Phoenix Energy One, LLC

Note 1. Business

Phoenix Energy One, LLC (“Phoenix Energy”) is a Delaware limited liability company focused on oil and gas operations and acquisitions primarily in the Williston Basin, North Dakota/Montana, the Uinta Basin, Utah, the Permian Basin, Texas, the Denver-Julesburg Basin, Colorado/Wyoming and the Powder River Basin, Wyoming. The Company was formed in April 2019 as Phoenix Capital Group Holdings, LLC and changed its name to Phoenix Energy One, LLC in January 2025. As used in these condensed consolidated financial statements, unless the context otherwise requires, references to the “Company,” “we,” “us,” and “our” refer to Phoenix Energy and its consolidated subsidiaries.

The Company’s strategy involves the acquisition of royalty assets, non-operated working interests, and operated leaseholds for the purpose of exploration, development, production, and sale of crude oil, natural gas, natural gas liquids, and other byproducts conducted through its wholly-owned subsidiaries, Phoenix Operating LLC (“PhoenixOp”), Firebird Services, LLC (“Firebird Services”), and Firebird Marketing, LLC (“Firebird Marketing”). PhoenixOp is a Delaware limited liability company formed in January 2022 to drill, complete and operate wells in the United States. Firebird Services is a Delaware limited liability company formed in October 2023 to perform saltwater disposal services on wells operated by PhoenixOp. Firebird Marketing is a Delaware limited liability company formed in March 2025 to take title to oil at or near the wellhead and market production to third-party purchasers. It manages commercial and logistical activities related to the sale of hydrocarbons, including transportation coordination, blending and quality optimization, scheduling, and counterparty negotiations, and assumes market, operational and credit risks related thereto. In return, Firebird Marketing may earn marketing margins based on market conditions and its ability to optimize sales execution.

Interim financial presentation

The accompanying condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for annual financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments considered necessary for fair presentation, have been included. Interim results are not necessarily indicative of results for a full year. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2025 (the “2025 annual financial statements”).

Note 2. Significant Accounting Policies

Basis of preparation and principles of consolidation

The condensed consolidated financial statements include the accounts of Phoenix Energy and its wholly-owned subsidiaries. All intercompany accounts and transactions with and between Phoenix Energy and its wholly-owned subsidiaries have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to current period presentation. These reclassifications had no effect on the Company’s previously reported results of operations or retained earnings.

Liquidity risk and management’s plans

Liquidity risk is the risk that the Company’s cash flows from operations will not be sufficient for the Company to continue operating and discharge its liabilities in the normal course of operations. The Company is exposed to liquidity risk as its continued operation is dependent upon its ability to continue to obtain financing, either in the form of debt or equity, or by continuing to achieve profitable operations in order to satisfy its liabilities as they come due.

As of June 30, 2026, the Company had negative working capital of approximately$411.2 million. The Company expects to repay its financial liabilities in the normal course of operations and to fund future operational and capital requirements through operating cash flows and through issuances of additional debt or equity. Since the balance sheet date and through the date of the filing of these condensed consolidated financial statements, the Company raised an additional$92.5 million of notes through its investor program (see Note 7 – Debt and Note 16 – Subsequent Events). Management believes its capital raises through its bond offerings will continue at or above this current pace.

The Company may conduct asset sales and/or issue debt or equity securities if liquidity risk increases in any given period. The Company believes it has sufficient funds to meet foreseeable obligations by actively monitoring its credit facilities through use of the loans, asset sales, cost reductions and coordinating payment and revenue cycles.

The Company is required to evaluate whether or not its current financial condition, including its sources of liquidity at the date that the condensed consolidated financial statements are issued, will enable the Company to meet its obligations as they come due within one year of the date of the issuance of these condensed consolidated financial statements and to make a determinationas to whether or not it is probable, under the application of this accounting guidance, that the Company will be able to continue as a going concern. In applying applicable accounting guidance, we considered the Company’s current financial condition and liquidity sources, including current funds available, forecasted future cash flows, the Company’s obligations due over the next twelve months as well as the Company’s recurring business operating expenses, and believe that the Company has sufficient financial resources to operate beyond the next twelve months following the date these condensed consolidated financial statements are issued.

Use of estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the applicable reporting period of such statements. Accordingly, actual results could differ materially from these estimates.

The accompanying condensed consolidated financial statements are based on a number of significant estimates including quantities of oil, natural gas and NGL reserves that are the basis for the calculations of depreciation, depletion, amortization, and determinations of impairment of oil and natural gas properties. Reservoir engineering is a subjective process of estimating underground accumulations of oil and natural gas and there are numerous uncertainties inherent in estimating quantities of proved oil and natural gas reserves. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment along with estimated selling prices. As a result, reserve estimates may materially differ from the quantities of oil and natural gas that are ultimately recovered.

Inventory

Crude oil in storage tanks that has not yet been sold is classified as inventory and recorded within other current assets on the Company’s condensed consolidated balance sheets. Inventory is stated at the lower of cost and net realizable value, with cost determined using a weighted average cost method, and includes costs incurred to bring the inventory to its present location and condition.

Deferred Contract Costs

The Company capitalizes certain costs incurred to fulfill customer contracts when such costs relate directly to a contract, generate or enhance resources that will be used in satisfying future performance obligations, and are expected to be recovered. Deferred contract costs consist of aid-in-construction (“AIC”) payments made pursuant to a long-term natural gas gathering agreement and are recorded within other current and other noncurrent assets on the condensed consolidated balance sheets. As of June 30, 2026, the Company had$6.4 million in deferred contract costs, which are included in other noncurrent assets on the condensed consolidated balance sheet.

Deferred contract costs are amortized on a straight-line basis over the estimated period of benefit beginning when the related gathering infrastructure is placed into service, and the associated economic benefits are realized and are recorded within cost of sales on the condensed consolidated statements of operations. No amortization expense related to deferred contract costs was recognized during the three and six months ended June 30, 2026.

Oil and gas properties

The Company accounts for crude oil, natural gas, and NGL exploration and development activities using the successful efforts method of accounting. Under this method, costs to acquire, drill, and complete development wells are capitalized when incurred, pending determination of whether the well has found proved reserves. Exploration costs, including geological and geophysical expenses and delay rentals for oil and gas leases, are expensed as incurred. Costs of drilling exploratory wells are initially capitalized but expensed if the well is determined to be unsuccessful. All capitalized well costs and leasehold costs of proved properties are depleted on a unit-of-production basis over the remaining life of proved developed reserves and total proved reserves, respectively, related to a geologic basin.

Recent accounting standards not yet adopted

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires disclosure in the Company’s annual and interim consolidated financial statements of specified information about certain costs and expenses, including depletion, depreciation, and amortization recognized as part of crude oil and natural gas producing activities, cost of sales, selling, general, and administrative expenses, and employee compensation. This ASU is effective for annual reporting periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. ASU 2024-03 can be applied prospectively or retrospectively at the Company’s election. The Company is currently evaluating the impact of the standard on its financial statements and disclosures and its plans for adoption, including the transition method and adoption date.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements(“ASU 2025-11”). ASU 2025-11 clarifies interim disclosure requirements and provides a comprehensive list of required interim disclosures. The update also incorporates a disclosure principle that requires entities to disclose events that occur after the end of the last annual reporting period. This update is effective for interim periods within annual periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of the standard on its financial statements and disclosures.

Accounting pronouncements not listed above were assessed and determined to not have a material impact on the Company’s condensed consolidated financial statements.

Note 3. Property, Plant, and Equipment

The following table summarizes the Company’s property, plant, and equipment, net as of the dates presented:

(a)

Represents proved and undeveloped (i.e., wells in progress) and proved and producing properties.

Depletion on oil and gas properties was$73.8 million and$36.6 million for the three months ended June 30, 2026 and 2025, respectively, and$133.8 million and$67.8 million for the six months ended June 30, 2026 and 2025, respectively.

Depreciation expense on the Company’s equipment and other property was$0.4 million and less than $0.1 millionfor the three months ended June 30, 2026 and 2025, respectively, and$0.5 million and less than $0.1 million for thesix months ended June 30, 2026 and 2025, respectively.

Impairment expense on the Company’s oil and gas properties was$0.6 million and less than $0.1 million for thethree months ended June 30, 2026 and 2025, respectively, and$1.4 million and$0.5 million for the six months ended June 30, 2026 and 2025, respectively, related to lease expirations and title defects on the Company’s oil and gas properties.

Note 4. Revenue

The following tables present the Company’s revenues disaggregated by product type and by segment for the periods presented:

Note 5. Other Current Assets

The following table summarizes the Company’s other current assets as of the dates presented:

During the three months ended June 30, 2026, the Company conveyed working interests in certain of its operated oil and gas properties to a third party. As of June 30, 2026, the Company recognized a receivable of$17.5 million related to the transaction, which is included in other current assets on the condensed consolidated balance sheet.

Note 6. Derivatives

The Company periodically enters into commodity derivative contracts to manage its exposure to crude oil price risk. Additionally, the Company is required to hedge a portion of anticipated crude oil production for future periods pursuant to its debt covenants under the Fortress Credit Agreement, as further described in Note 7 – Debt. The Company does not enter into derivative contracts for speculative trading purposes.

The Company may enter into crude oil derivative contracts, including collars, fixed-price swaps, put options and call options, to hedge a portion of its anticipated future production and reduce exposure to commodity price volatility. Collars establish both a floor and a ceiling price on contracted volumes, allowing the Company to receive payments if index prices fall below the floor, while requiring payments if index prices exceed the ceiling. Fixed-price swaps establish a fixed price for contracted volumes, resulting in payments to the Company when the index price is below the fixed price and payments by the Company when the index price exceeds the fixed price. Long call options are used to provide price protection in rising commodity price environments and provide the Company with the right to receive a cash settlement equal to the excess, if any, of the index price over the specified strike price, in exchange for the payment of an option premium. These instruments are settled net in cash and do not require the physical delivery of crude oil. As of June 30, 2026, the Company’s derivatives were comprised of crude oil commodity derivative contracts indexed to the U.S. New York Mercantile Exchange West Texas Intermediate (“NYMEX WTI”). The Company has not designated its derivative contracts for hedge accounting; therefore, changes in the fair value of these instruments, as well as cash settlements, are recognized in earnings in the period incurred. All derivative contracts are recorded at fair value on the condensed consolidated balance sheets as assets or liabilities and are presented on a net basis when a legally enforceable master netting arrangement exists with the counterparty.

As of June 30, 2026, the Company’s open crude oil derivative contracts consisted of the following:

(a)

Excludes a weighted average option premium of $3.31/Bbl, $5.41/Bbl and $3.31/Bbl for the settlement periods ending December 31, 2026, 2027 and 2028, respectively.

The following table summarizes the gains and losses on derivative instruments included on the condensed consolidated statements of operations and the net cash payments related thereto for the periods presented. Cash flows associated with these non-hedge designated derivatives are reported within operating activities on the condensed consolidated statements of cash flows.

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.

Certain assets and liabilities are reported at fair value on a recurring basis, including the Company’s derivative instruments. The Company obtains fair value estimates for its commodity derivative contracts from its counterparties and corroborates those estimates using observable market data. Significant inputs used to value the Company’s commodity derivative contracts are commodity futures price curves for the underlying commodities, contracted notional volumes, and remaining contractual terms. The resulting fair value measurements are classified within Level 2.

The following tables provide (i) fair value measurement information for financial assets and liabilities measured at fair value on a recurring basis, (ii) the gross amounts of recognized derivative assets and liabilities, (iii) the amounts offset under master netting arrangements with counterparties, and (iv) the resulting net amounts presented in the Company’s condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025. The net amounts are classified as current or noncurrent based on their anticipated settlement dates.

Note 7. Debt

The following table summarizes the Company’s long-term debt as of the dates presented:

(a)

Represents the contractual interest rate as of June 30, 2026.

(b)

Amortized into interest expense using the effective interest method. Write-offs of debt issuance costs associated with the redemption of bonds issued under the Company’s debt offerings are classified as loss on debt extinguishments on the condensed consolidated statements of operations.

Fortress Credit Agreement

In August 2024, the Company entered into the Fortress Credit Agreement, 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 the Company’s 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.

The all-in interest rate for the Fortress Term Loans was 10.8% and 11.1% at June 30, 2026 and December 31, 2025, respectively. The Fortress Credit Agreement contains various customary covenants, including financial covenants that require the Company to maintain ratios around its maximum total secured leverage, minimum asset coverage, and working capital as of the last day of each calendar month or fiscal quarter, as the case may be.

On August 10, 2026, subsequent to the balance sheet date, the Company obtained a waiver of noncompliance with (i) its current ratio covenant as of the last day of each calendar month ending during the period from April 30, 2026 through and including July 31, 2026, which resulted primarily from the timing of accelerated well completion expenditures undertaken to capitalize on higher commodity prices, and (ii) its covenant to enter into and maintain certain swap agreements as of June 30, 2026.

Unregistered Debt Offerings

Regulation D Bonds

In March 2026, the Company approved an increase to the maximum offering amount of the August 2023 506(c) Bonds from$1.5 billion to$2.0 billion. 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.

Adamantium Securities

In March 2026, the Company amended the Adamantium Loan Agreement to increase the amount available to borrow under the agreement from$409.3 million to$609.3 million. Correspondingly, the offering amount of Adamantium Bonds being offered by Adamantium was also increased from$400.0 million to$600.0 million, and the Adamantium Secured Note from$8.6 million to$9.3 million (collectively, the “Adamantium Securities”). The Adamantium Securities have maturity terms that range from five to eleven years and bear interest ranging from 13.0% to 16.5% per annum.

Interest Expense on Debt

The following table summarizes the total interest costs incurred on the Company’s debt:

Note 8. Other Current Liabilities

The following table summarizes the Company’s other current liabilities as of the dates presented:

Note 9. Preferred Equity

In September 2025, the Company completed its 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. The Company 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, the Company 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.

During the three and six months ended June 30, 2026, the Company 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, 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 July 15, 2026, to holders of record as of July 1, 2026, and totaled$1.7 million. As of June 30, 2026, the Company had accrued$1.5 million of divi dends payable, which is included in other current liabilities on the condensed consolidated balance sheet.

Note 10. Equity-Based Compensation

The Company’s parent, Phoenix Equity, has granted equity awards to employees and non-employee service providers of the Company under the 2024 Long-Term Incentive Plan (the “2024 Incentive Plan”).

A summary of the activity under the 2024 Incentive Plan for thesix months ended June 30, 2026 is presented below:

The Phantom Unit awards granted to employees are subject to both a performance condition and a service condition, each of which must be satisfied for the awards to vest. The performance condition requires the occurrence of an exit event (e.g., change in control) by the Company. No compensation cost will be recognized for the employee Phantom Unit awards unless and until the occurrence of such an exit event is deemed probable. As of June 30, 2026, the Company determined that the occurrence of a change in control event was not probable, and accordingly, no equity-based compensation expense was recognized in connection with these awards for the six months ended June 30, 2026. The Phantom Unit awards granted to the non-employee service provider vest partially upon the grant date, with the remaining portion subject to a monthly vesting schedule based on a service condition. The Company recognized less than$0.1 million and$0.1 million of equity-based compensation expense in connection with the Phantom Unit awards granted to the non-employee service provider for the three and six months ended June 30, 2026, respectively, which is included in selling, general, and administrative expenses on the condensed consolidated statement of operations. The related liability is presented within other current liabilities in the accompanying condensed consolidated balance sheet.

As of June 30, 2026 and December 31, 2025, there was$200.7 million and$193.4 million, respectively, of total unrecognized compensation cost related to nonvested equity awards granted under the 2024 Incentive Plan, measured based on the fair value of the awards; that cost is expected to be recognized at the time a liquidity event occurs.

The fair value of each unit granted under the 2024 Incentive Plan was valued on the date of grant under an independent third-party valuation, which included a combination of an income approach, based on the present value of estimated future cash flows, and a market approach based on market data of comparable businesses. The weighted average assumptions used in the valuation of performance unit awards granted for thesix months ended June 30, 2026 are presented in the table below:

(a)

The Company has no history or expectation of paying cash dividends on its awards.

(b)

The risk-free interest rate is based on the U.S. Treasury yield for a term consistent with the expected life of the awards in effect at the time of grant.

(c)

Volatility was estimated based on the different interests being appraised, leveraging historical volatility for comparable publicly traded organizations within its industry. The Company lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies within the industry with characteristics similar to the Company.

(d)

The expected term represents the estimated period, in years, until a liquidity event occurs.

(e)

Discount for lack of marketability was determined using the Restricted Stock Studies, Chaffee Put Option, Finnerty’s Put Option, and Qualitative Mandelbaum Factor approaches.

Note 11. Related Parties

Debt Offerings

Certain of the Company’s officers and their family members participate in the Company’s unregistered debt offerings. During the six months ended June 30, 2026 and 2025, these officers and their family members purchased, in aggregate,2,206 and 1,104 of the combined Regulation A Bonds, Regulation D Bonds, and Adamantium Bonds, respectively, for a total purchase price of$2.2 million and$1.1 million, respectively. As of June 30, 2026 and December 31, 2025, there were 8,315 and 6,288, respectively, of bonds outstanding with carrying values of$8.3 million and$6.3 million, respectively. Interest expense attributable to these securities was$0.4 million and$0.2 million for the three months ended June 30, 2026 and 2025, respectively, and$0.6 million and$0.3 million for the six months ended June 30, 2026 and 2025, respectively.

Lion of Judah

The Company paid interest expense to a financial institution on behalf of Lion of Judah Capital LLC (“Lion of Judah”) related to a certain financing agreement between Lion of Judah and the financial institution of less than $0.1 million for both thethree months ended June 30, 2026 and 2025, and less than $0.1 million for both thesix months ended June 30, 2026 and 2025. Interest payments made by the Company on behalf of Lion of Judah are discretionary in nature.

Note 12. Leases

The Company leases its office facilities primarily under noncancelable multi-year operating lease agreements.

The following table shows the line item classification of the Company’s right-of-use assets and lease liabilities on the Company’s condensed consolidated balance sheets:

Operating lease cost of$0.9 million and$0.6 million for the three months ended June 30, 2026 and 2025, respectively, and$1.7 million and$1.2 million for the six months ended June 30, 2026 and 2025, respectively, was classified as a component of selling, general, and administrative expenses on the condensed consolidated statements of operations.

Note 13. Commitments and Contingencies

For a summary of the Company’s lease obligations, see Note 12 – Leases.

Litigation

From time to time, the Company may become involved in other legal proceedings or be subject to claims arising in the ordinary course of business. Although the results of ordinary course litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not have a material adverse effect on its business, financial condition, results of operations or cash flows. Regardless of the outcome, litigation can have an adverse impact because of defense and settlement costs, diversion of management resources and other factors.

Drilling Rig Contracts

The Company has entered into drilling rig contracts to procure drilling services for wells operated by PhoenixOp. The contracts are short-term and provide a daily operating rate as consideration for services performed by the third-party provider. The contracts provide for termination at the election of the Company but may include an early termination payment if the contract is terminated prior to the expiration of the fixed term.

Natural Gas Processing Contracts

The Company entered into contracts for mobile cryogenic gas processing units to process raw gas, produce and store NGL, and compress residue natural gas at wells operated by PhoenixOp. The contracts range from 6 months to 36 months and provide monthly facility and service fees as consideration for services performed by the third-party provider. As of June 30, 2026, the Company was subject to$5.0 million of commitments under these contracts.

Generator Contracts

The Company entered into contracts with a third-party provider to supply generators used to provide power at wells operated by PhoenixOp. The contracts range from 12 months to 24 months and require monthly service payments for power generation and related equipment. As of June 30, 2026, the Company had approximately$8.4 million of remaining commitments under these contracts.

Saltwater Disposal Pump Contracts

The Company entered into contracts for pumps which are used to inject produced water and flowback into its saltwater disposal facilities on wells for which PhoenixOp serves as the operator. The contracts provide for monthly payments and have terms of twelve months or less. As of June 30, 2026, the Company had approximately$0.7 million of remaining commitments under these contracts.

Delivery Commitments

Crude Oil Commitments

PhoenixOp is subject to arrangements pursuant to which it has committed to deliver barrels of crude oil to a purchaser through December 31, 2030. PhoenixOp will be subject to a shortfall fee for failure to meet this commitment. As a part of these arrangements, PhoenixOp has dedicated to the counterparties certain rights to all oil extracted from its wells in certain properties in Dunn County, North Dakota. PhoenixOp has assessed the productivity potential of its leasehold in the area, as well as the feasibility of executing an operational plan to extract oil on its leasehold within the commitment period and dedication area, and deemed it to be reasonable to enter into such an agreement. As of June 30, 2026, the Company delivered approximately 1.4 million barrels of crude oil and the remaining aggregate commitment under the contract is approximately 0.8 million barrels of crude oil.

Natural Gas Gathering Commitments

In May 2026, the Company entered into afifteen-year gas gathering and processing contract with a third-party provider pursuant to which it has committed to deliver substantially all natural gas production from certain dedicated acreage in the Divide, Williams, and Dunn Counties in North Dakota, for gathering and processing services estimated to commence in March 2027. The Company is subject to afive-year minimum volume commitment of 20.0 million Mcf beginning on the commencement date, with an annual minimum requirement of 4.0 million Mcf, and may be subject to a shortfall fee. Deliveries in excess of annual commitments generate volume credits that may be applied against future annual commitments. Under this agreement, the Company pays gathering, compression, and other service fees based primarily on production volumes delivered. The Company has also agreed to fund certain AIC costs associated with the construction of gathering infrastructure totaling$10.0 million, of which$4.0 million was paid in May 2026 and$3.0 million is to be paid in November 2026. The final installment of$3.0 million is payable upon the achievement of certain specified milestones by the provider.

Note 14. Supplemental Cash Flow Information

The following table summarizes supplemental information to the condensed consolidated statements of cash flows for the periods presented:

Note 15. Segments

The following table summarizes segment operating profit and reconciliation to net income (loss) for the periods presented:

The following tables present financial information by segment for thethree and six months ended June 30, 2026 and 2025, and as of June 30, 2026 and December 31, 2025:

(a)

Selling, general, and administrative expense within the Operating segment reflects certain overhead costs attributable to field-level operations which are charged to operated wells and allocated to other working interest owners.

(b)

Other segment items include advertising and marketing expense and gain on sale of assets.

(c)

Other segment items include advertising and marketing expense and impairment expense.

The following tables summarize the Company’s oil and natural gas properties by proved and unproved properties, location and by segment (before accumulated depletion):

Note 16. Subsequent Events

Management has evaluated subsequent events through August 10, 2026 in connection with the preparation of these condensed consolidated financial statements, which is the date the condensed consolidated financial statements were available to be issued. The Company has determined that there were no material such events that warrant disclosure or recognition on the condensed consolidated financial statements, except for the following:

In June 2026, the Company filed a registration statement on Form S-1 with the SEC (File No. 333-296428), which the SEC declared effective in July 2026, that relates to the issuance of up to an aggregate principal amount of$100.0 million of Phoenix Flex Junior Secured Notes that the Company intends to offer on a continuous basis. The Phoenix Flex Junior Secured Notes comprise notes that will mature ten years from the date of initial issuance, with interest rates ranging from 6.0% to 7.0% per annum, depending on the applicable interval of three, six, nine, twelve, or eighteen months at which holders can request redemption of their Phoenix Flex Junior Secured Notes, and consist of either cash interest or compound interest on such notes.

In July 2026, the Company paid cash distributions totaling$1.7 million to holders of its Series A Preferred Shares, pursuant to distributions declared by the Company’s Board of Directors in July 2026.

In July 2026, the Company executed long call option contracts with a strike price of$75.00 per Bbl covering an aggregate notional volume of approximately 3,917,113 Bbls from July 2026 to September 2028 with a weighted-average premium of approximately$3.79 per Bbl. The premiums will be settled through the monthly derivative settlement process over the life of the contracts and are owed regardless of subsequent changes in commodity prices. These derivative contracts will be accounted for as derivative instruments at fair value in accordance with ASC 815, Derivatives and Hedging, with changes in fair value recognized in earnings as they occur.

The Company is continuing to raise debt capital under its exempt and registered debt offerings. Since the balance sheet date and through the date of filing of these condensed consolidated financial statements, the Company issued approximately$92.5 million of debt securities under these offerings.