Revenue Recognition

12 Months Ended

Jun. 30, 2022

Revenue Recognition

Revenue Recognition

Note 3. Revenue Recognition

The Company’s revenues are primarily generated from its crude oil, natural gas and NGL production from the Delhi Field in Northeast Louisiana, the Hamilton Dome Field in Wyoming, the Barnett Shale properties located in North Texas, the Williston Basin properties in North Dakota, and the Jonah Field in Sublette County, Wyoming. Additionally, an overriding royalty interest retained in a past divestiture of Texas properties historically provided de minimis revenue, with the exception of the three months ended December 31, 2021 in which the Company received $1.1 million for past royalties that accumulated over a period of approximately three years. These past royalties were recorded as operating revenues within the consolidated statements of operations for the year ended June 30, 2022. Going forward, the Company expects de minimis revenue from these royalty interests. The following table disaggregates the Company’s revenues by major product for the years ended June 30, 2022 and 2021 (in thousands):

	Years Ended June 30,
	2022		2021
Revenues
Crude oil	$	52,683	$	26,411
Natural gas		39,174		2,629
Natural gas liquids		17,069		3,662
Total revenues	$	108,926	$	32,702

As of June 30, 2022, as a non-operator, the Company did not take production in-kind and did not negotiate contracts with customers for its production from the Delhi Field, the Hamilton Dome Field, the Barnett Shale properties or the Willison Basin properties. The Company recognizes crude oil, natural gas, and NGL production revenue at the point in time when custody and title (“control”) of the product transfers to the customer. The sales of oil and natural gas are made under contracts which the Company’s third-party operators of its wells have negotiated with customers, which typically include variable consideration that is based on pricing tied to local indices and volumes delivered in the current month. The Company receives payment from the sale of oil and natural gas production one to two months after delivery.

In the Jonah Field, the Company has elected to take its natural gas and NGL working interest production in-kind and markets separately to different purchasers for natural gas and to Enterprise Products Partners L.P. (“Enterprise”) for its NGLs.

Judgments made in applying the guidance in ASC 606, Revenue from Contracts with Customers, relate primarily to determining the point in time when control of product transfers to the customer. The Company does not believe that significant judgments are required with respect to the determination of the transaction price, including amounts that represent variable consideration, as volume and price carry a low level of estimation uncertainty given the precision of volumetric measurements and the use of index pricing with predictable differentials. Accordingly, the Company does not consider estimates of variable consideration to be constrained.

The Company’s contractual performance obligations arise upon the production of hydrocarbons from wells in which the Company has an ownership interest. The performance obligations are considered satisfied at a point in time upon control transferring to a customer at a specified delivery point. Consideration is allocated to completed performance obligations at the end of an accounting period.

Revenue is recorded in the month when contractual performance obligations are satisfied. However, settlement statements from the purchasers of hydrocarbons and the related cash consideration are received by field operators before distributing the Company’s share one to two months after production has occurred, which is typical in the oil and natural gas industry. As a result, the Company must estimate the amount of production delivered to the customer and the consideration that will ultimately be received for the sale of the product. To estimate accounts receivable from operators’ contracts with customers, the Company uses knowledge of its properties, information from field operators, historical performance, contractual arrangements, index pricing, quality and transportation differentials, and other factors as the basis for these estimates. Because the contractual performance obligations have been satisfied and an unconditional right to consideration exists as of the balance sheet date, the Company recognized amounts due from contracts with field operators as “Receivables from crude oil, natural gas, and natural gas liquids sales” on the consolidated balance sheets. Differences between estimates and actual amounts received for product sales are recorded in the month that payment is received from the purchaser as remitted to the Company by field operators.