SANDRIDGE ENERGY INC
For the period ended Dec 31, 2025. Filed Mar 5, 2026.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 5, 2026
SD$12.49-1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-11.
0001628280-25-012086
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-05.
0001628280-26-015318
Item 7. 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 91 previous paragraphs and 84 current paragraphs.
41 unchanged; 31 reworded; 12 added; 18 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 12 previous and 12 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 (12)
Current report
•On August 5, 2025, the Board approved a dividend reinvestment plan (the “Dividend Reinvestment Plan”), pursuant to which the shareholders of the Company may, at their election, reinvest any dividends declared by the Board. During 2025, we issued 92,733 shares of common stock in lieu of cash dividends under the Dividend Reinvestment Plan.
Current report
•On July 18, 2025, the Board increased its size from five members to six members and appointed Mr. Brett Icahn to serve as a member of the Board, effective as of August 1, 2025. Mr. Icahn's current term as a member of the Board will run until the 2026 annual meeting of stockholders.
Current report
•Under our ongoing one-rig Cherokee development program we drilled seven operated wells, completed six operated wells during the year and turned six wells to sales during 2025.
Current report
•We paid cash dividends to stockholders totaling $15.9 million or $0.46 per share in 2025, excluding stockholders who elected to take shares in lieu of cash under the Dividend Reinvestment Plan.
Current report
•For the year ended December 31, 2025, we repurchased 595,635 shares of common stock for $6.4 million with a weighted average price of $10.72, under our share repurchase program.
Current report
Consolidated revenues are presented in the table below (in thousands):
Current report
Oil, natural gas and NGL revenues increased during 2025 primarily due to new production volumes from our Cherokee play development program and higher natural gas price realizations partially offset by lower oil and NGL price realizations.
Current report
Operating expenses consisted of the following (in thousands):
Current report
Lease operating expenses decreased in total and per Boe versus the same period in 2024 primarily due to $4.3 million of out of period corrections which are non-recurring, non-cash, adjustments of operating accruals dating as far back as the Company’s emergence from bankruptcy (see “Note 1—Summary of Significant Accounting Policies” to the accompanying consolidated financial statements included in Item 8 of this Form 10-K for further information), of which $2.1 million and $2.2 million were recorded in the second and fourth quarter of 2025, respectively. The removal of the operating accruals was partially offset by an increase in water hauling costs associated with increased activity from our 2025 development program.
Current report
Production, ad valorem, and other taxes increased due to higher average commodity prices, sales volumes, and related revenues. The increase in sales volumes was primarily the result of our one rig development program in the Cherokee Play of the Mid-Con. Production, ad valorem, and other taxes per Boe increased primarily due to higher average commodity prices.
Current report
Other operating expenses consisted of the following (in thousands):
Current report
The increase in cash flows from operations for the year ended December 31, 2025 compared to the same period in 2024 is primarily due to an increase in revenues from higher sales volumes from our 2025 development program in the Cherokee Play of the Mid-Continent region with our base production also benefiting from our 2024 acquisition and higher natural gas price realizations.
Removed paragraphs (18)
Previous report
The Company's production last year benefited from our previous drilling program that concluded in 2023. Production in 2024 decreased slightly due to the natural decline of our producing assets, but benefited by our newly acquired wells beginning in September 2024, as well as periods of ethane recovery.
Previous report
•On August 30, 2024, the Company closed on its previously announced acquisition of certain producing oil and natural gas properties in the Cherokee Play of the Western Anadarko Basin for $121.9 million, after customary post-closing adjustments. On December 13, 2024, the Company closed a subsequent acquisition that exchanged and increased its ownership interest in certain proved and unproved oil and gas properties within the same area for $5.2 million, before customary post-closing adjustments of $0.5 million, paid in January 2025, and terminated the previously announced joint development agreement. The Company will operate the majority of its planned development in 2025.
Previous report
•On September 30, 2024, and effective October 1, 2024, the Company announced the following changes (i) Jonathan Frates was appointed to serve as the Company's Executive Vice President and Chief Financial Officer and resigned as Chairman of the Board, (ii) the Board appointed Mr. Vincent Intrieri to serve as a Board member and as the Company’s Chairman of the Board to fill the vacancy following Jonathan Frates’ resignation from the Board; Mr. Intrieri also joined the Board’s Compensation and Nominating and Governance Committees, and (iii) Mr. Brandon Brown to serve as the Company’s Senior Vice President and Chief Accounting Officer, effective October 21, 2024. Mr. Brown no longer serves as Chief Financial Officer upon the commencement of Mr. Frates’ role as Chief Financial Officer on October 21, 2024.
Previous report
•On April 3, 2024, the Company announced that the Board had appointed Mr. Dean Parrish, Senior Vice President, Operations, to serve as the Company’s Senior Vice President and Chief Operating Officer, effective April 1, 2024.
Previous report
Consolidated revenues for the years ended December 31, 2024 and 2023 are presented in the table below (in
Previous report
thousands).
Previous report
Oil, natural gas and NGL revenues decreased primarily due to lower commodity prices. The Company's production benefited from its prior drilling program, concluded in 2023, as well as production from our newly acquired wells beginning in September 2024, offset by the natural decline of our producing assets.
Previous report
Operating expenses for the years ended December 31, 2024 and 2023 consisted of the following (in thousands):
Previous report
The decrease in lease operating expenses was primarily due to a decrease in workover expense.
Previous report
Production, ad valorem, and other taxes decreased primarily due to a $1.4 million ad valorem tax refund received in the fourth quarter of 2024 combined with a decrease in production taxes due to lower commodity prices and related revenues.
Previous report
Other operating expenses for the years ended December 31, 2024 and 2023 consisted of the following (in thousands):
Previous report
The following table summarizes derivative activity for the years ended December 31, 2024 and 2023 (in thousands):
Previous report
The $41.6 million decrease in operating cash flows for the year ended December 31, 2024 compared to 2023, is primarily due to a decrease in revenues from lower commodity prices. The changes in operating assets and liabilities do not include changes in accounts payable or accrued expenses attributable to capital expenditures noted in the capital expenditure table below.
Previous report
During the year ended December 31, 2024, cash flows used in investing activities primarily reflects $129.7 million in cash paid for oil and gas property acquisitions and capital expenditures of $26.4 million. Cash outflows were partially offset by $1.4 million of proceeds from the sale of equipment related to our oil and gas assets.
Previous report
During the year ended December 31, 2023, cash flows used in investing activities primarily reflects capital expenditures of $26.4 million made for drilling and completions, capital workovers, and well reactivations and $11.2 million related to an acquisition of proved reserves, which increased ownership interests in properties operated by the Company. Cash outflows were partially offset by $1.5 million of proceeds from the sale of equipment related to our oil and gas assets.
Previous report
See "Note 3—Acquisitions of Assets and Oil and Gas Properties" to theaccompanying consolidated financial statements included in Item 8 of this report for additional information.
Previous report
Capital Expenditures.
Previous report
Depreciation and Depletion of Oil and Natural Gas Properties. In accordance with full cost accounting rules, capitalized costs are amortized using the unit-of-production method. Under this method, depreciation and depletion is computed at the end of each quarter by multiplying total production for the quarter by a depletion rate. The depletion rate is determined by dividing the total unamortized cost base plus future development costs by net equivalent proved reserves at the beginning of the quarter. See above discussion on the uncertainty of proved reserves estimates. If we maintain the same level of production year over year, the depreciation and depletion of oil and natural gas properties may be significantly different if our estimate of remaining reserves or future development costs changes significantly. The average rates used for depreciation and depletion of oil and natural gas properties were $3.52 per Boe in 2024 and $1.82 per Boe in 2023.
Reworded paragraphs (31)
Previous wording
For the year ended December 31, 2024, there were no operated wells drilled, with three operated and one non-operated wells completed. For the year ended December 31, 2023 there were two operated wells drilled and four wells completed.
Current wording
During the year ended December 31, 2025, the Company operated one drilling rig and drilled seven operated wells, and completed six wells. As of December 31, 2025, one operated well was being drilled and another operated well was awaiting completion. Additionally, four non-operated wells were drilled and completed during 2025. For the year ended December 31, 2024 there were no operated wells drilled, while three operated and one non-operated wells were completed.
Previous wording
Total production by volume on a Boe basis for the years ended December 31, 2024 and 2023 was composed of the following:
Current wording
Total production by volume on a Boe basis was composed of the following:
Previous wording
We remain committed to growing the value of our asset base in a safe, responsible and efficient manner, while prudently allocating capital to high-return, organic growth projects. Currently, these projects include (1) One rig development in the Cherokee Shale Play, which consists of 9 wells to be spud, 8 wells to be drilled and 6 wells to be completed in 2025 (2) Production Optimization program through artificial lift conversions to more efficient and cost-effective systems and high-graded recompletions (3) leasing program that will bolster future development and extend development in our Cherokee assets. Our legacy non-Cherokee leasehold remains approximately 99% held by production, which cost-effectively maintains our development option over a reasonable tenor. We will continue to monitor forward-looking commodity prices, project results, costs and other factors that could influence returns and adjust capital allocations accordingly. These and other factors, to include reasonable reinvestment rates, sustaining our cash flows and prioritizing our regular-way dividend, will continue to shape our development decisions for the remainder of the year and beyond. We also remain vigilant in evaluating further merger and acquisition opportunities, with consideration of our strong balance sheet and commitment to our capital return program.
Current wording
We remain committed to growing the value of our asset base in a safe, responsible and efficient manner, while prudently allocating capital to high-return, growth projects. Currently, these projects include: (1) one-rig development in the Cherokee Shale Play (2) evaluation of accretive merger and acquisition opportunities, with consideration of our strong balance sheet and commitment to our capital return program (3) production optimization program through artificial lift conversions to more efficient and cost-effective systems and (4) a leasing program that will bolster future development and extend development in our Cherokee assets. We are developing our term acreage in the Cherokee Play, and our total leasehold position, inclusive of the Cherokee, NW Stack and legacy assets, is approximately 95% held by production, which cost-effectively maintains our development option over a reasonable tenor. We will continue to monitor forward-looking commodity prices, project results, costs, impacts of tariffs and other factors that could influence returns and cash flows, and will adjust our program accordingly, to include curtailment of capital activity and wells, if needed, or conversely, well reactivations in higher commodity price environments. These and other factors, including reasonable reinvestment rates, maintaining our cash flows and prioritizing our regular-way dividend, will continue to shape our development decisions for the remainder of the year and beyond.
Previous wording
The table below presents production and pricing information for the years ended December 31, 2024 and 2023.
Current wording
The table below presents production and pricing information.
Previous wording
The increase in depreciation and depletion for oil and natural gas properties was primarily the result of our acquisition in the Cherokee Play of the Western Anadarko Basin in the third quarter of 2024, which increased the book value of our proved properties and subsequently our depletion rate.
Current wording
The increase in depreciation and depletion for oil and natural gas properties was primarily the result of an increase in our depletion rate and higher production volumes.
Previous wording
Full cost pool impairment. We did not record a full cost ceiling limitation impairment for the years ended December 31, 2024 or 2023.
Current wording
Full cost pool impairment. We did not record a full cost ceiling limitation impairment for the years ended December 31, 2025 and 2024.
Previous wording
Calculation of the full cost ceiling test is based on, among other factors, trailing twelve-month SEC prices as adjusted for price differentials and other contractual arrangements. The SEC prices utilized in the calculation of proved reserves included in the full cost ceiling test at December 31, 2024 were $75.48 per barrel of oil and $2.13 per MMBtu of natural gas, before price differential adjustments.
Current wording
Calculation of the full cost ceiling test is based on, among other factors, trailing twelve-month SEC prices as adjusted for price differentials and other contractual arrangements. The SEC prices utilized in the calculation of proved reserves included in the full cost ceiling test at December 31, 2025 were $65.34 per barrel of oil and $3.39 per MMBtu of natural gas, before price differential adjustments.
Previous wording
Based on the SEC prices over the eleven months ended February 1, 2025 and NYMEX strip pricing for March 2025 as of February 28, 2025, we anticipate the SEC prices utilized in the March 31, 2025 full cost ceiling test may be $74.52 per barrel of oil and $2.44 per MMBtu of natural gas, (the "estimated first quarter prices"). Applying these estimated first quarter prices, and holding all other inputs constant to those used in the calculation of our December 31, 2024 ceiling test, no full cost ceiling limitation impairment is indicated for the first quarter of 2025.
Current wording
Based on the SEC prices over the eleven months ended February 1, 2026 and NYMEX strip pricing for March 2026 as of February 26, 2026, we anticipate the SEC prices utilized in the March 31, 2026 full cost ceiling test may be $63.16 per barrel of oil and $3.72 per MMBtu of natural gas, (the "estimated first quarter prices"). Applying these estimated first quarter prices, and holding all other inputs constant to those used in the calculation of our December 31, 2025 ceiling test, no full cost ceiling limitation impairment is indicated for the first quarter of 2026.
Previous wording
However, a full cost ceiling limitation impairment may still be realized in the future based on the outcome of numerous other factors such as declines in the actual trailing twelve-month SEC prices, production, lower commodity prices, changes in estimated future development costs and operating expenses, and other revisions to our proved reserves. Any such ceiling test impairments in the future could be material to our net earnings.
Current wording
However, a full cost ceiling limitation impairment may still be realized in the future based on the outcome of numerous other factors such as declines in the actual trailing twelve-month SEC prices, production, lower commodity prices, changes in estimated future development costs and operating expenses, and other revisions to our proved reserves. Any such ceiling test impairments in the future could be material to our net earnings. Full cost pool impairments have no impact to our cash flow or liquidity.
Previous wording
General and administrative expenses increased for the year ended December 31, 2024 primarily due to higher personnel and other costs.
Current wording
General and administrative expenses increased for the year ended December 31, 2025 primarily due to higher personnel costs and professional fees.
Previous wording
Restructuring expenses represent fees and costs associated with our predecessor company's 2016 bankruptcy filing and our exit from NPB in Colorado.
Current wording
Restructuring expenses represent fees and costs associated with our predecessor company's 2016 bankruptcy filing, the outsourcing of corporate functions and our exit from North Park Basin in Colorado.
Previous wording
Other operating expense (income) increased for the year ended December 31, 2024 primarily due to a $1.3 million impairment on our equipment inventory.
Current wording
Other operating expense (income) decreased for the year ended December 31, 2025 primarily due to an impairment in 2024 on our non-full cost pool inventory.
Previous wording
Interest (income) expense, net for the years ended December 31, 2024 and 2023 consisted of the following (in thousands):
Current wording
Interest income (expense), net consisted of the following (in thousands):
Previous wording
Interest (income) expense, net during the years ended December 31, 2024 and 2023 is primarily comprised of interest income received from cash deposits. The decrease in interest income, net is due to the Company’s lower cash balance primarily as a result of our acquisitions, and to a lesser extent, capital expenditures and dividend payments.
Current wording
Interest income (expense), net during the years ended December 31, 2025 and 2024 is primarily comprised of interest income received from cash deposits. The decrease in interest income, net is due to the Company’s lower cash balance primarily as a result of our capital expenditures, dividend payments, acquisitions and share repurchases as well as lower interest rates.
Previous wording
We recorded income tax benefit and expense of $22.2 million and $14.0 million for the years ended December 31, 2024 and 2023, respectively, which directly relates to movement in our valuation allowance against our deferred tax assets. As the partial valuation allowance release as of December 31, 2024 was higher than the partial valuation allowance release as of December 31, 2023 of $50.6 million, we recognized $22.2 million of deferred federal and state income tax benefit for the year ended December 31, 2024.
Current wording
We recorded income tax benefit of $5.5 million and $22.2 million for the years ended December 31, 2025 and 2024, respectively, which directly relates to movement in our valuation allowance against our deferred tax assets. As the partial valuation allowance release as of December 31, 2025 was higher than the partial valuation allowance release as of December 31, 2024 of $72.8 million, we recognized $5.5 million of deferred federal and state income tax benefit for the year ended December 31, 2025.
Previous wording
At December 31, 2024, our cash and cash equivalents, including restricted cash, was $99.5 million. We expect our cash on hand and cash from operations to be adequate to meet our short and long-term liquidity needs. As of March 4, 2025, the Company had no outstanding term or revolving debt obligations.
Current wording
At December 31, 2025, our cash and cash equivalents, including restricted cash, was $112.3 million. We expect our cash on hand and cash from operations to be adequate to meet our short and long-term liquidity needs. As of February 26, 2026, the Company had no outstanding term or revolving debt obligations.
Previous wording
Our working capital decreased to $67.1 million at December 31, 2024, compared to $228.5 million at December 31, 2023. Cash paid for oil and gas property acquisitions of $129.7 million, dividend payments to shareholders of $72.3 million, and $26.4 million in capital expenditures were the primary drivers in the reduction of working capital. These cash outflows were offset by $73.9 million in cash provided by operating activities.
Current wording
Our working capital increased to $79.8 million at December 31, 2025, compared to $67.1 million at December 31, 2024. The increase in working capital was primarily driven by cash flows provided by operating activities of $100.1 million and partially offset by $58.6 million in capital expenditures, dividend payments to stockholders of $15.9 million, $8.5 million in acquisitions and $6.4 million in share repurchases.
Previous wording
In January 2024, the Board approved a one-time cash dividend of $1.50 per share of the Company's common stock, which was paid on February 20, 2024 to shareholders of record as of the close of business on February 5, 2024. The aggregate total payout was approximately $55.6 million. Additionally, in March 2024, the Board increased the on-going quarterly dividend to $0.11 per share which was paid in March, May, August, and November 2024. The aggregate total payout was $16.3 million. The $0.11 per share dividend is subject to quarterly approval by the Board. Dividend payments for the year ended December 31, 2024 totaled $72.3 million, which included $0.5 million of dividends on vested stock awards. See Note 13 for further discussion of the Company’s dividends.
Current wording
Dividend payments, excluding shares issued in lieu of cash dividends, for the year ended December 31, 2025 totaled $15.9 million, which included $0.2 million of dividends on vested stock awards. See Note 13 for further discussion of the Company’s dividends.
Previous wording
Excluding any expenditures for acquisitions which may arise, we intend to spend between $66 million and $85 million in our 2025 capital budget plan. We intend to fund capital expenditures and other commitments for the next 12 months using cash flows from our operations and cash on hand. We will endeavor to keep our capital spending within or very close to our projected cash flows from operations subject to changing industry conditions or events.
Current wording
Excluding any expenditures for acquisitions which may arise, we intend to spend between $76.0 million and $97.0 million in our 2026 capital budget plan. We intend to fund capital expenditures and other commitments for the next 12 months using cash flows from our operations and cash on hand. We will endeavor to keep our capital spending within or very close to our projected cash flows from operations subject to changing industry conditions or events.
Previous wording
Our cash flows from operations are substantially dependent on current and future prices for oil, natural gas and NGL, which historically have been, and may continue to be, volatile. For example, during the period from January 2020 through December 2024, the NYMEX WTI settled price for oil fluctuated between a high of $123.64 per Bbl and a low of $(36.98) per Bbl, and the NYMEX Henry Hub spot prices for gas fluctuated between a high of $24.77 per Mcf and a low of $1.26 per Mcf.
Current wording
Our cash flows from operations are substantially dependent on current and future prices for oil, natural gas and NGL, which historically have been, and may continue to be, volatile. For example, during the period from January 1, 2021 through December 31, 2025, the NYMEX WTI settled price for oil fluctuated between a high of $123.64 per Bbl and a low of $47.47 per Bbl, and the NYMEX Henry Hub spot prices for gas fluctuated between a high of $24.77 per Mcf and a low of $1.26 per Mcf.
Previous wording
Cash flows for the years ended December 31, 2024, and 2023 are presented in the following table and discussed below (in thousands):
Current wording
Cash flows are presented in the following table and discussed below (in thousands):
Previous wording
(1) Includes $72.3 million and $81.5 million in dividend payments for the year ended December 31, 2024 and 2023, respectively.
Current wording
(1) Includes $15.9 million and $72.3 million in dividend payments for the year ended December 31, 2025 and 2024, respectively.
Previous wording
Our capital expenditures for the years ended December 31, 2024 and 2023, are summarized below (in thousands):
Current wording
Our capital expenditures and acquisitions of oil and gas properties are summarized below (in thousands):
Previous wording
Our financing activities used $73.7 million of cash for the year ended December 31, 2024, consisting primarily of $72.3 million in cash dividends, finance lease payments of $0.7 million, $0.4 million of cash used for tax withholdings paid in exchange for shares withheld on employee vested stock awards that were settled by net exercise, and $0.2 million in common stock repurchases. Net exercises of stock awards allows the holder of a stock award to tender back to us a number of shares at fair value upon the vesting of such stock award, that equals the employee payroll tax obligation due. We then remit a cash payment to the relevant taxing authority on behalf of the employee for their payroll tax obligations resulting from the vesting of their stock award.
Current wording
Our financing activities used $23.3 million of cash for the year ended December 31, 2025, consisting primarily of $15.9 million in cash dividends, $6.4 million in common stock repurchases, finance lease payments of $0.7 million, $0.3 million of cash used for tax withholdings paid in exchange for shares withheld on employee vested stock awards that were settled by net exercise. Net exercises of stock awards allows the holder of a stock award to tender back to us a number of shares at fair value upon the vesting of such stock award, that equals the employee payroll tax obligation due. We then remit a cash payment to the relevant taxing authority on behalf of the employee for their payroll tax obligations resulting from the vesting of their stock award.
Previous wording
Our financing activities used $82.9 million of cash for the year ended December 31, 2023, consisting primarily of $81.5 million in cash dividends, $0.9 million of cash used for tax withholdings paid in exchange for shares withheld on employee vested stock awards that were settled by net exercise, and finance lease payments of $0.6 million offset by $0.1 million of proceeds from the exercise of stock options. See discussion in above paragraph for additional information on net exercises of stock awards.
Current wording
Our financing activities used $73.7 million of cash for the year ended December 31, 2024, consisting primarily of $72.3 million in cash dividends, finance lease payments of $0.7 million, $0.4 million of cash used for tax withholdings paid in exchange for shares withheld on employee vested stock awards that were settled by net exercise, and $0.2 million in common stock repurchases. See discussion in above paragraph for additional information on net exercises of stock awards.
Previous wording
In May 2023, the Board approved a share repurchase program (the “Program”) authorizing the Company to repurchase up to an aggregate of $75.0 million of the Company’s outstanding common stock with the Company’s cash on hand. The Program replaced the prior share repurchase program previously approved by the Board in August 2021. Purchases under the Program are intended to meet the requirements of Rule 10b5-1 of the Exchange Act. The Program does not require any specific number of shares to be acquired, and can be modified or discontinued by the Board at any time. For the year ended December 31, 2024, the Company repurchased 21,308 shares for $0.2 million. The Company did not repurchase any common stock under the existing or prior Program during the year ended December 31, 2023.
Current wording
In May 2023, the Board approved a share repurchase program (the “Program”) authorizing the Company to repurchase up to an aggregate of $75.0 million of the Company’s outstanding common stock with the Company’s cash on hand. The Program replaced the prior share repurchase program previously approved by the Board in August 2021. Purchases under the Program are intended to meet the requirements of Rule 10b5-1 of the Exchange Act. The Program does not require any specific number of shares to be acquired, and can be modified or discontinued by the Board at any time. For the year ended December 31, 2025, the Company repurchased 595,635 shares for $6.4 million, or $10.72 per share. For the year ended December 31, 2024, the Company repurchased 21,308 shares for $0.2 million
Previous wording
(1)Asset retirement obligations are based on estimates and assumptions that affect the reported amounts as of December 31, 2024. These estimates and assumptions can be inherently unpredictable and may differ from actual results given the uncertainty of when we may be required to plug and abandon a well or retire an asset. As a result, we may not incur all or may incur more than the estimated costs for the current asset retirement obligation as depicted above. During the year ended December 31, 2024, plugging and abandonment costs incurred were $0.9 million.
Current wording
(1)Asset retirement obligations are based on estimates and assumptions that affect the reported amounts as of December 31, 2025. These estimates and assumptions can be inherently unpredictable and may differ from actual results given the uncertainty of when we may be required to plug and abandon a well or retire an asset. As a result, we may not incur all or may incur more than the estimated costs for the current asset retirement obligation as depicted above. During the year ended December 31, 2025, plugging and abandonment costs incurred were $1.0 million.
Previous wording
Proved Reserves. Approximately 97.5% of the Company’s reserves were estimated by independent petroleum engineers as of December 31, 2024. Estimates of proved reserves are based on the quantities of oil, natural gas and NGLs that geological and engineering data demonstrate, with reasonable certainty, to be recoverable in future years from known reservoirs under existing economic and operating conditions. However, there are numerous uncertainties inherent in estimating quantities of proved reserves and in projecting future revenues, rates of production and timing of development expenditures, including many factors beyond the Company’s control. Estimating reserves is a complex process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact manner and relies on assumptions and subjective interpretations of available geologic, geophysical, engineering and production data. The accuracy of reserve estimates is a function of the quality and quantity of available data, engineering and geological interpretation and judgment. In addition, as a result of volatility and changing market conditions, commodity prices and future development costs will change from period to period, causing estimates of proved reserves to change, as well as causing estimates of future net revenues to change. When excluding the effects of pricing and other commercial assumptions, the Company revised its proved reserves an average of approximately 5% over the past five years and the revisions for the year ended December 31, 2024 were approximately 3%. In the future, estimates of proved reserves could also be influenced by production performance indicating more (or less) reserves in place, larger (or smaller) reservoir size than initially estimated or additional proved reserve bookings within the original field boundaries among other factors. Estimates of proved reserves are key components of the Company’s financial estimates used to determine depreciation and depletion on oil and natural gas properties and its full cost ceiling limitation. Future revisions to estimates of proved reserves may be material and could materially affect the Company’s future depreciation, depletion and impairment expenses. See Proved Reserves discussion in Part I, Item 1 of this Form 10-K for additional detail.
Current wording
Proved Reserves. Approximately 97.9% of the Company’s reserves were estimated by independent petroleum engineers as of December 31, 2025. Estimates of proved reserves are based on the quantities of oil, natural gas and NGLs that geological and engineering data demonstrate, with reasonable certainty, to be recoverable in future years from known reservoirs under existing economic and operating conditions. However, there are numerous uncertainties inherent in estimating quantities of proved reserves and in projecting future revenues, rates of production and timing of development expenditures, including many factors beyond the Company’s control. Estimating reserves is a complex process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact manner and relies on assumptions and subjective interpretations of available geologic, geophysical, engineering and production data. The accuracy of reserve estimates is a function of the quality and quantity of available data, engineering and geological interpretation and judgment. In addition, as a result of volatility and changing market conditions, commodity prices and future development costs will change from period to period, causing estimates of proved reserves to change, as well as causing estimates of future net revenues to change. When excluding the effects of pricing and other commercial assumptions, the Company revised its proved reserves an average of approximately 5% over the past five years and the revisions for the year ended December 31, 2025 were approximately 2%. In the future, estimates of proved reserves could also be influenced by production performance indicating more (or less) reserves in place, larger (or smaller) reservoir size than initially estimated or additional proved reserve bookings within the original field boundaries among other factors. Estimates of proved reserves are key components of the Company’s financial estimates used to determine depreciation and depletion on oil and natural gas properties and its full cost ceiling limitation. Future revisions to estimates of proved reserves may be material and could materially affect the Company’s future depreciation, depletion and impairment expenses. See Proved Reserves discussion in Part I, Item 1 of this Form 10-K for additional detail.
Previous wording
Impairment of Oil and Natural Gas Properties. In accordance with full cost accounting rules, capitalized costs are subject to a limitation. The capitalized cost of oil and natural gas properties, net of accumulated depreciation, depletion and impairment, less related deferred income taxes and electrical infrastructure costs, may not exceed an amount equal to the ceiling limitation. The Company calculates its full cost ceiling limitation using SEC prices adjusted for basis or location differentials, held constant over the life of the reserves. See above discussion on the uncertainty of proved reserves estimates. If capitalized costs exceed the ceiling limitation, the excess must be charged to expense. Once incurred, a write-down cannot be reversed at a later date. The Company did not record any impairment for the years ended December 31, 2024 or 2023.
Current wording
Impairment of Oil and Natural Gas Properties. In accordance with full cost accounting rules, capitalized costs are subject to a limitation. The capitalized cost of oil and natural gas properties, net of accumulated depreciation, depletion and impairment, less related deferred income taxes and electrical infrastructure costs, may not exceed an amount equal to the ceiling limitation. The Company calculates its full cost ceiling limitation using SEC prices adjusted for basis or location differentials, held constant over the life of the reserves. See above discussion on the uncertainty of proved reserves estimates. If capitalized costs exceed the ceiling limitation, the excess must be charged to expense. Once incurred, a write-down cannot be reversed at a later date. The Company did not record any impairment for the years ended December 31, 2025 and 2024.
Previous wording
Asset Retirement Obligations. Asset retirement obligations represent the estimate of fair value of the cost to plug, abandon and remediate the Company’s wells at the end of their productive lives, in accordance with applicable federal and state laws. The Company estimates the fair value of an asset’s retirement obligation in the period in which the liability is incurred (at the time the wells are drilled or acquired). Estimating future asset retirement obligations requires management to make estimates and judgments regarding timing, existence of a liability and what constitutes adequate restoration. The Company employs a present value technique to estimate the fair value of an asset retirement obligation, which reflects certain assumptions and requires significant judgment, including an inflation rate, its credit-adjusted risk-free interest rate, the estimated settlement date of the liability and the estimated current cost to settle the liability based on current actual costs. Inherent in the present value calculation are the timing of settlement and changes in the legal, regulatory, environmental and political environments, which are subject to change. Changes in timing or to the original estimate of cash flows will result in changes to the carrying amount of the liability. The Company did not have significant revisions to its asset retirement obligations for the years ended December 31, 2024 or 2023.
Current wording
Asset Retirement Obligations. Asset retirement obligations represent the estimate of fair value of the cost to plug, abandon and remediate the Company’s wells at the end of their productive lives, in accordance with applicable federal and state laws. The Company estimates the fair value of an asset’s retirement obligation in the period in which the liability is incurred (at the time the wells are drilled or acquired). Estimating future asset retirement obligations requires management to make estimates and judgments regarding timing, existence of a liability and what constitutes adequate restoration. The Company employs a present value technique to estimate the fair value of an asset retirement obligation, which reflects certain assumptions and requires significant judgment, including an inflation rate, its credit-adjusted risk-free interest rate, the estimated settlement date of the liability and the estimated current cost to settle the liability based on current actual costs. Inherent in the present value calculation are the timing of settlement and changes in the legal, regulatory, environmental and political environments, which are subject to change. Changes in timing or to the original estimate of cash flows will result in changes to the carrying amount of the liability. The Company did not have significant revisions to its asset retirement obligations for the years ended December 31, 2025 and 2024.
Previous wording
Income Taxes. Deferred income taxes are recorded for temporary differences between the financial statement and income tax basis of assets and liabilities. Deferred tax assets are recognized for temporary differences that will be deductible in future years’ tax returns and for operating loss and tax credit carryforwards. Deferred tax assets are reduced by a valuation allowance if it is deemed more likely than not that some or all of the deferred tax assets will not be realized. Deferred tax liabilities are recognized for temporary differences that will be taxable in future years’ tax returns. In assessing the realizability of the deferred tax assets, we consider whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future income in periods in which the deferred tax assets can be utilized. Upon emergence from bankruptcy and the application of fresh start accounting in 2016, our tax basis in oil and gas properties and property, plant, and equipment exceeded the book carrying value of our assets. Additionally, we had significant U.S. federal net operating losses remaining after the attribute reduction caused by the restructuring transactions. As such, the successor Company had significant deferred tax assets to consume upon emergence. In prior years, we determined that the deferred tax assets did not meet the more likely than not threshold of being utilized and thus recorded a valuation allowance. Our partial valuation allowance release of $50.6 million as of December 31, 2023 was increased by $22.2 million due to changes in expected future income, resulting in net deferred tax assets of $72.8 million as of December 31, 2024. We anticipate being able to utilize these deferred tax assets based on the generation of future income. A change in the estimate of future income could cause the valuation allowance to be adjusted in subsequent periods.
Current wording
Income Taxes. Deferred income taxes are recorded for temporary differences between the financial statement and income tax basis of assets and liabilities. Deferred tax assets are recognized for temporary differences that will be deductible in future years’ tax returns and for operating loss and tax credit carryforwards. Deferred tax assets are reduced by a valuation allowance if it is deemed more likely than not that some or all of the deferred tax assets will not be realized. Deferred tax liabilities are recognized for temporary differences that will be taxable in future years’ tax returns. In assessing the realizability of the deferred tax assets, we consider whether it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future income in periods in which the deferred tax assets can be utilized. Upon emergence from bankruptcy and the application of fresh start accounting in 2016, our tax basis in oil and gas properties and property, plant, and equipment exceeded the book carrying value of our assets. Additionally, we had significant U.S. federal net operating losses remaining after the attribute reduction caused by the restructuring transactions. As such, the successor Company had significant deferred tax assets to consume upon emergence. In prior years, we determined that the deferred tax assets did not meet the more likely than not threshold of being utilized and thus recorded a valuation allowance. Our partial valuation allowance release of $72.8 million as of December 31, 2024 was increased by $5.5 million due to changes in expected future income, resulting in net deferred tax assets of $78.3 million as of December 31, 2025. We anticipate being able to utilize these deferred tax assets based on the generation of future income. A change in the estimate of future income could cause the valuation allowance to be adjusted in subsequent periods.
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Previous report — wording carried elsewhere
Full cost pool impairments have no impact to our cash flow or liquidity.