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Summary of Significant Accounting Policies
 6 Months Ended
Jun. 30, 2023
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies Summary of Significant Accounting Policies
Significant Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. These estimates and assumptions may also affect disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
The Company evaluates these estimates on an ongoing basis, using historical experience, consultation with experts and other methods the Company considers reasonable in the particular circumstances. Actual results may differ significantly from the Company’s estimates. Any effects on the Company’s business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known. Significant items subject to such estimates and assumptions include, but are not limited to, estimates of proved oil and natural gas reserves and related present value estimates of future net cash flows therefrom, the carrying value of oil and natural gas properties, accounts receivable, accrued capital expenditures and operating expenses, ARO, the fair value determination of acquired assets and assumed liabilities, certain tax accruals and the fair value of derivatives.
Accounts Receivable
Accounts receivable is summarized below:
June 30, 2023December 31, 2022
(In thousands)
Oil, natural gas and NGL sales$31,105 $24,136 
Joint interest accounts receivable996 793 
Other accounts receivable483 622 
Total accounts receivable$32,584 $25,551 
The Company had no allowance for credit losses at June 30, 2023 and December 31, 2022.
Other Non-Current Assets, Net
Other non-current assets consisted of the following:
June 30, 2023December 31, 2022
(In thousands)
Deferred financing costs, net (1)
$3,763 $2,556 
Right of use assets1,573 1,370 
Equity method investment5,602 — 
Other104 249 
Total other non-current assets, net$11,042 $4,175 
_____________________
(1)Deferred financing costs, net reflects costs associated with the Company's revolving credit facility which are amortized over the term of the revolving credit facility.
Equity method investment. In January 2023, the Company entered into an agreement to form a joint venture created for the purpose of constructing a new power infrastructure for onsite power generation in Yoakum County, Texas using produced natural gas. RPC Power Holdco LLC, a wholly-owned subsidiary of REPX, has a 30% investment in the joint venture, RPC Power LLC ("RPC Power"). The Company contributed its portion of capital for construction of the onsite power generation. As of June 30, 2023, the Company had invested $5.8 million to date in the joint venture, comprised of $3.6 million in cash and $2.3 million of contributed assets, which was reduced by the loss during the six months ended June 30, 2023. The onsite power generation facility is expected to be placed in service late in the third quarter or during the fourth quarter of 2023.
The Company accounts for its corporate joint ventures under the equity method of accounting in accordance with FASB Accounting Standards Codification Topic 323 “Investments — Equity Method and Joint Ventures.” The Company applies the equity method of accounting to investments of less than 50% in an investee over which the Company exercises significant influence but does not have control. Under the equity method of accounting, the Company’s share of the investee’s earnings or loss is recognized in the condensed consolidated statements of operations.
Judgment regarding the level of influence over each equity method investment includes considering key factors such as ownership interest, representation on the board of directors, participation in policy-making decisions, material intercompany transactions and extent of ownership by an investor in relation to the concentration of other shareholdings.
Accrued Liabilities
Accrued liabilities consisted of the following:
June 30, 2023December 31, 2022
(In thousands)
Accrued capital expenditures$10,790 $16,744 
Accrued lease operating expenses6,687 4,607 
Accrued general and administrative costs4,914 2,286 
Accrued inventory2,284 6,235 
Accrued ad valorem tax2,635 3,789 
Other accrued expenditures1,570 1,921 
Total accrued liabilities$28,880 $35,582 
Other Current Liabilities
Other current liabilities consisted of the following:
June 30, 2023December 31, 2022
(In thousands)
Advances from joint interest owners$360 $192 
Income taxes payable4,291 1,194 
Current ARO liabilities1,486 314 
Lease liabilities789 538 
Accounts payable - related parties290 324 
Total other current liabilities$7,216 $2,562 
Asset Retirement Obligations
Components of the changes in ARO consisted of the following and is shown below:
June 30, 2023December 31, 2022
(In thousands)
ARO, beginning balance$3,038 $2,453 
Liabilities incurred32 358 
Liabilities assumed in acquisitions19,359 — 
Revision of estimated obligations— 326 
Liability settlements and disposals(501)(178)
Accretion563 79 
ARO, ending balance22,491 3,038 
Less: current ARO(1)
(1,486)(314)
ARO, long-term$21,005 $2,724 
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(1)Current ARO is included within other current liabilities on the accompanying condensed consolidated balance sheets.
Revenue Recognition
The following table presents oil and natural gas sales disaggregated by product:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
(In thousands)
Oil and natural gas sales:
Oil$97,830 $82,501 $162,803 $144,877 
Natural gas40 2,850 564 4,639 
Natural gas liquids1,442 2,430 2,357 4,910 
Total oil and natural gas sales, net$99,312 $87,781 $165,724 $154,426 
Deferred financing costs
Long-term debt includes capitalized costs related to the issuance of $200 million of 10.50% senior unsecured notes with final maturity due 2028 ("Senior Notes"), net of accumulated amortization. The costs associated with the Senior Notes are netted against the Senior Notes balance and are amortized over the term of the Senior Notes using the effective interest method. See Note 9 - Long-Term Debt for additional information.
Recent Accounting Pronouncements