Permian Resources Corp

Note 1—Basis of Presentation and Summary of Significant Accounting Policies

Description of Business

Permian Resources Corporation is an independent oil and natural gas company focused on the responsible acquisition, optimization and development of crude oil and associated liquids-rich natural gas reserves. The Company’s assets and operations are primarily concentrated in the core of the Permian Basin, and its properties consist of large, contiguous acreage blocks located in West Texas and New Mexico. Unless otherwise specified or the context otherwise requires, all references in these notes to “Permian Resources” or the “Company” are to Permian Resources Corporation and its consolidated subsidiaries, including Permian Resources Operating, LLC (“OpCo”).

Principles of Consolidation and Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial reporting. Accordingly, certain disclosures normally included in an Annual Report on Form 10-K have been omitted or abbreviated. The consolidated financial statements and related notes included in this Quarterly Report should be read in conjunction with the Company’s consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the period ended December 31, 2024 (the “2024 Annual Report”). Except as disclosed herein, there have been no material changes to the information disclosed in the notes to the consolidated financial statements included in the 2024 Annual Report. Certain prior period amounts have been reclassified to conform to the current presentation in the accompanying consolidated financial statements. Such reclassifications had no impact on net income, cash flows or shareholders’ equity previously reported.

In the opinion of management, all normal, recurring adjustments and accruals considered necessary to present fairly, in all material respects, the Company’s interim financial results have been included. Operating results for the periods presented are not necessarily indicative of expected results for the full year. The consolidated financial statements include the accounts of the Company, its subsidiary OpCo and OpCo’s wholly-owned subsidiaries. Noncontrolling interest represents third-party ownership in OpCo and is presented as a component of equity. Refer to Note 9—Shareholders’ Equity and Noncontrolling Interestfor a discussion of noncontrolling interest.

Use of Estimates

The preparation of the Company’s consolidated financial statements requires the Company’s management to make various assumptions, judgments and estimates to determine the reported amounts of assets, liabilities, revenues and expenses, and the disclosures of commitments and contingencies. Changes in these assumptions, judgments and estimates will occur as a result of the passage of time and the occurrence of future events, and accordingly, actual results could differ from amounts previously established. Additionally, the prices received for oil, NGL and natural gas production can heavily influence the Company’s assumptions, judgments and estimates, and continued volatility of oil and gas prices could have a significant impact on the Company’s estimates.

The more significant areas requiring the use of assumptions, judgments and estimates include: (i) oil and natural gas reserves; (ii) cash flow estimates used in impairment tests for long-lived assets; (iii) impairment expense of unproved properties; (iv) depreciation, depletion and amortization; (v) asset retirement obligations; (vi) determining fair value and allocating purchase price in connection with business combinations and asset acquisitions; (vii) accrued revenues and related receivables; (viii) accrued liabilities; (ix) derivative valuations; (x) deferred income taxes; and (xi) determining the fair values of certain stock-based compensation awards.

Leases

The Company has operating leases for drilling rig contracts, office rental agreements and other wellhead equipment and a financing lease for a ground lease for its office building in Midland, Texas. During the nine months ended September 30, 2025, the Company entered intoone drilling rig contract with a lease term ofthree years. A lease right-of-use asset and related liability were recorded for this drilling rig contract based on the present value of the future lease payments of the drilling rig over the lease terms. As of September 30, 2025, the Company recorded in aggregate $10.5 million and $16.2 million of current and noncurrent operating lease liabilities, respectively, related to the new drilling rig contract.

The following table provides additional information related to the Company’s lease assets and liabilities as presented on the balance sheet for the periods presented:

There have been no other significant changes in leases during the nine months ended September 30, 2025.

Income Taxes

The Company is subject to U.S. federal, state and local income taxes with respect to its allocable share of any taxable income or loss of OpCo, as well as any stand-alone income generated by the Company. OpCo is treated as a partnership for U.S. federal and most applicable state and local income tax purposes. As a partnership, OpCo is not subject to U.S. federal and certain state and local income taxes. Any taxable income generated by OpCo is passed through to and included in the taxable income of its members, including the Company, on a pro rata basis.

Income tax expense recognized during interim periods is based on applying an estimated annual effective income tax rate to the Company’s year-to-date income, plus any significant unusual or infrequently occurring items which are recorded in the interim period. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in various state jurisdictions, permanent and temporary differences and the likelihood of recovering deferred tax assets generated. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information becomes known or as the tax environment changes.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. OBBBA included multiple provisions applicable to U.S. income taxes for businesses of which those with the most significant impact to the Company include the reinstatement of 100% bonus depreciation for certain capital expenditures and allowing intangible drilling costs as deductions for purposes of computing the corporate alternative minimum tax. The effects of changes in tax law are recognized in the period of enactment, and as a result, OBBBA is currently recognized in the Company’s condensed consolidated financial statements, but did not have a material impact on the Company's effective tax rate for either the three or nine months ended September 30, 2025.

Segment Reporting

The nature of the Company’s operations and geographical location of such are concentrated to exploration and production of oil and natural gas within the Permian Basin. The Company’s chief operating decision maker (“CODM”) is each of its Co-Chief Executive Officers who manage and review the Company’s operations on a consolidated basis. Accordingly, the Company operates inone reportable segment.

The CODM uses consolidated net income to measure profit or loss, assess performance and make key operating decisions. Additionally, the CODM utilizes cash flows to facilitate investment decisions, including determining future levels of developmental capital expenditures, assessing potential acquisitions and divestitures, assessing appropriate returns of capital to shareholders and other strategic sources and uses of capital. The CODM does not generally evaluate performance using asset information. Consolidated net income and all significant expenses are reported within the Company’s consolidated statements of operations while cash flows are presented on the Company’s consolidated statement of cash flows.

Recently Issued Accounting Standards

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-09, Improvements to Income Tax Disclosures, which requires public business entities to provide additional income tax disclosures including, among others, disaggregation of the effective tax rate reconciliation and information regarding income taxes paid. This ASU will result in additional disclosures in the notes to the Company’s financial statements beginning with the 2025 annual report and interim reporting periods beginning in 2026.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures, which requires public business entities to disclose specific expense categories in the notes to the financial statements. This ASU is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027. The Company is currently assessing the impact of this ASU on the Company’s financial statements.

Note 2—Acquisitions

2025 Bolt-On Acquisitions

On June 16, 2025, the Company completed its acquisition of approximately 13,000 net leasehold acres with Apache Corporation for an unadjusted purchase price of $608 million. The acreage acquired is predominately located directly offsetting the Company’s existing asset position in the core of its New Mexico operating area. The acquisition was recorded as an asset acquisition in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations(“ASC 805”). Total consideration paid was $572.3 million after settlement statement adjustments, of which $500.6 million was allocated to proved properties and $80.8 million to unproved properties on a relative fair value basis with the remaining $9.1 million related to liabilities assumed.

During the nine months ended September 30, 2025, the Company completed multiple acquisitions of oil and natural gas properties for a cumulative adjusted purchase price of approximately $225.6 million. These transactions were recorded as asset acquisitions in accordance with ASC 805.

2024 Bolt-On Acquisition

On September 17, 2024, the Company completed its acquisition of oil and gas properties with certain affiliates of Occidental Petroleum Corporation (the “Bolt-On Acquisition”). The Bolt-On Acquisition included approximately 29,500 net leasehold acres and approximately 9,900 net royalty acres that are predominately located directly offsetting the Company’s existing assets in Reeves County, Texas, as well as Eddy County, New Mexico. Refer to Note 2—Business Combinations footnote in the notes to the consolidated financial statements in Item 8 of the Company’s 2024 Annual Report for additional details regarding the Bolt-On Acquisition.

Purchase Price Allocation

The purchase price allocation was finalized during the nine months ended September 30, 2025. The following table represents the final consideration and purchase price of the identifiable assets acquired and the liabilities assumed based on their respective fair value as of the closing date of the Bolt-On Acquisition.

The pro forma impact of this business combination to revenues and net income is not disclosed as it was deemed not to have a material impact on the Company’s results of operations.

Note 3—Accounts Receivable, Accounts Payable and Accrued Expenses

Accounts receivable are comprised of the following:

Accounts payable and accrued expenses are comprised of the following:

Note 4—Long-Term Debt

The following table provides information about the Company’s long-term debt as of the dates indicated:

Credit Agreement

OpCo, the Company’s consolidated subsidiary, has a credit agreement with a syndicate of banks that provides for a secured revolving credit facility, maturing in February 2028 (the “Credit Agreement”) that, as of September 30, 2025, had a borrowing base of $4.0 billion and elected commitments of $2.5 billion. As of September 30, 2025, the Company hadno borrowings outstanding and $2.5 billion in available borrowing capacity, net of $2.5 million in letters of credit outstanding.

In connection with the spring borrowing base redetermination on April 30, 2025, the Company entered into the ninth amendment to its Credit Agreement (the “Ninth Amendment”). The Ninth Amendment, among other things, (i) reaffirmed the borrowing base at $4.0 billion and (ii) reaffirmed the aggregate elected commitments at $2.5 billion. Refer to Note 13—Subsequent Events for additional information regarding the 2025 fall borrowing base redetermination.

The amount available to be borrowed under the Credit Agreement is equal to the lesser of (i) the borrowing base, which is set at $4.0 billion; (ii) aggregate elected revolving commitments, which is set at $2.5 billion; or (iii) $6.0 billion. The borrowing base is redetermined semi-annually in the spring and fall by the lenders in their sole discretion. It also allows for the Company to requesttwo optional borrowing base redeterminations in between the scheduled redeterminations; one at the Borrower’s request and an additional one in connection with any Material Acquisition (as defined in the Credit Agreement). The borrowing base depends on, among other things, the quantities of OpCo’s proved oil and natural gas reserves, estimated cash flows from those reserves, and the Company’s commodity hedge positions. Upon a redetermination of the borrowing base, if actual borrowings outstanding exceed the revised borrowing capacity, OpCo could be required to immediately repay a portion of its debt outstanding in an amount equal to the excess. Borrowings under the Credit Agreement are guaranteed by certain of OpCo’s subsidiaries.

Borrowings under the Credit Agreement may be base rate loans or SOFR loans. Interest is payable quarterly for base rate loans and at the end of the applicable interest period for SOFR loans. SOFR loans bear interest at SOFR plus an applicable margin ranging from 175 to 275 basis points, depending on the percentage of elected commitments utilized, plus an additional 10 basis point credit spread adjustment. Base rate loans bear interest at a rate per annum equal to the greatest of: (i) the agent bank’s prime rate; (ii) the federal funds effective rate plus 50 basis points; or (iii) the adjusted Term SOFR rate for a one-month interest period plus 100 basis points, plus an applicable margin, ranging from 75 to 175 basis points, depending on the percentage of the borrowing base utilized. OpCo also pays a commitment fee of 37.5 to 50 basis points on unused elected commitment amounts under its facility.

The Credit Agreement contains restrictive covenants that limit our ability to, among other things: (i) incur additional indebtedness; (ii) make investments and loans; (iii) enter into mergers; (iv) make restricted payments; (v) repurchase or redeem junior debt; (vi) enter into commodity hedges exceeding a specified percentage of our expected production; (vii) enter into interest rate hedges exceeding a specified percentage of its outstanding indebtedness; (viii) incur liens; (ix) sell assets; and (x) engage in transactions with affiliates.

The Credit Agreement also requires OpCo to maintain compliance with the following financial ratios:

(i) a current ratio, which is the ratio of OpCo’s consolidated current assets (including an add back of unused commitments under the revolving credit facility and excluding non-cash derivative assets and certain restricted cash) to its consolidated current liabilities (excluding the current portion of long-term debt under the Credit Agreement and non-cash derivative liabilities), of not less than 1.0 to 1.0; and

(ii) a leverage ratio, which is the ratio of total funded debt to consolidated EBITDAX (with such terms defined within the Credit Agreement) for the most recent quarter annualized, of not greater than 3.5 to 1.0.

The Credit Agreement includes fall away covenants, lower interest rates and reduced collateral requirements that OpCo may elect if OpCo is assigned an Investment Grade Rating (as defined within the Credit Agreement).

OpCo was in compliance with the covenants and the applicable financial ratios described above as of September 30, 2025.

Convertible Senior Notes

In March 2021, OpCo issued $170.0 million in aggregate principal amount of 3.25% senior unsecured convertible notes due 2028 (the “Convertible Senior Notes”) resulting in aggregate net proceeds to OpCo of $163.6 million, after deducting debt issuance costs of $6.4 million. Interest was payable on the Convertible Senior Notes semi-annually in arrears on each April 1 and October 1 with a maturity date of April 1, 2028.

The Convertible Senior Notes could be settled by paying or delivering, as applicable, cash, shares of Class A Common Stock, or a combination of cash and shares of Class A Common Stock, at OpCo’s election. On or after April 7, 2025, the Convertible Senior Notes could be redeemed at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest to the date of redemption, if the last reported sale price per share of Class A Common Stock exceeded 130% of the conversion price (i) for any 20 trading days during the 30 consecutive trading days ending on the day immediately before the date OpCo sends the related redemption notice; and (ii) also on the trading day immediately before the date OpCo sends such notice.

On August 28, 2025, the Company issued a redemption notice (the “Redemption Notice”) to holders of the Convertible Senior Notes (“Holders”) calling for the redemption of all outstanding Convertible Senior Notes (the “Redemption”). The Redemption Notice allowed Holders the right to convert each $1,000 principal amount of the Convertible Senior Notes for 179.9208 shares of Class A Common Stock (the “Conversion Rate”) or a cash redemption price of $1,014.53. Certain Holders exercised their right to convert $169.9 million aggregate principal amount of the Convertible Senior Notes for 30.6 million shares of Class A Common Stock based on the Conversion Rate. The Class A Common Stock issued in the Redemption was valued at $430.0 million based on the trading price of the Company’s Class A Common Stock on the date of each conversion and was recorded as an increase to additional paid-in capital within the consolidated balance sheets. The remaining $0.1 million principal amount of Convertible Senior Notes was redeemed for cash.

The Redemption was accounted for as an extinguishment of debt in accordance with ASC 470-50, Modifications and Extinguishments, which resulted in a loss on extinguishment of debt of $263.9 million being recognized in the consolidated statement of operations during the nine months ended September 30, 2025. This loss on extinguishment of debt consisted of the difference in the value of the Class A Common Stock issued and cash paid for the Redemption and the carrying amount of the Convertible Senior Notes less professional fees incurred in connection with the Redemption.

Capped Called Transactions

In connection with the issuance of the Convertible Senior Notes in March 2021, OpCo entered into privately negotiated capped call spread transactions with option counterparties (the “Capped Call Transactions”). The Capped Call Transactions cover the aggregate number of shares of Class A Common Stock that initially underlie the Convertible Senior Notes and have a strike price of $6.28 per share of Class A Common Stock and a capped price of $8.4525 per share of Class A Common Stock, each of which are subject to certain customary adjustments upon the occurrence of certain corporate events, as defined in the capped call agreements. Following the Redemption, the Company elected to keep the Capped Call Transactions outstanding and the instruments are scheduled to expire on April 1, 2028.

Senior Unsecured Notes

The table below summarizes the interest rates, interest payment dates, principal amounts outstanding and the maturity dates related to OpCo’s outstanding senior unsecured note obligations as of September 30, 2025.

The 8.00% senior notes due 2027,5.875% senior notes due 2029,9.875% senior notes due 2031,7.00% senior notes due 2032 and 6.25% senior notes due 2033 (collectively, the “Senior Unsecured Notes”) are unsecured senior obligations. OpCo may redeem some or all of its Senior Unsecured Notes prior to their maturity at redemption prices that may include a premium, plus accrued and unpaid interest as described in the indentures governing the Senior Unsecured Notes. The Senior Unsecured Notes are fully and unconditionally guaranteed on a senior unsecured basis by the Company and each of OpCo’s current subsidiaries that guarantee borrowings under OpCo’s Credit Agreement.

If OpCo experiences certain defined changes of control accompanied by a ratings decline, each holder of the Senior Unsecured Notes may require OpCo to repurchase all or a portion of its Senior Unsecured Notes for cash at a price equal to 101% of the aggregate principal amount of such Senior Unsecured Notes, plus any accrued but unpaid interest to the date of repurchase.

The indentures governing the Senior Unsecured Notes contain covenants that, among other things and subject to certain exceptions and qualifications, limit OpCo’s ability and the ability of OpCo’s restricted subsidiaries to: (i) incur or guarantee additional indebtedness or issue certain types of preferred stock; (ii) pay dividends on capital stock or redeem, repurchase or retire capital stock or subordinated indebtedness; (iii) transfer or sell assets; (iv) make investments; (v) create certain liens; (vi) enter into agreements that restrict dividends or other payments from their subsidiaries to them; (vii) consolidate, merge or transfer all or substantially all of their assets; (viii) engage in transactions with affiliates; and (ix) create unrestricted subsidiaries. OpCo was in compliance with these covenants as of September 30, 2025.

Please refer to Note 5—Long-Term Debt included in Part II, Item 8 in the 2024 Annual Report for additional details around OpCo’s Senior Unsecured Notes and Convertible Senior Notes.

Partial Senior Note Repurchase and Redemptions

During June 2025, the Company repurchased $2.7 million of its outstanding 5.375% senior notes due 2026 (the “20265.375% Senior Notes”) at a price equal to 99.7% of the principal amount paid plus accrued and unpaid interest up to, but excluding, the repurchase date. Subsequently, on September 20, 2025, the Company redeemed all remaining outstanding 20265.375% Senior Notes at a price equal to 100% of the aggregate principal amount outstanding of $286.7 million plus accrued and unpaid interest up to, but excluding, the redemption date.

During January 2025, the Company redeemed $175 million of its 9.875% senior notes due 2031 (the “2031 Senior Notes”) at a redemption price equal to 109.875% of the principal amount redeemed plus accrued and unpaid interest up to, but excluding, the redemption date. The Company paid total consideration of $192.3 million, excluding interest, resulting in a loss on extinguishment of debt of $5.8 million after writing off the carrying value of the 2031 Senior Notes of $186.5 million, which included the associated pro rata unamortized debt premium. Following the redemption, the remaining aggregate principal amount of the 2031 Senior Notes outstanding was $325 million.

Note 5—Asset Retirement Obligations

The following table summarizes changes in the Company’s asset retirement obligations (“ARO”) associated with its working interests in oil and gas properties for the nine months ended September 30, 2025:

(1)The current portion of ARO is included within Other current liabilities in the consolidated balance sheets.

ARO reflect the present value of the estimated future costs associated with the plugging and abandonment of oil and gas wells, removal of equipment and facilities from leased acreage and land restoration in accordance with applicable local, state and federal laws. Inherent in the fair value calculation of ARO are numerous estimates and assumptions, including plug and abandonment settlement amounts, inflation factors, credit adjusted discount rates and the timing of settlement. To the extent future revisions to these assumptions impact the value of the existing ARO liabilities, a corresponding offsetting adjustment is made to the oil and gas property balance. Changes in the liability due to the passage of time are recognized as an increase in the carrying amount of the liability with an offsetting charge to accretion expense, which is included within depreciation, depletion and amortization.

Note 6—Stock-Based Compensation

The Company has a Long Term Incentive Plan (the “LTIP”) that has a total of 71,718,560 shares of Class A Common Stock authorized for issuance. The LTIP provides for grants of restricted stock, stock options (including incentive stock options and nonqualified stock options), restricted stock units (including performance stock units), stock appreciation rights and other stock or cash-based awards.

Stock-based compensation expense is recognized within both General and administrative expenses and Exploration and other expenses in the consolidated statements of operations. The Company accounts for forfeitures of awards granted under the LTIP as they occur.

The following table summarizes stock-based compensation expense recognized for the periods presented:

Equity Awards

The Company has restricted stock, stock options and performance stock units (“PSUs”) outstanding that were granted under the LTIP as discussed below. Each award has service-based and, in the case of the PSUs, market-based vesting requirements, and is expected to be settled in shares of Class A Common Stock upon vesting. As a result, these awards are classified as equity-based awards in accordance with ASC Topic 718, Compensation-Stock Compensation.

Restricted Stock

The following table provides information about restricted stock activity during the nine months ended September 30, 2025:

The Company grants service-based restricted stock to certain officers and employees, which either vests ratably over athree-year service period or cliff vests upon aneighteen month tofive year service period, and to directors, which vest over aone-year service period. Compensation cost for these service-based restricted stock grants is based on the closing market price of the Company’s Class A Common Stock on the grant date, and such costs are recognized ratably over the applicable vesting period. The total fair value of restricted stock that vested during the nine months ended September 30, 2025 and 2024 was $16.8 million and $19.1 million, respectively. Unrecognized compensation cost related to restricted shares that were unvested as of September 30, 2025 was $69.7 million, which the Company expects to recognize over a weighted average period of 2.4 years.

Stock Options

Stock options that have been granted under the LTIP expireten years from the grant date and vest ratably over their three-year service period. The exercise price for an option granted under the LTIP is the closing market price of the Company’s Class A Common Stock on the grant date. Compensation cost for stock options is based on the grant-date fair value of the award, which is then recognized ratably over the vesting period ofthree years.

The following table provides information about stock option awards outstanding during the nine months ended September 30, 2025:

Performance Stock Units

The Company grants PSUs to certain officers and members of management that are subject to market-based vesting criteria as well as a service period ofthree years. Vesting at the end of the service period depends on the Company’s absolute annualized total shareholder return (“TSR”) over the performance period, as well as the Company’s TSR relative to the TSR of a group of peer companies. These market-based conditions must be met in order for the stock awards to vest, and it is therefore possible that no shares could ultimately vest. However, the Company recognizes compensation expense for the PSUs subject to market conditions regardless of whether it becomes probable that these conditions will be met or not, and compensation expense is not reversed if vesting does not actually occur.

The Company’s PSUs currently outstanding can be settled in either Class A Common Stock or cash upon vesting at the Company’s discretion. The Company intends to settle all PSUs in Class A Common Stock and has sufficient shares available under the LTIP to settle the units in Class A Common Stock at the potential future vesting dates. Accordingly, the PSUs have been treated as equity-based awards with their fair values determined as of the grant or modification date, as applicable. The fair values of the awards are estimated using a Monte Carlo valuation model. The Monte Carlo valuation model is based on random projections of stock price paths and must be repeated numerous times to achieve a probabilistic assessment. Expected volatility was calculated based on the historical volatility of the Company’s Class A Common Stock, and the risk-free interest rate is based on U.S. Treasury yield curve rates with maturities consistent with the vesting periods.

The following table summarizes the key assumptions and related information used to determine the fair value of PSUs granted during the nine months ended September 30, 2025:

The following table provides information about PSUs outstanding during the nine months ended September 30, 2025:

(1)This balance includes vested PSU awards as of September 30, 2025 based on the original number of PSUs granted. Actual PSUs vested is based upon the Company’s absolute annualized TSR calculation at the time of vesting, which may be greater than or less than the original number granted.

As of September 30, 2025, there was $42.4 million of unrecognized compensation cost related to PSUs that were unvested, which the Company expects to recognize on a pro-rata basis over a weighted average period of 1.6 years.

Note 7—Derivative Instruments

The Company is exposed to certain risks relating to its ongoing business operations and may use derivative instruments to manage its exposure to commodity price risk from time to time.

Commodity Derivative Contracts

Historically, prices received for crude oil and natural gas production have been volatile because of supply and demand factors, worldwide political factors, general economic conditions and seasonal weather patterns. The Company may periodically use derivative instruments, such as swaps, costless collars, basis swaps, and other similar agreements, to mitigate its exposure to declines in commodity prices and to the corresponding negative impacts such declines can have on its cash flows from operations, returns on capital and other financial results. While the use of these instruments limits the downside risk of adverse price changes, their use may also limit future revenues from favorable price changes. The Company does not enter into derivative contracts for speculative or trading purposes.

Commodity Swaps. The Company may use commodity derivative instruments known as fixed price swaps to realize a known price for a specific volume of production or basis swaps to hedge the difference between the index price and a local or future index price. All transactions are settled in cash with one party paying the other for the resulting difference in price multiplied by the contract volume.

The following table summarizes the approximate volumes and average contract prices of derivative contracts the Company had in place as of September 30, 2025:

(1) These crude oil basis swap transactions are settled utilizing the ARGUS MIDLAND WTI and ARGUS WTI CUSHING indices.

(1) These natural gas basis swap contracts are settled utilizing the Inside FERC’s West Texas Waha Hub price and the NYMEX Henry Hub price of natural gas.

Derivative Instrument Reporting. The Company’s oil and natural gas derivative instruments have not been designated as hedges for accounting purposes. Therefore, all gains and losses are recognized in the Company’s consolidated statements of operations. All derivative instruments are recorded at fair value in the consolidated balance sheets, other than derivative instruments that meet the “normal purchase normal sale” exclusion, and any fair value gains and losses are recognized in current period earnings.

The following table presents the impact of the Company’s derivative instruments in its consolidated statements of operations for the periods presented:

Offsetting of Derivative Assets and Liabilities. The Company’s commodity derivatives are included in the accompanying consolidated balance sheets as derivative assets and liabilities. The Company nets its financial derivative instrument fair value amounts executed with the same counterparty pursuant to ISDA master netting agreements, which provide for net settlement over the term of the contract and in the event of default or termination of the contract. The tables below summarize the fair value amounts and the classification in the consolidated balance sheets of the Company’s derivative contracts outstanding at the respective balance dates, as well as the gross recognized derivative assets, liabilities and offset amounts:

(1) The Company has agreements in place with each of its counterparties that allow for the financial right of offset for derivative assets against derivative liabilities at settlement or in the event of a default under the agreements or if contracts are terminated.

Contingent Features in Financial Derivative Instruments. None of the Company’s derivative instruments contain credit-risk-related contingent features. Counterparties to the Company’s financial derivative contracts are high credit-quality financial institutions that are primarily lenders under OpCo’s Credit Agreement. The Company enters into new hedge arrangements only with participants under its Credit Agreement, since these institutions are secured equally with the holders of any OpCo bank debt, which eliminates the potential need to post collateral when the Company is in a derivative liability position. As a result, the Company is not required to post letters of credit or corporate guarantees for its derivative counterparties in order to secure contract performance obligations.

In addition, the Company is exposed to credit risk associated with its derivative contracts from non-performance by its counterparties. The Company mitigates its exposure to any single counterparty by contracting with a number of financial institutions, each of which has a high credit rating and is a lender under OpCo’s Credit Agreement as referenced above.

Note 8—Fair Value Measurements

Recurring Fair Value Measurements

The Company follows ASC Topic 820, Fair Value Measurement and Disclosure, which establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy categorizes assets and liabilities measured at fair value into one of three different levels depending on the observability of the inputs employed in the measurement. The three levels are defined as follows:

•Level 1: Quoted Prices in Active Markets for Identical Assets – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

•Level 2: Significant Other Observable Inputs – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

•Level 3: Significant Unobservable Inputs – inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The following table presents, for each applicable level within the fair value hierarchy, the Company’s net derivative assets and liabilities, including both current and noncurrent portions, measured at fair value on a recurring basis:

Both financial and non-financial assets and liabilities are categorized within the above fair value hierarchy based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The following is a description of the valuation methodologies used by the Company as well as the general classification of such instruments pursuant to the above fair value hierarchy. There were no transfers between any of the fair value levels during any period presented.

Derivatives

The Company uses Level 2 inputs to measure the fair value of its oil and natural gas commodity derivatives. The Company uses industry-standard models that consider various assumptions including current market and contractual prices for the underlying instruments, implied market volatility, time value, nonperformance risk, as well as other relevant economic measures. Substantially all of these inputs are observable in the marketplace throughout the full term of the instrument and can be supported by observable data. The Company utilizes its counterparties’ valuations to assess the reasonableness of its own valuations. Refer to Note 7—Derivative Instruments for details of the gross and net derivative assets, liabilities and offset amounts as presented in the consolidated balance sheets.

Nonrecurring Fair Value Measurements

The Company applies the provisions of the fair value measurement standard on a nonrecurring basis to its non-financial assets and liabilities, including proved oil and gas properties. These assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances.

Oil and Gas Property Acquisitions. The fair value measurements of assets acquired and liabilities assumed are measured on the acquisition date using an income valuation technique based on inputs that are not observable in the market and therefore represent Level 3 inputs. Significant inputs to the valuation of acquired oil and gas properties include estimates of: (i) reserves; (ii) production rates; (iii) future operating and development costs; (iv) future commodity prices, including price differentials; (v) future cash flows; (vi) a market participant-based weighted average cost of capital rate and (vii) risk adjustment factors applied to proved and unproved reserves. These inputs require significant judgements and estimates by the Company’s management at the time of valuation.

Impairment of Oil and Natural Gas Properties. The Company reviews its proved oil and natural gas properties for impairment whenever events and circumstances indicate that the fair value of these assets may be below their carrying value. An impairment loss is indicated if the sum of the expected undiscounted future net cash flows from oil and gas properties is less than the carrying amount of the assets. In this circumstance, the Company then recognizes impairment expense for the amount by which the carrying amount of proved properties exceeds their estimated fair value. The Company reviews its oil and natural gas properties on a field-by-field basis.

The Company calculates the estimated fair value of its oil and natural gas properties using an income approach that is based on inputs that are not observable in the market and therefore represent Level 3 inputs. Significant inputs to the expected future net cash flows used for the impairment review and the related fair value measurement of oil and natural gas proved properties include estimates of: (i) oil and gas reserves; (ii) future production decline rates; (iii) future operating and development costs; (iv) future commodity prices, including price differentials; and (v) a market participant-based weighted average cost of capital rate. These inputs require significant judgments and estimates by the Company’s management.

Asset Retirement Obligations. The initial measurement of ARO at fair value is calculated using discounted cash flow techniques and is based on internal estimates of future retirement costs associated with property, plant and equipment. Significant Level 3 inputs used in the calculation of ARO include the estimated future costs to plug and abandon oil and gas properties and reserve lives. Refer to Note 5—Asset Retirement Obligations for additional information on the Company’s ARO.

Other Financial Instruments

The carrying amounts of the Company’s cash, cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate their fair values because of the short-term maturities and/or liquid nature of these assets and liabilities.

The Company’s senior notes and borrowings under its Credit Agreement are accounted for at cost. The following table summarizes the carrying values, principal amounts and fair values of these instruments as of the periods indicated:

(1)The carrying values of the amounts outstanding under OpCo’s Credit Agreement approximate fair value because its variable interest rates are tied to current market rates and the applicable credit spreads represent current market rates for the credit risk profile of the Company.

(2)The carrying values include associated unamortized debt issuance costs and any debt discounts or premiums as reflected in the consolidated balance sheets. The fair values are determined using quoted market prices for these debt securities, a Level 1 classification in the fair value hierarchy, and are based on the aggregate principal amount of the senior notes outstanding.

Note 9—Shareholders’ Equity and Noncontrolling Interest

Stock Conversion

During the nine months ended September 30, 2025 and 2024, certain legacy owners of Colgate Energy Partners III, LLC (“Colgate”) and Earthstone Energy, Inc. (“Earthstone”) exchanged 12.4 million and 126.8 million, respectively, of their common units of OpCo (“Common Units”) with the cancellation of a corresponding number of shares of Class C Common Stock, for an equivalent number of shares of Class A Common Stock. A deferred tax liability of $3.2 million and a deferred tax asset of $89.7 million were recorded in equity as a result of the conversions of shares from the noncontrolling interest owners for the nine months ended September 30, 2025 and 2024, respectively. No cash proceeds were received by the Company in connection with these transactions.

Stock Issuances

During the nine months ended September 30, 2025, the Company issued 30.6 million shares of Class A Common Stock in connection with the Redemption of its Convertible Senior Notes as discussed in Note 4—Long-Term Debt.

During the nine months ended September 30, 2024, the Company completed an underwritten public offering of 26.5 million shares of its Class A Common Stock in which the Company received net cash proceeds of $402.2 million after underwriting discounts and commissions. The Company used the net proceeds from this equity offering to fund a portion of the aggregate purchase price of the Bolt-On Acquisition discussed in Note 2—Acquisitions.

Additionally, during the nine months ended September 30, 2024, the Company issued 6.2 million shares of Class A Common Stock, which were issued as partial consideration for a portion of the asset acquisitions executed during the year ended December 31, 2024 (discussed in Note 3 — Acquisitions and Divestituresin the 2024 Annual Report). No cash proceeds were received by the Company in connection with this issuance.

Dividends

The following table summarizes the Company’s base and variable dividend per share of Class A Common Stock and distribution per Common Unit (each of which has an underlying share of Class C Common Stock) declared and paid during each period:

Repurchase Program

The Company’s Board of Directors authorized a stock repurchase program to acquire up to $1 billion of the Company’s outstanding common stock (the “Repurchase Program”), which was approved to run on an indefinite basis and can be used by the Company to reduce its shares of Class A Common Stock and Class C Common Stock outstanding. Repurchases may be made from time to time in the open-market or via privately negotiated transactions at the Company’s discretion and will be subject to market conditions, applicable legal requirements, available liquidity, compliance with the Company’s debt agreements and other factors. The Repurchase Program does not require any specific number of shares to be acquired and can be modified or discontinued by the Company’s Board of Directors at any time.

During the nine months ended September 30, 2025, the Company paid $46.8 million to repurchase 4.4 million shares of Class A Common Stock at a weighted average price of $10.70 per share as part of the Repurchase Program. The shares that were repurchased were subsequently canceled by the Company.

Additionally, during the nine months ended September 30, 2025 and 2024, the Company paid $26.9 million and $61.0 million, respectively, to repurchase 2.0 million and 3.8 million, respectively, Common Units of OpCo resulting in an equal number of the underlying shares of Class C Common Stock simultaneously being canceled under its Repurchase Program.

Noncontrolling Interest

The noncontrolling interest relates to Common Units that were issued in connection with the merger with Colgate on September 1, 2022 and the merger with Earthstone on November 1, 2023. The noncontrolling interest percentage is affected by various equity transactions such as conversions of Common Units for Class A Common Stock (and corresponding Class C Common Stock cancellations) and transactions involving Class A Common Stock.

As of September 30, 2025 the noncontrolling interest ownership of OpCo had decreased to 10% from 12% as of December 31, 2024. The Company consolidates the financial position, results of operations and cash flows of OpCo and reflects the portion retained by other holders of Common Units as a noncontrolling interest. Refer to the consolidated statements of shareholders’ equity for a summary of the activity attributable to the noncontrolling interest during the period.

Note 10—Earnings Per Share

Basic earnings per share (“EPS”) is calculated by dividing net income attributable to Class A Common Stock by the weighted average shares of Class A Common Stock outstanding during each period. Diluted EPS is calculated by dividing adjusted net income by the weighted average shares of diluted Class A Common Stock outstanding, which includes the effect of potentially dilutive securities. Potentially dilutive securities for the diluted EPS calculation consists of (i) unvested equity-based restricted stock and performance stock units and outstanding stock options, all using the treasury stock method; and (ii) the Company’s Class C Common Stock and shares issuable for our Convertible Senior Notes, which were fully redeemed during the three months ended September 30, 2025, both using the “if-converted” method, which is net of tax.

The following table reflects the EPS computations for the periods indicated based on a weighted average number of Class A Common Stock outstanding each period:

The following table presents shares excluded from the diluted earnings per share calculation for the periods presented as their impact was anti-dilutive:

Note 11—Commitments and Contingencies

Commitments

During the nine months ended September 30, 2025, the Company entered into a series of firm commitment transportation agreements that guarantee volumetric capacity on pipelines for gas transportation with varying terms over ten years. The agreements are effective beginning in 2025 and will provide the Company natural gas capacity on the pipelines ranging from 25,000 to 300,000 MMBtu per day. The Company is not required to deliver natural gas volumes specifically produced from any of the Company’s properties under these agreements. The agreements include demand fees that are applied to the total volumetric capacity per the agreements regardless if utilized. As a result, the aggregate minimum financial commitment amount over the term of these agreements is approximately $1.2 billion based upon the volumetric commitments per the agreements as of September 30, 2025. The Company has paid $2.5 million related to these commitments during the nine months ended September 30, 2025, which are included in the Purchased gas sales, net line item described in Note 12—Revenues.

The Company routinely enters into, extends or amends operating agreements in the ordinary course of business. There has been no other material, non-routine changes in commitments during the nine months ended September 30, 2025.

Contingencies

The Company may at times be subject to various commercial or regulatory claims, prior period adjustments from service providers, litigation or other legal proceedings that arise in the ordinary course of business. While the outcome of these lawsuits and claims cannot be predicted with certainty, management believes it is remote that the impact of such matters that are reasonably possible to occur will have a material adverse effect on the Company’s financial position, results of operations, or cash flows. Management is unaware of any pending litigation brought against the Company requiring a contingent liability to be recognized as of the date of these consolidated financial statements.

Note 12—Revenues

Revenue from Contracts with Customers

Crude oil, NGL and natural gas sales are recognized at the point that control of the product is transferred to the customer and collectability is reasonably assured. Substantially all of the Company’s contract pricing provisions are tied to a market index, with certain adjustments based on, among other factors, transportation costs to an active spot market and quality differentials. As a result, the Company’s realized prices of oil, NGLs and natural gas fluctuate to remain competitive with other available oil, NGLs and natural gas supplies both globally and locally.

Oil and gas revenues presented within the consolidated statements of operations relate to the sale of oil, natural gas, NGLs and purchased gas sales as shown below:

Oil sales

The Company’s crude oil sales contracts are generally structured whereby oil is delivered to the purchaser at a contractually agreed-upon delivery point at which the purchaser takes title of the product. This delivery point is usually at the wellhead or at the inlet of a transportation pipeline. Revenue is recognized when control transfers to the purchaser at the delivery point based on the net price received from the purchaser. Any downstream transportation costs incurred by crude purchasers are reflected as a net reduction to oil sales revenues.

NGL and Natural gas sales

Under the Company’s natural gas processing contracts, liquids rich natural gas is delivered to a midstream gathering and processing entity at the agreed upon delivery point at which the purchaser takes title of the product. The midstream processing entity gathers and processes the raw gas and then remits proceeds to the Company. For these contracts, the Company evaluates when control is transferred and revenue should be recognized. Where the Company elects to take its NGL or residue gas product “in-kind” at the plant tailgate, fees incurred prior to transfer of control at the outlet of the plant are presented as GP&T within the consolidated statements of operations. Where the Company does not take its NGL or residue gas products “in-kind”, transfer of control occurs at the inlet of the gas gathering systems, or prior, and fees incurred subsequent to this point are reflected as a net reduction to NGL and natural gas sales revenues presented in the table above.

Purchased gas sales

The Company has entered into a series of natural gas purchase and sale agreements to facilitate the sale of natural gas at additional markets. The proceeds and costs of these transactions are presented net as they are transacted with the same counterparty (or same related parties) as shown in the line item Purchased gas sales, net in the table above.

Performance obligations

For all commodity products, the Company records revenue in the month production is delivered to the purchaser. Settlement statements for crude oil are generally received within 30 days following the date that production volumes are delivered, but for NGL and natural gas sales, statements may not be received for 30 to 60 days after delivery has occurred. However, payment is unconditional once the performance obligations have been satisfied. At such time, the volumes delivered and sales prices can be reasonably estimated and amounts due from customers are accrued in Accounts receivable, net in the consolidated balance sheets. As of September 30, 2025 and December 31, 2024, such receivable balances were $273.5 million and $326.4 million, respectively.

The Company records any differences between its estimates and the actual amounts received for product sales in the month that payment is received from the purchaser. Historically, any identified differences between revenue estimates and actual revenue received have not been significant. For the nine months ended September 30, 2025 and 2024, revenue recognized in the reporting period related to performance obligations satisfied in prior reporting periods were not material.

Transaction price allocated to remaining performance obligations

For the Company’s product sales that have a contract term greater than one year, the Company has utilized the practical expedient in ASC Topic 606, Revenue from contracts with Customers, which states the Company is not required to disclose the transaction price allocated to the remaining performance obligations if the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. Under these sales contracts, monthly sales of a product generally represent a separate performance obligation. Therefore, future commodity volumes to be delivered and sold are wholly unsatisfied, and disclosure of the transaction price allocated to such unsatisfied performance obligations is not required.

Note 13—Subsequent Events

Amended Credit Agreement

In connection with the fall borrowing base redetermination on October 24, 2025, the Company entered into the tenth amendment to its Credit Agreement (the “Tenth Amendment”). The Tenth Amendment, among other things, (i) reaffirmed the borrowing base at $4.0 billion, (ii) reaffirmed the aggregate elected revolving commitments at $2.5 billion, (iii) adjusted the applicable margin by (a) adding a new borrowing base utilization pricing grid applicable on any day during a borrowing base period on which the Company has an index debt rating of BBB- or better from Fitch Ratings, Inc. and (b) subject to certain conditions, reducing the interest rates applicable on any day during an investment grade period, and (iv) removed the additional 10 basis point credit spread adjustment factor from the SOFR definition.

Dividends Declared

On November 5, 2025, the Company announced that its Board of Directors declared a quarterly base dividend of $0.15 per share of Class A Common Stock and distribution of $0.15 per share of Class C Common Stock (each of which has an underlying Common Unit of OpCo). The dividend is payable December 31, 2025, to shareholders of record as of December 17, 2025.