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SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED)
 12 Months Ended
Dec. 31, 2022
Extractive Industries [Abstract]  
SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED)
SUPPLEMENTAL OIL AND GAS INFORMATION
(UNAUDITED)

Oil and Natural Gas Exploration and Production Activities

Oil and natural gas sales reflect the market prices of net production sold or transferred with appropriate adjustments for royalties, net profits interest, and other contractual provisions.  Production expenses include lifting costs incurred to operate and maintain productive wells and related equipment including such costs as operating labor, repairs and maintenance, materials, supplies and fuel consumed.  Production taxes include production and severance taxes. Depletion of crude oil and natural gas properties relates to capitalized costs incurred in acquisition, exploration, and development activities.  Results of operations do not include interest expense and general corporate amounts.  The results of operations for the Company’s crude oil and natural gas production activities are provided in the Company’s related statements of income.

Costs Incurred and Capitalized Costs

The costs incurred in crude oil and natural gas acquisition, exploration and development activities are highlighted in the table below.

 December 31,
 (In thousands)202220212020
Costs Incurred for the Year:
Proved Property Acquisition and Other$1,036,412 $434,519 $50,345 
Unproved Property Acquisition51,097 19,358 770 
Development386,972 202,325 162,797 
Total$1,474,482 $656,202 $213,912 

Excluded costs for unproved properties are accumulated by year.  Costs are reflected in the full cost pool as the drilling costs are incurred or as costs are evaluated and deemed impaired.  The Company anticipates these excluded costs will be included in the depletion computation over the next five years.  The Company is unable to predict the future impact on depletion rates.  The following is a summary of capitalized costs excluded from depletion at December 31, 2022 by year incurred.

 December 31,
(In thousands)202220212020Prior Years
Property Acquisition$17,659 $16,337 $160 $7,409 
Development— — — — 
Total$17,659 $16,337 $160 $7,409 

Oil and Natural Gas Reserves and Related Financial Data

Information with respect to the Company’s crude oil and natural gas producing activities is presented in the following tables.  Reserve quantities, as well as certain information regarding future production and discounted cash flows, were determined by the Company and audited by Cawley, Gillespie & Associates, Inc., our third-party independent reserve engineers.
Oil and Natural Gas Reserve Data

The following tables present the Company’s estimates of its proved crude oil and natural gas reserves.  The Company emphasizes that reserves are approximations and are expected to change as additional information becomes available.  Reservoir engineering is a subjective process of estimating underground accumulations of crude oil and natural gas that cannot be measured in an exact way, and the accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment.

(In thousands)Natural Gas
(MCF)		Oil
(BBLS)		BOE
Proved Developed and Undeveloped Reserves at December 31, 2019189,318 131,754 163,307 
Revisions of Previous Estimates(21,512)(33,289)(36,874)
Extensions, Discoveries and Other Additions8,308 6,921 8,306 
Production(16,473)(9,361)(12,107)
Proved Developed and Undeveloped Reserves at December 31, 2020159,641 96,025 122,632 
Revisions of Previous Estimates89,115 19,914 34,766 
Extensions, Discoveries and Other Additions32,432 12,759 18,164 
Purchases of Minerals in Place700,610 14,985 131,753 
Production(44,074)(12,288)(19,634)
Proved Developed and Undeveloped Reserves at December 31, 2021937,724 131,395 287,682 
Revisions of Previous Estimates(14,678)(2,787)(5,233)
Extensions, Discoveries and Other Additions54,431 22,563 31,635 
Purchases of Minerals in Place99,760 27,660 44,286 
Production(68,829)(16,090)(27,562)
Proved Developed and Undeveloped Reserves at December 31, 20221,008,407 162,741 330,808 
Proved Developed Reserves:  
December 31, 2019116,846 77,160 96,634 
December 31, 2020114,060 65,135 84,145 
December 31, 2021498,558 87,505 170,598 
December 31, 2022611,856 112,626 214,602 
Proved Undeveloped Reserves:  
December 31, 201972,473 54,594 66,673 
December 31, 202045,581 30,890 38,487 
December 31, 2021439,165 43,890 117,084 
December 31, 2022396,551 50,115 116,207 

Proved reserves are estimated quantities of crude oil and natural gas, which geological and engineering data indicate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions.  Proved developed reserves are proved reserves that can be expected to be recovered through existing wells with existing equipment and operating methods.  Proved undeveloped reserves are included for reserves for which there is a high degree of confidence in their recoverability and they are scheduled to be drilled within the next five years.
Notable changes in proved reserves for the year ended December 31, 2022 included the following:

•Extensions and discoveries. In 2022, total extensions and discoveries of 31.6 MMBoe were primarily attributable to successful drilling operations as well as the addition of proved undeveloped locations. Included in these extensions and discoveries were 13.3 MMBoe as a result of successful drilling operations and 18.3 MMBoe as a result of additional proved undeveloped locations.

•Purchases of minerals in place. In 2022, total purchases of minerals in place of 44.3 MMBoe were primarily attributable to acquisitions of oil and natural gas properties (see Note 3).

•Revisions to previous estimates. In 2022, revisions to previous estimates decreased proved developed and undeveloped reserves by a net amount of 5.2 MMBoe. Included in these revisions were 10.2 MMBoe of upward adjustments caused by higher crude oil and natural gas prices, a 1.0 MMBoe downward adjustment attributable to increased operating costs and 14.4 MMBoe of downward adjustments related to the removal of undeveloped drilling locations related to the 5-year rule and other adjustments.

Notable changes in proved reserves for the year ended December 31, 2021 included the following:

•Extensions and discoveries. In 2021, total extensions and discoveries of 18.2 MMBoe were primarily attributable to successful drilling operations as well as the addition of proved undeveloped locations. Included in these extensions and discoveries were 4.9 MMBoe as a result of successful drilling operations and 13.3 MMBoe as a result of additional proved undeveloped locations.

•Purchases of minerals in place. In 2021, total purchases of minerals in place of 131.8 MMBoe were primarily attributable to acquisitions of oil and natural gas properties (see Note 3).

•Revisions to previous estimates. In 2021, revisions to previous estimates increased proved developed and undeveloped reserves by a net amount of 34.8 MMBoe. Included in these revisions were 50.2 MMBoe of upward adjustments caused by higher crude oil and natural gas prices, a 1.1 MMBoe downward adjustment attributable to well performance when comparing the Company’s reserve estimates at December 31, 2021 to December 31, 2020 and 14.2 MMBoe of downward adjustments related to the removal of undeveloped drilling locations related to the 5-year rule and other adjustments.

Notable changes in proved reserves for the year ended December 31, 2020 included the following:

•Extensions and discoveries. In 2020, total extensions and discoveries of 8.3 MMBoe were primarily attributable to successful drilling in the Williston Basin as well as the addition of proved undeveloped locations. Included in these extensions and discoveries were 3.1 MMBoe as a result of successful drilling in the Williston Basin and 5.2 MMBoe as a result of additional proved undeveloped locations.

•Revisions to previous estimates. In 2020, revisions to previous estimates decreased proved developed and undeveloped reserves by a net amount of 36.9 MMBoe. Included in these revisions were 33.8 MMBoe of downward adjustments caused by lower crude oil and natural gas prices, a 0.7 MMBoe downward adjustment attributable to well performance when comparing the Company’s reserve estimates at December 31, 2020 to December 31, 2019 and 2.3 MMBoe of downward adjustments related to the removal of undeveloped drilling locations related to the 5-year rule.
Standardized Measure of Discounted Future Net Cash Inflows and Changes Therein

The following table presents a standardized measure of discounted future net cash flows relating to proved crude oil and natural gas reserves, and the changes in standardized measure of discounted future net cash flows relating to proved crude oil and natural gas were prepared in accordance with the provisions of ASC 932 Extractive Activities - Oil and Gas. Future cash inflows were computed by applying average prices of crude oil and natural gas for the last 12 months to estimated future production. Future production and development costs were computed by estimating the expenditures to be incurred in developing and producing the proved crude oil and natural gas reserves at the end of the year, based on year-end costs and assuming continuation of existing economic conditions.  Future income tax expenses were calculated by applying appropriate year-end tax rates to future pretax cash flows relating to proved crude oil and natural gas reserves, less the tax basis of properties involved and tax credits and loss carry forwards relating to crude oil and natural gas producing activities.  Future net cash flows are discounted at the rate of 10% annually to derive the standardized measure of discounted future cash flows. Actual future cash inflows may vary considerably, and the standardized measure does not necessarily represent the fair value of the Company’s crude oil and natural gas reserves.
 December 31,
(In thousands)202220212020
Future Cash Inflows$22,452,776 $11,339,861 $3,395,670 
Future Production Costs(6,820,784)(4,213,186)(1,747,325)
Future Development Costs(1,145,225)(932,480)(416,507)
Future Income Tax Expense(2,764,111)(947,303)(3,273)
Future Net Cash Inflows$11,722,656 $5,246,892 $1,228,565 
10% Annual Discount for Estimated Timing of Cash Flows(5,285,758)(2,356,783)(516,554)
Standardized Measure of Discounted Future Net Cash Flows$6,436,898 $2,890,109 $712,011 

The twelve-month average prices were adjusted to reflect applicable transportation and quality differentials on a well-by-well basis to arrive at realized sales prices used to estimate the Company’s reserves.  The price of other liquids is included in natural gas.  The prices for the Company’s reserve estimates were as follows:
Natural Gas
MCF
Oil
Bbl
December 31, 2022$7.43 $91.95 
December 31, 2021$3.37 $62.25 
December 31, 2020$1.61 $32.69 

The expected tax benefits to be realized from utilization of the net operating loss and tax credit carryforwards are used in the computation of future income tax cash flows.  As a result of available net operating loss carryforwards and the remaining tax basis of its assets at December 31, 2022, the Company’s future income taxes were significantly reduced.
Changes in the Standardized Measure of Discounted Future Net Cash Flows at 10% per annum follow:

 December 31,
(In thousands)202220212020
Beginning of Period$2,890,109 $712,011 $1,678,061 
Sales of Oil and Natural Gas Produced, Net of Production Costs(1,566,927)(727,317)(177,932)
Extensions and Discoveries888,067 258,399 52,232 
Previously Estimated Development Cost Incurred During the Period
147,439 85,526 78,633 
Net Change of Prices and Production Costs3,424,794 1,366,197 (815,278)
Change in Future Development Costs141,884 (103,806)(150,991)
Revisions of Quantity and Timing Estimates(134,880)607,774 (280,481)
Accretion of Discount334,109 71,254 182,202 
Change in Income Taxes(1,014,277)(450,455)143,438 
Purchases of Minerals in Place1,157,060 940,910 — 
Other169,521 129,615 19,902 
End of Period$6,436,898 $2,890,109 $712,011