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Acquisitions

3 Months Ended

Mar. 31, 2025

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

Note 3 – Acquisitions

As discussed in Note 1 – Organization, Description of Business, and Basis of Presentation, on February 6, 2025, the Company and certain of its subsidiaries entered into the Bayswater PSA with Bayswater, pursuant to which the Company agreed to acquire certain oil and gas assets from Bayswater for a purchase price of $602.8 million, subject to certain closing price adjustments, payable in cash and 3,656,099 shares of the Company’s Common Stock.

The Company closed the Bayswater Acquisition effective March 26, 2025 and paid Bayswater cash for the as-adjusted closing purchase price of approximately $482.5 million, $15.0 million of which was deposited in escrow pending the Additional Working Interest Acquisition, which closed on April 11, 2025. Additionally, the Company issued the Equity Consideration to Bayswater. The Company funded the cash portion of the Bayswater Purchase Price with cash on hand, the proceeds from the issuance of Common Stock in a public offering, the proceeds from the issuance of the Series F Preferred Stock, and borrowings under its Credit Facility. Refer to Note 14 – Stockholders’ Equity for a discussion of the issuance of Common Stock, Note 13 – Mezzanine Equity for a discussion of the issuance of Series F Preferred Stock, and Note 10 – Debt for a discussion of the Credit Facility.

The Bayswater Acquisition is expected to be accounted for as an asset acquisition in accordance with ASC Topic 805 - Accounting for Business Combinations (“ASC 805”). The estimated fair value of the consideration paid by the Company and the allocation of that amount to the underlying assets acquired, on a relative fair value basis, are recorded on the Company’s books as March 26, 2025, the closing date of the Bayswater Acquisition. Additionally, costs directly related to the Bayswater Acquisition are capitalized as a component of the Bayswater Purchase Price. The preliminary allocation of the total Bayswater Purchase Price in the Bayswater Acquisition, on a relative fair value basis, is based upon management’s estimates of and assumptions related to the fair value of assets acquired and liabilities assumed as of the closing date using currently available information. The preliminary purchase price allocation is subject to change due to several factors, including but not limited to changes in the estimated fair value of assets acquired and liabilities assumed as of the closing date, which could result from changes in future oil and natural gas commodity prices, reserve estimates, interest rates, as well as other factors.

The following table presents the preliminary allocation of the Bayswater Purchase Price to the net assets acquired on March 26, 2025, the closing date of the Bayswater Acquisition:

Schedule of Purchase Price Allocation

Preliminary Purchase Price Allocation:		(In thousands)
Consideration:
Cash consideration ⁽¹⁾		$	467,520
Common stock issued to the sellers ⁽²⁾			16,000
Direct transaction costs ⁽³⁾			7,061
Total consideration		$	490,581

Assets acquired:
Oil and natural gas properties ⁽⁴⁾		$	509,954
Other assets			17,096
Acquisition receivable ⁽⁵⁾			37,806
		$	564,856
Liabilities assumed:
Accounts payable and accrued expenses ⁽⁶⁾		$	(71,947	)
Asset retirement obligation, long-term			(2,328	)
		$	(74,275	)

⁽¹⁾	Includes customary purchase price adjustments.
⁽²⁾	Represents approximately 3.7 million shares of Common Stock issued to Bayswater.
⁽³⁾	Represents transaction costs associated with the Bayswater Acquisition, which have been capitalized in accordance with ASC 805.
⁽⁴⁾	Includes the asset retirement obligation asset associated with the proved oil and natural gas properties.
⁽⁵⁾	Represents February 1 through March 25, 2025 revenue, net of operating expenses, due to the Company from Bayswater at final settlement.
⁽⁶⁾	Represents the amounts associated with the assets acquired in the Bayswater Acquisition unpaid at the closing date and primarily relates to ad valorem tax liabilities of $27.1 million and suspended revenues of $44.8 million.

As discussed above, at closing, the Company deposited $15.0 million into escrow for the Additional Working Interest Acquisition, which is not included in the preliminary purchase price allocation above. The Additional Working Interest Acquisition was completed on April 11, 2025 and the Company will adjust the preliminary allocation of the Bayswater Purchase Price accordingly in the second quarter of 2025.

The consideration is allocated to the assets acquired and liabilities assumed on a relative fair value basis. The fair value measurements of assets acquired and liabilities assumed, on a relative fair value basis, are based on inputs that are not observable in the market and therefore represent Level 3 inputs. The fair value of oil and gas properties and asset retirement obligations were measured using the discounted cash flow technique of valuation. Significant inputs to the valuation of oil and gas properties include estimates of: (i) reserves, (ii) future operating and development costs, (iii) future commodity prices, (iv) future plugging and abandonment costs, (v) estimated future cash flows, and (vi) a market--based weighted average cost of capital rate. These inputs require significant judgments and estimates and are the most sensitive and subject to change.

NRO Acquisition

On January 11, 2024, the Company entered into an asset purchase agreement (the “NRO Agreement”) with Nickel Road Development LLC, Nickel Road Operating, LLC, (“NRO”) and Prairie LLC to acquire certain assets owned by NRO (the “Central Weld Assets”) for total consideration of $94.5 million (the “NRO Purchase Price”), subject to certain closing price adjustments and other customary closing conditions (the “NRO Acquisition”). The NRO Purchase Price consisted of $83.0 million in cash and $11.5 million in deferred cash payments. The Company deposited $9.0 million of the NRO Purchase Price into an escrow account on January 11, 2024 (the “Deposit”). On August 15, 2024, the Company and NRO agreed to amend certain terms of the NRO Agreement, pursuant to which the total consideration of the NRO Acquisition was reduced to $84.5 million cash, subject to certain closing price adjustments and other customary closing conditions, and the parties agreed to remove the deferred cash payments. Additionally on August 15, 2024, $6.0 million of the Deposit was released to NRO and the remaining $3.0 million was returned to the Company.

On October 1, 2024, the Company closed the NRO Acquisition and paid $49.6 million to the sellers in cash, using cash on hand, the proceeds from the issuance of Common Stock, and a portion of the proceeds from the issuance of the Senior Convertible Note. Refer to Note 10 – Debt for a discussion of the Senior Convertible Note and to Note 14 – Stockholders’ Equity for a discussion of the issuance of Common Stock. The Company completed the final settlement with NRO in December 2024, which resulted in a final purchase price of $55.5 million.

The NRO Acquisition was accounted for as an asset acquisition in accordance with ASC 805. The estimated fair value of the consideration paid by the Company and the allocation of that amount to the underlying assets acquired, on a relative fair value basis, were recorded on the Company’s books as of October 1, 2024, the closing date of the NRO Acquisition. Additionally, costs directly related to the NRO Acquisition were capitalized as a component of the NRO Purchase Price.

The following table presents the allocation of the NRO Purchase Price, adjusted for the final settlement, to the net assets acquired on October 1, 2024, the closing date of the NRO Acquisition:

Schedule of Purchase Price Allocation

Purchase Price Allocation:		(In thousands)
Consideration:
Cash consideration ⁽¹⁾		$	49,270
Deposits on oil and natural gas properties ⁽²⁾			6,000
Direct transaction costs ⁽³⁾			239
Total consideration		$	55,509

Assets acquired:
Oil and natural gas properties ⁽⁴⁾		$	63,591
Prepaid expenses, third-party JIB receivable, and other			104
		$	63,695
Liabilities assumed:
Accounts payable and accrued expenses ⁽⁵⁾		$	(7,965	)
Asset retirement obligation, long-term			(221	)
		$	(8,186	)

⁽¹⁾	Includes the final settlement statement payment of $0.3 million from NRO to the Company.
⁽²⁾	Represents the Deposit paid by the Company to NRO.
⁽³⁾	Represents transaction costs associated with the NRO Acquisition which have been capitalized in accordance with ASC 805.
⁽⁴⁾	Includes the asset retirement obligation asset associated with the proved oil and natural gas properties.
⁽⁵⁾	Represents the amounts associated with the assets acquired in the NRO Acquisition unpaid at the closing date and primarily relates to ad valorem tax liabilities of $6.6 million and suspended revenues of $1.2 million.

Genesis Bolt–on Acquisition

On February 5, 2024, the Company acquired a 1,280–acre drillable spacing unit and eight proved undeveloped drilling locations in the DJ Basin (the “Genesis Bolt–on Assets”) from a private seller for $0.9 million. These assets offset the other oil and gas assets held by the Company in northern Weld County, Colorado.