BIG SKY INDUSTRIAL INC.
For the period ended Sep 30, 2026. Filed Nov 10, 2026.
View on SEC.govAbout 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.
Sep 30, 2026 · Filed Nov 10, 2026
BSIN$1.31-1.5%Stored close · as of Nov 10, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-06-30; filed 2026-08-11.
0001437749-26-026861
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-09-30; filed 2026-11-10.
0001437749-26-036207
Item 2. 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 67 previous paragraphs and 74 current paragraphs.
35 unchanged; 27 reworded; 11 added; 3 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 14 previous and 14 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 (11)
Current report
For the three months ended September 30, 2026, lease operating expenses were $2.1 million, or $68.89 per BOE, including $1.2 million of environmental remediation costs associated with a fluid release. These costs are subject to an insurance claim with a $0.1 million deductible. Excluding the environmental remediation costs, lease operating expenses were $0.9 million, or $29.71 per BOE, compared to $1.0 million or $29.58 per BOE, for the prior-year period.
Current report
Exploration expense decreased$40 thousand, which was attributable to a reduction in professional fees.
Current report
Impairment of oil and natural gas properties. The Company recorded a ceiling test write down of $0.9 million for the three months ended September 30, 2025, resulting from a decrease in commodity prices used in the full cost pool ceiling test calculation.
Current report
The commodity derivative loss as of September 30, 2026 was due to the prevailing oil prices were above the costless collar ceiling price resulting in a loss.
Current report
As of September 30, 2026 and December 31, 2025, outstanding borrowings under our credit facility were $8.5 million and $2.5 million, respectively.
Current report
For the three months ended September 30, 2026, interest expense consisted of interest on outstanding borrowings, financing costs and fees associated with maintaining our credit facility. For the three months ended September 30, 2025, we had no outstanding borrowings under the credit facility, and interest expense consisted solely of fees associated with the credit facility.
Current report
For the nine months ended September 30, 2026, lease operating expenses were $4.0 million, or $40.70 per BOE, including $1.2 million of environmental remediation costs associated with a fluid release. These costs are subject to an insurance claim with a $0.1 million deductible. Excluding the environmental remediation costs, lease operating expenses were $2.8 million, or $28.54 per BOE, compared to $4.2 million, or $31.94 per BOE, for the comparable prior-year period. The decrease resulted from the 2025 divestiture of our Wyoming and West Texas properties that carried higher operating costs.
Current report
Impairment of oil and natural gas properties. The Company recorded a ceiling test write down of $3.6 million for the nine months ended September 30, 2025, resulting from a decrease in commodity prices used in the full cost pool ceiling test calculation.
Current report
The commodity derivative loss as of September 30, 2026 was due to the prevailing oil prices were above the costless collar ceiling price resulting in a loss
Current report
Interest expense primarily consists of interest and fees associated with maintaining our credit facility. During the nine months ended September 30, 2026, we capitalized $223 thousand of interest and related fees as part of the construction costs of our industrial gas processing plant.
Current report
As of September 30, 2026 and December 31, 2025, outstanding borrowings under our credit facility were $8.5 million and $2.5 million, respectively. For the nine months ended September 30, 2025, we had no outstanding borrowings under the credit facility, and interest expense consisted solely of fees associated with the credit facility.
Removed paragraphs (3)
Previous report
For the three months ended June 30, 2026, lease operating expenses were $1.0 million or $29.48 per BOE. While lease operating expenses decreased by $0.5 million when compared to $1.5 million or $31.14 per BOE for the three months ended June 30, 2025, the cost on a BOE basis decreased as the mix of properties changed as a result of the divestment of our Wyoming and West Texas properties.
Previous report
For the six months ended June 30, 2026, lease operating expenses were $1.9 million or $28.01 per BOE. Lease operating expenses decreased by $1.2 million when compared to $3.2 million or $32.82 per BOE for the six months ended June 30, 2025, the cost on a BOE basis decreased as the mix of properties changed as a result of the divestment of our Wyoming and West Texas properties.
Previous report
Interest expense primarily represents the interest and fees on our credit facility with FirstBank Southwest. Interest expense of $63 thousand dollars were capitalized as part of the industrial gas processing plant construction expenses during the three months ended June 30, 2026. As of December 31, 2025 and June 30, 2026, we had $2.5 million and $4.5 million, respectively outstanding on our credit facility. For the six months ended June 30, 2026, interest expense included interest incurred on the outstanding loan and fees to maintain our credit facility. For the six months ended June 30, 2025, we had no amounts outstanding under the credit facility and our interest expense comprised of fees to maintain our credit facility.
Reworded paragraphs (27)
Previous wording
During the first quarter of 2026, the Company reached a final investment decision (“FID”) for the construction of its processing facility at the Big Sky Carbon Hub ("Big Sky") in Montana and executed a fixed-scope engineering, procurement and construction agreement, initiating capital deployment for the project. The planned facility is designed with an initial inlet capacity up to 8.0 MMCF/d, targeting approximately 14.4 MMCF of annual helium production and 125,000 metric tons of refined CO₂ per year. The Company expects to commence gathering pipeline installation in spring 2026, with commissioning targeted for the third quarter of 2026 and initial gas processing and helium sales and carbon management operations anticipated in 2027.
Current wording
During the first quarter of 2026, the Company reached a final investment decision (“FID”) for the construction of its processing facility at the Big Sky Carbon Hub ("Big Sky") in Montana and executed a fixed-scope engineering, procurement and construction agreement, initiating capital deployment for the project. The planned facility is designed with an initial inlet capacity up to 7.7 MMCF/d, targeting approximately 14.4 MMCF of annual helium production and 125,000 metric tons of refined CO₂ per year. The Company expects its gathering pipeline installation to be completed in the 4th quarter of 2026, and initial gas processing and helium sales, and carbon management operations are anticipated in 2027.
Previous wording
In anticipation of reaching FID, during the six months ended June 30, 2026, the Company generated $17.2 million in proceeds from equity issuances. Additionally, on April 17, 2026, the Company entered into an amendment to its Credit Facility with FirstBank Southwest that among other things, (i) increased the borrowing base from $10.0 million to $20.0 million, (ii) revised the applicable margin on outstanding borrowings to a fixed 2.00% per annum, and (iii) suspended testing of financial covenants through the fiscal quarter ending March 31, 2027. The Credit Facility maturity date remains May 31, 2029.
Current wording
In anticipation of reaching FID, during the nine months ended September 30, 2026, the Company generated $17.2 million in proceeds from equity issuances. Additionally, on April 17, 2026, the Company entered into an amendment to its Credit Facility with FirstBank Southwest that among other things, (i) increased the borrowing base from $10.0 million to $20.0 million, (ii) revised the applicable margin on outstanding borrowings to a fixed 2.00% per annum, and (iii) suspended testing of financial covenants through the fiscal quarter ending March 31, 2027. The Credit Facility maturity date remains May 31, 2029.
Previous wording
For the three months ended June 30, 2026, we recorded a net loss of $2.3 million, which was primarily due to lower production resulting from divestitures in prior periods. In the following sections, we discuss our revenue, operating expenses, and other income (expense) for the three months ended June 30, 2026 compared to the three months ended June 30, 2025.
Current wording
For the three months ended September 30, 2026, we recorded a net loss of $3.5 million, which was primarily due to lower production resulting from divestitures in prior periods. In the following sections, we discuss our revenue, operating expenses, and other income (expense) for the three months ended September 30, 2026 compared to the three months ended September 30, 2025.
Previous wording
The increase in our oil and natural gas revenue of $0.1 million for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, was primarily due to a 41% increase in oil sales prices offset by a reduction in production volumes. For the three months ended June 30, 2026, we produced 33,747 BOE, or an average of 371 BOE per day, as compared to 48,816 BOE or an average of 536 BOE per day during the comparable period in 2025. The decrease in our production quantities primarily relates to the divestitures of our properties in Wyoming and West Texas and the natural decline in production in remaining producing assets.
Current wording
The increase in our oil and natural gas revenue of $0.2 million for the three months ended September 30, 2026, as compared to the three months ended September 30, 2025, was primarily due to a 30% increase in average BOE sales prices offset by a reduction in production volumes. For the three months ended September 30, 2026, we produced 30,628 BOE, or an average of 333 BOE per day, as compared to 35,326 BOE or an average of 384 BOE per day during the comparable period in 2025. The decrease in our production quantities primarily relates to the divestitures of our properties in Wyoming and West Texas and the natural decline in production in remaining producing assets.
Previous wording
For the three months ended June 30, 2026, production taxes consistently remained between 6% and 8% of revenue. This increase in production taxes was attributable to the increase in revenue of 5% during the same period, as discussed above.
Current wording
For the three months ended September 30, 2026, production taxes consistently remained between 6% and 8% of revenue. This increase in production taxes was attributable to the increase in revenue of 12% during the same period, as discussed above.
Previous wording
*Depreciation, Depletion and Amortization.*Our depreciation, depletion, and amortization (“DD&A”) was $0.6 million and $1.1 million for the three months ended June 30, 2026 and 2025, respectively. Depletion expense on our oil and natural gas properties is the primary driver of DD&A expense. Our depletion rate was $11.83 per BOE and $10.94 per BOE for the three months ended June 30, 2026 and 2025, respectively. Our depletion rate can fluctuate modestly because of 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 future development costs.
Current wording
*Depreciation, Depletion and Amortization.*Our depreciation, depletion, and amortization (“DD&A”) was $0.5 million and $0.8 million for the three months ended September 30, 2026 and 2025, respectively. Depletion expense on our oil and natural gas properties is the primary driver of DD&A expense. Our depletion rate was $10.92 per BOE and $14.19 per BOE for the three months ended September 30, 2026 and 2025, respectively. Our depletion rate can fluctuate modestly for a number of reasons including the size and timing of capital costs, acquisitions and divestitures, impairments and changes to estimated reserve volumes.
Previous wording
General and administrative expenses increased by $0.4 million for the three months ended June 30, 2026 as compared to the prior year period. The increase was primarily attributable to discretionary employee compensation accrued in the current period but not in the prior period, equity-based compensation issued to consultants, and higher investor relations expense, partially offset by lower fees for accounting and tax professional services in the three months ended June 30, 2025.
Current wording
General and administrative expenses increased by $0.1 million for the three months ended September 30, 2026 as compared to the prior year period. The increase was primarily attributable to equity-based compensation issued to consultants, and higher investor relations expense, partially offset by lower fees for accounting and tax professional services in the three months ended September 30, 2026.
Previous wording
Interest expense primarily represents the interest and fees on our credit facility with FirstBank Southwest. Interest expense of $63 thousand dollars were capitalized as part of the industrial gas processing plant construction expenses during the three months ended June 30, 2026. As of December 31, 2025 and June 30, 2026, we had $2.5 million and $4.5 million, respectively outstanding on our credit facility.
Current wording
Interest expense primarily consists of interest and fees associated with our credit facility. During the three months ended September 30, 2026, we capitalized $160 thousand of interest expense and related fees as part of the industrial gas processing plant construction expenses.
Previous wording
Comparison of our Statements of Operations for the Six Months Ended June 30, 2026 and 2025
Current wording
Comparison of our Statements of Operations for the Nine Months Ended September 30, 2026 and 2025
Previous wording
For the six months ended June 30, 2026, we recorded a net loss of $5.5 million, which was primarily due to lower production resulting from divestitures in prior periods. In the following sections, we discuss our revenue, operating expenses, and other income (expense) for the six months ended June 30, 2026 compared to the six months ended June 30, 2025.
Current wording
For the nine months ended September 30, 2026, we recorded a net loss of $9.0 million, which was primarily due to lower production resulting from divestitures in prior periods. In the following sections, we discuss our revenue, operating expenses, and other income (expense) for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025.
Previous wording
*Revenue.*Presented below is a comparison of our oil and natural gas sales, production quantities and average sales prices for the six months ended June 30, 2026 and 2025:
Current wording
*Revenue.*Presented below is a comparison of our oil and natural gas sales, production quantities and average sales prices for the nine months ended September 30, 2026 and 2025:
Previous wording
The decrease in our oil and natural gas revenue of $0.5 million for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, was primarily due to a decrease of 29% in production quantities offset primarily by increases in the oil sales price. For the six months ended June 30, 2026, we produced 68,037 BOE, or an average of 376 BOE per day, as compared to 95,824 BOE or an average of 529 BOE per day during the comparable period in 2025. The decrease in our production quantities primarily relates to the divestitures of our properties in Wyoming and West Texas and the natural decline in production in remaining producing assets.
Current wording
The decrease in our oil and natural gas revenue of $0.3 million for the nine months ended September 30, 2026, as compared to the nine months ended September 30, 2025, was primarily due to a reduction in production volumes offset by a 27% increase in average BOE sales prices. For the nine months ended September 30, 2026, we produced 98,666 BOE, or an average of 361 BOE per day, as compared to 131,150 BOE or an average of 480 BOE per day during the comparable period in 2025. The decrease in our production quantities primarily relates to the divestitures of our properties in Wyoming and West Texas and the natural decline in production in remaining producing assets.
Previous wording
Oil and Natural Gas Production Costs. Presented below is a comparison of our oil and natural gas production costs for the six months ended June 30, 2026 and 2025:
Current wording
Oil and Natural Gas Production Costs. Presented below is a comparison of our oil and natural gas production costs for the nine months ended September 30, 2026 and 2025:
Previous wording
Exploration expense increased$70 thousand, which was attributable to an increase in exploration activities for our industrial gas development, namely professional services supporting resource estimation and analysis and legal work.
Current wording
Exploration expense increased $136 thousand, which was attributable to an increase in exploration activities for our industrial gas development, namely professional services supporting resource estimation and analysis and legal work.
Previous wording
*Depreciation, Depletion and Amortization.*Our depreciation, depletion, and amortization (“DD&A”) was $1.2 million and $2.2 million for the six months ended June 30, 2026 and 2025, respectively. Depletion expense on our oil and natural gas properties is the primary driver of DD&A expense. Our depletion rate was $11.38 per BOE and $14.67 per BOE for the six months ended June 30, 2026 and 2025, respectively. Our depletion rate can fluctuate modestly because of 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 future development costs.
Current wording
*Depreciation, Depletion and Amortization.*Our depreciation, depletion, and amortization (“DD&A”) was $1.7 million and $3.1 million for the nine months ended September 30, 2026 and 2025, respectively. Depletion expense on our oil and natural gas properties is the primary driver of DD&A expense. Our depletion rate was $11.24 per BOE and $14.54 per BOE for the nine months ended September 30, 2026 and 2025, respectively. Our depletion rate can fluctuate modestly for a number of reasons including the size and timing of capital costs, acquisitions and divestitures, impairments and changes to estimated reserve volumes.
Previous wording
*General and Administrative Expenses.*Presented below is a comparison of our general and administrative expenses for the six months ended June 30, 2026 and 2025:
Current wording
*General and Administrative Expenses.*Presented below is a comparison of our general and administrative expenses for the nine months ended September 30, 2026 and 2025:
Previous wording
General and administrative expenses increased by $1.1 million for the six months ended June 30, 2026 as compared to the prior year period. The increase was primarily attributable to the timing of discretionary compensation, which occurred during the three months ended March 31, 2026. Professional fees decreased primarily due to a reduction in acquisition-related costs relative to the activity in the six months ended June 30, 2025.
Current wording
General and administrative expenses increased by $1.1 million for the nine months ended September 30, 2026 as compared to the prior year period. The increase was primarily attributable to the timing of discretionary compensation, which occurred during the three months ended March 31, 2026. Professional fees decreased primarily due to a reduction in acquisition-related costs relative to the activity in the nine months ended September 30, 2025.
Previous wording
Other Income (Expense). Presented below is a comparison of our other income (expense) for the six months ended June 30, 2026 and 2025:
Current wording
Other Income (Expense). Presented below is a comparison of our other income (expense) for the nine months ended September 30, 2026 and 2025:
Previous wording
Based on the current commodity price environment and our existing working capital, we believe we have sufficient liquidity and capital resources to execute our business plan and meet our current financial obligations. As of June 30, 2026, the Company was in compliance with all financial covenants under its credit facility. We continue to actively manage our capital commitments to maintain flexibility with respect to the timing and level of our development activities and capital expenditures.
Current wording
Based on the current commodity price environment and our existing working capital, we believe we have sufficient liquidity and capital resources to execute our business plan and meet our current financial obligations. Under the second amendment to our credit agreement, financial covenant test has been suspended through the fiscal quarter ending March 31, 2027. We continue to actively manage our capital commitments to maintain flexibility with respect to the timing and level of our development activities and capital expenditures.
Previous wording
For the remainder of 2026, the Company’s capital program is designed to advance the Big Sky project toward initial commercial operations targeted for the first quarter of 2027. We anticipate the remaining aggregate, near-term capital program to range between $20.0 million and $25.0 million, primarily related to the construction of our gas processing plant, production gathering system, and related infrastructure at our industrial gas development project. In addition, we may incur up to approximately $0.5 million for plugging and abandonment activities, depending on regulatory requirements, timing, and weather conditions. We expect these expenditures to be funded through a combination of cash on hand, operating cash flows, proceeds from the divestiture of oil and natural gas properties, borrowings under our credit facility, additional equity issuances, and potential project-specific financing, including equity and debt capital.
Current wording
For the remainder of 2026, the Company’s capital program is designed to advance the Big Sky project toward initial commercial operations targeted for the first quarter of 2027. We anticipate the remaining aggregate, near-term capital program to range between $28.0 million and $32.0 million, primarily related to the construction of our gas processing plant, production gathering system, power generation, and related infrastructure at our industrial gas development project. In addition, we may incur up to approximately $0.5 million for plugging and abandonment activities, depending on regulatory requirements, timing, and weather conditions. We expect these expenditures to be funded through a combination of cash on hand, operating activities, proceeds from the divestiture of oil and natural gas properties, borrowings under our credit facility, additional equity issuances, and project-specific financing, including equity and debt capital.
Previous wording
For the six months ended June 30, 2026, we funded our capital expenditures primarily through cash on hand, proceeds from equity issuances, and draws on our credit facility. During the period, we generated approximately $17.2 million from equity sales, issuances and had cash and cash equivalents of approximately $5.9 million, and $15.5 million available under our credit facility as of June 30, 2026.
Current wording
For the nine months ended September 30, 2026, we funded our capital expenditures primarily through cash on hand, proceeds from equity issuances, and draws on our credit facility. During the period, we generated approximately $17.2 million from equity sales, issuances and had cash and cash equivalents of approximately $2.9 million, and $11.5 million available under our credit facility as of September 30, 2026.
Previous wording
On April 17, 2026, the Company entered into an amendment to its credit facility with FirstBank Southwest, which, among other things, increased the borrowing base from $10.0 million to $20.0 million, revised the applicable margin on outstanding borrowings to a fixed 2.00% per annum, and suspended testing of financial covenants through the fiscal quarter ending March 31, 2027. The maturity date of the credit facility remains May 31, 2029. The increased borrowing base provides us access to an additional $15.5 million of capital.
Current wording
On April 17, 2026, the Company entered into an amendment to its credit facility with FirstBank Southwest, which, among other things, increased the borrowing base from $10.0 million to $20.0 million, revised the applicable margin on outstanding borrowings to a fixed 2.00% per annum, and suspended testing of financial covenants through the fiscal quarter ending March 31, 2027. The maturity date of the credit facility remains May 31, 2029.
Previous wording
We use cash primarily for the development of our industrial gas assets, including construction of processing and gathering infrastructure, as well as for operating expenses, general and administrative costs, and debt service obligations. During the six months ended June 30, 2026, we spent approximately $9.6 million on the acquisition and development of industrial gas properties and expect to continue allocating capital to the Big Sky project for the remainder of the year.
Current wording
We use cash primarily for the development of our industrial gas assets, including construction of processing and gathering infrastructure, as well as for operating expenses, general and administrative costs, and debt service obligations. During the nine months ended September 30, 2026, we spent approximately $15.2 million on the acquisition and development of industrial gas properties and expect to continue allocating capital to the Big Sky project for the remainder of the year.
Previous wording
The following table summarizes our cash flows for the six months ended June 30, 2026 and 2025:
Current wording
The following table summarizes our cash flows for the nine months ended September 30, 2026 and 2025:
Previous wording
Operating Activities. Cash used in operating activities of $3.3 million for the six months ended June 30, 2026 was mainly due to a $5.5 million net loss and a reduction of working capital of $0.2 million offset by$1.2 million of depreciation, depletion, accretion. Cash used by operating activities of $6.1 million for the six months ended June 30, 2025, was mainly due to a net loss of $9.2 million and a reduction of payables of $3.8 million offset by $2.2 million of depreciation, depletion, accretion, and amortization.
Current wording
Operating Activities. Cash used in operating activities of $4.8 million for the nine months ended September 30, 2026 was mainly due to a $9.0 million net loss offset by working capital changes of $0.3 million, and$1.7 million each of depreciation, depletion, accretion, and stock-based compensation. Cash used by operating activities of $6.3 million for the nine months ended September 30, 2025, was mainly due to a net loss of $12.5 million and a reduction of payables of $2.6 million offset by $3.1 million of depreciation, depletion, accretion, and amortization, and a $3.6 million impairment of oil and gas properties.
Previous wording
Investing Activities. Cash used in investing activities for the six months ended June 30, 2026 was $10.1 million as compared to cash used in investing activities of $4.5 million for the comparable period in 2025. The primary use of cash in our investing activities for the six months ended June 30, 2026 was attributable to initial plant construction costs. For the six months ended June 30, 2025, the cash investment was primarily attributed to the Synergy acquisition discussed inNote 2 - Acquisitions and Divestitures.
Current wording
Investing Activities. Cash used in investing activities for the nine months ended September 30, 2026 was $15.7 million as compared to cash used in investing activities of $9.7 million for the comparable period in 2025. The primary use of cash in our investing activities for the nine months ended September 30, 2026 was attributable to industrial plant development activities. For the nine months ended September 30, 2025, the cash investment was primarily attributed to industrial gas capital expenditures and the Synergy acquisition.
Previous wording
Financing Activities. Cash provided by financing activities for the six months ended June 30, 2026 was $18.9 million as compared to $9.6 million for the comparable period in 2025. The primary drivers of this cash inflow were equity sales of $17.2 million during the six months ended June 30, 2026, compared to $11.9 million in the prior period, which in the prior period were reduced by a related party share repurchase of $1.6 million.
Current wording
Financing Activities. Cash provided by financing activities for the nine months ended September 30, 2026 was $22.9 million as compared to $9.6 million for the comparable period in 2025. The primary drivers of this cash inflow were equity sales of $17.2 million and borrowings of $6.0 million during the nine months ended September 30, 2026, compared to $11.9 million of proceeds from underwritten offering in the prior period, which in the prior period were reduced by a related party share repurchase of $1.6 million.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
For the nine months ended September 30, 2026, production taxes consistently remained between 6% and 8% of revenue.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
For the six months ended June 30, 2026, production taxes consistently remain between 6% and 8% of revenue. This decrease in production taxes was attributable to the decrease in revenue of 11% discussed above.
Previous report — wording carried elsewhere
Exploration expense increased $171 thousand, which was attributable to an increase in exploration activities for our industrial gas development, namely professional services supporting resource estimation and analysis and legal work.