Segment Reporting

12 Months Ended

Dec. 31, 2022

Segment Reporting [Abstract]

Segment Reporting

The Company operates in two business segments: (i) exploration and production and (ii) midstream. The exploration and production segment is engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States and is currently focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. The Company also operates in the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana. The midstream segment conducts midstream operations in support of the Company’s exploration, development and production operations and provides

natural gas processing, oil transportation services, oil, natural gas and produced water gathering services and produced water disposal services to third parties. Substantially all of the Company’s midstream operations in the Rustler Breaks, Wolf and Stateline asset areas and the Greater Stebbins Area in the Delaware Basin, which comprise most of the Company’s midstream operations, are conducted through San Mateo (see Note 6). In addition, on June 30, 2022, an indirect wholly-owned subsidiary of the Company acquired a cryogenic gas processing plant, three compressor stations and approximately 45 miles of natural gas gathering pipelines in Lea and Eddy Counties, New Mexico as part of the Pronto Acquisition. Neither San Mateo nor Pronto is a guarantor of the Notes.

The following tables present selected financial information for the periods presented regarding the Company’s business segments on a stand-alone basis, corporate expenses that are not allocated to a segment and the consolidation and elimination entries necessary to arrive at the financial information for the Company on a consolidated basis (in thousands). On a consolidated basis, midstream services revenues consist primarily of those revenues from midstream operations related to third parties, including working interest owners in the Company’s operated wells. All midstream services revenues associated with Company-owned production are eliminated in consolidation. In evaluating the operating results of the exploration and production and midstream segments, the Company does not allocate certain expenses to the individual segments, including general and administrative expenses. Such expenses are reflected in the column labeled “Corporate.”

	Exploration and Production						Consolidations and Eliminations		Consolidated Company
			Midstream		Corporate
Year Ended December 31, 2022
Oil and natural gas revenues	$	2,897,336	$	8,402	$	—	$	—	$	2,905,738
Midstream services revenues	—		298,184		—		(207,578)		90,606
Sales of purchased natural gas	116,772		83,583		—		—		200,355
Realized loss on derivatives	(157,483)		—		—		—		(157,483)
Unrealized gain on derivatives	18,809		—		—		—		18,809
Expenses(1)	1,177,104		227,556		101,673		(207,578)		1,298,755
Operating income(2)	$	1,698,330	$	162,613	$	(101,673)	$	—	$	1,759,270
Total assets(3)	$	4,022,609	$	1,016,580	$	515,316	$	—	$	5,554,505
Capital expenditures(4)	$	903,518	$	158,544	$	1,213	$	—	$	1,063,275

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(1)Includes depletion, depreciation and amortization expenses of $429.7 million and $34.7 million for the exploration and production and midstream segments, respectively. Also includes corporate depletion, depreciation and amortization expenses of $2.0 million.

(2)Includes $72.1 million in net income attributable to non-controlling interest in subsidiaries related to the midstream segment.

(3)Excludes intercompany receivables and investments in subsidiaries.

(4)Includes $131.0 million attributable to land and seismic acquisition expenditures related to the exploration and production segment, $75.8 million in midstream acquisition expenditures and $39.6 million in capital expenditures attributable to non-controlling interest in subsidiaries related to the midstream segment.

	Exploration and Production						Consolidations and Eliminations		Consolidated Company
			Midstream		Corporate
Year Ended December 31, 2021
Oil and natural gas revenues	$	1,695,032	$	5,510	$	—	$	—	$	1,700,542
Midstream services revenues	—		228,817		—		(153,318)		75,499
Sales of purchased natural gas	47,398		38,636		—		—		86,034
Realized loss on derivatives	(220,105)		—		—		—		(220,105)
Unrealized gain on derivatives	21,011		—		—		—		21,011
Expenses(1)	794,880		142,444		85,899		(153,318)		869,905
Operating (loss) income(2)	$	748,456	$	130,519	$	(85,899)	$	—	$	793,076
Total assets(3)	$	3,324,681	$	879,672	$	57,800	$	—	$	4,262,153
Capital expenditures(4)	$	778,191	$	59,361	$	376	$	—	$	837,928

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(1)Includes depletion, depreciation and amortization expenses of $310.9 million and $31.5 million for the exploration and production and midstream segments, respectively. Also includes corporate depletion, depreciation and amortization expenses of $2.6 million.

(2)Includes $55.7 million in net income attributable to non-controlling interest in subsidiaries related to the midstream segment.

(3)Excludes intercompany receivables and investments in subsidiaries.

(4)Includes $263.5 million attributable to land and seismic acquisition expenditures related to the exploration and production segment and $28.5 million in capital expenditures attributable to non-controlling interest in subsidiaries related to the midstream segment.

	Exploration and Production						Consolidations and Eliminations		Consolidated Company
			Midstream		Corporate
Year Ended December 31, 2020
Oil and natural gas revenues	$	741,092	$	3,369	$	—	$	—	$	744,461
Midstream services revenues	—		166,194		—		(101,262)		64,932
Sales of purchased natural gas	20,736		21,006		—		—		41,742
Lease bonus - mineral acreage	4,062		—		—		—		4,062
Realized gain on derivatives	38,937		—		—		—		38,937
Unrealized loss on derivatives	(32,008)		—		—		—		(32,008)
Expenses(1)	1,334,378		97,599		52,910		(101,262)		1,383,625
Operating income (loss)(2)	$	(561,559)	$	92,970	$	(52,910)	$	—	$	(521,499)
Total assets(3)	$	2,782,819	$	836,509	$	67,952	$	—	$	3,687,280
Capital expenditures(4)	$	518,198	$	201,440	$	2,200	$	—	$	721,838

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(1)Includes depletion, depreciation and amortization expenses of $335.8 million and $23.3 million for the exploration and production and midstream segments, respectively. Includes full-cost ceiling impairment of $684.7 million for the exploration and production segment. Also includes corporate depletion, depreciation and amortization expenses of $2.7 million.

(2)Includes $39.6 million in net income attributable to non-controlling interest in subsidiaries related to the midstream segment.

(3)Excludes intercompany receivables and investments in subsidiaries.

(4)Includes $70.5 million attributable to land and seismic acquisition expenditures related to the exploration and production segment and $112.1 million in capital expenditures attributable to non-controlling interest in subsidiaries related to the midstream segment.