Crescent Energy Co
For the period ended Sep 30, 2024. Filed Nov 4, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 4, 2024
CRGY$11.22+0.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-05.
0001866175-24-000071
Item 2. Management’s discussion and analysis of financial condition and results of operationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-04.
0001866175-24-000106
Item 2. Management’s discussion and analysis of financial condition and results of operationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 179 previous paragraphs and 195 current paragraphs.
100 unchanged; 68 reworded; 26 added; 11 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 17 previous and 17 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 (26)
Current report
As of September 30, 2024, the carrying value of certain of our conventional assets in Wyoming in proved oil and natural gas properties was $203.0 million. At the current forward commodity price curve, these assets have limited cushion between their carrying value and estimated undiscounted cash flows. A further decline of future commodity prices or a decrease in estimates of oil and natural gas reserves for these assets would likely result in an impairment charge. The actual amount of impairment incurred, if any, for these properties will depend on a variety of factors including, but not limited to, subsequent forward price curve changes, weighted-average cost of capital, operating cost estimates and future capital expenditures estimates. An estimate of the sensitivity to changes in assumptions in our fair value calculations is not practicable, given the numerous assumptions (e.g. reserves, pace and timing of development plans, commodity prices, capital expenditures, operating costs, drilling and development costs, inflation and discount rates) that can materially affect our estimates. Unfavorable adjustments to some of the above listed assumptions would likely be offset by favorable adjustments in other assumptions. For example, the impact of sustained reduced commodity prices would likely be partially offset by lower costs.
Current report
All issuances of the 2033 Notes are treated as a single series of securities under the indenture governing the 2033 Notes, will vote together as a single class, and have substantially identical terms, other than the issue date and the issue price.
Current report
On July 30, 2024, Crescent Energy Company completed the SilverBow Merger, pursuant to which Crescent Energy Company acquired SilverBow. Immediately following the SilverBow Merger, Crescent Energy Company completed a series of internal transactions following which the assets of SilverBow and its subsidiary became held by subsidiaries of Crescent Energy Finance, LLC. In connection with the SilverBow Merger, Crescent issued 51.6 million shares of Class A Common Stock and paid $382.4 million in cash to former SilverBow shareholders, including amounts payable in respect of outstanding SilverBow equity awards. As of the closing date of the SilverBow Merger, former SilverBow shareholders own approximately 22% of the combined company on a fully diluted basis. In connection with the closing of the SilverBow Merger, we repaid all of SilverBow’s outstanding indebtedness.
Current report
In October 2024, we acquired from unaffiliated third parties certain interests in oil and gas properties, rights and related assets located in Atascosa, Frio, La Salle and McMullen Counties, Texas for aggregate consideration of approximately $168.0 million, subject to customary purchase price adjustments (the “October 2024 Acquisition”). We are currently evaluating the October 2024 Acquisition and have not completed the purchase accounting.
Current report
Management Agreement
Current report
Crescent Energy Company has a management agreement (the "Management Agreement") with KKR Energy Assets Manager LLC (the "Manager"). Pursuant to the Management Agreement, the Manager provides the Company with its senior executive management team and certain management services. The Management Agreement has an initial term of three years that began in 2021 and shall renew automatically at the end of the initial term for an additional three-year period unless the Company or the Manager elects not to renew the Management Agreement.
Current report
As consideration for the services rendered pursuant to the Management Agreement and the Manager’s overhead, including compensation of the executive management team, the Manager is currently entitled to receive compensation from the Company equal to $45.9 million per annum (the "Manager Compensation") (calculated based on the Company's pro rata relative ownership of OpCo multiplied by $64.5 million (the "Base Input")), which is included in General and administrative expenses on our consolidated statements of operations. As the Company's business and assets expand, the Base Input will increase by an amount equal to 1.5% per annum of the net proceeds from all future issuances of primary equity securities by the Company (including in connection with acquisitions) and increased by $9.0 million during the three months ended September 30, 2024 in conjunction with the closing of the SilverBow Merger. However, the Base Input will not increase from the issuance of the Company's shares upon the redemption or exchange of OpCo Units.
Current report
The Company expects its ownership of OpCo will increase over time through the redemption of OpCo Units for shares of Class A Common Stock or the issuance of additional shares of Class A Common Stock. As this occurs, the Manager Compensation pursuant to the formula defined in the Management Agreement, which is reflected in our consolidated statements of operations, will increase. In order to pay the Manager Compensation, the Company must first receive a cash distribution from OpCo, and any such cash distribution necessitates a concurrent pro rata cash distribution to the holders of redeemable noncontrolling interests. This cash distribution to the holders of redeemable noncontrolling interests does not represent additional Manager Compensation; rather, it represents an ordinary cash distribution to the holders of redeemable noncontrolling interests. In certain instances in our financial statements and other disclosures, we clarify the underlying event that requires us to make such distributions, not because the distributions to the holders of redeemable noncontrolling interests are made for such purpose (e.g. Cash distributions to redeemable noncontrolling interests initiated by Class A common stock dividend, Cash distributions to redeemable noncontrolling interests initiated by Manager Compensation and Cash contributions from (cash distributions to) redeemable noncontrolling interests initiated by income taxes).
Current report
Additionally, the Manager is entitled to receive incentive compensation ("Incentive Compensation") under which the Manager is targeted to receive 10% of our outstanding Class A Common Stock based on the achievement of certain performance-based measures. The Incentive Compensation consists of five tranches that settle over a five-year period beginning in 2024, and each tranche relates to a target number of shares of Class A Common Stock equal to 2% of the outstanding Class A Common Stock as of the time such tranche is settled. So long as the Manager continuously provides services to us until the end of the performance period applicable to a tranche, the Manager is entitled to settlement of such tranche with respect to a number of shares of Class A Common Stock ranging from 0% to 4.8% of the of the outstanding Class A Common Stock at the time each tranche is settled. Accordingly, as our Class A Common Stock share count increases, the number of equity-classified Manager PSU target Class A Shares granted under the Crescent Energy Company 2021 Manager Incentive Plan increases.
Current report
(1)The realized price presented above does not include $26.3 million received from the settlement of acquired oil, gas and NGL derivative contracts for the three and nine months ended September 30, 2024 and does not include $14.0 million and $49.0 million paid for the settlement of acquired oil derivative contracts for the three and nine months ended September 30, 2023, respectively.
Current report
(iv)Workover expense decreased $0.8 million, or 5%, in the three months ended September 30, 2024, compared to the three months ended September 30, 2023, and decreased $0.36 per Boe, or 32%, to $0.76 per Boe. This decrease was driven by a reduction in discretionary activity related to lower commodity prices.
Current report
General and administrative expense. General and administrative expense ("G&A") increased $115.8 million, or 264%, for the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily driven by (i) an increase in equity-based compensation expense of $59.1 million (2024 and 2023 include an additional catch up expense of $64.4 million and $9.7 million due to changes in estimates), (ii) $52.2 million higher transaction and nonrecurring expenses driven by the SilverBow Merger and (iii) higher recurring G&A, primarily driven by higher Manager Compensation expense.
Current report
The increase in the Manager Compensation expense is due to an increase in public ownership of Class A Common Stock and a corresponding increase in ownership of OpCo as a result of (i) our equity issuances that increased Class A Common Stock outstanding (and increased our ownership of OpCo), which increased the Base Input under the Management Agreement, and (ii) share redemptions for our Class A Common Stock, which does not increase the Base Input, but does increase the Manager Compensation due to our increased ownership of OpCo. The Class A Common Stock shares issued also increased our equity-based compensation expense related to Manager Incentive Compensation.
Current report
During the three months ended September 30, 2024, we incurred a loss on the extinguishment of debt related to the make whole provision and premium related to the repayment of SilverBow’s Second Lien Notes due 2028 of $36.5 million.
Current report
(1)In our calculation of Adjusted EBITDAX and Levered Free Cash Flow, we reflect Manager Compensation as if 100% of OpCo were owned and managed by the Company, to reflect consistent earnings and liquidity measures not impacted by the amount of OpCo's ownership under management.
Current report
(2)Transaction and nonrecurring expenses of $56.3 million for the three months ended September 30, 2024 were primarily related to our SilverBow Merger costs, capital markets transactions and integration expenses. Transaction and nonrecurring expenses of $8.0 million for the three months ended September 30, 2023 were primarily related to our Western Eagle Ford Acquisitions and system integration expenses.
Current report
(1)In our calculation of Adjusted EBITDAX and Levered Free Cash Flow, we reflect Manager Compensation as if 100% of OpCo were owned and managed by the Company, to reflect consistent earnings and liquidity measures not impacted by the amount of OpCo's ownership under management.
Current report
(2)Transaction and nonrecurring expenses of $56.3 million for the three months ended September 30, 2024 were primarily related to our SilverBow Merger costs, capital markets transactions and integration expenses. Transaction and nonrecurring expenses of $8.0 million for the three months ended September 30, 2023 were primarily related to our Western Eagle Ford Acquisitions and system integration expenses.
Current report
Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023
Current report
(i)Lease and asset operating expense increased $34.7 million, or 8%, in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, and decreased $1.66 per Boe, or 15%, to $9.26 per Boe. This $34.7 million increase was driven primarily by higher production from our Western Eagle Ford Acquisitions and the SilverBow Merger, which was more than offset on a per Boe basis with these additional volumes and cost reduction measures on our other assets.
Current report
Loss on extinguishment of debt
Current report
(1)In our calculation of Adjusted EBITDAX and Levered Free Cash Flow, we reflect Manager Compensation as if 100% of OpCo were owned and managed by the Company, to reflect consistent earnings and liquidity measures not impacted by the amount of OpCo's ownership under management.
Current report
(2)Transaction and nonrecurring expenses of $74.8 million for the nine months ended September 30, 2024 were primarily related to the SilverBow Merger, capital markets transactions and integration expenses. Transaction and nonrecurring expenses of $14.2 million for the nine months ended September 30, 2023 were primarily related to our Western Eagle Ford Acquisitions and system integration expenses.
Current report
(1)In our calculation of Adjusted EBITDAX and Levered Free Cash Flow, we reflect Manager Compensation as if 100% of OpCo were owned and managed by the Company, to reflect consistent earnings and liquidity measures not impacted by the amount of OpCo's ownership under management.
Current report
(2)Transaction and nonrecurring expenses of $74.8 million for the nine months ended September 30, 2024 were primarily related to the SilverBow Merger, capital markets transactions and integration expenses. Transaction and nonrecurring expenses of $14.2 million for the nine months ended September 30, 2023 were primarily related to our Western Eagle Ford Acquisitions and system integration expenses.
Current report
All issuances of the 2033 Notes are treated as a single series of securities under the indenture governing the 2033 Notes, will vote together as a single class, and have substantially identical terms, other than the issue date and the issue price.
Removed paragraphs (11)
Previous report
On July 30, 2024, we consummated the SilverBow Merger. See “—Acquisitions and Divestitures.” Upon the closing we expanded our position in the Eagle Ford increasing our production base by over 50% in the basin. Although this Quarterly Report on Form 10-Q was filed after the completion of the SilverBow Merger, information set forth herein only relates to the results of operations for Crescent Energy Company for the quarter and year-to-date periods ended June 30, 2024 and 2023 and does not include any operational or financial information for SilverBow for such periods.
Previous report
In May 2024, we entered into an Agreement and Plan of Merger ("the Merger Agreement") with SilverBow Resources, Inc., a Delaware corporation ("SilverBow"), pursuant to which we agreed to acquire SilverBow through a series of mergers (the "SilverBow Merger"). Subject to the terms and conditions of the Merger Agreement, each share of SilverBow's common stock, par value $0.01 per share ("SilverBow Common Stock") issued and outstanding immediately prior to the merger close date, was converted into the right to receive, pursuant to an election made and not revoked, one of the following forms of consideration: (A) 3.125 shares of Crescent Class A Common Stock, (B) a combination of 1.866 shares of Crescent Class A Common Stock and $15.31 in cash or (C) $38.00 in cash, subject to an aggregate cap of $400.0 million on the total cash consideration payable for the SilverBow Common Stock in the SilverBow Merger. The Merger Agreement also provided that each outstanding SilverBow restricted stock unit, performance-based stock unit (assuming maximum performance) and in-the money stock option, whether vested or unvested, held by certain employees and directors of SilverBow (collectively, the "SilverBow Equity Awards") became fully vested and was canceled and converted into a right to receive a cash payment (less the exercise price in the case of stock options) or, in the case of the restricted stock units and performance-based stock units, a partial cash payment and partial settlement in shares of Crescent Class A Common Stock. Each stock option with an exercise price that equaled or exceeded the amount of such cash payment was cancelled for no consideration. The SilverBow Merger closed on July 30, 2024. In conjunction with closing, we issued 51.6 million shares, including 1.2 million net shares to partially settle the SilverBow Equity Awards, of our Class A Common Stock at $11.82 per share and provided $376.9 million of cash consideration, including cash to partially settle the SilverBow Equity Awards.
Previous report
Divestitures
Previous report
(1)Does not include the $16.3 million or $35.0 million impact from the settlement of acquired derivative contracts for the three and six months ended June 30, 2023, respectively.
Previous report
(iv)Workover expense decreased $1.1 million, or 6%, in the three months ended June 30, 2024, compared to the three months ended June 30, 2023, and decreased $0.31 per Boe, or 21%, to $1.17 per Boe. This decrease was driven by lower natural gas prices and related reduced activity.
Previous report
(1)Transaction and nonrecurring expenses of $15.6 million for the three months ended June 30, 2024 were primarily related to our merger costs, capital markets transactions and integration expenses. Transaction and nonrecurring expenses of $3.8 million for the three months ended June 30, 2023 were primarily related to our Western Eagle Ford Acquisition and system integration expenses.
Previous report
(1)Transaction and nonrecurring expenses of $15.6 million for the three months ended June 30, 2024 were primarily related to our merger costs, capital markets transactions and integration expenses. Transaction and nonrecurring expenses of $3.8 million for the three months ended June 30, 2023 were primarily related to our Western Eagle Ford Acquisition and system integration expenses.
Previous report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Previous report
(i)Lease and asset operating expense increased $29.3 million, or 10%, in the six months ended June 30, 2024, compared to the six months ended June 30, 2023, and decreased $0.95 per Boe, or 8%, to $10.36 per Boe. This $29.3 million increase was driven primarily by higher production from our Western Eagle Ford Acquisitions, partially offset by lower cost residue gas purchases in the first quarter of 2024. During the first quarter of 2023, we experienced higher cost residue gas purchases related to increased natural gas prices in the west coast pricing market. This higher cost residue gas was more than offset by higher realized pricing during the period.
Previous report
(1)Transaction and nonrecurring expenses of $18.5 million for the six months ended June 30, 2024 were primarily related to our merger costs, capital markets transactions and integration expenses. Transaction and nonrecurring expenses of $6.2 million for the six months ended June 30, 2023 were primarily related to our July Western Eagle Ford Acquisition and system integration expenses.
Previous report
(1)Transaction and nonrecurring expenses of $18.5 million for the six months ended June 30, 2024 were primarily related to our merger costs, capital markets transactions and integration expenses. Transaction and nonrecurring expenses of $6.2 million for the six months ended June 30, 2023 were primarily related to our July Western Eagle Ford Acquisition and system integration expenses.
Reworded paragraphs (68)
Previous wording
Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide the reader of the financial statements with a narrative from the perspective of management on the financial condition, results of operations, liquidity and certain other factors that may affect the Company's operating results. The following discussion and analysis should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023 ("Annual Report"), our Quarterly Report on Form 10-Q for the period ended March 31, 2024, as well as our unaudited condensed consolidated financial statements for the three and six months ended June 30, 2024 and 2023. The following information updates the discussion of our financial condition provided in our previous filings, and analyzes the changes in the results of operations between the three and six months ended June 30, 2024 and 2023. The following discussion contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, commodity price volatility, capital requirements and uncertainty of obtaining additional funding on terms acceptable to the Company, realized oil, natural gas and NGL prices, the timing and amount of future production of oil, natural gas and NGLs, shortages of equipment, supplies, services and qualified personnel, the integration of operations following and actual results of the SilverBow Merger (as defined below), as well as those factors discussed below and elsewhere in this Quarterly Report and in our Annual Report, particularly under “Risk Factors” and “Cautionary Statement Regarding Forward Looking Statements,” all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law. Unless otherwise stated or the context otherwise indicates, all references to “we,” “us,” “our,” "Crescent" and the “Company” or similar expressions refer to Crescent Energy Company and its subsidiaries.
Current wording
Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide the reader of the financial statements with a narrative from the perspective of management on the financial condition, results of operations, liquidity and certain other factors that may affect the Company's operating results. The following discussion and analysis should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2023 ("Annual Report"), our Quarterly Report on Form 10-Q for the periods ended March 31, 2024 and June 30, 2024, as well as our unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2024 and 2023. The following information updates the discussion of our financial condition provided in our previous filings, and analyzes the changes in the results of operations between the three and nine months ended September 30, 2024 and 2023. The following discussion contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, commodity price volatility, capital requirements and uncertainty of obtaining additional funding on terms acceptable to the Company, realized oil, natural gas and NGL prices, the timing and amount of future production of oil, natural gas and NGLs, shortages of equipment, supplies, services and qualified personnel, the integration of operations following and actual results of the SilverBow Merger (as defined below), as well as those factors discussed below and elsewhere in this Quarterly Report and in our Annual Report, particularly under “Risk Factors” and “Cautionary Statement Regarding Forward Looking Statements,” all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law. Unless otherwise stated or the context otherwise indicates, all references to “we,” “us,” “our,” "Crescent" and the “Company” or similar expressions refer to Crescent Energy Company and its subsidiaries.
Previous wording
During the last several years, prices of crude oil, natural gas and NGLs have experienced periodic downturns and sustained volatility, impacted by the COVID-19 pandemic and recovery, Russia’s invasion of Ukraine and the related sanctions imposed on Russia, Hamas' attack against Israel and the ensuing conflict and escalation of tensions in the Middle East (including with Iran), supply chain constraints and elevated interest rates and costs of capital. Furthermore, the United States continued to experience a significant inflationary environment, which began in 2022 that, along with international geopolitical risks, has contributed to concerns of a potential recession in 2024 that has created further volatility. In June 2024, OPEC announced an extension of its production cuts through December 2025. The actions of OPEC with respect to oil production levels and announcements of potential changes in such levels, including agreement on and compliance with production cuts, may result in further volatility in commodity prices and the oil and natural gas industry generally. Such volatility may lead to a more difficult investing and planning environment for us and our customers. While we use derivative instruments to partially mitigate the impact of commodity price volatility, our revenues and operating results depend significantly upon the prevailing prices for oil and natural gas.
Current wording
During the last several years, prices of crude oil, natural gas and NGLs have experienced periodic downturns and sustained volatility, impacted by the COVID-19 pandemic and recovery, Russia’s invasion of Ukraine and the related sanctions imposed on Russia, Hamas' attack against Israel and the ensuing conflict and escalation of tensions in the Middle East (including with Lebanon and Yemen), supply chain constraints, elevated interest rates and costs of capital and political and regulatory uncertainties surrounding the U.S. presidential election. Furthermore, the United States has recently experienced, and may continue to experience, a significant inflationary environment, which began in 2022 that, along with international geopolitical risks, has contributed to concerns of a potential recession in 2024 that has created further volatility. In September 2024, OPEC announced an extension of its production cuts of approximately 2.2 million barrels per day through December 1, 2024. The actions of OPEC with respect to oil production levels and announcements of potential changes in such levels, including agreement on and compliance with production cuts, may result in further volatility in commodity prices and the oil and natural gas industry generally. Such volatility may lead to a more difficult investing and planning environment for us and our customers. While we use derivative instruments to partially mitigate the impact of commodity price volatility, our revenues and operating results depend significantly upon the prevailing prices for oil and natural gas.
Previous wording
Due to the cyclical nature of the oil and gas industry, fluctuating demand for oilfield goods and services can put pressure on the pricing structure within our industry. As commodity prices rise, the cost of oilfield goods and services generally also increase, while during periods of commodity price declines, oilfield costs typically lag and do not adjust downward as fast as oil prices do. The U.S. inflation rate began increasing in 2021, peaked in the middle of 2022 and began to gradually decline in the second half of 2022 and into 2023 and has remained relatively stable in the first half of 2024. Inflationary pressures have resulted in and may result in additional increases to the costs of our oilfield goods, services and personnel, which in turn cause our capital expenditures and operating costs to rise. Sustained levels of high inflation have likewise caused the U.S. Federal Reserve and other central banks to increase interest rates in 2022 continuing through 2023 and, although the financial health of the oil and gas industry has shown improvement as compared to prior periods, to the extent elevated inflation remains, we may experience further cost increases for our operations, including oilfield services, labor costs and equipment. Higher oil and natural gas prices may cause the costs of materials and services to continue to rise. We cannot predict any future trends in the rate of inflation and a significant increase in inflation, to the extent we are unable to recover higher costs through higher oil and natural gas prices and revenues, would negatively impact our business, financial condition and results of operations. See Part I, Item 1A. Risk Factors—"Risks related to the oil and natural gas industry—Continuing or worsening inflationary issues and associated changes in monetary policy have resulted in and may result in additional increases to the cost of our goods, services and personnel, which in turn cause our capital expenditures and operating costs to rise" in our Annual Report.
Current wording
Due to the cyclical nature of the oil and gas industry, fluctuating demand for oilfield goods and services can put pressure on the pricing structure within our industry. As commodity prices rise, the cost of oilfield goods and services generally also increase, while during periods of commodity price declines, oilfield costs typically lag and do not adjust downward as fast as oil prices do. The U.S. inflation rate began increasing in 2021, peaked in the middle of 2022 and began to gradually decline in the second half of 2022 and into 2023 and has remained relatively stable through 2024. Inflationary pressures have resulted in and may result in additional increases to the costs of our oilfield goods, services and personnel, which in turn cause our capital expenditures and operating costs to rise. Sustained levels of high inflation have likewise caused the U.S. Federal Reserve and other central banks to increase interest rates in 2022, continuing through 2023. The U.S. Federal Reserve made cuts to benchmark interest rates in September 2024 and it is currently anticipated that it will make additional cuts; however, there is no guarantee that such additional cuts will occur. Although the financial health of the oil and gas industry has shown improvement as compared to prior periods, to the extent elevated inflation remains, we may experience further cost increases for our operations, including oilfield services, labor costs and equipment. Higher oil and natural gas prices may cause the costs of materials and services to continue to rise. We cannot predict any future trends in the rate of inflation and a significant increase in inflation, to the extent we are unable to recover higher costs through higher oil and natural gas prices and revenues, would negatively impact our business, financial condition and results of operations. See Part I, Item 1A. Risk Factors—"Risks related to the oil and natural gas industry—Continuing or worsening inflationary issues and associated changes in monetary policy have resulted in and may result in additional increases to the cost of our goods, services and personnel, which in turn cause our capital expenditures and operating costs to rise" in our Annual Report.
Previous wording
In June 2024, we issued $750.0 million aggregate principal amount of 7.375% senior notes due 2033 (the "2033 Notes") at par (the "2033 Notes Offering"). The proceeds from the 2033 Notes Offering were approximately $734.8 million, after deducting the initial purchasers' discount and offering expenses. We used the net proceeds from the 2033 Notes Offering to fund the cash paid to the SilverBow stockholders and holders of SilverBow restricted stock units in connection with the SilverBow Merger and to repay SilverBow's existing indebtedness outstanding at the completion of the SilverBow Merger.
Current wording
In June 2024, we issued $750.0 million aggregate principal amount of 7.375% senior notes due 2033 (the "2033 Notes") at par (the "June 2024 Offering"). In September 2024, we issued an additional $250.0 million, aggregate principal amount of 2033 Notes at 101.000% of par (the "September 2024 Offering," and together with the June 2024 Offering, the "2033 Notes Offerings"). The aggregate proceeds from the 2033 Notes Offerings were approximately $981.8 million, after adjusting for premiums, the initial purchasers' discount and offering expenses. We used the aggregate net proceeds from the 2033 Notes Offerings to (i) fund the cash paid to the SilverBow stockholders and holders of SilverBow restricted stock units in connection with the SilverBow Merger, (ii) repay and extinguish SilverBow's existing indebtedness that was outstanding at the completion of the SilverBow Merger for $1.2 billion, including extinguishment costs and (iii) repay a portion of the amounts outstanding under our Revolving Credit Facility. In connection with the repayment of SilverBow's debt we incurred a Loss on the extinguishment of debt of $36.5 million, inclusive of make whole fees.
Previous wording
On April 1, 2024, Independence Energy Aggregator L.P., the entity through which certain private investors in affiliated KKR entities hold their interests in us, exchanged 6.0 million OpCo Units (and we cancelled a corresponding number of shares of Class B Common Stock) for an equivalent number of shares of Class A Common Stock (the "April 2024 Class A Conversion"). The shares of Class A Common Stock were sold at a price per share of $10.74, pursuant to Rule 144, through a broker-dealer. We did not receive any proceeds or incur any material expenses related to the April 2024 Class A Conversion.
Current wording
On April 1, 2024, Independence Energy Aggregator L.P., the entity through which certain private investors in affiliated KKR entities hold their interests in us, exchanged 6.0 million OpCo Units (and we cancelled a corresponding number of shares of Class B Common Stock) for an equivalent number of shares of Class A Common Stock (the "April 2024 Class A Conversion").
Previous wording
In March 2024, 16.1 million OpCo Units were acquired from Independence Energy Aggregator L.P. and we cancelled a corresponding number of shares of Class B Common Stock (the "March 2024 Redemption"). Of the total OpCo Units acquired, 13.8 million were acquired for shares of Class A Common Stock, which were subsequently sold in an underwritten public offering at a price to the public of $10.50 per share, or a net price of $9.87 per share after deducting the underwriters' discounts and commissions, from which we did not receive any proceeds, nor incur any material expenses with respect to such acquisition. In connection with the underwritten public offering, we repurchased 2.3 million OpCo Units from Independence Energy Aggregator L.P. for 22.7 million in cash and we cancelled a corresponding number of shares of Class B Common Stock (the "March 2024 Repurchase," together with the March 2024 Redemption, the "March 2024 Equity Transactions").
Current wording
In March 2024, 16.1 million OpCo Units were acquired from Independence Energy Aggregator L.P. and we cancelled a corresponding number of shares of Class B Common Stock (the "March 2024 Redemption"). Of the total OpCo Units acquired, 13.8 million were acquired for shares of Class A Common Stock, which were subsequently sold in an underwritten public offering at a price to the public of $10.50 per share, or a net price of $9.87 per share after deducting the underwriters' discounts and commissions, from which we did not receive any proceeds, nor incur any material expenses with respect to such acquisition. In connection with the underwritten public offering, we repurchased 2.3 million OpCo Units from Independence Energy Aggregator L.P. for $22.7 million in cash and we cancelled a corresponding number of shares of Class B Common Stock (the "March 2024 Repurchase," together with the March 2024 Redemption, the "March 2024 Equity Transactions").
Previous wording
As a result of the April 2024 Class A Conversion and the March 2024 Equity Transactions (the "2024 Equity Transactions"), the total number of shares of our Class A Common Stock increased by 19.8 million shares and the total number of shares of our Class B Common Stock decreased by 22.1 million shares. Redeemable noncontrolling interests decreased by $470.7 million while APIC increased by $448.0 million as a result of the 2024 Equity Transactions to reflect the new ownership of OpCo as of June 30, 2024.
Current wording
As a result of the April 2024 Class A Conversion and the March 2024 Equity Transactions (the "2024 Equity Transactions"), the total number of shares of our Class A Common Stock increased by 19.8 million shares and the total number of shares of our Class B Common Stock decreased by 22.1 million shares. Redeemable noncontrolling interests decreased by $470.7 million while APIC increased by $448.0 million as a result of the 2024 Equity Transactions.
Previous wording
In October 2023, we consummated an unrelated acquisition contemplated by the Purchase and Sale Agreement, dated as of August 22, 2023, between our subsidiary and an unaffiliated third party, pursuant to which we agreed to acquire certain incremental working interests in oil and natural gas properties (the "October Western Eagle Ford Acquisition," and together with the July Western Eagle Ford Acquisition, the "Western Eagle Ford Acquisitions") in certain of our existing Western Eagle Ford assets from the seller for aggregate cash consideration of approximately $235.1 million, including certain customary purchase price adjustments.
Current wording
In October 2023, we consummated the unrelated acquisition contemplated by the Purchase and Sale Agreement, dated as of August 22, 2023, between our subsidiary and an unaffiliated third party, pursuant to which we agreed to acquire certain incremental working interests in oil and natural gas properties (the "October Western Eagle Ford Acquisition," and together with the July Western Eagle Ford Acquisition, the "Western Eagle Ford Acquisitions") in certain of our existing Western Eagle Ford assets from the seller for aggregate cash consideration of approximately $235.1 million, including certain customary purchase price adjustments.
Previous wording
During the three and six months ended June 30, 2024, we sold non-core assets to unrelated third-party buyers for $23.2 million in aggregate net cash proceeds and recorded a gain on the sale of assets of approximately $19.4 million.
Current wording
During the three and nine months ended September 30, 2024, we sold non-core assets to unrelated third-party buyers for $29.7 million in aggregate cash proceeds and recorded a gain on the sale of assets of approximately $19.4 million. In October 2024, we sold additional non-core assets to unrelated third-party buyers for $20.5 million in aggregate cash proceeds, subject to customary purchase price adjustments.
Previous wording
In addition, revenue from our midstream assets is supported by commercial agreements that have established minimum volume commitments. These midstream revenues comprise the majority of our midstream and other revenue. Midstream and other revenue accounts for 6% or less of our total revenues for the three and six months ended June 30, 2024 and 2023.
Current wording
In addition, revenue from our midstream assets is supported by commercial agreements that have established minimum volume commitments. These midstream revenues comprise the majority of our midstream and other revenue. Midstream and other revenue accounts for 5% or less of our total revenues for the three and nine months ended September 30, 2024 and 2023.
Previous wording
Total sales volume increased 2,326 MBoe and increased 5,124 MBoe during the three and six months ended June 30, 2024, respectively, compared to the three and six months ended June 30, 2023. The increases for the three and six months ended June 30, 2024 are primarily due to our Western Eagle Ford Acquisitions.
Current wording
Total sales volume increased 5,684 MBoe and increased 10,808 MBoe during the three and nine months ended September 30, 2024, respectively, compared to the three and nine months ended September 30, 2023. The increases for the three and nine months ended September 30, 2024 are primarily due to our Western Eagle Ford Acquisitions and the SilverBow Merger.
Previous wording
The oil and natural gas industry is cyclical and commodity prices can be highly volatile. In recent years, commodity prices have been subject to significant fluctuations, impacted by the COVID-19 pandemic and recovery, Russia’s invasion of Ukraine and the associated sanctions imposed on Russia, the Israel-Hamas conflict, actions taken by OPEC, sustained elevated inflation and increased U.S. drilling activity. Uncertainty persists regarding OPEC’s actions, increased U.S. drilling, inflation and the armed conflicts in Ukraine and Israel. Additionally, market concern regarding the health of the global banking sector and any resultant recessionary effects contributed, among other factors, to increased volatility in the price for oil and natural gas.
Current wording
The oil and natural gas industry is cyclical and commodity prices can be highly volatile. In recent years, commodity prices have been subject to significant fluctuations, impacted by the COVID-19 pandemic and recovery, Russia’s invasion of Ukraine and the associated sanctions imposed on Russia, the Israel-Hamas conflict and the broader conflict in the Middle East, actions taken by OPEC, sustained elevated inflation and increased U.S. drilling activity. Uncertainty persists regarding OPEC’s actions, increased U.S. drilling, inflation and the armed conflicts in Ukraine and the Middle East. Additionally, market concern regarding the health of the global banking sector and any resultant recessionary effects contributed, among other factors, to increased volatility in the price for oil and natural gas.
Previous wording
Oil revenue. Oil revenue increased $207.9 million, or 27%, in the six months ended June 30, 2024, compared to the six months ended June 30, 2023. This was driven by a $129.0 million increase in sales volume (10 MBbls/d or 16%) and higher realized oil prices that resulted in an increase of $78.9 million (an increase of 9% per Bbl). The increase in sales volumes is primarily driven by our Western Eagle Ford Acquisitions, while the increase in realized prices is due to improved oil realizations and higher index prices.
Current wording
Oil revenue. Oil revenue increased $43.8 million, or 9%, in the three months ended September 30, 2024, compared to the three months ended September 30, 2023. This was driven by a $95.4 million increase from higher sales volume (14 MBbls/d, or 19%), partially offset by lower realized oil prices that resulted in a decrease of $51.6 million (a decrease of 9% per Bbl). The increase in sales volumes was primarily driven by our Western Eagle Ford Acquisitions and the SilverBow Merger.
Previous wording
Natural gas revenue. Natural gas revenue decreased $82.9 million, or 39% in the six months ended June 30, 2024, compared to the six months ended June 30, 2023. This was driven by lower natural gas prices that resulted in a decrease of $112.2 million (a decrease of 46% per Mcf), partially offset by a $29.3 million increase in sales volume (45 MMcf/d, or 13%). The increase in sales volumes was primarily due to our Western Eagle Ford Acquisitions while the decrease in realized prices is due to lower gas realizations and lower index prices.
Current wording
Natural gas revenue. Natural gas revenue increased $6.7 million, or 9%, in the three months ended September 30, 2024, compared to the three months ended September 30, 2023. This was driven by a $39.0 million increase from higher sales volume (195 MMcf/d, or 54%), partially offset by lower natural gas prices that resulted in a decrease of $32.3 million (a decrease of 29% per Mcf). The increase in sales volumes was primarily due to our Western Eagle Ford Acquisitions and the SilverBow Merger, while the decrease in realized natural gas prices was due to lower index prices and realizations.
Previous wording
NGL revenue. NGL revenue increased $57.5 million, or 75%, in the six months ended June 30, 2024, compared to the six months ended June 30, 2023. This was driven primarily by a $40.5 million increase in sales volume (10 MBbls/d, or 53%) and higher realized NGL prices that resulted in an increase of $17.0 million (an increase of 15% per Bbl). The increase in sales volumes is primarily driven by our Western Eagle Ford Acquisitions.
Current wording
NGL revenue. NGL revenue increased $32.5 million, or 59%, in the three months ended September 30, 2024, compared to the three months ended September 30, 2023. This was driven primarily by a $34.6 million increase from higher sales volume (15 MBbls/d, or 60%), partially offset by lower realized NGL prices that resulted in a decrease of $2.1 million (a decrease of 2% per Bbl). The increase in sales volumes was primarily driven by our Western Eagle Ford Acquisitions and the SilverBow Merger.
Previous wording
Midstream and other revenue. Midstream and other revenue increased $22.3 million, or 169%, in the three months ended June 30, 2024, compared to the three months ended June 30, 2023, driven primarily by higher oil blending revenues in 2024.
Current wording
Midstream and other revenue. Midstream and other revenue increased $19.5 million, or 178%, in the three months ended September 30, 2024, compared to the three months ended September 30, 2023, driven primarily by higher oil blending revenues in 2024.
Previous wording
Operating expense. Operating expense increased $67.9 million, or 30%, in the three months ended June 30, 2024, compared to the three months ended June 30, 2023, driven primarily by the following factors:
Current wording
Operating expense. Operating expense increased $56.0 million, or 21%, in the three months ended September 30, 2024, compared to the three months ended September 30, 2023, driven primarily by the following factors:
Previous wording
(i)Lease and asset operating expense increased $20.4 million, or 16%, in the three months ended June 30, 2024, compared to the three months ended June 30, 2023, and decreased $0.22 per Boe, or 2%, to $9.98 per Boe. This $20.4 million increase was driven primarily by higher production from our Western Eagle Ford Acquisitions, which was more than offset on a per Boe basis with these additional volumes.
Current wording
(i)Lease and asset operating expense increased $5.4 million, or 4%, in the three months ended September 30, 2024, compared to the three months ended September 30, 2023, and decreased $2.62 per Boe, or 26%, to $7.62 per Boe. This $5.4 million increase was driven primarily by higher production from our Western Eagle Ford Acquisitions and the SilverBow Merger, which was more than offset on a per Boe basis with these additional volumes and cost reduction measures on our other assets.
Previous wording
(ii)Gathering, transportation and marketing expense increased $14.3 million, or 28%, in the three months ended June 30, 2024, compared to the three months ended June 30, 2023, and increased $0.33 per Boe, or 8%, to $4.40 per Boe. The increase was driven primarily by our Western Eagle Ford Acquisitions.
Current wording
(ii)Gathering, transportation and marketing expense increased $27.7 million, or 45%, in the three months ended September 30, 2024, compared to the three months ended September 30, 2023, and increased $0.17 per Boe, or 4%, to $4.44 per Boe. The increase was driven primarily by our Western Eagle Ford Acquisitions and the SilverBow Merger.
Previous wording
(iii)Production and other taxes increased $6.2 million, or 25%, in the three months ended June 30, 2024, compared to the three months ended June 30, 2023, and increased $0.12 per Boe, or 6%, to $2.08 per Boe. This increase was driven primarily by higher oil and gas revenues, which increased the tax base on which our production and other taxes are calculated.
Current wording
(iii)Production and other taxes increased $6.7 million, or 18%, in the three months ended September 30, 2024, compared to the three months ended September 30, 2023, and decreased $0.38 per Boe, or 15%, to $2.15 per Boe. This net increase was driven primarily by higher oil and gas revenues, which increased the tax base on which our production and other taxes are calculated.
Previous wording
(v)Midstream and other operating expense increased $28.0 million in the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily due to increased crude oil blending expense. The additional crude oil blending expense is more than offset by additional oil blending revenue included as part of our Midstream and other revenue.
Current wording
(v)Midstream and other operating expense increased $17.0 million in the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily due to increased crude oil blending expense. The additional crude oil blending expense is more than offset by additional oil blending revenue included as part of our Midstream and other revenue.
Previous wording
Depreciation, depletion and amortization. In the three months ended June 30, 2024, depreciation, depletion and amortization increased $52.5 million, or 33%, compared to the three months ended June 30, 2023, driven primarily by increased production from our Western Eagle Ford Acquisitions.
Current wording
Depreciation, depletion and amortization. In the three months ended September 30, 2024, depreciation, depletion and amortization increased $65.0 million, or 35%, compared to the three months ended September 30, 2023, driven primarily by increased production from our Western Eagle Ford Acquisitions and the SilverBow Merger.
Previous wording
Other operating costs. Other operating costs include exploration expense and gain or loss on sale of assets. Other operating costs decreased by $20.8 million, compared to the three months ended June 30, 2023, primarily driven by a $19.4 million gain on sale of assets in 2024 and.$1.3 million lower exploration expense recognized during the three months ended June 30, 2024.
Current wording
Other operating costs. Other operating costs include exploration expense and gain on sale of assets. Other operating costs increased by $14.6 million, compared to the three months ended September 30, 2023, primarily driven by $14.6 million higher exploration expense recognized during the three months ended September 30, 2024.
Previous wording
In the three months ended June 30, 2024, we incurred interest expense of $42.4 million, as compared to $31.1 million in the three months ended June 30, 2023, a 36% increase. This increase was driven primarily by higher average debt balances driven by the Western Eagle Ford Acquisitions and higher interest rates associated with the issuance of the 2028 Notes, the 2032 Notes and 2033 Notes (as defined below).
Current wording
In the three months ended September 30, 2024, we incurred interest expense of $61.8 million, as compared to $42.2 million in the three months ended September 30, 2023, a 47% increase. This increase was driven primarily by higher average debt balances driven by the Western Eagle Ford Acquisitions and the SilverBow Merger.
Previous wording
We have entered into derivative contracts to manage our exposure to commodity price risks that impact our revenues. Our gain on commodity derivatives during the three months ended June 30, 2024 decreased by $29.5 million, or 88%, from a comparable gain during the three months ended June 30, 2023 primarily due to changes in commodity prices relative to our strike price.
Current wording
We have entered into derivative contracts to manage our exposure to commodity price risks that impact our revenues. Our gain on commodity derivatives during thethree months ended September 30, 2024 increased by $349.0 million, or 138%, from a comparable loss during the three months ended September 30, 2023 primarily due to changes in commodity prices relative to our strike price.
Previous wording
We are a corporation that is subject to U.S. federal and state income taxes on our allocable share of any taxable income from OpCo. OpCo is a partnership and is generally not subject to U.S. federal and certain state taxes. For the six months ended June 30, 2024 and June 30, 2023, we recognized income tax expense of $7.3 million and expense of $25.5 million, respectively, for an effective tax rate of 16.2% and 7.5%, respectively. Our effective tax rate is lower than the U.S. federal statutory income tax rate of 21% primarily due to effects of removing income and losses related to our noncontrolling interests and redeemable noncontrolling interests.
Current wording
We are a corporation that is subject to U.S. federal and state income taxes on our allocable share of any taxable income from OpCo. OpCo is a partnership and is generally not subject to U.S. federal and certain state taxes. For the three months ended September 30, 2024 and September 30, 2023, we recognized income tax benefit of $1.6 million and $20.6 million, respectively, for an effective tax rate of 22.7% and 13.6%, respectively. Our effective tax rate is typically lower than the U.S. federal statutory income tax rate of 21% primarily due to effects of removing income and losses related to our noncontrolling interests and redeemable noncontrolling interests. Our effective tax rate for the three months ended September 30, 2024 was driven higher as a result of deductible costs associated with the SilverBow Merger.
Previous wording
Adjusted EBITDAX (non-GAAP) increased by $95.1 million, or 42%, in the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily driven by higher realized oil prices and additional production generated by the Western Eagle Ford Acquisitions.
Current wording
Adjusted EBITDAX (non-GAAP) increased by $140.8 million, or 49%, in the three months ended September 30, 2024, compared to the three months ended September 30, 2023, primarily driven by additional production generated by our Western Eagle Ford Acquisitions and the SilverBow Merger.
Previous wording
Levered Free Cash Flow (non-GAAP) increased by $100.9 million, or 220%, in the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily driven by our increased Adjusted EBITDAX and $28.0 million of decreased capital expenditures.
Current wording
Levered Free Cash Flow (non-GAAP) decreased by $2.6 million, or 2%, in the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily driven by $116.8 million of increased capital expenditures and additional interest expense, partially offset by our increased Adjusted EBITDAX.
Previous wording
Oil revenue. Oil revenue increased $106.4 million, or 27%, in the three months ended June 30, 2024, compared to the three months ended June 30, 2023. This was driven by $53.6 million increase in sales volume (9 MBbls/d or 14%) and higher realized oil prices that resulted in an increase of $52.8 million (an increase of 12% per Bbl). The increase in sales volumes is primarily driven by our Western Eagle Ford Acquisitions.
Current wording
Oil revenue. Oil revenue increased $251.7 million, or 20%, in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. This was driven by a $223.7 million increase from higher sales volume (11 MBbls/d or 17%) and higher realized oil prices that resulted in an increase of $28.0 million (an increase of 2% per Bbl). The increase in sales volumes is primarily driven by our Western Eagle Ford Acquisitions and the SilverBow Merger.
Previous wording
Natural gas revenue. Natural gas revenue decreased $0.8 million, or 1% in the three months ended June 30, 2024, compared to the three months ended June 30, 2023. This was driven by a $6.0 million increase in sales volume (37 MMcf/d, or 11%), mostly offset by lower natural gas prices that resulted in a decrease of $6.8 million (a decrease of 12% per Mcf). The increase in sales volumes is primarily due to our Western Eagle Ford Acquisitions.
Current wording
Natural gas revenue. Natural gas revenue decreased $76.2 million, or 27%, in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. This was driven by lower natural gas prices that resulted in a decrease of $155.6 million (a decrease of 43% per Mcf), partially offset by a $79.4 million increase from higher sales volume (95 MMcf/d, or 27%). The increase in sales volumes was primarily due to our Western Eagle Ford Acquisitions and the SilverBow Merger.
Previous wording
NGL revenue. NGL revenue increased $33.1 million, or 98%, in the three months ended June 30, 2024, compared to the three months ended June 30, 2023. This was driven primarily by a $19.0 million increase in sales volume (11 MBbls/d, or 58%) and higher realized NGL prices that resulted in an increase of $14.1 million (an increase of 27% per Bbl). The increase in sales volumes is primarily driven by our Western Eagle Ford Acquisitions.
Current wording
NGL revenue. NGL revenue increased $90.0 million, or 69%, in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023. This was driven primarily by a $74.8 million increase from higher sales volume (12 MBbls/d, or 57%) and higher realized NGL prices that resulted in an increase of $15.1 million (an increase of 7% per Bbl). The increase in our NGL volumes was primarily driven by our Western Eagle Ford Acquisitions and the SilverBow Merger.
Previous wording
Midstream and other revenue. Midstream and other revenue increased $45.7 million, or 173%, in the six months ended June 30, 2024, compared to the six months ended June 30, 2023, driven primarily by higher oil blending revenues in 2024.
Current wording
Midstream and other revenue. Midstream and other revenue increased $65.2 million, or 175%, in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, driven primarily by higher oil blending revenue in 2024.
Previous wording
Operating expense. Operating expense increased $100.3 million, or 20%, in the six months ended June 30, 2024, compared to the six months ended June 30, 2023, driven primarily by the following factors:
Current wording
Operating expense. Operating expense increased $156.3 million, or 20%, in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, driven primarily by the following factors:
Previous wording
(ii)Gathering, transportation and marketing expense increased $36.5 million, or 37%, in the six months ended June 30, 2024, compared to the six months ended June 30, 2023, and increased $0.54 per Boe, or 14%, to $4.51 per Boe. This increase was driven primarily by our Western Eagle Ford Acquisitions.
Current wording
(ii)Gathering, transportation and marketing expense increased $64.2 million, or 40%, in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, and increased $0.40 per Boe, or 10%, to $4.48 per Boe. This increase was driven primarily by our Western Eagle Ford Acquisitions and the SilverBow Merger.
Previous wording
(iii)Production and other taxes decreased $16.2 million, or 20%, in the six months ended June 30, 2024, compared to the six months ended June 30, 2023 and decreased $1.08 per Boe, or 34%, to $2.12 per Boe. This decrease was driven primarily by lower natural gas revenues and increased gathering, transportation and marketing expense, which decreased the tax base on which a portion of our production and other taxes are calculated.
Current wording
(iii)Production and other taxes decreased $9.5 million, or 8%, in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023 and decreased $0.82 per Boe, or 28%, to $2.13 per Boe. This decrease was driven primarily by lower tax rates and increased gathering, transportation and marketing expense, which decreased the tax base on which a portion of our production and other taxes are calculated.
Previous wording
(iv)Workover expense decreased $1.4 million, or 4%, in the six months ended June 30, 2024, compared to the six months ended June 30, 2023, and decreased $0.26 per Boe, or 21%, to $0.99 per Boe. This decrease was primarily caused by lower natural gas prices and related reduced activity.
Current wording
(iv)Workover expense decreased $2.2 million, or 5%, in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, and decreased $0.30 per Boe, or 25%, to $0.90 per Boe. This decrease was primarily caused by lower commodity prices and a related reduction in discretionary activity.
Previous wording
(v)Midstream and other operating expense increased $52.0 million, or 943%, in the six months ended June 30, 2024, compared to the six months ended June 30, 2023 primarily due to increased crude oil blending expense. The additional crude oil blending expense is more than offset by additional oil blending revenue included as part of our Midstream and other revenue.
Current wording
(v)Midstream and other operating expense increased $69.0 million, or 500%, in the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023 primarily due to increased crude oil blending expense. The additional crude oil blending expense is more than offset by additional oil blending revenue included as part of our Midstream and other revenue.
Previous wording
Depreciation, depletion and amortization. In the six months ended June 30, 2024, depreciation, depletion and amortization increased $82.6 million, or 27%, compared to the six months ended June 30, 2023, driven primarily by increased production from our Western Eagle Ford Acquisitions.
Current wording
Depreciation, depletion and amortization. In the nine months ended September 30, 2024, depreciation, depletion and amortization increased $147.6 million, or 30%, compared to the nine months ended September 30, 2023, driven primarily by our Western Eagle Ford Acquisitions and the SilverBow Merger.
Previous wording
General and administrative expense. G&A expense increased $27.5 million, or 44%, for the six months ended June 30, 2024, compared to the six months ended June 30, 2023, primarily driven by (i) an increase in non-cash equity-based compensation expense of $15.3 million (2024 and 2023 include additional catch up expense of $21.1 million and $18.0 million due to changes in estimates) and (ii) $5.9 million higher transaction and nonrecurring related expenses and higher recurring G&A including higher expense payable under the Management Agreement with KKR Energy Assets Manager LLC, which is the pro-rata portion of the Manager Compensation borne by us. The increase in Manager Compensation and our non-cash equity-based compensation expense is due to an increase in public ownership of Class A Common Stock as a result of (i) our equity issuance in 2023 that increased public shares outstanding and also increased the annual Manager Compensation by $2.2 million to $55.5 million annually, and (ii) share redemptions for our Class A Common Stock completed in the first quarter of 2024 and throughout 2023, which does not increase the overall Manager Compensation, but does increase the portion of Manager Compensation borne by us. While only the portion of Manager Compensation borne by us impacts our consolidated statements of operations, we include the full Manager Compensation in the calculation of Adjusted EBITDAX and Levered Free Cash Flow (the difference between the Manager Compensation and the amount presented in G&A is represented by “Certain-redeemable noncontrolling interest distributions made by OpCo related to Manager Compensation”).
Current wording
General and administrative expense. General and administrative expense ("G&A") increased $143.3 million, or 135%, for the nine months ended September 30, 2024, compared to the nine months ended September 30, 2023, primarily driven by (i) an increase in equity-based compensation expense of $74.4 million (2024 and 2023 include additional catch up expense of $85.5 million and $27.7 million due to changes in estimates), (ii) $58.2 million higher transaction and nonrecurring related expenses driven by the SilverBow Merger and (iii) higher recurring G&A, primarily driven by higher Manager Compensation expense. The increase in the Manager Compensation expense is due to an increase in public ownership of Class A Common Stock and a corresponding increase in ownership of OpCo as a result of (i) our equity issuances that increased Class A Common Stock outstanding (and increased our ownership of OpCo), which increased the Base Input under the Management Agreement, and
Previous wording
General and administrative expense. General and administrative expense ("G&A") increased $6.0 million, or 15%, for the three months ended June 30, 2024, compared to the three months ended June 30, 2023, primarily driven by higher recurring G&A including higher expense payable under the Management Agreement with KKR Energy Assets Manager LLC, which is the pro-rata portion of the Manager Compensation borne by us and a $6.6 million increase in transaction and nonrecurring costs. partially offset by a decrease in non-cash equity-based compensation expense of $5.3 million. The increase in Manager Compensation expense is due to an increase in public ownership of Class A Common Stock as a result of (i) our equity issuance in 2023 that increased public shares outstanding and also increased the annual Manager Compensation by $2.2 million to $55.5 million annually, and (ii) share redemptions for our Class A Common Stock completed in the first quarter of 2024 and the second half of 2023, which does not increase the overall Manager Compensation, but does increase the portion of Manager Compensation borne by us. While the increase in public ownership of Class A Common Stock increased our non-cash equity-based compensation expense, G&A expense during the three months ended June 30, 2024 includes an additional catch up expense of $7.0 million due to change in estimate and the G&A expense during the three months ended June 30, 2023 included an additional catch up expense of $18.0 million. While only the portion of Manager Compensation borne by us impacts our consolidated statements of operations, we include the full Manager Compensation in the calculation of Adjusted EBITDAX and Levered Free Cash Flow (the difference between the Manager Compensation and the amount presented in G&A is represented by “Certain-redeemable noncontrolling interest distributions made by OpCo related to Manager Compensation”).
Current wording
(ii) share redemptions for our Class A Common Stock, which does not increase the Base Input, but does increase the Manager Compensation due to our increased ownership of OpCo.
Showing the first 40 of 68 pairs. Open the source sections for the rest.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The shares of Class A Common Stock were sold at a price per share of $10.74, pursuant to Rule 144, through a broker-dealer. We did not receive any proceeds or incur any material expenses related to the April 2024 Class A Conversion.