Oil and Natural Gas Properties

12 Months Ended

Dec. 31, 2023

Oil and natural gas properties are summarized below:


	December 31,
	2023		2022

	(In thousands)
Proved	$	895,783	$	516,011
Unproved	100,216		12,770
Work-in-progress	57,004		45,169
	1,053,003		573,950
Accumulated depletion, amortization and impairment	(206,102)		(133,848)
Total oil and natural gas properties, net	$	846,901	$	440,102

As of December 31, 2023, the Company had no exploratory wells included in work-in-progress. In 2022, the Company had one exploratory well drilled but uncompleted that was included in work-in-progress with associated well costs of $3.8 million. During the year ended December 31, 2023, the Company determined this exploratory well was not capable of producing commercial quantities and, as such, expensed the associated drilling costs.

Depletion and amortization expense for proved oil and natural gas properties was $62.5 million and $31.5 million for the years ended December 31, 2023 and 2022, respectively.

Exploration costs were $4.2 million and $2.0 million for the years ended December 31, 2023 and 2022, respectively, and were primarily attributable to exploratory well expense and the expiration of oil and natural gas leases in 2023 and the expiration of oil and natural gas leases in 2022.

Impairment of Proved Properties

Certain proved oil and natural gas properties were impaired during the year ended December 31, 2023. Our impairment test involved a step assessment to determine if the net book value of our proved oil and natural gas properties is expected to be recovered from the estimated undiscounted future net cash flows. We calculated the expected undiscounted future net cash flows of our long-lived assets using management’s assumptions and expectations.

Certain oil and natural gas properties in Texas outside of the Company's acreage in the Champions Field failed the initial step assessment, which looks at the carrying value compared to undiscounted cash flows for these properties. For these assets, we used a discounted cash flow analysis to estimate fair value. The expected future net cash flows were discounted using a rate of 10.0%, which we believe represents the estimated weighted average cost of capital of a market participant. Based on this assessment of our long-lived assets impairment test, we recognized a $9.8 million impairment because the carrying value exceeded the estimated fair market value as of the year ended December 31, 2023. The Company recognized an impairment of $7.3 million on proved properties in New Mexico, outside of the Redlake field, for the year ended December 31, 2022. See further discussion of our fair value assumptions in Note 7 - Fair Value Measurements.