RING ENERGY, INC.
For the period ended Jun 30, 2025. Filed Aug 6, 2025.
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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.
Jun 30, 2025 · Filed Aug 6, 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 2025-03-31; filed 2025-05-07.
0001628280-25-023254
Item 2. : Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-06.
0001628280-25-038401
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 68 previous paragraphs and 93 current paragraphs.
46 unchanged; 22 reworded; 13 added; 0 removed; 0 previous and 12 current paragraphs rearranged.
Tables are not compared: 10 previous and 15 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 (13)
Current report
Ceiling Test
Current report
We perform a ceiling test at the end of each reporting period to evaluate for potential non-cash impairments. Under the full cost method of accounting, the net book value of properties, less related deferred income taxes, may not exceed a calculated “ceiling,” which is defined as the estimated after-tax future net revenues from proved oil and natural gas properties, discounted at an annual rate of 10%. The discounted future net revenues are estimated using spot prices for oil and natural gas, based on the average price during the preceding twelve months. This average is calculated as an unweighted arithmetic mean of the first-day-of-the-month prices for each month within that period, except when changes are fixed and determinable by existing contracts. We anticipate a decrease in the twelve month average price over the next several months which will reasonably likely lead to a non-cash impairment. Estimating potential future non-cash impairments is complex due to numerous factors affecting the ceiling test calculation, including but not limited to future prices, operating costs, upward or downward reserve revisions, reserve additions, and tax attributes. The amount of any such potential non-cash impairment, if any, is not estimable at this time given the uncertainty of these factors.
Current report
Oil sales. Oil sales decreased approximately $16.5 million from $99.3 million to $82.8 million due to a price variance of $(23.0) million from a decrease in the average realized price per barrel from $80.09 to $62.69. This was offset by a volume variance of $6.5 million from an increase in sales volume from 1,239,731 barrels of oil to 1,320,508 barrels of oil. The increase in volume of 80,777 barrels of oil consisted of two components. An increase in volumes of 153,877 barrels was due to the wells acquired in the Lime Rock Acquisition (which closed at the end of March 2025), and a decrease of 73,100 was attributed to natural production declines from our legacy assets. The decreased average realized price per barrel was primarily a result of weaker market conditions.
Current report
Lease operating expenses. Our total lease operating expenses (“LOE”) increased from $19.3 million to $20.2 million and decreased on a per Boe basis from $10.72 to $10.45. 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 an 8% increase in production of 137,280 Boe as a result of the increased production and well count from the Lime Rock Acquisition as well as new wells drilled and completed in our development program. The primary cost driver for the period was an increase of $1.7 million in electricity costs. Other impacting factors included an increase of $0.1 million for environmental sustainability, offset by reductions of $0.5 million for supplies, tools, and materials, $0.1 million for workovers, $0.1 million for hot oil costs, and $0.1 million for chemical costs.
Current report
Gathering, transportation and processing costs. Our total gathering, transportation and processing costs (“GTP”) increased from $107,629 to $133,809 and increased on a per Boe basis from $0.06 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, one contract remains in place with a natural gas processing entity where point of control of gas dictates requiring the fees be recorded as an expense. The increase in GTP costs was primarily due to the higher natural gas Mcf and NGL barrels processed.
Current report
Ad valorem taxes. Our total ad valorem taxes increased from $1.3 million to $1.6 million and increased on a per Boe basis from $0.74 to $0.85. Of the $0.3 million increase in ad valorem taxes, $0.6 million was related to Andrews County tax estimates, primarily related to the Lime Rock acquisition. There was also an increase of $0.1 million for Ector County tax estimates. These were offset by a reduction of $(0.4) million for Yoakum County tax estimates.
Current report
Oil and natural gas production taxes. Oil and natural gas production taxes as a percentage of oil and natural gas sales were 3.66% for the three months ended June 30, 2024 and increased to 4.64% for the three months ended June 30, 2025. The tax in the three months ended June 30, 2024 included an accrual for refunds that had been filed with the state comptroller and therefore was less than the regular expected percentage of revenues.
Current report
Depreciation, depletion and amortization. Our depreciation, depletion and amortization increased from $24.7 million to $25.6 million, with $0.9 million of the increase from higher depletion. The increase in depletion was the result of a volume variance of $1.9 million due to an increase of 137,280 in Boe produced, offset by a price variance of $(1.0) million. driven by a lower depletion rate per Boe from higher reserves. Our average depreciation, depletion and amortization per Boe decreased from $13.72 per Boe to $13.19 per Boe.
Current report
Asset retirement obligation accretion. Our asset retirement obligation (“ARO”) accretion increased slightly from $352,184 to $382,251 due to additional ARO accretion associated with properties acquired in the Lime Rock Acquisition as well as new drilled and completed wells, offset by wells plugged and abandoned and sold.
Current report
General and administrative expense. General and administrative ("G&A") expense decreased from $7.7 million to $7.1 million. The $0.6 million cost decrease was primarily due to a decrease of $0.7 million in share-based compensation costs. Other cost reductions included a decrease of $0.3 million in legal fees, $0.2 million in additional costs capitalized for geological and geophysical ("G&G"), $0.1 million in reduced costs for environmental sustainablity, and a $0.1 million reduction in insurance costs. These cost reductions were offset by an increase of $0.8 million in salaries and bonuses.
Current report
Interest expense. Interest expense increased from $10.9 million to $11.8 million primarily due to additional deferred financing costs recognized from the credit agreement modification which was completed in June 2025. Also impacting the increase in interest expense was the deferred cash payment accretion related to the Lime Rock acquisition which closed at the end of March 2025. Although the Company had higher amounts outstanding on its Credit Facility, with a weighted average daily debt of approximately $456.3 million during the second quarter of 2025 compared to approximately $420.3 million during the second quarter of 2024, the interest on the revolving line of credit decreased slightly due to a meaningful reduction in interest rates, with a weighted average annual interest rate of 8.5% in the second quarter of 2025 compared to 9.3% in the second quarter of 2024.
Current report
Gain (loss) on disposal of assets. The Company's gain on disposal of assets increased by $103,955 from $51,338 during the three months ended June 30, 2024 to $155,293 during the three months ended June 30, 2025, with $89,716 of the increase from the sale of leased vehicles, and the remainder of $14,239 due to selling owned vehicles in the prior period.
Current report
Other income. During the three months ended June 30, 2025, the Company recorded $150,770 of other income from a pipeline easement lease.
Reworded paragraphs (22)
Previous wording
The table below sets forth our drilling and completion activities for the three months ended March 31, 2025.
Current wording
The table below sets forth our drilling and completion activities for the six months ended June 30, 2025.
Previous wording
$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 wording
Natural gas liquids sales. NGL sales decreased approximately $0.8 million from $2.8 million to $2.1 million. NGL sales volumes for the three months ended June 30, 2025 were 333,374 barrels of NGLs compared to 304,448 barrels of NGLs for the comparable period in 2024. Of the increase in volume of 28,926 barrels, 20,603 barrels were attributable to wells acquired and new wells drilled in the acreage acquired in the Lime Rock Acquisition, with the remaining 8,323 barrels attributable to our legacy assets due to increased NGL yields and increased gas production. The average realized price per barrel of NGLs was $6.19 for the three months ended June 30, 2025 compared to $9.27 for the three months ended June 30, 2024, due to weaker market conditions. Specifically, the gross realized price per NGL barrel was $19.02 and the average fees per barrel was $(12.83), resulting in a net realized price of $6.19 for the three months ended June 30, 2025, while the gross realized price per NGL barrel was $19.49 and the average fees per barrel was $(10.22), resulting in a net realized price of $9.27 for the same period in 2024.
Previous wording
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 wording
Oil sales. Oil sales decreased approximately $32.3 million from $191.6 million to $159.3 million, with a price variance of $(28.3) million from a decrease in the average realized price per barrel from $77.93 to $66.17 as well as a volume variance of $(4.0) million due to a decrease in sales volume from 2,458,568 barrels of oil to 2,407,202 barrels of oil. The decrease in volume of 51,366 barrels consisted of two components. An increase in volumes of 153,877 was due to the Lime Rock Acquisition, and a decrease of 205,243 was attributed to natural production declines in the legacy assets. The Company's drilling and completion spend was 39% lower in the months that affected production for the first half of 2025 compared to the same months that affected production in the first half of 2024. This resulted in less offsets to declining production. The decreased average realized price per barrel was primarily the result of weaker market conditions.
Previous 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.
Current wording
Natural gas sales. Natural gas sales increased approximately $1.2 million from a negative $3.8 million to a negative $2.5 million, with a price variance of $1.6 million with a volume variance making up the remaining variance. The natural gas sales volume increased from 3,034,854 Mcf to 3,319,004 Mcf, and the average realized price per Mcf increased from $(1.25) to $(0.77). Of the increase in volume of 284,150 Mcf, an increase of 98,282 was due to the Lime Rock Acquisition, with the remaining increase of 185,868 from the legacy assets. The price increase was driven by more favorable 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, 2025, gross revenues were $1.35 per Mcf and fees were $(2.12) per Mcf, compared to gross revenues of $0.42 per Mcf and fees of $(1.67) per Mcf for the six months ended June 30, 2024. This resulted in a net realized price of $(0.77) for the six months ended June 30, 2025 compared to $(1.25) per Mcf for the six months ended June 30, 2024.
Previous 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
Current wording
Natural gas liquids sales. NGL sales slightly decreased by approximately $0.8 million from $5.8 million to $5.0 million. NGL sales volumes for the six months ended June 30, 2025 were 632,740 barrels of NGLs compared to 568,250 barrels of NGLs for the comparable period in 2024. Of the increase in volume of 64,490 barrels, 20,603 was due to the Lime Rock Acquisition while the remaining 43,887 was from legacy assets. The average realized price per barrel of NGLs decreased by $2.46 to $7.83 for the six months ended June 30, 2025 compared to $10.29 for the six months ended June 30, 2024, attributable to weaker market conditions. Specifically, the gross realized price per NGL barrel was $20.74 and the average fees per barrel was $(12.91), resulting in a net realized price of $7.83 for the six months ended June 30, 2025, while the gross realized price per NGL barrel was $20.37 and the average fees per barrel was $(10.08), resulting in a net realized price of $10.29 for the same period in 2024.
Previous wording
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 wording
Lease operating expenses. Our total LOE increased from $37.7 million to $39.9 million and LOE per Boe increased from $10.66 to $11.11. Total LOE increased in accordance with a 2% increase in production of 60,482 Boe, as a result of the additional production and well count from the Lime Rock Acquisition. The primary cost driver for the period was an increase in electricity costs of $2.9 million. Other cost increases included environmental sustainability of $0.4 million, and contract and lease services of $0.3 million. This was offset by reductions in LOE costs from workovers of $0.9 million, supplies, tools, and materials of $0.3 million, and hot oil costs of $0.2 million.
Previous wording
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 wording
Gathering, transportation and processing costs. Our total GTP increased $63,738 from $273,683 to $337,421 and increased on a per Boe basis from $0.08 to $0.09. 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.
Previous 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.
Current wording
Ad valorem taxes. Our total ad valorem taxes decreased from $3.5 million to $3.2 million and decreased on a per Boe basis from $0.99 to $0.89. Of the approximate $0.3 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 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.
Current wording
Oil and natural gas production taxes. Oil and natural gas production taxes as a percentage of oil and natural gas sales were 4.16% for the six months ended June 30, 2024 and increased to 4.59% for the six months ended June 30, 2025. Overall, the percentage was consistent period over period.
Previous 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.
Current wording
Depreciation, depletion and amortization. Our depreciation, depletion and amortization decreased approximately $0.3 million from $48.5 million to $48.2 million, with substantially all of the reduction from lower depletion. The decrease in depletion was primarily due to a a price variance of $(1.1) million, from a lower depletion expense per Boe, due to an increase in the amortization base (Boe). Further, depletion had a volume variance of $0.8 million from a increase of 60,482 in Boe produced. Our average depreciation, depletion and amortization per Boe decreased from $13.73 per Boe to $13.41 per Boe.
Previous 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.
Current wording
Asset retirement obligation accretion. Our ARO accretion increased by $5,782 from $703,018 to $708,800 primarily as a result of newly acquired and drilled wells, offset by those plugged and abandoned and sold.
Previous 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.
Current wording
General and administrative expense. G&A expense increased approximately $0.6 million from $15.2 million to $15.8 million, with the $0.6 million cost increase primarily due to an increase of $2.3 million in salaries and bonuses (including impacts from severance paid), offset by reductions of $0.8 million in stock based compensation, $0.4 million in legal fees, $0.2 million in environmental sustainability, $0.2 million in credit loss expense, $0.1 million in additional costs capitalized for G&G, and a reduction of $0.1 million in other professional fees.
Previous wording
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 wording
Interest income. Interest income decreased $63,761 from $223,477 to $159,716, from a reduction of $71,128 from depositing excess cash balances in bank sweep accounts, offset by an increase of $7,367 in severance tax interest payments.
Previous 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.
Current wording
Interest expense. Interest expense decreased by approximately $1.2 million from $22.4 million to $21.3 million as a result of lower interest rates, with a weighted average annual interest rate of 8.4% during the six months ended June 30, 2025 compared to 9.3% during the six months ended June 30, 2024. Slightly offsetting this impact was higher amounts outstanding on our Credit Facility, with a weighted average daily debt of approximately $425.0 million during the six months ended June 30, 2025 compared to approximately $424.6 million during the six months ended June 30, 2024. Further offsetting was the increase in deferred financing costs recognized from the credit agreement modification.
Previous 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.
Current wording
Gain (loss) on derivative contracts. We recorded a gain on derivative contracts of $13.7 million for the six months ended June 30, 2025 and a loss on derivative contracts of $20.8 million for the six months ended June 30, 2024. For the derivative contract settlements, we recorded a realized gain of $0.1 million for the six months ended June 30, 2025 and a realized loss of $4.1 million for the six months ended June 30, 2024. The change of $4.2 million in the realized derivative gain (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 $13.6 million for the six months ended June 30, 2025 and an unrealized loss of $16.8 million for the six months ended June 30, 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
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 wording
Gain (loss) on disposal of assets. The Company's gain on disposal of assets increased by $190,210 from $89,693 to $279,903 with $182,945 of the increase from the sale of leased vehicles as well as $7,265 from more favorable sales of Company owned vehicles.
Previous wording
Other income. Other income decreased $16,744 from $25,686 to $8,942 from the Company's charge card rebate program.
Current wording
Other income. Other income increased $134,026 from $25,686 to $159,712 from due to an increase in income of $150,770 from a pipeline easement lease, offset by a reduction of $16,744 in income from the Company's charge card rebate program.
Previous wording
Benefit from (Provision for) Income Taxes for the Three Months Ended March 31, 2025 and 2024
Current wording
Provision for Income Taxes: for the Three Months Ended June 30, 2025 and 2024
Previous 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.
Current wording
Provision for income taxes. The provision for income taxes changed from a provision of $6.8 million for the three months ended June 30, 2024 to a provision of $6.1 million for the three months ended June 30, 2025. The 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 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.
Current wording
As of June 30, 2025, we had cash on hand of $0.0 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 six months ended June 30, 2025 of $61.7 million, compared to net cash provided by operating activities of $95.8 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 $121.0 million for the six months ended June 30, 2025, compared to net cash used in investing activities of $76.4 million for the same period in 2024, driven by the payments made for the Lime Rock Acquisition in the first half of 2025, with no comparable payments made in the first half of 2024. This increase in acquisition payments was offset by a reduction in payments to develop oil and natural gas properties. Net cash provided by financing activities was $57.4 million for the six months ended June 30, 2025 and net cash used in financing activities was $18.6 million for the six months ended June 30, 2024, during which time $63 million was the net borrowing and $18.0 million was the net paydown of principal on our Credit Facility, respectively.
Previous 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.
Current wording
As of June 30, 2025, $448 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 June 2029. The borrowing base under our Credit Facility is $585 million. The borrowing base is redetermined semi-annually 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.
Previous wording
The use of derivative transactions involves the risk that the counterparties, which generally are financial institutions, will be unable to meet the financial terms of such transactions. At March 31, 2025, 100% of our derivative instruments are with lenders under our Credit Facility.
Current wording
The use of derivative transactions involves the risk that the counterparties, which generally are financial institutions, will be unable to meet the financial terms of such transactions. At June 30, 2025, 86% of our derivative instruments were with lenders under our Credit Facility.
Rearranged current paragraphs (12)
Current report — wording carried from elsewhere
In the second quarter of 2025, in the Central Basin Platform in Andrews County, the Company drilled and completed one 1-mile horizontal well, with a working interest of 100%. Also in the Central Basin Platform in Crane County, the Company drilled and completed one vertical well, with a working interest of 100%.
Current report — wording carried from elsewhere
Natural gas sales. Natural gas sales increased approximately $0.7 million from a negative $3.0 million to a negative $2.2 million, with a price variance of $1.1 million and with a volume variance making up the remaining difference. Our natural gas sales volumes increased from 1,538,347 Mcf to 1,703,808 Mcf, and the average realized price per Mcf increased from $(1.93) to $(1.31). Of the increase in volume of 165,461 Mcf, an increase of 98,282 Mcf was from the Lime Rock Acquisition and 67,179 Mcf was attributable to legacy assets. The price increase was driven by better 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, 2025, gross revenues were $0.87 per Mcf and fees were $(2.18) per Mcf, compared to gross revenues of $(0.34) per Mcf and fees of $(1.59) per Mcf for the three months ended June 30, 2024. This resulted in a net realized price of $(1.31) per Mcf for the three months ended June 30, 2025 compared to $(1.93) per Mcf for the three months ended June 30, 2024.
Current report — wording carried from elsewhere
Oil, Natural Gas, and Natural Gas Liquids Revenues for the Six Months Ended June 30, 2025 and 2024
Current report — wording carried from elsewhere
(1) Boe is calculated using six Mcf of natural gas as the equivalent of one barrel of oil.
Current report — wording carried from elsewhere
Production Costs for the Six Months Ended June 30, 2025 and 2024
Current report — wording carried from elsewhere
Other Costs and Operating Expenses for the Six Months Ended June 30, 2025 and 2024
Current report — wording carried from elsewhere
Operating lease expense. Our operating lease expense costs were the same period over period.
Current report — wording carried from elsewhere
Interest income. Interest income decreased from $144,933 to $69,658 due to lower interest earned from depositing excess cash balances in bank sweep accounts.
Current report — wording carried from elsewhere
Gain (loss) on derivative contracts. We recorded a gain on derivative contracts of $14.6 million for the three months ended June 30, 2025 compared to a loss on derivative contracts of $1.8 million for the three months ended June 30, 2024. For the derivative contract settlements, we recorded a realized gain of $0.7 million for the three months ended June 30, 2025 and a realized loss of $2.6 million for the three months ended June 30, 2024. The change of $3.3 million in the realized gain (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 $14.0 million for the three months ended June 30, 2025 and an unrealized gain of $0.8 million for the three months ended June 30, 2024. The change in position was primarily due to the changes in crude oil futures prices.
Current report — wording carried from elsewhere
Other Income (Expense) for the Six Months Ended June 30, 2025 and 2024
Current report — wording carried from elsewhere
Provision for Income Taxes: for the Six Months Ended June 30, 2025 and 2024
Current report — wording carried from elsewhere
Provision for income taxes. The provision for income taxes changed from a provision of $8.5 million for the six months ended June 30, 2024 to a provision of $9.1 million for the six months ended June 30, 2025. The 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.