ended September 30, 2025, as compared to 3.4 million barrels during the same period in 2024.

Operating Expenses

The following table shows the components of our cost of sales for the periods presented:

Cost of sales was $105.2 million for the nine months ended September 30, 2025, as compared to $40.3 million for the same period in 2024, an increase of $64.8 million, or 160.8%. The increase was primarily driven by increased drilling, extraction and related oil and gas operating activities associated with wells operated by PhoenixOp, partially offset by a decrease in cost of sales due to lower lease operating expense and severance taxes resulting from decreased crude oil production volumes from our acquisitions of mineral andnon-operated working interests during the nine months ended September 30, 2025 as compared to the same period in 2024.

Mineral andnon-operating segment cost of sales was $18.2 million for the nine months ended September 30, 2025, as compared to $22.3 million for the same period in 2024, a decrease of $4.0 million, or 18.1%. The decrease in segment cost of sales was primarily attributable to lower lease operating expense and severance taxes resulting from a 14.6% decrease in crude oil production volumes from our acquisitions of mineral andnon-operated working interests during the nine months ended September 30, 2025 as compared to the same period in 2024.

Operating segment cost of sales was $87.2 million for the nine months ended September 30, 2025, as compared to $18.1 million for the same period in 2024, an increase of $69.0 million, or 380.4%. The increase in segment cost of sales was driven by increased production from PhoenixOp, which commenced operated production in the first quarter of 2024. As of September 30, 2025, PhoenixOp had placed into service an additional 68 producing wells since September 30, 2024, resulting in increased lease operating expenses, production andad valorem taxes, and production costs during the nine months ended September 30, 2025 as compared to the same period in 2024.

Depreciation, Depletion, Amortization, and Accretion Expense

The following table shows the components of our depletion, depreciation, amortization, and accretion expense for the periods presented:

Depreciation, depletion, amortization, and accretion expense was $113.4 million for the nine months ended September 30, 2025, as compared to $53.3 million for the same period in 2024, an increase of $60.1 million, or 112.7%, primarily due to a $71.0 million increase in depletion expense within the operating segment driven by increases in our depletable cost bases, partially offset by a $10.9 million decrease within the mineral andnon-operating segment primarily due to a lower depletion rate driven by reduced realized production volumes.

Depletion for the mineral andnon-operating segment was $25.6 million for the nine months ended September 30, 2025, as compared to $36.5 million for the same period in 2024, a decrease of $10.9 million, or 29.8%. On a per unit basis, depletion expense was $14.01 per Boe and $15.90 per Boe for the nine months ended September 30, 2025 and 2024, respectively, a decrease of $1.89 per Boe, driven by a lower depletion rate, primarily due to reduced realized production volumes.

Depletion for the operating segment was $87.8 million for the nine months ended September 30, 2025, as compared to $16.8 million for the same period in 2024, an increase of $71.0 million, or 422.4%, primarily due to increases in the depletable cost bases, partially offset by a lower depletion rate during the nine months ended September 30, 2025 as compared to the same period in 2024. The lower depletion rate is primarily attributable to significant growth in proved reserves due to drilling activity by PhoenixOp.

Purchased Crude Oil Expense

Purchased crude oil expense was $70.0 million for the nine months ended September 30, 2025, with no comparable activity for the same period in 2024. This change is attributable to the commencement of marketing activities in April 2025 through Firebird Marketing within the operating segment. Purchased crude oil expense represents the purchase of crude oil from working interest owners and royalty interest holders in properties operated by PhoenixOp.

Selling, general, and administrative expense was $21.4 million for the nine months ended September 30, 2025, as compared to $22.1 million for the same period in 2024, a decrease of $0.6 million, or 2.8%. The decrease was primarily due to a $6.5 million decrease in fees associated with professional legal services and a $3.6 million increase in the overhead charged to wells operated by us, which reduced selling, general, and administrative expense. The decrease was partially offset by a $3.5 million increase in fees associated with land acquisition and title work, a $3.1 million increase in allocated corporate overhead, a $2.2 million increase in financing-related costs, including administrative costs associated with our securities offerings, and a $0.6 million increase in contract labor costs.

Selling, general, and administrative expense for the mineral andnon-operating segment was $14.5 million for nine months ended September 30, 2025, as compared to $10.1 million for the same period in 2024, an increase of $4.4 million, or 43.7%. The increase was primarily due to increased fees associated with land acquisition and title work of $3.5 million and increased allocated corporate overhead of $1.1 million.

Selling, general, and administrative expense for the operating segment was $3.1 million for the nine months ended September 30, 2025 as compared to $7.1 million for the same period in 2024, a decrease of $3.9 million, or 55.8%, primarily due to a $3.6 million increase in the overhead charged to wells operated by us, which reduced selling, general, and administrative expense, and decreased allocated professional legal fees of $2.2 million, partially offset by increased allocated corporate overhead of $1.7 million.

Selling, general, and administrative expense for the securities segment was $3.8 million for the nine months ended September 30, 2025, as compared to $4.9 million for the same period in 2024, a decrease of $1.1 million, or 21.9%, primarily due to decreased professional legal service fees of $2.1 million, partially offset by increased administrative costs associated with our securities offerings of $1.1 million.

Payroll and payroll-related expense was $22.5 million for the nine months ended September 30, 2025, as compared to $15.7 million for the same period in 2024, an increase of $6.8 million, or 43.4%, primarily as a result of increased employee headcount and compensation. Employee headcount increased from 127 employees at September 30, 2024 to 182 employees at September 30, 2025.

Payroll and payroll-related expense for the mineral andnon-operating segment was $10.2 million for the nine months ended September 30, 2025, as compared to $8.1 million for the same period in 2024, an increase of $2.0 million, or 25.2%, due to increased activity in acquiring leasehold and mineral assets.

Payroll and payroll-related expense for the operating segment was $6.7 million for the nine months ended September 30, 2025, as compared to $4.3 million for the same period in 2024, an increase of $2.4 million, or 55.7%, primarily due to the increased number of personnel engaged in our oil and gas operating activities.

Payroll and payroll-related expense for the securities segment was $5.6 million for the nine months ended September 30, 2025, as compared to $3.2 million for the same period in 2024, an increase of $2.4 million, or 73.0%, primarily due to the increased number of personnel engaged in the administration and management of our securities offerings.

Advertising and marketing expense was $1.5 million for the nine months ended September 30, 2025, as compared to $0.4 million for the same period in 2024, an increase of $1.2 million, or 337.4%, primarily due to increased marketing expenses related to our debt securities offerings and offering of Series A Preferred Shares.

Loss on Sale of Assets

Loss on sale of assets was $0.6 million for the nine months ended September 30, 2024, as result of the disposition of certain mineral interests in the Williston Basin within the mineral andnon-operating segment, with no comparable activity in the current-year period.

Impairment Expense

Impairment expense was $2.5 million for the nine months ended September 30, 2025 as compared to $0.5 million for the same period in 2024, an increase of $2.0 million, or 375.2%, primarily as a result of lease expirations within the mineral andnon-operating segment.

Other Expenses

Interest expense, net, was $111.7 million for the nine months ended September 30, 2025, as compared to $61.1 million for the same period in 2024, an increase of $50.6 million, or 82.8%. The increase was primarily due to a $36.0 million increase in interest costs associated with sales of our unregistered debt securities and Registered Notes, which increased from $657.1 million outstanding at September 30, 2024 to $1,005.8 million outstanding at September 30, 2025, with no significant changes in interest rates between the periods, a $27.7 million increase in interest costs associated with the Fortress Credit Agreement, and a $2.6 million increase in interest costs associated with Securities debt issuance costs for the nine months ended September 30, 2025. The increase was partially offset by decreased interest costs of $4.4 million associated with merchant cash advances and a line of credit, which were previously outstanding as of September 30, 2024 but were repaid in full prior to 2025, $0.2 million of decreased interest costs associated with deferred closings associated with our mineral acquisitions, and a $11.1 million increase in capitalized interest primarily due to higher qualifying asset expenditures.

Gain on Derivatives

Gain on derivatives was $12.9 million for the nine months ended September 30, 2025, as compared to a gain on derivatives of $3.6 million for the same period in 2024, an increase of $9.3 million, or 255.6%, primarily as a result of favorable changes in themark-to-market value of commodity derivatives entered into during the nine months ended September 30, 2025, with limited comparable activity for the same period in 2024.

Loss on Debt Extinguishment

Loss on debt extinguishment was $1.9 million for the nine months ended September 30, 2025, as compared to $0.9 million for the same period in 2024, an increase of $1.0 million, or 120.7%. The increase was primarily due to increased write-offs of debt issuance costs associated with the redemption of bonds issued pursuant to our unregistered debt offerings, of which $12.4 million of bonds were redeemed during the nine months ended September 30, 2025, as compared to $9.9 million of bonds redeemed for the same period in 2024.

The following table summarizes the par value of bonds redeemed for the periods indicated:

Non-GAAP Financial Measures

Our management uses EBITDA to understand and compare our operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate financial performance and liquidity, in each case, without regard to financing methods, capital structure, or historical cost basis. EBITDA is presented as supplemental disclosure as we believe it provides useful information to investors and others in understanding and evaluating our results, prospects, and liquidity period over period, including as compared to results of other companies. By providing thisnon-GAAP financial measure, together with a reconciliation to GAAP results, we believe we are enhancing investors’ understanding of our business and our operating performance, as well as assisting investors in evaluating how well we are executing strategic initiatives.

EBITDA has important limitations as an analytical tool because it excludes some but not all items that affect net income (loss), the most directly comparable GAAP measure. In particular, EBITDA excludes certain material costs, such as interest expense, and certainnon-cash charges, such as depreciation, depletion, amortization, and accretion expense, which have been necessary elements of our expenses. Because EBITDA does not account for these expenses, its utility as a measure of our operating performance has material limitations. Other companies may not publish this or similar metrics, and our computation of EBITDA may differ from computations of similarly titled measures of other companies. Therefore, our EBITDA should be considered in addition to, and not as a substitute for, in isolation from, or superior to, our financial information prepared in accordance with GAAP, and should be read in conjunction with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report.

The following tables show a reconciliation of EBITDA to net income (loss), the most comparable GAAP measure, as presented in the condensed consolidated statements of operations for the periods presented:

EBITDA was $92.6 million for the three months ended September 30, 2025, as compared to $30.2 million for the same period in 2024, an increase of $62.4 million, or 206.5%. The increase in EBITDA was primarily driven by a $130.0 million increase in consolidated revenues, partially offset by a $65.2 million increase in operating expense (excluding depreciation, depletion, amortization, and accretion expense), primarily driven by increased purchased crude oil expenses and increased cost of sales, and a $1.7 million reduction in gain on derivatives, primarily due to a reduction in realized gain on derivatives, reflecting higher net payments made under our crude oil commodity derivative contracts during the three months ended September 30, 2025.

EBITDA was $256.5 million for the nine months ended September 30, 2025, as compared to $102.8 million for the same period in 2024, an increase of $153.7 million, or 149.5%. The increase in EBITDA was primarily driven by a $289.1 million increase in consolidated revenues and a $9.3 million increase in gain on derivatives, primarily as a result of favorable changes in themark-to-market value of commodity derivatives entered into during the nine months ended September 30, 2025, with limited comparable activity for the same period in 2024, partially offset by a $143.6 million increase in operating expense (excluding depreciation, depletion, amortization, and accretion expense), primarily driven by increased cost of sales, increased purchased crude oil expenses, increased payroll and payroll-related expenses and increased impairment expense.

Liquidity and Capital Resources

Overview

Our primary sources of liquidity to date have been cash flows from operations, borrowings under credit facilities, issuances of debt securities pursuant to registered debt offerings and unregistered debt offerings under Regulation D and A of the Securities Act, including the Registered Notes, Adamantium Securities and the Regulation D/Regulation A Bonds (the “Reg D/Reg A Bonds”), and issuances of preferred equity in September 2025. Future sources of liquidity may also include other credit facilities, continued issuances of debt or equity securities, and capital contributions. Our primary uses of cash are on the development and operation of PhoenixOp’s properties, the acquisition of mineral and royalty interests, lease operating expenses, and our proportionate share of production, severance, andad valorem taxes for mineral and royalty interests, production costs, including gathering, processing, and transportation costs, debt service payments, the reduction of outstanding debt balances, and general overhead and other corporate expenses. As we continue to engage in increased drilling and direct production activities through PhoenixOp, we expect the development and operation of PhoenixOp’s properties to become an increasingly significant use of our cash. As of September 30, 2025, we had cash and cash equivalents of $95.5 million and outstanding indebtedness of $1,405.8 million.

As of September 30, 2025, we had $145.3 million of debt coming due and $119.5 million of interest payable within the next 12 months. Over the next 12 months, we expect to drill between 90 to 110 gross and 62.0 to 76.0 net wells across our operated leasehold acreage in the Bakken/Williston Basin in North Dakota and Montana, and expect to participate in the drilling of approximately between 210 to 250 gross and 12.1 to 14.5 net wells across ournon-operated leasehold. We estimate that these direct drilling operations andnon-operated activity will require between $730.0 million and $830.0 million of capital expenditures over the next 12 months.

Our ability to finance our operations, including funding capital expenditures and acquisitions, to meet our indebtedness obligations, or to refinance our indebtedness, will depend on our ability to generate cash in the future. Although we expect that our cash flows from operations will be sufficient to meet our fixed obligations, to fully realize our business plan we anticipated at the beginning of the year that we would need to raise approximately $400 million in capital in 2025. We have raised $454.1 million in debt proceeds from the issuance of debt securities and increased borrowing under our credit facility and $47.9 million, net of offering costs, from the Series A Preferred Shares offering during the nine months ended September 30, 2025. We believe that these sources of liquidity will be sufficient to meet our cash requirements, including normal operating needs, debt service obligations, and capital expenditures, for at least the next 12 months, and will allow us to continue to execute on our strategy of expanding our direct drilling operations through PhoenixOp and acquiring attractive mineral and royalty interests in order to position us to grow our cash flows.

We periodically assess changes in current and projected cash flows, acquisition and divestiture activities, and other factors to determine the effects on our liquidity. Our ability to generate cash is subject to a number of factors, many of which are beyond our control, including commodity prices, weather, and general economic, financial, competitive, legislative, regulatory, and other factors. We are currently monitoring our operations and industry developments, including our drilling operations and production plans, in light of recent changes in the commodity price environment and industry volatility. In recent months, oil prices have decreased, going from $71.20 per barrel as of April 1, 2025 to $60.98 per barrel as of October 31, 2025, which prices are below those assumed for purposes of our business plan. While we believe the company is well-positioned to navigate a lower-price environment, in the event of a prolonged period of commodity prices below those assumed for purposes of our business plan, our cash flows from operations would decrease and we may determine to adjust our business plan by adjusting capital expenditures, decreasing drilling operations, and/or reducing production plans, among other actions. We may also be required to raise additional capital, above our current expectations, in order to fully realize our current or adjusted business plan. See“Risk Factors—Risks Related to Our Business and Operations—Our business is sensitive to the price of oil and gas, and sustained declines in prices may adversely affect our financial position, financial results, cash flows, access to capital, and ability to grow.”If cash flow from operations does not meet our expectations, we may reduce our expected level of capital expenditures. If we require additional capital for acquisitions or other reasons, we may raise such capital through additional borrowings, asset sales, offerings of equity and debt securities, or other means. We cannot assure you that necessary capital will be available on acceptable terms or at all. Our ability to raise funds through the incurrence of additional indebtedness could be limited by covenants in our debt arrangements. If we are unable to obtain funds when needed or on acceptable terms, we may not be able to complete acquisitions that are favorable to us or finance the capital expenditures necessary to maintain our production or proved reserves. See “Risk Factors.”

We or our affiliates may from time to time seek to repurchase or retire our indebtedness through cash purchases and/or exchanges for equity or debt securities, in open-market purchases, privately negotiated transactions, tender or exchange offers, or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity, contractual restrictions, and other factors. The amounts involved may be material. For more information regarding the material terms of our outstanding indebtedness, see “—Indebtedness”below.

Preferred Equity

In September 2025, we completed our offering of the Series A Cumulative Redeemable Preferred Shares (the “Series A Preferred Shares”) pursuant to Regulation A promulgated under the Securities Act, which shares were listed on the NYSE American under the ticker symbol PHXE.P and commenced trading on September 30, 2025. We sold an aggregate of 2,704,023 Series A Preferred Shares at closing, which represented $67.6 million in initial liquidation preference at a public offering price of $20.00 per share for gross proceeds of $54.1 million. Offering costs of $6.2 million were recorded as a reduction of the gross proceeds.

Holders of the Series A Preferred Shares generally have no voting rights. However, if we do not pay distributions on the Series A Preferred Shares for six or more quarterly distribution periods (whether or not consecutive), the holders of the Series A Preferred Shares will be entitled to vote for the election of two additional directors to serve on the Board of Directors until we pay, or declare and set aside funds for the payment of all distributions that we owe on the Series A Preferred Shares.

The Series A Preferred Shares rank senior to all classes of equity securities issued by us (including common equity) and are junior to all of our existing and future indebtedness. Holders of the Series A Preferred Shares are entitled to receive cumulative cash distributions based on the initial liquidation preference of $25.00 per share, accruing from the initial issuance date and, when, as and if declared by our Board of Directors, payable quarterly in arrears on January 15, April 15, July 15, and October 15 of each year, beginning on October 15, 2025. The annual distribution rate is 10.0% for the first three year-period, 10.5% in the fourth year, and 11.0% in the fifth year and thereon. As of September 30, 2025, $0.3 million of Series A Preferred distributions equal to $0.11111 per share had been declared and scheduled to be paid on October 15, 2025 to the holders on record as of October 1, 2025. On October 15, 2025, we paid cash distributions totaling $0.3 million to holders of our Series A Preferred Shares, pursuant to distributions declared by our Board of Directors in September 2025.

In the event of our voluntary or involuntary liquidation, dissolution, or winding up, the holders of the Series A Preferred Shares will generally have the right to receive the initial liquidation preference of $25.00 per Series A Preferred Share, plus any accumulated and unpaid distributions. The Series A Preferred Shares are not redeemable at the option of the holders. The Series A Preferred Shares, are, however, redeemable at our option, in whole or in part, at a cash redemption price of $27.50 per share, plus any accumulated and unpaid distributions. The Series A Preferred Shares are not convertible or exchangeable for any of our securities or property.

Cash Flows

The following table summarizes our cash flows for the periods indicated:

Operating Activities

Net cash provided by operating activities for the nine months ended September 30, 2025 was $190.6 million, as compared to $40.2 million for the same period in 2024, an increase of $150.4 million in net cash provided by operating activities. The increase was primarily due to a $102.7 million increase in net income, adjusted fornon-cash charges of $58.6 million, and net favorable fluctuations of $47.7 million from changes in operating assets and liabilities. The $47.7 million cash inflow from changes in operating assets and liabilities was primarily due to increased accounts payable, accrued and other liabilities and noncurrent accrued interest totaling $83.0 million, partially offset by increased accounts receivable of $32.1 million and decreased escrow account liability of $12.4 million primarily due to the timing of cash receipts and payments during the nine months ended September 30, 2025 as compared to the same period in 2024.

Investing Activities

Net cash used in investing activities for the nine months ended September 30, 2025 was $606.0 million, as compared to $274.2 million for the same period in 2024, an increase of $331.9 million in net cash used in investing activities. The increase was primarily driven by a $324.3 million increase in additions to oil and gas properties, primarily due to increased drilling and completion activities in our operating segment during the nine months ended September 30, 2025, as compared to the same period in 2024, and $6.2 million of proceeds received in connection with the disposition of mineral interests during the nine months ended September 30, 2024 that did not recur in the current year period.

Financing Activities

Net cash provided by financing activities for the nine months ended September 30, 2025 was $390.1 million, as compared to $253.0 million for the same period in 2024, an increase of $137.0 million in net cash provided by financing activities. The increase was primarily driven by increased proceeds from issuances of debt, net of debt discount, of $69.3 million, proceeds from the preferred equity offering that closed in September 2025 totaling $47.9 million, net of offering costs, a $29.7 million decrease in repayments of debt primarily due to the repayment of merchant cash advances and a line of credit in 2024 that were not applicable in 2025, and a $3.6 million decrease in payments of deferred closings associated with mineral interest acquisitions, partially offset by a $17.9 million increase in payments of debt issuance costs and a $0.3 million decrease in member’s contributions.

Indebtedness

Set forth below is a chart of our outstanding third-party indebtedness as of September 30, 2025 (dollars in thousands):

ANB Credit Agreement

We were borrowers under that certain Commercial Credit Agreement (the “ANB Credit Agreement”), which we entered into with Amarillo National Bank, a national banking association (“ANB”) on July 24, 2023. The ANB Credit Agreement provided for a $30.0 million revolving credit loan by ANB, and, as of June 30, 2024, the outstanding balance was $30.0 million. The proceeds from the borrowing under the ANB Credit Agreement were used in part to repay in full our outstanding facility with Cortland Credit Lending Corporation. ANB’s commitments under the ANB Credit Agreement and the loans thereunder were initially scheduled to terminate and mature, and be due and payable in full, on July 24, 2024. On July 24, 2024, we entered into an agreement that extended ANB’s commitments and the maturity of the loans under the ANB Credit Agreement to September 24, 2024. We fully repaid all amounts owed under the ANB Credit Agreement on August 12, 2024 in connection with entering into the Fortress Credit Agreement.

Fortress Credit Agreement

We entered into the Fortress Credit Agreement with Fortress Credit Corp. (“Fortress”) on August 12, 2024, which provides for a $100.0 million term loan facility (the “Fortress Term Loan”) that was borrowed in full on August 12, 2024, and a $35.0 million delayed draw term loan facility that was borrowed in full on October 11, 2024 (any loans thereunder, together with the Fortress Term Loan, the “Fortress Tranche A Loans”). On December 18, 2024, the Fortress Credit Agreement was amended to, among other things, provide for a new tranche of term loans (the “Fortress Tranche C Loan”) in an aggregate principal amount of $115.0 million that was borrowed in full on December 18, 2024. On April 16, 2025, the Fortress Credit Agreement was further amended to, among other things, establish a new tranche of term loans (the “Fortress Tranche D Loans”) in an aggregate principal amount of $50.0 million, with $25.0 million aggregate principal amount borrowed on April 16, 2025 and $25.0 million aggregate principal amount borrowed on May 9, 2025. Then, on August 1, 2025, the Fortress Credit Agreement was amended further to provide for a new tranche of term loans (the “Fortress Tranche E Loan”) in an aggregate principal amount of $100.0 million that was borrowed in full on August 1, 2025. On October 29. 2025, the Fortress Credit Agreement was further amended to, among other things, provide for a new tranche of term loans available on a discretionary basis (the “Fortress Tranche G Loans”, and, together with the Fortress Tranche A Loans, the Fortress Tranche C Loan, the Fortress Tranche D Loans, and the Fortress Tranche E Loans, the “Fortress Loans”) in an aggregate principal amount of $350.0 million, with $50.0 million aggregate principal amount borrowed on October 29, 2025. The Fortress Credit Agreement also provides for (a) a rebate of approximately $8.5 million in original issue discount (the “Fortress Tranche B Loan”) and (b) a rebate of approximately $6.5 million in original issue discount (the “Fortress Tranche F Loan” and, together with the Fortress Tranche B Loan, the “Fortress Rebate Loans”), each of which are payable by setoff against final payment in full of the Fortress Credit Agreement, if (a) all outstanding principal and accrued interest on the loans under the Fortress Credit Agreement are paid in full in cash on or before December 18, 2027, and (b) no event of default resulting from the failure to pay principal or interest when due under the terms and conditions of the Fortress Credit Agreement has occurred prior to such date, subject to certain other conditions.

Obligations under the Fortress Credit Agreement are secured by substantially all of the assets of Phoenix Equity and its subsidiaries that have guaranteed the obligations of the obligors under the Fortress Credit Agreement, subject to certain exceptions. Furthermore, pursuant to that certain Assignment of Loans and Liens, dated as of August 12, 2024, among Phoenix Energy (formerly Phoenix Capital Group Holdings, LLC), Phoenix Operating, ANB, Fortress, as administrative agent and as collateral agent, and the new lenders party thereto, ANB assigned, and Fortress assumed, all security interests granted by us in favor of ANB under the ANB Credit Agreement. The lenders under the Fortress Credit Agreement also purchased and assumed from ANB all of the outstanding extensions of credit made by ANB under the ANB Credit Agreement. As a result of the foregoing, the ANB Credit Agreement and all related documentation ceased to be of any force and effect.

The Fortress Loans are subject to a 3.00% original issue discount (“OID”). The $8.5 million and $6.5 million OID issued in connection with the Fortress Tranche B Loan and Fortress Tranche F Loan are to be rebated if certain conditions are met, and therefore represent contingent principal obligations that are only due and payable (together with accrued interest) upon the occurrence of those conditions, including payment defaults under the Fortress Credit Agreement or a bankruptcy filing. We expect the OIDs associated with the Fortress Rebate Loans will be rebated in full.

Borrowings under the Fortress Credit Agreement bear interest at a rate per annum equal to Term SOFR (as defined in the Fortress Credit Agreement) plus 0.1% plus 7.0%. Interest on the Fortress Loans is payable quarterly in arrears. The outstanding principal amount of the Fortress Loans (including, if applicable, the Fortress Tranche B Loan and the Fortress Tranche F Loan) must be repaid as follows: (i) on August 31, 2027, $200.0 million of the outstanding principal amount of the Fortress Loans less the aggregate amount of all voluntary prepayments and mandatory prepayments made as of August 31, 2027; and (ii) the remaining aggregate outstanding principal amount on December 18, 2027. In connection with any payment in full of the Fortress Loans (whether by voluntary prepayment, acceleration, or on the maturity date), PhoenixOp will pay a repayment premium in an amount sufficient to achieve a MOIC (as defined in the Fortress Credit Agreement) of 1.18.

The Fortress Credit Agreement contains various customary affirmative and negative covenants, as well as financial covenants. The Fortress Credit Agreement requires us to maintain (a) a maximum total secured leverage ratio (i) as of the last day of any fiscal quarter ending on or before December 31, 2025 of less than or equal to 2.00 to 1.00 (commencing with the fiscal quarter ending December 31, 2024), and (ii) as of the last day of any fiscal quarter ending on or after March 31, 2026 of less than or equal to 1.50 to 1.00, (b) a minimum current ratio as of the last day of each calendar month of (i) 0.90 to 1.00 from September 30, 2024 through October 31, 2024, (ii) 0.80 to 1.00 from November 30, 2024 through November 30, 2025, (iii) 0.90 to 1.00 from December 31, 2025 through December 31, 2026, and (iv) 1.00 to 1.00 for each calendar month ending thereafter, and (c) a minimum asset coverage ratio as of the last day of any fiscal quarter (i) ending during the period from June 30, 2024 through December 31, 2024, of at least 2.00 to 1.00, (ii) ending during the period from March 31, 2025 through September 30, 2025, of at least 1.70 to 1.00, and (iii) ending during the period from December 31, 2025 and thereafter, of at least 2.00 to 1.00. The Fortress Credit Agreement also places certain limits on our ability to incur additional indebtedness, including the issuance of unsecured notes or bonds and accounts receivable factoring arrangements, as well as limits on our ability to redeem the Preferred Shares. Under the terms of the Fortress Credit Agreement, we may only expend an aggregate amount of $5,000,000 to redeem Preferred Shares in any fiscal quarter, which quarterly limit may be reduced by the amount of certain cash payments made during such quarter to the extent related to certain debt refinancing transactions. On October 27, 2025, subsequent to the balance sheet date, we executed an amendment of the Fortress Credit Agreement, which provided a waiver of default on its current ratio as of September 30, 2025.

The Fortress Credit Agreement contains customary events of default, including, but not limited to, nonpayment of the Fortress Loans and any other material indebtedness, material inaccuracies of representations and warranties, violations of covenants, certain bankruptcies and liquidations, certain material judgments, and certain events related to the security documents.

As described above, a portion of the proceeds from the Fortress Term Loan was used to pay all amounts owed under the ANB Credit Agreement. We will use the remaining proceeds of the Fortress Loans to finance the development of oil and gas properties in accordance with the approved plan of development as provided in the Fortress Credit Agreement.

Adamantium Debt

Adamantium was formed on June 21, 2023, as our wholly owned financing subsidiary for the purpose of undertaking financing efforts under Regulation D and subsequently loaning amounts to us and/or our subsidiaries, as needed. Adamantium offers high net worth individuals Bonds pursuant to an offering under Rule 506(c) of Regulation D that commenced in September 2023, and does not expect to undertake financing efforts under Regulation A. Adamantium has in the past, and may in the future, issue debt securities in other offerings exempt from registration under the Securities Act under Section 4(a)(2) thereof or any other available exemption, including, for example, the Adamantium Secured Note.

On September 14, 2023, we, as borrower, entered into the Adamantium Loan Agreement with Adamantium, as lender. On October 30, 2023, Phoenix Energy (formerly Phoenix Capital Group Holdings, LLC), Adamantium, and PhoenixOp entered into an amendment to the Adamantium Loan Agreement to add PhoenixOp as a borrower, and on November 1, 2024 entered into another amendment to increase the loan amount thereunder. The Adamantium Loan Agreement provides for up to $407.0 million in aggregate principal amount of borrowings in one or more advances, comprising $400.0 million from the proceeds of Adamantium Bonds and $7.0 million from the proceeds of the Adamantium Secured Note. Adamantium may, but is not guaranteed to, issue $400.0 million in aggregate principal amount of Adamantium Bonds to fund advances to us and PhoenixOp pursuant to the Adamantium Loan Agreement. The timing of any advance under the Adamantium Loan Agreement is contingent upon Adamantium’s receipt of proceeds from the sale of Adamantium Securities. Each advance will have a maturity and interest rate that matches the terms of the respective Adamantium Securities sold prior to such advance and to which such advance relates. We expect to use the proceeds of borrowings under the Adamantium Loan Agreement (i) to purchase mineral rights andnon-operated working interests, as well as additional asset acquisitions, (ii) to finance potential drilling and exploration operations of one or more subsidiaries (including PhoenixOp), and (iii) for other working capital needs.

As of September 30, 2025, $211.2 million aggregate principal amount of Adamantium Bonds was outstanding, with maturity dates ranging from five to eleven years from the issue date and interest rates ranging from 13.0% to 16.0%per annum, and $7.0 million aggregate principal amount was outstanding under the Adamantium Secured Note, which initially matures in November 2031, has an interest rate of 16.5%per annum, and is secured by Adamantium’s rights under the Adamantium Loan Agreement, and, in each case, the corollary amount of borrowings was outstanding under the Adamantium Loan Agreement.

The Adamantium Securities contain customary events of default and may be redeemed at the option of Adamantium at any time without premium or penalty. The holders of Adamantium Bonds also have a right to request redemption of their bonds in certain circumstances at a discount to par, subject to a limit of 10.0% of the then-outstanding principal amount of Adamantium Bonds in any given calendar year. The holder of the Adamantium Secured Note has the right to request redemption of its note at par, subject to a limit of $5.0 million in aggregate principal amount of the Adamantium Secured Note in any 12-month period.

Amounts loaned under the Adamantium Loan Agreement are secured by mortgages on certain of our properties, which mortgages are junior to the security interest under the Fortress Credit Agreement and other existing and future senior secured indebtedness. The aggregate outstanding amount of all advances under the Adamantium Loan Agreement may not exceed 100.0% of the aggregate total discounted present value of the junior mortgages serving as collateral thereunder, after deducting any allocable amount securing any of our outstanding senior indebtedness (the “Adamantium Loan-to-Value Ratio”). The value of such collateral will be determined by one or more reserve studies performed by a third party retained by us on an annual basis. In the event the aggregate amount outstanding under the Adamantium Loan Agreement exceeds the Adamantium Loan-to-Value Ratio, we may cure such deficiency by either pledging additional collateral or repaying a portion of the borrowings under the Adamantium Loan Agreement until the Adamantium Loan-to-Value Ratio is achieved.

At the option of Adamantium, an advance may be made on either (i) a current basis, whereby we make interest-only monthly payments in cash to Adamantium on the tenth day of each month or (ii) an accrual basis, whereby interest is compounded monthly and we will pay all accrued and unpaid interest at maturity of the respective advance. Interest will accrue a full pro rata portion of the annual rate of interest for each calendar month regardless of the number of days an advance is outstanding during such calendar month, on the same terms as the interest payable on the Adamantium Securities sold prior to such advance and to which such advance relates. On each respective maturity date for advances made on both a current and accrual basis, the outstanding principal amount, together with all accrued and unpaid interest thereon, will mature and be due and payable to Adamantium. To the extent the Adamantium Securities are accelerated or prepaid, in whole or in part, we will be obligated to pay or prepay, in whole or in part, all or any part of any outstanding indebtedness under the Adamantium Loan Agreement so as to satisfy the obligations and terms of the accelerated or prepaid Adamantium Securities. Adamantium will use any amounts repaid under the Adamantium Loan Agreement to repay the corresponding Adamantium Securities. The Adamantium Loan Agreement is not a revolving facility and the Issuer may not reborrow amounts repaid.

The Adamantium Loan Agreement can be amended or waived with the consent of the Issuer and Adamantium, including in order to change the amount, rate, payment terms, collateral package, and borrowers thereunder. The consent of holders of the Adamantium Securities, the Reg D/Reg A Bonds, and/or the Registered Notes is not required for any amendment or waiver of the Adamantium Loan Agreement, and any such amendment or waiver may be adverse to the interests of such holders. Because Adamantium is our wholly owned financing subsidiary with common management, there exists the potential for conflicts of interest with respect to decisions regarding the Adamantium Loan Agreement, including with respect to waivers and amendments thereto. Management is committed to fulfilling its fiduciary duties and operating in good faith.

Registered Notes

In October 2024, we filed a registration statement on Form S-1 (the “Registration Statement”) with the SEC which was declared effective in May 2025 with respect to the continuous offering of up to $750.0 million aggregate principal amount of our senior subordinated notes (the “Registered Notes”) with maturity dates ranging from three to eleven years from the issue date and interest rates ranging from 9.0% to 12.0% per annum.

The Registered Notes are contractually senior to the Subordinated Regulation D Bonds and contractually subordinated to the Fortress Credit Agreement, the Adamantium Debt, and the Senior Regulation D/Regulation A Bonds. The Registered Notes contain customary events of default and may be redeemed at our option at any time without premium or penalty. The holders of Registered Notes also have a right to request redemption of their notes in certain circumstances at a discount to par, subject to a limit of 10% of the then-outstanding principal amount of the applicable series in any given calendar year. As of September 30, 2025, we have issued $18.4 million of Registered Notes.

Regulation D/Regulation A Bonds and Exchange Notes

In May 2025, we approved an increase to the maximum offering amount of the August 2023 506(c) Bonds from $750.0 million to $1,500.0 million. The August 2023 506(c) Bonds are unsecured bonds offered and sold pursuant to an offering under Rule 506(c) of Regulation D that commenced in August 2023 with maturity dates ranging from one to eleven years from the issue date and interest rates ranging from 9.0% to 14.0% per annum.

In May 2025, we entered into an indenture with UMB Bank, N.A., as trustee, pursuant to which we may, from time to time, issue debt securities to holders of our Regulation A Bonds in exchange for their Regulation A Bonds, in offerings exempt from registration under Section 3(a)(9) and/or 4(a)(2) of the Securities Act (the “Exchange Notes”). The Exchange Notes have maturities of three, five, seven, or eleven years and interest rates ranging from 9.0% to 12.0% per annum. As of September 30, 2025, $25.9 million aggregate principal amount of the Regulation A Bonds were exchanged for Exchange Notes.

As of September 30, 2025, we had $743.3 million aggregate principal amount outstanding of unsecured bonds issued pursuant to Regulation D or Regulation A, consisting of:

(a) $9.3 million aggregate principal amount outstanding of Senior Regulation D Bonds, which rank pari passu with the Regulation A Bonds, are contractually subordinated to amounts under the Fortress Credit Agreement, are contractually senior to obligations under the Subordinated Regulation D Bonds and the Registered Notes, comprising:

(i) $0.8 million aggregate principal amount outstanding of 2020 506(c) Bonds, which are unsecured bonds offered and sold pursuant to an offering under Rule 506(c) of Regulation D that commenced in October 2020 and terminated in July 2022, with a maturity date of four years from the issue date and an interest rate of 13.0% per annum; and

(ii) $8.5 million aggregate principal amount outstanding of July 2022 506(c) Bonds, which are unsecured bonds offered and sold pursuant to an offering under Rule 506(c) of Regulation D that commenced in July 2022 and terminated in December 2022, with a maturity date of five years from the issue date and an interest rate of 11.0% per annum;

(b) $674.4 million aggregate principal amount outstanding of Subordinated Regulation D Bonds, which are contractually subordinated to obligations under the Fortress Credit Agreement, the Regulation A Bonds, the Senior Regulation D Bonds, and the Registered Notes, comprising:

(i) $61.3 million aggregate principal amount outstanding of Series AAA through Series D-1 December 2022 506(c) Bonds, which are unsecured bonds offered and sold pursuant to an offering under Rule 506(c) of Regulation D that commenced in December 2022 and terminated in August 2023, with maturity dates ranging from three to seven years from the issue date and interest rates ranging from 10.0% to 12.0% per annum; and

(ii) $613.1 million aggregate principal amount outstanding of Series U through Series JJ-1 August 2023 506(c) Bonds, which are unsecured bonds offered and sold to date pursuant to an offering under Rule 506(c) of Regulation D that commenced in August 2023 with maturity dates ranging from one to eleven years from the issue date and interest rates ranging from 9.0% to 14.0% per annum; and

(c) $59.7 million aggregate principal amount outstanding of Regulation A Bonds, which are unsecured bonds offered and sold to date pursuant to an offering under Regulation A, which commenced in December 2021 and are being offered on a continuous basis, which Regulation A Bonds rank pari passu with the Senior Regulation D Bonds, are contractually senior to obligations under the Subordinated Regulation D Bonds, and will be contractually senior to obligations under the Registered Notes.

The Regulation D/Regulation A Bonds contain customary events of default. The Regulation D/Regulation A Bonds may be redeemed at the option of the Issuer at any time without premium or penalty. We will also be obligated to offer to holders of Regulation A Bonds the right to have their Regulation A Bonds repurchased upon a change of control (as described in the indenture governing the Regulation A Bonds). The holders of Regulation D/Regulation A Bonds (other than the 2020 506(b) Bonds and 2020 506(c) Bonds) also have a right to request redemption of their bonds in certain circumstances at a discount to par, subject to a limit of 10.0% of the then-outstanding principal amount of the applicable series in any given calendar year.

Critical Accounting Estimates

Our critical accounting policies are described under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Use of Estimates” in the prospectus for our offering of Registered Notes, dated as of May 14, 2025, and filed with the SEC pursuant to Rule 424(b)(4) on May 14, 2025 and the notes to the unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report. During the nine months ended September 30, 2025, there have been changes in our critical accounting policies from those discussed in such prospectus.

Revenue from contracts with customers

We recognize our revenues following Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers, (“ASC 606”). Our revenues are predominantly derived from contracts for the sale of crude oil, natural gas and NGLs. For crude oil, natural gas and NGLs produced by PhoenixOp, each delivery order is treated as a separate performance obligation that is satisfied at the point in time control of the product transfers to the customer. Revenue is measured as the amount we expect to receive in exchange for transferring commodities to the customer. Our commodity sales are typically based on prevailing market-based prices. When deliveries contain multiple products, an observable standalone selling price is generally used to measure revenue for each product. Revenues from product sales are presented separately from post-production expenses, including transportation costs, as we control the operated production prior to its transfer to customers.

In circumstances where we are the non-operator or mineral rights owner, we derive revenue from our interests in the sale of oil and natural gas production and do not consider ourself to have control of the product, resulting in the recognition of revenues net of post-production expenses. Oil, natural gas, and NGL sales revenues are generally recognized when control of the product is transferred to the customer, the performance obligations under the terms of the contracts with customers are satisfied and collectability is reasonably assured. Given the inherent time lag between when oil, natural gas, NGL production and sales occur, and when operators or purchasers often make disbursements to royalty interest owners and due to the large potential fluctuations of both production and sale price, a significant portion of our revenue may represent accrued revenue based on estimated net sales volumes and estimated selling prices of the commodities.

Effective April 2025, we began conducting marketing activities through our newly established subsidiary, Firebird Marketing. These activities include the purchase of crude oil from working interest owners and royalty interest holders in properties operated by PhoenixOp, and the subsequent sale of the crude oil to customers. The revenues and expenses from these sales and purchases are recognized on a gross basis as we act as a principal in these transactions by assuming control of the purchased crude oil before it is transferred to the customer.

We, through Firebird Services, provide water disposal services to PhoenixOp and third parties with respect to oil and gas production from wells in which we our the operator. Pricing for such services represents a fixed rate fee based on the quantity of water volume processed. Intercompany charges associated with PhoenixOp’s net interests are eliminated upon consolidation. The proportionate share of fees allocable to third-party working interest owners are recognized as revenues over the course of time, as services are performed. Revenues from water services are recognized only when it is probable we will collect the consideration we are entitled to in exchange for the services transferred to the customer.

Impairment of long-lived assets

We follow the provisions of ASC 360, Property, Plant, and Equipment (“ASC 360”). ASC 360 requires that our long-lived assets be assessed for potential impairment of their carrying values whenever events or changes in circumstances indicate such impairment may have occurred. Proved oil and natural gas properties are evaluated by geologic basin for potential impairment. In accordance with the successful efforts method of accounting, impairment on proved properties is recognized when the estimated undiscounted projected future net cash flows, or evaluation value using expected future prices of a geologic basin are less than its carrying value. If impairment occurs, the carrying value of the impaired geologic basin is reduced to its estimated fair value.

Unproved oil and natural gas properties do not have producing properties and are valued on acquisition by management, with the assistance of an independent expert when necessary. The valuation of unproved oil and gas properties is subjective and requires management to make estimates and assumptions that, with the passage of time, may prove to be materially different from actual results. The unproved basis is periodically evaluated by management to assess whether the value of a property has diminished. Management considers, (i) estimated potential reserves and future net revenues from an independent expert, (ii) its history in exploring the area, (iii) its future drilling plans per its capital drilling program prepared by its reservoir engineers and operations management, and (iv) other factors associated with the area. As reserves are proved through the successful completion of exploratory wells, the cost is transferred to proved properties. If it is determined that it is unlikely for an unproved property to be successfully developed prior to the lease expiration or extension, an impairment of the respective unproved property is recognized in the period in which that determination is made.

Preferred equity

We account for preferred equity in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”). The Series A Preferred Shares are not subject to any mandatory redemption and, accordingly, have been classified as permanent equity on our condensed consolidated balance sheets. Distributions are accrued as contractually obligated and are paid quarterly in arrears, when, as and if declared by our Board of Directors. The discount associated with the increasing-rate distributions is amortized using the effective interest method over the period preceding the commencement of the perpetual distribution rate. The accretion is recorded as an imputed distribution, recognized through retained earnings, with a corresponding increase to the carrying amount of the preferred equity.

Recent Accounting Pronouncements

See “Part I. Item 1. Financial Statements— Note 2 – Significant Accounting Policies” of the notes to the condensed consolidated financial statements included elsewhere in this Quarterly Report, for recently adopted accounting pronouncements and recent accounting pronouncements not yet adopted, if any.