RING ENERGY INC

Previous wording

•Reduction of long-term debt and deleveraging of asset. Ring intends to reduce its long-term debt primarily through the use of excess cash flow and potentially through the sale of non-core assets. The Company believes that with its attractive field level margins, it is well positioned to maximize the value of its assets and deleverage its balance sheet. The Company also believes through potential accretive acquisitions and strategic asset dispositions, it can accelerate the strengthening of its balance sheet. During the three months ended June 30, 2024, the Company made net paydowns of $15 million on its revolving line of credit, resulting in the outstanding long-term debt balance of $407 million.

Current wording

•Reduction of long-term debt and deleveraging of asset. Ring intends to reduce its long-term debt primarily through the use of excess cash flow and potentially through the sale of non-core assets. The Company believes that with its attractive field level margins, it is well positioned to maximize the value of its assets and deleverage its balance sheet. The Company also believes through potential accretive acquisitions and strategic asset dispositions, it can accelerate the strengthening of its balance sheet. During the three months ended September 30, 2024, the Company made net paydowns of $15 million on its revolving line of credit, resulting in the outstanding long-term debt balance of $392 million.

Previous wording

The table below sets forth our drilling and completion activities for the six months ended June 30, 2024.

Current wording

The table below sets forth our drilling and completion activities for the nine months ended September 30, 2024.

Previous wording

Our financial results depend on many factors, particularly the price of crude oil and natural gas and our ability to market our production on economically attractive terms. Commodity prices are affected by many factors outside of our control, including changes in market supply and demand both domestically and world wide, which are impacted by many factors. As a result, we cannot accurately predict future commodity prices, and therefore, we cannot determine with any degree of certainty what effect increases or decreases in these prices will have on our drilling program, production volumes or revenues.

Current wording

Our financial results depend on many factors, particularly the price of crude oil and natural gas and our ability to market our production on economically attractive terms. Commodity prices are affected by many factors outside of our control, including changes in market supply and demand both domestically and world wide, which are impacted by many factors.

Previous wording

The Permian Basin has been experiencing a shortage of pipeline transportation in order to sell natural gas produced in the Basin, resulting in negative natural gas prices, whereby the seller is actually paying the purchaser to take the gas. We have experienced negative gas prices since approximately March of 2023 and such conditions are continuing. If these depressed or inverted natural gas prices continue in the region, our natural gas revenues will continue to be negatively impacted.

Current wording

The Permian Basin has been experiencing a shortage of pipeline transportation in order to sell natural gas produced in the Basin, resulting in negative natural gas prices, whereby the seller is actually paying the purchaser to take the gas. We have experienced negative realized gas prices at times and conditions are continuing. If these depressed or inverted natural gas prices continue in the region, our natural gas revenues will continue to be negatively impacted.

Previous wording

Since 2022 inflation has increased costs associated with our capital program and production operations. We have experienced increases in the costs of many of the materials, supplies, equipment and services used in our operations and we expect inflation to continue based on current economic circumstances. In addition, the attempts to reduce inflation by the U.S. Federal Reserve have resulted in increased interest rates on debt. We continue to closely monitor costs and take all reasonable steps to mitigate the inflationary effect on our cost structure and also work to enhance our efficiency to minimize additional cost increases where possible.

Current wording

Since 2022 inflation has increased costs associated with our capital program and production operations. We have experienced increases in the costs of many of the materials, supplies, equipment and services used in our operation. While 2024 costs have risen compared to prior years, overall industry activity has been muted and therefore service costs have remained flat or slightly decreased. In addition, the attempts to reduce inflation by the U.S. Federal Reserve have resulted in increased interest rates on debt. We continue to closely monitor costs and take all reasonable steps to mitigate the inflationary effect on our cost structure and also work to enhance our efficiency to minimize additional cost increases where possible.

Previous wording

Oil sales. Oil sales increased approximately $21.2 million from $78.0 million to $99.3 million due to a increase in sales volume from 1,079,379 barrels of oil to 1,239,731 barrels of oil, as well as due to an increase in the average realized price per barrel from $72.30 to $80.09. Of the increase in volume of 160,352 barrels of oil, 179,911 barrels of oil were from wells acquired and new wells drilled in the acreage of the Founders Acquisition (which was closed in August of 2023), as well as drilling activity in other areas, offset by natural declines from the legacy assets. The increased average realized price per barrel was primarily a result of higher market conditions.

Current wording

Oil sales. Oil sales increased approximately $0.02 million from $90.4 million to $90.4 million due to a increase in sales volume from 1,106,531 barrels of oil to 1,214,788 barrels of oil, partially offset by a decrease in the average realized price per barrel from $81.69 to $74.43. Of the increase in volume of 108,257 barrels of oil, 94,512 barrels were from wells acquired and new wells drilled in the acreage acquired in the Founders Acquisition (which closed in August of 2023), as well as drilling activity in other areas, offset by natural declines from our legacy assets. The decreased average realized price per barrel was primarily a result of weaker market conditions.

Previous wording

Natural gas sales. Natural gas sales decreased approximately $1.9 million from a negative $1.1 million to a negative $3.0 million. While our natural gas sales volume marginally decreased from 1,557,545 Mcf to 1,538,347 Mcf, the average realized price per Mcf decreased from $(0.71) to $(1.93). Of the decrease in volume of (19,198) Mcf, a decrease of (158,324) Mcf attributable to legacy assets, impacted by higher shrinkage (resulting in higher NGL yields) and processing plant constraints, offset by an increase of 139,126 Mcf from the Founders Acquisition. The price decrease was driven by a significant reduction in realized revenue pricing due to depressed market conditions. The realized revenue pricing included the impact of gas plant processing fees that were netted from revenue. For the three months ended June 30, 2024, gross revenues were $(0.34) per Mcf and fees were $(1.59) per Mcf, compared to gross revenues of $1.01 per Mcf and fees of $(1.71) per Mcf for the three months ended June 30, 2023. This resulted in a net realized price of $(1.93) per Mcf for the three months ended June 30, 2024 compared to $(0.71) per Mcf for the three months ended June 30, 2023.

Current wording

Natural gas sales. Natural gas sales decreased approximately $4.4 million from $0.6 million to a negative $3.9 million. While our natural gas sales volume marginally increased from 1,567,104 Mcf to 1,705,027 Mcf, the average realized price per Mcf decreased from $0.36 to $(2.26). Of the increase in volume of 137,923 Mcf, an increase of 95,557 Mcf was from the Founders Acquisition and 42,366 Mcf was attributable to legacy assets. The price decrease was driven by a significant reduction in realized revenue pricing due to low demand as a result of current pipeline capacity constraints. The realized revenue pricing included the impact of gas plant processing fees that were netted from revenue. For the three months ended September 30, 2024, gross revenues were $(0.50) per Mcf and fees were $(1.76) per Mcf, compared to gross revenues of $2.16 per Mcf and fees of $(1.80) per Mcf for the three months ended September 30, 2023. This resulted in a net realized price of $(2.26) per Mcf for the three months ended September 30, 2024 compared to $0.36 per Mcf for the three months ended September 30, 2023.

Previous wording

Natural gas liquids sales. NGL sales increased approximately $0.4 million from $2.4 million to $2.8 million. NGL sales volumes for the three months ended June 30, 2024 were 304,448 barrels of NGLs compared to 232,698 barrels of NGLs for the comparable period in 2023. Of the increase in volume of 71,750 barrels, 38,335 barrels are attributable to wells acquired and new wells drilled in the acreage of the Founders Acquisition, with the remaining 33,415 barrels attributable to legacy assets due to increased NGL yields. The average realized price per barrel of NGLs was $9.27 for the three months ended June 30, 2024 compared to $10.35 for the three months ended June 30, 2023, due to lower market conditions.

Current wording

Natural gas liquids sales. NGL sales decreased approximately $0.04 million from $2.7 million to $2.7 million. NGL sales volumes for the three months ended September 30, 2024 were 350,975 barrels of NGLs compared to 243,142 barrels of NGLs for the comparable period in 2023. Of the increase in volume of 107,833 barrels, 28,066 barrels were attributable to wells acquired and new wells drilled in the acreage acquired in the Founders Acquisition, with the remaining 79,767 barrels attributable to our legacy assets due to increased NGL yields. The average realized price per barrel of NGLs was $7.66 for the three months ended September 30, 2024 compared to $11.22 for the three months ended September 30, 2023, due to weaker market conditions.

Previous wording

Oil, Natural Gas, and Natural Gas Liquids Revenues for the Six Months Ended June 30, 2024 and 2023

Current wording

Oil, Natural Gas, and Natural Gas Liquids Revenues for the Nine Months Ended September 30, 2024 and 2023

Previous wording

Oil sales. Oil sales increased approximately $30.0 million from $161.6 million to $191.6 million due to an increase in sales volume from 2,218,792 barrels of oil to 2,458,568 barrels of oil, further supported by a increase in the average realized price per barrel from $72.85 to $77.93. Of the increase in volume of 239,776 barrels, 337,001 barrels of oil were from wells acquired and new wells drilled in the acreage of the Founders Acquisition as well as drilling activity in other areas, offset by natural declines from the legacy assets and sale of non-core assets. The increased average realized price per barrel was primarily the result of higher market conditions.

Current wording

Oil sales. Oil sales increased approximately $30.0 million from $252.0 million to $282.0 million due to an increase in sales volume from 3,325,323 barrels of oil to 3,673,356 barrels of oil, further supported by a increase in the average realized price per barrel from $75.79 to $76.77. Of the increase in volume of 348,033 barrels, 431,512 barrels were from wells acquired and new wells drilled in the acreage acquired in the Founders Acquisition, as well as drilling activity in other areas, offset by natural declines from our legacy assets and sale of non-core assets. The increased average realized price per barrel was primarily the result of stronger market conditions.

Previous wording

Natural gas sales. Natural gas sales decreased approximately $3.8 million from a negative $36,213 to a negative $3,791,042. In addition to natural gas sales volume decreasing from 3,158,952 Mcf to 3,034,854 Mcf, the average realized price per Mcf decreased from $(0.01) to $(1.25). Of the decrease in volume of 124,098 Mcf, 245,545 Mcf was from wells acquired and new wells drilled in the acreage of the Founders Acquisition, and the offsetting decrease of (369,643) Mcf was attributable to legacy assets. The price decrease was driven by lower market conditions. The realized revenue pricing includes the impact of gas plant processing fees that were netted from revenue. For the six months ended June 30, 2024, gross revenues were $0.42 per Mcf and fees were $(1.67) per Mcf, compared to gross revenues of $1.52 per Mcf and fees of $(1.53) per Mcf for the six months ended June 30, 2023. This resulted in a net realized price of $(1.25) for the six months ended June 30, 2024 compared to $(0.01) per Mcf for the six months ended June 30, 2023.

Current wording

Natural gas sales. Natural gas sales decreased approximately $8.2 million from $0.5 million to a negative $7.7 million. While the natural gas sales volume increased from 4,726,056 Mcf to 4,739,881 Mcf, the average realized price per Mcf decreased from $0.11 to $(1.61). Of the increase in volume of 13,825 Mcf, 341,102 Mcf was from wells acquired and new wells drilled in the acreage acquired in the Founders Acquisition, and the offsetting decrease of (327,277) Mcf was attributable to natural declines in our legacy assets. The price decrease was driven by lower market conditions. The realized revenue pricing includes the impact of gas plant processing fees that were netted from revenue. For the nine months ended September 30, 2024, gross revenues were $0.09 per Mcf and fees were $(1.70) per Mcf, compared to gross revenues of $1.73 per Mcf and fees of $(1.62) per Mcf for the nine months ended September 30, 2023. This resulted in a net realized price of $(1.61) for the nine months ended September 30, 2024 compared to $0.11 per Mcf for the nine months ended September 30, 2023.

Previous wording

Natural gas liquids sales. NGL sales slightly increased by $10,145 from $5,839,299 to $5,849,444. NGL sales volumes for the six months ended June 30, 2024 were 568,250 barrels of NGLs compared to 472,690 barrels of NGLs for the comparable period in 2023. Of the increase in volume of 95,560 barrels, 67,449 barrels were attributable to the wells acquired and new wells drilled within the acreage of the Founders Acquisition, and 28,111 barrels were from the legacy assets. The average realized price per barrel of NGLs was $10.29 for the six months ended June 30, 2024 compared to $12.35 for the six months ended June 30, 2023, attributable to lower market conditions.

Current wording

Natural gas liquids sales. NGL sales slightly decreased by $0.03 million from $8.6 million to $8.5 million. NGL sales volumes for the nine months ended September 30, 2024 were 919,225 barrels of NGLs compared to 715,832 barrels of NGLs for the comparable period in 2023. Of the increase in volume of 203,393 barrels, 95,515 barrels were attributable to the wells acquired and new wells drilled in the acreage acquired in the Founders Acquisition, and 107,878 barrels were from our legacy assets. The average realized price per barrel of NGLs was $9.29 for the nine months ended September 30, 2024 compared to $11.97 for the nine months ended September 30, 2023, attributable to weaker market conditions.

Previous wording

Lease operating expenses. Our total lease operating expenses (“LOE”) increased from $15.9 million to $19.3 million and increased on a per Boe basis from $10.14 to $10.72. These per Boe amounts are calculated by dividing our total lease operating expenses by our total volume sold, in Boe. Total LOE increased primarily due to a 15% increase in production of 228,902 Boe as a result of the new wells acquired in the Founders Acquisition as well as new wells drilled and completed from our development program. Specific cost categories with significant increases included chemical and electric.

Current wording

Lease operating expenses. Our total lease operating expenses (“LOE”) increased from $18.0 million to $20.3 million and decreased on a per Boe basis from $11.18 to $10.98. These per Boe amounts are calculated by dividing our total lease operating expenses by our total volume sold, in Boe. Total LOE increased primarily due to a 15% increase in production of 239,077 Boe as a result of the new wells acquired in the Founders Acquisition as well as new wells drilled and completed from our development program. Specific cost categories with significant increases included electricity and chemical.

Previous wording

Gathering, transportation and processing costs. Our total gathering, transportation and processing costs (“GTP”) increased from negative $1,632 to $107,629 and increased on a per Boe basis from $0.00 to $0.06. Beginning May 1, 2022, due to a natural gas processing entity taking control of transportation at the wellhead, GTP costs were re-classified as a reduction to oil and natural gas sales revenues. However, GTP costs increased on the period shown due to one remaining contract with a natural gas processing entity in place where point of control of gas dictates requiring the fees be recorded as an expense.

Current wording

Gathering, transportation and processing costs. Our total gathering, transportation and processing costs (“GTP”) increased from negative $4,530 to $102,420 and increased on a per Boe basis from $0.00 to $0.06. Beginning May 1, 2022, due to a natural gas processing entity taking control of transportation at the wellhead, GTP costs were re-classified as a reduction to oil and natural gas sales revenues. However, GTP costs increased on the period shown due to one remaining contract with a natural gas processing entity in place where point of control of gas dictates requiring the fees be recorded as an expense.

Previous wording

Ad valorem taxes. Our total ad valorem taxes decreased from $1.7 million to $1.3 million and decreased on a per Boe basis from $1.06 to $0.74. Of the $(0.3) million decrease in ad valorem taxes, $(0.5) million was for adjustments to Crane County tax estimates, offset by a $0.2 million increase in adding Ector County properties from the Founders Acquisition.

Current wording

Ad valorem taxes. Our total ad valorem taxes increased from $1.8 million to $2.2 million and increased on a per Boe basis from $1.10 to $1.17. Of the $0.4 million increase in ad valorem taxes, $0.4 million was for Yoakum County properties, and $0.2 million for Ector County properties, offset by a reduction in $0.3 million related to Crane County tax estimates.

Previous wording

Oil and natural gas production taxes. Oil and natural gas production taxes as a percentage of oil and natural gas sales were 5.06% for the three months ended June 30, 2023 and decreased to 3.66% for the three months ended June 30, 2024. During the quarter, ($0.9) million was realized for severance tax credits associated with low-producing and two-year inactive wells, which caused the average for the three months ended June 30, 2024 to be lower than historical trends.

Current wording

Oil and natural gas production taxes. Oil and natural gas production taxes as a percentage of oil and natural gas sales were 5.07% for the three months ended September 30, 2023 and decreased to 4.71% for the three months ended September 30, 2024. The change in average tax percentage is due to the divestiture of the New Mexico assets in the third quarter of 2023, which had higher tax rates on both oil and gas than the remaining Texas assets.

Previous wording

Production Costs for the Six Months Ended June 30, 2024 and 2023

Current wording

Production Costs for the Nine Months Ended September 30, 2024 and 2023

Previous wording

Lease operating expenses. Our total LOE increased from $33.4 million to $37.7 million and LOE per Boe increased from $10.38 to $10.66. Total LOE increased primarily due to a 10% increase in production of 314,653 Boe as a result of the new wells acquired from the Founders Acquisition as well as new wells drilled and completed from our development program. Specific cost categories with significant increases included chemical, salaries, electric, and workover expense.

Current wording

Lease operating expenses. Our total LOE increased from $51.4 million to $58.0 million and LOE per Boe increased from $10.65 to $10.77. Total LOE increased primarily due to an 11% increase in production of 553,730 Boe as a result of the new wells acquired in the Founders Acquisition as well as new wells drilled and completed from our development program. Specific cost categories with significant increases included chemical, electricity, salaries, and other employee expenses.

Previous wording

Gathering, transportation and processing costs. Our total GTP increased from negative $2,455 to $273,683 and increased on a per Boe basis from $0.00 to $0.08. Beginning May 1, 2022, due to a natural gas processing entity taking control of transportation at the wellhead, GTP costs were re-classified as a reduction to oil and natural gas sales revenues. However, GTP costs increased on the period shown due to one remaining contract with a natural gas processing entity in place where point of control of gas dictates requiring the fees be recorded as an expense.

Current wording

Gathering, transportation and processing costs. Our total GTP increased from negative $6,985 to $376,103 and increased on a per Boe basis from $0.00 to $0.07. Beginning May 1, 2022, due to a natural gas processing entity taking control of transportation at the wellhead, GTP costs were re-classified as a reduction to oil and natural gas sales revenues. However, GTP costs increased on the period shown due to one remaining contract with a natural gas processing entity in place where point of control of gas dictates requiring the fees be recorded as an expense.

Previous wording

Ad valorem taxes. Our total ad valorem taxes increased from $3.3 million to $3.5 million and decreased on a per Boe basis from $1.04 to $0.99. Of the approximate $0.1 million increase in ad valorem taxes, $0.7 million was from the addition of Ector County due to the Founders Acquisition, offset by a net reduction in estimates for other jurisdictions of $0.6 million.

Current wording

Ad valorem taxes. Our total ad valorem taxes increased from $5.1 million to $5.6 million and decreased on a per Boe basis from $1.06 to $1.05. Of the approximate $0.5 million increase in ad valorem taxes, $0.9 million was from the addition of Ector County properties acquired in the Founders Acquisition, offset by a net reduction in estimates for other jurisdictions of $0.4 million.

Previous wording

Oil and natural gas production taxes. Oil and natural gas production taxes as a percentage of oil and natural gas sales were 5.03% for the six months ended June 30, 2023 and decreased to 4.16% for the six months ended June 30, 2024. The overall average percentage of production taxes to oil and gas sales in 2024 is 4.7% which is in line with historical rates. In May 2024, an accrual of $(0.9) million was made for estimated severance tax refunds expected, which lowered the average for the six months ended June 30, 2024.

Current wording

Oil and natural gas production taxes. Oil and natural gas production taxes as a percentage of oil and natural gas sales were 5.05% for the nine months ended September 30, 2023 and decreased to 4.33% for the nine months ended September 30, 2024. The overall average percentage of production taxes to oil and gas sales in 2024 is 4.7% which is in line with historical rates. However, in May 2024, an accrual of $(0.9) million was made for estimated severance tax refunds expected, which lowered the average for the nine months ended September 30, 2024.

Previous wording

Depreciation, depletion and amortization. Our depreciation, depletion and amortization increased from $20.8 million to $24.7 million due to a higher depletion rate as well as an increase of 228,902 in Boe produced. Additional trucks were leased for field operations, resulting in higher finance lease amortization costs. Our average depreciation, depletion and amortization per Boe increased from $13.23 per Boe to $13.72 per Boe. The increase in DD&A per Boe was from an increase in the total estimated costs of property.

Current wording

Depreciation, depletion and amortization. Our depreciation, depletion and amortization increased from $22.0 million to $25.7 million due to a higher depletion rate as well as an increase of 239,077 in Boe produced. Additional trucks were leased for field operations, resulting in higher finance lease amortization costs. Our average depreciation, depletion and amortization per Boe increased from $13.65 per Boe to $13.87 per Boe, due to the higher percentage reduction in the Boe amortization base compared to the reduction in the total estimated costs of property.

Previous wording

Asset retirement obligation accretion. Our asset retirement obligation (“ARO”) accretion decreased from $353,878 to $352,184 primarily as a result of wells plugged and abandoned and sold, offset by the additional ARO accretion associated with the properties added from the Founders Acquisition.

Current wording

Asset retirement obligation accretion. Our asset retirement obligation (“ARO”) accretion increased slightly from $354,175 to $354,195 due to additional ARO accretion associated with properties acquired in the Founders Acquisition as well as new drilled and completed wells, offset by wells plugged and abandoned and sold.

Previous wording

Operating lease expense. Our operating lease expense increased from $228,491 to $350,181 due to additional office space leased in both the Midland and The Woodlands offices.

Current wording

Operating lease expense. Our operating lease expense increased from $138,220 to $175,091 due to additional office space leased in The Woodlands office expansion beginning in October 2023.

Previous wording

General and administrative expense. General and administrative ("G&A") expense increased from $6.8 million to $7.7 million. Of the $0.9 million cost increase, $0.6 million was associated with the employee retention tax credit that was received in 2023,$0.6 million represented an increase in salaries and wages, $0.2 million in legal fees, $0.1 million in rent expenses, and $0.1 million in other professional fees. This was offset by $0.4 million in lower transaction costs, a decrease of $0.2 million in share-based compensation costs, and $0.2 million in lower bonus accruals.

Current wording

General and administrative expense. General and administrative ("G&A") expense decreased from $7.1 million to $6.4 million. Of the $0.7 million cost decrease, there was a decrease of $2.1 million in share-based compensation costs, offset by $0.7 million of an increase in salaries and wages, $0.5 million in bonus compensation, $0.2 million in transaction costs, and $0.1 million in other professional fees.

Previous wording

Other Costs and Operating Expenses for the Six Months Ended June 30, 2024 and 2023

Current wording

Other Costs and Operating Expenses for the Nine Months Ended September 30, 2024 and 2023

Previous wording

Depreciation, depletion and amortization. Our depreciation, depletion and amortization increased from $42.1 million to $48.5 million due to a higher depletion rate as well as an increase of 314,653 in Boe produced. Our average depreciation, depletion and amortization per Boe increased from $13.07 per Boe to $13.73 per Boe, due to the increase in the total costs of property and the decrease in the Boe amortization base.

Current wording

Depreciation, depletion and amortization. Our depreciation, depletion and amortization increased from $64.1 million to $74.2 million due to a higher depletion rate as well as an increase of 553,730 in Boe produced. Our average depreciation, depletion and amortization per Boe increased from $13.26 per Boe to $13.78 per Boe, due to the increase in the total estimated costs of property, as well as the reduction in the Boe amortization base.

Previous wording

Asset retirement obligation accretion. Our ARO accretion decreased from $719,725 to $703,018 primarily as a result of wells plugged and abandoned and sold, offset by the additional ARO accretion associated with the properties added from the Founders Acquisition.

Current wording

Asset retirement obligation accretion. Our ARO accretion decreased from $1,073,900 to $1,057,213 primarily as a result of wells plugged and abandoned and sold, offset by the additional ARO accretion associated with the properties acquired in the Founders Acquisition.

Previous wording

Operating lease expense. Our operating lease expense increased from $115,353 to $175,090 due to additional office space leased in The Woodlands office expansion.

Current wording

Operating lease expense. Our operating lease expense increased from $366,711 to $525,272 due to the additional office space leased in The Woodlands office.

Previous wording

General and administrative expense. General and administrative ("G&A") expense increased from $13.9 million to $15.2 million, with the $1.2 million cost increase due to an increase of $1.0 million in salaries and wages, $0.6 million for an employee retention tax credit that was received in 2023, $0.3 million in legal fees, and $0.2 million in other professional fees. This was offset by a decrease of $0.4 million in lower transaction costs and $0.4 million in share-based compensation costs.

Current wording

General and administrative expense. G&A expense increased from $21.0 million to $21.6 million, with the $0.6 million cost increase due to an increase of $1.6 million in salaries and wages, $0.6 million for an employee retention tax credit that was received in 2023, $0.4 million in bonus compensation, $0.3 million in other professional fees, and $0.3 million in legal fees. This was offset by a decrease of $2.5 million in share-based compensation costs and $0.3 million in lower transaction costs.

Previous wording

Interest income. During the six months ended June 30, 2024, interest income of $223,477 was earned from excess cash balances in bank sweep accounts. During the six months ended June 30, 2023, interest income of $50,703 was depositing excess cash balances in bank sweep accounts beginning May 2023 and $29,042 was earned from the employee retention tax credit.

Current wording

Interest income. During the three months ended September 30, 2024, interest income of $143,704 was earned from excess cash balances in bank sweep accounts. During the three months ended September 30, 2023, interest income of $78,679 was earned from depositing excess cash balances in bank sweep accounts and $1,747 was from interest on an escrow account.

Previous wording

Interest expense. Interest expense increased from $10.6 million to $10.9 million primarily due to higher amounts outstanding on our Credit Facility, with a weighted average daily debt of approximately $420.3 million during the second quarter of 2024 compared to approximately $414.9 million during the second quarter of 2023. Additionally, the increase in interest expense was due to higher interest rates, with a weighted average annual interest rate of 9.3% in the second quarter of 2024 compared to 8.7% in the second quarter of 2023.

Current wording

Interest expense. Interest expense decreased from $11.4 million to $10.8 million primarily due to lower amounts outstanding on our Credit Facility, with a weighted average daily debt of approximately $406.5 million during the third quarter of 2024 compared to approximately $422.6 million during the third quarter of 2023. Offsetting this change was an increase in interest rates, with a weighted average annual interest rate of 9.3% in the third quarter of 2024 compared to 9.2% in the third quarter of 2023.

Previous wording

Gain (loss) on derivative contracts. We recorded a loss on derivative contracts of $1.8 million for the three months ended June 30, 2024 compared to a gain on derivative contracts of $3.3 million for the three months ended June 30, 2023. For the derivative contract settlements, we recorded a realized loss of $2.6 million for the three months ended June 30, 2024 and a realized gain of $0.2 million for the three months ended June 30, 2023. The increase of $2.8 million in the realized loss was a result of our less favorable settlements of crude oil derivative contracts during the current year. For the marked-to-market contracts, we recorded an unrealized gain of $0.8 million for the three months ended June 30, 2024 and an unrealized gain of $3.1 million for the three months ended June 30, 2023. The reduction of the unrealized gain was primarily due to the changes in crude oil futures prices.

Current wording

Gain (loss) on derivative contracts. We recorded a gain on derivative contracts of $24.7 million for the three months ended September 30, 2024 compared to a loss on derivative contracts of $39.2 million for the three months ended September 30, 2023. For the derivative contract settlements, we recorded a realized loss of $1.9 million for the three months ended September 30, 2024 and a realized loss of $5.4 million for the three months ended September 30, 2023. The reduction of $3.5 million in the realized loss was a result of more favorable settlements of crude oil derivative contracts during the current year. For the marked-to-market contracts, we recorded an unrealized gain of $26.6 million for the three months ended September 30, 2024 and an unrealized loss of $33.9 million for the three months ended September 30, 2023. The change in position was primarily due to the changes in crude oil futures prices.

Previous wording

Other Income (Expense) for the Six Months Ended June 30, 2024 and 2023

Current wording

Other Income (Expense) for the Nine Months Ended September 30, 2024 and 2023

Previous wording

Interest income. During the three months ended June 30, 2024, interest income of $144,933 was earned from excess cash balances in bank sweep accounts. During the three months ended June 30, 2023, interest income of $50,703 was earned from depositing excess cash balances in bank sweep accounts beginning May 2023 and $29,042 was earned from the employee retention tax credit.

Current wording

Interest income. During the nine months ended September 30, 2024, interest income of $367,181 was earned from excess cash balances in bank sweep accounts. During the nine months ended September 30, 2023, interest income of $129,382 was depositing excess cash balances in bank sweep accounts beginning May 2023, $29,042 was earned from the employee retention tax credit, and $1,747 was from interest on an escrow account.

Previous wording

Interest expense. Interest expense increased from $20.9 million to $22.4 million primarily due to the result of higher amounts outstanding on our Credit Facility, with a weighted average daily debt of approximately $424.6 million during the six months ended June 30, 2024 compared to approximately $419.6 million during the six months ended June 30, 2023. Additionally, the increase in interest expense was due to higher interest rates, with a weighted average annual interest rate of 9.3% during the six months ended June 30, 2024 compared to 8.5% during the six months ended June 30, 2023.

Current wording

Interest expense. Interest expense increased from $32.3 million to $33.2 million primarily due to the result of higher interest rates, with a weighted average annual interest rate of 9.3% during the nine months ended September 30, 2024 compared to 8.7% during the nine months ended September 30, 2023. This change was offset by lower amounts outstanding on our Credit Facility, with a weighted average daily debt of approximately $418.5 million during the nine months ended September 30, 2024 compared to approximately $420.6 million during the nine months ended September 30, 2023.

Previous wording

Gain (loss) on derivative contracts. We recorded a loss on derivative contracts of $20.8 million for the six months ended June 30, 2024 and a gain on derivative contracts of $12.7 million for the six months ended June 30, 2023. For the derivative contract settlements, we recorded a realized loss of $4.1 million for the six months ended June 30, 2024 and a realized loss of $0.5 million for the six months ended June 30, 2023. The increase of $3.6 million in the realized loss was a result of less favorable settlements of crude oil derivative contracts during the current year. For the marked-to-market contracts, we recorded an unrealized loss of $16.8 million for the six months ended June 30, 2024 and an unrealized gain of $13.2 million for the six months ended June 30, 2023. This change in unrealized derivatives primarily was due to the changes in crude oil futures prices on derivative contracts in the Company's portfolio.

Current wording

Gain (loss) on derivative contracts. We recorded a gain on derivative contracts of $3.9 million for the nine months ended September 30, 2024 and a loss on derivative contracts of $26.5 million for the nine months ended September 30, 2023. For the derivative contract settlements, we recorded a realized loss of $5.9 million for the nine months ended September 30, 2024 and a realized loss of $5.8 million for the nine months ended September 30, 2023. The increase of $0.1 million in the realized loss was a result of slightly less favorable settlements of crude oil derivative contracts during the current year. For the marked-to-market contracts, we recorded an unrealized gain of $9.8 million for the nine months ended September 30,

Previous wording

Gain (loss) on disposal of assets. During the six months ended June 30, 2024 the Company recognized a gain of $89,693 on disposal from selling multiple Company owned vehicles. Also, during the six months ended June 30, 2023, the Company recognized a loss of $132,109 on disposal from selling multiple Company owned vehicles.

Current wording

Gain (loss) on disposal of assets. During the nine months ended September 30, 2024 the Company recognized a gain of $89,693 on disposal from selling multiple Company owned vehicles. Also, during the nine months ended September 30, 2023, the Company recognized a loss of $132,109 on disposal from selling multiple Company owned vehicles.

Previous wording

Other income. During the six months ended June 30, 2024, the Company recorded other income of $25,686 from an additional bank rebate related to the use of a vendor payment program. During the six months ended June 30, 2023, the Company recorded $126,210 of other income, primarily from the termination of the Woodlands office operating lease as of May 31, 2023.

Current wording

Other income. During the nine months ended September 30, 2024, the Company recorded other income of $25,686 from an additional bank rebate related to the use of a vendor payment program. During the nine months ended September 30, 2023, the Company recorded $126,210 of other income, primarily from the termination of the Woodlands office operating lease as of May 31, 2023.

Previous wording

Benefit from (Provision for) income taxes. The benefit from (provision for) income taxes changed from a benefit of $6.4 million for the three months ended June 30, 2023 to a provision of $(6.8) million for the three months ended June 30, 2024. The benefit from (provision for) income taxes was calculated using the annual effective tax rate method based on our estimated earnings and estimated state and federal income taxes due for 2024, taking into account all applicable tax rates and laws.

Current wording

Benefit from (Provision for) income taxes. The benefit from (provision for) income taxes changed from a benefit of $3.4 million for the three months ended September 30, 2023 to a provision of $10.1 million for the three months ended September 30, 2024. The benefit from (provision for) income taxes was calculated using the annual effective tax rate method based on our estimated earnings and estimated state and federal income taxes due for 2024, taking into account all applicable tax rates and laws.