Vitesse Energy, Inc.

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 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.

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 June 30, 2026, we had a working interest in 6,579 gross (237.4 net) productive wells and 278 gross (6.4 net) wells that were being drilled or completed, and an additional 320 gross (13.0 net) wells that had been permitted for development by our operators. In addition, we had a royalty only interest in 1,289 gross (3.1 net) productive wells.

Previous wording

■Paid $23.5 million in dividends to our equity holders.

Current wording

■Paid $20.6 million in dividends to our equity holders.

Previous wording

■Production of 15,962 Boe/d with 63% of production from oil.

Current wording

■Production of 17,354 Boe/d with 60% of production from oil.

Previous wording

■Invested $18.7 million in capital development and acquisitions, net of divestitures.

Current wording

■Invested $20.7 million in capital development and acquisitions, net of divestitures.

Previous wording

■Total debt of $144.5 million at March 31, 2026.

Current wording

■Total debt of $158.5 million at June 30, 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 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.

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, U.S. international trade and tariff policies and responses thereto, 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

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.

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 six months ended June 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 a settlement discussed in Note 9 (“Commitments and Contingencies”) to the Condensed Consolidated Financial Statements.

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 months ended March 31, 2026 and 2025.

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 and six months ended June 30, 2026 and 2025.

Previous 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.

Current wording

The average second quarter 2026 NYMEX oil price was $92.38 per barrel, or 45% higher than the average NYMEX oil price per barrel in the second quarter of 2025. Our settled derivatives decreased our second quarter 2026 realized oil price per barrel by $20.84 and increased our second quarter 2025 realized oil price per barrel by $4.71. Our average second quarter 2026 realized oil price per barrel after reflecting settled derivatives was $71.14 compared to $64.21 during the same period in 2025.

Previous 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.

Current wording

The average second quarter 2026 NYMEX natural gas price was $2.95 per MMBtu, or 8% lower than the average NYMEX price per MMBtu in the second quarter of 2025. In the second quarter of 2026, our settled derivatives increased our realized natural gas price by $0.38 per Mcf, bringing our realized natural gas price after reflecting settled derivatives to $1.55 per Mcf. In the second quarter of 2025, we had no material natural gas price derivatives in place and our realized natural gas price was $4.17 per Mcf.

Previous wording

We employ a hedging program that partially mitigates the risk associated with fluctuations in commodity prices. For detailed information on our commodity hedging program, see Part I, Item 3 Quantitative and Qualitative Disclosures about Market Risk and Note 6 (“Derivative Instruments”) to the Condensed Consolidated Financial Statements.

Current wording

We employ a hedging program that partially mitigates the risk associated with fluctuations in commodity prices. For detailed information on our commodity hedging program, see Part I, Item 3 Quantitative and Qualitative Disclosures about Market Risk and Note 6 (“Commodity Derivative Instruments”) to the Condensed Consolidated Financial Statements.

Previous 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.

Current wording

Our oil price differential to the weighted average benchmark price during the three months ended June 30, 2026 was negative $0.88 per barrel, as compared to a negative $4.17 per barrel during the three months ended June 30, 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 June 30, 2026 was $1.17 per Mcf, representing a 40% realization relative to the weighted average NYMEX natural gas price, compared to a net realized natural gas price of $4.17 per Mcf during the three months ended June 30, 2025, representing a 130% realization relative to the weighted average NYMEX natural gas price. The lower realized price was primarily due to the legal settlement increasing the realized price per Mcf in the prior 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, 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

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 wording

Lease Operating Expense. Lease operating expense decreased to $18.0 million for the three months ended June 30, 2026 from $19.6 million for the three months ended June 30, 2025. The decrease is primarily attributable to an 8% decrease in production volumes between periods.

Previous 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.

Current wording

Production Tax Expense. Total production taxes increased to $8.5 million for the three months ended June 30, 2026 from $6.2 million for the three months ended June 30, 2025. 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 9.3% and 7.6% for the three months ended June 30, 2026 and 2025, respectively. The production tax rate was lower for the three months ended June 30, 2025 due to a legal settlement increasing revenue in the period.

Previous 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.

Current wording

DD&A. DD&A increased to $34.8 million for the three months ended June 30, 2026 compared with $34.6 million for the three months ended June 30, 2025. The increase was the result of a $1.99 per Boe increase in the DD&A rate for the three months ended June 30, 2026, partially offset by an 8% decrease in production compared with the three months ended June 30, 2025. The increase in the DD&A rate accounted for a $3.4 million increase in DD&A expense while the decrease in production accounted for a $3.2 million decrease in DD&A expense.

Previous 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.

Current wording

For the three months ended June 30, 2026, the relationship of capital expenditures, proved reserves and production from certain producing fields yielded a depletion rate (excluding depreciation, amortization and accretion) of $21.85 per Boe compared with $19.88 per Boe for the three months ended June 30, 2025.

Previous 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.

Current wording

Interest Expense. Interest expense increased to $3.0 million for the three months ended June 30, 2026 from $2.5 million for the three months ended June 30, 2025. The increase for the three months ended June 30, 2026 was primarily due to a higher average debt balance during the period.

Previous 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.

Current wording

Commodity Derivative Gain, Net. The commodity derivative gain was $22.0 million for the three months ended June 30, 2026 compared with a gain of $18.5 million for the three months ended June 30, 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 (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.

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 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 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.

Current wording

In the three months ended June 30, 2026, 84% of our oil volumes were covered by financial hedges, which resulted in a realized loss on oil derivatives of $19.6 million. In the three months ended June 30, 2026, half of our natural gas volumes were covered by residue gas and NGL financial hedges, which resulted in a realized gain on gas and NGL derivatives of $1.4 million. In the three months ended June 30, 2025, 58% of our oil volumes and no material natural gas volumes were covered by financial hedges, which resulted in a realized gain on oil derivatives of $5.3 million.

Previous 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.

Current wording

Income Tax Expense. During the three months ended June 30, 2026, we recorded an income tax expense of $6.8 million related to federal and state income taxes compared to an income tax expense of $9.9 million for the three months ended June 30, 2025.

Previous 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.

Current wording

Oil and Natural Gas Revenue and Volumes. Oil and natural gas revenue increased to $158.4 million for the six months ended June 30, 2026 from $147.9 million for the six months ended June 30, 2025. The increase in oil and natural gas revenue was due to a 9% increase in the average realized prices per Boe before hedging, which was partially offset by a 2% decrease in production volumes for the six months ended June 30, 2026. The increase in average realized prices per Boe before hedging increased oil and natural gas revenue by $13.4 million, while the decrease in production volumes decreased oil and natural gas revenue by $2.9 million.

Previous wording

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 wording

General and Administrative Expense. General and administrative expense increased to $14.7 million for the six months ended June 30, 2026 from $12.4 million for the six months ended June 30, 2025. During the six months ended June 30, 2026, $2.4 million in separation benefits related to our leadership transition were incurred. During the six months ended June 30, 2025, $7.1 million of litigation costs were reimbursed as a result of a legal settlement and Lucero Acquisition transaction costs of $4.9 million were incurred. Excluding these one-time costs, general and administrative expense on a per Boe basis increased to $4.09 for the six months ended June 30, 2026 from $3.87 for the six months ended June 30, 2025.

Previous 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.

Current wording

Equity-Based Compensation. During the six months ended June 30, 2026, equity-based compensation expense decreased to $3.5 million from $4.9 million during the six months ended June 30, 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

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.

Current wording

At June 30, 2026, all of our derivative contracts were recorded at their fair value, which was a net asset of $6.4 million, a decrease in value of $8.0 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 $69.50/Bbl at June 30, 2026 and the corresponding change in forward commodity prices.

Previous 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.

Current wording

Overview. At June 30, 2026, we had $0.9 million of unrestricted cash on hand and $116.5 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

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.

Current wording

At June 30, 2026 and December 31, 2025, we had a working capital surplus of $3.1 million and $0.9 million, respectively. Current assets increased by $6.2 million and current liabilities increased by $4.0 million at June 30, 2026, compared to December 31, 2025. The increase in current assets during the six months ended June 30, 2026 was primarily due to an increase of $21.8 million in accrued revenue, partially offset by a decrease of $12.5 million in current derivative instrument assets due to forward oil price increases as compared to hedged oil prices. The increase in current liabilities during the six months ended June 30, 2026 was primarily due to an increase of $4.3 million in current derivative instrument liabilities due to forward oil price increases as compared to hedged oil prices.

Previous wording

Cash Flows. Our cash flows for the three months ended March 31, 2026 and 2025 are presented below:

Current wording

Cash Flows. Our cash flows for the six months ended June 30, 2026 and 2025 are presented below:

Previous 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.

Current wording

During the six months ended June 30, 2026, we generated $49.5 million of cash from operations, a $34.0 million decrease from the six months ended June 30, 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. During 2025, we received a one-time $24.0 million legal settlement that impacted cash flows from operating activities. 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 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 (“Commodity Derivative Instruments”) to the Condensed Consolidated Financial Statements.

Previous 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.

Current wording

Cash used in investing activities during the six months ended June 30, 2026 was $39.4 million compared to $66.1 million during the six months ended June 30, 2025. The $26.7 million decrease was primarily related to lower development activity between periods. 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 $0.7 million and $(1.6) million, during the six months ended June 30, 2026 and 2025, respectively.

Previous 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.

Current wording

Cash used in financing activities was $10.5 million and $18.4 million during the six months ended June 30, 2026 and 2025, respectively. The cash used in financing activities during the six months ended June 30, 2026 was related to $44.1 million in dividends paid, partially offset by $34.0 million of net borrowings under our Revolving Credit Facility. The cash used in financing activities during the six months ended June 30, 2025 was related to $47.8 million in dividends paid, $11.0 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.

Previous 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.

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 June 30, 2026, our borrowing base and aggregate elected commitment was $275.0 million of which $158.5 million was outstanding. See Note 5 (“Credit Facility”) to the Condensed Consolidated Financial Statements for further details regarding the Revolving Credit Facility.

Previous wording

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.

Current wording

As previously disclosed, in conjunction with the semi-annual borrowing base redetermination, the Revolving Credit Facility was amended in April 2026 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 the less restrictive requirement described above.

Previous 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.

Current wording

Dividends. We paid cash dividends to our equity holders of $44.1 million during the six months ended June 30, 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 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.

Current wording

Capital Expenditures. For the six months ended June 30, 2026, total capital expenditures was $39.4 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 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.

Current wording

The critical accounting policies and estimates used in preparing our interim condensed consolidated financial statements for the three and six months ended June 30, 2026 are the same as those described in our Annual Report on Form 10-K for the year ended December 31, 2025.