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| PART I | | FINANCIAL INFORMATION | | |
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| ITEM 1. | | Condensed Consolidated Financial Statements (Unaudited) | | 5 |
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| | | Condensed Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2025 and 2024 | | 5 |
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| | | Condensed Consolidated Balance Sheets (Unaudited) at June 30, 2025 and December 31, 2024 | | 6 |
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| | | Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) for the Three and Six Months Ended June 30, 2025 and the Year Ended December 31, 2024 | | 7 |
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| | | Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2025 and 2024 | | 8 |
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| | | Notes to Unaudited Condensed Consolidated Financial Statements | | 9 |
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| ITEM 2. | | Management’s Discussion and Analysis of Financial Condition and Results of Operations | | 25 |
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| ITEM 3. | | Quantitative and Qualitative Disclosures about Market Risk | | 32 |
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| ITEM 4. | | Controls and Procedures | | 33 |
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| PART II | | OTHER INFORMATION | | |
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| ITEM 1. | | Legal Proceedings | | 34 |
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| ITEM 1A. | | Risk Factors | | 34 |
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| ITEM 2. | | Unregistered Sales of Equity Securities and Use of Proceeds | | 34 |
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| ITEM 3. | | Defaults Upon Senior Securities | | 34 |
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| ITEM 4. | | Mine Safety Disclosures | | 34 |
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| ITEM 5. | | Other Information | | 34 |
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| ITEM 6. | | Exhibits | | 35 |
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| Signatures | | | | 36 |
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Special note regarding forward-looking statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. All statements, other than statements of historical facts, may be forward-looking statements, should be evaluated as such and may concern, among other things, planned capital expenditures, potential increases in oil and natural gas production, potential costs to be incurred, future cash flows and borrowings, our financial position, business strategy and other plans and objectives for future operations. These forward-looking statements may be identified by their use of terms and phrases such as “may,” “expect,” “estimate,” “project,” “plan,” “objective,” “believe,” “predict,” “intend,” “achievable,” “anticipate,” “will,” “continue,” “potential,” “should,” “could” and similar terms and phrases. Although we believe that the expectations reflected in forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements. Readers should consider carefully the risks described under the “Risk Factors” section of our previously filed Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as well as the other disclosures contained herein and therein, which describe factors that could cause our actual results to differ from those anticipated in forward-looking statements, which include, but are not limited to, the following factors:
| ● | volatility in prices for oil, natural gas and natural gas liquids (“NGLs”); |
| ● | our ability to generate sufficient cash flows from operations, borrowings or other sources to enable us to fund our operations, satisfy our obligations and develop our undeveloped acreage positions; |
| ● | contractual limitations that affect our management’s discretion in managing our business, including covenants that, among other things, limit our ability to incur debt, make investments and pay cash dividends; |
| ● | our indebtedness, which may increase in the future, and higher levels of indebtedness can make us more vulnerable to economic downturns and adverse developments in our business; |
| ● | our ability to replace our oil and natural gas reserves and production; |
| ● | the presence or recoverability of estimated oil and natural gas reserves attributable to our properties and the actual future production rates and associated costs of producing those oil and natural gas reserves; |
| ● | our ability to successfully develop our large inventory of undeveloped acreage; |
| ● | the cost and availability of goods and services, such as drilling rigs, fracture stimulation services and tubulars, which may be subject to inflation caused by labor shortages, supply shortages and increased demand, and other inflationary pressures; |
| ● | our ability to secure adequate sour gas treating and/or sour gas take-away capacity, including the acid gas treatment facility for our Monument Draw area attaining targeted production volumes and costs in treating our sour gas; |
| ● | drilling and operating risks, including accidents, equipment failures, fires, and releases of toxic or hazardous materials, such as hydrogen sulfide (H2S), which can result in injury, loss of life, pollution, property damage and suspension of operations; |
| ● | senior management’s ability to execute our plans to meet our goals; |
| ● | access to and availability of water, sand and other treatment materials to carry out fracture stimulations in our completion operations; |
| ● | the possibility that our industry may be subject to future regulatory or legislative actions (including, but not limited to, additional taxes and changes in environmental regulations); |
| ● | access to adequate gathering systems, processing and treating facilities and transportation take-away capacity to move our production to marketing outlets to sell our production at market prices; |
| ● | our ability to pursue and integrate strategic mergers and acquisitions; |
| ● | the potential for production decline rates for our wells to be greater than we expect; |
| ● | competition, including competition for acreage in our resource play; |
| ● | environmental risks, such as accidental spills of toxic or hazardous materials, and the potential for environmental liabilities; |
| ● | exploration and development risks; |
| ● | our ability to retain key members of senior management, the board of directors and key technical employees; |
| ● | social unrest, political instability or armed conflict in major oil and natural gas producing regions outside the United States (“U.S.”), such as the conflict between Ukraine and Russia, and acts of terrorism or sabotage; |
| ● | impacts of climate regulations or lawsuits; |
| ● | general economic conditions, whether internationally, nationally or in the regional and local market areas in which we do business, may be less favorable than expected, including the possibility that economic conditions in the U.S. will worsen and that capital markets are disrupted, which could adversely affect demand for oil and natural gas and make it difficult to access capital; |
| ● | changes in U.S. trade policies, including the imposition of tariffs and retaliatory tariffs and their related impacts on the economy; |
| ● | impacts and potential risks related to actual or anticipated pandemics, including any associated impact to our operations, financial results, liquidity, contractors, customers, employees and vendors; |
| ● | impacts and potential risks of extreme weather; |
| ● | other economic, competitive, governmental, regulatory, legislative, including federal and state regulations and laws, geopolitical and technological factors that may negatively impact our business, operations or oil and natural gas prices; |
| ● | our insurance coverage may not adequately cover all losses that we may sustain; and |
| ● | title to the properties in which we have an interest that may be impaired by title defects. |
All forward-looking statements are expressly qualified in their entirety by the cautionary statements in this paragraph and elsewhere in this document. Other than as required under the securities laws, we do not assume a duty to update these forward-looking statements, whether as a result of new information, subsequent events or circumstances, changes in expectations or otherwise.
