UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

 ☒      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the quarterly period ended June 30, 2024

 or

☐     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period from                             to                            

Commission File Number: 001-35380

 Vital Energy, Inc.

(Exact name of registrant as specified in its charter)

Delaware	45-3007926
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

521 E. Second Street	Suite 1000
Tulsa	Oklahoma	74120
(Address of principal executive offices)		(Zip code)

(918) 513-4570

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class	Trading symbol	Name of each exchange on which registered
Common stock, $0.01 par value per share	VTLE	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. 

Large accelerated filer ☒ Accelerated filer  ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒ 

Number of shares of registrant's common stock outstanding as of August 2, 2024: 38,177,190

VITAL ENERGY, INC.

FOR THE QUARTER ENDED JUNE 30, 2024

TABLE OF CONTENTS

	Page
Glossary of Oil and Natural Gas Terms and Certain Other Terms	iii
Cautionary Statement Regarding Forward-Looking Statements	v
Part I	1
Item 1.    Consolidated Financial Statements (Unaudited)	1
Consolidated balance sheets	1
Consolidated statements of operations	2
Consolidated statements of stockholders' equity	3
Consolidated statements of cash flows	4
Condensed notes to the consolidated financial statements:	5
Note 1—Organization and basis of presentation	5
Note 2—New accounting standards	6
Note 3—Acquisitions	6
Note 4—Debt	7
Note 5—Stockholders' equity	9
Note 6—Equity Incentive Plan	9
Note 7—Net income (loss) per common share	11
Note 8—Derivatives	12
Note 9—Fair value measurements	14
Note 10—Commitments and contingencies	16
Note 11—Supplemental cash flow and non-cash information	16
Note 12—Income taxes	17
Note 13—Related parties	17
Note 14—Subsequent events	18
Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.    Quantitative and Qualitative Disclosures About Market Risk	33
Item 4.    Controls and Procedures	34
Part II	35
Item 1.    Legal Proceedings	35
Item 1A.    Risk Factors	35
Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.    Defaults Upon Senior Securities	35
Item 4.    Mine Safety Disclosures	35
Item 5.    Other Information	36
Item 6.    Exhibits	37
Signatures	38

ii

Glossary of Oil and Natural Gas Terms and Certain Other Terms

The following terms are used throughout this Quarterly Report on Form 10-Q (this "Quarterly Report"):

"Argus WTI Midland"—An index price reflecting the weighted average price of WTI at the pipeline and storage hub at Midland.

"Argus WTI Formula Basis"—The outright price at Cushing that is used as the basis for pricing all other Argus US Gulf coast physical crudes.

"Basin"—A large natural depression on the earth's surface in which sediments, generally brought by water, accumulate.

"Bbl" or "barrel"—One stock tank barrel, of 42 U.S. gallons liquid volume, used herein in reference to crude oil, condensate, natural gas liquids or water.

"Bbl/d"—Bbl per day.

"Benchmark Prices"—The unweighted arithmetic average first-day-of-the-month price for each month within the 12-month period prior to the end of the reporting period before differentials, as required by SEC guidelines.

"BOE"—One barrel of oil equivalent, calculated by converting natural gas to oil equivalent barrels at a ratio of six Mcf of natural gas to one Bbl of oil.

"BOE/d"—BOE per day.

"Btu"—British thermal unit, the quantity of heat required to raise the temperature of a one pound mass of water by one degree Fahrenheit.

"Completion"—The process of treating a drilled well followed by the installation of permanent equipment for the production of oil or natural gas, or in the case of a dry hole, the reporting of abandonment to the appropriate agency.

"Dry hole"—A well found to be incapable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of such production exceed production expenses and taxes.

"Exchange Act" —The Securities Exchange Act of 1934, as amended.

"Formation"—A layer of rock which has distinct characteristics that differ from nearby rock.

"Fracturing" or "Frac"—The propagation of fractures in a rock layer by a pressurized fluid. This technique is used to release petroleum and natural gas for extraction.

"GAAP"—Generally accepted accounting principles in the United States.

"Gross acres"—The total acres or wells, as the case may be, in which a working interest is owned.

"Henry Hub"—A natural gas pipeline delivery point in south Louisiana that serves as the benchmark natural gas price underlying NYMEX natural gas futures contracts.

"Horizon" —A term used to denote a surface in or of rock, or a distinctive layer of rock that might be represented by a reflection in seismic data.

"Initial Production"—The measurement of production from an oil or gas well when first brought on stream. Often stated in terms of production during the first thirty days.

"Liquids"—Describes oil, condensate and natural gas liquids.

"MBbl"—One thousand barrels of crude oil, condensate or natural gas liquids.

"MBOE"—One thousand BOE.

"Mcf"—One thousand cubic feet of natural gas.

"MMBtu"—One million Btu.

"MMcf"—One million cubic feet of natural gas.

"Natural gas liquids" or "NGL"—Components of natural gas that are separated from the gas state in the form of liquids, which include propane, butanes and ethane, among others.

iii

"Net acres"—The percentage of gross acres an owner has out of a particular number of acres, or a specified tract. An owner who has 50% interest in 100 acres owns 50 net acres.

"NYMEX"—The New York Mercantile Exchange.

"OPEC"—The Organization of the Petroleum Exporting Countries.

"Proved reserves"—The estimated quantities of oil, natural gas and natural gas liquids that geological and engineering data demonstrate with reasonable certainty to be commercially recoverable in future years from known reservoirs under existing economic and operating conditions.

"Realized prices"—Prices which reflect adjustments to the Benchmark Prices for quality, transportation fees, geographical differentials, marketing bonuses or deductions and other factors affecting the price received at the delivery point without giving effect to our commodity derivative transactions.

"Reservoir"—A porous and permeable underground formation containing a natural accumulation of producible oil and/or natural gas that is confined by impermeable rock or water barriers and is separate from other reservoirs.

"SEC" — The U.S. Securities and Exchange Commission.

"Securities Act" — The Securities Act of 1933, as amended.

"Senior Secured Credit Facility" — The Fifth Amended and Restated Credit Agreement among Vital Energy, Inc., as borrower, Wells Fargo Bank, N.A., as administrative agent, Vital Midstream Services, LLC, as guarantor, and the banks signatory thereto.

"Spacing"—The distance between wells producing from the same reservoir.

"Standardized measure"—Discounted future net cash flows estimated by applying realized prices to the estimated future production of year-end proved reserves. Future cash inflows are reduced by estimated future production and development costs based on period end costs to determine pre-tax cash inflows. Future income taxes, if applicable, are computed by applying the statutory tax rate to the excess of pre-tax cash inflows over our tax basis in the oil and natural gas properties. Future net cash inflows after income taxes are discounted using a 10% annual discount rate.

"WAHA"—Waha West Texas Natural Gas Index price as quoted in Platt's Inside FERC.

"Working interest" or "WI"—The right granted to the lessee of a property to explore for and to produce and own crude oil, natural gas liquids, natural gas or other minerals. The working interest owners bear the exploration, development and operating costs on either a cash, penalty or carried basis.

"WTI"—West Texas Intermediate grade crude oil. A light (low density) and sweet (low sulfur) crude oil, used as a pricing benchmark for NYMEX oil futures contracts.

iv

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Various statements contained in or incorporated by reference into this Quarterly Report are forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act. These forward-looking statements include statements, projections and estimates concerning our operations, performance, business strategy, oil, NGL and natural gas reserves, drilling program capital expenditures, liquidity and capital resources, the timing and success of specific projects, outcomes and effects of litigation, claims and disputes, derivative activities and potential financing. Forward-looking statements are generally accompanied by words such as "estimate," "project," "predict," "believe," "expect," "anticipate," "potential," "could," "may," "will," "foresee," "plan," "goal," "should," "intend," "pursue," "target," "continue," "suggest" or the negative thereof or other variations thereof or other words that convey the uncertainty of future events or outcomes. Forward-looking statements are not guarantees of performance. These statements are based on certain assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate under the circumstances. Among the factors that significantly impact our business and could impact our business in the future are:

•the volatility of oil, NGL and natural gas prices, including our area of operation in the Permian Basin;

•continuing and/or worsening inflationary pressures and associated changes in monetary policy that may cause costs to rise;

•changes in domestic and global production, supply and demand for oil, NGL and natural gas, and actions by the Organization of the Petroleum Exporting Countries members and other oil exporting nations ("OPEC+");

•our ability to execute our strategies, including our ability to successfully identify and consummate strategic acquisitions at purchase prices that are accretive to our financial results and to successfully integrate acquired businesses, assets and properties;

•our ability to realize the anticipated benefits of acquisitions, including effectively managing our expanded acreage;

•reduced demand due to shifting market perception towards the oil and gas industry;

•our ability to optimize spacing, drilling and completions techniques in order to maximize our rate of return, cash flows from operations and stockholder value;

•the ongoing instability and uncertainty in the United States ("U.S.") and international energy, financial and consumer markets that could adversely affect the liquidity available to us and our customers and the demand for commodities, including oil, NGL and natural gas;

•competition in the oil and gas industry;

•our ability to discover, estimate, develop and replace oil, NGL and natural gas reserves and inventory;

•insufficient transportation capacity in the Permian Basin and challenges associated with such constraint, and the availability and costs of sufficient gathering, processing, storage and export capacity;

•a decrease in production levels which may impair our ability to meet our contractual obligations and ability to retain our leases;

•risks associated with the uncertainty of potential drilling locations and plans to drill in the future;

•the inability of significant customers to meet their obligations;

•revisions to our reserve estimates as a result of changes in commodity prices, decline curves and other uncertainties;

•the availability and costs of drilling and production equipment, supplies, labor and oil and natural gas processing and other services;

•the effects, duration and other implications of, including government response to, widespread epidemic or pandemic diseases;

v

•ongoing war and political instability in Ukraine, Israel and the Middle East and the effects of such conflicts on the global hydrocarbon market;

•loss of senior management or other key personnel;

•risks related to the geographic concentration of our assets;

•capital requirements for our operations and projects;

•our ability to hedge commercial risk, including commodity price volatility, and regulations that affect our ability to hedge such risks;

•our ability to continue to maintain the borrowing capacity under our Senior Secured Credit Facility (as defined herein) or access other means of obtaining capital and liquidity, especially during periods of sustained low commodity prices;

•our ability to comply with restrictions contained in our debt agreements, including our Senior Secured Credit Facility and the indentures governing our senior unsecured notes, as well as debt that could be incurred in the future;

•our ability to generate sufficient cash to service our indebtedness, fund our capital requirements and generate future profits;

•drilling and operating risks, including risks related to hydraulic fracturing activities and those related to inclement or extreme weather, impacting our ability to produce existing wells and/or drill and complete new wells over an extended period of time;

•the impact of legislation or regulatory initiatives intended to address induced seismicity on our ability to conduct our operations;

•U.S. and international economic conditions and legal, tax, political and administrative developments, including the effects of energy, trade and environmental policies and existing and future laws and government regulations as well as volatility in the political, legal and regulatory environments ahead of the upcoming U.S. presidential election;

•our ability to comply with federal, state and local regulatory requirements;

•the impact of repurchases, if any, of securities from time to time;

•our ability to maintain the health and safety of, as well as recruit and retain, qualified personnel necessary to operate our business;

•our ability to secure or generate sufficient electricity to produce our wells without limitations; and

•our belief that the outcome of any legal proceedings will not materially affect our financial results and operations.

Reserve engineering is a process of estimating underground accumulations of oil, NGL and natural gas that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data and price and cost assumptions made by reserve engineers. In addition, the results of drilling, testing and production activities may justify upward or downward revisions of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of oil, NGL and natural gas that are ultimately recovered.

These forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Forward-looking statements should therefore be considered in light of various factors, including those set forth under "Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Quarterly Report, and under "Item 1A. Risk Factors," in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the "2023 Annual Report") and those set forth from time to time in our other filings with the SEC. These documents are available through our website or through the SEC's Electronic Data Gathering and Analysis Retrieval system at https://www.sec.gov. In light of such risks and uncertainties, we caution you not to place undue reliance on these forward-looking statements. These forward-looking statements speak only as of the date of this Quarterly Report, or if earlier, as of the date they were made.

vi

Should one or more of the risks or uncertainties described herein occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. All forward-looking statements, expressed or implied, included in this Quarterly Report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Quarterly Report.

vii

Part I

Item 1.    Consolidated Financial Statements (Unaudited)

Vital Energy, Inc.

Consolidated balance sheets

(in thousands, except share data)

(Unaudited)

	June 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	56,564	$	14,061
Accounts receivable, net	225,111		238,773
Derivatives	4,495		99,336
Other current assets	26,356		18,749
Total current assets	312,526		370,919
Property and equipment:
Oil and natural gas properties, full cost method:
Evaluated properties	12,317,485		11,799,155
Unevaluated properties not being depleted	193,845		195,457
Less: accumulated depletion and impairment	(8,094,808)		(7,764,697)
Oil and natural gas properties, net	4,416,522		4,229,915
Midstream and other fixed assets, net	131,200		130,293
Property and equipment, net	4,547,722		4,360,208
Derivatives	36,375		51,071
Operating lease right-of-use assets	139,037		144,900
Deferred income taxes	196,413		188,836
Other noncurrent assets, net	31,135		33,647
Total assets	$	5,263,208	$	5,149,581
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities	$	153,117	$	159,892
Accrued capital expenditures	91,064		91,937
Undistributed revenue and royalties	219,292		194,307
Derivatives	16,537		—
Operating lease liabilities	78,672		70,651
Other current liabilities	58,738		78,802
Total current liabilities	617,420		595,589
Long-term debt, net	1,662,263		1,609,424
Derivatives	152		—
Asset retirement obligations	84,149		81,680
Operating lease liabilities	56,947		71,343
Other noncurrent liabilities	6,379		6,288
Total liabilities	2,427,310		2,364,324
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.01 par value, 50,000,000 shares authorized, and zero and 595,104 issued and outstanding as of June 30, 2024 and December 31, 2023, respectively	—		6
Common stock, $0.01 par value, 80,000,000 shares authorized, and 38,164,905 and 35,413,551 issued and outstanding as of June 30, 2024 and December 31, 2023, respectively	382		354
Additional paid-in capital	3,814,475		3,733,775
Accumulated deficit	(978,959)		(948,878)
Total stockholders' equity	2,835,898		2,785,257
Total liabilities and stockholders' equity	$	5,263,208	$	5,149,581

The accompanying notes are an integral part of these unaudited consolidated financial statements.

1

Vital Energy, Inc.

Consolidated statements of operations

(in thousands, except per share data)

(Unaudited)

	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Revenues:
Oil sales	$	441,667	$	299,085	$	857,451	$	565,816
NGL sales	39,870		25,887		86,945		58,893
Natural gas sales	(5,371)		8,952		12,874		27,026
Sales of purchased oil	—		338		—		14,189
Other operating revenues	205		800		1,440		1,645
Total revenues	476,371		335,062		958,710		667,569
Costs and expenses:
Lease operating expenses	113,742		57,718		219,470		107,899
Production and ad valorem taxes	27,079		21,607		57,693		42,138
Oil transportation and marketing expenses	12,199		10,681		22,032		21,596
Gas gathering, processing and transportation expenses	5,088		—		7,464		—
Costs of purchased oil	—		588		—		14,755
General and administrative	23,573		18,482		52,929		44,412
Depletion, depreciation and amortization	174,298		103,340		340,405		190,119
Other operating expenses, net	2,593		1,351		3,611		2,835
Total costs and expenses	358,572		213,767		703,604		423,754
Gain on disposal of assets, net	36		154		166		391
Operating income	117,835		121,449		255,272		244,206
Non-operating income (expense):
Gain (loss) on derivatives, net	7,658		(18,044)		(144,489)		2,446
Interest expense	(40,690)		(31,529)		(84,111)		(60,083)
Loss on extinguishment of debt, net	(40,301)		—		(66,115)		—
Other income, net	2,609		1,104		4,674		1,958
Total non-operating expense, net	(70,724)		(48,469)		(290,041)		(55,679)
Income (loss) before income taxes	47,111		72,980		(34,769)		188,527
Income tax benefit (expense)	(10,409)		221,831		5,340		220,224
Net income (loss)	36,702		294,811		(29,429)		408,751
Preferred stock dividends	(303)		—		(652)		—
Net income (loss) available to common stockholders	$	36,399	$	294,811	$	(30,081)	$	408,751
Net income (loss) per common share:
Basic	$	1.00	$	16.35	$	(0.84)	$	23.71
Diluted	$	0.98	$	16.30	$	(0.84)	$	23.60
Weighted-average common shares outstanding:
Basic	36,381		18,031		35,973		17,236
Diluted	37,605		18,085		35,973		17,319

The accompanying notes are an integral part of these unaudited consolidated financial statements.

2

Vital Energy, Inc.

Consolidated statements of stockholders' equity

(in thousands)

(Unaudited)

	Preferred Stock			Common stock			Additional paid-in capital		Treasury stock (at cost)			Accumulated deficit
	Shares	Amount		Shares	Amount				Shares	Amount				Total
Balance, December 31, 2023	595	$	6	35,414	$	354	$	3,733,775	—	$	—	$	(948,878)	$	2,785,257
Restricted stock awards	—	—		445	5		—		—	—		—		5
Restricted stock forfeitures	—	—		(5)	—		(4)		—	—		—		(4)
Stock exchanged for tax withholding	—	—		(72)	(1)		(3,410)		72	3,411		—		—
Retirement of treasury stock	—	—		—	—		—		(72)	(3,411)		—		(3,411)
Share-settled equity-based compensation	—	—		—	—		4,348		—	—		—		4,348
Equity issued for acquisition of oil and natural gas properties	980	10		879	9		78,721		—	—		—		78,740
Net loss	—	—		—	—		—		—	—		(66,131)		(66,131)
Balance, March 31, 2024	1,575	16		36,661	367		3,813,430		—	—		(1,015,009)		2,798,804
Restricted stock awards	—	—		13	—		—		—	—		—		—
Restricted stock forfeitures	—	—		(8)	—		—		—	—		—		—
Stock exchanged for tax withholding	—	—		—	—		(9)		—	9		—		—
Retirement of treasury stock	—	—		—	—		—		—	(9)		—		(9)
Share-settled equity-based compensation	—	—		—	—		4,865		—	—		—		4,865
Equity issued for acquisition of oil and natural gas properties	—	—		(76)	(1)		(3,811)		—	—		—		(3,812)
Preferred stock conversion	(1,575)	(16)		1,575	16		—		—	—		—		—
Preferred stock dividend paid	—	—		—	—		—		—	—		(652)		(652)
Net income	—	—		—	—		—		—	—		36,702		36,702
Balance, June 30, 2024	—	$	—	38,165	$	382	$	3,814,475	—	$	—	$	(978,959)	$	2,835,898

	Preferred Stock			Common stock			Additional paid-in capital		Treasury stock (at cost)			Accumulated deficit
	Shares	Amount		Shares	Amount				Shares	Amount				Total
Balance, December 31, 2022	—	$	—	16,762	$	168	$	2,754,085	—	$	—	$	(1,643,507)	$	1,110,746
Restricted stock awards	—	—		315	3		(3)		—	—		—		—
Restricted stock forfeitures	—	—		(3)	—		—		—	—		—		—
Stock exchanged for tax withholding	—	—		(49)	(1)		(2,458)		49	2,459		—		—
Retirement of treasury stock	—	—		—	—		—		(49)	(2,459)		—		(2,459)
Share-settled equity-based compensation	—	—		—	—		3,141		—	—		—		3,141
Net income	—	—		—	—		—		—	—		113,940		113,940
Balance, March 31, 2023	—	—		17,025	170		2,754,765		—	—		(1,529,567)		1,225,368
Restricted stock awards	—	—		6	—		—		—	—		—		—
Restricted stock forfeitures	—	—		(9)	—		—		—	—		—		—
Stock exchanged for tax withholding	—	—		(7)	—		(385)		7	385		—		—
Retirement of treasury stock	—	—		—	—		—		(7)	(385)		—		(385)
Share-settled equity-based compensation	—	—		—	—		3,711		—	—		—		3,711
Equity issued for acquisition of oil and natural gas properties	—	—		1,579	16		80,052		—	—		—		80,068
Net income	—	—		—	—		—		—	—		294,811		294,811
Balance, June 30, 2023	—	$	—	18,594	$	186	$	2,838,143	—	$	—	$	(1,234,756)	$	1,603,573

The accompanying notes are an integral part of these unaudited consolidated financial statements.

3

Vital Energy, Inc.

Consolidated statements of cash flows

(in thousands)

(Unaudited)

	Six months ended June 30,
	2024		2023
Cash flows from operating activities:
Net income (loss)	$	(29,429)	$	408,751
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Share-settled equity-based compensation, net	7,435		5,465
Depletion, depreciation and amortization	340,405		190,119
Mark-to-market on derivatives:
(Gain) loss on derivatives, net	144,489		(2,446)
Settlements received (paid) for matured derivatives, net	(18,262)		8,440
Loss on extinguishment of debt, net	66,115		—
Deferred income tax benefit	(7,577)		(222,058)
Other, net	12,429		4,756
Changes in operating assets and liabilities:
Accounts receivable, net	13,662		17,360
Other current assets	(7,607)		(8,230)
Other noncurrent assets, net	1,549		1,590
Accounts payable and accrued liabilities	(16,867)		(17,435)
Undistributed revenue and royalties	16,268		1,847
Other current liabilities	(20,383)		(18,647)
Other noncurrent liabilities	(5,236)		(4,499)
Net cash provided by operating activities	496,991		365,013
Cash flows from investing activities:
Acquisitions of oil and natural gas properties, net	(4,679)		(526,985)
Capital expenditures:
Oil and natural gas properties	(417,706)		(309,223)
Midstream and other fixed assets	(9,178)		(6,899)
Proceeds from dispositions of capital assets, net of selling costs	180		2,252
Other, net	(952)		2,035
Net cash used in investing activities	(432,335)		(838,820)
Cash flows from financing activities:
Borrowings on Senior Secured Credit Facility	405,000		595,000
Payments on Senior Secured Credit Facility	(450,000)		(90,000)
Issuance of senior unsecured notes	1,001,500		—
Extinguishment of debt	(952,214)		—
Stock exchanged for tax withholding	(3,420)		(2,844)
Payments for debt issuance costs	(20,285)		—
Other, net	(2,734)		(1,088)
Net cash (used in) provided by financing activities	(22,153)		501,068
Net increase in cash and cash equivalents	42,503		27,261
Cash and cash equivalents, beginning of period	14,061		44,435
Cash and cash equivalents, end of period	$	56,564	$	71,696

 The accompanying notes are an integral part of these unaudited consolidated financial statements.

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Note 1—Organization and basis of presentation

Organization

Vital Energy, Inc. ("Vital Energy" or the "Company"), together with its wholly-owned subsidiaries, is an independent energy company focused on the acquisition, exploration and development of oil and natural gas properties in the Permian Basin of West Texas. The Company has identified one operating segment: exploration and production. In these notes, the "Company" refers to Vital Energy and its subsidiaries collectively, unless the context indicates otherwise. All amounts, dollars and percentages presented in these unaudited consolidated financial statements and the related notes are rounded and, therefore, approximate.

Basis of presentation

The unaudited consolidated financial statements were derived from the historical accounting records of the Company and reflect the historical financial position, results of operations and cash flows for the periods described herein. The unaudited consolidated financial statements have been prepared in accordance with GAAP. All material intercompany transactions and account balances have been eliminated in the consolidation of accounts.

The unaudited consolidated financial statements have not been audited by the Company's independent registered public accounting firm, except that the consolidated balance sheet as of December 31, 2023 is derived from the Company's audited consolidated financial statements. In the opinion of management, the unaudited consolidated financial statements reflect all necessary adjustments to present fairly the Company's interim financial position, results of operations and cash flows. All adjustments are of a recurring nature unless otherwise disclosed herein.

Certain disclosures have been condensed or omitted from the unaudited consolidated financial statements. Accordingly, the unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the 2023 Annual Report.

Significant accounting policies

There have been no material changes in the Company's significant accounting policies during the six months ended June 30, 2024.

As discussed in Note 2 in the 2023 Annual Report, the Company uses the full cost method of accounting for its oil and natural gas properties. This accounting method requires a quarterly full cost ceiling test. The full cost ceiling is based principally on the estimated future net cash flows from proved oil, NGL and natural gas reserves, which exclude the effect of the Company's commodity derivative transactions, discounted at 10%. The SEC guidelines require companies to use the unweighted arithmetic average first-day-of-the-month price for each month within the 12-month period prior to the end of the reporting period, which are then adjusted for quality, certain transportation fees, geographical differentials, marketing bonuses or deductions and other factors affecting the price received at the delivery point without giving effect to the Company's commodity derivative transactions. These prices are utilized to calculate the estimated future net cash flows in the full cost ceiling calculation. Additional significant inputs included in the calculation of discounted cash flows used in the full cost ceiling calculation include the Company's estimate of operating and development costs, anticipated production of proved reserves and other relevant data. In the event the unamortized cost of evaluated oil and natural gas properties being depleted exceeds the full cost ceiling, as defined by the SEC, the excess is expensed in the period such excess occurs. Once incurred, a write-down of oil and natural gas properties is not reversible.

The unamortized cost of evaluated oil and natural gas properties being depleted did not exceed the full cost ceiling as of June 30, 2024 or June 30, 2023. As such, no full cost ceiling impairments were recorded during the six months ending June 30, 2024 and June 30, 2023. However, as of June 30, 2024, the difference between the unamortized costs of evaluated oil and natural gas properties being depleted and the full cost ceiling was approximately 1% of the full cost ceiling. There are numerous uncertainties inherent in the estimation of proved reserves and accounting for oil and natural gas properties in future periods. In addition to commodity prices, our production rates, levels of proved reserves, future development costs, changes in oilfield service costs, potential recognition of additional proved undeveloped reserves, transfers of unevaluated properties and other factors will determine the Company's actual ceiling test calculation and impairment analysis in future periods. As a result, the Company could incur a non-cash full cost ceiling impairment in future quarters, which would have an adverse effect on its statement of operations.

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See Note 2 in the 2023 Annual Report for further discussion of significant accounting policies.

Use of estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although management believes these estimates are reasonable, actual results could differ.

See Note 2 in the 2023 Annual Report for further information regarding the use of estimates and assumptions.

Note 2—New accounting standards

The Company considered the applicability and impact of all Accounting Standards Updates ("ASU") issued by the Financial Accounting Standards Board ("FASB") to the Accounting Standards Codification. ASUs not discussed were assessed and determined to be either not applicable, the effects of adoption are not expected to be material or are clarifications of ASUs previously disclosed. There were no new material ASUs adopted during the six months ended June 30, 2024. See below for discussion of ASUs not yet adopted.

Accounting pronouncements not yet adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which sets forth improvements to the current segment disclosure requirements in accordance with Topic 280 "Segment Reporting," including clarifying that entities with a single reportable segment are subject to both new and existing segment reporting requirements. ASU 2023-07 will be effective retrospectively for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024. Early adoption is permitted. Adoption of this ASU will result in additional disclosure, but will not impact the Company’s consolidated financial position, results of operations or cash flows.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires more detailed tax disclosures, including disaggregated information about an entity's effective tax rate reconciliation as well as expanded information on income taxes paid by jurisdiction. The amendments in this accounting standard are effective for fiscal years beginning after December 15, 2024, on a prospective basis. Early adoption is permitted. Adoption of this ASU will result in additional disclosure, but will not impact the Company’s consolidated financial position, results of operations or cash flows.

Note 3—Acquisitions

2024 acquisitions

PEP Acquisition

On February 2, 2024 (the "PEP Closing Date"), the Company purchased additional working interests in producing properties associated with the Henry Acquisition (as defined herein), with an effective date of August 1, 2023 (the "PEP Acquisition") through PEP Henry Production Partners LP, PEP HPP Jubilee SPV LP, PEP PEOF Dropkick SPV, LLC, PEP HPP Dropkick SPV LP and HPP Acorn SPV LP (collectively, "PEP"). The aggregate purchase price of $79.3 million consisted of (i) 878,690 shares of the Company's common stock, par value $0.01 per share ("Common Stock") based upon the share price as of the PEP Closing Date, (ii) 980,272 shares of the Company's 2.0% Cumulative Mandatorily Convertible Series A Preferred Stock, par value $0.01 per share ("Preferred Stock") based upon the share price as of the PEP Closing Date and (iii) $0.6 million in transaction-related expenses, inclusive of customary closing price adjustments and subject to post-closing adjustments. The PEP Acquisition was accounted for as an asset acquisition, as substantially all the gross assets acquired are concentrated in a group of similar identifiable assets. The 980,272 shares of Preferred Stock were subsequently converted to an equal number of shares of Common Stock on May 23, 2024. See Note 5 for further discussion of the Preferred Stock conversion.

The "Henry Acquisition," which closed on November 5, 2023, consisted of the purchase of certain oil and natural gas properties in the Midland and Delaware basins, and was accounted for as a business combination. See Note 4 in the 2023 Annual Report for additional discussion of the Henry Acquisition and the Company's 2023 asset acquisitions.

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2023 acquisitions

Forge Acquisition

On June 30, 2023, the Company purchased certain oil and natural gas properties located in the Delaware Basin, including approximately 24,000 net acres in Pecos, Reeves and Ward Counties, and related assets and contracts, with an effective date of March 1, 2023 (the "Forge Acquisition") from Forge Energy II Delaware, LLC. The aggregate purchase price of $397.5 million consisted of (i) $389.9 million in cash and (ii) $7.6 million in transaction-related expenses, inclusive of customary post-closing adjustments.

Driftwood Acquisition

On April 3, 2023, the Company purchased certain oil and natural gas properties in the Midland Basin, including approximately 11,200 net acres located in Upton and Reagan Counties and related assets and contracts, inclusive of derivatives with an effective date of January 1, 2023 (the "Driftwood Acquisition") from Driftwood Energy Operating, LLC. The aggregate purchase price of $201.7 million consisted of (i) $117.4 million of cash, (ii) 1,578,948 shares of Common Stock based upon the share price as of the Driftwood Closing Date and (iii) $4.2 million in transaction related expenses.

During the second quarter of 2023, the Company acquired additional interests in producing properties associated with the Driftwood Acquisition through additional sellers that exercised their "tag-along" sales rights, for total cash consideration of $8.6 million, excluding customary purchase price adjustments.

Note 4—Debt

Long-term debt, net

The following table presents the Company's long-term debt and unamortized debt issuance costs, discounts and premiums included in "Long-term debt, net" on the consolidated balance sheets as of the dates presented:

(in thousands)	June 30, 2024		December 31, 2023
10.125% senior unsecured notes due 2028	$	—	$	700,309
7.750% senior unsecured notes due 2029	298,214		298,214
9.750% senior unsecured notes due 2030	302,364		500,000
7.875% senior unsecured notes due 2032	1,000,000		—
Senior Secured Credit Facility(1)	90,000		135,000
Total long-term debt	1,690,578		1,633,523
Unamortized debt issuance costs	(26,383)		(21,800)
Unamortized discounts	(3,401)		(6,068)
Unamortized premiums	1,469		3,769
Total long-term debt, net	$	1,662,263	$	1,609,424

______________________________________________________________________________

(1)Unamortized debt issuance costs related to the Senior Secured Credit Facility of $12.9 million and $14.1 million as of June 30, 2024 and December 31, 2023, respectively, are included in "Other noncurrent assets, net" on the consolidated balance sheets.

Senior Secured Credit Facility

On May 8, 2024, the Company entered into the Twelfth Amendment to the Senior Secured Credit Facility (the "Twelfth Amendment"). The Twelfth Amendment, among other things, reaffirmed the borrowing base at $1.5 billion and (ii) increased the aggregate elected commitment to $1.35 billion under the Senior Secured Credit Facility.

As of June 30, 2024, the Senior Secured Credit Facility, which matures on September 13, 2027, had a maximum credit amount of $3.0 billion, a borrowing base and an aggregate elected commitment of $1.5 billion and $1.35 billion, respectively, with an outstanding balance of $90.0 million subject to a weighted-average interest rate of 7.694%. The Senior Secured Credit Facility contains both financial and non-financial covenants, all of which the Company was in compliance with for all periods presented. Additionally, the Senior Secured Credit Facility provides for the issuance of letters of credit, limited to the lesser of

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total capacity or $80.0 million. As of June 30, 2024 and December 31, 2023, the Company had no letters of credit outstanding under the Senior Secured Credit Facility. For additional information see Note 7 in the 2023 Annual Report. See Note 14 for discussion of additional borrowings and an expected increase in the aggregate elected commitment on the Senior Secured Credit Facility subsequent to June 30, 2024.

March 2032 Notes

On March 28, 2024, the Company completed an offering of $800.0 million in aggregate principal amount of 7.875% senior unsecured notes due 2032 (the "Initial March 2032 Notes") for net proceeds of $784.8 million. The net proceeds from this offering and the Tack-On March 2032 Notes (defined below) were used to (i) extinguish in full the Company's outstanding 10.125% senior unsecured notes due 2028 (the "January 2028 Notes"), (ii) reduce the outstanding principal amount of the 9.750% senior unsecured notes due 2030 (the "September 2030 Notes") and (iii) repay a portion of the outstanding borrowings on the Senior Secured Credit Facility. On March 29, 2024, the Company settled a cash tender offer on the January 2028 Notes for an aggregate principal amount outstanding of $431.2 million.

On April 3, 2024, the Company completed an offering of an additional $200.0 million in aggregate principal amount of 7.875% senior unsecured notes due 2032 (the "Tack-On March 2032 Notes," and, together with the Initial March 2032 Notes, the "March 2032 Notes"), at 100.750% of par, under the same indenture dated as of March 28, 2024 for net proceeds of approximately $198.7 million. On April 3, 2024, the Company settled a cash tender offer on the September 2030 Notes of $197.6 million and on April 29, 2024, the Company redeemed the remaining principal amount outstanding on the January 2028 Notes of $269.2 million at a redemption price of 105.063%.

Interest for the March 2032 Notes is payable semi-annually, in cash in arrears on April 15 and October 15 of each year, commencing October 15, 2024 with interest from closing to that date. The terms of the Company's March 2032 Notes include covenants, which are in addition to covenants in the Senior Secured Credit Facility that limit the Company's ability to incur indebtedness, make restricted payments, grant liens and dispose of assets. The March 2032 Notes are fully and unconditionally guaranteed on a senior unsecured basis by Vital Midstream Services, LLC and certain of the Company's future restricted subsidiaries, subject to certain automatic customary releases, including the sale, disposition or transfer of all of the capital stock or of all or substantially all of the assets of a subsidiary guarantor to one or more persons that are not the Company or a restricted subsidiary, exercise of legal defeasance or covenant defeasance options or satisfaction and discharge of the applicable indenture, designation of a subsidiary guarantor as a non-guarantor restricted subsidiary or as an unrestricted subsidiary in accordance with the applicable indenture, release from guarantee under the Senior Secured Credit Facility, or liquidation or dissolution.

The following table presents the components of the Company's loss on extinguishment of debt during the periods presented:

(in thousands)	Three months ended June 30, 2024		Six months ended June 30, 2024
Principal amount tendered or redeemed	$	466,795	$	897,945
Extinguishment of debt(1)	(498,696)		(952,214)
Early tender or redemption premiums	(31,901)		(54,269)
Write-off of debt issuance costs	(7,449)		(13,121)
Write-off of issuance discount	(2,311)		(2,311)
Write-off of issuance premium	1,360		3,586
Loss on extinguishment of debt, net(2)	$	(40,301)	$	(66,115)

______________________________________________________________________________

(1)Amounts are included in "Extinguishment of debt" in cash flows from financing activities on the consolidated statements of cash flows.

(2)Amounts are included in "Loss on extinguishment of debt, net" on the consolidated statements of operations.

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Note 5—Stockholders' equity

Equity transactions related to acquisitions of oil and natural gas properties

On May 22, 2024, in connection with the final settlement of the Maple Acquisition (as defined herein), 76,166 shares of the Company's common stock held in escrow were cancelled and returned to the Company's pool of authorized and unissued common stock. The "Maple Acquisition," which closed on October 31, 2023, consisted of the purchase of certain oil and natural gas properties in the Delaware Basin. See Note 4 in the 2023 Annual Report for additional discussion of the Maple Acquisition.

Preferred Stock

On May 23, 2024, upon recommendation of the Company's board of directors, stockholders approved the conversion of the remaining 1,575,376 outstanding shares of Preferred Stock to an equal number of shares of common stock. The conversion occurred on June 4, 2024. As a result of the conversion, the Company paid a dividend of $0.3 million for the period the Preferred Stock was outstanding during the second quarter of 2024.

Share repurchase program

On May 31, 2022, the Company's board of directors authorized a $200.0 million share repurchase program. The repurchase program commenced in May 2022 and was originally set to expire in May 2024. On May 23, 2024, the board of directors approved an amendment to the share repurchase program to (i) increase the shares of Common Stock which the Company may purchase to a total aggregate authorization of $237.3 million, and (ii) extend the expiration date to May 22, 2026. Share repurchases under the program may be made through a variety of methods, which may include open market purchases, including under plans complying with Rule 10b5-1 of the Exchange Act, and privately negotiated transactions. The timing and actual number of share repurchases will depend upon several factors, including market conditions, business conditions, the trading price of the Company's common stock and the nature of other investment opportunities available to the Company. No shares were repurchased during the six months ended June 30, 2024 and 2023.

Note 6—Equity Incentive Plan

The Vital Energy, Inc. Omnibus Equity Incentive Plan (the "Equity Incentive Plan") provides for the granting of incentive awards in the form of restricted stock awards, stock option awards, performance share awards, performance unit awards, phantom unit awards and other awards. On May 23, 2024, the Company's stockholders approved an amendment and restatement to the Equity Incentive Plan, which increased the maximum number of shares of the Company's common stock issuable under the Equity Incentive Plan from 2,432,500 to 3,332,500 shares.

See Note 9 in the 2023 Annual Report for additional discussion of the Company's equity-based compensation awards.

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The following table presents activity for equity-based compensation awards for the six months ended June 30, 2024:

	Equity Awards		Liability Awards
(in thousands)	Restricted Stock Awards	Performance Share Awards	Performance Unit Awards(1)(2)
Outstanding as of December 31, 2023	472	48	158
Granted	458	—	141
Forfeited	(13)	—	—
Vested	(203)	—	(83)
Outstanding as of June 30, 2024	714	48	216

_____________________________________________________________________________

(1)The performance unit awards granted on March 9, 2021 had a performance period of January 1, 2021 to December 31, 2023 and, as their market and performance criteria were satisfied, resulted in a 145.83% payout, or 120,297 units. As such, the granted awards vested and were paid out in cash on March 8, 2024 at $50.38 per unit based on the Company's closing stock price on the vesting date.

(2)On February 20, 2024 and April 1, 2024, the Company granted performance unit awards with a performance period of January 1, 2024 through December 31, 2026. The market criteria consists of: (i) relative total shareholder return comparing the Company's shareholder return to the shareholder return of the exploration and production companies listed in the Russell 2000 Index and (ii) absolute shareholder return. The performance criteria for these awards consists of: (i) earnings before interest, taxes, depreciation, amortization and exploration expense and three-year total debt reduction, (ii) growth in inventory and (iii) emissions reductions. Any units earned are expected to be paid in cash during the first quarter following the completion of the requisite service period, based on the achievement of market and performance criteria, and the payout can range from 0% to 225%.

As of June 30, 2024, total unrecognized cost related to equity-based compensation awards was $36.4 million, of which $7.7 million was attributable to liability awards which will be settled in cash rather than shares. Such cost will be recognized on a straight-line basis over an expected weighted-average period of 2.15 years.

Equity-based compensation

The following table reflects equity-based compensation expense for the periods presented:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2024		2023		2024		2023
Equity awards:
Restricted stock awards	$	4,392	$	3,322	$	8,194	$	6,039
Performance share awards	473		389		1,019		813
Total share-settled equity-based compensation, gross	4,865		3,711		9,213		6,852
Less amounts capitalized	(931)		(818)		(1,778)		(1,387)
Total share-settled equity-based compensation, net	3,934		2,893		7,435		5,465
Liability awards:
Performance unit awards and phantom unit awards	460		1,111		2,227		1,825
Total cash-settled equity-based compensation, gross	460		1,111		2,227		1,825
Less amounts capitalized	(7)		—		(14)		(50)
Total cash-settled equity-based compensation, net	453		1,111		2,213		1,775
Total equity-based compensation, net	$	4,387	$	4,004	$	9,648	$	7,240

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Note 7—Net income (loss) per common share

Basic net income (loss) per common share is computed by first subtracting preferred stock dividends from net income (loss) to arrive at net income (loss) available to common stockholders, and then dividing net income (loss) available to common stockholders by the basic weighted-average common shares outstanding for the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the diluted weighted average common shares outstanding for the period, which reflects the potential dilution of preferred stock and non-vested equity-based compensation awards. See Notes 8 and 9 in the 2023 Annual Report for additional discussion of the Company's preferred stock and equity-based compensation awards, respectively. For the six months ended June 30, 2024, the preferred stock and equity-based compensation awards were anti-dilutive due to the Company's net loss and, therefore, were excluded from the calculation of diluted net loss per common share.

The following table reflects the calculations of basic and diluted (i) weighted-average common shares outstanding and (ii) net income (loss) per common share for the periods presented:

	Three months ended June 30,				Six months ended June 30,
(in thousands, except for per share data)	2024		2023		2024		2023
Net income (loss)	$	36,702	$	294,811	$	(29,429)	$	408,751
Less: Preferred Stock dividends	(303)		—		(652)		—
Net income (loss) available to common stockholders	$	36,399	$	294,811	$	(30,081)	$	408,751
Weighted-average common shares outstanding:
Basic	36,381		18,031		35,973		17,236
Dilutive non-vested restricted stock awards	104		54		—		83
Dilutive non-vested performance share awards(1)	12		—		—		—
Dilutive preferred stock	1,108		—		—		—
Diluted	37,605		18,085		35,973		17,319
Net income (loss) per common share:
Basic	$	1.00	$	16.35	$	(0.84)	$	23.71
Diluted	$	0.98	$	16.30	$	(0.84)	$	23.60
Anti-dilutive weighted-average common shares outstanding(2):
Restricted stock awards	157		345		268		343
Performance share awards	—		25		10		25
Preferred stock	—		—		1,169		—

_____________________________________________________________________________

(1)The dilutive effect of the non-vested performance shares for the three and six months ended June 30, 2023 and 2024 were calculated assuming each respective performance period ended on June 30, 2023 and 2024.

(2)Shares excluded from the diluted net income (loss) per common share calculation because their effect would be anti-dilutive.

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Note 8—Derivatives

The Company has two types of derivative instruments as of June 30, 2024: (i) commodity derivatives and (ii) a contingent consideration derivative. See Note 9 for discussion of fair value measurement of derivatives on a recurring basis. The Company's derivatives were not designated as hedges for accounting purposes, and the Company does not enter into such instruments for speculative trading purposes. Accordingly, the changes in derivative fair values are recognized in "Gain (loss) on derivatives, net" under "Non-operating income (expense)" on the consolidated statements of operations.

The following table summarizes components of the Company's gain (loss) on derivatives, net by type of derivative instrument for the periods presented:

	Three months ended June 30,				Six months ended June 30,
(in thousands)	2024		2023		2024		2023
Commodity	$	9,425	$	(16,190)	$	(146,410)	$	1,392
Contingent consideration	(1,767)		(1,854)		1,921		1,054
Gain (loss) on derivatives, net	$	7,658	$	(18,044)	$	(144,489)	$	2,446

Commodity

Due to the inherent volatility in oil, NGL and natural gas prices and the sometimes wide pricing differentials between where the Company produces and where the Company sells such commodities, the Company engages in commodity derivative transactions, such as puts, swaps, collars and basis swaps, to hedge price risk associated with a portion of the Company's anticipated sales volumes. By removing a portion of the price volatility associated with future sales volumes, the Company expects to mitigate, but not eliminate, the potential effects of variability in cash flows from operations. See Note 11 in the 2023 Annual Report for discussion of transaction types and settlement indexes. During the six months ended June 30, 2024, the Company’s derivatives were settled based on reported prices on commodity exchanges, with (i) oil derivatives settled based on WTI NYMEX, Argus WTI Midland and Argus WTI Formula Basis pricing, (ii) NGL derivatives settled based on Mont Belvieu OPIS pricing and (iii) natural gas derivatives settled based on Henry Hub NYMEX and Waha Inside FERC pricing.

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The following table summarizes open commodity derivative positions as of June 30, 2024, for commodity derivatives that were entered into through June 30, 2024, for the settlement periods presented:

	Remaining Year 2024		Year 2025		Year 2026
Oil:
WTI NYMEX - Swaps:
Volume (Bbl)	10,279,500		11,362,000		—
Weighted-average price ($/Bbl)	$	76.88	$	75.13	$	—
WTI NYMEX - Three-way Collars:
Volume (Bbl)	100,400		—		—
Weighted-average sold put price ($/Bbl)	$	50.00	$	—	$	—
Weighted-average floor price ($/Bbl)	$	66.46	$	—	$	—
Weighted-average ceiling price ($/Bbl)	$	87.06	$	—	$	—
Argus WTI Midland to Argus WTI Formula Basis - Basis Swaps:
Volume (Bbl)	135,900		—		—
Weighted-average differential ($/Bbl)	$	0.11	$	—	$	—
NGL:
Non-TET Propane - Swaps:
Volume (Bbl)	124,000		—		—
Weighted-average price ($/Bbl)	$	34.23	$	—	$	—
Non-TET Normal Butane - Swaps:
Volume (Bbl)	27,457		—		—
Weighted-average price ($/Bbl)	$	39.78	$	—	$	—
Non-TET Isobutane - Swaps:
Volume (Bbl)	88,571		—		—
Weighted-average price ($/Bbl)	$	42.26	$	—	$	—
Non-TET Pentane - Swaps:
Volume (Bbl)	85,619		—		—
Weighted-average price ($/Bbl)	$	65.15	$	—	$	—
Natural gas:
Henry Hub NYMEX - Swaps:
Volume (MMBtu)	13,120,850		—		—
Weighted-average price ($/MMBtu)	$	3.47	$	—	$	—
Waha Inside FERC - Swaps:
Volume (MMBtu)	—		15,330,000		15,330,000
Weighted-average price ($/MMBtu)	$	—	$	2.61	$	2.76
Henry Hub NYMEX - Collars:
Volume (MMBtu)	318,831		—		—
Weighted-average floor price ($/MMBtu)	$	3.42	$	—	$	—
Weighted-average ceiling price ($/MMBtu)	$	6.17	$	—	$	—
Waha Inside FERC to Henry Hub NYMEX - Basis Swaps:
Volume (MMBtu)	13,439,681		—		—
Weighted-average differential ($/MMBtu)	$	(0.74)	$	—	$	—

Contingent consideration

On May 7, 2021, the Company entered into a purchase and sale agreement (the "Sixth Street PSA"), to sell 37.5% of the Company's working interest in certain producing wellbores and the related properties primarily located within Glasscock and Reagan Counties, Texas. The Sixth Street PSA provides for potential contingent payments to be paid to the Company if certain

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cash flow targets are met related to divested oil and natural gas property operations (the "Sixth Street Contingent Consideration"). The Sixth Street Contingent Consideration provides the Company with the right to receive up to a maximum of $93.7 million in additional cash consideration, comprised of potential quarterly payments through June 2027 totaling up to $38.7 million and a potential balloon payment of $55.0 million in June 2027. As of June 30, 2024, the Company had received life-to-date contingent consideration payments of $4.3 million, with maximum remaining potential cash consideration totaling $81.7 million. The fair value of the Sixth Street Contingent Consideration was $33.0 million as of June 30, 2024 and $31.1 million as of December 31, 2023.

Note 9—Fair value measurements

See the beginning of Note 12 in the 2023 Annual Report for information about the fair value hierarchy levels.

Fair value measurement on a recurring basis

See Note 8 for further discussion of the Company's derivatives.

Balance sheet presentation

The following tables present the Company's derivatives by (i) balance sheet classification, (ii) derivative type and (iii) fair value hierarchy level, and provide a total, on a gross basis and a net basis reflected in "Derivatives" on the consolidated balance sheets as of the dates presented:

	June 30, 2024
(in thousands)	Level 1		Level 2		Level 3		Total gross fair value		Amounts offset		Net fair value presented on the consolidated balance sheets
Assets:
Current:
Commodity	$	—	$	17,101	$	—	$	17,101	$	(13,637)