Phoenix Energy One, LLC

Previous wording

First Quarter 2026 Financial and Operational Highlights

Current wording

Second Quarter 2026 Financial and Operational Highlights

Previous wording

In March 2026, we produced 1.23 million Bbls of crude oil, representing our highest monthly production volume to date.

Current wording

During the period, we produced 3.7 million Bbls of crude oil, representing our highest quarterly production volume to date, with 1.3 million Bbls of crude oil produced in June 2026, representing our highest monthly production volume to date;

Previous wording

We disposed of approximately 11.5 million Bbls of produced water through our own saltwater disposal wells during the period, with approximately 98.6% of total produced water volumes handled internally through our operated facilities.

Current wording

We produced approximately 13.4 million Bbls of water and injected approximately 13.1 million Bbls through our own saltwater disposal wells during the period, with approximately 97.8% of total produced water volumes handled internally through our operated facilities.

Previous wording

Revenue was $298.7 million for the three months ended March 31, 2026, as compared to $115.7 million for the same period in 2025, an increase of $183.0 million, or 158.2%. The increase was primarily attributable to a $97.3 million increase in product sales generated from our direct drilling, extraction, and related oil and gas operating activities, $77.1 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, a $5.8 million increase in mineral and royalty revenues generated from our mineral and non-operating activities, and a $2.7 million increase in revenue from water disposal services.

Current wording

Revenue was $405.9 million for the three months ended June 30, 2026, as compared to $163.8 million for the same period in 2025, an increase of $242.1 million, or 147.8%. The increase was primarily attributable to a $144.6 million increase in product sales generated from our direct drilling, extraction, and related oil and gas operating activities, a $77.2 million increase in 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, a $17.1 million increase in mineral and royalty revenues generated from our mineral and non-operating activities, and a $2.4 million increase in revenue from water disposal services.

Previous wording

Operating segment revenue was $263.1 million for the three months ended March 31, 2026, as compared to $85.8 million for the same period in 2025, an increase of $177.3 million, or 206.6%. The increase was primarily attributable to a $97.3 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 121 producing wells in service as of March 31, 2026, as compared to 37 producing wells in service as of March 31, 2025, $77.1 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 $2.7 million increase in revenue from water disposal services driven by higher disposal volumes, with 11.5 million barrels of saltwater disposed by Firebird Services during the three months ended March 31, 2026, as compared to 4.2 million barrels during the same period in 2025, and a 2.1% increase in average realized price from $71.33/Bbl to $72.81/Bbl for crude oil in 2026 as compared to the same period in 2025.

Current wording

Operating segment revenue was $356.2 million for the three months ended June 30, 2026, as compared to $131.8 million for the same period in 2025, an increase of $224.4 million, or 170.3%. The increase was primarily attributable to a $144.6 million increase in product sales generated from our direct drilling, extraction, and related oil and gas operating activities driven by additional wells placed into service, of which there were 147 producing wells in service as of June 30, 2026, as compared to 62 producing wells in service as of June 30, 2025, a $77.2 million increase in 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, and a $2.4 million increase in revenue from water disposal services driven by higher disposal volumes, with 13.1 million barrels of saltwater disposed by Firebird Services during the three months ended June 30, 2026, as compared to 4.8 million barrels during the same period in 2025. The increase in segment revenue was also driven by increased revenues from crude oil due to a 42.8% increase in average realized price for crude oil from $63.98/Bbl for the three months ended June 30, 2025 to $91.37/Bbl for the three months ended June 30, 2026.

Previous wording

Operating segment cost of sales was $49.6 million for the three months ended March 31, 2026, as compared to $22.5 million for the same period in 2025, an increase of $27.1 million, or 120.4%. The increase in segment cost of sales was driven by additional wells placed into service, of which there were 121 producing wells as of March 31, 2026, as compared to 37 producing wells in service as of March 31, 2025, resulting in increased lease operating expenses, production costs, and production andad valorem taxes during the three months ended March 31, 2026 as compared to the same period in 2025.

Current wording

Operating segment cost of sales was $42.7 million for the three months ended June 30, 2026, as compared to $28.5 million for the same period in 2025, an increase of $14.2 million, or 49.8%. The increase in segment cost of sales was driven by additional wells placed into service, of which there were 147 producing wells in service as of June 30, 2026, as compared to 62 producing wells in service as of June 30, 2025, resulting in increased lease operating expenses, and production andad valorem taxes during the three months ended June 30, 2026 as compared to the same period in 2025.

Previous wording

Depreciation, depletion, and amortization expense was $60.2 million for the three months ended March 31, 2026, as compared to $31.2 million for the same period in 2025, an increase of $29.0 million, or 92.9%, primarily due to a $24.3 million increase in depletion expense within the operating segment driven by increases in our depletable cost bases and a $4.7 million increase in depletion expense within the mineral and non-operating segment, primarily due to a higher depletion rate driven by increased realized production volumes, and increases in the depletable cost bases.

Current wording

Depreciation, depletion, and amortization expense was $74.3 million for the three months ended June 30, 2026, as compared to $36.6 million for the same period in 2025, an increase of $37.7 million, or 103.0%, primarily due to a $32.6 million increase within the operating segment from a $32.2 million increase in depletion expense driven by increases in our depletable cost bases, and a $5.1 million increase within the mineral and non-operating segment from a $5.0 million increase in depletion expense, primarily due to a higher depletion rate driven by increased realized production volumes and increases in the depletable cost bases.

Previous wording

Depreciation, depletion, and amortization expense for the operating segment was $47.3 million for the three months ended March 31, 2026, as compared to $23.0 million for the same period in 2025, an increase of $24.3 million, or 105.7%, primarily due to an increase in depletion expense from increases in the depletable cost bases, partially offset by a lower depletion rate during the three months ended March 31, 2026 as compared to the same period in 2025. The lower depletion rate is primarily attributable to significant growth in proved reserves due to drilling activity by PhoenixOp.

Current wording

Depreciation, depletion, and amortization expense for the operating segment was $62.1 million for the three months ended June 30, 2026, as compared to $29.5 million for the same period in 2025, an increase of $32.6 million, or 110.5%, primarily due to an increase in depletion expense from increases in the depletable cost bases, partially offset by a lower depletion rate during the three months ended June 30, 2026 as compared to the same period in 2025. The lower depletion rate is primarily attributable to significant growth in proved reserves due to drilling activity by PhoenixOp.

Previous wording

Depreciation, depletion, and amortization expense for the mineral and non-operating segment was $13.0 million for the three months ended March 31, 2026, as compared to $8.3 million for the same period in 2025, an increase of $4.7 million, or 56.6%. On a per unit basis, depletion expense was $17.66 per Boe and $14.86 per Boe for the three months ended March 31, 2026 and 2025, respectively, an increase of $2.80 per Boe, driven by a higher depletion rate, primarily due to increased realized production volumes, and increases in the depletable cost bases.

Current wording

Depreciation, depletion, and amortization expense for the mineral and non-operating segment was $12.2 million for the three months ended June 30, 2026, as compared to $7.1 million for the same period in 2025, an increase of $5.1 million, or 71.8%. On a per unit basis, depletion expense within the mineral and non-operating segment was $17.07 per Boe and $11.52 per Boe for the three months ended June 30, 2026 and 2025, respectively, an increase of $5.55 per Boe, driven by a higher depletion rate, primarily due to increased realized production volumes and increases in the depletable cost bases.

Previous wording

Selling, general, and administrative expense was $4.3 million for the three months ended March 31, 2026, as compared to $9.5 million for the same period in 2025, a decrease of $5.2 million, or 54.7%. The decrease was primarily due to a $5.0 million increase in the overhead attributable to field-level operations charged to operated wells, which reduced selling, general, and administrative expense, and a $2.3 million decrease in professional legal service fees. The decrease was partially offset by a $1.0 million increase in allocated corporate overhead, a $0.4 million increase in technology expenses, and a $0.4 million increase in fees charged by purchasers for early revenue payments received within the operating segment.

Current wording

Selling, general, and administrative expense was $2.8 million for the three months ended June 30, 2026, as compared to $6.4 million for the same period in 2025, a decrease of $3.6 million, or 56.3%. The decrease was primarily due to a $4.8 million increase in the overhead attributable to field-level operations charged to operated wells, which reduced selling, general, and administrative expense, and a $1.7 million decrease in fees associated with land acquisition and title work. The decrease was partially offset by a $1.3 million increase in professional legal service fees, increased fees charged by purchasers for early revenue payments received within the operating segment of $1.3 million, and a $0.4 million increase in allocated corporate overhead.

Previous wording

Payroll and payroll-related expense was $9.4 million for the three months ended March 31, 2026, as compared to $7.9 million for the same period in 2025, an increase of $1.5 million, or 19.0%, primarily as a result of increased employee headcount and compensation. Employee headcount increased from 154 employees at March 31, 2025 to 189 employees at March 31, 2026.

Current wording

Payroll and payroll-related expense was $9.0 million for the three months ended June 30, 2026, as compared to $8.1 million for the same period in 2025, an increase of $0.9 million, or 11.1%, primarily as a result of increased employee headcount and compensation. Employee headcount increased from 167 employees at June 30, 2025 to 191 employees at June 30, 2026.

Previous wording

Payroll and payroll-related expense for the operating segment was $3.8 million for the three months ended March 31, 2026, as compared to $2.0 million for the same period in 2025, an increase of $1.8 million, or 90.0%, primarily due to the increased number of personnel engaged in our oil and gas operating activities, partially offset by a $0.2 million increase in labor charged to wells operated by us, which reduced payroll and payroll-related expense.

Current wording

Payroll and payroll-related expense for the operating segment was $3.8 million for the three months ended June 30, 2026, as compared to $2.4 million for the same period in 2025, an increase of $1.4 million, or 58.3%, primarily due to the increased number of personnel engaged in our oil and gas operating activities.

Previous wording

Payroll and payroll-related expense for the securities segment was $2.6 million for the three months ended March 31, 2026, as compared to $2.0 million for the same period in 2025, an increase of $0.6 million, or 30.0%, primarily due to increased employee compensation and the increased number of personnel engaged in the administration and management of our securities offerings.

Current wording

Payroll and payroll-related expense for the securities segment was $2.8 million for the three months ended June 30, 2026, as compared to $1.8 million for the same period in 2025, an increase of $1.0 million, or 55.6%, primarily due to increased employee compensation and the increased number of personnel engaged in the administration and management of our securities offerings.

Previous wording

Advertising and marketing expense was $0.4 million for the three months ended March 31, 2026, as compared to $0.3 million for the same period in 2025, an increase of $0.1 million, or 33.3%, which was not material for the periods presented.

Current wording

Advertising and marketing expense was $0.6 million for the three months ended June 30, 2026, as compared to $0.5 million for the same period in 2025, an increase of $0.1 million, or 20.0%, which was not material for the periods presented.

Previous wording

Loss on debt extinguishments was $0.9 million for the three months ended March 31, 2026, as compared to $0.3 million for the same period in 2025, an increase of $0.6 million, or 200.0%. The increase was primarily due to increased write-offs of debt issuance costs associated with the redemption of bonds issued pursuant to our debt offerings, of which $8.2 million of bonds were redeemed during the three months ended March 31, 2026, as compared to $2.6 million of bonds redeemed for the same period in 2025.

Current wording

Loss on debt extinguishments was $1.0 million for the three months ended June 30, 2026, as compared to $0.3 million for the same period in 2025, an increase of $0.7 million, or 233.3%. The increase was primarily due to increased write-offs of debt issuance costs associated with the redemption of bonds issued pursuant to our debt offerings, of which $6.3 million of bonds were redeemed during the three months ended June 30, 2026, as compared to $2.7 million of bonds redeemed for the same period in 2025.

Previous wording

Cost of sales was $56.1 million for the three months ended March 31, 2026, as compared to $27.1 million for the same period in 2025, an increase of $29.0 million, or 107.0%. The increase was primarily driven by increased drilling, extraction, and related oil and gas operating activities associated with wells operated by PhoenixOp, and an increase in cost of sales due to higher lease operating expense and severance taxes resulting from increased crude oil production volumes from our acquisitions of mineral and non-operated working interests during the three months ended March 31, 2026 as compared to the same period in 2025.

Current wording

Cost of sales was $107.7 million for the six months ended June 30, 2026, as compared to $62.3 million for the same period in 2025, an increase of $45.4 million, or 72.9%. The increase was primarily driven by increased drilling, extraction, and related oil and gas operating activities associated with wells operated by PhoenixOp, and an increase in cost of sales due to higher lease operating expense and severance taxes resulting from increased average realized price for crude oil and increased production volumes for crude oil and natural gas from our acquisitions of mineral and non-operated working interests during the six months ended June 30, 2026 as compared to the same period in 2025.

Previous wording

Selling, general, and administrative expense for the operating segment was ($0.3) million for the three months ended March 31, 2026 as compared to $2.0 million for the same period in 2025, a decrease of $2.3 million, or 115.0%, primarily due to a $5.0 million increase in the overhead attributable to field-level operations charged to operated wells, which reduced selling, general, and administrative expense, partially offset by increased allocated corporate overhead of $1.1 million, a $1.0 million increase in fees associated with lease acquisition fees allocated to the operating segment, increased fees charged by purchasers for early revenue payments received of $0.4 million, and increased professional legal fees of $0.2 million within the operating segment.

Current wording

Selling, general, and administrative expense for the operating segment was ($1.1) million for the six months ended June 30, 2026, as compared to $3.1 million for the same period in 2025, a change of $4.2 million, primarily due to a $9.7 million increase in the overhead attributable to field-level operations charged to operated wells, which reduced selling, general, and administrative expense, partially offset by increased allocated corporate overhead of $1.9 million, increased fees charged by purchasers for early revenue payments received of $1.7 million, a $1.0 million increase in fees associated with land acquisition and title work allocated to the operating segment, and increased professional legal fees within the operating segment of $0.3 million.

Previous wording

Impairment expense was $0.8 million for the three months ended March 31, 2026, as compared to $0.5 million for the same period in 2025, an increase of $0.3 million, or 60.0%, primarily as a result of lease expirations within the mineral and non-operating segment.

Current wording

Impairment expense was $1.4 million for the six months ended June 30, 2026, as compared to $0.5 million for the same period in 2025, an increase of $0.9 million, or 180.0%, primarily as a result of lease expirations within the mineral and non-operating segment.

Previous wording

Interest expense, net, was $52.5 million for the three months ended March 31, 2026, as compared to $35.8 million for the same period in 2025, an increase of $16.7 million, or 46.6%. The increase was primarily due to a $12.2 million increase in interest costs associated with sales of our unregistered debt securities and Registered Notes, which increased from $1.1 billion outstanding at March 31, 2025 to $1.2 billion outstanding at March 31, 2026, with no significant changes in interest rates between the periods, a $6.5 million increase in interest costs associated with the Fortress Credit Agreement, and a $1.5 million increase in interest costs associated with securities-related debt issuance costs for the three months ended March 31, 2026. The increase was partially offset by a $3.6 million increase in capitalized interest primarily due to higher qualifying asset expenditures.

Current wording

Interest expense, net, was $110.8 million for the six months ended June 30, 2026, as compared to $72.9 million for the same period in 2025, an increase of $37.9 million, or 52.0%. The increase was primarily due to a $25.5 million increase in interest costs associated with sales of our unregistered debt securities and Registered Notes, which increased from $920.6 million outstanding at June 30, 2025 to $1.3 billion outstanding at June 30, 2026, with no significant changes in interest rates between the periods, a $13.1 million increase in interest costs associated with the Fortress Credit Agreement, and a $2.9 million increase in interest costs associated with securities-related debt issuance costs, partially offset by a $3.5 million increase in capitalized interest primarily due to higher qualifying asset expenditures for the six months ended June 30, 2026 as compared to the same period in 2025.

Previous wording

Loss on derivatives was $178.8 million for the three months ended March 31, 2026, as compared to a gain on derivatives of $1.9 million for the same period in 2025, an increase of $180.7 million, primarily as a result of unfavorable changes in the mark-to-market value of commodity derivatives entered into during the three months ended March 31, 2026 as compared to the same period in 2025.

Current wording

Loss on derivatives was $177.2 million for the six months ended June 30, 2026, as compared to a gain on derivatives of $10.8 million for the same period in 2025, a change of $188.0 million, primarily as a result of unfavorable changes in the mark-to-market value of our outstanding commodity derivatives during the six months ended June 30, 2026 as compared to the same period in 2025.

Previous wording

The following table shows a reconciliation of EBITDA and Adjusted EBITDA to net income (loss), the most comparable GAAP measure, as presented on the condensed consolidated statements of operations for the periods presented:

Current wording

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

Previous wording

EBITDA was $(27.6) million for the three months ended March 31, 2026 as compared to $72.0 million for the three months ended March 31, 2025, a decrease of $99.6 million, or 138.3%. The decrease in EBITDA was primarily driven by a $180.7 million increase in loss on derivatives, primarily as a result of unfavorable changes in the mark-to-market value of commodity derivatives entered into during the three months ended March 31, 2026, and a $101.2 million increase in operating expense (excluding depreciation, depletion, and amortization expense), primarily driven by purchased crude oil expenses, increased cost of sales, and increased payroll and payroll-related expenses, partially offset by a $183.0 million increase in consolidated revenues. Adjusted EBITDA, which excludes unrealized gains and losses on derivatives, was $130.2 million for the three months ended March 31, 2026 as compared to $69.2 million for the three months ended March 31, 2025, an increase of $61.0 million, or 88.2%. Unrealized loss on derivatives increased by $160.6 million due to unfavorable mark-to-market changes in our open commodity derivative contracts.

Current wording

EBITDA was $238.4 million for the three months ended June 30, 2026 as compared to $92.0 million for the three months ended June 30, 2025, an increase of $146.4 million, or 159.1%. The increase in EBITDA was primarily driven by a $242.1 million increase in consolidated revenues, partially offset by an $87.5 million increase in operating expense (excluding depreciation, depletion, and amortization expense), primarily driven by purchased crude oil expenses and increased cost of sales, and a $7.3 million decrease in gain on derivatives, primarily as a result of unfavorable changes in the mark-to-market value of our outstanding commodity derivatives during the three months ended June 30, 2026. Adjusted EBITDA, which excludes unrealized gains and losses on derivatives, was $181.3 million for the three months ended June 30, 2026 as compared to $84.3 million for the three months ended June 30, 2025, an increase of $97.0 million, or 115.1%. Unrealized gain on derivatives increased by $49.5 million due to favorable mark-to-market changes in our open commodity derivative contracts.

Previous wording

Our primary sources of liquidity to date have been cash flows from operations, borrowings under credit facilities, issuances of debt securities, and the issuance of the Series A Preferred Shares in September 2025. Future sources of liquidity may also include other credit facilities, continued issuances of debt or equity securities, which may be different than the type of debt or equity securities we have issued so far in terms of security, maturity, and interest rates, asset-backed or other securitizations, 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 and ad valorem taxes for mineral and royalty interests, production costs, including gathering, processing, and transportation costs, debt service payments and distributions on the Series A Preferred Shares, 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 March 31, 2026, we had cash and cash equivalents of $70.2 million, outstanding indebtedness of $1.7 billion, and a liquidation preference of Series A Preferred Shares of $67.6 million.

Current wording

Our primary sources of liquidity to date have been cash flows from operations, borrowings under credit facilities, issuances of debt securities, and the issuance of the Series A Preferred Shares in September 2025. Future sources of liquidity may also include other credit facilities, continued issuances of debt or equity securities, which may be different than the type of debt or equity securities we have issued so far in terms of security, maturity, and interest rates, asset-backed or other securitizations, 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 and ad valorem taxes for mineral and royalty interests, production costs, including gathering, processing, and transportation costs, debt service payments and distributions on the Series A Preferred Shares, 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 June 30, 2026, we had cash and cash equivalents of $37.0 million, outstanding indebtedness of $1.8 billion, and a liquidation preference of Series A Preferred Shares of $67.6 million.

Previous wording

As of March 31, 2026, we had $148.7 million of debt coming due and $146.5 million of interest payable within the next 12 months, as well as $1.7 million of distributions payable on the Series A Preferred Shares. Over the next 12 months, we expect to drill between 75 to 105 gross and 54.0 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 between 310 to 410 gross and 10.8 to 14.2 net wells across our non-operated leasehold. We estimate that these direct drilling operations and non-operated activity will require between $750.0 million and $810.0 million of capital expenditures over the next 12 months.

Current wording

As of June 30, 2026, we had $173.5 million of debt coming due and $156.8 million of interest due within the next 12 months, as well as $6.8 million of distributions due on the Series A Preferred Shares. Over the next 12 months, we expect to drill between 70 to 110 gross and 53.0 to 83.0 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 between 220 to 320 gross and 6.3 to 9.2 net wells across our non-operated leasehold. We estimate that these direct drilling operations and non-operated activity will require between $710.0 million and $810.0 million of capital expenditures over the next 12 months.

Previous wording

Our ability to finance our operations, including funding capital expenditures and acquisitions, meeting our indebtedness obligations, making distributions on the Series A Preferred Shares, or refinancing our indebtedness, will depend on our ability to generate cash in the future. We raised $185.6 million in proceeds from the issuance of debt securities and increased borrowings under the Fortress Credit Agreement during the three months ended March 31, 2026. We believe that these sources of liquidity will be sufficient to meet our cash requirements, with respect to our current commitments, 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. Although we expect that our cash flows from operations will be sufficient to meet our fixed obligations, to fully realize our business plan we anticipate that we would need to raise approximately $147.3 million in capital in 2026, which may involve different types of financing or issuances of debt or equity securities that differ from the types of securities we have previously issued.

Current wording

Our ability to finance our operations, including funding capital expenditures and acquisitions, meeting our indebtedness obligations, making distributions on the Series A Preferred Shares, or refinancing our indebtedness, will depend on our ability to generate cash in the future. We raised $312.7 million in proceeds from the issuance of debt securities and increased borrowings under the Fortress Credit Agreement during the six months ended June 30, 2026. We believe that these sources of liquidity will be sufficient to meet our cash requirements, with respect to our current commitments, 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.

Previous wording

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. Although oil prices have surged recently, rising to $112.95 per Bbl as of April 7, 2026, following the onset of the conflict in the Middle East involving Iran, Israel, the United States, and numerous other oil producing countries in the region, and the closure of the Strait of Hormuz, this follows weaker oil prices that persisted through much of the second half of 2025, when oil prices went from $70.00 per barrel as of July 30, 2025 to $55.27 per barrel as of December 16, 2025. These prices were below those assumed for purposes of our business plan. While we believe we are 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. Conversely, subject to commodity prices, operational conditions and capital availability, we may contemplate adding additional completion resources during the second quarter of 2026 in order to accelerate the timing of bringing certain wells online and increase production volumes, and may also evaluate the addition of a fourth drilling rig later in 2026. We may also be required to raise additional capital, above our current expectations, in order to fully realize our current or adjusted business plan. 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 “Risks Related to Our Business and Operations” and “Risks Related to Our Indebtedness” in Part I. Item 1A of our 2025 Annual Report.

Current wording

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. Although oil prices have surged recently, rising to $112.95 per Bbl as of April 7, 2026, following the onset of the conflict in the Middle East involving Iran, Israel, the United States, and numerous other oil producing countries in the region, and the closure of the Strait of Hormuz, this follows weaker oil prices that persisted through much of the second half of 2025, when oil prices went from $70.00 per barrel as of July 30, 2025 to $55.27 per barrel as of December 16, 2025. These prices were below those assumed for purposes of our business plan. While we believe we are 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. 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 “Risks Related to Our Business and Operations” and “Risks Related to Our Indebtedness” in Part I. Item 1A of our 2025 Annual Report.

Previous wording

We or our affiliates may from time to time seek to repurchase or retire Registered Notes, other indebtedness, or Series A Preferred Shares 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.

Current wording

We or our affiliates may from time to time seek to repurchase or retire Registered Notes, the Phoenix Flex Junior Secured Notes, our other indebtedness, or Series A Preferred Shares 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.

Previous wording

Net cash provided by operating activities for the three months ended March 31, 2026 was $103.8 million, as compared to $18.1 million for the same period in 2025, an increase of $85.7 million in cash provided by operating activities. The increase was primarily due to a $145.7 million increase in net loss, adjusted for non-cash charges of $192.9 million, and net favorable fluctuations of $38.5 million from changes in operating assets and liabilities. The $38.5 million cash inflow from changes in operating assets and liabilities was primarily due to increased other current liabilities, earnest payments, and accrued interest totaling $28.2 million, increased net derivative liability of $22.3 million, and decreased escrow account liability of $3.6 million, partially offset by an increase in accounts receivable of $15.3 million, primarily due to the timing of cash receipts and payments during the three months ended March 31, 2026 as compared to the same period in 2025.

Current wording

Net cash provided by operating activities for the six months ended June 30, 2026 was $277.3 million, as compared to $100.6 million for the same period in 2025, an increase of $176.7 million in cash provided by operating activities. The increase was primarily due to a $58.4 million increase in net loss, adjusted for non-cash charges of $182.6 million, and favorable fluctuations of $52.6 million from changes in operating assets and liabilities. The $52.6 million favorable fluctuations in operating assets and liabilities were primarily attributable to a decrease in accounts receivable, escrow, and earnest payments of $25.0 million, an increase in accrued interest and other current liabilities of $23.0 million, and an increase in net derivative assets of $12.2 million due to decreases in the forward commodity price curves, partially offset by unfavorable fluctuations primarily attributable to a decrease in accounts payable of $1.5 million, primarily due to the timing of cash receipts and payments, a decrease in accrued expenses of $0.8 million, and an increase in other operating activities of $5.4 million during the six months ended June 30, 2026 as compared to the same period in 2025.

Previous wording

Net cash used in investing activities for the three months ended March 31, 2026 was $238.6 million, as compared to $182.4 million for the same period in 2025, an increase of $56.2 million in cash used in investing activities. The increase was driven by a $56.2 million increase in additions to oil and gas properties, primarily due to increased drilling and completion activities in our operating segment during three months ended March 31, 2026 as compared to the same period in 2025.

Current wording

Net cash used in investing activities for the six months ended June 30, 2026 was $532.9 million, as compared to $350.0 million for the same period in 2025, an increase of $182.9 million in cash used in investing activities. The increase was driven by a $183.7 million increase in additions to oil and gas properties, primarily due to increased drilling and completion activities in our operating segment during the six months ended June 30, 2026 as compared to the same period in 2025.

Previous wording

Net cash provided by financing activities for the three months ended March 31, 2026 was $139.2 million, as compared to $78.8 million for the same period in 2025, an increase of $60.4 million in cash provided by financing activities. The increase was primarily driven by increased proceeds from issuances of debt, net of debt discount, of $79.7 million, partially offset by a $9.4 million increase in repayments of debt related to securities, a $5.4 million increase in payments of debt issuance costs, a

Current wording

Net cash provided by financing activities for the six months ended June 30, 2026 was $226.8 million, as compared to $189.1 million for the same period in 2025, an increase of $37.7 million in cash provided by financing activities, primarily driven by increased proceeds from issuances of debt, net of debt discount, of $58.5 million, partially offset by a $13.7 million increase in repayments of debt related to securities, a $0.3 million increase in payments of debt issuance costs, a $3.4 million increase in payments of deferred closings associated with mineral interest acquisitions, and a $3.4 million increase in payments of dividends for the Series A Preferred Shares.

Previous wording

In September 2025, we completed our offering of the Series A Preferred Shares, 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. In addition, at issuance we recorded a $2.4 million discount associated with the stepped distribution rate feature of the Series A Preferred Shares, which provides for increases in the distribution rate prior to the commencement of the 11.0% perpetual distribution rate in year five. For the three months ended March 31, 2026, $0.2 million of this discount was amortized.

Current wording

In September 2025, we completed our offering of the Series A Preferred Shares, 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. In addition, at issuance we recorded a $2.4 million discount associated with the stepped distribution rate feature of the Series A Preferred Shares, which provides for increases in the distribution rate prior to the commencement of the 11.0% perpetual distribution rate in year five. For the three and six months ended June 30, 2026, $0.1 million and $0.3 million of this discount was amortized, respectively.

Previous wording

During the three months ended March 31, 2026, the Company paid $1.7 million of distributions to the holders of the Series A Preferred Shares equal to $0.625 per share. In March 2026, the Company’s Board of Directors authorized and declared a distribution on the Series A Preferred Shares equal to $0.625 per share, which was paid on April 15, 2026, to holders of record as of April 1, 2026, and totaled $1.7 million. As of March 31, 2026, the Company had accrued $1.5 million of dividends payable, which is included in other current liabilities on the condensed consolidated balance sheet.

Current wording

During the three and six months ended June 30, 2026, we paid $1.7 million and $3.4 million, respectively, of distributions to the holders of the Series A Preferred Shares equal to $0.625 per share. In July 2026, our Board of Directors authorized and declared a distribution on the Series A Preferred Shares equal to $0.625 per share, which was paid on July 15, 2026, to holders of record as of July 1, 2026, and totaled $1.7 million. As of June 30, 2026, we accrued $1.5 million of dividends payable, which is included in other current liabilities on the condensed consolidated balance sheet.

Previous wording

The Fortress Credit Agreement provides for a $100.0 million term loan facility, borrowed in full on August 12, 2024, a $35.0 million delayed draw term loan facility, which was fully drawn on October 11, 2024, a $115.0 million term loan facility, borrowed in full on December 18, 2024, a $50.0 million term loan facility, of which $25.0 million was borrowed on April 16, 2025 and $25.0 million was borrowed on May 9, 2025, a $100.0 million term loan facility, borrowed in full on August 1, 2025, a tranche of commitments to make term loans available in an aggregate principal amount of $350.0 million, of which $50.0 million was borrowed on October 27, 2025, and up to $300.0 million available on a discretionary basis. On February 12, 2026, the Fortress Credit Agreement was amended to provide for a $75.0 million term loan facility, which was borrowed in full on February 12, 2026, reducing the commitments available on a discretionary basis from $300.0 million to $225.0 million. The Fortress Credit Agreement also provides for an $8.5 million tranche of loans and a $6.5 million tranche of loans that represent a contingent principal obligation that is only due and payable (together with accrued interest thereon) upon certain conditions occurring, including payment defaults under the Fortress Credit Agreement or a bankruptcy filing by the obligors thereunder. See “—Fortress Credit Agreement.”

Current wording

The Fortress Credit Agreement provides for a $100.0 million term loan facility, borrowed in full on August 12, 2024, a $35.0 million delayed draw term loan facility, which was fully drawn on October 11, 2024, a $115.0 million term loan facility, borrowed in full on December 18, 2024, a $50.0 million term loan facility, of which $25.0 million was borrowed on April 16, 2025 and $25.0 million was borrowed on May 9, 2025, a $100.0 million term loan facility, borrowed in full on August 1, 2025, and a tranche of commitments to make term loans available in an aggregate principal amount of $350.0 million, of which $50.0 million was borrowed on October 27, 2025, and up to $300.0 million available on a discretionary basis. On February 12, 2026, the Fortress Credit Agreement was amended to provide for a $75.0 million term loan facility, which was borrowed in full on February 12, 2026, reducing the commitments available on a discretionary basis from $300.0 million to $225.0 million. The Fortress Credit Agreement also provides for an $8.5 million tranche of loans and a $6.5 million tranche of loans that represent a contingent principal obligation that is only due and payable (together with accrued interest thereon) upon certain conditions occurring, including payment defaults under the Fortress Credit Agreement or a bankruptcy filing by the obligors thereunder. Obligations under the Fortress Credit Agreement constitute Senior Debt and Phoenix Flex Senior Debt, and the liens securing such obligations are senior in priority to the liens securing the Phoenix Flex Junior Secured Notes. See “—Fortress Credit Agreement.”

Previous wording

The Adamantium Secured Note is contractually subordinated to amounts under the Fortress Credit Agreement, contractually senior to the Adamantium Bonds and the Registered Notes, and structurally senior to the Reg D/Reg A Bonds, the Exchange Notes, and the Registered Notes to the extent of the value of Adamantium’s assets, including the collateral securing the Adamantium Loan Agreement. On February 12, 2026, an additional $0.7 million of principal amount was issued under the Adamantium Secured Note (and the Adamantium Loan Agreement was amended to provide for a corresponding borrowing amount).

Current wording

The Adamantium Secured Note is contractually subordinated to amounts under the Fortress Credit Agreement, contractually senior to the Adamantium Bonds and the Registered Notes, and structurally senior to the Reg D/Reg A Bonds, the Exchange Notes, the Registered Notes, and the Phoenix Flex Junior Secured Notes to the extent of the value of Adamantium’s assets, including the collateral securing the Adamantium Loan Agreement. On February 12, 2026, an additional $0.7 million of principal amount was issued under the Adamantium Secured Note (and the Adamantium Loan Agreement was amended to provide for a corresponding borrowing amount).

Previous wording

The Reg A Bonds and the Exchange Notes arepari passu obligations with the Senior Reg D Bonds and are contractually senior to obligations under the Subordinated Reg D Bonds and the Registered Notes, and the Exchange Notes are contractually subordinated to amounts under the Fortress Credit Agreement and the Adamantium Debt. Amount displayed does not include amounts of Exchange Notes issued after March 31, 2026.

Current wording

The Reg A Bonds and the Exchange Notes arepari passu obligations with the Senior Reg D Bonds, are contractually senior to obligations under the Subordinated Reg D Bonds and the Registered Notes, and, without giving effect to collateral arrangements, rank equally in right of payment with the Phoenix Flex Junior Secured Notes. The Exchange Notes are contractually subordinated to amounts under the Fortress Credit Agreement and the Adamantium Debt. Amount displayed does not include amounts of Exchange Notes issued after June 30, 2026.

Previous wording

The Senior Reg D Bonds arepari passu obligations with the Reg A Bonds and the Exchange Notes, are contractually subordinated to amounts under the Fortress Credit Agreement and the Adamantium Debt, and are contractually senior to obligations under the Subordinated Reg D Bonds and the Registered Notes.

Current wording

The Senior Reg D Bonds arepari passu obligations with the Reg A Bonds and the Exchange Notes, are contractually subordinated to amounts under the Fortress Credit Agreement and the Adamantium Debt, are contractually senior to obligations under the Subordinated Reg D Bonds and the Registered Notes, and, without giving effect to collateral arrangements, rank equally in right of payment with the Phoenix Flex Junior Secured Notes.

Previous wording

The Subordinated Reg D Bonds are contractually subordinated to obligations under the Fortress Credit Agreement, the Adamantium Debt, the Reg A Bonds, the Exchange Notes, the Senior Reg D Bonds, and the Registered Notes. Amount displayed does not include amounts issued after March 31, 2026.

Current wording

The Subordinated Reg D Bonds are contractually subordinated to obligations under the Fortress Credit Agreement, the Adamantium Debt, the Reg A Bonds, the Exchange Notes, the Senior Reg D Bonds, the Registered Notes, and the Phoenix Flex Junior Secured Notes. Amount displayed does not include amounts issued after June 30, 2026.

Previous wording

The Registered Notes are contractually subordinated to amounts under the Fortress Credit Agreement, the Adamantium Debt, the Senior Phoenix Bonds, and are contractually senior to the Subordinated Reg D Bonds. Amount displayed does not include amounts issued after March 31, 2026.

Current wording

The Registered Notes are contractually subordinated to amounts under the Fortress Credit Agreement, the Adamantium Debt, the Senior Phoenix Bonds, are contractually senior to the Subordinated Reg D Bonds, and, without giving effect to collateral arrangements, rank equally in right of payment with the Phoenix Flex Junior Secured Notes. Amount displayed does not include amounts issued after June 30, 2026.

Previous wording

The Adamantium Bonds are contractually subordinated to amounts under the Fortress Credit Agreement and the Adamantium Secured Note, structurally senior to the Reg D/Reg A Bonds, the Exchange Notes, and the Registered Notes to the extent of the value of Adamantium’s assets, including the collateral securing the Adamantium Loan Agreement, and are contractually senior to the obligations under the Registered Notes and the Reg D Bonds. Amount displayed does not include amounts issued after March 31, 2026.

Current wording

The Adamantium Bonds are contractually subordinated to amounts under the Fortress Credit Agreement and the Adamantium Secured Note, structurally senior to the Reg D/Reg A Bonds, the Exchange Notes, the Registered Notes, and the Phoenix Flex Junior Secured Notes to the extent of the value of Adamantium’s assets, including the collateral securing the Adamantium Loan Agreement, and are contractually senior to the obligations under the Registered Notes and the Reg D Bonds. Amount displayed does not include amounts issued after June 30, 2026.

Previous wording

In August 2024, we entered into a senior secured credit agreement with Fortress Credit Corp. (the “Fortress Credit Agreement”) as lender and administrative agent, which was subsequently amended to add additional term loan tranches and syndicated to include an additional institutional lender. In February 2026, the Fortress Credit Agreement was further amended to provide a $75.0 million term loan funded at closing and up to $225.0 million available on a discretionary basis. Proceeds are to be used to finance the development of our oil and gas properties in accordance with the approved plan of development provided in the Fortress Credit Agreement.

Current wording

In August 2024, we entered into a senior secured credit agreement with Fortress Credit Corp. (the “Fortress Credit Agreement”) as lender and administrative agent, which was subsequently amended to add additional term loan tranches and syndicated to include an additional institutional lender. In February 2026, the Fortress Credit Agreement was further amended to provide a $75.0 million term loan funded at closing and up to $225.0 million available on a discretionary basis. Proceeds are to be used to finance the development of our oil and gas properties in accordance with the approved plan of development provided in the Fortress Credit Agreement. In June 2026, the Fortress Credit Agreement was further amended to, among other things, permit the issuance of the Phoenix Flex Junior Secured Notes.