Oil and Natural Gas Properties

6 Months Ended

Mar. 31, 2021

Oil and natural gas properties are summarized below:


	March 31, 2021		September 30, 2020

	($ in thousands)
Proved	$	359,407	$	326,420
Unproved	25,570		32,084
Work-in-progress	10,021		15,398
	394,998		373,902
Accumulated depletion and amortization	(75,182)		(63,176)
Total oil and natural gas properties, net	$	319,816	$	310,726

Depletion and amortization expense for proved oil and natural gas properties was $6.1 million and $5.2 million, respectively, for the three months ended March 31, 2021 and 2020. Depletion and amortization expense for proved oil and natural gas properties was $12.0 million and $10.7 million, respectively, for the six months ended March 31, 2021 and 2020.

The Company incurred $5.5 million and $1.7 million of exploration costs for the three months ended March 31, 2021 and 2020, respectively, $5.4 million and $0 of which related to the expiration of oil and natural gas leases. The Company also incurred $0.1 million and $1.7 million of geological and geophysical costs during the three months ended March 31, 2021 and 2020, respectively. The Company incurred $5.9 million and $2.5 million of exploration costs for the six months ended March 31, 2021 and 2020, respectively, $5.8 million and $0.5 million of which related to the abandonment of oil and natural gas leases. The Company also incurred $0.1 million and $1.9 million of geological and geophysical costs during the six months ended March 31, 2021 and 2020, respectively.

Acquisitions and Divestitures of Oil and Natural Gas Properties

Through the Merger on February 26, 2021, the Company acquired approximately 11,000 net acres (unaudited) located in central Kansas. The acquisition included the Kansas Properties which included 153 producing oil wells, 19 shut-in wells, 6 temporarily abandoned wells, and 36 active disposal wells. The Company also acquired all onsite production management and field personnel as a result of the Merger. See further discussion in Note 4 - Business Combinations and Note 15 - Discontinued Operations and Assets Held for Sale.

On March 10, 2021, the Company entered into a PSA to sell the Kansas Properties for an agreed upon purchase price of $3.5 million (subject to certain adjustments), contingent upon certain conditions to closing. The effective date of the sale was March 1, 2021 and the sale closed on April 2, 2021 for the agreed upon purchase price, adjusted for closing costs. As of March 31, 2021, the assets and liabilities associated with these divested assets were classified as held for sale in the accompanying condensed consolidated balance sheet. See further discussion in Note 15 - Discontinued Operations and Assets Held for Sale.

On December 20, 2019, the Company acquired 1,237 net acres (unaudited) in Yoakum County, Texas. The acquisition included 17 total wells, with 11 producing and 6 salt water disposals, for a total purchase price of $3.3 million, as adjusted in accordance with the terms of a PSA with J. Cleo Thompson and James Cleo Thompson, Jr., L.P. The effective date of the transaction was August 1, 2019. The transaction was accounted for as an asset acquisition in accordance with ASU 2017-01 and was therefore recorded based on the total consideration paid, with value assigned to unproved oil and natural gas properties, capitalized asset retirement cost and ARO.