PRIMEENERGY RESOURCES CORP

For the period ended Jun 30, 2025. Filed Aug 19, 2025.

About this filing

A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.

Jun 30, 2025 · Filed Aug 19, 2025

PNRG$185.64+2.7%Stored close · as of Nov 6, 2026

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Contents

Item 1. Financial Statements

Part II - Other Information
Consolidated Balance Sheets – June 30, 2025 and December 31, 2024	1
Consolidated Statements of Income – For the three and six months ended June 30, 2025 and 2024	2
Consolidated Statements of Equity – For the three and six months ended June 30, 2025 and 2024	3
Consolidated Statements of Cash Flows – For the six months ended June 30, 2025 and 2024	4
Notes to Consolidated Financial Statements – June 30, 2025	5-8
Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operation	9-17
Item 3. Quantitative and Qualitative Disclosures About Market Risk	17
Item 4. Controls and Procedures	17
Item 1. Legal Proceedings	18
Item 1A. Risk Factors	18
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	18
Item 3. Defaults Upon Senior Securities	18
Item 4. Reserved	18
Item 5. Other Information	18
Item 6. Exhibits	19
Signatures	21

Definitions of Certain Terms and Conventions Used Herein

Within this Report, the following terms and conventions have specific meanings:

Measurements.

●	“Bbl” means a standard barrel containing 42 United States gallons.

●

“BOE” means a barrel of oil equivalent and is a standard convention used to express oil and gas volumes on a comparable oil equivalent basis. Gas equivalents are determined under the relative energy content method by using the ratio of six thousand cubic feet of gas to one Bbl of oil or natural gas liquid.

●	“BOEPD” means BOE per day.

●	“Btu” means British thermal unit, which is a measure of the amount of energy required to raise the temperature of one pound of water one degree Fahrenheit.

●	“MBbl” means one thousand Bbls.

●	“MBOE” means one thousand BOEs.

●	“Mcf” means one thousand cubic feet and is a measure of gas volume.

●	“MMcf” means one million cubic feet.

Indices.

●	“Brent” means Brent oil price, a major trading classification of light sweet oil that serves as a benchmark price for oil worldwide.

●	“WAHA” is a benchmark pricing hub for West Texas gas.

●	“WTI” means West Texas Intermediate, a light sweet blend of oil produced from fields in western Texas and is a grade of oil used as a benchmark in oil pricing.

General terms and conventions.

●	“Borrowing Base” is the maximum amount a company can borrow under a reserve-based lending (RBL) facility, calculated primarily on the value of its proved reserves.

●	“DD&A” means depletion, depreciation and amortization.

●	“ESG” means environmental, social and governance.

●	“GAAP” means accounting principles generally accepted in the United States of America.

●	“GHG” means greenhouse gases.

●	“LNG” means liquefied natural gas.

●	“NGLs” means natural gas liquids, which are the heavier hydrocarbon liquids that are separated from the gas stream; such liquids include ethane, propane, isobutane, normal butane and natural gasoline.

●	“NYMEX” means the New York Mercantile Exchange.

●	“OPEC” means the Organization of Petroleum Exporting Countries.

●	“PrimeEnergy” or the “Company” means PrimeEnergy Resources Corporation and its subsidiaries.

●	“Proved developed reserves” means reserves that can be expected to be recovered through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well.

●

“Proved reserves” means those quantities of oil and gas, which, by analysis of geosciences and engineering data, can be estimated with reasonable certainty to be economically producible – from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations – prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

(i)

The area of the reservoir considered as proved includes: (A) The area identified by drilling and limited by fluid contacts, if any, and (B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data.

(ii)	In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons as seen in a well penetration unless geoscience, engineering or performance data and reliable technology establishes a lower contact with reasonable certainty.

(iii)

Where direct observation from well penetrations has defined a highest known oil elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering or performance data and reliable technology establish the higher contact with reasonable certainty.

(iv)

Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when: (A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and (B) The project has been approved for development by all necessary parties and entities, including governmental entities.

(v)

Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.

●	“Proved undeveloped reserves” means reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.

(i)	Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.

(ii)	Undrilled locations can be classified as having proved undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify a longer time.

(iii)

Under no circumstances shall estimates for proved undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, or by other evidence using reliable technology establishing reasonable certainty.

●	“PV-10” (Present Value at 10%) measures the future net cash flows from proved reserves, discounted at a fixed 10% annual rate to account for the time value of money.

●	“SEC” means the United States Securities and Exchange Commission.

●	“Standardized Measure” means the after-tax present value of estimated future net cash flows of proved reserves, determined in accordance with the rules and regulations of the SEC, using prices and costs employed in the determination of proved reserves and a 10 percent discount rate.

●	“U.S.” means United States.

●

With respect to information on the working interest in wells, drilling locations and acreage, “net” wells, drilling locations and acres are determined by multiplying “gross” wells, drilling locations and acres by the Company’s working interest in such wells, drilling locations or acres. Unless otherwise specified, wells, drilling locations and acreage statistics quoted herein represent gross wells, drilling locations or acres.

●	“WASP” means weighted average sales price.

●	All currency amounts are expressed in U.S. dollars.

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This information in this Quarterly Report on Form 10-Q (this“Report”) contains forward-looking statements that involve risks and uncertainties. When used in this document, the words“believes,”* “plans,” “expects,” “anticipates,” “forecasts,” “models,” “intends,” “continue,” “may,” “will,” “could,” “should,” “future,” “potential,” “estimate,” or the negative of such terms and similar expressions as they relate to the Company are intended to identify forward-looking statements, which are generally not historical in nature. The forward-looking statements are based on PrimeEnergy Resources Corporation*“the Company”* current expectations, assumptions, estimates and projections about the Company and the industry in which the Company operates. Although the Company believes that the expectations and assumptions reflected in the forward-looking statements are reasonable as and when made, they involve risks and uncertainties that are difficult to predict and, in many cases, beyond the Company*’s control. In addition, the Company may be subject to currently unforeseen risks that may have a material adverse effect on it.

These risks and uncertainties include, among other things, volatility of commodity prices; product supply and demand; the impact of armed conflict (including the conflicts in Ukraine and the Middle East) or political instability on economic activity and oil and gas supply and demand; competition; the ability to obtain drilling, environmental and other permits and the timing thereof; the effect of future regulatory or legislative actions on the Company or the industry in which it operates, including potential changes to tax rates or laws, new restrictions on development activities or potential changes in regulations limiting produced water disposal; the ability to obtain approvals from third parties and negotiate agreements with third parties on mutually acceptable terms; potential liability resulting from pending or future litigation; the costs, including the potential impact of cost increases due to inflation and supply chain disruptions, and results of development and operating activities; the impact of a widespread outbreak of an illness on global and U.S. economic activity, oil and gas demand, and global and U.S. supply chains; availability of equipment, services, resources and personnel required to perform the Company’s development and operating activities; access to and availability of transportation, processing, fractionation, refining, storage and export facilities; the Company’s ability to replace reserves, implement its business plans or complete its development activities as scheduled; the Company’s ability to achieve its emissions reductions, flaring and other ESG goals; access to and cost of capital; the financial strength of (i) counterparties to the Company’s credit facility and derivative contracts, (ii) issuers of the Company’s investment securities and (iii) purchasers of the Company’s oil, NGL and gas production and downstream sales of purchased commodities; uncertainties about estimates of reserves, identification of drilling locations and the ability to add proved reserves in the future; the assumptions underlying forecasts, including forecasts of production, operating cash flow, well costs, capital expenditures, rates of return, expenses, and cash flow from downstream purchases and sales of oil and gas, net of firm transportation commitments; quality of technical data; environmental and weather risks, including the possible impacts of climate change on the Company’s operations and demand for its products; cybersecurity risks; the risks associated with the ownership and operation of the Company’s well services business and acts of war or terrorism. In addition, the Company may be subject to currently unforeseen risks that may have a materially adverse effect on it.

Accordingly, no assurances can be given that the actual events and results will not be materially different than the anticipated results described in the forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. The Company undertakes no duty to publicly update these statements except as required by law.

PART I—FINANCIAL INFORMATION

Item 1.	FINANCIAL STATEMENTS

CONSOLIDATED BALANCE SHEETS

(Thousands of dollars, except share data)

	June 30, 2025 Unaudited	December 31, 2024
ASSETS
Current Assets
Cash and cash equivalents	$2,364	$2,549
Accounts receivable, net	28,919	24,338
Prepaid obligations	1,946	1,372
Other current assets	13	11
Total Current Assets	33,242	28,270
Property and Equipment
Oil and gas properties at cost	825,159	773,330
Less: Accumulated depletion, depreciation and amortization	(518,367)	(479,424)
	306,792	293,906
Field and office equipment at cost	13,330	14,643
Less: Accumulated depreciation	(11,494)	(12,712)
	1,836	1,931
Total Property and Equipment, Net	308,628	295,837
Other Assets	1,156	515
Total Assets	$343,026	$324,622
LIABILITIES AND EQUITY
Current Liabilities
Accounts payable	$7,797	$16,329
Accrued property cost	33,317	7,578
Accrued liabilities	12,686	25,514
Due to related parties	80	34
Current portion of asset retirement and other long-term obligations	1,430	200
Total Current Liabilities	55,310	49,655
Long-Term Bank Debt	12,000	4,000
Asset Retirement Obligations	12,907	13,799
Deferred Income Taxes	56,510	53,405
Other Long-Term Obligations	1,050	838
Total Liabilities and Contingencies	137,777	121,697
Equity
Common stock, $.10 par value; 2025 and 2024: Authorized and Issued 2,810,000 shares, outstanding 2025: 2,810,000 shares, outstanding 2024: 2,810,000 shares	281	281
Paid-in capital	7,555	7,555
Retained earnings	273,435	261,073
Treasury stock, at cost; 2025: 1,154,500 shares; 2024: 1,101,530 shares	(76,022)	(65,984)
Total Equity	205,249	202,925
Total Liabilities and Equity	$343,026	$324,622

CONSOLIDATED STATEMENTS OFINCOME–** Unaudited **

Three and Six Months Ended June 30, 2025 and 2024

(Thousands of dollars, except per share amounts)

	Three Months Ended June 30,		Six Months Ended June 30,
	2025	2024	2025	2024
Revenues:
Oil	$34,178	$56,234	$66,844	$89,533
Natural gas	43	82	6,072	1,440
Natural gas liquids	5,617	5,374	14,146	9,739
Field service income	1,975	2,911	4,120	6,310
Interest and other income	170	19	238	157
Gain on disposition of assets	0	205	619	636
Total revenues	41,983	64,825	92,039	107,815
Costs and expenses:
Oil and gas production	10,135	12,416	19,654	21,546
Production and ad valorem taxes	1,819	3,698	5,090	6,651
Field service	1,233	2,472	3,092	5,273
Depreciation, depletion and amortization	20,783	17,294	41,141	27,614
Accretion of discount on asset retirement obligations	152	171	335	342
General and administrative expense	2,971	3,863	5,874	6,920
Interest	710	236	1,300	451
Total costs and expenses	37,803	40,150	76,486	68,797
Income before taxes	4,180	24,675	15,553	39,018
Income tax provision	952	4,943	3,191	7,967
Net income	$3,228	$19,732	$12,362	$31,051
Net income per share attributable to common stockholders:
Basic	$1.94	$11.08	$7.37	$17.31
Diluted	$1.33	$7.77	$5.07	$12.16
Weighted average shares outstanding:
Basic	1,661,916	1,780,593	1,677,096	1,793,640
Diluted	2,424,723	2,540,322	2,440,305	2,553,147

CONSOLIDATED STATEMENTS OF EQUITY–** Unaudited **

Three and Six Months Ended June 30, 2025 and 2024

(Thousands of dollars, except share amounts)

Common Stock · Additional
	Shares	Common Stock	Paid-In Capital	Retained Earnings	Treasury Stock	Total Equity
Balance at December 31, 2024	2,810,000	$281	$7,555	$261,073	$(65,984)	$202,925
Purchase of 36.600 shares, at cost	-	—	—	—	(7,095)	(7,095)
Net Income	—	—	—	9,134	—	9,134
Balance at March 31, 2025	2,810,000	281	7,555	270,207	(73,079)	204,964
Purchase of 16,970 shares, at cost	-	—	—	—	(2,943)	(2,943)
Net income	—	—	—	3,228	—	3,228
Balance at June 30, 2025	2,810,000	$281	$7,555	$273,435	$(76,022)	$205,249

Common Stock · Additional
	Shares	Common Stock	Paid-In Capital	Retained Earnings	Treasury Stock	Total Equity
Balance at December 31, 2023	2,810,000	$281	$7,555	$205,669	$(52,555)	$160,950
Purchase of 29,855 shares, at cost	-	—	—	—	(2,849)	(2,849)
Net income	—	—	—	11,319	—	11,319
Balance at March 31, 2024	2,810,000		7,555	216,988	(55,404)	169,420
Purchase of 28,191 shares, at cost	-	—	—	—	(2,857)	(2,857)
Net income	—	—	—	19,732	—	19,732
Balance at June 30, 2024	2,810,000	$281	$7,555	$236,720	$(58,261)	$186,295

CONSOLIDATED STATEMENTS OF CASH FLOWS–** Unaudited **

Six Months Ended June 30, 2025 and 2024

(Thousands of dollars)

	2025	2024
Cash Flows from Operating Activities:
Net Income	$12,362	$31,051
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization	41,141	27,614
Accretion of discount on asset retirement obligations	335	342
Gain on sale and exchange of assets	(619)	(636)
Provision for deferred income taxes	3,105	5,080
Changes in assets and liabilities:
Accounts receivable	(4,581)	(25,187)
Prepaids obligations	(574)	(1,026)
Other current assets	(2)	33
Accounts payable	(8,532)	4,087
Accrued liabilities	(12,828)	303
Due to related parties	46	61
Other long-term liabilities	10	(470)
Net Cash Provided by Operating Activities	29,863	41,252
Cash Flows from Investing Activities:
Property Expenditures	(28,629)	(45,228)
Proceeds from disposition of properties and equipment	619	636
Net Cash Used in Investing Activities	(28,010)	(44,592)
Cash Flows from Financing Activities:
Purchase of stock for treasury	(10,038)	(5,706)
Proceeds from long-term bank debt	52,500	30,500
Repayment of long-term bank debt and other long-term obligations	(44,500)	(30,500)
Net Cash Used in Financing Activities	(2,038)	(5,706)
Net Decrease in Cash and Cash Equivalents	(185)	(9,046)
Cash and Cash Equivalents at the Beginning of the Period	2,549	11,061
Cash and Cash Equivalents at the End of the Period	$2,364	$2,015
Supplemental Disclosures:
Income taxes paid during the year	$6,676	$101
Interest paid during the year	$1,418	$390
Non-cash financing and investing activities:
Change in Accrued Property Costs	$25,739	$11,158
Asset Retirement Obligations	$67	$70

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2025

(1)	Basis of Presentation:

The accompanying condensed consolidated financial statements of PrimeEnergy Resources Corporation (“PrimeEnergy” or the “Company”) have not been audited by independent public accountants. Pursuant to applicable Securities and Exchange Commission (“SEC”) rules and regulations, the accompanying interim financial statements do not include all disclosures presented in annual financial statements and the reader should refer to the Company’s Form 10-K for the year ended December 31, 2024. In the opinion of management, the accompanying interim consolidated financial statements contain all material adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the Company’s consolidated balance sheets as of June 30, 2025, and December 31, 2024, the consolidated results of operations, cash flows and equity for the six months ended June 30, 2025, and 2024.

As of June 30, 2025, PrimeEnergy’s significant accounting policies are consistent with those discussed in Note 1—Description of Operations and Significant Accounting Policies of its consolidated financial statements contained in PrimeEnergy’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Certain amounts presented in prior period financial statements have been reclassified for consistency with current period presentation. The results for interim periods are not necessarily indicative of annual results. For purposes of disclosure in the consolidated financial statements, subsequent events have been evaluated through the date the statements were issued.

Recently Issued Accounting Pronouncements

In November 2024, the FASB issued ASU 2024-03,Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 increases the transparency of expense information presented in the statement of operations through disclosures of expanded disaggregation of relevant expense captions including purchases of inventory, employee compensation, depletion, depreciation, and amortization. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027 with early adoption permitted. The Company is currently evaluating ASU 2024-03 and the impact it may have to the Company’s disclosures.

In December 2023, the FASB issued ASU 2023-09, Improvements toIncome Tax Disclosures(“ASU 2023-09”). ASU 2023-09 enhances the transparency of income tax disclosures by expanding the income tax rate reconciliation disclosure and income taxes paid information. ASU 2023-09 also includes certain other amendments to improve the effectiveness of income tax disclosures. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating ASU 2023-09 and the impact it may have to the Company’s financial position, results of operations, cash flow or disclosures.

Other accounting pronouncements that have recently been issued by the FASB or other standards-setting bodies are not expected to have a material impact on the Company’s financial position, results of operations, cash flows or disclosures.

(2)	Acquisitions and Dispositions

In the first quarter of 2025, the Company recognized a gain of $619,000 on the disposition of a workover rig related to our service company that was fully depreciated.

In the first quarter of 2024, the Company sold 48 net acres in Lea County, New Mexico, along with minor working interest in 23 non-operated wells, receiving gross proceeds of $375,600, and in the second quarter of 2024, sold an additional 12 net acres in Lea County for proceeds of $150,600. Also in the second quarter of 2024, we farmed out certain acreage in east Texas for $54,800.

(3)	Additional Balance Sheet Information:

Certain balance sheet amounts are comprised of the following:

(Thousands of dollars)	June 30, 2025	December 31, 2024
Accounts Receivable:
Joint interest billings	$1,812	$2,413
Trade receivables	839	958
Oil and gas sales	26,653	21,211
Other	29	170
	29,333	24,752
Less: Allowance for credit losses	(414)	(414)
Total	$28,919	$24,338
Accounts Payable:
Trade	$3,636	$12,038
Royalty and other owners	3,841	3,607
Partner advances	311	511
Other	9	173
Total	$7,797	$16,329
Accrued Liabilities:
Compensation and related expenses	$4,605	$10,668
Taxes	3,070	9,524
Lease operating costs	4,033	4,263
Other	978	1,059
Total	$12,686	$25,514

(4)	Long-Term Debt:

On July 5,* 2022,* the Company and its lenders entered into aFourth Amended and Restated Credit Agreement (the “2022 Credit Agreement”) with a maturity date of June 1, 2026*.* Under the 2022 Credit Agreement, the Company has a revolving line of credit and letter of credit facility of up to $300 million subject to aborrowingbase that is determined semi-annually by the lenders based upon the Company’s consolidated financial statements and the estimated value of the Company’s oil and gas properties, in accordance with the Lenders’ customary practices for oil and gas loans. The initialb orrowingbase of the agreement was*$*75 million and adjusted to $65 million in July 2023. The credit facility is secured by substantially all of the Company’s oil and gas properties. The 2022Credit Agreement includes terms and covenants that require the Company to maintain a minimum current ratio and total indebtedness to EBITDAX (earnings before depreciation, depletion, amortization, taxes, interest expense and exploration costs) ratio, as defined, and restrictions are placed on the payment of dividends, the amount of treasury stock the Company may purchase, and commodity hedge agreements.

Effective February 9, 2024, the Company and its lenders entered into the Second Amendment to the 2022 Credit Agreement. This amendment included an increase of the Borrowing Base from $65 million to $85 million.

Effective July 29, 2024, the Company and its lenders entered into the Third Amendment to the 2022 Credit Agreement, increasing the Borrowing Base from $85 million to $115 million.

Effective December 20, 2024, the Company and its lenders entered into the Fourth Amendment to the 2022 Credit Agreement, reaffirming the credit agreement at $115 million and extending maturity to 2028. The Borrowingbase will remain in effect until either the next scheduled Redetermination Date, June 2025, or the date the Borrowing Base is next adjusted in accordance with the Credit Agreement. As of December 31, 2024, the Company had $4 million in outstanding borrowings and $111 million in availability. Theprime rate in effect for December 2024, was 7.50%. The $4 million in outstanding borrowings was considered prime rate borrowings, and were subject to utilization percentage of 2.25%. The effective rate for this borrowing balance at December 31, 2024, was 9.75%.

As of June 30, 2025, the Company had $12 million in outstanding borrowings and $103 million in available under the credit facility. The funds outstanding were considered prime rate borrowings and were subject to an effective rate of 9.75%. As of August 14, 2025, thec ompany hadno outstanding borrowings and $115 million in availability under the credit facility.

(5)	Other Long-Term Obligations and Commitments:

Operating Leases:

The Company leases office facilities under operating leases and recognizes lease expense on a straight-line basis over the lease term. Lease assets and liabilities are initially recorded at commencement date based on the present value of lease payments over the lease term. As most of the Company’s lease contracts do not provide an implicit discount rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The weighted average discount rate used was 9.50%. Certain leases may contain variable costs above the minimum required payments and are not included in the right-of-use assets or liabilities. Leases may include renewal, purchase or termination options that can extend or shorten the term of the lease. The exercise of those options is at the Company’s sole discretion and is evaluated at inception and throughout the contract to determine if a modification of the lease term is required.

Operating lease costs for the six months ended June 30, 2025 and 2024 were $386 thousand and $370 thousand, respectively. Cash payments included in the operating lease cost for the six months ended June 30, 2025 and 2024 were $408 thousand and $391 thousand, respectively. The weighted-average remaining operating lease terms as of June 30, 2025 and 2024 were 8.63 months and 5.19 months, respectively. The Company acquired and amended certain leases for office space in Texas providing for future payments of $412 thousand for the remainder of 2025, and $291 thousand in 2026, $127 thousand in 2027 and $27 thousand in 2028.

All current leases have been included within the current balance sheet and the Company has not entered into any new leases since the reporting date of June 30, 2025. Rent expense for office space for the six months ended June 30, 2025 and 2024 was $438 thousand and $441 thousand, respectively.

The payment schedule for the Company’s operating lease obligations as of June 30, 2025 is as follows:

(Thousands of dollars)	Operating Leases
2025 (remainder of year)	$412
2026	291
2027	127
2028	27
Total undiscounted lease payments	$857
Less: Amount associated with discounting	(84)
Total net operating lease liabilities	$773
Less: Current portion of net operating lease liabilities	571
Non-current portion included in Other long-term obligations	$202

Asset Retirement Obligation:

A reconciliation of the liability for plugging and abandonment costs for the six months ended June 30, 2025 is as follows:

(Thousands of dollars)	June 30, 2025
Asset retirement obligation at December 31, 2024	$13,867
Net wells placed on production	67
Liabilities settled	(503)
Accretion of discount	335
Asset retirement obligation at June 30, 2025	$13,766
Less current portion of asset retirement obligations	859
Asset retirement obligations, long-term	$12,907

The Company’s liability is determined using significant assumptions, including current estimates of plugging and abandonment costs, annual inflation of these costs, the productive life of wells and a credit adjusted risk free interest rate. Changes in any of these assumptions can result in significant revisions to the estimated asset retirement obligation. Revisions to the asset retirement obligation are recorded with an offsetting change to producing properties, resulting in prospective changes to depreciation, depletion and amortization expense and accretion of discount. Because of the subjectivity of assumptions and the relatively long life of most of the Company’s wells, the costs to ultimately retire the wells may vary significantly from previous estimates.

(6)	Contingent Liabilities:

The Company is subject to environmental laws and regulations. Management believes that future expenses, before recoveries from third parties, if any, will not have a material effect on the Company’s financial condition. This opinion is based on expenses incurred to date for remediation and compliance with laws and regulations, which have not been material to the Company’s results of operations.

From time to time, the Company is party to certain legal actions arising in the ordinary course of business. While the outcome of these events cannot be predicted with certainty, management does not expect these matters to have a materially adverse effect on the financial position or results of operations of the Company.

(7)	Stock Options and Other Compensation:

In May 1989, non-statutory stock options were granted by the Company tofour key executive officers for the purchase of shares of common stock. At June 30, 2025 and 2024, remaining options held by two key executive officers on 767,500 shares were outstanding and exercisable at prices ranging from $1.00 to $1.25. According to their terms, the options have no expiration date.

(8)	Related Party Transactions:

Amounts due to or from related parties primarily represent receipts or expenses, related to oil and gas properties, collected or paid by the Company as agent for the joint venture partners, which may include members of the Company’s Board of Directors.

(9)	Segment Information:

The Company operates in one industry – oil and gas exploration, development, operation and servicing. Net income (loss) before income taxes is the measure reported to the chief operating decision maker (CODM) for purposes of making decisions about allocating resources and assessing performance. This measure allows our management to effectively evaluate our operating performance and compare the results between periods. The CODM is our Chief Executive Officer.

(10)	Earnings Per Share:

Basic earnings per share are computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect per share amounts that would have resulted if dilutive potential common stock had been converted to common stock in gain periods. The following reconciles amounts reported in the consolidated financial statements:

	Six Months Ended June 30,
	2025			2024
	Net Income (In thousands)	Weighted Average Number of Shares Outstanding	Per Share Amount	Net Income (In thousands)	Weighted Average Number of Shares Outstanding	Per Share Amount
Basic	$12,362	1,677,096	$7.37	$31,051	1,793,640	$17.31
Effect of dilutive securities:
Options		763,209			759,507
Diluted	$12,362	2,440,305	$5.07	$31,051	2,553,147	$12.16

	Three Months Ended June 30,
	2025			2024
	Net Income (In thousands)	Weighted Average Number of Shares Outstanding	Per Share Amount	Net Income (In thousands)	Weighted Average Number of Shares Outstanding	Per Share Amount
Basic	$3,228	1,661,916	$1.94	$19,732	1,780,593	$11.08
Effect of dilutive securities:
Options		762,807			759,729
Diluted	$3,228	2,424,723	$1.33	$19,732	2,540,322	$7.77

(11)	Subsequent Event:

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (the “OBBBA”) into law. Among other things, the OBBBA indefinitely extends the 100% first-year depreciation allowance on qualified property placed in service after January 19, 2025, includes favorable modifications to the business interest expense limitation, and otherwise extends and enhances certain key provisions of the Tax Cuts & Jobs Act. The OBBBA has multiple effective dates with respect to its various provisions, with certain provisions effective in 2025. We are currently assessing the impacts of the OBBBA on our consolidated financial statements, and while we do not expect it to have a material impact on our results of operations, we do expect it to provide a benefit to our cash flows from operating activities.

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