Commitments and Contingencies

12 Months Ended

Dec. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

Note 6 – Commitments and Contingencies

Commitments

As of December 31, 2024, the Company had entered into various types of agreements as discussed below. The following table presents the annual minimum payments related to these agreements for the next five years, and the total minimum payments thereafter as of December 31, 2024:


		For the Years Ending December 31,
		2025		2026		2027		2028		2029		Thereafter		Total

	(in thousands)
Delivery commitments (1) (2)		$	48,002	$	28,679	$	25,814	$	20,879	$	—	$	—	$	123,374
Drilling rig contracts (3)		34,729		—		—		—		—		—		34,729
Office space leases (4)		4,926		3,785		3,272		3,361		2,571		9,321		27,236
Electrical power purchase contracts		13,268		13,945		15,735		16,683		2,209		—		61,840
Compression service contracts		11,916		9,677		7,967		3,296		—		—		32,856
Railcar agreements		10,080		7,993		7,775		2,938		1,469		—		30,255
Sand purchase agreement (5)		16,800		4,200		—		—		—		—		21,000
Other (6)		15,159		13,197		7,425		1,293		—		—		37,074
Total		$	154,880	$	81,476	$	67,988	$	48,450	$	6,249	$	9,321	$	368,364

____________________________________________

Note: The Company does not expect to incur material penalties or shortfalls with regard to its commitments.

(1) The Company has transportation throughput, terminal services, transloading, and delivery commitments with various third-parties that require delivery of a minimum amount of oil and produced water. As of December 31, 2024, the Company had commitments to deliver a minimum of 46 MMBbl of oil through December of 2028, and 3 MMBbl of produced water through June of 2027. Certain of these oil delivery commitments may be fulfilled with the same single barrel of oil. The Company would be required to make periodic deficiency payments for any shortfalls in delivering the minimum volume commitments under certain agreements. Additionally, one of the contracts does not have a minimum volume commitment associated with it, however, as of December 31, 2024, the Company would owe a cancellation fee of $3.4 million if the agreement was terminated.

(2) The Company expects to fulfill the delivery commitments from a combination of production from existing productive wells, future development of net proved undeveloped reserves, and future development of resources not yet characterized as proved reserves. Under certain of the Company’s commitments, if the Company is unable to deliver the minimum quantity from its production, it may deliver production acquired from third-parties to satisfy its minimum volume commitments.

(3) As of December 31, 2024, the Company’s drilling rig commitments had contract terms extending through the fourth quarter of 2025. If all of these contracts were terminated as of December 31, 2024, the Company would avoid a portion of the contractual service commitments; however, the Company would be required to pay $24.0 million in early termination fees. No material expenses related to early termination or standby fees were incurred by the Company during the year ended December 31, 2024.

(4) The Company leases office space under various operating leases, including maintenance, with certain terms extending into 2033. Rent expense was $2.5 million for each of the years ended December 31, 2024, and 2023, and was $3.5 million for the year ended December 31, 2022.

(5) If the Company terminated the agreement as of December 31, 2024, the Company would avoid a portion of the contractual purchase commitment; however, the Company would be required to pay an $8.0 million penalty.

(6) Primarily consists of IT contracts, water purchase agreements, and vehicle leases.

Drilling and Completion Commitments. As of December 31, 2024, the Company had an agreement that includes minimum drilling and completion footage requirements on certain existing leases. If these minimum requirements are not satisfied by March 31, 2026, the Company will be required to pay liquidated damages based on the difference between the actual footage drilled and completed and the minimum requirements. As of December 31, 2024, the liquidated damages could range from zero to a maximum of $37.2 million, with the maximum exposure assuming no additional development activity occurs prior to March 31, 2026. As of the filing of this report, the Company does not expect to incur material liquidated damages with regard to this agreement.

Contingencies

The Company is subject to litigation and claims arising in the ordinary course of business. The Company accrues for such items when a liability is both probable and the amount can be reasonably estimated. In the opinion of management, the anticipated results of any pending litigation and claims are not expected to have a material effect on the results of operations, the financial position, or the cash flows of the Company.