Note 16 - Subsequent Events

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Subsequent Events [Text Block]

NOTE 16. Subsequent Events

Dividends and dividend equivalents. In July 2023, the Board approved a quarterly dividend of $0.025 per share of common stock outstanding which will result in a total of approximately $3.2 million in dividends to be paid on August 25, 2023. In addition, under the terms of the LTIP, the Company will pay a dividend equivalent per share to all vested stock option holders of $331,000 in August 2023 and will accrue a dividend equivalent per share to all unvested stock option holders which is payable upon vesting of up to an additional $5,000, assuming no forfeitures. In addition, the Company will accrue an additional combined $54,000 in dividends on the restricted stock issued to directors, management directors and certain employees that will be payable upon vesting.

Derivatives. In July 2023, the Company entered into an additional commodity derivative financial instrument (crude oil price swap – WTI) to hedge a portion of its crude oil production for approximately 8,000 Bopd during the second half of 2023 at a strike price of $74.46 per Bbl. After the effect of this new contract, the Company’s outstanding crude oil derivative contracts and the weighted average crude oil prices per barrel for those contracts are as follows:

	Remainder of 2023
	Third Quarter		Fourth Quarter		Total
Crude Oil Price Swaps – WTI:
Volume (MBbls)		1,072.3		671.6		1,743.9
Price per Bbl	$	73.90	$	74.46	$	74.12
Deferred Premium Put Options – WTI:
Volume (MBbls)		644.0		920.0		1,564.0
Price per Bbl (Put Price)	$	60.46	$	55.97	$	57.82
Price per Bbl (Net of Premium)	$	55.46	$	50.97	$	52.82

	2024
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Total
Deferred Premium Put Options – WTI:
Volume (MBbls)		910.0		910.0		920.0		—		2,740.0
Price per Bbl (Put Price)	$	53.83	$	53.83	$	53.83	$	—	$	53.83
Price per Bbl (Net of Premium)	$	48.83	$	48.83	$	48.83	$	—	$	48.83

Ninth Amendment to Credit Agreement. In July 2023, the Company entered into the Ninth Amendment to its Credit Agreement whereby it, among other things, provides for (i) a waiver of the minimum current ratio covenant for the fiscal quarter ended June 30, 2023 under the Credit Agreement, (ii) a waiver of the failure to subject one or more certain accounts to an Account Control Agreement within the period provided in the Credit Agreement, (iii) a postponement of the April 2023 borrowing base redetermination until September 2023, (iv) a postponement of the date on which the Company was previously obligated thereunder to either extend the maturity of the 10.000% Senior Notes due February 2024, redeem or refinance the 10.000% Senior Notes or allocate a portion of the Company’s cash flow satisfactory to the Administrative Agent and the Majority Lenders that will retire the 10.000% Senior Notes on or before November 30, 2023 to September 1, 2023 or such later date as agreed to in writing by the Majority Lenders in their reasonable discretion, (v) certain pricing increases and additional minimum hedging requirements, (vi) an additional requirement to deliver a 13-week cash flow forecast on a weekly basis through completion of the September 2023 borrowing base redetermination and (vii) a temporary restriction on borrowing further amounts under the Credit Agreement until the Company has received at least $95.0 million of net proceeds from the sales of the Company’s equity securities.

Public stock offering. In July 2023, the Company completed a public stock offering whereby 14,835,000 shares of common stock were issued at a price of $10.50 per share, netting proceeds to the Company of approximately $151.2 million that will be used for working capital and to otherwise enhance near-term liquidity. In connection with the offering, certain of the Company’s existing stockholders, including the John Paul DeJoria Family Trust and Jack Hightower, the Company’s Chairman and Chief Executive Officer, and entities and individuals associated with them, purchased an aggregate of approximately 10 million shares of common stock in the offering at the public offering price per share.