OIL AND NATURAL GAS PROPERTIES	3 Months Ended
Mar. 31, 2023
OIL AND NATURAL GAS PROPERTIES
OIL AND NATURAL GAS PROPERTIES	4. OIL AND NATURAL GAS PROPERTIES The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under this method of accounting, all costs of acquisition, exploration and development of oil and natural gas reserves (including such costs as leasehold acquisition costs, geological expenditures, treating equipment and gathering support facilities costs, dry hole costs, tangible and intangible development costs and direct internal costs) are capitalized as the cost of oil and natural gas 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 are charged to expense. Additionally, the Company assesses all properties classified as unevaluated property on a quarterly basis for possible impairment. The Company assesses properties on an individual basis or as a group, if properties are individually insignificant. The assessment includes consideration of the following factors, among others: intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; the assignment of proved reserves; and the economic viability of development if proved reserves are assigned. During any period in which these factors indicate impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and are then subject to depletion and the full cost ceiling test limitation. At March 31, 2023, and March 31, 2022, using first-day-of-the-month average West Texas Intermediate (WTI) crude oil spot prices (adjusted by lease or field for quality, transportation fees, and regional price differentials) and Henry Hub natural gas prices (adjusted by lease or field for energy content, transportation fees, and regional price differentials) for the respective prior 12-month periods, the Company’s net book value of oil and natural gas properties at March 31, 2023 and March 31, 2022, did not exceed the ceiling test value of the Company’s reserves. Oil and natural gas prices utilized for the ceiling test calculations as of March 31, 2023 and March 31, 2022 were $91.38/bbl and $75.28/bbl of oil, respectively and $5.96/MMBtu and $4.09/MMBtu per MMBtu for natural gas, respectively. Changes in commodity prices, production rates, levels of reserves, future development costs, transfers of unevaluated properties to the full cost pool, capital spending, and other factors will determine the Company’s ceiling test calculation and impairment analyses in future periods. Additionally, since oil and natural gas prices are inherently volatile, sustained lower commodity prices over a period of time could result in non-cash impairment charges of our oil and natural gas properties under our full cost ceiling test calculation which would result in a negative impact to our earnings and financial position.

OIL AND NATURAL GAS PROPERTIES

3 Months Ended

Mar. 31, 2023

4. OIL AND NATURAL GAS PROPERTIES

The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under this method of accounting, all costs of acquisition, exploration and development of oil and natural gas reserves (including such costs as leasehold acquisition costs, geological expenditures, treating equipment and gathering support facilities costs, dry hole costs, tangible and intangible development costs and direct internal costs) are capitalized as the cost of oil and natural gas 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 are charged to expense.

Additionally, the Company assesses all properties classified as unevaluated property on a quarterly basis for possible impairment. The Company assesses properties on an individual basis or as a group, if properties are individually insignificant. The assessment includes consideration of the following factors, among others: intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; the assignment of proved reserves; and the economic viability of development if proved reserves are assigned. During any period in which these factors indicate impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and are then subject to depletion and the full cost ceiling test limitation.

At March 31, 2023, and March 31, 2022, using first-day-of-the-month average West Texas Intermediate (WTI) crude oil spot prices (adjusted by lease or field for quality, transportation fees, and regional price differentials) and Henry Hub natural gas prices (adjusted by lease or field for energy content, transportation fees, and regional price differentials) for the respective prior 12-month periods, the Company’s net book value of oil and natural gas properties at March 31, 2023 and March 31, 2022, did not exceed the ceiling test value of the Company’s reserves. Oil and natural gas prices utilized for the ceiling test calculations as of March 31, 2023 and March 31, 2022 were $91.38/bbl and $75.28/bbl of oil, respectively and $5.96/MMBtu and $4.09/MMBtu per MMBtu for natural gas, respectively.

Changes in commodity prices, production rates, levels of reserves, future development costs, transfers of unevaluated properties to the full cost pool, capital spending, and other factors will determine the Company’s ceiling test calculation and impairment analyses in future periods. Additionally, since oil and natural gas prices are inherently volatile, sustained lower commodity prices over a period of time could result in non-cash impairment charges of our oil and natural gas properties under our full cost ceiling test calculation which would result in a negative impact to our earnings and financial position.