Vitesse Energy, Inc.
For the period ended Mar 31, 2026. Filed May 4, 2026.
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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.
Mar 31, 2026 · Filed May 4, 2026
VTS$14.78-1.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-09-30; filed 2025-11-03.
0001944558-25-000081
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-04.
0001944558-26-000024
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 120 previous paragraphs and 95 current paragraphs.
48 unchanged; 39 reworded; 8 added; 21 removed; 12 previous and 0 current paragraphs rearranged.
Tables are not compared: 6 previous and 4 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 (8)
Current report
On March 26, 2026 we announced a leadership transition with Jamie Benard set to join our team as President and Chief Executive Officer effective May 1, 2026, the resignation of Robert Gerrity as our Chief Executive Officer and Chairman and the transition on May 1, 2026 of Brian Cree our existing President and Interim Chief Executive Officer transitioning to Senior Advisor and his retirement on December 31, 2026. This leadership transition does not change our overall business strategy.
Current report
■Paid $23.5 million in dividends to our equity holders.
Current report
■Net loss of $42.3 million, including an unrealized loss on commodity derivatives of $48.2 million.
Current report
■Cash flows from operations of $24.0 million.
Current report
Lease Operating Expense. Lease operating expense increased to $15.3 million for the three months ended March 31, 2026 from $13.9 million for the three months ended March 31, 2025 primarily as a result of a 7% increase in production volumes between periods.
Current report
General and Administrative Expense. General and administrative expense decreased to $8.6 million for the three months ended March 31, 2026 from $12.1 million for the three months ended March 31, 2025. General and administrative expense on a per Boe basis decreased to $5.98 for the three months ended March 31, 2026 from $9.00 for the three months ended March 31, 2025. The decrease in general and administrative expense was primarily due to Lucero Acquisition transaction costs of $4.6 million incurred during the three months ended March 31, 2025, partially offset by $2.4 million in separation benefits incurred during the three months ended March 31, 2026 related to our leadership transition. Excluding these costs the per Boe rate for the three months ended March 31, 2025 would have been $5.57 and the Boe rate for the three months ended March 31, 2026 would have been $4.31.
Current report
Income Tax Expense.
Current report
In April 2026, in conjunction with the semi-annual borrowing base redetermination, the Revolving Credit Facility was amended to decrease the borrowing base to $275 million and increase the elected commitments to $275 million. In addition, the derivative compliance requirement was amended to require coverage of not less than 40% of reasonably anticipated PDP production for each fiscal quarter over the following four quarters, but such requirements are increased to 50% for the first eight quarters if both the Utilization Percentage is more than 50% and the EBITDAX ratio is more than 1.50 to 1.00.
Removed paragraphs (21)
Previous report
■Paid quarterly dividend of $0.5625 per share to our common stockholders.
Previous report
■Net loss of $1.3 million.
Previous report
■Cash flows from operations of $49.4 million.
Previous report
The average year-to-date 2025 NYMEX oil price was $66.50 per barrel or 14% lower than the 2024 average year-to-date oil price per barrel. Our settled derivatives increased our average year-to-date 2025 and 2024 realized oil price per barrel by $2.94 and $0.50, respectively. Our average year-to-date 2025 realized oil price per barrel after reflecting settled derivatives was $63.90 compared to $72.12 during the same period in 2024.
Previous report
The average year-to-date 2025 NYMEX natural gas price was $3.45 per MMBtu, or 64% higher than the 2024 average year-to-date price per MMBtu. During the nine months ended September 30, 2025, our settled derivatives increased our realized natural gas price by $0.11 per Mcf, bringing our realized natural gas price after reflecting settled derivatives to $2.71 per Mcf. During the nine months ended September 30, 2024, we had no natural gas price derivatives in place and our realized natural gas price was $1.29 per Mcf.
Previous report
Lease Operating Expense. Lease operating expense increased to $11.05 per Boe for the three months ended September 30, 2025 from $9.71 per Boe for the three months ended September 30, 2024. The increase per Boe for the three months ended September 30, 2025 compared with the three months ended September 30, 2024 was due in part to a $1.10 per Boe increase in workover costs between periods and a $0.21 per Boe increase in transportation expense included in lease operating expense.
Previous report
General and Administrative Expense. General and administrative expense increased to $5.7 million for the three months ended September 30, 2025 from $5.2 million for the three months ended September 30, 2024 primarily due to incremental costs related to becoming an operator. General and administrative expense on a per Boe basis decreased to $3.44 for the three months ended September 30, 2025 from $4.37 for the three months ended September 30, 2024. The decrease in per Boe cost is associated with economies of scale on a 40% increase in production between periods.
Previous report
Results of Operations
Previous report
Nine Months Ended September 30, 2025 Compared with Nine Months Ended September 30, 2024
Previous report
Lease Operating Expense. Lease operating expense increased to $10.95 per Boe for the nine months ended September 30, 2025 from $10.00 per Boe for the nine months ended September 30, 2024. The increase per Boe for the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024 was due in part to a $1.03 per Boe increase in workover costs between periods.
Previous report
General and Administrative Expense. General and administrative expense increased to $18.2 million for the nine months ended September 30, 2025 from $15.3 million for the nine months ended September 30, 2024. During the nine months ended September 30, 2025, $7.1 million of litigation costs were reimbursed as a result of the settlement discussed in Note 9 (“Commitments and Contingencies”) to the Condensed Consolidated Financial Statements. Excluding net litigation costs and Lucero Acquisition transaction costs of $5.2 million, general and administrative expense on a per Boe basis decreased to $3.64 for the nine months ended September 30, 2025 from $4.30 for the nine months ended September 30, 2024. The decrease in per Boe cost is associated with economies of scale on a 33% increase in production between periods.
Previous report
DD&A. DD&A increased to $95.4 million for the nine months ended September 30, 2025 compared with $73.8 million for the nine months ended September 30, 2024. The increase was the result of a 33% increase in production, partially offset by a $0.57 per Boe decrease in the DD&A rate for the nine months ended September 30, 2025 compared with the nine months ended September 30, 2024. The lower DD&A rate was driven by the properties acquired in the Lucero Acquisition in 2025. The increase in production accounted for a $23.6 million increase in DD&A expense while the decrease in the DD&A rate accounted for a $2.0 million decrease in DD&A expense.
Previous report
Equity-Based Compensation. During the nine months ended September 30, 2025, equity-based compensation expense increased to $7.6 million from $5.9 million during the nine months ended September 30, 2024. Equity-based compensation expense was higher in 2025 due to additional LTIP RSUs and PSUs awarded to employees and directors at a higher grant date price.
Previous report
Interest Expense. Interest expense increased to $7.8 million for the nine months ended September 30, 2025 from $7.5 million for the nine months ended September 30, 2024. The increase for the nine months ended September 30, 2025 was due to a higher average debt balance during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, partially offset by a lower interest rate.
Previous report
Commodity Derivative Gain, Net. The commodity derivative gain was $19.0 million for the nine months ended September 30, 2025 compared with a gain of $3.9 million for the nine months ended September 30, 2024. Gain (Loss) on Commodity Derivatives is comprised of (1) cash gains and losses we recognize on settled commodity derivative instruments during the period, and (2) unsettled gains and losses we incur on commodity derivative instruments outstanding at period-end.
Previous report
Income Tax Expense. During the nine months ended September 30, 2025, we recorded an income tax expense of $9.4 million related to federal and state income taxes compared to an income tax expense of $9.2 million for the nine months ended September 30, 2024.
Previous report
Business Combinations
Previous report
We account for business combinations using the acquisition method of accounting. Under this method, we recognize the identifiable assets acquired and liabilities assumed at their estimated acquisition-date fair values. Transaction and integration costs related to business combinations are expensed as incurred.
Previous report
In valuing the assets acquired and liabilities assumed, we make various assumptions to estimate fair values. Fair value is a market-based measurement that reflects the assumptions market participants would use in pricing an asset or liability. For the Lucero Acquisition, the most significant assumptions related to the estimated fair value of the proved oil and gas properties. The fair value of these properties was determined using the income approach, which is based on discounted future net cash flows derived from the properties' reserve reports. The valuation relied primarily on unobservable inputs, which are classified as Level 3 within the fair value hierarchy under ASC 820. Key inputs included estimates of future production volumes from the proved reserves, future commodity prices based on forward strip price curves (adjusted for basis differentials), estimates of lease operating, development and abandonment costs, and the application of a discount rate.
Previous report
Any excess of the acquisition price over the estimated fair value of net assets acquired is recorded as goodwill and is subject to ongoing impairment evaluation as described. Any excess of the estimated fair value of net assets acquired over the acquisition price is recorded in current earnings as a gain on bargain purchase. Deferred taxes are recorded for any differences between the assigned values and the tax basis of assets and liabilities. Estimated deferred taxes are based on available information concerning the tax basis of assets acquired and liabilities assumed and loss carryforwards at the acquisition date, although such estimates may change in the future as additional information becomes known.
Previous report
A description of our significant accounting policies and fair value measurements is included in Note 2 (“Significant Accounting Policies”) and Note 4 (“Fair Value Measurements”), respectively, to the Condensed Consolidated Financial Statements set forth in Part I, Item 1 Financial Statements.
Reworded paragraphs (39)
Previous wording
Our business strategy is focused on creating long-term stockholder value through the profitable acquisition, development and production of oil and natural gas assets that provide an attractive return on invested capital, while maintaining a strong balance sheet and distributing a meaningful dividend to our stockholders. We invest in working and mineral interests in oil and natural gas properties with our core area of focus currently in the Bakken and Three Forks formations of the Williston Basin of North Dakota and Montana. We also have interests in wells in the Denver-Julesburg Basin located in Colorado and Wyoming and the Powder River Basin located in Wyoming. As of September 30, 2025, we had a working interest in 6,326 gross (225.7 net) productive wells and 268 gross (5.6 net) wells that were being drilled or completed, and an additional 377 gross (15.2 net) wells that had been permitted for development by our operators. In addition, we had a royalty only interest in 1,286 gross (3.2 net) productive wells.
Current wording
Our business strategy is focused on creating long-term stockholder value through the profitable acquisition, development and production of oil and natural gas assets that provide an attractive return on invested capital, while maintaining a strong balance sheet and distributing a meaningful dividend to our stockholders. We invest in working and mineral interests in oil and natural gas properties with our core area of focus currently in the Bakken and Three Forks formations of the Williston Basin of North Dakota and Montana. We also have interests in wells in the Denver-Julesburg Basin located in Colorado and Wyoming and the Powder River Basin located in Wyoming. As of March 31, 2026, we had a working interest in 6,427 gross (226.0 net) productive wells and 303 gross (6.2 net) wells that were being drilled or completed, and an additional 282 gross (13.7 net) wells that had been permitted for development by our operators. In addition, we had a royalty only interest in 1,299 gross (3.1 net) productive wells.
Previous wording
■Production of 18,163 BOE/day with 65% of production from oil.
Current wording
■Production of 15,962 Boe/d with 63% of production from oil.
Previous wording
■Invested $31.8 million in capital development and acquisitions.
Current wording
■Invested $18.7 million in capital development and acquisitions, net of divestitures.
Previous wording
■Total debt of $114.0 million at September 30, 2025.
Current wording
■Total debt of $144.5 million at March 31, 2026.
Previous wording
Commodity prices are a significant factor impacting our earnings, operating cash flows and our acquisition and divestiture strategy, as well as the decisions of us and our operators in conducting operations. During the last several years, prices for oil and natural gas have experienced periodic downturns and sustained volatility, impacted by general economic and political conditions, the ongoing military conflict between Russia and Ukraine, conflict in the Middle East, supply chain constraints, elevated interest rates and costs of capital, and changes in production by OPEC and its key member, Saudi Arabia, and certain other non-OPEC oil-producing countries.
Current wording
Commodity prices are a significant factor impacting our earnings, operating cash flows and our acquisition and divestiture strategy, as well as the decisions of us and our operators in conducting operations. During the last several years, prices for oil and natural gas have experienced sustained volatility, impacted by general economic and political conditions, the conflict between Russia and Ukraine, conflict in the Middle East, including Iran, the situation in Venezuela, supply chain constraints, elevated interest rates and costs of capital, and changes in production by OPEC and its key member, Saudi Arabia, and certain other non-OPEC oil-producing countries. Most recently, the conflict in Iran and disruption of maritime traffic through the Strait of Hormuz has caused significant volatility in commodity prices.
Previous wording
As a result of such commodity price volatility, which we expect to continue throughout 2025, our earnings and operating cash flows can vary substantially. While we do hedge a substantial portion of our production, we are still significantly subject to movements in commodity prices. Such volatility can make it difficult to predict future effects on our financial results and the decisions of our operators. Factors that we expect will continue to impact commodity prices include product demand connected with global economic conditions, inflationary factors, industry production and inventory levels, the United States Department of Energy’s planned repurchases (or possible releases) of oil from the strategic petroleum reserve, technology advancements, production quotas or other actions imposed by OPEC and other oil-producing countries, the imposition of and changes in tariffs and other controls on imports and exports and resulting consequences of such, actions of regulators, and regional supply interruptions or fears thereof that may be caused by military conflicts, civil unrest or political uncertainty, including a prolonged U.S. government shutdown. Any of the foregoing can have a substantial impact on the prices of oil and natural gas, which in turn impacts our decisions and the decision of our operators to drill and extract resources.
Current wording
As a result of such commodity price volatility, which we expect to continue throughout 2026, our earnings and operating cash flows can vary substantially. While we do hedge a substantial portion of our production, we are still significantly subject to movements in commodity prices. Such volatility can make it difficult to predict future effects on our financial results and the decisions of our operators. Factors that we expect will continue to impact commodity prices include product demand connected with global economic conditions, inflationary factors, industry production and inventory levels, the United States Department of Energy’s sales and purchases related to the U.S. strategic petroleum reserve, technology advancements, production quotas or other actions imposed by OPEC and other oil-producing countries, the imposition of and changes in tariffs and other controls on imports and exports and resulting consequences of such, actions of regulators, and regional supply interruptions or fears thereof that may be caused by military conflicts, civil unrest or political uncertainty, including as a result of the conflict in Iran and disruption of maritime traffic through the Strait of Hormuz. Any of the foregoing can have a substantial impact on the prices of oil and natural gas, which in turn impacts our decisions and the decision of our operators to drill and extract resources.
Previous wording
Commodity derivative gain, net. We utilize commodity derivative financial instruments to reduce our exposure to fluctuations in the prices of oil and gas. Gain (loss) on commodity derivatives, net is comprised of (1) cash gains and losses we recognize on settled commodity derivatives during the period, and (2) non-cash mark-to-market gains and losses we incur on commodity derivative instruments outstanding at period-end.
Current wording
Commodity derivative gain (loss), net. We utilize commodity derivative financial instruments to reduce our exposure to fluctuations in the prices of oil and gas. Gain (loss) on commodity derivatives, net is comprised of (1) cash gains and losses we recognize on settled commodity derivatives during the period, and (2) non-cash mark-to-market gains and losses we incur on commodity derivative instruments outstanding at period-end.
Previous wording
General and administrative expenses. General and administrative expenses include overhead, including payroll and benefits for our staff, costs of maintaining our headquarters, costs of managing our acquisition and development operations, franchise taxes, audit and other professional fees and legal compliance. During the nine months ended September 30, 2025, general and administrative expenses included non-recurring costs related to the Lucero Acquisition and an offset for reimbursement of past legal expenses as a result of the settlement discussed in Note 9 (“Commitments and Contingencies”) to the Condensed Consolidated Financial Statements.
Current wording
General and administrative expenses. General and administrative expenses include overhead, including payroll and benefits for our staff, costs of maintaining our headquarters, costs of managing our acquisition and development operations, franchise taxes, audit and other professional fees and legal compliance. During the three months ended March 31, 2025, general and administrative expenses included non-recurring costs related to the Lucero Acquisition.
Previous wording
Impairment expense. Under the successful efforts method of accounting, we review our oil and natural gas properties for impairment whenever events and circumstances indicate that a decline in the recoverability of their carrying value may have occurred. Whenever we conclude the carrying value may not be recoverable, we estimate the expected undiscounted future net cash flows of our oil and natural gas properties using proved and risked probable and possible reserves based on our development plans and best estimate of future production, commodity pricing, reserve risking, gathering, processing and transportation deductions, production tax rates, lease operating expenses and future development costs. We compare such undiscounted future net cash flows to the carrying amount of the oil and natural gas properties in each depletion pool to determine if the carrying amount is recoverable. If the undiscounted future net cash flows exceed the carrying amount of the aggregated oil and natural gas properties, no impairment is recorded. If the carrying amount of the oil and natural gas properties exceeds the undiscounted future net cash flows, we will record an impairment expense to reduce the carrying value to fair value as of the balance sheet date. The factors used to determine fair value may include, but are not limited to, recent sales prices of comparable properties, indications from marketing activities, the present value of future revenues, net of estimated operating and development costs using estimates of reserves, future commodity pricing, future production estimates, anticipated capital expenditures and various discount rates commensurate with the risk and current market conditions associated with realizing the projected cash flows. There were no proved oil and gas property impairments during the three and nine months ended September 30, 2025 and 2024.
Current wording
Impairment expense. Under the successful efforts method of accounting, we review our oil and natural gas properties for impairment whenever events and circumstances indicate that a decline in the recoverability of their carrying value may have occurred. Whenever we conclude the carrying value may not be recoverable, we estimate the expected undiscounted future net cash flows of our oil and natural gas properties using proved and risked probable and possible reserves based on our development plans and best estimate of future production, commodity pricing, reserve risking, gathering, processing and transportation deductions, production tax rates, lease operating expenses and future development costs. We compare such undiscounted future net cash flows to the carrying amount of the oil and natural gas properties in each depletion pool to determine if the carrying amount is recoverable. If the undiscounted future net cash flows exceed the carrying amount of the aggregated oil and natural gas properties, no impairment is recorded. If the carrying amount of the oil and natural gas properties exceeds the undiscounted future net cash flows, we will record an impairment expense to reduce the carrying value to fair value as of the balance sheet date. The factors used to determine fair value may include, but are not limited to, recent sales prices of comparable properties, indications from marketing activities, the present value of future revenues, net of estimated operating and development costs using estimates of reserves, future commodity pricing, future production estimates, anticipated capital expenditures and various discount rates commensurate with the risk and current market conditions associated with realizing the projected cash flows. There were no proved oil and gas property impairments during the three months ended March 31, 2026 and 2025.
Previous wording
The price that we receive for the oil and natural gas we produce is largely a function of market supply and demand. Because our oil and gas revenues are heavily weighted toward oil, we are more significantly impacted by changes in oil prices than by changes in the price of natural gas. Worldwide supply in terms of output, especially production from properties within the United States, the production quotas set by OPEC and certain other oil-producing countries, the conflicts in Ukraine and in the Middle East and the strength of the U.S. dollar can adversely impact oil prices.
Current wording
The price that we receive for the oil and natural gas we produce is largely a function of market supply and demand. Because our oil and gas revenues are heavily weighted toward oil, we are more significantly impacted by changes in oil prices than by changes in the price of natural gas. Worldwide supply in terms of output, especially production from properties within the United States, the production quotas set by OPEC and certain other oil-producing countries, the conflicts in Ukraine and in the Middle East, including Iran, the situation in Venezuela and the strength or weakness of the U.S. dollar can impact oil prices.
Previous wording
The average third quarter 2025 NYMEX oil price was $64.84 per barrel or 14% lower than the average oil price per barrel in the third quarter of 2024. Our settled derivatives increased our realized oil price per barrel by $2.98 and $1.77 in the third quarter of 2025 and 2024, respectively. Our average third quarter 2025 realized oil price per barrel after reflecting settled derivatives was $62.71 compared to $71.20 during the same period in 2024.
Current wording
The average first quarter 2026 NYMEX oil price was $72.43 per barrel or 2% higher than the average NYMEX oil price per barrel in the first quarter of 2025. Our settled derivatives decreased and increased our realized oil price per barrel by $4.91 and $0.75 in the first quarter of 2026 and 2025, respectively. Our average first quarter 2026 realized oil price per barrel after reflecting settled derivatives was $61.85 compared to $64.93 during the same period in 2025.
Previous wording
The average third quarter 2025 NYMEX natural gas price was $3.03 per MMBtu, or 44% higher than the average NYMEX price per MMBtu in the third quarter of 2024. In the third quarter 2025, our settled derivatives increased our realized natural gas price by $0.29 per Mcf, bringing our realized natural gas price after reflecting settled derivatives to $1.14 per Mcf. In the third quarter 2024, we had no natural gas price derivatives in place and our realized natural gas price was $0.90 per Mcf.
Current wording
The average first quarter 2026 NYMEX natural gas price was $4.71 per MMBtu, or 14% higher than the average NYMEX price per MMBtu in the first quarter of 2025. In the first quarter of 2026, our settled derivatives decreased our realized natural gas price per Mcf by $0.75, bringing our realized natural gas price after reflecting settled derivatives to $1.54 per Mcf. In the first quarter of 2025, we had no realized natural gas derivative settlements and our realized natural gas price was $2.81 per Mcf.
Previous wording
Oil and Natural Gas Revenue and Volumes. Oil and natural gas revenue increased to $67.4 million for the three months ended September 30, 2025 from $58.3 million for the three months ended September 30, 2024. The increase in oil and natural gas revenue was due to a 40% increase in production volumes, driven by acquisition and development activity (including the Lucero Acquisition), which was partially offset by a 17% decrease in the average realized prices per Boe before hedging for the three months ended September 30, 2025. The increase in production volumes increased oil and natural gas revenue by approximately $19.1 million, while the decrease in average realized prices per Boe before hedging decreased oil and natural gas revenue by approximately $10.0 million.
Current wording
Oil and Natural Gas Revenue and Volumes. Oil and natural gas revenue increased to $67.4 million for the three months ended March 31, 2026 from $66.2 million for the three months ended March 31, 2025. The increase in oil and natural gas revenue was due to a 7% increase in production volumes, driven by acquisition and development activity (including the Lucero Acquisition for a full period in the most recently completed quarter), which was partially offset by a 4% decrease in the average realized prices per Boe before hedging for the three months ended March 31, 2026. The increase in production volumes increased oil and natural gas revenue by $4.2 million, while the decrease in average realized prices per Boe before hedging decreased oil and natural gas revenue by $2.9 million.
Previous wording
During the nine months ended September 30, 2025, $3.3 million and $13.6 million of recoupments of oil and gas revenue, respectively, were recognized as part of the settlement discussed in Note 9 (“Commitments and Contingencies”) to the Condensed Consolidated Financial Statements. Our oil price differential to the weighted average benchmark price during the nine months ended September 30, 2025 was negative $5.33 per barrel, as compared to a negative $6.05 per barrel during the nine months ended September 30, 2024, primarily due to the legal settlement increasing the realized price per Bbl in the period, partially offset by less favorable local market pricing as compared to the benchmark price. Our net realized natural gas price during the nine months ended September 30, 2025 was $2.60 per Mcf, representing a 77% realization relative to the weighted average NYMEX natural gas price, compared to a net realized natural gas price of $1.29 per Mcf during the nine months ended September 30, 2024, representing a 62% realization relative to the weighted average NYMEX natural gas price. The higher realized price was primarily due to the legal settlement increasing the realized price per Mcf in the period. Fluctuations in our natural gas price differentials and realizations are due to several factors such as NGL value net of processing costs, gathering and transportation fees, takeaway capacity relative to production levels, regional storage capacity, and seasonal refinery maintenance temporarily depressing demand. The exact impact of each of these items is difficult to quantify as each of our operators passes through these costs in a different manner.
Current wording
Our oil price differential to the weighted average benchmark price during the three months ended March 31, 2026 was negative $5.44 per barrel, as compared to a negative $6.72 per barrel during the three months ended March 31, 2025, primarily due to more favorable local market pricing as compared to the benchmark price. Our net realized natural gas price during the three months ended March 31, 2026 was $2.29 per Mcf, representing a 47% realization relative to the weighted average NYMEX natural gas price, compared to a net realized natural gas price of $2.81 per Mcf during the three months ended March 31, 2025, representing a 68% realization relative to weighted average NYMEX natural gas price. Fluctuations in our natural gas price differentials and realizations are due to several factors such as NGL value net of processing costs, gathering and transportation fees, takeaway capacity relative to production levels, regional storage capacity, seasonal demand for heating fuel and seasonal refinery maintenance temporarily depressing demand. The exact impact of each of these items is difficult to quantify as each of our operators passes through these costs in a different manner.
Previous wording
Production Tax Expense. Total production taxes increased to $6.2 million for the three months ended September 30, 2025 from $5.3 million for the three months ended September 30, 2024. Production taxes are primarily based on oil revenue and natural gas production, excluding gains and losses associated with hedging activities. Production taxes as a percentage of oil and natural gas sales before hedging adjustments were 9.2% and 9.1% for the three months ended September 30, 2025 and 2024, respectively.
Current wording
Production Tax Expense. Total production taxes were $5.7 million and $5.8 million for the three months ended March 31, 2026 and 2025, respectively. Production taxes are primarily based on oil revenue and natural gas production, excluding gains and losses associated with hedging activities. Production taxes as a percentage of oil and natural gas sales before hedging adjustments were 8.4% and 8.7% for the three months ended March 31, 2026 and 2025, respectively.
Previous wording
DD&A. DD&A increased to $34.2 million for the three months ended September 30, 2025 compared with $24.9 million for the three months ended September 30, 2024. The increase was the result of a 40% increase in production, partially offset by a $0.34 per Boe decrease in the DD&A rate for the three months ended September 30, 2025 compared with the three months ended September 30, 2024. The increase in production accounted for a $9.7 million increase in DD&A expense while the decrease in the DD&A rate accounted for a $0.4 million decrease in DD&A expense.
Current wording
DD&A. DD&A increased to $31.2 million for the three months ended March 31, 2026 compared with $26.6 million for the three months ended March 31, 2025. The increase of $4.6 million, or 17%, was the result of a 7% increase in production and a $1.99 per Boe increase in the DD&A rate for the three months ended March 31, 2026 compared with the three months ended March 31, 2025. The increase in production accounted for a $1.9 million increase in DD&A expense while the increase in the DD&A rate accounted for a $2.7 million increase in DD&A expense.
Previous wording
For the three months ended September 30, 2025, the relationship of capital expenditures, proved reserves and production from certain producing fields yielded a depletion rate (excluding depreciation, amortization and accretion) of $20.32 per Boe compared with $20.67 per Boe for the three months ended September 30, 2024.
Current wording
For the three months ended March 31, 2026, the relationship of capital expenditures, proved reserves and production from certain producing fields yielded a depletion rate (excluding depreciation, amortization and accretion) of $21.51 per Boe compared with $19.56 per Boe for the three months ended March 31, 2025. The rate was primarily higher for the three months ended March 31, 2026 due to lower SEC oil prices used to estimate reserves between periods.
Previous wording
Equity-Based Compensation. During the three months ended September 30, 2025, equity-based compensation expense increased to $2.7 million from $2.2 million during the three months ended September 30, 2024. Equity-based compensation expense was higher in 2025 due to additional LTIP RSUs and PSUs awarded to employees and directors at a higher grant date price.
Current wording
Equity-Based Compensation. During the three months ended March 31, 2026, equity-based compensation expense decreased to $0.7 million from $2.5 million during the three months ended March 31, 2025. Equity-based compensation expense was primarily lower in 2026 due to a $1.4 million reversal of expense for forfeited awards during the period.
Previous wording
Interest Expense. Interest expense decreased to $2.4 million for the three months ended September 30, 2025 from $2.7 million for the three months ended September 30, 2024. The decrease for the three months ended September 30, 2025 was primarily due to a lower interest rate during the period.
Current wording
Interest Expense. Interest expense decreased to $2.6 million for the three months ended March 31, 2026 from $2.9 million for the three months ended March 31, 2025. The decrease was due to a lower average debt balance and lower interest rate during the three months ended March 31, 2026 compared to the three months ended March 31, 2025.
Previous wording
Commodity Derivative Gain, Net. The commodity derivative gain was $0.7 million for the three months ended September 30, 2025 compared with a gain of $17.4 million for the three months ended September 30, 2024. Gain (Loss) on Commodity Derivatives is comprised of (1) cash gains and losses we recognize on settled commodity derivative instruments during the period, and (2) unsettled gains and losses we incur on commodity derivative instruments outstanding at period-end.
Current wording
Commodity Derivative (Loss), Net. The net commodity derivative loss was $55.0 million for the three months ended March 31, 2026 compared with a loss of $0.2 million for the three months ended March 31, 2025. Gain (Loss) on Commodity Derivatives is comprised of (1) cash gains and losses we recognize on settled commodity derivative instruments during the period, and (2) unsettled gains and losses we incur on commodity derivative instruments outstanding at period-end.
Previous wording
(1)Realized and unrealized gains and losses on commodity derivatives are presented herein as separate line items but are combined for a total commodity derivative gain (loss) in the statements of operations included in this Form 10-Q. Management believes the separate presentation of the realized and unrealized commodity derivative gains and losses is useful because the realized cash settlement portion provides a better understanding of our hedge position.
Current wording
(1)Realized and unrealized gains and losses on commodity derivatives are presented herein as separate line items but are combined for a total Commodity derivative (loss), net in the statements of operations included in this Form 10-Q. Management believes the separate presentation of the realized and unrealized commodity derivative gains and losses is useful because the realized cash settlement portion provides a better understanding of our hedge position.
Previous wording
In the three months ended September 30, 2025, approximately 63% of our oil volumes were covered by financial hedges, which resulted in a realized gain on oil derivatives of $3.2 million. In the three months ended September 30, 2025, a portion of our natural gas volumes was covered by residue gas and NGL financial hedges, which resulted in a realized gain on gas and NGL derivatives of $1.0 million. In the three months ended September 30, 2024, approximately 63% of our oil volumes and none of our natural gas volumes were covered by financial hedges, which resulted in a realized gain on oil derivatives of $1.4 million.
Current wording
In the three months ended March 31, 2026, approximately 61% of our oil volumes were covered by financial hedges, which resulted in a realized loss on oil derivatives of $4.4 million. In the three months ended March 31, 2026, approximately half of our natural gas volume was covered by residue gas and NGL financial hedges, which resulted in a realized loss on gas and NGL derivatives of $2.4 million. In the three months ended March 31, 2025, approximately 65% of our oil volumes and none of our natural gas volumes were covered by financial hedges, which resulted in a realized gain on oil derivatives of $0.7 million.
Previous wording
At September 30, 2025, all of our derivative contracts were recorded at their fair value, which was a net asset of $12.3 million, an increase in value of $8.6 million from the $3.7 million net asset recorded as of December 31, 2024. The increase was primarily due to decreases in forward commodity prices since December 31, 2024 relative to prices on our open commodity derivative contracts.
Current wording
At March 31, 2026, all of our derivative contracts were recorded at their fair value, which was a net liability of $33.8 million, a decrease in value of $48.2 million from the $14.4 million net asset recorded as of December 31, 2025. Derivative contract fair value is recorded in part based on published forward commodity prices. This decline in fair value was largely driven by the NYMEX WTI price increasing from $57.42/Bbl at December 31, 2025 to $101.38/Bbl at March 31, 2026 and the corresponding change in forward commodity prices.
Previous wording
Income Tax Expense. During the three months ended September 30, 2025, we recorded an income tax benefit of $0.3 million related to federal and state income taxes compared to an income tax expense of $6.2 million for the three months ended September 30, 2024.
Current wording
During the three months ended March 31, 2026 and 2025, we recorded an income tax benefit of $9.5 million and $0.2 million, respectively, related to federal and state income taxes.
Previous wording
Overview. At September 30, 2025, we had $5.6 million of unrestricted cash on hand and $136.0 million available under the elected commitments in our Revolving Credit Facility. At December 31, 2024, we had $3.0 million of unrestricted cash on hand and $118.0 million available under the elected commitments in our Revolving Credit Facility. We expect that our liquidity going forward will be primarily derived from cash flows from our operations, cash on hand, availability under the Revolving Credit Facility and proceeds from equity or debt offerings and that these sources of liquidity will be sufficient to provide us the ability to fund our material cash requirements for the next twelve months, as described below, including our planned capital expenditures program, as well as dividends and our share repurchase program. We may need to fund acquisitions or other business opportunities that support our strategy through additional borrowings under our Revolving Credit Facility or the issuance of equity or debt. Our primary uses of capital have been for the acquisition and development of our oil and natural gas properties and dividend payments. We continually monitor potential capital sources for opportunities to enhance liquidity or otherwise improve our financial position.
Current wording
Overview. At March 31, 2026, we had $3.2 million of unrestricted cash on hand and $105.5 million available under the elected commitments in our Revolving Credit Facility. At December 31, 2025, we had $1.3 million of unrestricted cash on hand and $125.5 million available under the elected commitments in our Revolving Credit Facility. We expect that our liquidity going forward will be primarily derived from cash flows from our operations, cash on hand, availability under the Revolving Credit Facility and proceeds from equity or debt offerings and that these sources of liquidity will be sufficient to provide us the ability to fund our material cash requirements for the next twelve months, as described below, including our planned capital expenditures program, as well as dividends and our share repurchase program. We may need to fund acquisitions or other business opportunities that support our strategy through additional borrowings under our Revolving Credit Facility or the issuance of equity or debt. Our primary uses of capital have been for the acquisition and development of our oil and natural gas properties and dividend payments. We continually monitor potential capital sources for opportunities to enhance liquidity or otherwise improve our financial position.
Previous wording
Working Capital. Our working capital balance fluctuates as a result of changes in commodity pricing and production volumes, the collection of revenue receivables, expenditures related to our acquisition and development, and production operations and the impact of our outstanding commodity derivative instruments.
Current wording
Working Capital. Our working capital balance fluctuates as a result of changes in commodity pricing and production volumes, the collection of accrued revenue, expenditures related to our acquisition and development, and production operations and the impact of our outstanding commodity derivative instruments.
Previous wording
At September 30, 2025, we had a working capital deficit of $9.7 million, compared to a deficit of $49.4 million at December 31, 2024. Current assets increased by $6.1 million while current liabilities decreased by $33.5 million at September 30, 2025, compared to December 31, 2024. The increase in current assets during the nine months ended September 30, 2025 was primarily due to an increase of $7.5 million in our current commodity derivative instruments due to the change in fair value and a $2.6 million increase in cash, partially offset by a $5.0 million decrease in revenue receivable. The decrease in current liabilities during the nine months ended September 30, 2025 was principally due to a decrease of $33.4 million in accounts payable and accrued liabilities as a result of paying accrued oil and gas development costs and accrued employee compensation.
Current wording
At March 31, 2026, we had a working capital deficit of $38.3 million compared to a surplus of $0.9 million at December 31, 2025. Current assets decreased by $3.4 million while current liabilities increased by $35.7 million at March 31, 2026, compared to December 31, 2025. The decrease in current assets during the three months ended March 31, 2026 was primarily due to a decrease of $14.3 million in current derivative instrument assets due to forward oil price increases as compared to hedged oil prices, partially offset by a $10.7 million increase in accrued revenue due to an increase in the oil index price in March. The change in current liabilities during the three months ended March 31, 2026 was primarily due to an increase of $32.0 million in current derivative instrument liabilities due to forward oil price increases as compared to hedged oil prices and a $3.8 million increase in accounts payable and accrued liabilities as a result increased development activity.
Previous wording
Cash Flows. Our cash flows for the nine months ended September 30, 2025 and 2024 are presented below:
Current wording
Cash Flows. Our cash flows for the three months ended March 31, 2026 and 2025 are presented below:
Previous wording
During the nine months ended September 30, 2025, we generated $132.9 million of cash from operations, a $12.6 million increase from the nine months ended September 30, 2024. Cash flows from operating activities are primarily affected by production volumes and commodity prices, net of the effects of settlements of our derivative contracts, and by changes in working capital. Any interim cash needs are funded by cash on hand, cash flows from operations or borrowings under our Revolving Credit Facility. We typically enter into commodity derivative transactions covering a substantial, but varying, portion of our anticipated future oil and gas production for the next 12 to 24 months. A minimum level of derivative coverage is required by certain debt covenants. See Part I, Item 3 Quantitative and Qualitative Disclosures about Market Risk.
Current wording
During the three months ended March 31, 2026, we generated $24.0 million of cash from operating activities, a 37% increase from the three months ended March 31, 2025. Cash flows from operating activities are primarily affected by production volumes, commodity prices, net of the effects of settlements of our derivative contracts, and by changes in working capital. Any interim cash needs are funded by cash on hand, cash flows from operations or borrowings under our Revolving Credit Facility. A minimum level of derivative coverage is required by certain debt covenants. See Part I, Item 3 Quantitative and Qualitative Disclosures about Market Risk.
Previous wording
One of the primary sources of variability in our cash provided by operating activities is commodity price volatility, which we partially mitigate through the use of oil and natural gas commodity derivative contracts. For more information on our outstanding derivatives, see Note 6 (“Derivative Instruments”) to the Condensed Consolidated Financial Statements.
Current wording
One of the primary sources of variability in our cash provided by operating activities is commodity price volatility, which we partially mitigate through the use of commodity derivative contracts. For more information on our outstanding derivatives, see Note 6 (“Derivative Instruments”) to the Condensed Consolidated Financial Statements.
Previous wording
Cash used in investing activities during the nine months ended September 30, 2025 was $97.9 million compared to $87.1 million during the nine months ended September 30, 2024. The $10.8 million increase was primarily related to higher development activity between periods, partially offset by lower acquisition activity. Cash used in investing activities primarily relates to capital expenditures for acquisition and development costs. Our cash used in investing activities reflects actual cash spending, which can lag several months from when the related costs were accrued. As a result, our actual cash spending is not always reflective of current levels of development activity. Acquisition and development activities are discretionary. We monitor our capital expenditures on a regular basis, adjusting the amount up or down, and between projects, depending on projected commodity prices, cash flows and financial returns. We supplement development activity on our asset base with opportunistic acquisitions of near-term drilling opportunities when development activity by our operators on our existing properties does not meet our development objectives. Our cash spending for acquisition activities was $7.4 million and $20.7 million, during the nine months ended September 30, 2025 and 2024, respectively, with the decrease attributed to lower activity levels in the lower commodity price environment.
Current wording
Cash used in investing activities during the three months ended March 31, 2026 was $18.7 million compared to $30.4 million during the three months ended March 31, 2025. Cash used in investing activities primarily relates to capital expenditures for acquisition and development costs. Our cash used in investing activities reflects actual cash spending, which can lag several months from when the related costs were accrued. As a result, our actual cash spending is not always reflective of current levels of development activity. Acquisition and development activities are discretionary. We monitor our capital expenditures on a regular basis, adjusting the amount up or down, and between projects, depending on projected commodity prices, cash flows and financial returns. We supplement development activity on our asset base with opportunistic acquisitions of near-term drilling opportunities when development activity by our operators on our existing properties does not meet our development objectives. Our net cash proceeds and spending for divestiture and acquisition activities was $0.3 million and $1.5 million, during the three months ended March 31, 2026 and 2025, respectively.
Previous wording
Cash used in financing activities was $32.4 million and $31.3 million during the nine months ended September 30, 2025 and 2024, respectively. The cash used in financing activities during the nine months ended September 30, 2025 was related to $69.8 million in dividends paid, $3.0 million of net repayments under our Revolving Credit Facility and the $9.2 million value of retained shares paid to fund employee tax withholding in connection with the vesting of restricted stock units, which was partially offset by $49.8 million in cash acquired in the Lucero Acquisition. The cash used in financing activities during the nine months ended September 30, 2024 was related to $47.6 million in dividends paid and the $7.5 million value of retained shares paid to fund employee tax withholding in connection with the vesting of restricted stock units, which was partially offset by $24.0 million of net borrowings under our Revolving Credit Facility.
Current wording
Cash used in and provided by financing activities was $3.5 million and $14.4 million during the three months ended March 31, 2026 and 2025, respectively. The cash used in financing activities during the three months ended March 31, 2026 was related to $23.5 million in dividends paid, partially offset by $20.0 million in net borrowings under our Revolving Credit Facility. The cash provided by financing activities during the three months ended March 31, 2025 was related to $49.8 million in cash acquired in the Lucero Acquisition, partially offset by $26.0 million in dividends paid and the $9.2 million value of retained shares paid to fund employee tax withholding in connection with the vesting of restricted stock units.
Previous wording
Revolving Credit Facility. In connection with the Spin-Off, we entered into the secured Revolving Credit Facility with Wells Fargo Bank, N.A., as administrative agent, and a syndicate of banks, as lenders. The Revolving Credit Facility will mature on October 22, 2028.
Current wording
Revolving Credit Facility. In January 2023, we entered into the secured Revolving Credit Facility with Wells Fargo Bank, N.A., as administrative agent, and a syndicate of banks, as lenders. The Revolving Credit Facility matures on October 22, 2028.
Previous wording
See Note 5 (“Credit Facility”) to the Condensed Consolidated Financial Statements for further details regarding the Revolving Credit Facility.
Current wording
The borrowing base under the Revolving Credit Facility is subject to regular, semi-annual redeterminations on or about April 1 and October 1 of each year based on, among other things, the value of our proved oil and natural gas reserves, as determined by the lenders in their discretion. As of March 31, 2026, our borrowing base was $295.0 million with an aggregate elected commitment of $250.0 million of which $144.5 million was outstanding. See Note 5 (“Credit Facility”) to the Condensed Consolidated Financial Statements for further details regarding the Revolving Credit Facility.
Previous wording
Our long-term material cash requirements from currently known obligations include settlements on our outstanding commodity derivative contracts, future obligations to plug, abandon and remediate our oil and gas properties at the end of their productive lives, and operating lease obligations. We cannot provide specific timing for repayments of outstanding borrowings on our Revolving Credit Facility, or the associated interest payments, as the timing and amount of borrowings and repayments cannot be forecasted with certainty and are based on working capital requirements, commodity prices and acquisition and divestiture activity, among other factors. We cannot provide specific timing for other current and long-term liability obligations where we cannot forecast with certainty the amount and timing of such payments, including asset retirement obligations, as the plugging and abandonment of wells is at our discretion and the discretion of the operators and any amounts we may be obligated to pay under our derivative contracts, as such payments are dependent on commodity prices in effect at the time of settlement. See Note 4 (“Fair Value Measurements”) to the Condensed Consolidated Financial Statements for further information on these contracts and their fair values as of September 30, 2025, which fair values represent the estimated cash settlement amount required to terminate such instruments based on forward price curves for commodities as of that date.
Current wording
Our long-term material cash requirements from currently known obligations include settlements on our outstanding commodity derivative contracts, future obligations to plug, abandon and remediate our oil and gas properties at the end of their productive lives, and operating lease obligations. We cannot provide specific timing for repayments of outstanding borrowings on our Revolving Credit Facility, or the associated interest payments, as the timing and amount of borrowings and repayments cannot be forecasted with certainty and are based on working capital requirements, commodity prices and acquisition and divestiture activity, among other factors. We cannot provide specific timing for other current and long-term liability obligations where we cannot forecast with certainty the amount and timing of such payments, including asset retirement obligations, as the plugging and abandonment of wells is primarily at the discretion of the operators and any amounts we may be obligated to pay under our derivative contracts, as such payments are dependent on commodity prices in effect at the time of settlement. See Note 4 (“Fair Value Measurements”) to the Condensed Consolidated Financial Statements for further information on these contracts and their fair values as of March 31, 2026, which fair values represent the estimated cash settlement amount required to terminate such instruments based on forward price curves for commodities as of that date.
Previous wording
Dividends. We paid cash dividends to our equity holders of $69.8 million during the nine months ended September 30, 2025. While we believe that our future cash flows from operations will be able to sustain future dividends, future dividends may change based on a variety of factors, including contractual restrictions, legal limitations (the most common of which are limitations set forth in a company’s organizational documents and insolvency), business developments and the judgment of our Board. Future cash dividends to equity holders are subject to the terms of the Revolving Credit Facility, as previously described. There can be no guarantee that we will be able to pay dividends at current levels or at all or otherwise return capital to our investors in the future.
Current wording
Dividends. We paid cash dividends to our equity holders of $23.5 million during the three months ended March 31, 2026. While we believe that our future cash flows from operations will be able to sustain future dividends, future dividends may change based on a variety of factors, including contractual restrictions, legal limitations (the most common of which are limitations set forth in a company’s organizational documents and insolvency), business developments and the judgment of our Board. Future cash dividends to equity holders are subject to the terms of the Revolving Credit Facility, as previously described. There can be no guarantee that we will be able to pay dividends at current levels or at all or otherwise return capital to our investors in the future.
Previous wording
Capital Expenditures. For the nine months ended September 30, 2025, total capital expenditures was $97.9 million, including development expenditures and our acquisition activity. We expect to fund future capital expenditures with cash generated from operations and, if required, borrowings under our Revolving Credit Facility. The foregoing excludes larger acquisitions, which are typically not included in our annual capital expenditures budget and which may be financed through equity consideration, like the Lucero Acquisition. With our cash on hand, cash flow from operations, and borrowing capacity under our Revolving Credit Facility, we believe that we will have sufficient cash flow and liquidity to fund our budgeted capital expenditures and operating expenses for at least the next twelve months. However, we may seek additional access to capital and liquidity including issuing equity or debt securities and extending maturities. We cannot assure you, however, that any additional capital will be available to us on favorable terms or at all. Our capital expenditures could be curtailed if our cash flows decline or we are otherwise unable to access capital or liquidity. Reductions of capital expenditures used to drill and complete new oil and natural gas wells would likely result in lower levels of oil and natural gas production in the future. Our future success in growing proved reserves and production may be dependent on our ability to access outside sources of capital.
Current wording
Capital Expenditures. For the three months ended March 31, 2026, total capital expenditures was $18.7 million, including development expenditures and our acquisition and divestiture activity. We expect to fund future capital expenditures with cash generated from operations and, if required, borrowings under our Revolving Credit Facility. The foregoing excludes larger acquisitions, which are typically not included in our annual capital expenditures budget and which may be financed through equity consideration, like the Lucero Acquisition. With our cash on hand, cash flow from operations, and borrowing capacity under our Revolving Credit Facility, we believe that we will have sufficient cash flow and liquidity to fund our budgeted capital expenditures and operating expenses for at least the next twelve months. However, we may seek additional access to capital and liquidity including issuing equity or debt securities and extending maturities. We cannot assure you, however, that any additional capital will be available to us on favorable terms or at all. Our capital expenditures could be curtailed if our cash flows decline or we are otherwise unable to access capital or liquidity. Reductions of capital expenditures used to drill and complete new oil and natural gas wells would likely result in lower levels of oil and natural gas production in the future. Our future success in growing proved reserves and production may be dependent on our ability to access outside sources of capital.
Previous wording
The critical accounting policies and estimates used in preparing our interim Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2025 are the same as those described in our Annual Report on Form 10-K for the year ended December 31, 2024 except as follows.
Current wording
The critical accounting policies and estimates used in preparing our interim condensed consolidated financial statements for the three months ended March 31, 2026 are the same as those described in our Annual Report on Form 10-K for the year ended December 31, 2025.
Previous wording
For discussion of recently issued or adopted accounting pronouncements, see Note 2 (“Significant Accounting Policies”) to the Condensed Consolidated Financial Statements set forth in Part I, Item 1 Financial Statements.
Current wording
For discussion of recently issued or adopted accounting pronouncements, see Note 2 (“Significant Accounting Policies”) to the Condensed Consolidated Financial Statements set forth in Part I, Item 1.
Rearranged previous paragraphs (12)
Previous report — wording carried elsewhere
Our oil price differential to the weighted average benchmark price during the three months ended September 30, 2025 was negative $5.35 per barrel, as compared to a negative $5.80 per barrel during the three months ended September 30, 2024, primarily due to more favorable local market pricing as compared to the benchmark price. Our net realized natural gas price during the three months ended September 30, 2025 was $0.85 per Mcf, representing a 28% realization relative to the weighted average NYMEX natural gas price, compared to a net realized natural gas price of $0.90 per Mcf during the three months ended
Previous report — wording carried elsewhere
September 30, 2024, representing a 43% realization relative to the weighted average NYMEX natural gas price. Fluctuations in our natural gas price differentials and realizations are generally due to several factors such as NGL value net of processing costs, gathering and transportation fees, takeaway capacity relative to production levels, regional storage capacity, and seasonal refinery maintenance temporarily depressing demand. The exact impact of each of these items is difficult to quantify as each of our operators passes through these costs in a different manner.
Previous report — wording carried elsewhere
At September 30, 2025, all of our derivative contracts were recorded at their fair value, which was a net asset of $12.3 million, a decrease in value of $3.6 million from the $15.9 million net asset recorded as of June 30, 2025. The decrease was primarily due to the gains realized on commodity derivative contracts in the period.
Previous report — wording carried elsewhere
The following table sets forth selected financial and operating data for the periods indicated.
Previous report — wording carried elsewhere
Oil and Natural Gas Revenue and Volumes. Oil and natural gas revenue increased to $215.4 million for the nine months ended September 30, 2025 from $186.1 million for the nine months ended September 30, 2024. The increase in oil and natural gas revenue was due to a 33% increase in production volumes, driven by acquisition and development activity (including the Lucero Acquisition), which was partially offset by a 13% decrease in the average realized prices per Boe before hedging for the nine months ended September 30, 2025. The increase in production volumes increased oil and natural gas revenue by approximately $53.4 million, while the decrease in average realized prices per Boe before hedging decreased oil and natural gas revenue by approximately $24.1 million.
Previous report — wording carried elsewhere
Production Tax Expense. Total production taxes increased to $18.2 million for the nine months ended September 30, 2025 from $16.6 million for the nine months ended September 30, 2024. Production taxes are primarily based on oil revenue and natural gas production, excluding gains and losses associated with hedging activities. Production taxes as a percentage of oil and natural gas sales before hedging adjustments were 8.4% and 8.9% for the nine months ended September 30, 2025 and 2024, respectively.
Previous report — wording carried elsewhere
For the nine months ended September 30, 2025, the relationship of capital expenditures, proved reserves and production from certain producing fields yielded a depletion rate (excluding depreciation, amortization and accretion) of $19.95 per Boe compared with $20.52 per Boe for the nine months ended September 30, 2024.
Previous report — wording carried elsewhere
The mark-to-market fair value of the unsettled commodity derivative instruments will generally be inversely related to the price movement of the underlying commodity. If commodity price trends reverse from period to period, prior unrealized gains may become unrealized losses and vice versa. These unrealized gains and losses will impact our net income in the period reported. The mark-to-market fair value can create non-cash volatility in our reported earnings during periods of commodity price volatility. We have experienced such volatility in the past and are likely to experience it in the future. Gains on our derivatives generally indicate lower oil revenues in the future while losses indicate higher future oil revenues.
Previous report — wording carried elsewhere
The table below summarizes our commodity derivative gains and losses that were recorded in the periods presented.
Previous report — wording carried elsewhere
(1)Realized and unrealized gains and losses on commodity derivatives are presented herein as separate line items but are combined for a total commodity derivative gain (loss) in the statements of operations included in this Form 10-Q. Management believes the separate presentation of the realized and unrealized commodity derivative gains and losses is useful because the realized cash settlement portion provides a better understanding of our hedge position.
Previous report — wording carried elsewhere
In the nine months ended September 30, 2025, approximately 62% of our oil volumes were subject to financial hedges, which resulted in a realized gain on oil derivatives of $9.2 million. In the nine months ended September 30, 2025, a portion of our natural gas volumes was covered by residue gas and NGL financial hedges, which resulted in a realized gain on gas and NGL derivatives of $1.0 million. In the nine months ended September 30, 2024, approximately 58% of our oil volumes and none of our natural gas volumes were covered by financial hedges, which resulted in a realized gain on oil derivatives of $1.2 million.
Previous report — wording carried elsewhere
The provision for income taxes for the nine months ended September 30, 2025 and 2024 differs from the amount that would be provided by applying the statutory U.S. federal income tax rate of 21% to pre-tax income primarily due to §162(m) limitations on certain covered employee compensation, other discrete permanent differences related to vesting of RSUs for non-covered employees and state income taxes.