US ENERGY CORP
For the period ended Dec 31, 2025. Filed Mar 13, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 13, 2026
BSIN$1.33+0.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-13.
0001437749-25-007375
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-13.
0001437749-26-008057
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 94 previous paragraphs and 66 current paragraphs.
31 unchanged; 24 reworded; 10 added; 39 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
Item 7. Management**’s Discussion and Analysis of Financial Condition and Results of Operations
Current report
In 2026 and beyond, we intend to seek additional opportunities in the oil, natural gas and industrial gas sectors, including but not limited to further acquisition of assets, participation with industry partners, and the acquisition of existing companies. We also plan to finalize the detailed engineering of our processing facility and related activities necessary to bring the plant online. These activities include but are not limited to acquiring surface acreage, negotiating rights of way and offtake agreements, designing power infrastructure, and raise capital to fully fund development.
Current report
Business Strategy
Current report
Results of Operations
Current report
For the year ended December 31, 2025, aggregate lease operating expenses decreased as a result of divestitures in 2025 and 2024. On a per BOE basis, lease operating expense increased $4.57 per BOE produced relative to 2024. The increase in lease operating expense on a per BOE basis is in part due to inflation and due to the fixed cost components of our lease operating expense becoming a larger portion of total costs as we have divested of lower cost properties and a result of natural production declines.
Current report
Production taxes for our properties typically average 7% of revenue. Any change in the production taxes is attributable to revenue changes resulting from changes in production volumes and realized prices year to year.
Current report
Exploration expense. * *For the years ended December 31, 2025 and 2024, exploration expense consisted primarily of professional fees and other costs associated with evaluating potential acquisitions, including land title review, regulatory consultations and geological assessments. These costs do not qualify for capitalization under the full cost method and are therefore expensed as incurred. Exploration expense decreased by $139 thousand in 2025 compared to 2024, primarily due to a higher level of acquisition evaluation activity during 2024.
Current report
Income Tax Benefit (Expense). The Company generated losses for income tax purposes in 2025 and 2024, and any additional net deferred income tax assets were offset by a corresponding valuation allowance.
Current report
During 2026, the Company expects to seek financing in the equity and credit markets to fund the construction of its gas processing plant, production gathering and related utility infrastructure. The estimated cost of this next development phase is approximately $35.0 million. The Company may sell equity under its existing Form S-3 registration statement, and/or sell equity under the purchase agreement with Roth Principal; however, no financing commitments have been secured to date, other than the purchase agreement. Such funding may not be available on favorable terms, or at all, and any equity funding raised may be dilutive to existing stockholders. If the Company is unable to obtain sufficient financing on acceptable terms, the timing or scope of this development phase may be delayed or modified.
Current report
On September 16, 2025, effective August 1, 2025, the Company entered into a First Amendment to Credit Agreement and Limited Waiver ("Amendment") with FirstBank, as administrative agent for the lenders party thereto, and such lenders. Significant revisions made to the Credit Amendment as a result of the Amendment include extending the maturity date of amounts owed from January 5, 2026 to May 31, 2029, lowering the borrowing base from $20 million to $10 million and deferring the next test period for the ratio of total debt to EBITDAX to March 31, 2026*.*
Removed paragraphs (39)
Previous report
Recent Developments
Previous report
Acquisition of Properties
Previous report
Wavetech
Previous report
On June 26, 2024, we entered into and closed the transactions contemplated by, a purchase and sale agreement with Wavetech Helium (“Wavetech” and the “Purchase Agreement”). Pursuant to the Purchase Agreement, effective June 1, 2024, we acquired 82.5% of Wavetech's rights under a farmout agreement for approximately 144,000 net acres located across the Kevin Dome Structure in Toole County, Montana (“the Assigned Rights”). The Assigned Rights vest upon the drilling of two wells on the property. In consideration for the Assigned Rights, the Company paid Wavetech $2.0 million in cash and 2.6 million shares of restricted common stock, which were valued at $2.7 million on June 26, 2024. In addition, prior to the closing of the Purchase Agreement, the Company incurred $0.4 million of transaction costs related to the acquisition of the Assigned Rights. Additionally, we agreed to be responsible for 100% of capital costs, including costs related to project exploration, appraisal, development drilling and completion until $20 million has been incurred related to Wavetech's 17.5% interest. The Company accounted for the acquisition of the Assigned Rights as an asset acquisition. As of March 10, 2025, we had drilled one of the two wells required to vest the Assigned Rights, and we expect this to be completed in the first half of 2025.
Previous report
Synergy
Previous report
On January 7, 2025, we entered and simultaneously closed the transactions contemplated by, a purchase and sale agreement, with Synergy Offshore LLC (“Synergy”). Synergy is controlled by Mr. Duane H. King, a member of the Board of Directors of the Company, who serves as the Chief Executive Officer and Manager of Synergy, and John A. Weinzierl, the Company’s Chairman, who is an approximate sixty percent beneficial owner of Synergy.
Previous report
We acquired approximately 24,000 net operated acres located across the Kevin Dome structure in Toole County, Montana, including all leases, wells, rights and interests in, under or derived from the acquired acreage subject to Synergy retaining an undivided twenty percent (20%) of Synergy’s right title and interest in the property.
Previous report
Consideration for the transaction consisted of the following: (a) $2.0 million in cash, subject to customary adjustments; (b) 1,400,000 shares of the Company’s common stock; (c) a carried working interest whereby the Company agreed to cover and pay for 100% of Synergy’s costs attributable to the Synergy acreage, until the earlier of (i) 78 months from the closing date; or (ii) the date the total costs associated therewith total $20 million; (d) our agreement to pay Synergy 18% of the cash amounts we actually realize from any law or regulation from our sequestration of carbon oxides or similar substances derived directly from an agreed area of mutual interest including Synergy’s acreage; and (e) our agreement to pay Synergy 18% of the gain we may receive in connection with the sale of the future, first, gas processing plant located on Synergy’s acreage.
Previous report
Divestiture of Properties
Previous report
During the year ended December 31, 2024, the Company closed on a series of individual divestitures for a total of $14.0 million in net proceeds before transaction costs of $0.4 million. The Company was also relieved of associated asset retirement obligations of $5.4 million. The divestitures included primarily operated properties in Texas and Mid-Continent ("Mid-con") and encompassed 408 gross wells, with two prior dispositions, one relating to our South Texas properties and one relating to our East Texas properties, each discussed in greater detail below, accounting for the majority of the proceeds.
Previous report
In South Texas, the Company divested its assets in Karnes County, Texas, for approximately $5.2 million in net cash proceeds after customary purchase price adjustments, effective April 1, 2024, with the transaction closing on July 31, 2024. These primarily operated properties, consisting of 8 gross wells, which averaged 155 barrels of oil equivalent per day (85% oil) during the first quarter of 2024, representing 13% of our total production over that period.
Previous report
In East Texas, the Company sold the majority of its assets across Anderson, Chambers, Henderson, and Liberty Counties, Texas, for $6.8 million in net cash proceeds, effective November 1, 2024, with the transaction closing on December 31, 2024. This package, comprising 122 gross wells, averaged approximately 1.1 million cubic feet per day of natural gas and 168 barrels of oil per day (48% oil) for the quarter ending September 30, 2024.
Previous report
In the Mid-con region, the Company divested all of its operated properties in the state of Kansas and Kay County, Oklahoma, for $1.2 million in net cash proceeds, effective November 1, 2024, with the transaction closing on October 31, 2024. This package comprised 21 gross wells.
Previous report
Properties divested during 2024 represented 42% of the beginning of the year reserve volumes. The Company recognized a $5.0 million loss on the sale of its East Texas properties in the fourth quarter of 2024. The Company considered this a significant divestment that would significantly alter the relationship between capitalized costs and proved reserves as the divestiture represented 36% of our reserve volumes and 30% of our reserve value at the date of the divestiture.
Previous report
The net proceeds from these divestitures were used to repay the outstanding balance on our credit facility, bringing the balance as of December 31, 2024 to $0.0 million. We also used part of the proceeds to fund the continued development of the Company's industrial gas project in Montana. These divestitures reflect the Company's strategic portfolio management, exiting non-core geographic regions to enhance liquidity, strengthen the balance sheet, and redirect capital toward high-growth opportunities.
Previous report
Derivative Activities
Previous report
On September 10, 2024, the Company settled all of its then outstanding commodity derivative contracts for 2024 and 2025 production receiving $1.8 million. As of December 31, 2024, the Company no longer has any commodity derivative contracts outstanding.
Previous report
Underwritten Offering
Previous report
On January 22, 2025, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Roth Capital Partners, LLC (the “Representative”), as representative of the several underwriters named in the Underwriting Agreement (the “Underwriters”), relating to an underwritten offering of 4,236,000 shares of common stock, par value $0.01 per share, of the Company (the “Common Stock”), at a price to the public of $2.65 per share (such offering, the “Offering”).
Previous report
Under the terms of the Underwriting Agreement, the Company granted the Underwriters a 30-day option to purchase up to 635,400 additional shares of Common Stock (the “Option”), which was exercised in full on January 25, 2025.
Previous report
The sale of 4,871,400 shares of Common Stock (including the full 635,400 Option) in connection with the Offering, closed on January 23, 2025. The Company intends to use the approximately $12.1 million of net proceeds from the Offering, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, for the development of its recent acquisition in Montana, general corporate purposes, and working capital, or for other purposes that our board of directors, in their good faith, deems to be in the best interest of the Company. Additionally, management had the ability, pursuant to the terms of the Underwriting Agreement, to use up to the entire amount of proceeds from the Option exercise to purchase shares of Common Stock from Sage Road Capital, LLC (a current shareholder of the Company whose co-manager is Joshua L. Batchelor, a member of the Board of Directors of the Company) or its affiliates at a price up to the public offering price of the Offering, less underwriting discounts, which sale took place in January 2025, as discussed below.
Previous report
Under the terms of the Underwriting Agreement, the Company and the Company’s directors and executive officers and their affiliates, also agreed not to sell or transfer any Common Stock without first obtaining the written consent of the Representative, subject to certain exceptions (including the Sage Road Purchase, discussed below), for 60 days after January 22, 2025, the date of the final prospectus supplement relating to the Offering.
Previous report
Related Party Share Repurchase
Previous report
On January 27, 2025, the Company entered into a Share Repurchase Agreement with Banner Oil & Gas, LLC (“Banner”), Woodford Petroleum, LLC (“Woodford”), and Sage Road Energy II, LP, (“Sage Road”, and together with Banner and Woodford, the “Selling Stockholders”). In his capacity as co-Managing Partner of Sage Road Capital, LLC, which indirectly controls and manages certain funds which own a majority interest in Banner, Woodford and Sage Road, Joshua L. Batchelor, a member of the Board of Directors of the Company, may be deemed to beneficially own the shares of Common Stock held by the Selling Stockholders.
Previous report
Pursuant to the Share Repurchase Agreement, the Company, in a private transaction, outside of, and separate from the Company’s previously disclosed share repurchase program, on January 27, 2025, repurchased (a) 534,020 shares of Common Stock held by Banner, (b) 41,229 shares of Common Stock held by Woodford, and (c) 60,151 shares of Common Stock held by Sage Road, for an aggregate of $1,574,362 or $2.47775 per share, which is the price per share of the 4,871,400 shares of Common Stock which we sold in our underwritten public offering which closed on January 23, 2025, less underwriting discounts and commissions, and which represented an 8.2% premium to the closing sales price of the Company’s Common Stock on January 27, 2025.
Previous report
The Share Repurchase Agreement contains customary representations, warranties and covenants of the parties. The share repurchase was approved by the disinterested members of the Board of Directors of the Company, as well as the Company’s Audit Committee, comprised solely of independent directors not affiliated with Mr. Batchelor or the Selling Stockholders.
Previous report
Debt Repayment
Previous report
During the year ended December 31, 2024, the Company repaid $7.0 million on its credit facility, bringing the outstanding balance as of December 31, 2024 to $0.0 million. The repayments were primarily funded by the net proceeds from divestitures discussed above.
Previous report
In 2025 and beyond, we intend to seek additional opportunities in the oil, natural gas and industrial gas sectors, including but not limited to further acquisition of assets, participation with industry partners in exploration and development projects, acquisition of existing companies, and the purchase of other industrial gas assets. We will continue to monetize legacy assets and redeploy capital into our core focus areas. During the first half of 2025 we intend to complete two wells and drill two additional new wells targeting a industrial gas zone. Share repurchases under our approved share repurchase program continued in 2024, and the Board of Directors has extended share repurchase program until June 30, 2026. These repurchases may resume so long as share prices remain attractive and repurchases remain in the best interests of both the Company and its stockholders.
Previous report
Exploratory wells in progress are excluded from the DD&A calculation until the outcome of the well is determined. Similarly, unproved property costs are initially excluded from the DD&A calculation. Unproved property costs not subject to the DD&A calculation consist primarily of leasehold and seismic costs related to unproved areas. Unproved property costs are transferred into the amortization base on an ongoing basis as the properties are evaluated and proved reserves are established or impairment is determined. Unproved oil and natural gas properties are assessed quarterly for impairment to determine whether we are still actively pursuing the project and whether the project has been proven either to have economic quantities of reserves or that economic quantities of reserves do not exist.
Previous report
Joint Interest Operations. Until the January 2022 acquisition, the majority of our properties were operated by other companies. Therefore, we relied to a large extent on the operator of the property to provide us with timely and accurate information about the operations of the properties. Revenue statements and joint interest billings from the operators serve as our primary source of information to record revenue, operating expenses and capital expenditures for our properties on a monthly basis. Many of our properties are subject to complex participation and operating agreements where our working interests and net revenue interests are subject to change upon the occurrence of certain events, such as the achievement of “payout.” These calculations may be subject to error and differences of interpretation which can cause uncertainties about the proper amount that should be recorded in our accounting records. When these issues arise, we make every effort to work with the operators to resolve the issues promptly.
Previous report
Acquisitions. The Company accounts for acquisitions as business combinations if the acquired assets meet the definition of a business. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar assets, the acquisition is not considered a business and is accounted for as an asset acquisition. This determination of whether the gross assets acquired are concentrated in a group of similar assets is based on whether the risks associated with managing and creating outputs from the assets are similar.
Previous report
Stock-Based Compensation. We measure the cost of employee services received in exchange for all equity awards granted, including stock options, based on the fair market value of the award as of the grant date. We recognize the cost of the equity awards over the period during which an employee is required to provide service in exchange for the award, usually the vesting period.
Previous report
For the year ended December 31, 2024, lease operating expenses were $11.2 million or $26.83 per BOE, a decrease of $4.1 million when compared to the $15.3 million or $24.43 per BOE for the year ended December 31, 2023. The decrease in lease operating expense was due to the divesture of some lower cost properties during 2024 and the divestiture of substantially all of our non-operated properties in the fourth quarter of 2023. In addition, we had lower workover activity on our properties and improved operating efficiencies from integrating and optimizing our oil and natural gas assets acquired in 2022. The increase in lease operating expense on a per BOE basis is due to certain fixed cost components of our lease operating expense which remain for a period after divesting of a property.
Previous report
For the year ended December 31, 2024, production taxes were $1.3 million, a decrease of $0.8 million, or 39%, compared to $2.1 million in the comparable period of 2023. This decrease was attributable to and consistent with the decrease in total revenues of 36%from oil and natural gas properties as discussed above. Production taxes for our properties average 6% of revenue.
Previous report
Income Tax Benefit (Expense). Income tax benefit decreased $0.9 million during the year ended December 31, 2024, as compared to December 31, 2023. This change is almost entirely related to a deferred tax benefit from the reduction of our net deferred tax liability. The change in our net deferred tax liability is primarily related to property and equipment deferred tax liabilities that decreased as a result of the $11.9 million in before tax ceiling test write-downs of our oil and gas properties recognized for the year ended December 31, 2024.
Previous report
As described above under “Item 1. Business-Recent Events”, during 2024 we closed on a series of individual divestitures for a total of $14.0 million in net proceeds before transaction costs of $0.4 million. The net proceeds from these divestitures were used to repay the outstanding balance on our credit facility, bringing the balance as of December 31, 2024 to $0.0 million. We also used a portion of the proceeds from the divestitures for the development of our industrial gas properties acquired during 2024. As of December 31, 2024, the Company was in compliance with all financial covenants related to the credit facility.
Previous report
Cash flows provided by our operating activities, proceeds received from divestitures of properties, capital markets activities, and our capital expenditures, including acquisitions, all impact the amount we borrow under our revolving Credit Agreement. The amount outstanding on the Credit Agreement as of December 31, 2024, was $0.0 million.
Previous report
As described above under “Item 1. Business-Recent Events” we closed on a series of individual divestitures for a total of $14.0 million in net proceeds before transaction costs of $0.4 million. The net proceeds from these divestitures were used to repay the outstanding balance on our credit facility, bringing the balance as of December 31, 2024 to $0.0 million and development of our industrial gas properties acquired during 2024.
Reworded paragraphs (24)
Previous wording
During the year ended December 31, 2024, we recorded a net loss of $25.8 million. The net loss is primarily due to a reduction in revenue of $11.7 million (discussed below), ceiling test write downs of $11.9 million of the Company's oil and gas properties as a result of divestments, lower crude oil and natural gas prices and other reserves revisions since December 31, 2023 and a loss on sale of our East Texas properties of $5.0 million. During the year ended December 31, 2023 we recorded a net loss of $32.4 million.
Current wording
During the year ended December 31, 2025, we recorded a net loss of $14.4 million. The net loss is primarily due to a reduction in revenue of $13.3 million (discussed below), ceiling test impairment of $3.6 million of the Company's oil and gas properties, lower production volumes resulting from cumulative divestments, lower realized sales price for our production and increasing lease operating expense on a BOE basis. During the year ended December 31, 2024, we recorded a net loss of $25.6 million including an $11.9 million ceiling test impairment.
Previous wording
The decrease in our oil and gas revenue of $11.7 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023, was due to decreases in both production quantities and commodity prices. The realized price received for our oil production decreased 2% and the realized price received for our natural gas production decreased 10% for the year ended December 31, 2024, compared to the year ended December 31, 2023.
Current wording
The decrease in our oil and gas revenue of $13.3 million for the year ended December 31, 2025, as compared to the year ended December 31, 2024, was due to decreases in both production quantities and commodity prices. The realized price received for our oil production decreased 20% and the realized price received for our natural gas production increased 22% for the year ended December 31, 2025, compared to the year ended December 31, 2024.
Previous wording
For the year ended December 31, 2024, we produced 415,887 BOE, or an average of 1,136 BOE per day, as compared to 624,420 BOE or 1,711 BOE per day, during the comparable period in 2023. Our oil production decreased 35% and our natural gas production decreased 31% compared to the prior year period. Production declines were primarily the result of property sales during 2024 and the sale of substantially all of our non-operated properties in the fourth quarter of 2023. In addition, we experienced temporary weather-related events, such as severe storms, flooding and winter weather at certain of our property locations in Texas and Montana. During the year ended December 31, 2024, our BOE production mix was 62% oil and 38% natural gas and liquids, consistent with 63% oil and 37% natural gas and liquids in the comparable period of 2023.
Current wording
For the year ended December 31, 2025, we produced 164,752 BOE, or an average of 451 BOE per day, as compared to 415,887 BOE or 1,136 BOE per day, during the comparable period in 2024. Our oil production decreased 56% and our natural gas production decreased 67% compared to the prior year period. Production declines were primarily the result of property sales during 2025 and 2024. During the year ended December 31, 2025, our BOE production mix was 68% oil and 32% natural gas and liquids, consistent with 62% oil and 38% natural gas and liquids during 2024.
Previous wording
Gathering, transportation, and treating costs decreased $352 thousand or 63%, for the year ended December 31, 2024 compared to 2023. The decrease was attributable to the divestitures of operated properties in 2024 and the sale of substantially all of our non-operating properties in the fourth quarter of 2023.
Current wording
Gathering, transportation, and treating costs decreased $146 thousand or 71%, for the year ended December 31, 2025 compared to 2024. The decrease was attributable to the divestitures of operated properties in 2025 and 2024.
Previous wording
*Depreciation, Depletion, Accretion and Amortization.*Our depreciation, depletion, and amortization ("DD&A") includes depletion expense on our oil and gas properties, accretion expense from our asset retirement obligations, and depreciation expense on our fixed assets. Depletion expenses on our oil and gas properties are the primary driver of DD&A expense making up 87% and 89% of DD&A expense for the years ended December 31, 2024 and 2023, respectively. Our depletion rate for the year ended December 31, 2024, was $19.64 per BOE, compared to $17.99 per BOE for the year ended December 31, 2023. Our depletion rate can fluctuate because of acquisitions, changes in drilling and completion costs, impairments, revisions in asset retirement obligation cost estimates or timing, divestitures, changes in the mix of our production, the underlying proved reserve volumes and estimated costs to drill and complete proved undeveloped reserves. DD&A was $8.3 million for the year ended December 31, 2024, compared to $11.2 million for the year ended December 31, 2023.
Current wording
*Depreciation, Depletion, Accretion and Amortization.*DD&A was $3.6 million for the year ended December 31, 2025, compared to $8.3 million for the year ended December 31, 2024. Our depreciation, depletion, and amortization ("DD&A") includes depletion expense on our oil and gas properties, accretion expense on our asset retirement obligations, and depreciation expense on our fixed assets. Depletion expenses on our oil and gas properties are the primary driver of DD&A expense making up 63% and 78% of DD&A expense for the years ended December 31, 2025 and 2024, respectively. Our depletion rate for the year ended December 31, 2025, was $21.89 per BOE, compared to $19.64 per BOE for the year ended December 31, 2024. Our depletion rate fluctuates because of the impact of divestitures, impairments on the full cost pool, but other factors such as acquisitions, revisions in asset retirement obligation cost estimates or timing, and underlying proved reserve volumes can also impact the rate.
Previous wording
Impairment of oil and natural gas properties. Impairment of $11.9 million during the year ended December 31, 2024 was driven by ceiling test write-downs of oil and gas properties as a result of a decrease in crude oil and natural gas prices, divestments and other reserves revisions since December 31, 2023 For the year ended December 31, 2023, the Company recorded ceiling test write-downs of its oil and natural gas properties of $26.7 million as a result of a decrease in crude oil and natural gas prices, divestments and other reserves revisions since December 31, 2022.
Current wording
Impairment of oil and natural gas properties. Ceiling test impairment of $3.6 million during the year ended December 31, 2025 was incurred as a result of a decrease in crude oil and natural gas prices. For the year ended December 31, 2024, the Company recorded ceiling test impairment of its oil and natural gas properties of $11.9 million as a result of a decrease in crude oil and natural gas prices and the reduction in reserves from divestitures.
Previous wording
General and administrative expenses decreased by $3.3 million during the year ended December 31, 2024, as compared to the prior year period. Compensation and benefits decreased $1.5 million due to decreased headcount related to the divestment of properties during 2024. Stock-based compensation decreased $1.0 million primarily due to a reduction in the value of employee and director stock-based compensation awards amortized during 2024, Professional fees, insurance and other expenses decreased $0.8 million, primarily due to non-recurring accounting, audit, and recruiting fees recognized in 2023.
Current wording
General and administrative expenses decreased by $132 thousand during the year ended December 31, 2025, as compared to the prior year period. Compensation and benefits decreased $1.3 million due to decreased headcount as the Company focused on the development of the industrial gas business. Stock-based compensation increased $586 thousand primarily due to grant prices used in prior employee and director stock-based compensation awards that amortized during 2025. Professional fees, insurance and other expenses increased $557 thousand, primarily due to professional fees associated with outsourcing a portion of our accounting function.
Previous wording
*Loss on sale of assets.*During the year ended December 31, 2024 we recognized a $5.0 million loss on the sale of our East Texas properties. The Company considered this a significant divestment that would significantly alter the relationship between capitalized costs and proved reserves as the divestiture represented 36% of our reserve volumes and 30% of our reserve value at the date of the divestiture.
Current wording
*Loss on sale of assets.*During the year ended December 31, 2025, we recognized a $411 thousand related to the final settlement on our sale of our East Texas properties.
Previous wording
Commodity derivative gain (loss), net is the result of changes in derivative fair values associated with fluctuations in forward price curves for the commodities underlying our outstanding derivative contracts and the monthly cash settlements of our derivative positions during the period. On September 10, 2024, the Company settled all of its then outstanding commodity derivative contracts and received proceeds of $1.8 million. For the year ended December 31, 2024, we recognized gains on the settlement of commodity derivative contracts of $0.5 million.
Current wording
Commodity derivative gain (loss), net is the result of changes in derivative fair values associated with fluctuations in forward price curves for the commodities underlying our outstanding derivative contracts and the monthly cash settlements of our derivative positions during the period. During 2024, the Company settled all of its then outstanding commodity derivative contracts and received proceeds of $1.8 million. As of and for the year ended December 31, 2025, the Company had no derivative positions.
Previous wording
Interest expense, net, represents the interest related to our Credit Facility. The decrease in interest expense, net is primarily driven by a decrease in the outstanding principal balance on our credit facility as we have paid down the amount borrowed on the facility with proceeds from the divestments of properties. As of December 31, 2024, we had borrowed $0.0 million on the credit facility as compared to $5.0 million outstanding as of December 31, 2023. The average interest rate increased to 9.2% per annum for the year ended December 31, 2024, as compared to 8.9% per annum for the year ended December 31, 2023. The balance outstanding on the Credit Facility as of December 31, 2024 was $0.0 million.
Current wording
Interest expense, net, represents the interest related to our Credit Facility. The decrease in interest expense, net is primarily driven by a decrease in the outstanding principal balance on our credit facility as we have paid down the amount borrowed on the facility with proceeds from the divestments of properties. As of December 31, 2025, we had borrowed $2.5 million on the credit facility as compared to zero outstanding as of December 31, 2024.
Previous wording
Other income (expense), net is primarily impacted from changes in the fair value of our investment in Anfield Energy. We recognized a net gain of $33 thousand on these items for the year ended December 31, 2024, but recognized a loss of $25 thousand for the comparable period of 2023.
Current wording
Other income (expense), net is primarily impacted from changes in the fair value of our investment in Anfield Energy. We recognized a net gain of $199 thousand on these items for the year ended December 31, 2025, but recognized a loss of $33 thousand for the comparable period of 2024.
Previous wording
Based on the current commodity price environment and our current working capital, we believe we have sufficient liquidity and capital resources to execute our business plan while continuing to meet our current financial obligations. We continue to manage our commitments in order to maintain flexibility with regard to our activity level and capital expenditures.
Current wording
Based on the current commodity price environment and our current working capital, we believe we have sufficient liquidity and capital resources to meet our current financial obligations. We continue to manage our commitments in order to maintain flexibility with regard to our activity level and capital expenditures.
Previous wording
Over the next year, we anticipate our industrial gas development to cost between $4.0 and $6.5 million on drilling and completing 2 – 4 industrial gas wells, acreage extension payments as well as site and preliminary design for our anticipated industrial gas processing plant and related infrastructure. The total costs depend primarily on the number of industrial gas wells drilled and the timing of construction on an industrial gas processing plant. In addition, depending on timing, regulatory requirements and weather, we plan to incur costs for plugging and abandonment of oil and natural gas wells of approximately $1.0 million. We view much of these capital activities as discretionary for which we can control both the timing and amount of the expenditures. Other activities, such as some repairs and maintenance may be required from time to time by regulatory bodies. We anticipate our expenditures will be funded primarily by cash on hand, operating cash flows, proceeds from divestitures of oil and gas properties, and if necessary, borrowings under our credit facility. In the event that readily available sources of cash flow are insufficient to fund our capital needs, we may utilize equity and credit markets as a funding mechanism. In the event we sell equity, such sales may cause dilution to existing stockholders.
Current wording
We anticipate funding our day-to-day expenditures primarily with cash on hand, operating or investing cash inflows, and if necessary, borrowings under our credit facility or purchase agreement. If readily available sources of cash flow are insufficient to fund our capital needs, we may utilize equity and credit markets as a funding mechanism. In the event we sell equity, such sales may cause dilution to existing stockholders.
Previous wording
For the year ended December 31, 2024, we funded our capital expenditures with cash on hand, cash flows from operating activities, proceeds from the divestitures of oil and gas producing properties and borrowings under our credit facility. In January 2025, we raised $12.1 million ($10.5 million after the Related Party Share Repurchase – seeNote 16 Subsequent Events) in an underwritten offering of 4,236,000 shares of our common stock. In future quarters, if cash flows are not sufficient to fund our capital expenditures and operations, we may raise funds through additional equity offerings or from other sources of financing. We also may re-evaluate our capital spend program as economic conditions warrant. Additionally, we may enter into carrying cost and sharing arrangements with third parties for certain development programs. All of our sources of liquidity can be affected by the changes in economic conditions, rising interest rates, changes in debt and equity markets, force majeure events, fluctuations in commodity prices, operating costs, tax law changes, and volumes produced, all of which would affect us and our industry.
Current wording
All of our sources of liquidity can be affected by the changes in economic conditions, rising interest rates, changes in debt and equity markets, force majeure events, fluctuations in commodity prices, operating costs, tax law changes, and volumes produced, all of which would affect us and our industry.
Previous wording
On January 5, 2022, we entered into a four-year credit agreement with FirstBank Southwest as administrative agent, which provides for a revolving line of credit with a borrowing base of $20 million, and a maximum credit amount of $100 million. Under the Credit Agreement, revolving loans may be borrowed, repaid and re-borrowed until January 5, 2026, when all outstanding amounts must be repaid. The Credit Agreement contains customary indemnification requirements, representations and warranties and customary affirmative and negative covenants applicable to the Company and its subsidiaries. In addition, the Credit Agreement contains financial covenants, tested quarterly, that limit our ratio of total debt to EBITDAX (as defined in the Credit Agreement) to 3:1 and require our ratio of consolidated current assets to consolidated current liabilities (as each is described in the Credit Agreement) to remain at 1:1 or higher. We were in compliance with all financial covenants as of December 31, 2024.
Current wording
On January 5, 2022, we entered into a four-year credit agreement with FirstBank Southwest as administrative agent, which provides for a revolving line of credit with a borrowing base of $20 million, and a maximum credit amount of $100 million. Under the Credit Agreement, revolving loans may be borrowed, repaid and re-borrowed until January 5, 2026, when all outstanding amounts must be repaid. The Credit Agreement contains customary indemnification requirements, representations and warranties and customary affirmative and negative covenants applicable to the Company and its subsidiaries. In addition, the Credit Agreement contains financial covenants that limit our ratio of total debt to EBITDAX (as defined in the Credit Agreement) to 3:1 and require our ratio of consolidated current assets to consolidated current liabilities (as each is described in the Credit Agreement) to remain at 1:1 or higher.
Previous wording
The borrowing base is subject to redetermination semi-annually, commencing on or about April 1 and October 1 of each year during the four-year term of the Credit Agreement. Our borrowing base can be adjusted as a result of changes in commodity prices, acquisitions or divestitures of proved properties, or financing activities, all as provided for in the Credit Agreement. We are currently in talks with our bank to renew and extend the Credit Agreement and anticipate that process to be complete in the second quarter of 2025.
Current wording
The borrowing base is subject to redetermination semi-annually, commencing on or about April 1 and October 1 of each year during the four-year term of the Credit Agreement. Our borrowing base can be adjusted as a result of changes in commodity prices, acquisitions or divestitures of proved properties, or financing activities, all as provided for in the Credit Agreement. We were in compliance with our financial covenants as of December 31, 2025. The amount outstanding on the Credit Agreement as of December 31, 2025, was $2.5 million.
Previous wording
We use cash for the acquisition and development of our industrial gas properties, capital expenditures, workovers and operating costs related to our oil and gas properties, and general and administrative costs, settlements of commodity derivative contracts, debt obligations including interest, and share repurchases. During the year ended December 31, 2024, we spent approximately $6.5 million on the acquisition and development of our industrial gas properties.
Current wording
We use cash for the acquisition and development of our industrial gas properties, capital expenditures, workovers and operating costs related to our oil and gas properties, and general and administrative costs, settlements of commodity derivative contracts, debt obligations including interest, and share repurchases. During the year ended December 31, 2025, we spent approximately $12.0 million on the acquisition and development of our industrial gas properties.
Previous wording
The amount and allocation of our future capital expenditures will depend upon a number of factors, including our cash flows from operating, investing, and financing activities, our ability to execute our development program, and the number and size of acquisitions that we complete. In addition, the impact of industrial gas, oil and natural gas prices on investment opportunities, the availability of capital, tax law changes, and the timing and results of our development activities may lead to changes in funding requirements for future development. We periodically review our capital expenditure budget to assess if changes are necessary based on current and projected cash flows, acquisition and divestiture activities, and other factors. We will continue to monitor the economic environment through the remainder of the year and adjust our activity level as warranted.
Current wording
The amount, timing and allocation of our future capital expenditures will depend upon a number of factors, including our cash flows from operating, investing, and financing activities, our ability to execute our development program, and the number and size of acquisitions that we complete. In addition, the impact of industrial gas, oil and natural gas prices on investment opportunities, the availability of capital, tax law changes, and the timing and results of our development activities may lead to changes in funding requirements for future development. We periodically review our capital expenditure budget to assess if changes are necessary based on current and projected cash flows, acquisition and divestiture activities, and other factors. We will continue to monitor the economic environment through the remainder of the year and adjust our activity level as warranted.
Previous wording
As of December 31, 2024, we had a working capital deficit of $2.6 million compared to a working capital deficit of $2.7 million as of December 31, 2023, an increase in working capital deficit of $0.1 million. However, when including the available borrowing capacity under the credit facility of $20.0 million as of December 31, 2024, we have a working capital surplus of $17.4 million, not including the cash proceeds received from the equity offering noted above.
Current wording
As of December 31, 2025, we had a working capital deficit of $4.0 million compared to a working capital deficit of $2.2 million as of December 31, 2024, a decrease in working capital deficit of $1.8 million. However, when including the available borrowing capacity under the credit facility of $7.5 million as of December 31, 2025, we have a working capital surplus of $3.5 million, not including the cash proceeds received from the equity offering noted above.
Previous wording
As of December 31, 2024, we had cash and cash equivalents of $7.7 million and accounts payable and accrued liabilities of $5.5 million. As of December 31, 2023, we had cash and cash equivalents of $3.4 million and accounts payable and accrued liabilities of approximately $4.1 million. Revenue and royalties payable were nearly unchanged year over year.
Current wording
As of December 31, 2025, we had cash and cash equivalents of $429 thousand and accounts payable and accrued liabilities of $1.5 million. As of December 31, 2024, we had cash and cash equivalents of $7.7 million and accounts payable and accrued liabilities of approximately $5.1 million. Revenue and royalties payable decreased $915 thousand year over year.
Previous wording
If we have needs for financing in 2025, alternatives that we will consider would potentially include borrowing amounts on our Credit Agreement, selling all or a partial interest in certain of our oil and natural gas assets, selling our marketable equity securities, issuing additional shares of our common stock for cash or as consideration for acquisitions in public or private offerings, and other alternatives, as we determine how to best fund our capital programs and meet our financial obligations.
Current wording
If we have needs for financing in 2026, alternatives that we will consider would include borrowing amounts on our Credit Agreement, selling shares under the purchase agreement, selling all or a partial interest in certain of our oil and natural gas assets, issuing additional shares of our common stock for cash or as consideration for acquisitions in public or private offerings, and other alternatives, as we determine how to best fund our capital programs and meet our financial obligations.
Previous wording
Operating Activities. Cash provided by operating activities for the year ended December 31, 2024, was $4.6 million as compared to cash provided by operating activities of $5.5 million for 2023, a decrease of $0.9 million. The decrease in cash provided by operating activities is mainly attributable to a reduction in cash receipts for revenues as a result of divestments and a decrease in prices we received for our oil and natural gas production partially offset by decreases in operating expenses.
Current wording
Operating Activities. Cash used in operating activities for the year ended December 31, 2025, was $7.1 million as compared to cash provided by operating activities of $4.6 million for 2024, a decrease of $11.7 million. The decrease in cash provided by operating activities is mainly attributable to a reduction in cash receipts for revenues as a result of divestments and a decrease in prices we received for our oil and natural gas production.
Previous wording
Investing Activities. Cash provided by investing activities for the year ended December 31, 2024, was $5.8 million compared to cash provided by investing activities of $2.8 million for 2023, an increase of $2.9 million. The increase of cash provided by our investing activities for the year ended December 31, 2024 was primarily due to $13.5 million of net proceeds from the sale of non-operated oil and natural gas properties, which were partially offset by capital expenditures related to oil and natural gas properties of $1.4 million. and acquisition and development of industrial gas properties of $6.8 million. The comparable number in 2023 represents cash provided by investing activities of $2.8 million which represented proceeds from the sale of substantially all of our non-operated properties of $6.7 million and $3.4 million of capital expenditures related to capital workovers on our oil and natural gas properties.
Current wording
Investing Activities. Cash used in investing activities for the year ended December 31, 2025, was $11.9 million compared to cash provided by investing activities of $5.8 million for 2024, a decrease of $17.7 million. The use of cash in our investing activities for the year ended December 31, 2025 was due primarily to capital expenditures to acquire and develop our industrial gas project. In 2024 cash provided by investing activities consisted of proceeds from divestitures offset by capital expenditures on our oil and gas and industrial gas properties.
Previous wording
Financing Activities. Cash used in financing activities for the year ended December 31, 2024, was $6.0 million as compared to cash used in financing activities of $9.4 million for the comparable period in 2023. The cash used in financing activities during the year ended December 31, 2024 was primarily attributable to net payments of debt under our credit facility of $5.0 million and amounts paid to repurchase our common stock of $0.8 million The comparable number in 2023 mainly represents net payments of borrowings on our credit facility of $7.0 million and dividends paid on our common stock of $1.2 million.
Current wording
Financing Activities. Cash provided by financing activities for the year ended December 31, 2025, was $11.7 million as compared to cash used in financing activities of $6.0 million for the comparable period in 2024. The cash provided by financing activities during the year ended December 31, 2025 was primarily attributable to proceeds from equity issuances under our January 2025 underwritten offering and borrowing under our credit facility. The use of cash in 2024 mainly represents net payments of borrowings on our credit facility of $5.0 million.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
For the year ended December 31, 2025, we funded our capital expenditures with cash on hand, proceeds from the divestitures of oil and gas producing properties and borrowings under our credit facility. In January 2025, we raised net proceeds of $10.3 million after the related party share Repurchase in an underwritten offering of 4,236,000 shares of our common stock discussed in greater detail above under"Item 1. Business—Material Events—Underwritten Offering" and "—Related Party Shares Repurchase".