Note 16 - Subsequent Events

3 Months Ended

Mar. 31, 2021

Notes to Financial Statements

Subsequent Events [Text Block]

NOTE

16.

Subsequent Events

Commodity Derivative Financial Instruments.

In

April

of

2021,

the Company entered into commodity derivative financial instruments with Fifth Third to hedge a portion of its crude oil production. Details of the contracts are as follows:

	2021								2022
	Second Quarter		Third Quarter		Fourth Quarter		Total		First Quarter		Second Quarter		Total
Oil Price Swaps - WTI: (a)
Volume (Bbls)		152,500		230,000		230,000		612,500		225,000		75,000		300,000
Price per Bbl	$	61.40	$	61.40	$	61.40	$	61.40	$	61.40	$	61.40	$	61.40

(a) These oil derivative contracts are settled based on the NYMEX – WTI calendar month average futures price.

Crude oil marketing contract.

In

May 2021,

the Company entered into a crude oil marketing contract with Lion as the purchaser and DKL Permian Gathering, LLC (“DKL”) as the gatherer and transporter. The contract includes the Company's current and future crude oil production from its horizontal wells in Flat Top where DKL will construct an oil gathering system and custody transfer meters to all the Company's central tank batteries. The oil gathering system and custody transfer meters are expected to be operational by

October 2021.

The contract contains a minimum volume commitment commencing

October 2021

based on the gross barrels delivered at the Company's central tank battery facilities and is

5,000

Bopd for the

first

year,

7,500

Bopd for the

second

year and

10,000

Bopd for the remaining

eight

years of the contract. However, the Company has the ability under the contract to cumulatively bank excess volumes delivered to offset future minimum volume commitments. The Company believes it will meet the minimum volume commitments based on the Company's current gross production levels and the current Flat Top development plan.

Natural gas purchasing replacement contract.

In

May 2021,

the Company entered into a replacement gas purchase contract with WTG Gas Processing, L.P. (“WTG”) as the gatherer, processor and purchaser of the Company's current and future gross natural gas production in Flat Top. The replacement contract provides the Company with improved natural gas and NGL pricing and requires WTG to expand its current low-pressure gathering system, which eliminates the need for in-field compression in Flat Top to accommodate the Company's increased natural gas production volumes based on the current plan of development. In exchange for the improved pricing terms and expansion of the gathering system, the Company will provide WTG with certain aid-in-construction payments. The replacement contract does

not

contain minimum volume commitments.  Once operational, the expanded natural gas gathering system will reduce flaring and the emission of greenhouse gases.