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Financial report summary
?Risks
- Our existing developed oil and natural gas production will decline; we may be unable to acquire or develop the additional oil and natural gas reserves that are required in order to sustain our production and business operations.
- Oil and natural gas development, re-completion of wells from one reservoir to another reservoir, restoring wells to production, and drilling and completing new wells are speculative activities which involve numerous risks and substantial uncertain costs.
- Our derivative activities could result in financial losses or could reduce our income.
- Our operations may require significant amounts of capital and additional financing may be necessary in order for us to continue our exploitation activities.
- Government regulation and liability for oil and natural gas operations and environmental matters may adversely affect our business and results of operations.
- The risks arising out of the threat of climate change, including transition risks and physical risks, may adversely affect our business and results of operations.
- Our business could be negatively affected by security threats. A cyber-attack or similar incident could occur and result in information theft, data corruption, operational disruption, damage to our reputation, and/or financial loss.
- Our insurance may not protect us against all of the operating risks to which our business is exposed.
- The loss of key personnel could adversely affect us.
- Oilfield service and materials prices may increase, and the availability of such services and materials may be inadequate to meet our needs.
- We cannot market the oil and natural gas that we produce without the assistance of third-parties.
- We face strong competition from larger oil and natural gas companies.
- We have been, and in the future may become, involved in legal proceedings related to our properties or operations and, as a result, may incur substantial costs in connection with those proceedings.
- Ownership of our oil, natural gas, and mineral production depends on good title to our property.
- Significant ownership of our common stock is concentrated in a small number of shareholders who may be able to affect the outcome of the election of our directors and all other matters submitted to our stockholders for approval.
- The market for our common stock is limited and may not provide adequate liquidity.
- If securities or industry analysts do not publish research reports about our business, or if they downgrade our stock, the price of our common stock could decline.
- Payment of dividends on our common stock has been in the past, and could be in the future, reduced or eliminated.
- There may be future sales or issuances of our common stock, which will dilute the ownership interests of stockholders and may adversely affect the market price of our common stock.
Management Discussion
- Crude oil, natural gas and NGL revenues were $21.0 million and $33.7 million for the three months ended December 31, 2023 and 2022, respectively. The decrease in revenues is primarily due to the decrease in our average realized price per BOE coupled with a decrease in our sales volumes. Our average realized commodity price (excluding the impact of derivative contracts) for the three months ended December 31, 2023 decreased approximately $14.24 per BOE, or 28.2%, compared to the prior year period. The amount we realize for our production depends predominantly upon commodity prices, which are affected by changes in market demand and supply, as impacted by overall economic activity, weather, inventory storage levels, basis differentials and other factors. Realized natural gas prices decreased 54.4% from the prior year period, driving the largest decrease in revenues. This was partially attributed to the prior year period benefit of strong natural gas price differentials received at the Jonah Field where we realized an average natural gas price of $11.00 per MCF in the prior year period compared to $4.87 in the current year quarter. Average daily equivalent production decreased 13.0% from 7,250 BOEPD in the prior year period to 6,304 BOEPD in the current period. We began experiencing production declines and downtime in April 2023 at Barnett Shale. Production declines were primarily related to compression issues due to excessive heat, downtime in the gathering and processing system, pipeline rerouting and optimization, and our operator’s decision to temporarily shut-in certain low margin wells. As of December 31, 2023, the midstream issues have been moderated, but due to low natural gas prices the shut-in wells remain offline which has continued to impact production volumes.