PRIMEENERGY RESOURCES CORP

Previous wording

The Company is actively developing additional reserves of its leasehold acreage positions in Texas and Oklahoma. In the Permian Basin of West Texas, the Company maintains an acreage position of approximately 17,138 gross (9,622 net) acres, 89.3% of which is located in Reagan, Upton, Martin, and Midland counties of Texas where our current horizontal drilling activity is focused. In addition to the wells currently being drilled or completed, we believe this acreage has the resource potential to support the drilling of as many as 100 additional horizontal wells.

Current wording

The Company is actively developing additional reserves of its leasehold acreage positions in Texas and Oklahoma. In the Permian Basin of West Texas, the Company maintains an acreage position of approximately 17,138 gross (9,622 net) acres, 96.1% of which is located in Reagan, Upton, Martin, and Midland counties of Texas where our current horizontal drilling activity is focused. In addition to the wells currently being drilled or completed, we believe this acreage has the resource potential to support the drilling of as many as 100 additional horizontal wells.

Previous wording

In Oklahoma, we are focused on the development of our reserves in Canadian, Grady, Kingfisher, Garfield, Major, and Garvin counties where we have approximately 4,021 net leasehold acres in the Scoop/Stack Play.

Current wording

In Oklahoma, we are focused on the development of our reserves in Canadian, Grady, Kingfisher, Garfield, Major, and Garvin counties where we have approximately 4,015 net leasehold acres in the Scoop/Stack Play.

Previous wording

Currently, we are monitoring the production from a new well drilled by Ventex Operating, on acreage in the Segno field of Polk County, Texas where the Company farmed-out its 55% leasehold rights for cash and a 5.53% over-riding royalty interest (ORRI). The well was cased in February 2025 and fraced in May 2025. Currently, the well is producing approximately 1700 Mcfd along with 75 Bcpd and 130 Bwpd.

Current wording

Currently, we are monitoring the production from a new well drilled by Ventex Operating, on acreage in the Segno field of Polk County, Texas where the Company farmed-out its 55% leasehold rights for cash and a 5.53% over-riding royalty interest (ORRI). The well was cased in February 2025 and fraced in May 2025. Currently, the well is producing approximately 1100 Mcfd along with 40 Bcpd and 100 Bwpd.

Previous wording

In the Segno Field of Polk County, Texas, the Wing #16 was completed in May 2025 at an estimated cost of $400,000. First gas sales occurred in June 2025. Currently, the well is producing 240 Mcfd, 3 Bcpd, and 50 Bwpd. Gulf Coast also plans to recomplete the Sarah F. Wing #80 in the Segno field of Polk County, Texas, at an expense of approximately $100,000.

Current wording

In the Segno Field of Polk County, Texas, the Wing #16 was completed in May 2025 at an estimated cost of $400,000. First gas sales occurred in June 2025. Currently, the well is producing 160 Mcfd, 1 Bcpd, and 35 Bwpd. Gulf Coast will soon install gas lift/plunger lift to boost production. In the first quarter of 2026, Gulf Coast also plans to recomplete the Sarah F. Wing #80 in the Segno field at an expense of approximately $100,000.

Previous wording

Our Mid-Continent activities are concentrated in central Oklahoma. This region is managed from our office in Oklahoma City, Oklahoma. As of December 31, 2024, we had 359 producing wells (159 net) in the Mid-Continent area, of which 117 wells are operated by us. Principal producing intervals are in the Robberson, Avant, Skinner, Sycamore, Bromide, McLish, Hunton, Mississippian, Oswego, Red Fork, and Chester formations at depths ranging from 1,100 to 10,500 feet. The average net daily production in our Mid-Continent Region in 2024 was 806 Boe. On December 31, 2024, we had 2,643 MBoe of proved reserves in the Mid-Continent area, representing 10% of our total proved reserves. We maintain an acreage position of approximately 45,075 gross (10,050 net) acres in this region, primarily in Canadian, Kingfisher, Grant, Major, and Garvin counties.

Current wording

Our Mid-Continent activities are concentrated in central Oklahoma. This region is managed from our office in Oklahoma City, Oklahoma. As of December 31, 2024, we had 359 producing wells (159 net) in the Mid-Continent area, of which 117 wells are operated by us. Principal producing intervals are in the Robberson, Avant, Skinner, Sycamore, Bromide, McLish, Hunton, Mississippian, Oswego, Red Fork, and Chester formations at depths ranging from 1,100 to 10,500 feet. The average net daily production in our Mid-Continent Region in 2024 was 806 Boe. On December 31, 2024, we had 2,643 MBoe of proved reserves in the Mid-Continent area, representing 10% of our total proved reserves. We maintain an acreage position of approximately 43,837 gross (10,062 net) acres in this region, primarily in Canadian, Kingfisher, Grant, Major, and Garvin counties.

Previous wording

Our Mid-Continent region is actively participating with third-party operators in the horizontal development of lands that include Company owned interest in several counties in the Scoop and Stack plays of Oklahoma where drilling is primarily targeting reservoirs of the Mississippian and Woodford formations. In Canadian County, Oklahoma we participated with Ovintiv Mid-Continent in drilling of two 2-mile-long horizontal wells which were spud in March 2025 and completed in May 2025. Our share of these wells are around 3.1% and the total investment will be on the order of $402,000. We have also elected to participate with Devon in Kingfisher County, Oklahoma in drilling two 2-mile-long horizontal wells which should be spud in August 2025. Our share of these wells are around 9.95% and total investment will be on the order of $1,414,000.

Current wording

Our Mid-Continent region is actively participating with third-party operators in the horizontal development of lands that include Company owned interest in several counties in the Scoop and Stack plays of Oklahoma where drilling is primarily targeting reservoirs of the Mississippian and Woodford formations. In Canadian County, Oklahoma we participated with Ovintiv Mid-Continent in drilling of two 2-mile-long horizontal wells which were spud in March 2025 and completed in May 2025. Our share of these wells is approximately 3.1% and the total investment will be approximately $402,000. We have also participated with Devon in Kingfisher County, Oklahoma to drill two 2-mile-long horizontal wells which were spud July 2025 and are presently being completed, therefore, we anticipate these wells to be producing in November 2025. Our share of these wells is approximately 9.95% and total investment will be approximately $1,414,000.

Previous wording

Our West Texas activities are concentrated in the Permian Basin in Texas. The oil and gas in this basin are produced primarily from five intervals; the Upper and Lower Spraberry, the Wolfcamp, the Strawn, and the Atoka, at depths ranging from 6,700 feet to 11,300 feet. This region is managed from our office in Midland, Texas. As of June 30, 2025, we had 543 wells (274 net) in the West Texas area, of which 304 wells are operated by us. Principal producing intervals are in the Spraberry, Wolfcamp, and San Andres formations at depths ranging from 4,200 to 12,500 feet. The average net daily production in our West Texas Region at year- end 2024 was 13,749 Boe. On December 31, 2024, we had 23,383 MBoe of proved reserves in the West Texas area, or 88.3% of our total proved reserves. We maintain an acreage position of approximately 17,138 gross (9,622 net) acres in the Permian Basin in West Texas, primarily in Reagan, Upton, Martin, and Midland counties and believe this acreage has significant resource potential for horizontal drilling in the Spraberry, Jo Mill, and Wolfcamp intervals. We operate a field service group in this region utilizing eight workover rigs, three hot oiler trucks, and one kill truck. Oil field support is provided for drilling and workover operations both to third-party operators as well as for our own operated wells and locations.

Current wording

Our West Texas activities are concentrated in the Permian Basin in Texas. The oil and gas in this basin are produced primarily from five intervals; the Upper and Lower Spraberry, the Wolfcamp, the Strawn, and the Atoka, at depths ranging from 6,700 feet to 11,300 feet. This region is managed from our office in Midland, Texas. As of September 30, 2025, we had 543 wells (274 net) in the West Texas area, of which 296 wells are operated by us. Principal producing intervals are in the Spraberry, Wolfcamp, and San Andres formations at depths ranging from 4,200 to 12,500 feet. The average net daily production in our West Texas Region at year- end 2024 was 13,749 Boe. On December 31, 2024, we had 23,383 MBoe of proved reserves in the West Texas area, or 88.3% of our total proved reserves. We maintain an acreage position of approximately 17,138 gross (9,622 net) acres in the Permian Basin in West Texas, primarily in Reagan, Upton, Martin, and Midland counties and believe this acreage has significant resource potential for horizontal drilling in the Spraberry, Jo Mill, and Wolfcamp intervals. We operate a field service group in this region utilizing eight workover rigs, three hot oiler trucks, and one kill truck. Oil field support is provided for drilling and workover operations both to third-party operators as well as for our own operated wells and locations.

Previous wording

In 2024, the Company invested $113 million in 48 horizontals in West Texas: 47 of these are located in Reagan County and one is located in Upton County. In Reagan County, the Company joined Double Eagle in drilling and completing 33 new horizontal wells: on the “Honey RF” tract we completed 12 horizontals each being two-mile-long laterals, and participated with 50% interest investing $37 million; on the “Prime West” tract we have 50% interest in six wells and invested $20.5 million; on both the “Kramer” and “O’Bannion” tracts we participated in six horizontals, each with an average 8.3% interest and we invested approximately $7.8 million; and on the “Pink Floyd” tract we have less than 1% interest in two wells in which we invested approximately $174,900; and on our “Studley AV” tract we participated with Double eagle in testing the Wolfcamp “D” interval; in this well we have about 6.3% interest and invested approximately $600,000. Also in Reagan County, we participated with Civitas in 14 horizontal wells on the “Christi” tract, carrying an average of 39% interest and investing roughly $46.7 million. Also in 2024, in Upton County, we participated with Pioneer Natural Resources in one 2-mile-long horizontal with 3.94% interest, investing approximately $425,800. Of these 48 wells, 32 are 2-mile-long laterals, 14 are 2.5-mile-long laterals, and two are 3-mile-long laterals.

Current wording

In 2024, the Company invested $113 million in 48 horizontals in West Texas: 47 of these are located in Reagan County and one is located in Upton County. In Reagan County, the Company joined Double Eagle in drilling and completing 33 new horizontal wells: on the “Honey RF” tract we completed 12 horizontals each being two-mile-long laterals, and participated with 50% interest investing $37 million; on the “Prime West” tract we have 50% interest in six wells and invested $20.5 million; on both the “Kramer” and “O’Bannion” tracts we participated in six horizontals, each with an average 8.3% interest and we invested approximately $7.8 million; and on the “Pink Floyd” tract we have less than 1% interest in two wells in which we invested approximately $174,900; and on our “Studley AV” tract we participated with Double eagle in testing the Wolfcamp “D” interval; in this well we have approximately a 6.3% interest and invested approximately $600,000. Also in Reagan County, we participated with Civitas in 14 horizontal wells on the “Christi” tract, carrying an average of 39% interest and investing roughly $46.7 million. Also in 2024, in Upton County, we participated with Pioneer Natural Resources in one 2-mile-long horizontal with 3.94% interest, investing approximately $425,800. Of these 48 wells, 32 are 2-mile-long laterals, 14 are 2.5-mile-long laterals, and two are 3-mile-long laterals.

Previous wording

In addition to this activity, in June of 2024, we began participation with Apache in the drilling of six additional 3-mile-long laterals in Upton County on our “Mt. Moran” tract. Three of these wells were completed in late December 2024 and three were completed in January of 2025. All six new “Mt. Moran” wells are producing as of April 1, 2025. In these six Mt. Moran wells, the Company has an average of 51.16% interest and will in total invest approximately $40.5 million. In addition, in November of 2024, in Reagan County, we began participating with Double Eagle in 15 “OG” horizontal wells: eight are 2.5-mile-long laterals, and seven are 2-mile-long laterals. In each of these 15 “OG” wells the Company has approximately 23% interest and in total will invest roughly $23 million through completion of production facilities. Each of these 15 horizontals are on production as of June 1, 2025. By the end of the second quarter of 2025, therefore, the Company has invested approximately $64 million in these additional 21 horizontal wells.

Current wording

In addition to this activity, in June of 2024, we began participation with Apache in the drilling of six additional 3-mile-long laterals in Upton County on our “Mt. Moran” tract. Three of these wells were completed in late December 2024 and three were completed in January of 2025. All six new “Mt. Moran” wells are producing as of April 1, 2025. In these six Mt. Moran wells, the Company has an average of 51.16% interest and will in total invest approximately $40.5 million. In addition, in November of 2024, in Reagan County, we began participating with Double Eagle in 15 “OG” horizontal wells: eight are 2.5-mile-long laterals, and seven are 2-mile-long laterals. In each of these 15 “OG” wells the Company has approximately 23% interest and in total will invest roughly $23 million through completion of production facilities. Each of these 15 horizontals are on production as of September 30, 2025 and the Company has invested approximately $64 million in these additional 21 horizontal wells.

Previous wording

In the second half of 2025, we are anticipating the start of 15 new horizontals in the Midland Basin of West Texas operated by Double Eagle on our “Full House” tract in Reagan County in which the Company will participate with approximately 27% interest and invest $30.1 million. Drilling has been completed on all 15 wells and completion is in progress as of August 1, 2025. These wells are expected to be on production late third quarter of this year. In addition to the Reagan County activity, the company is participating in eight (8) “Horseshoe” wells in Midland County with Vital Energy. Drilling activity with these wells began in the second quarter and will complete in early third quarter of 2025 with production early fourth quarter. The Company has an average of 8.2% interest in these eight (8) wells and will invest approximately $5.4 million in Midland County.

Current wording

During the third quarter of 2025, we participated in the drilling and completion of 15 horizontal wells in the Midland Basin of West Texas operated by Double Eagle on our “Full House” tract in Reagan County. Drilling and completion has been completed and as of the end of the third quarter 2025 each of the 15 wells were on production. The company participated with approximately 27% interest, investing approximately $30.1 million. In addition to the Reagan County activity, the company is participating in eight (8) “Horseshoe” wells in Midland County with Vital Energy. Drilling activity with these wells began in the second quarter 2025 and completed in the third quarter of 2025 with production early fourth quarter 2025. The Company has an average of 8.2% interest in these eight (8) wells and investing approximately $5.4 million in Midland County.

Previous wording

Future drilling activity on our leasehold acreage in West Texas is expected in the next few years as well. In particular, based on activity west of our acreage in Reagan County, and a recent deep test by Double Eagle on our joint leasehold, we anticipate that proposals will soon be put forward for the drilling of between 36 and 45 new horizontals that will target the Wolfcamp “D” pay zone in Reagan County and perhaps an additional test well or two in one or more of the other undeveloped pay horizons. In this future activity, we would expect to invest in excess of $100 million. In addition, the Company has identified 25 horizontal locations across our acreage in Upton and Martin counties that could be drilled in this same time frame. These additional wells will require an investment of approximately $76 million. In total, therefore, with approximately $48 million to be invested in the various wells drilling or to begin drilling in 2025, the $100 million in Wolfcamp “D” development, and the $76 million in 25 other near-term wells expected in the 2026-2027 timeframe, we anticipate investing approximately $224 million in horizontal drilling in West Texas over the next several years.

Current wording

Future drilling activity on our leasehold acreage in West Texas is expected in the next few years as well. In particular, based on activity west of our acreage in Reagan County, and a recent deep test by Double Eagle on our joint leasehold, we anticipate that proposals in the future will be put forward for the drilling of between 36 and 45 new horizontals that will target the Wolfcamp “D” pay zone in Reagan County and perhaps an additional test well or two in one or more of the other undeveloped pay horizons. In this future activity, we would expect to invest in excess of $100 million. In addition, the Company has identified 25 horizontal locations across our acreage in Upton and Martin counties that could be drilled in this same time frame. These additional wells will require an investment of approximately $76 million. In total, therefore, with approximately $48 million to be invested in the various wells drilling or to begin drilling in 2025, the $100 million in Wolfcamp “D” development, and the $76 million in 25 other near-term wells expected in the 2026-2027 timeframe, we anticipate investing approximately $224 million in horizontal drilling in West Texas over the next several years.

Previous wording

We reported net income of $12.4 million, or $7.37 basic earnings per share, and $3.2 million, or $1.94 basic earnings per share for the six and three months ended June 30, 2025, respectively, as compared to $31.1 million, or $17.31 basic earnings per share, and $19.7 million, or $11.08 basic earnings per share for the six and three months ended June 30, 2024, respectively. Current year net income reflects increases in production and oil commodity prices combined with lower gas and natural gas liquid commodity prices over the three and six months ended June 30, 2025. The significant components of income and expense are discussed below.

Current wording

We reported net income of $22.93 million, or $13.75 per share, and $10.56 million, or $6.41 per share for the nine and three months ended September 30, 2025, respectively, as compared to $53.13 million, or $29.88 per share and $22.08 million, or $12.63 per share for the nine and three months ended September 30, 2024, respectively. Current year net income reflects increases in gas and NGL combined with lower oil and natural gas liquid commodity prices over the three and nine months ended September 30, 2025. The significant components of income and expense are discussed below.

Previous wording

Oil, gas and NGLs sales decreased $21.9 million, or 35.4% to $39.8 million for the three months ended June 30, 2025, from $61.7 million for the three months ended June 30, 2024, and $13.7 million, or 13.6% to $87.1 million for the six months ended June 30, 2025, from $100.7 million for the six months ended June 30, 2024. Sales vary due to changes in volumes of production sold and realized commodity prices.

Current wording

Oil, gas and NGLs sales decreased $21.61 million, or 33.77% to $42.39 million for the three months ended September 30, 2025, from $64.01 million for the three months ended September 30, 2024, and decreased $35.26 million, or 21.41% to $129.46 million for the nine months ended September 30, 2025, from $164.72 million for the nine months ended September 30, 2024. Sales vary due to changes in volumes of production and realized commodity prices.

Previous wording

The following tables summarize the primary components of production volumes and average sales prices realized for the three and six months ended June 30, 2025 and 2024 (excluding realized gains and losses from derivatives).

Current wording

The following tables summarize the primary components of production volumes and average sales prices realized for the three and nine months ended September 30, 2025 and 2024 (excluding realized gains and losses from derivatives).

Previous wording

Production and ad valorem taxesdecreased $1.9 million, or 51.4% to $1.8 million for the three months ended June 30, 2025 from $3.7 million for the three months ended June 30, 2024, and $1.6 million, or 23.9% to $5.1 million for the six months ended June 30, 2025 from $6.7 million for the six months ended June 30, 2024. These decreases reflect the changes in oil, natural gas and natural gas liquids revenues in the related periods.

Current wording

Production and ad valorem taxesdecreased $0.2 million, or 9.13% to $2.4 million for the three months ended September 30, 2025 from $2.6 million for the three months ended September 30, 2024, and decreased $1.8 million, or 19.39% to $7.5 million for the nine months ended September 30, 2025 from $9.3 million for the nine months ended September 30, 2024. These decreases reflect the lower oil revenues partially offset by higher gas and natural gas liquid revenues in the related periods.

Previous wording

Field service income decreased $0.9 million or 31.0% to $2.0 million for the three months ended June 30, 2025 from $2.9 million for the three months ended June 30, 2024 and $2.2 million, or 34.9% to $4.1 million for the six months ended June 30, 2025 from $6.3 million for the six months ended June 30, 2024. Workover rig services and hot oil treatments represent the bulk of our field service operations. These changes reflect the sale of our South Texas service company in Q3 2024.

Current wording

Field service income decreased $0.4 million or 14.57% to $2.3 million for the third quarter 2025 from $2.7 million for the third quarter 2024 and decreased $2.6 million, or 28.74% to $6.4 million for the nine months ended September 30, 2025 from $9.0 million for the nine months ended September 30, 2024. Workover rig services, hot oil treatments, saltwater hauling, and disposal represent the bulk of our field service operations. These changes reflect the sale of our South Texas service company in Q3 2024.

Previous wording

Field service expense decreased $1.3 million or 52.0% to $1.2 million for the three months ended June 30, 2025 from $2.5 million for the three months ended June 30, 2024 and $2.2 million, or 41.5% to $3.1 million for the six months ended June 30, 2025 from $5.3 million for the six months ended June 30, 2024. Field service expenses primarily consist of wages and vehicle operating expenses. These changes reflect the sale of our South Texas service company in Q3 2024.

Current wording

Field service expense decreased $1.1 million or 34.64% to $2.0 million for the third quarter 2025 from $3.1 million for the third quarter 2024 and decreased $3.3 million, or 38.87% to $5.1 million for the nine months ended September 30, 2025 from $8.4 million for the nine months ended September 30, 2024. Workover rig services, hot oil treatments, saltwater hauling, and disposal represent the bulk of our field service operations. These changes reflect the sale of our South Texas service company in Q3 2024.

Previous wording

General and administrative expense decreased $0.9 million or 23.1% to $3.0 million for the three months ended June 30, 2025 from $3.9 million for the three months ended June 30, 2024 and decreased $1.0 million, or 14.5% to $5.9 million for the six months ended June 30, 2025 from $6.9 million for the six months ended June 30, 2024. These changes are primarily due to lower employee compensation, benefits and other corporate costs.

Current wording

General and administrative expense decreased $0.9 million, or 22.93% to $3.0 million for the three months ended September 30, 2025 from $3.9 million for the three months ended September 30, 2024, and decreased $1.9 million or 17.95% to $8.9 million for the nine months ended September 30, 2025 from $10.8 million for the nine months ended September 30, 2024. This decrease is primarily due to lower employee compensation, benefits and other corporate costs in 2025.

Previous wording

Interest expense increased $0.5 million or 250.0% to $0.7 million for the three months ended June 30, 2025 from $0.2 million for the three months ended June 30, 2024 and increased $0.8 million, or 160.0% to $1.3 million for the six months ended June 30, 2025 from $0.5 million for the six months ended June 30, 2024.This increase reflects the higher borrowings during the six months of 2025 under our revolving credit agreement.

Current wording

Interest expense increased $0.07 million to $0.48 million for the third quarter 2025 from $0.41 million for the third quarter 2024, and increased $0.9 million to $1.8 million for the nine months ended September 30, 2025 from increased $0.9 million for the nine months ended September 2024. This increase reflects the higher interest and fee rates combined with increased borrowings throughout the nine months of 2025 under our revolving credit agreement.

Previous wording

Income tax expense for the June 30, 2025 and 2024 periods varied due to the change in net income.

Current wording

Income tax expense for the three and nine month periods ending September 30, 2025 and 2024 varied due to the change in net income.

Previous wording

Our credit agreement requires us to hedge a portion of our production as forecasted for the PDP reserves included in our borrowing base review engineering reports. If the borrowing base utilization percentage is less than 15% of total available borrowings, the Company is not required to enter into any hedge agreements. As of August 14, 2025, the Company is not required to enter into any hedge agreements. Additional drilling and future development plans will be established based on an expectation of available cash flows from operations and availability of funds under our revolving credit facility.

Current wording

Our credit agreement requires us to hedge a portion of our production as forecasted for the PDP reserves included in our borrowing base review engineering reports. If the borrowing base utilization percentage is less than 25% of total available borrowings, the Company is not required to enter into any hedge agreements. As of November 12, 2025, the Company is not required to enter into any hedge agreements. Additional drilling and future development plans will be established based on an expectation of available cash flows from operations and availability of funds under our revolving credit facility.

Previous wording

The Company maintains a Credit Agreement providing for a reserves-based line of credit totaling $300 million, with a current borrowing base of $115 million. As of August 14, 2025, there were no outstanding borrowings under this line. The bank reviews the borrowing base semi-annually and, at their discretion, may decrease or propose an increase to the borrowing base relative to a re-determined estimate of proved oil and gas reserves. The new borrowing base review is currently in progress and no change in the borrowing base is expected. Our oil and gas properties are pledged as collateral for the line of credit and we are subject to certain financial and operational covenants defined in the agreement. We are currently in compliance with these covenants and expect to be in compliance over the next twelve months. If we do not comply with these covenants on a continuing basis, the lenders have the right to refuse to advance additional funds under the facility and/or declare all principal and interest immediately due and payable. Our borrowing base may decrease as a result of lower commodity prices, operating difficulties, declines in reserves, lending requirements or regulations, the issuance of new indebtedness or for other reasons set forth in our revolving credit agreement. In the event of a decrease in our borrowing base due to declines in commodity prices or otherwise, our ability to borrow under our revolving credit facility may be limited and we could be required to repay any indebtedness in excess of the re-determined borrowing base.

Current wording

The Company maintains a Credit Agreement providing for a reserves-based line of credit totaling $300 million, with a current borrowing base of $115 million. As of November 12, 2025, the Company had $20 million in outstanding borrowings under this line of credit. The bank reviews the borrowing base semi-annually and, at their discretion, may decrease or propose an increase to the borrowing base relative to a re-determined estimate of proved oil and gas reserves. The new borrowing base review is currently in progress and no change in the borrowing base is expected. Our oil and gas properties are pledged as collateral for the line of credit and we are subject to certain financial and operational covenants defined in the agreement. We are currently in compliance with these covenants and expect to be in compliance over the next twelve months. If we do not comply with these covenants on a continuing basis, the lenders have the right to refuse to advance additional funds under the facility and/or declare all principal and interest immediately due and payable. Our borrowing base may decrease as a result of lower commodity prices, operating difficulties, declines in reserves, lending requirements or regulations, the issuance of new indebtedness or for other reasons set forth in our revolving credit agreement. In the event of a decrease in our borrowing base due to declines in commodity prices or otherwise, our ability to borrow under our revolving credit facility may be limited and we could be required to repay any indebtedness in excess of the re-determined borrowing base.