Property and Equipment

12 Months Ended

Jun. 30, 2022

Property and Equipment

Property and Equipment

Note 5. Property and Equipment

Property and equipment as of June 30, 2022 and 2021 consisted of the following (in thousands):

	June 30, 2022		June 30, 2021
Oil and natural gas properties
Property costs subject to amortization	$	188,634	$	129,123
Less: Accumulated depletion, depreciation, and amortization		(78,126)		(70,607)
Oil and natural gas properties, net	$	110,508	$	58,516
Other property and equipment
Furniture, fixtures and office equipment, at cost	$	148	$	155
Less: Accumulated depreciation		(148)		(144)
Other property and equipment, net	$	—	$	11

As of June 30, 2022 and 2021, all oil and natural gas property costs were subject to amortization. Depletion on oil and natural gas properties was $7.5 million and $4.9 million for the years ended June 30, 2022 and 2021, respectively. Depreciation on other properties and equipment was less than $0.1 million for both the years ended June 30, 2022 and 2021.

During the years ended June 30, 2022 and 2021, the Company incurred development capital expenditures of $2.6 million and $0.6 million, respectively. In addition, during the year ended June 30, 2022, the Company recorded a downward $0.9 million purchase adjustment related to its acquisition of the Barnett Shale properties. The Company received $0.9 million during the year ended June 30, 2022 primarily related to effective date net revenues received from the previous owner of the properties.

The Company uses the full cost method of accounting for its investments in oil and natural gas properties. All costs of acquisition, exploration, and development of oil and natural gas reserves are capitalized as the cost of oil and natural gas and properties when incurred. To the extent capitalized costs of evaluated oil and natural gas properties, net of accumulated depletion, exceed the discounted future net revenues of proved oil and natural gas reserves, net of deferred taxes, such excess capitalized costs result in an impairment charge.

At June 30, 2022, the ceiling test value of the Company’s reserves was calculated based on the first-day-of-the-month average for the 12-months ended June 30, 2022 of the West Texas Intermediate (“WTI”) crude oil spot price of $85.82 per barrel and Henry Hub natural gas spot price of $5.19 per MMBtu, adjusted by market differentials by field. The net price per barrel of NGLs was $44.24, which was based on historical differentials to WTI as NGLs do not have any single comparable reference index price. Using these prices, the Company’s net book value of oil and natural gas properties as of June 30, 2022 did not exceed the current ceiling. There was no impairment on oil and natural gas properties for the year ended June 30, 2022.

At June 30, 2021, the ceiling test value of the Company’s reserves was calculated based on the first-day-of-the-month average for the 12-months ended June 30, 2021 of the WTI crude oil spot price of $49.72 per barrel and Henry Hub natural gas spot price of $2.46 per MMBtu, adjusted by market differentials by field. The net price per barrel of NGLs was $19.81, which was based on historical differentials to WTI as NGLs do not have any single comparable reference

index price. Using these prices, the Company’s net book value of oil and natural gas properties at June 30, 2021 did not exceed the current ceiling. At December 31, 2020 and September 30, 2020, the Company recorded ceiling test impairment charges of $15.2 million and $9.6 million, respectively. The ceiling test impairments were driven by decreases in the first-day-of-the-month average for crude oil used in the ceiling test calculation, from $47.37 per barrel at June 30, 2020 to $43.63 per barrel at September 30, 2020 to $39.54 per barrel at December 31, 2020. For the year ended June 30, 2021, the Company recorded total impairment on oil and natural gas properties of $24.8 million recorded as “Impairment of proved property” on the consolidated statements of operations.