Overview

We are an oil and gas company focused on the acquisition and development of oil and natural gas assets where the latest in modern drilling and completion techniques and technologies have yet to be applied. In particular, we focus on legacy proven properties where there is a long production history, well defined geology and existing infrastructure that can be leveraged when applying modern field management technologies. Our current properties are located in the San Andres formation of the Permian Basin situated in West Texas and eastern New Mexico and in the Denver-Julesberg Basin in Colorado and Wyoming. As of December 31, 2024, we held approximately 14,105 net Permian Basin acres and 18,669 net D-J Basin acres.

How We Conduct Our Business and Evaluate Our Operations

We use a variety of financial and operational metrics to assess our performance, including production volumes, realized prices, operating expenses, capital expenditures, general and administrative expenses, net cash flow, and net income.

Reserves

Our estimated net proved crude oil and natural gas reserves at December 31, 2024 were approximately 18.1 million barrels of oil equivalent (MMBoe), a 1.1 MMBoe increase from 2023 primarily due to additions in our D-J Basin asset. Using SEC pricing, our estimated discounted future net cash flow (PV-10) for our proved reserves was $178.9 million, a 23% decrease from 2023 due to lower commodity prices.

Oil and Natural Gas Sales Volumes

Our net crude oil, natural gas, and NGLs sales volumes increased 29% in 2024 to 671,796 Bbls, or 1,835 barrels of oil per day, due to new wells in the D-J Basin and Permian Basin.

Significant Capital Expenditures

We incurred $22.1 million in capital expenditures in 2024, primarily for drilling and facilities in the D-J Basin and Permian Basin.

Market Conditions and Commodity Prices

Our financial results depend heavily on crude oil and natural gas prices, which are volatile and outside our control. We expect prices to remain volatile for the remainder of the year.

Results of Operations

We reported net income of $17.8 million in 2024, a significant increase from $1.7 million in 2023, primarily due to a $12.8 million income tax benefit and an $8.8 million increase in revenue, partially offset by higher operating expenses.

Liquidity and Capital Resources

As of December 31, 2024, we had a working capital surplus of $6.3 million. We plan to fund our 2025 capital program of $27-$33 million through cash flow from operations, existing cash, our credit facility, equity financing, and potential asset sales or joint ventures.

Non-GAAP Financial Measures

We have included EBITDA and Adjusted EBITDA as non-GAAP measures to provide additional financial analytical information. These measures exclude certain items that affect the comparability of our results.

Overall, the company had a strong operational and financial performance in 2024, with increased production, reserves, and net income, though lower commodity prices impacted the value of our proved reserves. We remain focused on optimizing our existing assets and pursuing strategic opportunities to grow and create shareholder value.