Property and Equipment

9 Months Ended

Mar. 31, 2023

Property and Equipment

Property and Equipment

Note 4. Property and Equipment

Property and equipment as of March 31, 2023 and June 30, 2022 consisted of the following (in thousands):

	March 31, 2023		June 30, 2022
Oil and natural gas properties
Property costs subject to amortization	$	193,039	$	188,634
Less: Accumulated depletion, depreciation, and impairment		(87,724)		(78,126)
Oil and natural gas properties, net	$	105,315	$	110,508

As of March 31, 2023 and June 30, 2022, all oil and natural gas property costs were subject to amortization. Depletion of oil and natural gas properties was $9.6 million and $4.1 million for the nine months ended March 31, 2023 and 2022, respectively.

During the nine months ended March 31, 2023 and 2022, the Company incurred development capital expenditures of $4.4 million and $0.8 million, respectively.

The Company uses the full cost method of accounting for its investments in oil and natural gas properties. All costs of acquisition, exploration, and development of oil and natural gas reserves are capitalized as the cost of oil and natural gas and properties when incurred. To the extent capitalized costs of evaluated oil and natural gas properties, net of accumulated depletion, exceed the discounted future net revenues of proved oil and natural gas reserves, net of deferred taxes, such excess capitalized costs would be charged to expense as a write-down of oil and natural gas properties.

At March 31, 2023, the ceiling test value of the Company’s reserves was calculated based on the first-day-of-the-month average for the 12-months ended March 31, 2023 of the West Texas Intermediate (“WTI”) crude oil spot price of $91.38 per barrel and Henry Hub natural gas spot price of $5.97 per MMBtu, adjusted by market differentials by field. The net price per barrel of NGLs was $47.07, which was based on historical differentials to WTI as NGLs do not have any single comparable reference index price. Using these prices, at March 31, 2023 the cost center ceiling was higher than the capitalized costs of oil and natural gas properties, and as a result, no write-down was necessary.

At March 31, 2022, the ceiling test value of the Company’s reserves was calculated based on the first-day-of the month average for the 12-months ended March 31, 2022 of the WTI crude oil spot price of $75.28 per barrel and Henry Hub natural gas spot price of $4.15 per MMBtu, adjusted by market differentials by field. The net price per barrel of NGLs was $40.07, which was based on historical prices received as NGLs do not have any single comparable reference index price. Using these prices, at March 31, 2022 the cost center ceiling was higher than the capitalized costs of oil and natural gas properties, and as a result, no write-down was necessary.