RING ENERGY, INC.
For the period ended Mar 31, 2025. Filed May 7, 2025.
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.
Mar 31, 2025 · Filed May 7, 2025
REI$1.11-0.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-06.
0001628280-24-045791
Item 2. : Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-07.
0001628280-25-023254
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 93 previous paragraphs and 68 current paragraphs.
32 unchanged; 26 reworded; 10 added; 25 removed; 10 previous and 0 current paragraphs rearranged.
Tables are not compared: 14 previous and 10 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
Lime Rock Acquisition
Current report
On March 31, 2025, the Company, as buyer, and Lime Rock Resources IV-A, L.P. (“LRRA”), and Lime Rock Resources IV-C, L.P. (“LRRC” and with LRRA, “Lime Rock”), as seller, consummated the transactions contemplated in that certain Purchase and Sale Agreement dated February 25, 2025, by and among the Company, LRRA and LRRC (the “Purchase Agreement”) that was previously reported on Form 8-K filed on February 28, 2025 with the Securities and Exchange Commission (“SEC”). At the closing of the Purchase Agreement, among other things, the Company acquired (the “Lime Rock Acquisition”) interests in oil and gas leases and related property of Lime Rock located in Andrews County, Texas, for an aggregate purchase price (the “Purchase Price”) of approximately $68.6 million in cash at closing (the “Closing Cash Consideration”), net of preliminary and customary purchase price adjustments and subject to final post-closing settlement between the Company and Lime Rock, $10.0 million due on or about December 31, 2025, and an aggregate of 6,452,879 shares of common stock of the Company, net of preliminary and customary purchase price adjustments. At the closing of the Lime Rock Acquisition, $5.0 million of the Closing Cash Consideration was retained in an escrow account to support Lime Rock’s indemnity obligations under the Purchase Agreement.
Current report
Oil sales. Oil sales decreased approximately $15.8 million from $92.3 million to $76.5 million, with a volume variance of $(10.0) million due to an decrease in sales volume from 1,218,837 barrels of oil to 1,086,694 barrels of oil, as well as a price variance of $(5.8) million from a decrease in the average realized price per barrel from $75.72 to $70.40. Of the decrease in volume of (132,143) barrels, 62% was related to a reduction in production in the Northwest Shelf and 38% was related to a reduction in production in the Central Basin Platform. The Company's drilling and completion activities in the months preceding the first quarter of 2024 were higher than in the months preceding the first quarter of 2025, which resulted in less offsets to declining production. The decreased average realized price per barrel was primarily the result of weaker market conditions.
Current report
$9.65 for the three months ended March 31, 2025, while the gross realized price per NGL barrel was $21.40 and the average fees per barrel was $(9.93), resulting in a net realized price of $11.47 for the same period in 2024.
Current report
Lease operating expenses. Our total LOE increased from $18.4 million to $19.7 million and LOE per Boe increased from $10.60 to $11.89. Total LOE increased despite a 4% decrease in production of 76,798 Boe primarily due to an increase in electricity costs of $1.2 million. Other cost increases included contract services of $0.6 million, environmental costs of $0.3 million, equipment rental of $0.2 million, and chemical costs of $0.2 million. This was offset by reductions in LOE costs from workovers of $0.8 million and salaries of $0.4 million.
Current report
Gathering, transportation and processing costs. Our total GTP increased $37,558 from $166,054 to $203,612 and increased on a per Boe basis from $0.10 to $0.12. The increase in GTP costs was due to the higher natural gas Mcf and NGL barrels processed as well as a prior period adjustment for fee exempt owners.
Current report
Interest income. Interest income increased $11,514 from $78,544 to $90,058, from $7,367 in severance tax interest payments and $4,147 from depositing excess cash balances in bank sweep accounts.
Current report
Gain (loss) on disposal of assets. The Company's gain on disposal of assets increased $86,255 from $38,355 to $124,610 with $93,229 of the increase from the sale of leased vehicles offset by a reduction of $6,974 from selling owned vehicles.
Current report
Other income. Other income decreased $16,744 from $25,686 to $8,942 from the Company's charge card rebate program.
Current report
(2) The gas basis swap hedges are calculated as the Henry Hub natural gas price less the fixed amount specified as the weighted average spread price above.
Removed paragraphs (25)
Previous report
In the first quarter of 2024, in the Northwest Shelf, the Company drilled and completed two 1-mile horizontal wells (one with a working interest of 99.5% and the other with a working interest of 100%). In the Central Basin Platform, the Company drilled and completed nine wells, all with a working interest of 100%. Specifically, in our Andrews County acreage the Company drilled and completed three 1-mile horizontal wells, in the Ector County acreage the Company drilled three vertical wells, and in the Crane County acreage the Company drilled and completed three vertical wells. Additionally, within the Central Basin Platform, the Company drilled and completed one salt water disposal ("SWD") well in Crane County.
Previous report
In the second quarter of 2024, in the Central Basin Platform, the Company drilled and completed eleven wells, all with a working interest of 100%. Specifically, in our Andrews County acreage the Company drilled and completed five 1-mile horizontal wells, in the Ector County acreage the Company drilled three vertical wells, and in the Crane County acreage the Company drilled and completed three vertical wells.
Previous report
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 report
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 report
(2) Not meaningful.
Previous report
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 report
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 report
(1) Not meaningful.
Previous report
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 report
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 report
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 report
(1) Not meaningful.
Previous report
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 report
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 report
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 report
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 report
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 report
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 report
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 report
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 report
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 report
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 report
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 report
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 report
During the remainder of 2024, we will remain focused on maximizing cash flow, reducing our debt level, and maximizing our liquidity.
Reworded paragraphs (26)
Previous wording
Ring Energy, Inc. (the "Company," "Ring," "we," "us," "our" and similar terms) is a growth oriented independent exploration and production company based in The Woodlands, Texas engaged in oil and natural gas development, production, acquisition, and exploration activities currently focused in the Permian Basin of Texas. Our primary drilling operations target the oil and liquids rich producing formations in the Northwest Shelf and the Central Basin Platform, both of which are part of the Permian Basin.
Current wording
Ring Energy, Inc. (the "Company," "Ring," "we," "us," "our" and similar terms) is a growth oriented independent oil and natural gas exploration and production company based in The Woodlands, Texas engaged in oil and natural gas development, production, acquisition, and exploration activities currently focused in the Permian Basin in Texas. Our primary drilling operations target the oil and liquids rich producing formations in the Northwest Shelf and the Central Basin Platform, both of which are part of the Permian Basin.
Previous wording
The Company is focused on balancing reduction of long-term debt and further developing our oil and gas properties to maintain or grow our annual production. We intend to achieve both through proper allocation of cash flow generated by our operations and potentially through the sale of non-core assets. We intend to continue evaluating potential transactions to acquire strategic producing assets with attractive acreage positions that can provide competitive returns for our shareholders.
Current wording
The Company is focused on balancing the need to reduce long-term debt and further developing our oil and gas properties to maintain or grow our annual production. We intend to achieve both through proper allocation of cash flow generated by our operations and potentially through the sale of non-core assets. We intend to continue evaluating potential transactions to acquire strategic producing assets with attractive acreage positions that can provide competitive returns for our stockholders.
Previous wording
•Growing production and reserves by developing our oil-rich resource base through conventional vertical and horizontal drilling. In an effort to maximize its value and resources potential, Ring intends to drill and develop its acreage base in both its Northwest Shelf and Central Basin Platform assets, allowing Ring to execute on its plan of operating within its generated cash flow.
Current wording
•Growing production and reserves by developing our oil-rich resource base through conventional and horizontal drilling. In an effort to maximize its value and resources potential, Ring intends to drill and develop its acreage base in both the Northwest Shelf and Central Basin Platform, allowing Ring to execute on its plan of operating within its generated cash flow.
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 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.
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 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.
Previous wording
•Employ industry leading drilling and completion techniques. Ring’s executive team utilizes new and innovative technological advancements for completion optimization, comprehensive geological evaluation, and reservoir engineering analysis to generate value and to build future development opportunities. These technological advancements have led to a low-cost structure that helps maximize returns generated by our drilling programs.
Current wording
•Employ industry leading drilling and completion techniques. Ring’s executive team intends to utilize new and innovative technological advancements for completion optimization, comprehensive geological evaluation, and reservoir engineering analysis to generate value and to build future development opportunities. These technological advancements have led to a low-cost structure that helps maximize the returns generated by our drilling programs.
Previous wording
•Pursue strategic acquisitions with attractive upside potential. Ring has a history of acquiring leasehold positions that it believes to have additional resource potential that meet its targeted returns on invested capital and are comparable to its existing inventory of drilling locations. We pursue an acquisition strategy designed to increase reserves at attractive finding costs and complement our existing core properties. Management intends to continue to pursue strategic acquisitions and structure them financially, to improve balance sheet metrics and be accretive to income metrics. Our executive team, with its extensive experience in the Permian Basin, has many relationships with operators and service providers in the region. Ring believes that leveraging the relationships of its management and board of directors is a competitive advantage in identifying potential acquisition targets.
Current wording
•Pursue strategic acquisitions with attractive upside potential. Ring has a history of acquiring leasehold positions that it believes to have additional resource potential that meet its targeted returns on invested capital and comparable to its existing inventory of drilling locations. We pursue an acquisition strategy designed to increase reserves at attractive finding costs and complement existing core properties. Management intends to continue to pursue strategic acquisitions and structure the potential transactions financially, so they improve our balance sheet metrics and are accretive to stockholders. Our executive team, with its extensive experience in the Permian Basin, has many relationships with operators and service providers in the region.
Previous wording
In the third quarter of 2024, in the Northwest Shelf in Yoakum County, the Company drilled and completed two 1-mile horizontal wells, each with a working interest of 100%, and one 1.5-mile horizontal well with a working interest of approximately 94.2%. Meanwhile, in the Central Basin Platform, the Company drilled and completed six vertical wells, all with a working interest of 100%, three in Ector County and three in Crane County. Finally, in the Central Basin Platform in Andrews County, the Company drilled four 1-mile horizontal wells, all with a working interest of 100%. Two of these wells were completed. The remaining two wells will be completed in the fourth quarter of 2024.
Current wording
In the first quarter of 2025, in the Northwest Shelf in Yoakum County, the Company drilled and completed three 1-mile horizontal wells and one 1.25-mile horizontal well, all with a working interest of 75%. In the Central Basin Platform in Ector County, the Company drilled and completed three vertical wells, all with a working interest of 100%.
Previous wording
The table below sets forth our drilling and completion activities for the nine months ended September 30, 2024.
Current wording
The table below sets forth our drilling and completion activities for the three months ended March 31, 2025.
Previous wording
(1)First quarter total does not include the SWD well drilled and completed in the Central Basin Platform.
Current wording
(1)Total does not include the SWD well(s) drilled and completed in the [ ].
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.
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. 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.
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 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.
Current wording
The Permian Basin has been experiencing a lack of sufficient pipeline transportation that is connected to markets that are purchasing the natural gas produced. This has resulted in negative natural gas prices at times, 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 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.
Current wording
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, including tariffs, trade wars, and supply chain disruptions. 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
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.
Current wording
Natural gas sales. Natural gas sales increased approximately $0.5 million from a negative $0.8 million to a negative $0.3 million, with a price variance of $0.6 million with a volume variance making up the remaining variance. The natural gas sales volume increased from 1,496,507 Mcf to 1,615,196 Mcf, and the average realized price per Mcf increased from $(0.55) to $(0.19). Of the increase in volume of 118,689 Mcf, 129% was from increased production in the Northwest Shelf, with a reduction of 29% from lower production in the Central Basin Platform. The price increase was driven by higher market conditions. The realized revenue pricing includes the impact of gas plant processing fees that were netted from revenue. For the three months ended March 31, 2025, gross revenues were $1.86 per Mcf and fees were $(2.05) per Mcf, compared to gross revenues of $1.19 per Mcf and fees of $(1.74) per Mcf for the three months ended March 31, 2024. This resulted in a net realized price of $(0.19) for the three months ended March 31, 2025 compared to $(0.55) per Mcf for the three months ended March 31, 2024.
Previous 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.
Current wording
Natural gas liquids sales. NGL sales slightly decreased by $0.1 million from $3.0 million to $2.9 million. NGL sales volumes for the three months ended March 31, 2025 were 299,366 barrels of NGLs compared to 263,802 barrels of NGLs for the comparable period in 2024. Of the increase in volume of 35,564 barrels, 128% was due to increased production in the Northwest Shelf while a reduction of 28% was due to lower production in the Central Basin Platform. The average realized price per barrel of NGLs decreased by $1.82 to $9.65 for the three months ended March 31, 2025 compared to $11.47 for the three months ended March 31, 2024, attributable to weaker market conditions. Specifically, the gross realized price per NGL barrel was $22.64 and the average fees per barrel was $(12.99), resulting in a net realized price of
Previous 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.
Current wording
Ad valorem taxes. Our total ad valorem taxes decreased from $2.1 million to $1.5 million and decreased on a per Boe basis from $1.24 to $0.93. Of the approximate $0.6 million decrease in ad valorem taxes, $0.5 million was from the reversal of the 2024 methane tax accrual for the waste emissions charge ("WEC"), which was repealed by Congress on March 14, 2025.
Previous wording
Oil and natural gas production taxes. Oil and natural gas production taxes as a percentage of oil and natural gas sales were 5.07% 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.
Current wording
Oil and natural gas production taxes. Oil and natural gas production taxes as a percentage of oil and natural gas sales were 4.69% for the three months ended March 31, 2024 and decreased to 4.53% for the three months ended March 31, 2025. Overall, the percentage was consistent period over period.
Previous 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.
Current wording
Depreciation, depletion and amortization. Our depreciation, depletion and amortization decreased approximately $1.2 million from $23.8 million to $22.6 million, with $1.2 million of the reduction from lower depletion. The decrease in depletion was primarily due to a volume variance of $(1.1) million from a decrease of 76,798 in Boe produced. Further, depletion had a price variance of $(0.1) million, from a lower depletion expense per Boe, due to an increase in the amortization base (Boe). Our average depreciation, depletion and amortization per Boe decreased from $13.74 per Boe to $13.66 per Boe.
Previous 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.
Current wording
Asset retirement obligation accretion. Our ARO accretion decreased by $24,285 from $350,834 to $326,549 primarily as a result of wells plugged and abandoned and sold, offset by the additional ARO accretion associated with newly drilled wells.
Previous 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.
Current wording
Operating lease expense. Our operating lease expense costs were the same period over period.
Previous 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.
Current wording
General and administrative expense. G&A expense increased approximately $1.2 million from $7.5 million to $8.6 million, with the $1.2 million cost increase primarily due to an increase of $0.8 million in bonus compensation and $0.7 million in salaries and wages (including impacts from severance paid), offset by reductions of $0.1 million in credit loss expense, $0.1 million in legal fees, and $0.1 million in other professional fees.
Previous 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.
Current wording
Interest expense. Interest expense decreased by $2.0 million from $11.5 million to $9.5 million due to the result of lower interest rates, with a weighted average annual interest rate of 8.3% during the three months ended March 31, 2025 compared to 9.3% during the three months ended March 31, 2024. Further, we had lower amounts outstanding on our Credit Facility, with a weighted average daily debt of approximately $393.3 million during the three months ended March 31, 2025 compared to approximately $428.8 million during the three months ended March 31, 2024.
Previous 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.
Current wording
Gain (loss) on derivative contracts. We recorded a loss on derivative contracts of $0.9 million for the three months ended March 31, 2025 and a loss on derivative contracts of $19.0 million for the three months ended March 31, 2024. For the derivative contract settlements, we recorded a realized loss of $0.6 million for the three months ended March 31, 2025 and a realized loss of $1.5 million for the three months ended March 31, 2024. The decrease of $0.9 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 loss of $0.4 million for the three months ended March 31, 2025 and an unrealized loss of $17.6 million for the three months ended March 31, 2024. This positive change in unrealized derivatives primarily was due to the changes in crude oil futures prices on derivative contracts in the Company's portfolio.
Previous 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.
Current wording
Benefit from (Provision for) income taxes. The benefit from (provision for) income taxes changed from a provision of $1.7 million for the three months ended March 31, 2024 to a provision of $3.0 million for the three months ended March 31, 2025. 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 2025, taking into account all applicable tax rates and laws.
Previous wording
As of September 30, 2024, we had cash on hand of $0.0 million, compared to $0.3 million as of December 31, 2023. We strive to keep our cash balance as low as possible to minimize our outstanding debt and associated interest. At certain times we reflect a zero book balance while utilizing the float on outstanding checks. We had net cash provided by operating activities for the nine months ended September 30, 2024 of $147.1 million, compared to net cash provided by operating activities of $142.4 million for the same period in 2023, which was primarily due to higher year to date revenues, which resulted in more cash received from purchasers. We had net cash used in investing activities of $113.2 million for the nine months ended September 30, 2024, compared to net cash used in investing activities of $170.9 million for the same period in 2023, driven by the deferred cash payment made for the Stronghold Acquisition in the first quarter of 2023 as well as the payment for the Founders Acquisition in the third quarter of 2023, with no comparable payments made to date in 2024. Net cash used in financing activities was $34.3 million for the nine months ended September 30, 2024 during which time $33 million was the net paydown of principal on our Credit Facility.
Current wording
As of March 31, 2025, we had cash on hand of $1.1 million, compared to $1.9 million as of December 31, 2024. We strive to keep our cash balance as low as possible to minimize our outstanding debt and associated interest. At certain times we reflect a zero book balance while utilizing the float on outstanding checks. We had net cash provided by operating activities for the three months ended March 31, 2025 of $28.4 million, compared to net cash provided by operating activities of $45.2 million for the same period in 2024, which was primarily due to lower year to date revenues, which resulted in less cash received from purchasers. We had net cash used in investing activities of $102.6 million for the three months ended March 31, 2025, compared to net cash used in investing activities of $39.5 million for the same period in 2024, driven by the payments made for the Lime Rock Acquisition in the first quarter of 2025, with no comparable payments made in the first quarter of 2024. Net cash provided by financing activities was $73.5 million for the three months ended March 31, 2025 and net cash used in financing activities was $4.6 million for the three months ended March 31, 2024, during which time $75 million was the net borrowing and $3.0 million was the net paydown of principal on our Credit Facility, respectively.
Previous wording
We will continue to focus on maximizing cash flow in 2024 through a combination of cost monitoring and prudent capital allocation, which includes prioritizing our capital to projects we believe will provide high rates of return in the current commodity price environment. We will continue our pursuit of acquisitions and business combinations, seeking opportunities that we believe will provide high margin properties with attractive returns at current commodity prices.
Current wording
We will continue to focus on maximizing cash flow in 2025 through a combination of cost monitoring and prudent capital allocation, which includes prioritizing our capital to projects we believe will provide high rates of return in the current commodity price environment. We will continue our pursuit of acquisitions and business combinations, seeking opportunities that we believe will provide high margin properties with attractive returns at current commodity prices, ultimately pushing to reduce our debt level and maximize our liquidity.
Previous wording
As of September 30, 2024, $392 million was outstanding on our Credit Facility and we were in compliance with all of the covenants under the Credit Facility. The Credit Facility matures in August 2026. The borrowing base under our Credit Facility is $600 million. The borrowing base is redetermined semi-annually on each May and November. See "NOTE 8 — REVOLVING LINE OF CREDIT" in the Notes to the condensed financial statements for more information on our Credit Facility.
Current wording
As of March 31, 2025, $460 million was outstanding on our Credit Facility and we were in compliance with all of the covenants under the Credit Facility. The Credit Facility matures in August 2026. The borrowing base under our Credit Facility is $600 million. The borrowing base is redetermined semi-annually on each May and November. See "NOTE 8 — REVOLVING LINE OF CREDIT" in the Notes to the condensed financial statements for more information on our Credit Facility.
Rearranged previous paragraphs (10)
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
Oil, Natural Gas, and Natural Gas Liquids Revenues for the Nine Months Ended September 30, 2024 and 2023
Previous report — wording carried elsewhere
(1) Boe is calculated using six Mcf of natural gas as the equivalent of one barrel of oil.
Previous report — wording carried elsewhere
Production Costs for the Nine Months Ended September 30, 2024 and 2023
Previous report — wording carried elsewhere
Other Costs and Operating Expenses for the Nine Months Ended September 30, 2024 and 2023
Previous report — wording carried elsewhere
Other Income (Expense) for the Nine Months Ended September 30, 2024 and 2023
Previous report — wording carried elsewhere
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 report — wording carried elsewhere
2024 and an unrealized loss of $20.7 million for the nine months ended September 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.
Previous report — wording carried elsewhere
Benefit from (Provision for) Income Taxes for the Nine Months Ended September 30, 2024 and 2023
Previous report — wording carried elsewhere
Benefit from (Provision for) income taxes. The benefit from (provision for) income taxes changed from a benefit of $7.7 million for the nine months ended September 30, 2023 to a provision of $18.6 million for the nine 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.