Senior Secured Credit Facility

12 Months Ended

Jun. 30, 2025

Senior Secured Credit Facility

Senior Secured Credit Facility

Note 5. Senior Secured Credit Facility

On April 11, 2016, the Company entered into a senior secured reserve-based credit facility with MidFirst Bank in an amount up to $50.0 million. On June 30, 2025, the Company entered into a syndicated amended and restated senior secured reserve-based credit facility (the “Senior Secured Credit Facility”) with MidFirst Bank, as administrative agent for the lenders party, thereto, in an amount up to $200.0 million with an initial and current borrowing base of $65.0 million, maturing on June 30, 2028. The borrowing base will be redetermined semiannually, with the lenders and the

Company each having the right to one interim unscheduled redetermination between any two consecutive semi-annual redeterminations. The borrowing base takes into account the estimated value of the Company’s oil and natural gas properties, proved reserves, total indebtedness, and other relevant factors consistent with customary oil and natural gas lending criteria. The Senior Secured Credit Facility carries a commitment fee of 0.25% per annum on the undrawn portion of the borrowing base. Any borrowings under the Senior Secured Credit Facility will bear interest, at the Company’s option, at either (i) the Secured Overnight Financing Rate (“SOFR”), subject to a minimum SOFR of 3.25%, plus a credit spread adjustment of 0.05%, or (ii) the Prime Rate, as defined under the Senior Secured Credit Facility, plus 1.00%, plus, in either case of (i) or (ii), an applicable margin of 2.75%.

The Company may elect, at its option, to prepay any borrowings outstanding under the Senior Secured Credit Facility without premium or penalty. Amounts outstanding under the Senior Secured Credit Facility are guaranteed by the Company’s direct and indirect subsidiaries and secured by a security interest in substantially all of the properties of the Company and its subsidiaries. Borrowings under the Senior Secured Credit Facility may be used for the acquisition and for the drilling and development of oil and natural gas properties, investments in cash flow generating properties complimentary to the production of oil and natural gas, and for letters of credit or other general corporate purposes.

The Senior Secured Credit Facility contains certain events of default, including non-payment; breaches of representation and warranties; non-compliance with covenants; cross-defaults to material indebtedness; voluntary or involuntary bankruptcy; judgments and change in control. The Senior Secured Credit Facility also contains financial covenants including a requirement that the Company maintain, as of the last day of each fiscal quarter, (i) a maximum total leverage ratio of not more than 3.00 to 1.00, (ii) a current ratio of not less than 1.00 to 1.00, and (iii) a consolidated tangible net worth of not less than $40.0 million, each as defined in the Senior Secured Credit Facility. In addition, the Senior Secured Credit Facility contains hedging requirements that apply when utilization is greater than 25% of (x) the Margined Collateral Value, as defined under the Senior Secured Credit Facility, at any time when the leverage ratio is less than 2.25 to 1.00, or (y) the borrowing base, at any time when the leverage ratio is greater than or equal to 2.25 to 1.00. As of June 30, 2025, the Company had $37.5 million in borrowings outstanding under its Senior Secured Credit Facility, resulting in $27.5 million of available borrowing capacity. For the years ended June 30, 2025 and 2024, the weighted average interest rate on borrowings under the Senior Secured Credit Facility was 7.48% and 8.12%, respectively. As of June 30, 2025, the Company was in compliance with all covenants under the Senior Secured Credit Facility.

On March 7, 2025, the Company entered into a letter agreement with MidFirst Bank, which allows for the option to hedge 72% of expected natural gas production rather than hedging 25% of expected crude oil production in each month of the calendar year ending December, 31, 2026, as long as the Company remains in the 25% required hedging tier. See Note 7, “Derivatives,” for a listing of all crude oil and natural gas derivative contracts the Company has entered into.

On August 29, 2025, the Company entered into an amendment of its Senior Secured Credit Facility with MidFirst Bank, whereas it was determined for purposes of the hedge covenant that total crude oil and natural gas volumes from proved developed producing reserves will be combined on a barrels of oil equivalent basis to determine compliance with the required hedging covenant.

The Company capitalizes certain direct costs associated with the its Senior Secured Credit Facility and amortizes these costs over the life of the facility. For the year ended June 30, 2025, the Company capitalized $0.4 million of debt issuance costs in conjunction with amending and restating the Senior Secured Credit Facility. The debt issuance costs were presented in "Other Assets" on the consolidated balance sheet at June 30, 2025.