Each share of Class C Common Stock has no economic rights, but entitles the holder to one vote for each share of Class C Common Stock. Each Sitio OpCo Partnership Unit holder, subject to certain limitations, has a redemption right to cause Sitio to acquire all or a portion of its Sitio OpCo Partnership Units for, at Sitio’s election, (i) shares of our Class A Common Stock at a redemption ratio of one share of Class A Common Stock for together, one Sitio OpCo Partnership Unit and one share of Class C Common Stock, or (ii) an equivalent amount of cash.

Temporary equity represents ownership interests held in the form of Class C Common Stock and Sitio OpCo Partnership Units. Prior to the Brigham Merger, Class C Common Stock was classified as temporary equity in the consolidated balance sheet as the redemption rights of each holder of Sitio OpCo Partnership Units for either shares of Class A Common Stock or an equivalent amount of cash was not solely within the Company’s control. This was due to the fact that the holders of Class C Common Stock controlled a majority of the votes of the Board through ownership of a majority of the voting stock, which allowed the holders of Class C Common Stock to effectively control the determination of whether a redemption would be settled in shares of Class A Common Stock or an equivalent amount of cash.

In connection with the Brigham Merger, prior Class B common stockholders in Brigham received Class C Common Stock and a corresponding number of Sitio OpCo Partnership Units. Prior Brigham Class A common stockholders received Sitio Class A Common Stock. Subsequent to the Brigham Merger transactions, the holders of Class C Common Stock no longer hold a majority of the voting

shares outstanding and their representation on the Board is less than a majority. As a result, holders of the Company’s Class C Common Stock no longer effectively control the determination of whether a redemption would be settled in Shares of Class A Common Stock or an equivalent amount of cash. Consequently, after December 29, 2022, interests held in the form of Class C Common Stock and Sitio OpCo Partnership Units are presented as noncontrolling interest in the consolidated balance sheets.

Temporary equity is recorded at the greater of the carrying value or redemption amount with a corresponding adjustment to retained earnings or if a retained deficit to additional paid-in capital. From the date of the Falcon Merger through December 28, 2022, the Company recorded adjustments to the value of temporary equity as presented in the table below (in thousands):


	Temporary equity adjustments
Balance – June 7, 2022(1)	$	1,395,799
Share-based compensation		1,283
Conversion of Class C Common Stock to Class A Common Stock		(34,038	)
Net income attributable to temporary equity		90,377
Distributions to holders of temporary equity		(115,375	)
Adjustment of temporary equity to redemption amount		706,940
Reclassification to noncontrolling interest (2)		(2,044,986	)
Balance – December 28, 2022	$	—

(1) Based on 71,752,285 shares of Class C Common Stock outstanding at June 7, 2022.

(2) Based on 70,390,316 shares of Class C Common Stock outstanding and Class A Common Stock 5-day volume-weighted average price of $29.05 at December 28, 2022. The December 28, 2022 redemption value of temporary equity became the carrying value of noncontrolling interest.

Noncontrolling interest as of December 31, 2023 represents the 47.6% economic interest of the units of Sitio OpCo not owned by Sitio in the consolidated balance sheets. These interests are held in the form of Class C Common Stock and Sitio OpCo Partnership Units.

Noncontrolling interest is recorded at its carrying value. On December 29, 2022, the redemption value of temporary equity of $2.0 billion became the carrying value of noncontrolling interest. For the period December 29, 2022 to December 31, 2022, the carrying value of noncontrolling interest increased by $119.3 million as a result of the Brigham Merger transaction and decreased due to a loss of $51,000 attributable to noncontrolling interest. As of December 31, 2022 the carrying value of noncontrolling interest was $2.2 billion.

For the year ended December 31, 2023, the Company recorded adjustments to the value of noncontrolling interest as presented in the table below (in thousands):


	Noncontrolling Interest
Balance – December 31, 2022	$	2,164,228
Net income		(31,159	)
Share-based compensation		2,252
Conversion of Class C Common Stock to Class A Common Stock		(59,566	)
Distributions to noncontrolling interest		(158,968	)
Issuance of Class C Common Stock in connection with acquisition		70,739
Balance – December 31, 2023	$	1,987,526