| ☒ |
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 84-0637348 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, $0.10 par value | PNRG | NASDAQ |
| Large Accelerated Filer | ☐ | Accelerated Filer | ☐ | |||
Non-Accelerated Filer | ☒ | Smaller Reporting Company | ☒ | |||
| Emerging growth company | ☐ | |||||
PrimeEnergy Resources Corporation
Index to Form
September 30, 2021
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 23 | |||
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2
Item 1. | FINANCIAL STATEMENTS |
September 30, 2021 | December 31, 2020 | September 30, 2022 | December 31, 2021 | |||||||||||||
ASSETS | ||||||||||||||||
Current Assets | ||||||||||||||||
Cash and cash equivalents | $ | 3,624 | $ | 996 | $ | 24,059 | $ | 10,347 | ||||||||
Accounts receivable, net | 14,341 | 7,221 | 16,943 | 14,208 | ||||||||||||
Prepaid obligations | 781 | 590 | 783 | 733 | ||||||||||||
Other current assets | 568 | 104 | 348 | 40 | ||||||||||||
Total Current Assets | 19,314 | 8,911 | 42,133 | 25,328 | ||||||||||||
Property and Equipment, at cost | ||||||||||||||||
Oil and gas properties (successful efforts method), net | 176,497 | 185,098 | ||||||||||||||
Field and office equipment, net | 5,774 | 5,955 | ||||||||||||||
| Property and Equipment | ||||||||||||||||
| Oil and gas properties at cost | 545,345 | 539,484 | ||||||||||||||
| Less: Accumulated depletion and depreciation | (380,287 | ) | (359,742 | ) | ||||||||||||
| 165,058 | 179,742 | |||||||||||||||
| Field and office equipment at cost | 28,013 | 27,080 | ||||||||||||||
| Less: Accumulated depreciation | (23,041 | ) | (22,159 | ) | ||||||||||||
| 4,972 | 4,921 | |||||||||||||||
Total Property and Equipment, Net | 182,271 | 191,053 | 170,030 | 184,663 | ||||||||||||
Other assets | 593 | 520 | ||||||||||||||
| Derivative asset long-term and other assets | 736 | 923 | ||||||||||||||
Total Assets | $ | 202,178 | $ | 200,484 | $ | 212,899 | $ | 210,914 | ||||||||
LIABILITIES AND EQUITY | ||||||||||||||||
Current Liabilities | ||||||||||||||||
Accounts payable | $ | 11,387 | $ | 5,217 | $ | 6,168 | $ | 7,282 | ||||||||
Accrued liabilities | 6,896 | 6,787 | 10,526 | 7,821 | ||||||||||||
Due to Related Parties | 34 | 38 | ||||||||||||||
Current portion of long-term debt | 1,365 | 487 | ||||||||||||||
| Due to related parties | 113 | 52 | ||||||||||||||
Current portion of asset retirement and other long-term obligations | 816 | 867 | 1,438 | 1,630 | ||||||||||||
Derivative liability short-term | 6,177 | 724 | 3,975 | 4,935 | ||||||||||||
Total Current Liabilities | 26,675 | 14,120 | 22,220 | 21,720 | ||||||||||||
Long-Term Bank Debt | 32,164 | 38,267 | — | 36,000 | ||||||||||||
Asset Retirement Obligations | 13,281 | 12,891 | 12,460 | 13,222 | ||||||||||||
Derivative Liability Long-Term | 1,657 | 44 | — | 650 | ||||||||||||
Deferred Income Taxes | 34,667 | 36,367 | 47,518 | 38,743 | ||||||||||||
Other Long-Term Obligations | 759 | 797 | 1,323 | 1,488 | ||||||||||||
Total Liabilities | 109,203 | 102,486 | 83,521 | 111,823 | ||||||||||||
Commitments and Contingencies | 0 | 0 | ||||||||||||||
Equity | ||||||||||||||||
Common stock, $.10 par value; Authorized: 2,810,000 shares; Outstanding: 1,994,177 shares | 281 | 281 | ||||||||||||||
Paid-in capital | 7,560 | 7,541 | ||||||||||||||
| Common stock, $.10 par value; 2022 and 2021: Authorized: 2,810,000 shares, outstanding 2022: 1,930,700 shares; outstanding 2021: 1,992,077 shares. | 281 | 281 | ||||||||||||||
Additional paid-in capital | 7,555 | 7,555 | ||||||||||||||
Retained earnings | 121,783 | 126,804 | 164,181 | 128,902 | ||||||||||||
Treasury stock, at cost; 815,823 shares | (37,502 | ) | (37,502 | ) | ||||||||||||
Total Stockholders’ Equity – PrimeEnergy Resources | 92,122 | 97,124 | ||||||||||||||
Non-controlling interest | 853 | 874 | ||||||||||||||
Treasury stock, at cost; 2022: 879,300 shares; 2021: 817,923 shares | (42,639 | ) | (37,647 | ) | ||||||||||||
Total Equity | 92,975 | 97,998 | 129,378 | 99,091 | ||||||||||||
Total Liabilities and Equity | $ | 202,178 | $ | 200,484 | $ | 212,899 | $ | 210,914 | ||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2021 | 2020 | 2021 | 2020 | |||||||||||||
Revenues | ||||||||||||||||
Oil sales | $ | 10,442 | $ | 6,339 | $ | 30,376 | $ | 20,663 | ||||||||
Natural gas sales | 3,998 | 1,052 | 7,948 | 3,212 | ||||||||||||
Natural gas liquids sales | 3,632 | 1,474 | 7,781 | 2,441 | ||||||||||||
Realized (loss) gain on derivative instruments, net | (1,983 | ) | 222 | (2,896 | ) | 6,176 | ||||||||||
Field service income | 2,975 | 2,567 | 8,138 | 9,248 | ||||||||||||
Administrative overhead fees | 1,164 | 1,066 | 3,455 | 3,260 | ||||||||||||
Unrealized (loss) on derivative instruments, net | (1,194 | ) | (1,003 | ) | (7,162 | ) | (62 | ) | ||||||||
Other income | 1 | 75 | 30 | 240 | ||||||||||||
Total Revenues | 19,035 | 11,792 | 47,670 | 45,178 | ||||||||||||
Costs and Expenses | ||||||||||||||||
Lease operating expense | 7,248 | 3,804 | 17,820 | 16,378 | ||||||||||||
Field service expense | 3,413 | 1,974 | 7,744 | 7,448 | ||||||||||||
Depreciation, depletion, amortization and accretion on discounted liabilities | 6,883 | 9,431 | 19,990 | 24,524 | ||||||||||||
General and administrative expense | 2,368 | 2,571 | 7,475 | 12,877 | ||||||||||||
Total Costs and Expenses | 19,912 | 17,780 | 53,029 | 61,227 | ||||||||||||
Gain on Sale and Exchange of Assets | 5 | 14,773 | 111 | 14,967 | ||||||||||||
(Loss) Income from Operations | (872 | ) | 8,785 | (5,248 | ) | (1,082 | ) | |||||||||
Other Income (Expense) | ||||||||||||||||
Interest Income | — | 1 | — | 1 | ||||||||||||
Interest Expense | (462 | ) | (470 | ) | (1,469) | (1,629 | ) | |||||||||
(Loss) Income Before Income Taxes | (1,334 | ) | 8,316 | (6,717 | ) | (2,710 | ) | |||||||||
Income Taxes Expense (Benefit) | (186 | ) | 1,372 | (1,700 | ) | (2,664 | ) | |||||||||
Net (Loss) Income | (1,148 | ) | 6,944 | (5,017 | ) | (46 | ) | |||||||||
Less: Net Income (Loss) Attributable to Non-Controlling Interests | 15 | 443 | 4 | (111 | ) | |||||||||||
Net (Loss) Income Attributable to PrimeEnergy | $ | (1,163 | ) | $ | 6,501 | $ | (5,021 | ) | $ | 65 | ||||||
| Basic (Loss) Income Per Common Share | $ | (0.58 | ) | $ | 3.26 | $ | (2.52 | ) | $ | 0.03 | ||||||
| Diluted (Loss) Income Per Common Share | $ | (0.58 | ) | $ | 2.36 | $ | (2.52 | ) | $ | 0.02 | ||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues | ||||||||||||||||
| Oil sales | $ | 23,403 | $ | 10,442 | $ | 75,546 | $ | 30,376 | ||||||||
| Natural gas sales | 6,359 | 3,998 | 14,762 | 7,948 | ||||||||||||
| Natural gas liquids sales | 4,204 | 3,632 | 12,477 | 7,781 | ||||||||||||
| Realized (loss) on derivative instruments, net | (4,285 | ) | (1,983 | ) | (13,992 | ) | (2,896 | ) | ||||||||
| Field service income | 3,846 | 2,415 | 10,822 | 6,215 | ||||||||||||
| Unrealized gain (loss) on derivative instruments, net | 6,124 | (1,194 | ) | 1,918 | (7,162 | ) | ||||||||||
| Other income | — | 1 | 29 | 30 | ||||||||||||
| Total Revenues | 39,651 | 17,311 | 101,562 | 42,292 | ||||||||||||
| Costs and Expenses | ||||||||||||||||
| Lease operating expense | 8,679 | 6,396 | 26,613 | 15,298 | ||||||||||||
| Field service expense | 3,005 | 2,925 | 9,545 | 6,180 | ||||||||||||
| Depreciation, depletion, amortization and accretion on discounted liabilities | 7,732 | 6,883 | 21,931 | 19,990 | ||||||||||||
| General and administrative expense | 2,453 | 1,984 | 11,543 | 6,183 | ||||||||||||
| Total Costs and Expenses | 21,869 | 18,188 | 69,632 | 47,651 | ||||||||||||
| Gain on Sale and Exchange of Assets | 494 | 5 | 15,330 | 111 | ||||||||||||
| Income (Loss) from Operations | 18,276 | (872 | ) | 47,260 | (5,248 | ) | ||||||||||
| Other Income (Expense) | ||||||||||||||||
| Interest Income | 8 | — | 8 | — | ||||||||||||
| Interest Expense | (253 | ) | (462 | ) | (752 | ) | (1,469 | ) | ||||||||
| Income (Loss) Before Income Taxes | 18,031 | (1,334 | ) | 46,516 | (6,717 | ) | ||||||||||
| Income Taxes Expense (Benefit) | 4,877 | (186 | ) | 11,237 | (1,700 | ) | ||||||||||
| Net Income (Loss) | 13,154 | (1,148 | ) | 35,279 | (5,017 | ) | ||||||||||
Less: Net Income Attributable to Non-Controlling Interests | — | 15 | — | 4 | ||||||||||||
| Net Income (Loss) Attributable to PrimeEnergy | $ | 13,154 | $ | (1,163 | ) | $ | 35,279 | $ | (5,021 | ) | ||||||
| Basic Income (Loss) Per Common Share | $ | 6.79 | $ | (0.58 | ) | $ | 17.95 | $ | (2.52 | ) | ||||||
| Diluted Income (Loss) Per Common Share | $ | 4.88 | $ | (0.58 | ) | $ | 12.96 | $ | (2.52 | ) | ||||||
Common Stock | ||||||||||||||||||||||||||||||||
Shares | Amount | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Total Stockholders’ Equity – PrimeEnergy | Non- Controlling Interest | Total Equity | |||||||||||||||||||||||||
Balance at December 31, 2020 | 1,994,177 | $ | 281 | $ | 7,541 | $ | 126,804 | $ | (37,502 | ) | $ | 97,124 | $ | 874 | $ | 97,998 | ||||||||||||||||
Net Income (Loss) | (5,021 | ) | (5,021 | ) | 4 | (5,017 | ) | |||||||||||||||||||||||||
Purchase of non- controlling interest | — | — | 19 | — | — | 19 | (25 | ) | (6 | ) | ||||||||||||||||||||||
Balance at September 30, 2021 | 1,994,177 | $ | 281 | $ | 7,560 | $ | 121,783 | $ | (37,502 | ) | $ | 92,122 | $ | 853 | $ | 92,975 | ||||||||||||||||
Balance at December 31, 2019 | 1,998,978 | $ | 281 | $ | 7,505 | $ | 129,120 | $ | (36,792 | ) | $ | 100,114 | $ | 3,249 | $ | 103,363 | ||||||||||||||||
Purchase 4,801 shares of common stock | (4,801 | ) | — | — | — | (709 | ) | (709 | ) | — | (709 | ) | ||||||||||||||||||||
Net Income (Loss) | — | — | — | 65 | — | 65 | (111 | ) | (46 | ) | ||||||||||||||||||||||
Balance at September 30, 2020 | 1,994,177 | $ | 281 | $ | 7,505 | $ | 129,185 | $ | (37,501 | ) | $ | 99,470 | $ | 3,138 | $ | 102,608 | ||||||||||||||||
Common Stock | ||||||||||||||||||||||||||||||||
Shares | Amount | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Total Stockholders’ Equity – PrimeEnergy | Non- Controlling Interest | Total Equity | |||||||||||||||||||||||||
| Balance at December 31, 2021 | 1,992,077 | $ | 281 | $ | 7,555 | $ | 128,902 | $ | (37,647 | ) | $ | 99,091 | $ | — | $ | 99,091 | ||||||||||||||||
| Purchase 61,377 shares of Common stock | (61,377 | ) | — | — | — | (4,992 | ) | (4,992 | ) | — | (4,992 | ) | ||||||||||||||||||||
| Net Income | — | — | — | 35,279 | — | 35,279 | — | 35,279 | ||||||||||||||||||||||||
| Balance at September 30, 2022 | 1,930,700 | $ | 281 | $ | 7,555 | $ | 164,181 | $ | (42,639 | ) | $ | 129,378 | $ | — | $ | 129,378 | ||||||||||||||||
| Balance at December 31, 2020 | 1,994,177 | $ | 281 | $ | 7,541 | $ | 126,804 | $ | (37,502 | ) | $ | 97,124 | $ | 874 | $ | 97,998 | ||||||||||||||||
| Net (Loss) Income | (5,021 | ) | (5,021 | ) | 4 | (5,017 | ) | |||||||||||||||||||||||||
Purchase of non- controlling interest | — | — | 19 | — | — | 19 | (25 | ) | (6 | ) | ||||||||||||||||||||||
| Balance at September 30, 2021 | 1,994,177 | $ | 281 | $ | 7,560 | $ | 121,783 | $ | (37,502 | ) | $ | 92,122 | $ | 853 | $ | 92,975 | ||||||||||||||||
2021 | 2020 | |||||||
Cash Flows from Operating Activities: | ||||||||
| Net (Loss) | $ | (5,017 | ) | $ | (46 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Depreciation, depletion, amortization and accretion on discounted liabilities | 19,990 | 24,524 | ||||||
Gain on sale of properties | (111 | ) | (14,967 | ) | ||||
Unrealized loss (gain) on derivative instruments, net | 7,162 | (62 | ) | |||||
Provision for deferred income taxes | (1,700 | ) | 676 | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (7,120 | ) | 9,073 | |||||
Due to related parties | (4 | ) | — | |||||
Other assets | (655 | ) | 422 | |||||
Accounts payable | 6,170 | (438 | ) | |||||
Accrued liabilities | 109 | (1,293 | ) | |||||
| Net Cash Provided by Operating Activities | 18,824 | 17,889 | ||||||
Cash Flows from Investing Activities: | ||||||||
Capital expenditures | (11,301 | ) | (13,142 | ) | ||||
Proceeds from sale of properties and equipment | 111 | 10,777 | ||||||
Net Cash (Used in) Investing Activities | (11,190 | ) | (2,365 | ) | ||||
Cash Flows from Financing Activities: | ||||||||
Purchase of stock for treasury | — | (709 | ) | |||||
Purchase of non-controlling interests | (6 | ) | 0 | |||||
Proceeds from long-term bank debt and other long-term obligations | 3,000 | 6,756 | ||||||
Repayment of long-term bank debt and other long-term obligations | (8,000 | ) | (18,500 | ) | ||||
Net Cash (Used in) Financing Activities | (5,006 | ) | (12,453 | ) | ||||
Net Increase in Cash and Cash Equivalents | 2,628 | 3,071 | ||||||
Cash and Cash Equivalents at the Beginning of the Period | 996 | 1,015 | ||||||
Cash and Cash Equivalents at the End of the Period | $ | 3,624 | $ | 4,086 | ||||
Supplemental Disclosures: | ||||||||
Income taxes paid | $ | 0— | $ | 01 | ||||
Interest paid | $ | 1,384 | $ | 1,653 | ||||
2022 | 2021 | |||||||
| Cash Flows from Operating Activities: | ||||||||
| Net Income (Loss) | $ | 35,279 | $ | (5,017 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
| Depreciation, depletion, amortization and accretion on discounted liabilities | 21,931 | 19,990 | ||||||
| Gain on sale of properties | (15,330 | ) | (111 | ) | ||||
| Unrealized (gain) loss on derivative instruments, net | (1,918 | ) | 7,162 | |||||
| Provision for deferred income taxes | 8,775 | (1,700 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (2,735 | ) | (7,120 | ) | ||||
| Due to related parties | 61 | (4 | ) | |||||
| Other assets | (308 | ) | (655 | ) | ||||
| Accounts payable | (1,114 | ) | 6,170 | |||||
| Accrued liabilities | 2,705 | 109 | ||||||
| Net Cash Provided by Operating Activities | 47,346 | 18,824 | ||||||
| Cash Flows from Investing Activities: | ||||||||
| Capital expenditures | (7,972 | ) | (11,301 | ) | ||||
| Proceeds from sale of properties and equipment | 15,330 | 111 | ||||||
| Net Cash Provided by (Used in) Investing Activities | 7,358 | (11,190 | ) | |||||
| Cash Flows from Financing Activities: | ||||||||
| Purchase of stock for treasury | (4,992 | ) | — | |||||
Purchase of non-controlling interests | — | (6 | ) | |||||
| Proceeds from long-term bank debt and other long-term obligations | — | 3,000 | ||||||
| Repayment of long-term bank debt and other long-term obligations | (36,000 | ) | (8,000 | ) | ||||
| Net Cash (Used in) Financing Activities | (40,992 | ) | (5,006 | ) | ||||
| Net Increase in Cash and Cash Equivalents | 13,712 | 2,628 | ||||||
| Cash and Cash Equivalents at the Beginning of the Period | 10,347 | 996 | ||||||
| Cash and Cash Equivalents at the End of the Period | $ | 24,059 | $ | 3,624 | ||||
| Supplemental Disclosures: | ||||||||
| Income taxes paid | $ | 61 | $ | — | ||||
| Interest paid | $ | 714 | $ | 1,384 | ||||
(Thousands of dollars) | September, 30, 2021 | December 31, 2020 | ||||||
Accounts Receivable: | ||||||||
Joint interest billing | $ | 2,589 | $ | 2,475 | ||||
Trade receivables | 1,866 | 1,073 | ||||||
Oil and gas sales | 10,084 | 3,469 | ||||||
Other | 400 | 802 | ||||||
| 14,939 | 7,819 | |||||||
Less: Allowance for doubtful accounts | (598 | ) | (598 | ) | ||||
Total | $ | 14,341 | $ | 7,221 | ||||
Accounts Payable: | ||||||||
Trade | $ | 7,011 | $ | 876 | ||||
Royalty and other owners | 3,724 | 3,569 | ||||||
Partner advances | 223 | 193 | ||||||
Other | 429 | 579 | ||||||
Total | $ | 11,387 | $ | 5,217 | ||||
Accrued Liabilities: | ||||||||
Compensation and related expenses | $ | 3,259 | $ | 3,331 | ||||
Property costs | 2,533 | 2,056 | ||||||
Taxes | 866 | 1,016 | ||||||
Other | 238 | 384 | ||||||
Total | $ | 6,896 | $ | 6,787 | ||||
(Thousands of dollars) | September 30, 2022 | December 31, 2021 | ||||||
Accounts Receivable: | ||||||||
| Joint interest billing | $ | 2,338 | $ | 1,902 | ||||
| Trade receivables | 1,780 | 1,429 | ||||||
| Oil and gas sales | 13,095 | 11,154 | ||||||
| Other | 101 | 94 | ||||||
| 17,314 | 14,579 | |||||||
| Less: Allowance for doubtful accounts | (371 | ) | (371 | ) | ||||
| Total | $ | 16,943 | $ | 14,208 | ||||
| Accounts Payable: | ||||||||
| Trade | $ | 1,428 | $ | 2,390 | ||||
| Royalty and other owners | 3,605 | 2,802 | ||||||
| Partner advances | 1,062 | 1,209 | ||||||
| Other | 73 | 881 | ||||||
| Total | $ | 6,168 | $ | 7,282 | ||||
(Thousands of dollars) | September 30, 2022 | December 31, 2021 | ||||||
Accrued Liabilities: | ||||||||
| Compensation and related expenses | $ | 4,211 | $ | 3,919 | ||||
| Property costs | 3,011 | 2,901 | ||||||
| Taxes | 3,213 | 893 | ||||||
| Other | 91 | 108 | ||||||
| Total | $ | 10,526 | $ | 7,821 | ||||
(Thousands of dollars) | September 30, | December 31, 2020 | ||||||
Proved oil and gas properties, at cost | $ | 531,475 | $ | 520,488 | ||||
Less: Accumulated depletion and depreciation | (354,978 | ) | (335,390 | ) | ||||
Oil and Gas Properties, Net | $ | 176,497 | $ | 185,098 | ||||
Field and office equipment | $ | 27,018 | $ | 26,797 | ||||
Less: Accumulated depreciation | (21,244 | ) | (20,842 | ) | ||||
Field and Office Equipment, Net | $ | 5,774 | $ | 5,955 | ||||
Total Property and Equipment, Net | $ | 182,271 | $ | 191,053 | ||||
(Thousands of dollars) | Operating Leases | |||
2021 | $ | 144 | ||
2022 | 158 | |||
2023 | 17 | |||
Total undiscounted lease payments | $ | 319 | ||
Less: Amount associated with discounting | (11 | ) | ||
Net operating lease liabilities | $ | 308 | ||
(Thousands of dollars) | Operating Leases | |||
| 2022 | 174 | |||
| 2023 | 251 | |||
| 2024 | 107 | |||
| 2025 | 27 | |||
| Total undiscounted lease payments | $ | 559 | ||
| Less: Amount associated with discounting | (54 | ) | ||
| Net operating lease liabilities | $ | 505 | ||
(Thousands of dollars) | September 30, | |||
Asset retirement obligation at December 31, 2020 | $ | 13,660 | ||
Liabilities incurred | 721 | |||
Liabilities settled | (1,047 | ) | ||
Accretion expense | 487 | |||
Asset retirement obligation at September 30, 2021 | $ | 13,821 | ||
(Thousands of dollars) | September 30, 2022 | |||
| Asset retirement obligation at December 31, 2021 | $ | 14,295 | ||
| Liabilities incurred | 11 | |||
| Liabilities settled | (1,276 | ) | ||
| Accretion expense | 503 | |||
| Asset retirement obligation at September 30, 2022 | $ | 13,533 | ||
September 30, 2021 | Quoted Prices in Active Markets For Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance at September 30, 2021 | ||||||||||||
(Thousands of dollars) | ||||||||||||||||
Liabilities | ||||||||||||||||
Commodity derivative contracts | $ | — | $ | — | $ | (7,834 | ) | $ | (7,834 | ) | ||||||
Total liabilities | $ | — | $ | — | $ | (7,834 | ) | $ | (7,834 | ) | ||||||
September 30, 2022 | Quoted Prices in Active Markets For Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance at September 30, 2022 | ||||||||||||
(Thousands of dollars) | ||||||||||||||||
| Assets | ||||||||||||||||
| Commodity derivative contracts | $ | — | $ | — | $ | 308 | $ | 308 | ||||||||
| Total assets | $ | — | $ | — | $ | 308 | $ | 308 | ||||||||
| Liabilities | ||||||||||||||||
| Commodity derivative contracts | $ | — | $ | — | $ | (3,975 | ) | $ | (3,975 | ) | ||||||
| Total liabilities | $ | — | $ | — | $ | (3,975 | ) | $ | (3,975 | ) | ||||||
December 31, 2020 | Quoted Prices in Active Markets For Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance at December 31, 2020 | ||||||||||||
(Thousands of dollars) | ||||||||||||||||
Assets | ||||||||||||||||
Commodity derivative contracts | $ | — | $ | — | $ | 97 | $ | 97 | ||||||||
Total assets | $ | — | $ | — | $ | 97 | $ | 97 | ||||||||
Liabilities | ||||||||||||||||
Commodity derivative contract | $ | — | $ | — | $ | (768 | ) | $ | (768 | ) | ||||||
Total liabilities | $ | — | $ | — | $ | (768 | ) | $ | (768 | ) | ||||||
December 31, 2021 | Quoted Prices in Active Markets For Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Balance at December 31, 2021 | ||||||||||||
(Thousands of dollars) | ||||||||||||||||
| Assets | ||||||||||||||||
| Commodity derivative contracts | $ | — | $ | — | $ | — | $ | — | ||||||||
| Total assets | $ | — | $ | — | $ | — | $ | — | ||||||||
| Liabilities | ||||||||||||||||
| Total liabilities | $ | — | $ | — | $ | (5,585 | ) | $ | (5,585 | ) | ||||||
(Thousands of dollars) | ||||||||
Net Liabilities – December 31, 2020 | $ | (671 | ) | |||||
| Net Liabilities – December 31, 2021 | $ | (5,585 | ) | |||||
Total realized and unrealized (gains) losses: | ||||||||
Included in earnings (a) | (10,058 | ) | (12,074 | ) | ||||
Purchases, sales, issuances and settlements | 2,895 | 13,992 | ||||||
Net Liabilities — September 30, 2021 | $ | (7,834 | ) | |||||
| Net Liabilities - September 30, 2022 | $ | (3,667 | ) | |||||
| (a) | Derivative instruments are reported in revenues as realized gain/loss and on a separately reported line item captioned unrealized gain/loss on derivative instruments. |
Fair Value | ||||||||||
(Thousands of dollars) | Balance Sheet Location | September 30, | December 31, 2020 | |||||||
Asset Derivatives: | ||||||||||
Derivatives not designated as cash-flow hedging instruments: | ||||||||||
Natural gas commodity contracts | Derivative asset long-term and other assets | — | $ | 97 | ||||||
Total | $ | — | $ | 97 | ||||||
Liability Derivatives: | ||||||||||
Derivatives not designated as cash-flow hedging instruments: | ||||||||||
Crude oil commodity contracts | Derivative liability short-term | $ | (3,994 | ) | $ | (428 | ) | |||
Natural gas commodity contracts | Derivative liability short-term | (2,183 | ) | (296 | ) | |||||
Crude oil commodity contracts | Derivative liability long-term | (1,178 | ) | — | ||||||
Natural gas commodity contracts | Derivative liability long-term | (479 | ) | (44 | ) | |||||
Total | $ | (7,834 | ) | $ | (768 | ) | ||||
Total derivative instruments | $ | (7,834 | ) | $ | (671 | ) | ||||
Fair Value | ||||||||||
(Thousands of dollars) | Balance Sheet Location | September 30, 2022 | December 31, 2021 | |||||||
Asset Derivatives: | ||||||||||
Derivatives not designated as cash-flow hedging instruments: | ||||||||||
| Crude oil commodity contracts | Derivative asset short-term | $ | 308 | $ | — | |||||
| Total | $ | 308 | $ | — | ||||||
Liability Derivatives: | ||||||||||
Derivatives not designated as cash-flow hedging instruments: | ||||||||||
| Crude oil commodity contracts | Derivative liability short-term | $ | (2,072 | ) | $ | (3,992 | ) | |||
| Natural gas commodity contracts | Derivative liability short-term | (1,903 | ) | (943 | ) | |||||
| Crude oil commodity contracts | Derivative liability long-term | — | (490 | ) | ||||||
| Natural gas commodity contracts | Derivative liability long-term | — | (160 | ) | ||||||
| Total derivative instruments | $ | (3,975 | ) | $ | (5,585 | ) | ||||
| Total derivative instruments | $ | (3,667 | ) | $ | (5,585 | ) | ||||
Amount of gain/loss recognized in income | ||||||||||
(Thousands of dollars) | Location of gain/loss recognized in income | 2021 | 2020 | |||||||
Derivatives not designated as cash-flow hedge instruments: | ||||||||||
Natural gas commodity contracts | Unrealized | (2,418 | ) | (576 | ) | |||||
Crude oil commodity contracts | Unrealized | (4,744 | ) | 514 | ||||||
Natural gas commodity contracts | Realized gain (loss) on derivative instruments, net | (1,009 | ) | 533 | ||||||
Crude oil commodity contracts | Realized (loss) on derivative instruments, net | (1,887 | ) | 5,643 | ||||||
| $ | (10,058) | $ | 6,114 | |||||||
Amount of gain/loss recognized in income | ||||||||||
(Thousands of dollars) | Location of gain/loss recognized in income | 2022 | 2021 | |||||||
Derivatives not designated as cash-flow hedge instruments: | ||||||||||
| Natural gas commodity contracts | Unrealized (loss) on derivative instruments, net | $ | (800 | ) | $ | (2,418 | ) | |||
| Crude oil commodity contracts | Unrealized gain (loss) on derivative instruments, net | 2,718 | (4,744 | ) | ||||||
| Natural gas commodity contracts | Realized (loss) on derivative instruments, net | (3,603 | ) | (1,009 | ) | |||||
| Crude oil commodity contracts | Realized (loss) on derivative instruments, net | (10,389 | ) | (1,887 | ) | |||||
| $ | (12,074 | ) | $ | (10,058 | ) | |||||
Nine Months Ended September 30, | ||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||
Net Income (In 000’s) | Weighted Average Number of Shares Outstanding | Per Share Amount | Net Loss (In 000’s) | Weighted Average Number of Shares Outstanding | Per Share Amount | |||||||||||||||||||
| Basic | $ | 35,279 | 1,965,334 | $ | 17.95 | $ | (5,021 | ) | 1,994,177 | $ | (2.52 | ) | ||||||||||||
| Effect of dilutive securities: | ||||||||||||||||||||||||
| Options (a) | — | 757,218 | — | |||||||||||||||||||||
| Diluted | $ | 35,279 | 2,722,522 | $ | 12.96 | $ | (5,021 | ) | 1,994,177 | $ | (2.52 | ) | ||||||||||||
Nine Months Ended September 30, | ||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||
Net Loss (In000’s) | Weighted Average Number of Shares Outstanding | Per Share Amount | Net Income (In 000’s) | Weighted Average Number of Shares Outstanding | Per Share Amount | |||||||||||||||||||
Basic | $ | (5,021 | ) | 1,994,177 | $ | (2.52 | $ | 65 | 1,994,175 | $ | 0.03 | |||||||||||||
Effect of dilutive securities: | ||||||||||||||||||||||||
Options (a) | 758,367 | |||||||||||||||||||||||
Diluted | $ | (5,021 | ) | 1,994,177 | $ | (2.52 | ) | $ | 65 | 2,752,542 | $ | 0.02 | ||||||||||||
Three Months Ended September 30, | ||||||||||||||||||||||||
2021 | 2020 | |||||||||||||||||||||||
Net Loss (In 000’s) | Weighted Average Number of Shares Outstanding | Per Share Amount | Net Income (In 000’s) | Weighted Average Number of Shares Outstanding | Per Share Amount | |||||||||||||||||||
Basic | $ | (1,163 | ) | 1,994,177 | $ | (0.58 | ) | $ | 6,501 | 1,994,177 | $ | 3.26 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||||||||||||
Options (a) | — | 756,154 | ||||||||||||||||||||||
Diluted | $ | (1,163 | ) | 1,994,177 | $ | (0.58 | ) | $ | 6,501 | 2,750,331 | $ | 2.36 | ||||||||||||
Three Months Ended September 30, | ||||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||||
Net Income (In 000’s) | Weighted Average Number of Shares Outstanding | Per Share Amount | Net Loss (In 000’s) | Weighted Average Number of Shares Outstanding | Per Share Amount | |||||||||||||||||||
| Basic | $ | 13,154 | 1,937,091 | $ | 6.79 | $ | (1,163 | ) | 1,994,177 | $ | (0.58 | ) | ||||||||||||
| Effect of dilutive securities: | ||||||||||||||||||||||||
| Options (a) | — | 757,815 | — | — | — | — | ||||||||||||||||||
| Diluted | $ | 13,154 | 2,694,906 | $ | 4.88 | $ | (1,163 | ) | 1,994,177 | $ | (0.58 | ) | ||||||||||||
| (a) | The effect of the 767,500 outstanding stock options is antidilutive for the nine and three months ended September 30, 2021 due to net loss for these periods. |
Item 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following discussion is intended to assist you in understanding our results of operations and our present financial condition. Our Condensed Consolidated Financial Statements and the accompanying Notes to the Condensed Consolidated Financial Statements included elsewhere in this Report contain additional information that should be referred to when reviewing this material.
OVERVIEW
We are an independent oil and natural gas company engaged in acquiring, developing, and producing oil and natural gas. We presently own producing and
In addition to developing our oil and natural gas reserves, we continue to actively pursue the acquisition of producing properties. We attempt to assume the position of operator in all acquisitions of producing properties and will continue to evaluate properties for leasehold acquisition and for exploration and development operations in areas in which we own interests. To diversify and broaden our asset base, we will consider acquiring the assets or stock in other entities in the oil and gas business. Our main objective in making any such acquisitions will be to acquire income-producing assets or developable leasehold acreage to build stockholder value through consistent growth and development of our oil and gas reserve base on a cost-effective basis.
Our cash flows depend on many factors, including the price of oil gas, and natural gas, liquids (NGL’s), the success of our acquisition and drilling activities, and the operational performance of our producing properties. We use derivative instruments to manage our commodity price risk. This practice may prevent us from receiving the full advantage of any increases in commodityoil and gas prices above the maximum fixed amount specified in the derivative agreements and subjects us to the credit risk of the counterparties to such agreements. Since all our derivative contracts are accounted for under
Our financial results depend on many factors, particularly the price of natural gas and crude oil and NGLs and our ability to market our productsproduction on economically attractive terms. Commodity prices are affected by many factors outside of our control, including changes in market supply and demand, which are impacted by weather conditions, pipeline capacity constraints, inventory storage levels, basis differentials and other factors. In addition, our realized prices are further impacted by our derivative and hedging activities.
We derive our revenue and cash flow principally from the sale of oil, natural gas, and NGLs. As a result, our revenues are determined, to a large degree, by prevailing prices for crude oil, natural gas, and NGLs. We sell our oil and natural gas and NGLs on the open market and to local processing companies at prevailing market prices or through forward delivery contracts. Because some of our operations are located outside major markets, we are directly impacted by regional prices regardless of Henry Hub, WTI or other major market pricing. The market price for oil, natural gas, and NGLs is dictated by supply and demand; consequently, we cannot accurately predict or control the pricesprice we may receive for our produced products.oil, natural gas, and NGLs. Index prices for oil, natural gas, and NGLsNGL’s are considerably higher than and we expectin the recent past, however, prices to remainmay be volatile and, consequently, we cannot determine with any degree of certainty what effect increases or decreases in these prices will have on our capital program, production volumes or revenue.
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We are the operator of the majority of our developed and undeveloped acreage which is nearly all held by production. In the Permian Basin of West Texas and eastern New Mexico the Company maintains an acreage position of approximately 19,68016,960 gross (12,460(10,640 net) acres, 97%96.5% of which is located in Reagan, Upton, Martin, and Midland counties of Texas where our current West Texas horizontal drilling activity isactivities are focused. ThisWe believe this acreage has significant resource potential in the Spraberry and Wolfcamp intervals for additional horizontal drilling that could support the drilling of more thanas many as 250 additional horizontal wells. In Oklahoma we maintain an acreage position of approximately 49,76547,120 gross (10,953(10,300 net) acres. Our Oklahoma horizontal development is focused primarily in Canadian, Kingfisher, Grady, Garfield, Major and Garvin counties. We believe approximately 5,5795,800 net acres in these counties hold significant additional resource potential that could support the drilling of as many as 4950 new horizontal wells based on an estimate of four wells per section, depending onmulti-section drilling unit, two in the reservoir target area.Mississippian and two in the Woodford Shale. Should we choose to participate with a working interest in future development, our share of these future capital expenditures would be approximately $34$34.6 million at an average 10% ownership level.
Future development plans are established based on various factors, including the expectation of available cash flows from operations and availability of funds under our revolving credit facility.
District Information:
The following table represents certain reservereserves and well information as of December 31, 2020.
Gulf Coast | Mid- Continent | West Texas | Other | Total | ||||||||||||||||
Proved Reserves as of December 31, 2020 (MBoe) | ||||||||||||||||||||
Developed | 517 | 1,575 | 5,116 | 6 | 7,214 | |||||||||||||||
Undeveloped | — | 95 | 3,126 | — | 3,221 | |||||||||||||||
Total | 517 | 1,670 | 8,242 | 6 | 10,435 | |||||||||||||||
Average Daily Production (Boe per day) | 297 | 788 | 3,178 | 2 | 4,265 | |||||||||||||||
Gross Productive Wells (Working Interest and ORRI Wells) | 239 | 549 | 556 | 170 | 1,514 | |||||||||||||||
Gross Productive Wells (Working Interest Only) | 209 | 485 | 518 | 69 | 1,281 | |||||||||||||||
Net Productive Wells (Working Interest Only) | 124 | 217 | 263 | 2 | 606 | |||||||||||||||
Gross Operated Productive Wells | 158 | 209 | 325 | — | 692 | |||||||||||||||
Gross Operated Water Disposal, Injection and Supply wells | 9 | 53 | 6 | — | 68 | |||||||||||||||
| Proved Reserves as of December 31, 2021 (MBoe) | Gulf Coast | Mid- Continent | West Texas | Other | Total | |||||||||||||||
Developed | 906 | 2,383 | 8,957 | 6 | 12,252 | |||||||||||||||
Undeveloped Total | — | — | — | — | — | |||||||||||||||
Average Net Daily Production (Boe per day) | 336 | 747 | 2,878 | 3 | 3,964 | |||||||||||||||
Gross Productive Wells (Working Interest and ORRI Wells) | 207 | 549 | 576 | 200 | 1,532 | |||||||||||||||
Gross Productive Wells (Working Interest Only) | 189 | 400 | 530 | 88 | 1,207 | |||||||||||||||
Net Productive Wells (Working Interest Only) | 105 | 189 | 263 | 6 | 564 | |||||||||||||||
Gross Operated Productive Wells | 137 | 195 | 321 | — | 653 | |||||||||||||||
Gross Operated Water Disposal, Injection and Supply wells | 7 | 44 | 6 | — | 57 | |||||||||||||||
In several of our producing regions we have field service groups to service our operated wells and locations as well as third-party operators in the area.operators. These services consist of well service support, site preparation and construction services for drilling and workover operations. Our operations are performed utilizing workover andor swab rigs, water transport trucks, hot oil trucks, saltwater disposal facilities, various land excavating equipment and trucks we own and that are operated by our field employees.
Gulf Coast Region
Our development, exploitation, exploration, and production activities in the Gulf Coast region are primarily production and development of our existing operated properties concentrated in east and southeast Texas. This region is managed from our office in Houston, Texas. Principal producing intervals are in the Wilcox, San Miguel, Olmos, and Yegua formations at depths ranging from 3,000 to 12,500 feet. WeAs of December 31, 2021, we had 239207 producing wells (124(105 net) in the Gulf Coast region, as of December 31, 2020, of which 158137 wells are operated by us. The Average net daily production in our Gulf Coast Region in 20202021 was 297336 Boe. OnAt December 31, 2020,2021, we had 517906 MBoe of proved reserves in the Gulf Coast region, which represented 5%7% of our total proved reserves. We maintain an acreage position of over 11,54810,700 gross (3,968(3,215 net) acres in this region, primarily in Dimmit and Polk counties. We operate a field service group in this region from a field office in Carrizo Springs, Texas utilizing four workover rigs, nineteentwenty-three water transport trucks, two saltwater disposal wells two hot oilers,and several trucks and excavating equipment. Services including well service support, site preparation and construction services for drilling and workover operations are provided to third-party operators as well as utilized in our own operated wells and locations. The Company also owns, through its wholly-owned offshore company, a 60-mile-long pipeline on the shallow shelf of Texas that is currently idle but may someday have value. As of September 30, 2021,2022, the Gulf Coast region has no operated wells in the process of being drilled, no waterfloods in the process of being installed and no other related activities of material importance.
Mid-Continent
Our
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In the second quarterfirst half of 2021,2022, in the Mid-Continent region, the Company participated for 11.25% with Ovintiv
West Texas Region
Our West Texas activities are concentrated in the Spraberry and Wolfcamp shale plays of the Permian Basin ofencompassing eight counties in West Texas and New Mexico.Texas. The basin covers more than 75,000 square miles and extends across 52 Counties. The Wolfcamp and Spraberry reservoirs of this basin are among the largest contiguous accumulations of oil and gas in the United States. Productionproduced from these reservoirsshales is West Texas Intermediate Sweet
As of December 31, 2020,2021, we had 556576 wells (263 net) in the West Texas area, of which 325321 wells are operated by us. Principal producing intervals are in the Wolfcamp and Spraberry formations at depths ranging from 5,500 to 12,500 feet. The average net daily production in Our West Texas Region in 20202021 was 3,1782,878 Boe. On December 31, 2020,2021, we had 8,2428,957 MBoe of proved reserves in the West Texas area, or 79%73% of our total proved reserves. We maintain an acreage position of approximately 19,67916,960 gross (12,461(10,640 net) acres in the Permian Basin in West Texas, primarily in Reagan, Upton, Martin, and Midland counties, and believe this acreage has significant resource potential for horizontal drilling in the Spraberry, Jo Mill, and Wolfcamp intervals. We operate a field service group in this region utilizing nine workover rigs, threefour hot oiler trucks, one kill truck, and two roustabout trucks. Services, including well service support, site preparation, and construction services for drilling and workover operations, are provided to third-party operators as well as utilized infor our operated wells and locations.
In the thirdfirst half of 2022, the Company participated with 10.3% interest in the drilling of four 1.5-mile-long horizontal wells in Irion County, Texas operated by SEM Operating Company, LLC. All four wells have been drilled and completed and began production in early August.
In the fourth quarter of 2021,2022, the Company and Apache Corporation completed nine new Kashmir wells in Upton County, Texas: three eachan acreage exchange agreement with a large independent oil & gas operator to exchange approximately 725 net acres in the Upper Wolfcamp, Jo Mill, and Lower Spraberry reservoirs. Six of these had been drilledMidland Basin. In combination with existing acreage, this newly acquired acreage results in the spring of 2020 and three were drilled early in 2021. The Company owns 47.5%having 100% working interest in these wellsapproximately 1,200 contiguous acres and therefore the ability to efficiently and cost-effectively develop the Wolfcamp formation and other prospective reservoirs through 2-mile-long horizontal laterals.
Along with the 1,200 contiguous acres created from the acreage exchange, the Company has investedcompleted an agreement with a separate prominent independent oil & gas operator to create a 2,560-acre AMI for the joint development of horizontal wells. As part of the agreement, the Company has divested of a portion of its interest to operator for $16.1 million with the ability to acquire additional acreage from the operator located within the AMI. These exchanges should result in an approximately $2450/50 ownership of the development with the operator. This newly formed 2,560 acreage-block will allow the Company to reinvest approximately $90 million
In the fourth quarter of 2021.
Reserve Information:
Our interests in proved developed and undeveloped oil and gas properties, including the interests held by the Partnerships, have been evaluated by Ryder Scott Company, L.P. for each of the three years ended December 31, 2020.2021. The professional qualifications of the technical persons primarily responsible for overseeing the preparation of the reserve estimates can be found in Exhibit 99.1, the Ryder Scott Company, L.P. Report on Registrant’s Reserves Estimates. In matters related to the preparation of our reserve estimates, our district managers report to the Engineering Data manager, who maintains oversight and compliance responsibility for the internal reserve estimate process and provides oversight for the annual preparation of reserve estimates of 100% of our
15
twenty-five years of experience managing our reserves. Our Engineering Data manager, the technical person primarily responsible for overseeing the preparation of reserves estimates, has over thirty years of experience, holds a Bachelor’sBachelor degree in Geology and an MBA in finance and is a member of the Society of Petroleum Engineers and American Association of Petroleum Geologist. See Part II, Item 8 “Financial Statements and Supplementary Data”, for additional discussions regarding proved reserves and their related cash flows.
Reserve Category | ||||||||||||||||||||||||||||||||||||||||||||||||
Proved Developed | Proved Undeveloped | Total | ||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, | Oil (MBbls) | NGLs (MBbls) | Gas (MMcf) | Total (MBoe) | Oil (MBbls) | NGLs (MBbls) | Gas (MMcf) | Total (MBoe) | Oil (MBbls) | NGLs (MBbls) | Gas (MMcf) | Total (MBoe) | ||||||||||||||||||||||||||||||||||||
2018 | 6,404 | 2,707 | 21,065 | 12,622 | 10 | 12 | 124 | 43 | 6,414 | 2,719 | 21,189 | 12,665 | ||||||||||||||||||||||||||||||||||||
2019 | 4,381 | 2,914 | 19,995 | 10,268 | 1,833 | 1,017 | 4,547 | 3,608 | 6,214 | 3,931 | 24,542 | 14,235 | ||||||||||||||||||||||||||||||||||||
2020 | 2,684 | 2,258 | 13,633 | 7,214 | 1,784 | 787 | 3,897 | 3,221 | 4,468 | 3,045 | 17,530 | 10,435 | ||||||||||||||||||||||||||||||||||||
| Reserve Category | ||||||||||||||||||||||||||||||||||||||||||||||||
| Proved Developed | Proved Undeveloped | Total | ||||||||||||||||||||||||||||||||||||||||||||||
As of December 31, | Oil (MBbls) | NGLs (MBbls) | Gas (MMcf) | Total (MBoe) | Oil (MBbls) | NGLs (MBbls) | Gas (MMcf) | Total (MBoe) | Oil (MBbls) | NGLs (MBbls) | Gas (MMcf) | Total (MBoe) | ||||||||||||||||||||||||||||||||||||
| 2019 | 4,381 | 2,914 | 19,995 | 10,628 | 1,833 | 1,017 | 4,547 | 3,608 | 6,214 | 3,931 | 24,542 | 14,235 | ||||||||||||||||||||||||||||||||||||
| 2020 | 2,684 | 2,258 | 13,633 | 7,214 | 1,784 | 787 | 3,897 | 3,221 | 4,468 | 3,045 | 17,530 | 10,435 | ||||||||||||||||||||||||||||||||||||
| 2021 | 5,386 | 2,882 | 23,902 | 12,252 | — | — | — | — | 5,386 | 2,882 | 23,902 | 12,252 | ||||||||||||||||||||||||||||||||||||
| (a) | In computing total reserves on a |
In 2019, in West Texas, we participated in the initial three shallow horizontals on our Kashmir tract with one of each of these wells completed in the Wolfcamp “A”, Jo Mill, and Lower Spraberry. The Company has 48% interest in two of these wells and 5.3% in one well. All three wells were brought on production in May of 2019.
In 2020, in West Texas we participated in the drilling of seven wells: one for 8.6% interest which was brought into production in July of 2020, and six wells with an average 47.5% interest that were drilled but not completed at year-end and therefore classified as Proved Undeveloped in the year-end reserve report. The Company invested approximately $8.0 million in these seven wells in 2020. Also in 2020, proved producing reserves were added in West Texas through the addition of 11 horizontal wells completed in Midland County, Texas, in which we receive 0.56% to 1% over-riding royalty interest.
In 2021, in West Texas, we participated with Apache in the drilling of three additional horizontals on the Kashmir Tract in Upton County, Texas and completed these three wells in September of 2021 along with six other wells drilled in 2020 on the same lease that were drilled but uncompleted at year-end 2020. The Company has an average of 47.8% interest in these nine wells and invested approximately $30 million in these horizontal wells.
In our Oklahoma, Scoop-Stack play, in 2019, we participated in the drilling and completion of six wells on our WM Wallace tract for 7.67% interest, and nine wells, included on our Slash, Osborn, and Leon tracts, with an average 1.34% interest. In addition, three wells drilled in Oklahoma in 2018, were completed in 2019 converting 24 Mboe of reserves to proved developed. Also in Oklahoma, six wells designated as Shut-in on December 31, 2018, were brought into production in 2019: five located on our Ruthie tract, and one on our Braum tract.
In 2019, in our Gulf Coast region, we added production through the recompletion of three vertical wells in Polk County, Texas: one operated by the Company in which we have 72.5% interest, and two operated by Unit Petroleum in which the Company owns 2.81% working interest and 3.77% net revenue interest. In 2020, the Company successfully recompleted one additional operated well in the Segno field with a 72.5% interest.
At December 31, 2020, in total, the Company had 3,221 Mboe of proved undeveloped (PUD) reserves attributable to 13 wells operated by others, three10 of which are new wells spud inwere drilled but not completed by year-end 2020, butand three that were not drilled until the first quarter of 2021, and 10 of which that were drilled as of
At December 31, 2021, the Company had 159 Mboe of proved developed shut-in reserves attributable to three horizontal wells drilled and completed in Canadian County, Oklahoma in December of 2021, but not yet online. Three of the four wells were successfully completed and online in January, 2022, while one well had completion issues and has been temporarily abandoned. Regarding the four drilled but uncompleted PUD wells in Grady County, Oklahoma noted in the paragraph above, reserves previously attributed to these wells were not included in the 2021 year-end reserve report as the operator has no near-term plans for their completion.
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We employ technologies to establish provenproved reserves that have been demonstrated to provide consistent results capable of repetition. The technologies and economic data being used in the estimation of our proved reserves include, but are not limited to, decline curveelectrical logs, radioactivity logs, geologic maps, production data, and volumetric analysis, analogy, geologic mapping, as well as evaluation of reservoir properties, production, and well testwell-test data. The estimated reserves of wells with sufficient production history are estimated using appropriate decline curves. Estimated reserves of producing wells with limited production history and for undeveloped locations are estimated using performance data from analogous wells in the area. These wells are considered analogous based on production performance from the same formation and with similar completion techniques.
The estimated future net revenue (using current prices and costs as of those dates) and the present value of future net revenue (at a 10% discount for estimated timing of cash flow) for our proved developed and proved undeveloped oil and gas reserves at the end of each of the three years ended December 31, 2020,2021, are summarized as follows (in thousands of dollars):
Proved Developed | Proved Undeveloped | Total | ||||||||||||||||||||||||||||||
As of December 31, | Future Net Revenue | Present Value 10 Of Future Net Revenue | Future Net Revenue | Present Value 10 Of Future Net Revenue | Future Net Revenue | Present Value 10 Of Future Net Revenue | Present Value 10 Of Future Income Taxes | Standardized Measure of Discounted Cash flow | ||||||||||||||||||||||||
| 2018 | $ | 239,337 | $ | 161,376 | $ | 767 | $ | 525 | $ | 240,104 | $ | 161,901 | $ | 23,992 | $ | 137,909 | ||||||||||||||||
| 2019 | $ | 116,592 | $ | 82,155 | $ | 42,700 | $ | 17,876 | $ | 159,292 | $ | 100,031 | $ | 18,419 | $ | 81,612 | ||||||||||||||||
| 2020 | $ | 43,886 | $ | 34,717 | $ | 37,346 | $ | 21,823 | $ | 81,232 | $ | 56,539 | $ | 14,920 | $ | 41,619 | ||||||||||||||||
| Proved Developed | Proved Undeveloped | Total | ||||||||||||||||||||||||||||||
As of December 31, | Future Net Revenue | Present Value 10 Of Future Net Revenue | Future Net Revenue | Present Value 10 Of Future Net Revenue | Future Net Revenue | Present Value 10 Of Future Net Revenue | Present Value 10 Of Future Income Taxes | Standardized Measure of Discounted Cash flow | ||||||||||||||||||||||||
| 2019 | $ | 116,592 | $ | 82,155 | $ | 42,700 | $ | 17,876 | $ | 159,292 | $ | 100,031 | $ | 18,419 | $ | 81,612 | ||||||||||||||||
| 2020 | $ | 43,886 | $ | 34,717 | $ | 37,346 | $ | 21,823 | $ | 81,232 | $ | 56,539 | $ | 14,920 | $ | 41,619 | ||||||||||||||||
| 2021 | $ | 275,227 | $ | 171,906 | $ | — | $ | — | $ | 275,227 | $ | 171,906 | $ | 36,100 | $ | 135,806 | ||||||||||||||||
The PV 10 Value represents the discounted future net cash flows attributable to our proved oil and gas reserves before income tax, discounted at 10%. Although this measure is not in accordance with U.S. generally accepted accounting principles (“GAAP”), we believe that the presentation of the PV10 Value is relevant and useful to investors because it presents the discounted future net cash flow attributable to proved reserves beforeprior to taking into account corporate future income taxes and the current tax structure. We use this measure when assessing the potential return on investment related to oil and gas properties. The PV10 of future income taxes represents the sole reconciling item between this
“Proved developed” oil and gas reserves are reserves that can be expected to be recovered from existing wells with existing equipment and operating methods. “Proved undeveloped” oil and gas reserves are reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion. Our reserves include amounts attributable to
In accordance with U.S. generally accepted accounting principles, product prices are determined using the twelve-month average oil and gas index prices, calculated as the unweighted arithmetic average for the first day of the month price for each month, adjusted for oilfield or gas gathering hub and wellhead price differentials (e.g. grade, transportation, gravity, sulfur, and basic sediment and water) as appropriate. Also, in accordance with SEC specifications and U.S. generally accepted accounting principles, changes in market prices subsequent to December 31 are not considered.
While it may be reasonably anticipated that the prices received for the sale of our production may be higher or lower than the prices used in this evaluation, as described above, and the operating costs relating to such production may also increase or decrease from existing levels, such possible changes in prices and costs were, in accordance with rules adopted by the SEC, omitted from consideration in making this evaluation for the SEC case. Actual volumes produced, prices received and costs incurred may vary significantly from the SEC case.
17
Natural gas prices, based on the twelve-month average of the first of the month Henry Hub index price, were $3.598 per MMBtu in 2021 as compared to $1.985 per MMBtu in 2020, as compared to $2.58and $2.581 per MMBtu in 2019, and $3.102019. Through November 1, 2022, the twelve-month average of the first of the month Henry Hub index price is $6.166 per MMBtu in 2018.MMBtu. Oil prices, based on the NYMEX first of the month average price, were $66.56 per barrel in 2021 as compared to $39.57 per barrel in 2020, as compared toand $55.69 per barrel in 2019,2019. Through November 1, 2022, the NYMEX first of the month average price was $92.37. Since January 1, 2021, we have not filed any estimates of our oil and $65.56 per barrelgas reserves with, nor were any such estimates included in 2018.
Maintaining a strong balance sheet and ample liquidity are key components of our business strategy. For 2021,In 2022, we will continue our focus on preserving financial flexibility and ample liquidity as we manage the risks facing our industry. Our 2021 capital budget for the year is reflective of current commodity prices and has been established based on an expectation of available cash flows, with any cash flow deficiencies expected to be funded by borrowings under our revolving credit facility. As we have done historically to preserve or enhance liquidity, we may adjust our capital program throughout the year, divest
In the third quarter of 2021, the Company, together with Apache Corporation, completed nine newtwo-mile horizontal wells on the Kashmir tract in Upton County, Texas. These nineTexas, operated by Apache Corporation, were completed and brought into production. In the fourth quarter of 2021, three two-mile horizontal wells include three lateralsoperated by Ovintiv Mid-Continent in each of the Upper Wolfcamp, Jo Mill,Canadian County, Oklahoma were completed and Lower Spraberry reservoirs. All nine wells were on production by October 4, 2021.brought online in January 2022. The Company has an average of 47.5% working interest in thesethe nine wells completed with a total investment of approximately $24 million. We believe the additional income from these wells will have a significant impact on the Company’s fourth-quarter cash flow. In addition to the MiddleApache and Upper Wolfcamp, the Jo Mill and the Lower Spraberry, which we now consider fully developed, we believe there is future development potential11.25% interest in the Middle Spraberry reservoir on this 1280 acre block. This reservoir will likely be developedthree wells completed with four
In the second quarter of 2021,2022, the Company participated with Ovintiv
Since the start of our West Texas horizontal drilling program in each well2015, we have participated in 81 wells and expects to investinvested approximately $1.98$130 million in these wells.
In WestUpton County, Texas, in addition to the Kashmir Tract described above, we are actively developing a contiguous 3,260 acre Area of Mutual Interest (AMI) in Upton County3,260-acre block with our joint venture partner, Apache Corporation. In this acreage block the Company has 2,600 leasehold acres with interest of between 14% and 56% depending on the particular lease and depth being developed. Development
In addition to the 3,260-acre block being developed, as described above, the Company has also been developing an offsetting 1,300-acre block in Upton County, Texas, with Apache Corporation as operator. In the second quarter of 2019 three horizontal wells were completed and brought on production from reservoirs above the Middle Wolfcamp: one in the Wolfcamp “A”, one in the Jo Mill, and one in the Lower Spraberry, confirming the economic viability of these reservoirs on our acreage. Prime holds 47.5% working interest in these reservoirs. As a result of the success of the initial three wells, nine additional horizontals followed and were completed in the third quarter of 2021. Our average 47.5% share of the cost of these nine horizontal wells was approximately $26.7 million in total. In addition to the Wolfcamp “A”, Jo Mill and Lower Spraberry, that are now considered fully developed on the tract, four locations in the Middle Spraberry will be considered for future development at an estimated gross cost of approximately $40.0 million with the Company’s share being approximately $18.8 million.
Also in the Permian Basin of West Texas, we are developing a
18
As mentioned above, in West Texas, the Company participated for 10.3% interest with SEM Operating Company in four 7,900’-long horizontal wells in Irion County, Texas. We anticipate an investment of $2.55 million in these wells which have been producing since August. Also planned for this year is the operator. No near-term additional drilling plans have been received, however, development of offset acreage by other operators has demonstrated the potential for good economic production from multiple landing zones on our acreage block.
In the fourth quarter of 2022, the Company completed an acreage exchange agreement with a large independent oil & gas operator to exchange approximately 725 net acres in the Midland Basin. In combination with existing acreage, this newly acquired acreage results in the Company having 100% working interest in approximately 1,200 contiguous acres and therefore the ability to efficiently and cost-effectively develop the Wolfcamp formation and other prospective reservoirs through 2-mile-long horizontal laterals.
Along with the 1,200 contiguous acres created from the acreage exchange, the Company has twocompleted an agreement with a separate prominent independent oil & gas operator to create a 2,560-acre AMI for the joint development projects that are inof horizontal wells. As part of the planning stage for the initial phase of development to occur in 2022: one with BTA Producers, Inc. and one with Hibernia Resources, LLC. These two joint development acreage blocks can accommodate the drilling of 144 horizontal wells to produce from five prospective reservoirs, four of which are proven. The Company’s share is expected to be 50% and the potential investment byagreement, the Company would behas divested of a portion of its interest to operator for $16.1 million with the ability to acquire additional acreage from the operator located within the AMI. These exchanges should result in an approximately $442 million. The actual number50/50 ownership of wells eventually drilled, and the cost anddevelopment with the timing of such wells are dependent upon many factors including commodity market conditions.
In Oklahoma, we are focused on the development of our reserves in Canadian, Grady, Kingfisher, Garfield, Major, and Garvin counties where we have approximately 5,800 net leasehold acres in the company would haveScoop/Stack Play. In 2019, we participated for an average of 34.5% working4.6% interest with Newfield Exploration in twelve successful wells in Canadian County on our Slash and invest approximately $236Wallace tracts. In 2021, we participated for 11.25% interest with Ovintiv Mid-Continent Inc. in four wells on our Peters tract, in Canadian County. Three of these wells were successfully completed in December 2021 and online in January 2022, while one well had completion issues and has been temporarily abandoned. At today’s product prices, payout of the Company’s $2.3 million investment in these four wells occurred in four months.
In April 2022, in Oklahoma, the Company and Ovintiv Mid-Continent began drilling four horizontal wells on our Bohlman tract in the same area as the successful Peters wells. All four of the Bohlman wells have been drilled, completed, and were placed on production in early August.. The Company is participating with 9.38% interest in these wells with an approximate investment $2.45 million. In May, we sold 241 acres in Canadian County, Oklahoma for proceeds of $845,000, and in August another 113 acres for $423,700. Both of these sales were of non-strategic acreage and the Company retained its interest in existing wells and a small overriding royalty interest in future development.
We believe this agreement represents significant future value for PrimeEnergy.
LIQUIDITY AND CAPITAL RESOURCES
Maintaining a strong balance sheet and ample liquidity are key components of our business strategy. For 2022, we will continue our focus on preserving financial flexibility and ample liquidity as we manage the risks facing our industry. Our 2022 capital budget is reflective of commodity prices and has been established based on an expectation of available cash flows, with any cash flow deficiencies expected to be funded by borrowings under our revolving credit facility. As we have done historically to preserve or enhance liquidity, we may adjust our capital program throughout the year, divest assets, or enter into strategic joint ventures.
Our primary sources of liquidity are cash generated from our operations, through our producing oil and gas properties, field services business and sales of acreage.
Excluding the effects of significant unforeseen expenses or other income, our cash flow from operations fluctuates primarily because of variations in oil and gas production and prices or changes in working capital accounts. Our oil and gas production will vary based on actual well performance but may be curtailed due to factors beyond our control.
Our realized oil and gas prices vary due to world political events, supply and demand of products, product storage levels, and weather patterns. We sell the majority of our production at spot market prices. Accordingly, product price volatility will affect our cash flow from operations. To mitigate price volatility, we sometimes lock in prices for some portion of our production through the use of derivatives.
19
Our credit agreement required us to hedge a strong balance sheet and ample liquidity are key componentsportion of our business strategy. For 2021, weproduction as forecasted for the PDP reserves included in our borrowing base review engineering reports. Accordingly, the Company has in place the following swap agreements for oil and natural gas.
| 2022 | 2023 | 2022 | 2023 | |||||||||||||
Swap Agreements | ||||||||||||||||
Natural Gas (MMBTU) | 279,000 | 254,000 | $ | $ | 3.60 | |||||||||||
Oil (barrels) | 79,300 | 70,700 | $ | $ | 69.50 | |||||||||||
In the first quarter of 2022, the Company participated in the drilling of four wells with SEM Operating Company in Irion County, Texas for 10.3% interest and in April of this year began participating with Ovintiv Mid-Continent in four wells in Canadian County, Oklahoma with 9.38% interest.
These eight wells have been completed and were put on production in early August. In addition, the Company has received drilling proposals for an additional 26 horizontal wells to be drilled in West Texas with 15 of these slated to begin drilling this year. In total, the Company is likely to invest approximately $86 million in these 26 wells. Additional drilling and future development plans will continue our focus on preserving financial flexibility and ample liquidity as we manage the risks facing our industry. Our 2021 capital budget is reflective of commodity prices and has beenbe established based on an expectation of available cash flows with any cash flow deficiencies expected to be funded by borrowingsfrom operations and availability of funds under our revolving credit facility. As we have done historically to preserve or enhance liquidity, we may adjust our capital program throughout the year, divest assets, or enter into strategic joint ventures. We are actively in discussions with financial partners for funding to develop our asset base and, if required, pay down our revolving credit facility should our borrowing base become limited due to the deterioration of commodity prices.
The Company maintains a Credit Agreement with a maturity date of February 15, 2023, providing for a reserves-based line of credit facility totaling $300 million, with a current borrowing base of $40$75 million. At September 30, 2021,As of August 15, 2022, the Company had $31.5 million inhas no outstanding borrowings and $8.5 million in availability under this facility.line. The bank reviews the borrowing base semi-annually and, at their discretion, may decrease or propose an increase to the borrowing base relative to a
In the first quarter of 2022, the Company sold 1,809 net leasehold acres in Reagan and Midland Counties, Texas through three transactions receiving gross proceeds of $14.1 million and retaining certain over-riding royalty interests.
In the second quarter of 2022, the Company sold 241 net acres in Canadian County, Oklahoma for proceeds of $845,000 and a retained over-riding royalty interest.
In the third quarter of 2022, the Company sold an additional 113 net acres in Canadian County, Oklahoma for $423,700.
In November of 2022, the Company completed an acreage exchange with a large independent oil & gas operator to exchange approximately 725 net acres in the Midland Basin. When combined with currently held acreage, this acreage exchange results in the Company having 100% working interest in approximately 1,200 contiguous acres and therefore the ability to efficiently and cost-effectively develop the Wolfcamp and other prospective reservoirs through 2-mile-long horizontal laterals. In addition to this exchange, the Company has completed an agreement requires uswith a separate prominent independent oil & gas operator to hedgecreate a 2,560-acre AMI for the joint development of horizontal wells. As part of the plan, the Company has divested a portion of our production as forecastedits interest to the operator for $16.1 million and has the PDP reserves includedright to acquire additional acreage from the operator within the AMI. These exchanges should result in our borrowing base review engineering reports. Accordingly, asan approximate 50/50 ownership of September 30, 2021,the AMI development with the operator. This newly formed 2,560 acreage block will allow the Company hasto reinvest approximately $90 million of its cash flow in place the following swap and put agreements for oil and natural gas.
2021 | 2022 | 2023 | 2021 | 2022 | 2023 | |||||||||||||||||||
Swap Agreements | ||||||||||||||||||||||||
Natural Gas (MMBTU) | 268,000 | 928,000 | 131,000 | $ | 2.48 | $ | 2.67 | $ | 2.81 | |||||||||||||||
Oil (barrels) | 133,500 | 196,200 | 27,200 | $ | 53.60 | $ | 51.99 | $ | 50.31 | |||||||||||||||
The majority of our capital spending is discretionary, and the ultimate level of expenditures will be dependent on our assessment of the oil and gas business environment, the number and quality of oil and gas prospects available, the market for oilfield services, and oil and gas business opportunities in general.
The Company has in place both a stock repurchase program and a limited partnership interest repurchase program. Spendingin place, spending under these programs in 2020this program during the first nine months of 2022 was $1.452$5.0 million. The Company expects continued spending under these programs through 2021.the stock repurchase program in 2022.
20
RESULTS OF OPERATIONS
2022 and 2021 and 2020 Compared
We reported net income of $6.5$35.3 million, or $3.26$17.95 per share and $65 thousand$13.2 million, or $0.03$6.79 per share for the threenine and ninethree months ended September 30, 2020,2022, respectively, as compared to net losses of $1.2 million, or $(0.58) per share and $5.0 million, or $(2.52) per share for the three and nine months ended September 30, 2021, respectively. Current year net lossincome reflects changesincreases in production combined withand commodity price increases over the three and nine months ended September 30, 2020, decreases2022, fluctuations in gains related to the sale of acreageassets and changes related to the valuation of derivative instruments. The significant components of income and expense are discussed below.
Oil, gas and NGLs sales
The following tabletables summarizes the primary components of production volumes and average sales prices realized for the three and nine months ended September 30, 20212022 and 20202021 (excluding realized gains and losses from derivatives).
Nine months ended September 30, | ||||||||||||||||
2021 | 2020 | Increase / (Decrease) | Increase / (Decrease) | |||||||||||||
Barrels of Oil Produced | 480,000 | 538,000 | (58,000 | ) | (10.80 | )% | ||||||||||
Average Price Received | $ | 63.28 | $ | 38.41 | $ | 24.88 | 64.8 | % | ||||||||
Oil Revenue (In 000’s) | $ | 30,376 | $ | 20,663 | $ | 9,713 | 47.0 | % | ||||||||
Mcf of Gas Sold | 2,395,000 | 2,038,000 | 357,000 | 17.5 | % | |||||||||||
Average Price Received | $ | 3.32 | $ | 1.20 | $ | 2.12 | 177.1 | % | ||||||||
Gas Revenue (In 000’s) | $ | 7,948 | $ | 2,441 | $ | 5,507 | 225.6 | % | ||||||||
Barrels of Natural Gas Liquids Sold | 298,000 | 319,000 | (21,000 | ) | (6.60 | )% | ||||||||||
Average Price Received | $ | 26.11 | $ | 10.07 | $ | 16.04 | 159.3 | % | ||||||||
Natural Gas Liquids Revenue (In 000’s) | $ | 7,781 | $ | 3,212 | $ | 4,569 | 142.2 | % | ||||||||
Total Oil & Gas Revenue (In 000’s) | $ | 46,105 | $ | 26,316 | $ | 19,789 | 75.2 | % | ||||||||
Three months ended September 30, | ||||||||||||||||
2021 | 2020 | Increase / (Decrease) | Increase / (Decrease) | |||||||||||||
Barrels of Oil Produced | 152,000 | 160,000 | (8,000 | ) | (5.0 | )% | ||||||||||
Average Price Received | $ | 68.70 | $ | 39.62 | $ | 29.08 | 73.4 | % | ||||||||
Oil Revenue (In 000’s) | $ | 10.442 | $ | 6,339 | $ | 4,103 | 64.7 | % | ||||||||
Mcf of Gas Sold | 950,000 | 496,000 | 454,000 | 91.5 | % | |||||||||||
Average Price Received | $ | 4.21 | $ | 2.12 | $ | 2.09 | 98.5 | % | ||||||||
Gas Revenue (In 000’s) | $ | 3,998 | $ | 1,052 | $ | 2,946 | 280.0 | % | ||||||||
Barrels of Natural Gas Liquids Sold | 103,000 | 106,000 | (3,000 | ) | (2.80 | )% | ||||||||||
Average Price Received | $ | 35.26 | $ | 13.91 | $ | 21.35 | 153.5 | % | ||||||||
Natural Gas Liquids Revenue (In 000’s) | $ | 3,632 | $ | 1,474 | $ | 2,158 | 146.4 | % | ||||||||
Total Oil & Gas Revenue (In 000’s) | $ | 18,072 | $ | 8,865 | $ | 9,207 | 103.9 | % | ||||||||
| Nine months ended September 30, | ||||||||||||||||
| 2022 | 2021 | Increase / (Decrease) | Increase / (Decrease) | |||||||||||||
Barrels of Oil Produced | 752,500 | 480,000 | 272,500 | 56.8 | % | |||||||||||
Average Price Received | $ | 100.39 | $ | 63.28 | $ | 37.11 | 58.6 | % | ||||||||
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Oil Revenue (In 000’s) | $ | 75,546 | $ | 30,376 | $ | 45,170.00 | 148.7 | % | ||||||||
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Mcf of Gas Sold | 2,456,800 | 2,395,000 | 61,800 | 2.6 | % | |||||||||||
Average Price Received | $ | 6.01 | $ | 3.32 | $ | 2.69 | 81.0 | % | ||||||||
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Gas Revenue (In 000’s) | $ | 14,762 | $ | 7,948 | $ | 6,814.00 | 85.7 | % | ||||||||
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Barrels of Natural Gas Liquids Sold | 332,400 | 298,000 | 34,400 | 11.5 | % | |||||||||||
Average Price Received | $ | 37.54 | $ | 26.11 | $ | 11.43 | 43.8 | % | ||||||||
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Natural Gas Liquids Revenue (In 000’s) | $ | 12,477 | $ | 7,781 | $ | 4,696 | 60.4 | % | ||||||||
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Total Oil & Gas Revenue (In 000’s) | $ | 102,785 | $ | 46,105 | $ | 56,680 | 122.9 | % | ||||||||
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| Three months ended September 30, | ||||||||||||||||
| 2022 | 2021 | Increase / (Decrease) | Increase / (Decrease) | |||||||||||||
Barrels of Oil Produced | 244,500 | 152,000 | 92.500 | 60.9 | % | |||||||||||
Average Price Received | $ | 95.72 | $ | 68.70 | $ | 27.02 | 39.3 | % | ||||||||
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Oil Revenue (In 000’s) | $ | 23,403 | $ | 10.442 | $ | 12,961 | 124.1 | % | ||||||||
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Mcf of Gas Sold | 879,800 | 950,000 | (70,200 | ) | (7.39 | )% | ||||||||||
Average Price Received | $ | 7.23 | $ | 4.21 | $ | 3.02 | 71.7 | % | ||||||||
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Gas Revenue (In 000’s) | $ | 6,359 | $ | 3,998 | $ | 2,361 | 59.1 | % | ||||||||
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Barrels of Natural Gas Liquids Sold | 122,400 | 103,000 | 19,400 | 18.8 | % | |||||||||||
Average Price Received | $ | 34.35 | $ | 35.26 | $ | (0.91 | ) | (2.59 | )% | |||||||
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Natural Gas Liquids Revenue (In 000’s) | $ | 4,204 | $ | 3,632 | $ | 572 | 15.7 | % | ||||||||
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Total Oil & Gas Revenue (In 000’s) | $ | 33,966 | $ | 18,072 | $ | 15,894 | 87.9 | % | ||||||||
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Oil, Natural Gas and NGL Derivatives
Field service income
21
Lease operating expense
Field service expense
Depreciation, depletion, amortization and accretion on discounted liabilities
General and administrative expense
Interest expense
Income tax benefit/expense or benefit
Item 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
The Company is a smaller reporting company and no response is required pursuant to this Item.
Item 4. | CONTROLS AND PROCEDURES |
As of the end of the current reported period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Rules
There were no changes in the Company’s internal control over financial reporting that occurred during the first nine months of 20212022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
22
PART II—OTHER INFORMATION
Item 1. | LEGAL PROCEEDINGS |
None.
Item 1A. | RISK FACTORS |
The Company is a smaller reporting company and no response is required pursuant to this Item.
Item 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
There were no sales of equity securities by the Company during the period covered by this report.
During the nine months ended September 30, 2021,2022, the Company purchased the following shares of common stock as treasury shares.
2022 Month | Number of Shares | Average Price Paid per share | Maximum Number of Shares that May Yet Be Purchased Under The Program at Month—End (1) | |||||||||
January | 2,981 | $ | 76.21 | 144,740 | ||||||||
February | 5,948 | $ | 73.26 | 138,792 | ||||||||
March | 2,259 | $ | 75.36 | 136,533 | ||||||||
April | 3,426 | $ | 74.82 | 133,107 | ||||||||
May | 5,963 | $ | 82.37 | 127,144 | ||||||||
June | 18,855 | $ | 85.18 | 108,289 | ||||||||
July | 15,645 | $ | 79.68 | 92,644 | ||||||||
August | 5,500 | $ | 87.99 | 87,144 | ||||||||
September | 800 | $ | 92.80 | 86,344 | ||||||||
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Total/Average | 61,377 | $ | 81,33 | |||||||||
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| (1) | ||||||||||||
shares | paid per share | of shares that may yet be purchased under the program at month end | ||||||||||
In December 1993, we announced that the Board of Directors authorized a stock repurchase program whereby we may purchase outstanding shares of the common stock from time-to-time, |
Item 3. | DEFAULTS UPON SENIOR SECURITIES |
None
Item 4. | RESERVED |
Item 5. | OTHER INFORMATION |
Non
23
Item 6. | EXHIBITS |
The following exhibits are filed as a part of this report:
24
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
PRIMEENERGY RESOURCES CORPORATION | ||||||
Dated: November | By: | /s/ Charles E. Drimal, Jr. | ||||
| Charles E. Drimal, Jr. | ||||||
| Chairman, President | ||||||
25