ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(state or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
(Address of principal executive offices) |
(Zip Code) |
Title of each class |
Trading Symbol |
Name of each Exchange on which registered | ||
Large Accelerated Filer |
☐ |
Accelerated Filer |
☐ | |||
Non-Accelerated Filer |
☒ | Smaller Reporting Company |
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Emerging growth company |
PART I | ||||||
Item 1. |
1 | |||||
Item 1A. |
14 | |||||
Item 1B. |
28 | |||||
Item 2. |
28 | |||||
Item 3. |
35 | |||||
Item 4. |
35 | |||||
PART II | ||||||
Item 5. |
36 | |||||
Item 6. |
37 | |||||
Item 7. |
37 | |||||
Item 7A. |
43 | |||||
Item 8. |
43 | |||||
Item 9. |
43 | |||||
Item 9A. |
43 | |||||
Item 9B. |
44 | |||||
PART III | ||||||
Item 10. |
45 | |||||
Item 11. |
45 | |||||
Item 12. |
45 | |||||
Item 13. |
45 | |||||
Item 14. |
45 | |||||
PART IV | ||||||
Item 15. |
46 | |||||
SIGNATURES | 50 | |||||
FINANCIAL STATEMENTS: | ||||||
F-1 |
• | The market prices of oil, natural gas, NGLs, and other products or services, |
• | Our commodity hedging arrangements |
• | The supply and demand for oil, natural gas, NGLs, and other products or services |
• | Production and reserve levels; |
• | Drilling risks; |
• | Economic and competitive conditions; |
• | The availability of capital resources; |
• | Capital expenditure and other contractual obligations; |
• | Weather conditions’ |
• | Inflation rates; |
• | The availability of goods and services; |
• | Legislative, regulatory or policy changes; |
• | Terrorism or cyber attacks |
• | Occurrence of property acquisitions or divestitures; |
• | The integration of acquisitions; |
• | The securities or capital markets and related risks such as general credit, liquidity, market and interest-rate risks; and |
• | Other factors disclosed under Items 1 and 2—Business and Properties—Estimated Proved Reserves and Future Net Cash Flows, Item 1A—Risk Factors, Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this Form 10-K |
Item 1. |
BUSINESS. |
Oil Purchasers: |
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Apache Corporation |
48 | % | ||
Plains All American Inc. |
18 | % | ||
Gas Purchasers: |
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Apache Corporation |
52 | % | ||
Targa Pipeline Mid-Continent West Tex, LLC |
19 | % |
Item 1A. |
RISK FACTORS. |
• | the level of consumer product demand; |
• | weather conditions; |
• | political conditions in natural gas and oil producing regions, including the Middle East, Africa and South America; |
• | the ability of the members of the Organization of Petroleum Exporting Countries to agree to and maintain oil price and production controls; |
• | the price levels and quantities of foreign imports; |
• | actions of governmental authorities; |
• | the availability, proximity and capacity of gathering, transportation, processing and/or refining facilities in regional or localized areas that may affect the realized price for natural gas and oil; |
• | inventory storage levels; |
• | the nature and extent of domestic and foreign governmental regulations and taxation, including environmental and climate change regulation; |
• | the price, availability and acceptance of alternative fuels; |
• | technological advances affecting energy consumption; |
• | speculation by investors in oil and natural gas; |
• | variations between product prices at sales points and applicable index prices; |
• | overall economic conditions and |
• | global or national health concerns, including the outbreak of pandemic or contagious disease, such as the coronavirus. |
• | decreases in natural gas and oil prices; |
• | unexpected drilling conditions, pressure or irregularities in formations; |
• | equipment failures or accidents; |
• | adverse weather conditions; |
• | loss of title or other title related issues; |
• | surface access restrictions; |
• | lack of available gathering or processing facilities or delays in the construction thereof; |
• | compliance with, or changes in, governmental requirements and regulation, including with respect to wastewater disposal, discharge of greenhouse gases and fracturing; and |
• | shortages or delays in the availability of required goods or services such as drilling rigs or crews, the delivery of equipment and the availability of sufficient water for drilling operations. |
• | the results of exploration efforts and the acquisition, review and analysis of the seismic data; |
• | the availability of sufficient capital resources to us and the other participants for the drilling of the prospects; |
• | the approval of the prospects by other participants after additional data has been compiled; |
• | economic and industry conditions at the time of drilling, including prevailing and anticipated prices for natural gas and oil and the availability of drilling rigs and crews; |
• | our financial resources and results; and |
• | the availability of leases and permits on reasonable terms for the prospects. |
• | the quality and quantity of available data; |
• | the interpretation of that data; |
• | the accuracy of various mandated economic assumptions; and |
• | the judgment of the persons preparing the estimate. |
• | blowouts, cratering and explosions; |
• | mechanical problems; |
• | uncontrolled flows of natural gas, oil or well fluids; |
• | formations with abnormal pressures; |
• | pollution and other environmental risks; and |
• | natural disasters. |
• | a counterparty is unable to satisfy its obligations |
• | production is less than expected; or |
• | there is an adverse change in the expected differential between the underlying price in the derivative instrument and actual prices received for our production. |
Item 1B. |
UNRESOLVED STAFF COMMENTS. |
Item 2. |
PROPERTIES. |
2021 |
2020 |
2019 |
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Gross |
Net |
Gross |
Net |
Gross |
Net |
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Exploratory: |
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Oil |
— | — | — | — | — | — | ||||||||||||||||||
Gas |
— | — | — | — | — | — | ||||||||||||||||||
Dry |
— | — | — | — | — | — | ||||||||||||||||||
Development: |
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Oil |
12 | 4.61 | 1 | 0.1 | 18 | 1.6 | ||||||||||||||||||
Gas |
— | — | — | — | — | — | ||||||||||||||||||
Dry |
— | — | — | — | — | — | ||||||||||||||||||
Total: |
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Oil |
12 | 4.61 | 1 | 0.1 | 18 | 1.6 | ||||||||||||||||||
Gas |
— | — | — | — | — | — | ||||||||||||||||||
Dry |
— | — | — | — | — | — | ||||||||||||||||||
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12 | 4.61 | 1 | 0.1 | 18 | 1.6 | |||||||||||||||||||
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Gross |
Net |
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Producing wells (1) : |
||||||||
Oil Wells |
926 | 498 | ||||||
Gas Wells |
281 | 66 |
(1) |
A gross well is a well in which a working interest is owned. A net well is the sum of the fractional revenue interests owned in gross wells. Wells are classified by their primary product. Some wells produce both oil and gas. |
2021 |
2020 |
2019 |
||||||||||
Oil (barrels) |
738,000 | 726,996 | 1,242,000 | |||||||||
NGL (barrels) |
416,000 | 435,260 | 574,000 | |||||||||
Gas (Mcf) |
3,236,000 | 3,374,397 | 4,397,000 |
2021 |
2020 |
2019 |
||||||||||
Average sales price per barrel of oil |
$ | 68.39 | $ | 38.02 | $ | 55.04 | ||||||
Average sales price per barrel of NGL |
$ | 26.97 | $ | 11.22 | $ | 15.87 | ||||||
Average sales price per Mcf of natural gas |
$ | 3.53 | $ | 1.24 | $ | 1.49 | ||||||
Average production costs per net equivalent barrel of oil (1) |
$ | 13.76 | $ | 12.25 | $ | 11.52 |
(1) |
Net equivalent barrels are computed at a rate of 6 Mcf per barrel and costs exclude production taxes. |
2021 |
2020 |
2019 |
||||||||||
Average sales price per barrel of oil |
$ | 64.04 | $ | 45.79 | $ | 53.58 | ||||||
Average sales price per barrel of NGL |
$ | 26.97 | $ | 11.22 | $ | 16.49 | ||||||
Average sales price per Mcf of natural gas |
$ | 2.97 | $ | 1.38 | $ | 1.51 |
Developed |
Undeveloped |
Total |
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Gross |
Net |
Gross |
Net |
Gross |
Net |
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Leasehold acreage |
90,933 | 25,358 | — | — | 90,933 | 25,358 | ||||||||||||||||||
Mineral fee acreage |
1,640 | 117 | 19,257 | 417 | 20,897 | 534 | ||||||||||||||||||
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|
|
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|
|
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Total |
92,573 | 25,475 | 19,257 | 417 | 111,830 | 25,892 | ||||||||||||||||||
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Reserve Category |
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Proved Developed |
Proved Undeveloped |
Total |
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As of December 31, |
Oil (MBbls) |
NGLs (MBbls) |
Gas (MMcf) |
Total (MBoe) |
Oil (MBbls) |
NGLs (MBbls) |
Gas (MMcf) |
Total (MBoe) |
Oil (MBbls) |
NGLs (MBbls) |
Gas (MMcf) |
Total (MBoe) |
||||||||||||||||||||||||||||||||||||
2019 |
4,381 | 2,914 | 19,995 | 10,268 | 1,833 | 1,017 | 4,547 | 3,608 | 6,214 | 3,931 | 24,542 | 14,235 | ||||||||||||||||||||||||||||||||||||
2020 |
2,684 | 2,258 | 13,633 | 7,214 | 1,784 | 787 | 3,897 | 3,221 | 4,468 | 3,045 | 17,530 | 10,435 | ||||||||||||||||||||||||||||||||||||
2021 |
5,386 | 2,882 | 23,902 | 12,252 | — | — | — | — | 5,386 | 2,882 | 23,902 | 12,252 |
(a) | In computing total reserves on a barrels of oil equivalent (Boe) basis, gas is converted to oil based on its relative energy content at the rate of six Mcf of gas to one barrel of oil and NGLs are converted based upon volume; one barrel of natural gas liquids equals one barrel of oil. |
Proved Developed |
Proved Undeveloped |
Total |
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As of December 31, |
Future Net Revenue |
Present Value 10 Of Future Net Revenue |
Future Net Revenue |
Present Value 10 Of Future Net Revenue |
Future Net Revenue |
Present Value 10 Of Future Net Revenue |
Present Value 10 Of Future Income Taxes |
Standardized Measure of Discounted Cash flow |
||||||||||||||||||||||||
2019 |
$ | 116,592 | $ | 82,155 | $ | 42,700 | $ | 17,876 | $ | 159,292 | $ | 100,031 | $ | 18,419 | $ | 81,612 | ||||||||||||||||
2020 |
$ | 43,886 | $ | 34,717 | $ | 37,346 | $ | 21,823 | $ | 81,232 | $ | 56,539 | $ | 14,920 | $ | 41,619 | ||||||||||||||||
2021 |
$ | 275,227 | $ | 171,906 | $ | — | $ | — | $ | 275,227 | $ | 171,906 | $ | 36,100 | $ | 135,806 |
Gulf Coast |
Mid- Continent |
West Texas |
Other |
Total |
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Proved Reserves as of December 31, 2021 (MBoe) |
||||||||||||||||||||
Developed |
906 | 2,383 | 8,957 | 6 | 12,252 | |||||||||||||||
Undeveloped |
— | — | — | — | — | |||||||||||||||
Total |
906 | 2,383 | 8,957 | 6 | 12,252 | |||||||||||||||
Average Net Daily Production (Boe per day) |
336 | 747 | 2,878 | 3 | 3,964 | |||||||||||||||
Gross Productive Wells (Working Interest and ORRI Wells) |
207 | 549 | 576 | 200 | 1,532 | |||||||||||||||
Gross Productive Wells (Working Interest Only) |
189 | 400 | 530 | 88 | 1,207 | |||||||||||||||
Net Productive Wells (Working Interest Only) |
105 | 189 | 263 | 6 | 564 | |||||||||||||||
Gross Operated Productive Wells |
137 | 195 | 321 | — | 653 | |||||||||||||||
Gross Operated Water Disposal, Injection and Supply wells |
7 | 44 | 6 | — | 57 |
Item 3. |
LEGAL PROCEEDINGS. |
Item 4. |
MINE SAFETY DISCLOSURES. |
Item 5. |
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. |
High |
Low |
|||||||
2021 |
||||||||
First Quarter |
$ | 98.00 | $ | 34.33 | ||||
Second Quarter |
53.72 | 39.89 | ||||||
Third Quarter |
73.80 | 45.20 | ||||||
Fourth Quarter |
71.71 | 58.50 | ||||||
2020 |
||||||||
First Quarter |
$ | 154.38 | $ | 47.68 | ||||
Second Quarter |
110.79 | 49.70 | ||||||
Third Quarter |
79.13 | 62.60 | ||||||
Fourth Quarter |
71.80 | 42.39 |
2021 Month |
Number of Shares |
Average Price Paid per share |
Maximum Number of Shares that May Yet Be Purchased Under The Program at Month-End |
|||||||||
January |
— | $ | — | 147,721 | ||||||||
February |
— | — | 147,721 | |||||||||
March |
— | — | 147,721 | |||||||||
April |
— | — | 147,721 | |||||||||
May |
— | — | 147,721 | |||||||||
June |
— | — | 147,721 | |||||||||
July |
— | — | 147,721 |
2021 Month |
Number of Shares |
Average Price Paid per share |
Maximum Number of Shares that May Yet Be Purchased Under The Program at Month-End |
|||||||||
August |
— | — | 147,721 | |||||||||
September |
— | — | 147,721 | |||||||||
October |
— | — | 147,721 | |||||||||
November |
— | — | 147,721 | |||||||||
December |
2,100 | 69.04 | 145,621 | |||||||||
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Total / Average |
2,100 | $ | 69.04 | |||||||||
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|
Item 6. |
SELECTED FINANCIAL DATA |
Item 7. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
2022 |
2023 |
2022 |
2023 |
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Swap Agreements |
||||||||||||||||
Natural Gas (MMBTU) |
1,528,000 | 377,000 | $ | 3.15 | $ | 3.87 | ||||||||||
Oil (barrels) |
530,600 | 114,200 | $ | 66.20 | $ | 74.07 |
Twelve months ended December 31, |
Increase / (Decrease) |
Increase / (Decrease) |
||||||||||||||
2021 |
2020 |
|||||||||||||||
Barrels of Oil Produced |
738,000 | 733,000 | 5,000 | 0.68 | % | |||||||||||
Average Price Received |
$ | 68.39 | $ | 38.02 | $ | 30.38 | 79.91 | % | ||||||||
Oil Revenue (In 000’s) |
$ | 50,474 | $ | 27,865 | $ | 22,609 | 81.14 | % | ||||||||
Mcf of Gas Sold |
3,236,000 | 3,381,000 | (145,000 | ) | (4.29 | )% | ||||||||||
Average Price Received |
$ | 3.53 | $ | 1.24 | $ | 2.29 | 184.25 | % | ||||||||
Gas Revenue (In 000’s) |
$ | 11,432 | $ | 4,202 | $ | 7,230 | 172.06 | % | ||||||||
Barrels of Natural Gas Liquids Sold |
416,000 | 437,000 | (21,000 | ) | (4.85 | )% | ||||||||||
Average Price Received |
$ | 26.97 | $ | 11.22 | $ | 15.75 | 140.36 | % | ||||||||
Natural Gas Liquids Revenue (In 000’s) |
$ | 11,220 | $ | 4,906 | $ | 6,314 | 128.70 | % | ||||||||
Total Oil & Gas Revenue (In 000’s) |
$ | 73,126 | $ | 36,973 | $ | 36,153 | 97.78 | % |
Twelve months ended December 31, |
||||||||
2021 |
2020 |
|||||||
Oil derivatives – realized (losses) gains |
$ | (3,212 | ) | $ | 5,697 | |||
Oil derivatives – unrealized (losses) gains |
(4,055 | ) | 161 | |||||
Total (losses) gains on oil derivatives |
$ | (7,267 | ) | $ | 5,858 | |||
Natural gas derivatives – realized (losses) gains |
(1,833 | ) | 476 | |||||
Natural gas derivatives – unrealized (losses) |
(859 | ) | (351 | ) | ||||
Total (losses) gains on natural gas derivatives |
$ | (2,692 | ) | $ | 125 | |||
Total (losses) gains on oil and natural gas |
$ | (9,959 | ) | $ | 5,983 | |||
2021 |
2020 |
Increase / (Decrease) |
Increase / (Decrease) |
|||||||||||||
Oil Price |
$ | 64.04 | $ | 45.79 | $ | 18.25 | 39.9 | % | ||||||||
Gas Price |
$ | 2.97 | $ | 1.38 | $ | 1.58 | 114.4 | % | ||||||||
NGL Price |
$ | 26.97 | $ | 11.22 | $ | 15.75 | 140.4 | % |
Item 7A. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. |
Item 8. |
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. |
Item 9. |
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. |
Item 9A. |
CONTROLS AND PROCEDURES. |
Item 9B. |
OTHER INFORMATION. |
Item 10. |
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. |
Item 11. |
EXECUTIVE COMPENSATION. |
Item 12. |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. |
Item 13. |
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. |
Item 14. |
PRINCIPAL ACCOUNTANT FEES AND SERVICES. |
Item 15. |
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. |
1. | Financial statements (Index to Consolidated Financial Statements at page F-1 of this Report) |
2. | Financial Statement Schedules (Index to Consolidated Financial Statements – Supplementary Information at page F-1 of this Report) |
3. | Exhibits: |
Exhibit No. |
||
101.INS | Inline XBRL (eXtensible Business Reporting Language) Instance Document (filed herewith) | |
101.SCH | Inline XBRL Taxonomy Extension Schema Document (filed herewith) | |
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document (filed herewith) | |
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document (filed herewith) | |
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document (filed herewith) | |
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document (filed herewith) | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
PrimeEnergy Resources Corporation | ||
By: | /s/ Charles E. Drimal, Jr. | |
Charles E. Drimal, Jr. | ||
Chairman, Chief Executive Officer and President |
/s/ Charles E. Drimal, Jr. Charles E. Drimal, Jr. |
Chairman, Chief Executive Officer and President; The Principal Executive Officer | |
/s/ Beverly A. Cummings Beverly A. Cummings |
Director, Executive Vice President and Treasurer; The Principal Financial Officer |
/s/ Clint Hurt Clint Hurt |
Director | /s/ Thomas S. T. Gimbel Thomas S. T. Gimbel |
Director | |||
/s/ H. Gifford Fong H. Gifford Fong |
Director |
F-2 |
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Financial Statements |
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F-5 |
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F-6 |
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F-7 |
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F-8 |
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F-9 |
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Supplementary Information: |
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F-22 |
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F-22 |
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F-22 |
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F-23 |
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F-24 |
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F-24 |
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F-25 |
Depreciation, Depletion and Amortization and Impairment of Property and Equipment | ||
Description of the Matter |
At December 31, 2021, the carrying value of the Company’s property and equipment was $184.7 million, and depreciation, depletion and amortization (DD&A) expense was $26.3 million for the year then ended. As described in Note 1, the Company follows the “successful efforts” method of accounting for its oil and gas properties. Under the “successful efforts” method, costs of acquiring undeveloped oil and gas leasehold acreage, including lease bonuses, brokers’ fees and other related costs, are capitalized. Provisions for impairment of undeveloped oil and gas leases are based on periodic evaluations. Annual lease rentals and exploration expenses, including geological and geophysical expenses and exploratory dry hole costs, are charged against income as incurred. Costs of drilling and equipping productive wells, including development of dry holes and related production facilities, are capitalized. All other property and equipment are carried at cost. Depreciation and depletion of oil and gas production equipment and properties are determined under the unit-of-production method based on estimated proved developed recoverable oil and gas reserves. Depreciation of all other equipment is determined under the straight-line method using various rates based on useful lives generally ranging from 5 to 10 years. The cost of assets and related accumulated depreciation is removed from the accounts when such assets are disposed of, and any related gains or losses are reflected in current earnings. Interest costs related to financing major oil and gas projects in progress are capitalized until the projects are evaluated or until the projects are substantially complete and ready for their intended use if the projects are evaluated and successful. The Company reviews long-lived assets, including oil and gas properties, for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recovered. If the carrying amounts are not expected to be recovered by undiscounted cash flows, the assets are impaired, and an impairment loss is recorded. The amount of impairment is based on the estimated fair value of the assets determined by discounting anticipated future net cash flows. Proved oil and gas reserves directly impact financial accounting estimates, including depreciation, depletion and amortization. Proved reserves represent estimated quantities of natural gas, crude oil, condensate, and natural gas liquids that geological and engineering data demonstrate, with reasonable certainty, to be recoverable in future years from known reservoirs under economic and operating conditions existing at the time the estimates were made. The process of estimating quantities of proved oil and gas reserves is very complex, requiring significant subjective decisions in the evaluation of all available geological, engineering and economic data for each reservoir. The data for a given reservoir may also change substantially over time as a result of numerous factors including, but not limited to, additional development activity, evolving production history and continual reassessment of the viability of production under varying economic conditions. Consequently, material revisions (upward or downward) to existing reserve estimates may occur from time to time. Estimates of oil and gas reserves, as determined by independent petroleum engineers, are continually subject to revision based on price, production history and other factors. Depletion expense, which is computed based on the units of production method, could be significantly impacted by changes in such estimates. Additionally, U.S. generally accepted accounting principles require that if the expected future undiscounted cash flows from an asset are less than its carrying cost, that asset must be written down to its fair market value. As the fair market value of an oil and gas property will usually be significantly less than the total undiscounted future net revenues expected from that asset, slight changes in the estimates used to determine future net revenues from an asset could lead to the necessity of recording a significant impairment of that asset. Auditing the Company’s DD&A and impairment calculations is complex because of the use of independent petroleum engineers and the evaluation of management’s determination of the inputs described above used by the engineers in estimating oil and gas reserves. |
How We Addressed the Matter in Our Audit |
We obtained an understanding and evaluated the design of the Company’s controls over its process to calculate DD&A and impairment, including management’s controls over the completeness and accuracy of the financial data utilized by the engineers in estimating oil and gas reserves. Our audit procedures included, among others, evaluating the professional qualifications and objectivity of the Company’s independent petroleum engineers responsible for the preparation of the proved oil and gas reserve estimates for select properties. In addition, we compared the Company’s recent production with its reserve estimates for properties that have significant production or significant reserve quantities and inquired of disproportionate ratios that did not align with our expectations. We also tested the mathematical accuracy of the DD&A and impairment calculations, including comparing the oil and gas reserve amounts used in the calculations to the Company’s reserve reports. | |
Accounting for Asset Retirement Obligations | ||
Description of the Matter |
At December 31, 2021, the asset retirement obligation (ARO) balance totaled $14.3 million. As further described in Note 1, the Company’s ARO primarily represents the estimated present value of the amount the Company will incur to plug, abandon, and remediate producing properties at the end of their productive lives, in accordance with applicable state laws. The Company determined its asset retirement obligation by calculating the present value of estimated cash flows related to the liability. The asset retirement obligation is recorded as a liability at its estimated present value at its inception, with an offsetting increase to producing properties. Periodic accretion of discount of the estimated liability is recorded as an expense in the statement of operations. The Company’s liability is determined using significant assumptions, including current estimates of plugging and abandonment costs, annual inflation of these costs, the productive life of wells and a risk-adjusted interest rate. Changes in any of these assumptions can result in significant revisions to the estimated asset retirement obligation. Revisions to the asset retirement obligation are recorded with an offsetting change to producing properties, resulting in prospective changes to depreciation, depletion and amortization expense and accretion of discount. Because of the subjectivity of assumptions and the relatively long life of most of the Company’s wells, the costs to ultimately retire the wells may vary significantly from previous estimates. Auditing the Company’s ARO is complex and highly judgmental because of the significant estimation by management in determining the obligation. In particular, the estimate was sensitive to significant subjective assumptions such as retirement cost estimates and the estimated timing of settlements, which are both affected by expectations about future market and economic conditions. | |
How We Addressed the Matter in Our Audit |
We obtained an understanding and evaluated the design of the Company’s internal controls over its ARO estimation process, including management’s review of the significant assumptions that have a material effect on the determination of the obligations. To test the ARO for the Company, our audit procedures included, among others, assessing the significant assumptions and inputs used in the valuation, such as retirement cost estimates and timing of settlement assumptions. Additionally, we compared the ARO against historical results, reviewed the reasonableness of the discount rate utilized in the estimate, considered the reasonableness of the current and long-term portion of the obligation by comparing the accretion expense trends, and considered the completeness of the properties included in the estimate by comparing to the Company’s reserve reports. |
As of December 31, |
||||||||
2021 |
2020 |
|||||||
ASSETS |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ |
$ |
||||||
Accounts receivable, net |
||||||||
Prepaid obligations |
||||||||
Other current assets |
||||||||
|
|
|
|
|||||
Total Current Assets |
||||||||
Property and Equipment |
||||||||
Oil and gas properties at cost |
||||||||
Less: Accumulated depletion and depreciation |
( |
) |
( |
) | ||||
|
|
|
|
|||||
|
|
|
|
|||||
Field and office equipment at cost |
||||||||
Less: Accumulated depreciation |
( |
) |
( |
) | ||||
|
|
|
|
|||||
|
|
|
|
|||||
Total Property and Equipment, Net |
||||||||
Derivative asset long-term and other assets |
||||||||
|
|
|
|
|||||
Total Assets |
$ |
$ |
||||||
|
|
|
|
|||||
LIABILITIES AND EQUITY |
||||||||
Current Liabilities |
||||||||
Accounts payable |
$ |
$ |
||||||
Accrued liabilities |
||||||||
Due to related parties |
||||||||
Current portion of long-term debt |
— |
|||||||
Current portion of asset retirement and other long-term obligations |
||||||||
Derivative liability short-term |
||||||||
|
|
|
|
|||||
Total Current Liabilities |
||||||||
Long-Term Bank Debt |
||||||||
Asset Retirement Obligations |
||||||||
Derivative Liability Long-Term |
||||||||
Deferred Income Taxes |
||||||||
Other Long-Term Obligations |
||||||||
|
|
|
|
|||||
Total Liabilities |
||||||||
Commitments and Contingencies |
||||||||
Equity |
||||||||
Common stock, $. . |
||||||||
Paid-in capital |
||||||||
Retained earnings |
||||||||
Treasury stock, at cost; 2021: |
( |
) |
( |
) | ||||
|
|
|
|
|||||
Total Stockholders’ Equity – PrimeEnergy |
||||||||
Non-controlling interest |
||||||||
|
|
|
|
|||||
Total Equity |
||||||||
|
|
|
|
|||||
Total Liabilities and Equity |
$ |
$ |
||||||
|
|
|
|
For the Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Revenues |
||||||||
Oil sales |
$ | $ | ||||||
Natural gas sales |
||||||||
Natural gas liquids sales |
||||||||
Realized gain (loss) on derivative instruments, net |
( |
) | ||||||
Field service income |
||||||||
Administrative overhead fees |
||||||||
Unrealized (loss) on derivative instruments |
( |
) | ( |
) | ||||
Other income |
||||||||
Total Revenues |
||||||||
Costs and Expenses |
||||||||
Lease operating expense |
||||||||
Field service expense |
||||||||
Depreciation, depletion, amortization and accretion on discounted liabilities |
||||||||
General and administrative expense |
||||||||
Total Costs and Expenses |
||||||||
Gain on Sale and Exchange of Assets |
||||||||
Income (Loss) from Operations |
( |
) | ||||||
Other Income and Expenses |
||||||||
Less: Interest expense |
( |
) | ( |
) | ||||
Add: Other income |
— | |||||||
Add: PPP Loan Forgiveness |
— | |||||||
Income (Loss) Before Provision for (Benefit from) Income Taxes |
( |
) | ||||||
Provision (Benefit from) Income Taxes |
( |
) | ||||||
Net Income (Loss) |
( |
) | ||||||
Less: Net Income (Loss) Attributable to Non-Controlling Interest |
( |
) | ||||||
Net Income (Loss) Attributable to PrimeEnergy |
$ | $ | ( |
) | ||||
Basic Income (Loss) Per Common Share |
$ | $ | ( |
) | ||||
Diluted Income (Loss) Per Common Share |
$ | $ | ( |
) | ||||
Shares Outstanding |
Common Stock |
Additional Paid-In Capital |
Retained Earnings |
Treasury Stock |
Total Stockholders’ Equity – PrimeEnergy |
Non- Controlling Interest |
Total Equity |
|||||||||||||||||||||||||
Balance at December 31, 2019 |
$ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||
Purchase |
( |
) | — | — | — | ( |
) | ( |
) | — | ( |
) | ||||||||||||||||||||
Net loss |
— | — | — | ( |
) | — | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||
Purchase of non-controlling interest |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||||
Distributions to non-controlling interest |
— | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||
Balance at December 31, 2020 |
$ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||
Purchase |
( |
) | — | — | — | ( |
) | ( |
) | — | ( |
) | ||||||||||||||||||||
Net Income |
— | — | — | — | ||||||||||||||||||||||||||||
Purchase of non-controlling interest |
— | — | — | ( |
) | ( |
) | |||||||||||||||||||||||||
Distributions to non-controlling interest |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||||||
Balance at December 31, 2021 |
$ | $ | $ | $ | ( |
) | $ | $ | $ | |||||||||||||||||||||||
For the Year Ended December 31, |
||||||||
2021 |
2020 |
|||||||
Cash Flows from Operating Activities: |
||||||||
Net Income (Loss) |
$ | $ | ( |
) | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
||||||||
Depreciation, depletion, amortization and accretion on discounted liabilities |
||||||||
Gain on sale of properties |
( |
) | ( |
) | ||||
Unrealized loss (gain) on derivative instruments |
||||||||
PPP Loan forgiveness |
( |
) |
— |
|||||
Provision for deferred income taxes |
||||||||
Changes in assets and liabilities: |
||||||||
Accounts receivable |
( |
) | ||||||
Due to related parties |
||||||||
Prepaid expenses and other assets |
( |
) | ||||||
Accounts payable |
( |
) | ||||||
Accrued liabilities |
( |
) | ||||||
Net Cash Provided by Operating Activities |
||||||||
Cash Flows from Investing Activities: |
||||||||
Capital expenditures, including exploration expense |
( |
) | ( |
) | ||||
Proceeds from sale of properties and equipment |
||||||||
Net Cash (Used in) provided by Investing Activities |
( |
) | ||||||
Cash Flows from Financing Activities: |
||||||||
Purchase of stock for treasury |
( |
) | ( |
) | ||||
Purchase of non-controlling interests |
( |
) | ( |
) | ||||
Increase in long-term bank debt and other long-term obligations |
||||||||
Repayment of long-term bank debt and other long-term obligations |
( |
) | ( |
) | ||||
Distribution to non-controlling interest |
( |
) | ( |
) | ||||
Net Cash (used in) Financing Activities |
( |
) | ( |
) | ||||
Net Increase (Decrease) in Cash and Cash Equivalents |
( |
) | ||||||
Cash and Cash Equivalents at the Beginning of the Year |
||||||||
Cash and Cash Equivalents at the End of the Year |
$ | $ | ||||||
Supplemental Disclosures: |
||||||||
Income taxes paid during the year |
$ | $ | ||||||
Interest paid during the year |
$ | $ | ||||||
Non-Cash Disclosures: |
||||||||
Purchase of non-controlling interest |
$ | $ | ||||||
Distribution of non-controlling interest in liquidated partnerships |
$ | $ |
December 31, |
||||||||
(Thousands of dollars) |
2021 |
2020 |
||||||
Joint interest billings |
$ | $ | ||||||
Trade receivables |
||||||||
Oil and gas sales |
||||||||
Other |
||||||||
Less: Allowance for doubtful accounts |
( |
) | ( |
) | ||||
Total |
$ | $ | ||||||
December 31, |
||||||||
(Thousands of dollars) |
2021 |
2020 |
||||||
Trade |
$ | $ | ||||||
Royalty and other owners |
||||||||
Partner advances |
||||||||
Other |
||||||||
Total |
$ | $ | ||||||
December 31, |
||||||||
(Thousands of dollars) |
2021 |
2020 |
||||||
Compensation and related expenses |
$ | $ | ||||||
Property costs |
||||||||
Taxes |
||||||||
Other |
||||||||
Total |
$ | $ | ||||||
(Thousands of dollars) |
Operating Leases |
|||
2022 |
$ | |||
2023 |
||||
Total undiscounted lease payments |
$ | |||
Less: Amount associated with discounting |
( |
) | ||
operating lease liabilities |
$ | |||
Year Ended December 31, |
||||||||
(Thousands of dollars) |
2021 |
2020 |
||||||
Asset retirement obligation at beginning of period |
$ | $ | ||||||
Liabilities incurred |
||||||||
Liabilities settled |
( |
) | ( |
) | ||||
Liabilities divested |
( |
) | ( |
) | ||||
Accretion expense |
||||||||
Revisions in estimated liabilities |
( |
) | ||||||
Asset retirement obligation at end of period |
$ | $ | ||||||
Year Ended December 31, |
||||||||
(Thousands of dollars) |
2021 |
2020 |
||||||
Current: |
||||||||
Federal |
$ | $ | ||||||
State |
||||||||
Total current |
||||||||
Deferred: |
||||||||
Federal |
( |
) | ||||||
State |
( |
) | ||||||
Total deferred |
( |
) | ||||||
Total income tax provision |
$ | $ | ( |
) | ||||
At December 31, |
||||||||
(Thousands of dollars) |
2021 |
2020 |
||||||
Deferred Tax Assets: |
||||||||
Accrued liabilities |
$ |
$ |
( |
) | ||||
Allowance for doubtful accounts |
||||||||
Derivative Contracts |
||||||||
State Net operating loss carry-forwards |
||||||||
Total deferred tax assets |
||||||||
Deferred Tax Liabilities: |
||||||||
Partnership basis difference |
( |
) | ||||||
Depletion and depreciation |
||||||||
Total deferred tax liabilities |
||||||||
Net deferred tax liabilities |
$ |
$ |
||||||
Year Ended December 31, |
||||||||
(Thousands of dollars) |
2021 |
2020 |
||||||
Expected tax expense |
$ | $ | ( |
) | ||||
Net changes in deferred assets and liabilities |
( |
) | ||||||
Permanent differences |
( |
) | ||||||
State income tax, net of federal benefit |
||||||||
Provision to return adjustment |
||||||||
Tax Credits |
( |
) | ( |
) | ||||
Other, net |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Total income tax provision (benefit) |
$ | $ | ( |
) | ||||
|
|
|
|
Oil: |
||||
Apache Corporation |
% | |||
Plains All American Inc. |
% | |||
Natural gas and liquids: |
||||
Apache Corporation |
% | |||
Targa Pipeline Mid-Continent West Tex, LLC |
% |
December 31, 2021 |
Quoted Prices in Active Markets For Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Balance at December 31, 2021 |
||||||||||||
(Thousands of dollars) |
||||||||||||||||
Assets |
||||||||||||||||
Commodity derivative contracts |
$ |
— |
$ |
— |
$ |
$ |
||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets |
$ |
— |
$ |
— |
$ |
$ |
||||||||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities |
||||||||||||||||
Commodity derivative contracts |
$ |
— |
$ |
— |
$ |
( |
) |
$ |
( |
) | ||||||
|
|
|
|
|
|
|
|
|||||||||
Total liabilities |
$ |
— |
$ |
— |
$ |
( |
) |
$ |
( |
) | ||||||
|
|
|
|
|
|
|
|
December 31, 2020 |
Quoted Prices in Active Markets For Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Balance at December 31, 2020 |
||||||||||||
(Thousands of dollars) |
||||||||||||||||
Assets |
||||||||||||||||
Commodity derivative contracts |
$ | — | $ | — | $ | $ |
||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets |
$ | — | $ | — | $ | $ |
||||||||||
|
|
|
|
|
|
|
|
|||||||||
Liabilities |
||||||||||||||||
Commodity derivative contract |
$ | — | $ | — | $ | ( |
) |
$ |
( |
) | ||||||
|
|
|
|
|
|
|
|
|||||||||
Total liabilities |
$ | — | $ | — | $ | ( |
) |
$ |
( |
) | ||||||
|
|
|
|
|
|
|
|
(Thousands of dollars) |
||||
Net Liabilities – December 31, 2020 |
$ | ( |
) | |
Total realized and unrealized gains (losses): |
||||
Included in earnings (a) |
( |
) | ||
Purchases, sales, issuances and settlements |
||||
Net Liabilities — December 31, 2021 |
$ | ( |
) | |
(a) | Derivative instruments are reported in revenues as realized gain/loss and on a separately reported line item captioned unrealized gain/loss on derivative instruments. |
Fair Value |
||||||||||
(Thousands of dollars) |
Balance Sheet Location |
December 31, 2021 |
December 31, 2020 |
|||||||
Asset Derivatives: |
||||||||||
Derivatives not designated as cash-flow hedging instruments: |
||||||||||
Natural gas commodity contracts |
Derivative asset long-term and |
$ |
— | $ |
||||||
Total |
$ |
— | $ |
|||||||
Liability Derivatives: |
||||||||||
Derivatives not designated as cash-flow hedging instruments: |
||||||||||
Crude oil commodity contracts |
Derivative liability short-term | $ |
( |
) |
$ |
( |
) | |||
Natural gas commodity contracts |
Derivative liability short-term | ( |
) |
( |
) | |||||
Crude oil commodity contracts |
Derivative liability long-term | ( |
) |
— | ||||||
Natural gas commodity contracts |
Derivative liability long-term | ( |
) |
( |
) | |||||
Total |
$ |
( |
) |
$ |
( |
) | ||||
Total derivative instruments |
$ |
( |
) |
$ |
( |
) |
(Thousands of dollars) |
Location of gain/loss recognized in income |
Amount of gain/loss recognized in income |
||||||||
2021 |
2020 |
|||||||||
Derivatives not designated as cash-flow hedge instruments: |
||||||||||
Natural gas commodity contracts |
Unrealized (loss) gain on derivative instruments, net | ( |
) | ( |
) | |||||
Crude oil commodity contracts |
Unrealized (loss) gain on derivative instruments, net | ( |
) | |||||||
Natural gas commodity contracts |
Realized (loss) on derivative instruments, net | ( |
) | |||||||
Crude oil commodity contracts |
Realized (loss) gain on derivative instruments, net | ( |
) | |||||||
$ | ( |
) | $ | |||||||
Year Ended December 31, |
||||||||||||||||||||||||
2021 |
2020 |
|||||||||||||||||||||||
Net Income (In 000’s) |
Weighted Average Number of Shares Outstanding |
Per Share Amount |
Net Income (In 000’s) |
Weighted Average Number of Shares Outstanding |
Per Share Amount |
|||||||||||||||||||
Basic |
$ | |
$ | $ | ( |
) | $ | ( |
) | |||||||||||||||
Effect of dilutive securities: |
||||||||||||||||||||||||
Options (a) |
— | — | ||||||||||||||||||||||
Diluted |
$ | $ | $ | ( |
) | $ | ( |
) | ||||||||||||||||
(a) |
The effect of the 0 , due to net loss for this period. |
As of December 31, |
||||||||
(Thousands of dollars) |
2021 |
2020 |
||||||
Proved Developed oil and gas properties |
$ |
$ | ||||||
Proved Undeveloped oil and gas properties |
||||||||
|
|
|
|
|||||
Total Capitalized Costs |
||||||||
Accumulated depreciation, depletion and valuation allowance |
( |
) |
( |
) | ||||
|
|
|
|
|||||
Net Capitalized Costs |
$ |
$ | ||||||
|
|
|
|
Year Ended December 31, |
||||||||
(Thousands of dollars) |
2021 |
2020 |
||||||
Development Costs |
$ |
$ |
As of December 31, |
||||||||
(Thousands of dollars) |
2021 |
2020 |
||||||
Future cash inflows |
$ |
$ | ||||||
Future production costs |
( |
) | ( |
) | ||||
Future development costs |
( |
) | ( |
) | ||||
Future income tax expenses |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Future Net Cash Flows |
||||||||
10% annual discount for estimated timing of cash flows |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Standardized Measure of Discounted Future Net Cash Flows |
$ |
$ | ||||||
|
|
|
|
Year Ended December 31, |
||||||||
(Thousands of dollars) |
2021 |
2020 |
||||||
Sales of oil and gas produced, net of production costs |
$ | ( |
) | $ | ( |
) | ||
Net changes in prices and production costs |
( |
) | ||||||
Extensions, discoveries and improved recovery |
||||||||
Revisions of previous quantity estimates |
( |
) | ||||||
Net change in development costs |
( |
) |
||||||
Reserves sold |
( |
) |
( |
) | ||||
Reserves purchased |
||||||||
Accretion of discount |
||||||||
Net change in income taxes |
( |
) | ||||||
Changes in production rates (timing) and other |
( |
) | ||||||
|
|
|
|
|||||
Net change |
( |
) | ||||||
Standardized measure of discounted future net cash flow: |
||||||||
Beginning of year |
||||||||
|
|
|
|
|||||
End of year |
$ |
$ | ||||||
|
|
|
|
As of December 31, |
||||||||||||||||||||||||
2021 |
2020 |
|||||||||||||||||||||||
Oil (MBbls) |
NGL’s (MBbls) |
Gas (MMcf) |
Oil (MBbls) |
NGLs (MBbls) |
Gas (MMcf) |
|||||||||||||||||||
Proved Developed Reserves: |
||||||||||||||||||||||||
Beginning of year |
||||||||||||||||||||||||
Extensions, discoveries and improved recovery |
||||||||||||||||||||||||
Revisions of previous estimates |
( |
) |
( |
) | ( |
) | ( |
) | ||||||||||||||||
Converted from undeveloped reserves |
||||||||||||||||||||||||
Reserves sold |
( |
) | ( |
) | ||||||||||||||||||||
Reserve purchased |
— |
— |
— |
|||||||||||||||||||||
Production |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
End of year |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Proved Undeveloped Reserves: |
||||||||||||||||||||||||
Beginning of year |
||||||||||||||||||||||||
Extensions, discoveries and improved recovery |
( |
) |
( |
) |
( |
) |
— | — | — | |||||||||||||||
Revisions of previous estimates |
( |
) | ( |
( |
) | |||||||||||||||||||
Converted to developed reserves |
( |
) |
( |
) |
( |
) |
( |
) | ( |
) | ( |
) | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Reserves Sold |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
End of year |
— |
— |
— |
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Proved Reserves at the End of the Year |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
||||||||
(Thousands of dollars) |
2021 |
2020 |
||||||
Revenue: |
||||||||
Oil and gas sales |
$ | |
$ | |||||
Costs and Expenses: |
|
|||||||
Lease operating expenses |
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Results of Operations from Producing Activities (excluding corporate overhead and interest costs) |
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EXHIBIT 10.22.5.10.7
SEVENTH AMENDMENT TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
dated as of
December 20, 2021
among
PRIMEENERGY RESOURCES CORPORATION,
as Borrower,
THE GUARANTORS PARTY HERETO,
THE LENDERS PARTY HERETO,
CITIBANK, N.A.,
as Administrative Agent,
and
CITIBANK, N.A.,
as Sole Lead Arranger and Sole Book Runner
SEVENTH AMENDMENT TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIS SEVENTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this Amendment) is entered into as of December 20, 2021, among PRIMEENERGY RESOURCES CORPORATION, a Delaware corporation (the Borrower), the Guarantors party hereto, CITIBANK, N.A., as Successor Administrative Agent (hereinafter defined) and as Issuing Bank, the financial institutions executing this Amendment as Lenders, and the financial institution executing this Amendment as an Exiting Lender.
R E C I T A L S
A. The Borrower, the Lenders party thereto and PNC Bank, National Association, successor to BBVA USA, as the administrative agent prior to the date hereof (in such capacity, the Prior Administrative Agent) are parties to that certain Third Amended and Restated Credit Agreement, dated as of February 15, 2017, and as amended by (i) that certain First Amendment to Third Amended and Restated Credit Agreement dated as of December 22, 2017, (ii) that certain Second Amendment to Third Amended and Restated Credit Agreement dated as of July 17, 2018, (iii) that certain Third Amendment to Third Amended and Restated Credit Agreement dated as of January 8, 2019, (iv) that certain Fourth Amendment to Third Amended and Restated Credit Agreement dated as of May 8, 2020, (v) that certain Fifth Amendment to Third Amended and Restated Credit Agreement dated as of September 4, 2020, and (vi) that certain Sixth Amendment to Third Amended and Restated Credit Agreement dated as of February 11, 2021 (collectively, the Original Credit Agreement).
B. Pursuant to that certain Resignation and Appointment Agreement dated as of even date herewith (the Resignation and Appointment Agreement), effective as of the Effective Date (hereinafter defined), the Prior Administrative Agent has agreed to resign as administrative agent under the Credit Agreement and the other Loan Documents, and Citibank, N.A., has agreed to accept appointment as successor administrative agent thereunder (in such capacity, the Successor Administrative Agent or Administrative Agent, as applicable).
C. The parties desire to amend the Original Credit Agreement as hereafter provided.
NOW THEREFORE, in consideration of these premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Same Terms. All terms used herein that are defined in the Credit Agreement (as hereinafter defined) shall have the same meanings when used herein, unless the context hereof otherwise requires or provides. In addition, from and after the Effective Date, (a) all references in the Original Credit Agreement and, where appropriate in the context, in the other Loan Documents to the Credit Agreement shall be deemed to be references to the Original Credit Agreement, as amended by this Amendment and as the same may hereafter be amended or otherwise modified from time to time, and (b) all references in the Loan Documents to the Loan Documents shall mean the Loan Documents, as amended by the Modification Papers and as the same may hereafter be amended or otherwise modified from time to time. In addition, the following terms have the meanings set forth below:
Credit Agreement means the Original Credit Agreement, as amended by this Amendment.
Effective Date means the date on which the conditions specified in Section 2 below are satisfied (or waived in writing in accordance with Section 12.02(b) of the Original Credit Agreement).
SEVENTH AMENDMENT Page 1
Exiting Lender shall mean PNC Bank, National Association, successor to BBVA USA.
Modification Papers means this Amendment, and all of the other documents and agreements executed in connection with the transactions contemplated by this Amendment.
2. Conditions Precedent. The obligations and agreements of the Lenders as set forth in this Amendment are subject to the satisfaction, unless waived in writing in accordance with Section 12.02(b) of the Original Credit Agreement, of each of the following conditions (and upon such satisfaction, this Amendment shall be deemed to be effective as of the Effective Date):
(a) Amendment. The Administrative Agent shall have received duly executed counterparts of this Amendment from the Borrower, each other Loan Party, and each Lender.
(b) Officers Certificates. The Administrative Agent shall have received a bring-down certificate of a Responsible Officer of each Loan Party setting forth that the officers certificate previously delivered contains Organizational Documents, resolutions, incumbency and authorization that have not changed and remain in full force and effect.
(c) Certificates of Good Standing. The Administrative Agent shall have received certificates of the appropriate State agencies, as requested by the Administrative Agent, with respect to the existence, qualification and good standing of each Loan Party in each jurisdiction where any such Loan Party is organized.
(d) UCC Lien Searches. The Administrative Agent shall have received UCC lien searches satisfactory to it evidencing that, upon filing of any UCC assignments described in Section 6 below, no Liens exist other than Liens permitted by Section 9.03 of the Credit Agreement.
(e) Fees. The Borrower shall have paid to the Administrative Agent the fees set forth in the Fee Letter between them dated as of the date hereof.
(f) Expenses. Administrative Agent shall have received from the Borrower payment of all out-of-pocket fees and expenses (including reasonable attorneys fees and expenses) incurred by Administrative Agent in connection with the preparation, negotiation and execution of the Modification Papers.
3. Amendments to Original Credit Agreement. On the Effective Date, the Original Credit Agreement shall be amended as follows:
(a) the Credit Agreement is hereby amended in its entirety to read as set forth in Exhibit A attached hereto. The Schedules and Exhibits to the Credit Agreement remain unmodified except to the extent amended, modified, added or replaced pursuant to clause (b) below; and
(b) Annex I to the Original Credit Agreement shall be replaced in its entirety by Annex I attached as Exhibit B hereto.
4. Global Amendment to Other Loan Documents. On the Effective Date, with respect to each Loan Document other than the Credit Agreement, each reference to BBVA USA or Compass Bank in its capacity as Administrative Agent, Arranger, collateral agent, trustee, beneficiary, mortgagee or any comparable representative capacity in each such Loan Document is hereby deleted and the reference to Citibank, N.A. is hereby inserted in lieu thereof.
SEVENTH AMENDMENT Page 2
5. Borrowing Base. As of the Effective Date, the Borrowing Base is hereby increased from $40,000,000 to $50,000,000, which redetermination constitutes the December 1, 2021 Scheduled Redetermination of the Borrowing Base pursuant to Section 2.07 of the Credit Agreement. The Borrowing Base, as adjusted hereby, shall remain in effect until next redetermined in accordance with the provisions of the Credit Agreement.
6. Security Instruments and Recorded Documents. As contemplated by the Resignation and Appointment Agreement, the parties hereto intend that in connection herewith, the parties will specifically amend each Security Document, UCC financing statement or other document filed of record to reflect of record the Successor Administrative Agent and any other changes to conform hereto, and in furtherance thereof, the Administrative Agent will file such amendments as it deems necessary to accomplish the purposes hereof.
7. Post-Closing Obligations. Notwithstanding anything to the contrary in any Loan Documents, on or before the date that is 30 days after the Effective Date (or such later date to which the Administrative Agent may agree in writing):
(a) Mortgage Amendments. The Administrative Agent shall have received duly executed amendments and/or restatements to the Security Instruments, in form and substance acceptable to it, to evidence of record the change in Administrative Agent evidenced by the Resignation and Appointment Agreement and this Amendment.
(b) Mortgage and Title Coverage Requirements. The Administrative Agent shall have received (i) duly executed Security Instruments (or amendments, restatements or supplements to Security Instruments) covering enough of the Borrowing Base Properties such that Mortgaged Properties represent at least 90% of the Borrowing Base Value of the Oil and Gas Properties evaluated in the most recently delivered Reserve Report, and (ii) title information in form and substance acceptable to the Administrative Agent covering enough of the Borrowing Base Properties evaluated in the most recently delivered Reserve Report, such that the Administrative Agent shall have had the opportunity to review (including title information previously delivered to the Administrative Agent), satisfactory title information on Hydrocarbon Interests constituting at least 85% of the total value of the Borrowing Base Oil and Gas Properties evaluated by such Reserve Report.
(c) Accounts and Control Agreements. The Administrative Agent shall have received, in form and substance satisfactory to it, (i) evidence that each deposit or security account (other than Excluded Accounts) of any Loan Party is held and maintained with a Lender, and (ii) Control Agreements in favor of Administrative Agent covering each deposit or security account (other than Excluded Accounts) in accordance with Section 8.19 of the Credit Agreement.
8. Certain Representations. Each Loan Party represents and warrants that, as of the Effective Date: (a) such Person has full power and authority to execute the Modification Papers to which it is a party and such Modification Papers constitute the legal, valid and binding obligation of such Person enforceable in accordance with their terms, except as enforceability may be limited by general principles of equity and applicable bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting the enforcement of creditors rights generally; (b) no authorization, approval, consent or other action by, notice to, or filing with, any Governmental Authority or other Person is required for the execution, delivery and performance by such Person thereof; (c) no Default has occurred and is continuing or will result from the consummation of the transactions contemplated by this Amendment, and (d) the information included in each Beneficial Ownership Certification is true and correct in all respects and no change has occurred in respect of the information provided in any Beneficial Ownership Certification last
SEVENTH AMENDMENT Page 3
delivered to the Administrative Agent or any Lender that would result in a change to the list of beneficial owners identified in such certification. In addition, each Loan Party represents that after giving effect to the Modification Papers, all representations and warranties contained in the Credit Agreement and the other Loan Documents are true and correct in all material respects (provided that any such representations or warranties that are, by their terms, already qualified by reference to materiality or Material Adverse Effect shall be true and correct without regard to such additional materiality qualification) on and as of the Effective Date as if made on and as of such date, except to the extent that any such representation or warranty expressly relates to an earlier date, in which case such representation or warranty is true and correct in all material respects (or true and correct without regard to such additional materiality qualification, as applicable) as of such earlier date.
9. Concerning the Exiting Lender and Reallocation.
(a) The Lenders have agreed among themselves, in consultation with the Borrower, to reallocate their respective Maximum Credit Amounts and Applicable Percentages as set forth on Annex I to this Amendment, and the Administrative Agent, the Lenders and the Borrower hereby consent to such reallocation. The Administrative Agent, the Lenders and the Borrower hereby waive (a) any requirement that an Assignment and Assumption or any other documentation be executed in connection with such reallocation, and (b) the payment of any processing and recordation fee required to be paid to the Administrative Agent in connection with such reallocation. In connection herewith, Exiting Lender irrevocably sells and assigns to each Lender, and each Lender, severally and not jointly, hereby irrevocably purchases and assumes from the Exiting Lender, subject to and in accordance with the Standard Terms and Conditions For Assignment and Acceptance set forth in Annex 1 attached to Exhibit F to the Credit Agreement, as of the Effective Date, so much of such Exiting Lenders Commitment, Maximum Credit Amount, outstanding Loans and participations in Letters of Credit, and rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto (including without limitation any guaranties and, to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of such Exiting Lender (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way related to any of the foregoing, including contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity), such that each Lenders Maximum Credit Amount, Applicable Percentage of the outstanding Loans and participations in Letters of Credit, and rights and obligations as a Lender shall be equal to its Applicable Percentage and Maximum Credit Amount set forth on Annex I to this Amendment. The reallocation of the Maximum Credit Amounts and Applicable Percentages among the Lenders shall be deemed to have been consummated pursuant to the terms of an Assignment and Assumption attached as Exhibit F to the Original Credit Agreement as if the Lenders had executed an Assignment and Assumption with respect to such reallocation, and Exiting Lender agrees that the provisions of the form of Assignment and Assumption attached as Exhibit F to the Original Credit Agreement shall apply to it as the Assignor thereunder. On the Effective Date, the Maximum Credit Amount and Applicable Percentage of each Lender shall be as set forth on Annex I attached to this Amendment, Exiting Lender is released of its Commitment under the Original Credit Agreement and Exiting Lender shall have no Maximum Credit Amount or Applicable Percentage.
(b) Upon the Effective Date, all Loans and participations in Letters of Credit of the Lenders and the Exiting Lender outstanding immediately prior to the Effective Date shall be, and hereby are, restructured, rearranged and continued as provided in this Amendment and shall continue as Loans and participations in Letters of Credit of the Lenders under the Credit Agreement pursuant to this Amendment, and Exiting Lender shall have been repaid the Applicable Percentage of its outstanding Loans immediately prior to the Effective Date, and it shall not have any participations in any Letter of Credit.
SEVENTH AMENDMENT Page 4
10. No Further Amendments. Except as previously amended or waived in writing or as amended or waived hereby, the Credit Agreement shall remain unchanged and all provisions shall remain fully effective between the parties thereto.
11. Acknowledgments and Agreements. Each Loan Party acknowledges that on the date hereof all outstanding Secured Obligations are payable in accordance with their terms, and such Person waives any defense, offset, counterclaim or recoupment with respect thereto. Each of the Borrower, each other Loan Party, the Administrative Agent, the Issuing Bank and the Lenders does hereby adopt, ratify and confirm the Credit Agreement and acknowledges and agrees that the Credit Agreement is and remains in full force and effect. Each Loan Party acknowledges and agrees that its liabilities and obligations under the Credit Agreement and the other Loan Documents are not impaired in any respect by this Amendment.
12. Limitation on Agreements. The modifications set forth herein are limited precisely as written and shall not be deemed (a) to be a consent under or a waiver of or an amendment to any other term or condition in the Credit Agreement or any of the other Loan Documents, or (b) to prejudice any other right or rights that the Administrative Agent, the Issuing Bank or the Lenders now have or may have in the future under or in connection with the Credit Agreement and the other Loan Documents or any of the other documents referred to herein or therein. The Modification Papers shall constitute Loan Documents for all purposes.
13. Confirmation of Security. Each Loan Party hereby confirms and agrees that all of the Security Instruments that presently secure the Secured Obligations shall continue to secure, in the same manner and to the same extent provided therein, the payment and performance of the Secured Obligations as described in the Credit Agreement.
14. Reaffirmation of the Guaranty. Each Guarantor hereby ratifies, confirms, acknowledges and agrees that its obligations under the Guaranty are in full force and effect and that such Loan Party continues to unconditionally and irrevocably guarantee the full and punctual payment, when due, whether at stated maturity or earlier by acceleration or otherwise, all of the Secured Obligations, as such Secured Obligations may have been amended by this Amendment, and its execution and delivery of this Amendment does not indicate or establish an approval or consent requirement by any Loan Party under the Guaranty in connection with the execution and delivery of amendments, consents or waivers to the Credit Agreement, the Notes or any of the other Loan Documents.
15. Counterparts. This Amendment may be executed in any number of counterparts, each of which when executed and delivered shall be deemed an original, but all of which constitute one instrument. In making proof of this Amendment, it shall not be necessary to produce or account for more than one counterpart thereof signed by each of the parties hereto. Delivery of an executed counterpart of this Amendment by facsimile or other electronic means shall be deemed effective as delivery of a manually executed counterpart of this Amendment.
16. Incorporation of Certain Provisions by Reference. The provisions of Section 12.09 of the Credit Agreement captioned Governing Law, Jurisdiction, Consent to Service of Process is incorporated herein by reference for all purposes.
SEVENTH AMENDMENT Page 5
17. Release. To induce the Administrative Agent, the Issuing Bank and the Lenders to agree to the terms hereof, each Loan Party represents and warrants that as of the Effective Date, there are no claims or offsets or defenses or counterclaims to such Loan Partys obligations under the Loan Documents, and in accordance therewith each Loan Party:
(a) waives any and all such claims, offsets, defenses or counterclaims, whether known or unknown, arising under the Loan Documents prior to the Effective Date; and
(b) releases and discharges each of the Administrative Agent, the Issuing Bank, the Lenders and their respective Related Parties (collectively, the Released Parties) from any and all obligations, indebtedness, liabilities, claims, rights, causes of action or other demands whatsoever, whether known or unknown, suspected or unsuspected, in law or equity, which such Loan Party ever had, now has or claims to have or may have against any Released Party arising prior to the Effective Date and from or in connection with the Loan Documents or the transactions contemplated thereby.
18. Entirety, Etc. This Amendment, the other Modification Papers and all of the other Loan Documents embody the entire agreement among the parties. THIS AMENDMENT, THE OTHER MODIFICATION PAPERS AND ALL OF THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
[This space is left intentionally blank. Signature pages follow.]
SEVENTH AMENDMENT Page 6
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to be effective as of the Effective Date.
BORROWER: | ||
PRIMEENERGY RESOURCES CORPORATION | ||
By: | /s/ Beverly A. Cummings | |
Name: | Beverly A. Cummings | |
Title: | Executive Vice President, Treasurer & Chief Financial Officer | |
GUARANTORS: | ||
PRIME OPERATING COMPANY | ||
By: | /s/ Beverly A. Cummings | |
Name: | Beverly A. Cummings | |
Title: | Executive Vice President, Treasurer & Chief Financial Officer | |
EASTERN OIL WELL SERVICE COMPANY | ||
By: | /s/ Beverly A. Cummings | |
Name: | Beverly A. Cummings | |
Title: | Executive Vice President, Treasurer & Chief Financial Officer | |
EOWS MIDLAND COMPANY | ||
By: | /s/ Beverly A. Cummings | |
Name: | Beverly A. Cummings | |
Title: | Executive Vice President, Treasurer & Chief Financial Officer | |
PRIMEENERGY MANAGEMENT CORPORATION | ||
By: | /s/ Beverly A. Cummings | |
Name: | Beverly A. Cummings | |
Title: | Executive Vice President, Treasurer & Chief Financial Officer |
SEVENTH AMENDMENT Signature Page
PRIME OFFSHORE L.L.C. | ||
By: | /s/ Beverly A. Cummings | |
Name: | Beverly A. Cummings | |
Title: | Executive Vice President, Treasurer & Chief Financial Officer |
SEVENTH AMENDMENT Signature Page
ADMINISTRATIVE AGENT: | ||
CITIBANK, N.A., as Administrative Agent and Issuing Bank | ||
By: | /s/ Ryan Watson | |
Name: | Ryan Watson | |
Title: | Senior Vice President | |
LENDERS: | ||
CITIBANK, N.A., as a Lender | ||
By: | /s/ Ryan Watson | |
Name: | Ryan Watson | |
Title: | Senior Vice President |
SEVENTH AMENDMENT Signature Page
FIFTH THIRD BANK, as a Lender | ||
By: | /s/ Dan Condley | |
Name: | Dan Condley | |
Title: | Managing Director |
SEVENTH AMENDMENT Signature Page
PRIOR ADMINISTRATIVE AGENT: | ||
PNC BANK, NATIONAL ASSOCIATION, successor to BBVA USA, as an Exiting Lender | ||
By: | /s/ Julia Barnhill | |
Name: | Julia Barnhill | |
Title: | Vice President | |
EXITING LENDER: | ||
PNC BANK, NATIONAL ASSOCIATION, successor to BBVA USA, as an Exiting Lender | ||
By: | /s/ Julia Barnhill | |
Name: | Julia Barnhill | |
Title: | Vice President |
SEVENTH AMENDMENT Signature Page
EXHIBIT A
AMENDED CREDIT AGREEMENT
[See Attached].
SEVENTH AMENDMENT Exhibit A Cover Page
EXHIBIT B
ANNEX I
LIST OF MAXIMUM CREDIT AMOUNTS
Aggregate Maximum Credit Amounts
Name of Lender |
Applicable Percentage | Maximum Credit Amount | ||||||
Citibank, N.A. |
50.000000000 | % | $ | 150,000,000.00 | ||||
Fifth Third Bank |
50.000000000 | % | $ | 150,000,000.00 | ||||
TOTAL: |
100.000000000 | % | $ | 300,000,000.00 |
SEVENTH AMENDMENT Exhibit B Page Solo
Exhibit 10.22.5.13.1
After recording, return to:
Winstead PC
2728 N. Harwood St., Suite 500
Dallas, Texas 75201
Attn: Bee Archaphorn
NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVERS LICENSE NUMBER.
Andrews County, Texas | Fayette County, Texas | Newton County, Texas | ||
Borden County, Texas | Glasscock County, Texas | Polk County, Texas | ||
Colorado County, Texas | Goliad County, Texas | Reagan County, Texas | ||
Crane County, Texas | Grimes County, Texas | Webb County, Texas | ||
Crockett County, Texas | Irion County, Texas | Winkler County, Texas | ||
Dimmit County, Texas | Martin County, Texas | |||
Duval County, Texas | Midland County, Texas |
FIRST AMENDMENT TO AMENDED, RESTATED AND CONSOLIDATED
DEED OF TRUST, MORTGAGE, SECURITY AGREEMENT,
ASSIGNMENT OF PRODUCTION AND FINANCING STATEMENT
KNOW ALL MEN BY THESE PRESENTS:
THIS FIRST AMENDMENT TO AMENDED, RESTATED AND CONSOLIDATED DEED OF TRUST, MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF PRODUCTION AND FINANCING STATEMENT (this Amendment) is made and entered into as of December 20, 2021, by PRIMEENERGY RESOURCES CORPORATION, a Delaware corporation, formerly known as PrimeEnergy Corporation (Prime) and PRIMEENERGY MANAGEMENT CORPORATION, a New York corporation (PEMC, and Prime and PEMC herein, individually and collectively, Grantor), and CITIBANK, N.A., as Administrative Agent for the benefit of the Secured Parties (in such capacity and together with its successors and assigns in such capacity, Beneficiary).
R E C I T A L S
A. Grantor has heretofore executed and delivered those certain Deeds of Trust, Mortgages, Security Agreements, Assignments of Production, and Financing Statements set forth in Schedule 1 attached hereto (collectively, as so amended, the Original Deed of Trust), covering the real property described on Exhibit A to the Original Deed of Trust and securing the indebtedness as described therein, to DOROTHY E. MARCHAND (Original Trustee) and PNC BANK, NATIONAL ASSOCIATION, successor to BBVA USA, which was formerly known as Compass Bank, in its capacity as administrative agent for the Secured Parties and original beneficiary under the Original Deed of Trust (in such capacity, the Original Beneficiary).
FIRST AMENDMENT Page 1
B. The Original Deed of Trust secures, among other things, the payment of all of the indebtedness owed by Grantor under that certain Third Amended and Restated Credit Agreement, dated as of February 15, 2017, among Borrower, Original Beneficiary as Administrative Agent and the lenders party thereto (as amended, restated, supplemented or otherwise modified prior to the date hereof, the Credit Agreement; each capitalized term which is defined in the Credit Agreement, but which is not defined in this Amendment, shall have the meaning ascribed such term in the Credit Agreement), including without limitation the Secured Obligations as therein defined.
C. Pursuant to that certain Resignation and Appointment Agreement dated as of December 20, 2021, the Original Beneficiary agreed to resign as administrative agent under the Credit Agreement and the other Loan Documents, and Citibank, N.A., has agreed to accept appointment as successor administrative agent thereunder (in such capacity, the Successor Administrative Agent or Administrative Agent, as applicable).
D. In connection with the foregoing, Beneficiary, Original Beneficiary, Borrower and Lenders have amended the Credit Agreement pursuant to the terms of the Seventh Amendment to Third Amended and Restated Credit Agreement between the parties dated as of December 20, 2021, and the parties hereto desire to amend the Original Deed of Trust as hereafter provided.
NOW THEREFORE, in consideration of these premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantor does hereby grant, bargain, sell, assign, mortgage with power of sale, transfer, and convey unto Mary C. Tucker, as trustee (in such capacity, Trustee), for the benefit of the Beneficiary, with power of sale, the Mortgaged Properties (as defined in the Original Deed of Trust), to have and to hold such Mortgaged Properties unto Trustee and their respective successors and assigns, and the parties hereto agree as follows:
1. Same Terms. All terms used herein that are defined in the Original Deed of Trust shall have the same meanings when used herein, unless the context hereof otherwise requires or provides.
2. Amendments to Original Deed of Trust.
(a) Each reference to Compass Bank in the Original Deed of Trust is hereby deleted and the reference to Citibank, N.A. is hereby inserted in lieu thereof.
(b) Each reference to Dorothy E. Marchand in the Original Deed of Trust is hereby deleted and the reference to Mary C. Tucker is hereby inserted in lieu thereof.
(c) The address of the Beneficiary set forth in cover page of the Original Deed of Trust is hereby amended to read as 2001 Ross Ave, Ste 4300, Dallas, TX 75201.
(d) The address set forth in Section 4.2 of the Original Deed of Trust is hereby amended to read in its entirety as follows:
Citibank, N.A., as Administrative Agent
2001 Ross Ave, Ste 4300
Dallas, TX 75201
(e) The notice information for Beneficiary set forth in Section 6.9 of the Original Deed of Trust is hereby amended to read in its entirety as follows:
If to Beneficiary: |
Citibank, N.A., as Administrative Agent 2001 Ross Ave, Ste 4300 Dallas, TX 75201 |
FIRST AMENDMENT Page 2
3. Notice of Removal of Trustee and Appointment of Successor Trustee. Effective as of the date hereof, the Beneficiary hereby removes, without cause, Dorothy E. Marchand, as the Original Trustee under the Original Deed of Trust and any previously named substitute trustee, and designates and appoints, upon the contingency and in the manner authorized by the Original Deed of Trust, Mary C. Tucker as substitute Trustee in lieu and in place and stead of the aforesaid Original Trustee or any substitute Trustee heretofore appointed, with all the powers and authority delegated to the Original Trustee by the terms of the Original Deed of Trust, and does hereby authorize said substitute Trustee to take any action permitted to be taken under the Original Deed of Trust by the Original Trustee or any substitute Trustee heretofore appointed, including without limitation, the sale of any real property subject to the Original Deed of Trust for the purpose of collecting any of the Obligation pursuant to the provisions of the Original Deed of Trust and applicable law.
4. Certain Representations. Grantor represents and warrants that, as of the date hereof: (a) Grantor has full power and authority to execute this Amendment, and this Amendment constitutes the legal, valid and binding obligation of Grantor, enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting the enforcement of creditors rights generally; and (b) no authorization, approval, consent or other action by, notice to, or filing with, any governmental authority or other person is required for the execution and delivery by Grantor of this Amendment, or the performance of this Amendment.
5. Ratification and Confirmation. It is expressly agreed that the execution of this Amendment shall not alter or otherwise affect the terms, provisions and conditions of the Original Deed of Trust EXCEPT as expressly set out above. Grantor hereby RATIFIES, CONFIRMS AND AGREES that (a) the Original Deed of Trust, as amended hereby, shall continue to be in full force and effect to the same extent as provided therein, and (b) the Secured Obligations as defined in the Credit Agreement, including without limitation the Notes as defined in the Credit Agreement, are secured by the Original Deed of Trust, as amended hereby.
6. Limitation on Agreements. The modifications set forth herein are limited precisely as written and shall not be deemed (a) to be a consent under or a waiver of or an amendment to any other term or condition in the Original Deed of Trust, or (b) to prejudice any right or rights which Beneficiary now has or may have in the future under or in connection with the Original Deed of Trust, as amended hereby, or any of the other documents referred to herein or therein.
7. Effect of Amendment; Conflicts. This Amendment shall be construed as, and is hereby made a part of, the Original Deed of Trust, and such instruments (the Original Deed of Trust and this Amendment) shall be construed and interpreted together as a single instrument, excepting only that in the case of any inconsistency which cannot be reconciled, the terms of this Amendment shall be controlling.
8. Incorporation of Certain Provisions by Reference. The provisions of Section 6.10 of the Original Deed of Trust captioned Governing Law are incorporated herein by reference for all purposes.
9. Continued Effect of Original Deed of Trust. Nothing in this Amendment shall be construed as in any way releasing, affecting or impairing the lien created by the Original Deed of Trust against the oil and gas properties described therein. The Original Deed of Trust shall continue to be in full force and effect against all of the oil and gas properties described therein in order to secure the payment and performance of the indebtedness and obligations secured by the Original Deed of Trust.
FIRST AMENDMENT Page 3
10. Counterparts. This Amendment may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Amendment and all of which, when taken together, will be deemed to constitute one and the same agreement.
11. Entirety. THIS AGREEMENT AND ALL OF THE OTHER LOAN DOCUMENTS (AS DEFINED IN THE ORIGINAL DEED OF TRUST) REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
12. Miscellaneous. This Amendment shall be considered as an amendment to and ratification of the Original Deed of Trust, and the Original Deed of Trust, as herein expressly amended, is hereby ratified, approved and confirmed in every respect. All liens created, extended or renewed by the Original Deed of Trust are hereby extended, renewed and carried forward by this instrument and incorporated herein. All references to the Original Deed of Trust in any documents heretofore or hereafter executed shall be deemed to refer to the Original Deed of Trust as amended by this Amendment.
[The rest of this page is intentionally left blank; the signature pages follow.]
FIRST AMENDMENT Page 4
EXECUTED on the date(s) of the acknowledgment(s) below to be effective as of the date first set forth above.
GRANTOR: | ||
PRIMEENERGY RESOURCES CORPORATION, f/k/a PrimeEnergy Corporation | ||
By: | /s/ Beverly A. Cummings | |
Beverly A. Cummings Executive Vice President, Treasurer & Chief Financial Officer |
STATE OF TEXAS |
§ |
|||
§ |
||||
COUNTY OF ____________ | § |
This instrument was acknowledged before me on the ____ day of December, 2021, by Beverly A. Cummings, Executive Vice President, Treasurer & Chief Financial Officer of PrimeEnergy Resources Corporation, a Delaware corporation (f/k/a PrimeEnergy Corporation), on behalf of said corporation.
Notary Public, State of Texas |
FIRST AMENDMENT Signature Page
GRANTOR (CONTINUED): | ||
PRIMEENERGY MANAGEMENT CORPORATION | ||
By: | /s/ Beverly A. Cummings | |
Beverly A. Cummings Executive Vice President, Treasurer & Chief Financial Officer |
STATE OF TEXAS |
§ |
|||
$ | ||||
COUNTY OF ____________ | § |
This instrument was acknowledged before me on the ____ day of December, 2021, by Beverly A. Cummings, Executive Vice President, Treasurer & Chief Financial Officer of PrimeEnergy Management Corporation, a New York corporation, on behalf of said corporation.
Notary Public, State of Texas |
FIRST AMENDMENT Signature Page
BENEFICIARY: | ||
CITIBANK, N.A., as Administrative Agent, | ||
as Beneficiary | ||
By: | /s/ Ryan Watson | |
Ryan Watson Senior Vice President |
STATE OF TEXAS |
§ |
|||
$ | ||||
COUNTY OF ____________ | § |
This instrument was acknowledged before me on the ____ day of December, 2021, by Ryan Watson, Senior Vice President of Citibank, N.A., a national banking association, on behalf of said banking association.
Notary Public, State of Texas |
FIRST AMENDMENT Signature Page
ORIGINAL BENEFICIARY: | ||
PNC BANK, successor to BBVA USA, | ||
formerly known as Compass Bank, as Original Beneficiary | ||
By: | /s/ Julia Barnhill | |
Julia Barnhill | ||
Vice President |
STATE OF TEXAS |
§ |
|||
$ | ||||
COUNTY OF ____________ | § |
This instrument was acknowledged before me on the ____ day of December, 2021, by Julia Barnhill, a Vice President of PNC Bank, successor to BBVA USA, a national banking association, on behalf of said banking association.
Notary Public, State of Texas |
FIRST AMENDMENT Signature Page
SCHEDULE I
A. Amended, Restated and Consolidated Deed of Trust, Mortgage, Security Agreement, Assignment of Production and Financing Statement by PrimeEnergy Corporation and PrimeEnergy Management Corporation, as Grantor to Dorothy E. Marchand, as Trustee, and Compass Bank, as Administrative Agent for the benefit of the Secured Parties, dated as of May 5, 2017, which has been recorded as follows:
Location |
Recording Information |
Date Recorded | ||
Andrews County, Texas |
Instrument No. 17-2232 | 06/05/2017 | ||
Borden County, Texas |
Instrument No. 20170353 | 06/05/2017 | ||
Colorado County, Texas |
Vol. 839, Page 510, Instrument No. 3016 |
06/14/2017 | ||
Crane County, Texas |
Book OPR, Vol. 597, Page 770, Instrument No. 103736 |
06/05/2017 | ||
Crockett County, Texas |
Book 842, Page 906, Document No. 0000169764 |
06/05/2017 | ||
Dimmit County, Texas |
Vol. 596, Page 620, Instrument No. 45004 |
06/13/2017 | ||
Duval County, Texas |
Book OR, Vol. 649, Page 1, Document No. 2017-17119 |
06/05/2017 | ||
Fayette County, Texas |
Vol. 1818, Page 258, Instrument No. 17-04388 |
06/05/2017 | ||
Glasscock County, Texas |
Book PM, Vol. 349, Page 636, Document No. 2017-1703 |
06/05/2017 | ||
Goliad County, Texas |
Book OR, Vol. 451, Page 702, Document No. 00139990 |
06/05/2017 | ||
Grimes County, Texas |
Book RP, Vol. 1650, Page 227, Document No. 002887747 |
06/08/2017 | ||
Irion County, Texas |
Book 244, Page 851, Document No. 20170001342 |
06/12/2017 | ||
Martin County, Texas |
Vol. 561, Page 59, Instrument No. 2486 |
06/06/2017 | ||
Midland County, Texas |
Document No. 2017-16528 | 06/05/2017 | ||
Newton County, Texas |
Vol. 686, Page 777, Instrument No. 163424 |
06/05/2017 |
FIRST AMENDMENT Page 1
Location |
Recording Information |
Date Recorded | ||
Polk County, Texas |
Book 2104, Page 482, Document No. 4622 |
06/05/2017 | ||
Reagan County, Texas |
Vol. 284, Page 177, Instrument No. 2017-125692 |
06/05/2017 | ||
Webb County, Texas |
Vol. 4257, Page 579, Document No. 1300811 |
06/20/2017 | ||
Winkler County, Texas |
Instrument No. C21587 | 06/05/2017 |
FIRST AMENDMENT Page 2
After recording, return to:
Winstead PC
2728 N. Harwood St., Suite 500
Dallas, Texas 75201
Attn: Bee Archaphorn
NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVERS LICENSE NUMBER.
Chambers County, Texas
FIRST AMENDMENT TO DEED OF TRUST, MORTGAGE, SECURITY AGREEMENT,
ASSIGNMENT OF PRODUCTION AND FINANCING STATEMENT
KNOW ALL MEN BY THESE PRESENTS:
THIS FIRST AMENDMENT TO DEED OF TRUST, MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF PRODUCTION AND FINANCING STATEMENT (this Amendment) is made and entered into as of December 20, 2021, by PRIMEENERGY RESOURCES CORPORATION, a Delaware corporation, formerly known as PrimeEnergy Corporation (Prime) and PRIMEENERGY MANAGEMENT CORPORATION, a New York corporation (PEMC, and Prime and PEMC herein, individually and collectively, Grantor), and CITIBANK, N.A., as Administrative Agent for the benefit of the Secured Parties (in such capacity and together with its successors and assigns in such capacity, Beneficiary).
R E C I T A L S
B. Grantor has heretofore executed and delivered that certain Deed of Trust, Mortgage, Security Agreement, Assignment of Production, and Financing Statement set forth in Schedule 1 attached hereto (collectively, the Original Deed of Trust), covering the real property described on Exhibit A to the Original Deed of Trust and securing the indebtedness as described therein, to DOROTHY E. MARCHAND (Original Trustee) and PNC BANK, NATIONAL ASSOCIATION, successor to BBVA USA, which was formerly known as Compass Bank, in its capacity as administrative agent for the Secured Parties and original beneficiary under the Original Deed of Trust (in such capacity, the Original Beneficiary).
B. The Original Deed of Trust secures, among other things, the payment of all of the indebtedness owed by Grantor under that certain Third Amended and Restated Credit Agreement, dated as of February 15, 2017, among Borrower, Original Beneficiary as Administrative Agent and the lenders party thereto (as amended, restated, supplemented or otherwise modified prior to the date hereof, the Credit Agreement; each capitalized term which is defined in the Credit Agreement, but which is not defined in this Amendment, shall have the meaning ascribed such term in the Credit Agreement), including without limitation the Secured Obligations as therein defined.
C. Pursuant to that certain Resignation and Appointment Agreement dated as of December 20, 2021, the Original Beneficiary agreed to resign as administrative agent under the Credit Agreement and the other Loan Documents, and Citibank, N.A., has agreed to accept appointment as successor administrative agent thereunder (in such capacity, the Successor Administrative Agent or Administrative Agent, as applicable).
FIRST AMENDMENT Page 3
D. In connection with the foregoing, Beneficiary, Original Beneficiary, Borrower and Lenders have amended the Credit Agreement pursuant to the terms of the Seventh Amendment to Third Amended and Restated Credit Agreement between the parties dated as of December 20, 2021, and the parties hereto desire to amend the Original Deed of Trust as hereafter provided.
NOW THEREFORE, in consideration of these premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantor does hereby grant, bargain, sell, assign, mortgage with power of sale, transfer, and convey unto Mary C. Tucker, as trustee (in such capacity, Trustee), for the benefit of the Beneficiary, with power of sale, the Mortgaged Properties (as defined in the Original Deed of Trust), to have and to hold such Mortgaged Properties unto Trustee and their respective successors and assigns, and the parties hereto agree as follows:
13. Same Terms. All terms used herein that are defined in the Original Deed of Trust shall have the same meanings when used herein, unless the context hereof otherwise requires or provides.
14. Amendments to Original Deed of Trust.
(f) Each reference to Compass Bank in the Original Deed of Trust is hereby deleted and the reference to Citibank, N.A. is hereby inserted in lieu thereof.
(g) Each reference to Dorothy E. Marchand in the Original Deed of Trust is hereby deleted and the reference to Mary C. Tucker is hereby inserted in lieu thereof.
(h) The address of the Beneficiary set forth in cover page of the Original Deed of Trust is hereby amended to read as 2001 Ross Ave, Ste 4300, Dallas, TX 75201.
(i) The address set forth in Section 4.2 of the Original Deed of Trust is hereby amended to read in its entirety as follows:
Citibank, N.A., as Administrative Agent
2001 Ross Ave, Ste 4300
Dallas, TX 75201
(j) The notice information for Beneficiary set forth in Section 6.9 of the Original Deed of Trust is hereby amended to read in its entirety as follows:
|
If to Beneficiary: | Citibank, N.A., as Administrative Agent 2001 Ross Ave, Ste 4300 Dallas, TX 75201 |
15. Notice of Removal of Trustee and Appointment of Successor Trustee. Effective as of the date hereof, the Beneficiary hereby removes, without cause, Dorothy E. Marchand, as the Original Trustee under the Original Deed of Trust and any previously named substitute trustee, and designates and appoints, upon the contingency and in the manner authorized by the Original Deed of Trust, Mary C. Tucker as substitute Trustee in lieu and in place and stead of the aforesaid Original Trustee or any substitute Trustee heretofore appointed, with all the powers and authority delegated to the Original Trustee by the terms of the Original Deed of Trust, and does hereby authorize said substitute Trustee to take any action permitted to be taken under the Original Deed of Trust by the Original Trustee or any substitute Trustee heretofore appointed, including without limitation, the sale of any real property subject to the Original Deed of Trust for the purpose of collecting any of the Obligation pursuant to the provisions of the Original Deed of Trust and applicable law.
FIRST AMENDMENT Page 4
16. Certain Representations. Grantor represents and warrants that, as of the date hereof: (a) Grantor has full power and authority to execute this Amendment, and this Amendment constitutes the legal, valid and binding obligation of Grantor, enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting the enforcement of creditors rights generally; and (b) no authorization, approval, consent or other action by, notice to, or filing with, any governmental authority or other person is required for the execution and delivery by Grantor of this Amendment, or the performance of this Amendment.
17. Ratification and Confirmation. It is expressly agreed that the execution of this Amendment shall not alter or otherwise affect the terms, provisions and conditions of the Original Deed of Trust EXCEPT as expressly set out above. Grantor hereby RATIFIES, CONFIRMS AND AGREES that (a) the Original Deed of Trust, as amended hereby, shall continue to be in full force and effect to the same extent as provided therein, and (b) the Secured Obligations as defined in the Credit Agreement, including without limitation the Notes as defined in the Credit Agreement, are secured by the Original Deed of Trust, as amended hereby.
18. Limitation on Agreements. The modifications set forth herein are limited precisely as written and shall not be deemed (a) to be a consent under or a waiver of or an amendment to any other term or condition in the Original Deed of Trust, or (b) to prejudice any right or rights which Beneficiary now has or may have in the future under or in connection with the Original Deed of Trust, as amended hereby, or any of the other documents referred to herein or therein.
19. Effect of Amendment; Conflicts. This Amendment shall be construed as, and is hereby made a part of, the Original Deed of Trust, and such instruments (the Original Deed of Trust and this Amendment) shall be construed and interpreted together as a single instrument, excepting only that in the case of any inconsistency which cannot be reconciled, the terms of this Amendment shall be controlling.
20. Incorporation of Certain Provisions by Reference. The provisions of Section 6.10 of the Original Deed of Trust captioned Governing Law are incorporated herein by reference for all purposes.
21. Continued Effect of Original Deed of Trust. Nothing in this Amendment shall be construed as in any way releasing, affecting or impairing the lien created by the Original Deed of Trust against the oil and gas properties described therein. The Original Deed of Trust shall continue to be in full force and effect against all of the oil and gas properties described therein in order to secure the payment and performance of the indebtedness and obligations secured by the Original Deed of Trust.
22. Counterparts. This Amendment may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Amendment and all of which, when taken together, will be deemed to constitute one and the same agreement.
23. Entirety. THIS AGREEMENT AND ALL OF THE OTHER LOAN DOCUMENTS (AS DEFINED IN THE ORIGINAL DEED OF TRUST) REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
FIRST AMENDMENT Page 5
24. Miscellaneous. This Amendment shall be considered as an amendment to and ratification of the Original Deed of Trust, and the Original Deed of Trust, as herein expressly amended, is hereby ratified, approved and confirmed in every respect. All liens created, extended or renewed by the Original Deed of Trust are hereby extended, renewed and carried forward by this instrument and incorporated herein. All references to the Original Deed of Trust in any documents heretofore or hereafter executed shall be deemed to refer to the Original Deed of Trust as amended by this Amendment.
[The rest of this page is intentionally left blank; the signature pages follow.]
FIRST AMENDMENT Page 6
EXECUTED on the date(s) of the acknowledgment(s) below to be effective as of the date first set forth above.
GRANTOR: | ||
PRIMEENERGY RESOURCES CORPORATION, f/k/a PrimeEnergy Corporation | ||
By: | /s/ Beverly A. Cummings | |
Beverly A. Cummings | ||
Executive Vice President, Treasurer & Chief Financial Officer |
STATE OF TEXAS |
§ | |
§ | ||
COUNTY OF ____________ | § |
This instrument was acknowledged before me on the ____ day of December, 2021, by Beverly A. Cummings, Executive Vice President, Treasurer & Chief Financial Officer of PrimeEnergy Resources Corporation, a Delaware corporation (f/k/a PrimeEnergy Corporation), on behalf of said corporation.
Notary Public, State of Texas |
FIRST AMENDMENT Signature Page
GRANTOR (CONTINUED): | ||
PRIMEENERGY MANAGEMENT CORPORATION | ||
By: | /s/ Beverly A. Cummings | |
Beverly A. Cummings | ||
Executive Vice President, Treasurer & Chief Financial Officer |
STATE OF TEXAS |
§ | |
§ | ||
COUNTY OF ____________ | § |
This instrument was acknowledged before me on the ____ day of December, 2021, by Beverly A. Cummings, Executive Vice President, Treasurer & Chief Financial Officer of PrimeEnergy Management Corporation, a New York corporation, on behalf of said corporation.
Notary Public, State of Texas |
FIRST AMENDMENT Signature Page
BENEFICIARY: | ||
CITIBANK, N.A., as Administrative Agent, | ||
as Beneficiary | ||
By: | /s/ Ryan Watson | |
Ryan Watson | ||
Senior Vice President |
STATE OF TEXAS |
§ | |
§ | ||
COUNTY OF ____________ | § |
This instrument was acknowledged before me on the ____ day of December, 2021, by Ryan Watson, Senior Vice President of Citibank, N.A., a national banking association, on behalf of said banking association.
Notary Public, State of Texas |
FIRST AMENDMENT Signature Page
ORIGINAL BENEFICIARY: | ||
PNC BANK, successor to BBVA USA, | ||
formerly known as Compass Bank, as Original Beneficiary |
By: | /s/ Julia Barnhill | |
Julia Barnhill | ||
Vice President |
STATE OF TEXAS |
§ | |
§ | ||
COUNTY OF ____________ | § |
This instrument was acknowledged before me on the ____ day of December, 2021, by Julia Barnhill, a Vice President of PNC Bank, successor to BBVA USA, a national banking association, on behalf of said banking association.
Notary Public, State of Texas |
FIRST AMENDMENT Signature Page
SCHEDULE I
A. Deed of Trust, Mortgage, Security Agreement, Assignment of Production and Financing Statement by PrimeEnergy Corporation and PrimeEnergy Management Corporation, as Grantor to Dorothy E. Marchand, as Trustee, and Compass Bank, as Administrative Agent for the benefit of the Secured Parties, dated as of May 5, 2017, which has been recorded as follows:
Location |
Recording Information |
Date Recorded | ||
Chambers County, Texas |
Book OR, Vol. 1740, Page 689, |
06/05/2017 |
FIFTH AMENDMENT Page 1
After recording, return to:
Winstead PC
2728 N. Harwood St., Suite 500
Dallas, Texas 75201
Attn: Bee Archaphorn
NOTICE OF CONFIDENTIALITY RIGHTS: IF YOU ARE A NATURAL PERSON, YOU MAY REMOVE OR STRIKE ANY OR ALL OF THE FOLLOWING INFORMATION FROM ANY INSTRUMENT THAT TRANSFERS AN INTEREST IN REAL PROPERTY BEFORE IT IS FILED FOR RECORD IN THE PUBLIC RECORDS: YOUR SOCIAL SECURITY NUMBER OR YOUR DRIVERS LICENSE NUMBER.
Upton County, Texas
FIFTH AMENDMENT TO AMENDED, RESTATED AND CONSOLIDATED
DEED OF TRUST, MORTGAGE, SECURITY AGREEMENT,
ASSIGNMENT OF PRODUCTION AND FINANCING STATEMENT
KNOW ALL MEN BY THESE PRESENTS:
THIS FIFTH AMENDMENT TO AMENDED, RESTATED AND CONSOLIDATED DEED OF TRUST, MORTGAGE, SECURITY AGREEMENT, ASSIGNMENT OF PRODUCTION AND FINANCING STATEMENT (this Amendment) is made and entered into as of December 20, 2021, by PRIMEENERGY RESOURCES CORPORATION, a Delaware corporation, formerly known as PrimeEnergy Corporation (Prime) and PRIMEENERGY MANAGEMENT CORPORATION, a New York corporation (PEMC, and Prime and PEMC herein, individually and collectively, Grantor), and CITIBANK, N.A., as Administrative Agent for the benefit of the Secured Parties (in such capacity and together with its successors and assigns in such capacity, Beneficiary).
R E C I T A L S
C. Grantor has heretofore executed and delivered those certain Deeds of Trust, Mortgages, Security Agreements, Assignments of Production, and Financing Statements set forth in Schedule 1 attached hereto (collectively, as so amended, the Original Deed of Trust), covering the real property described on Exhibit A to the Original Deed of Trust and securing the indebtedness as described therein, to DANIELLE FARNHAM (Original Trustee) and PNC BANK, NATIONAL ASSOCIATION, successor to BBVA USA, in its capacity as administrative agent for the Secured Parties and original beneficiary under the Original Deed of Trust (in such capacity, the Original Beneficiary).
B. The Original Deed of Trust secures, among other things, the payment of all of the indebtedness owed by Grantor under that certain Third Amended and Restated Credit Agreement, dated as of February 15, 2017, among Borrower, Original Beneficiary as Administrative Agent and the lenders party thereto (as amended, restated, supplemented or otherwise modified prior to the date hereof, the Credit Agreement; each capitalized term which is defined in the Credit Agreement, but which is not defined in this Amendment, shall have the meaning ascribed such term in the Credit Agreement), including without limitation the Secured Obligations as therein defined.
FIFTH AMENDMENT Page 2
C. Pursuant to that certain Resignation and Appointment Agreement dated as of December 20, 2021, the Original Beneficiary agreed to resign as administrative agent under the Credit Agreement and the other Loan Documents, and Citibank, N.A., has agreed to accept appointment as successor administrative agent thereunder (in such capacity, the Successor Administrative Agent or Administrative Agent, as applicable).
D. In connection with the foregoing, Beneficiary, Original Beneficiary, Borrower and Lenders have amended the Credit Agreement pursuant to the terms of the Seventh Amendment to Third Amended and Restated Credit Agreement between the parties dated as of December 20, 2021, and the parties hereto desire to amend the Original Deed of Trust as hereafter provided.
NOW THEREFORE, in consideration of these premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Grantor does hereby grant, bargain, sell, assign, mortgage with power of sale, transfer, and convey unto Mary C. Tucker, as trustee (in such capacity, Trustee), for the benefit of the Beneficiary, with power of sale, the Mortgaged Properties (as defined in the Original Deed of Trust), to have and to hold such Mortgaged Properties unto Trustee and their respective successors and assigns, and the parties hereto agree as follows:
25. Same Terms. All terms used herein that are defined in the Original Deed of Trust shall have the same meanings when used herein, unless the context hereof otherwise requires or provides.
26. Amendments to Original Deed of Trust.
(k) Each reference to Compass Bank or BBVA USA in the Original Deed of Trust is hereby deleted and the reference to Citibank, N.A. is hereby inserted in lieu thereof.
(l) Each reference to Dorothy E. Marchand or Danielle Farnham in the Original Deed of Trust is hereby deleted and the reference to Mary C. Tucker is hereby inserted in lieu thereof.
(m) The address of the Beneficiary set forth in cover page of the Original Deed of Trust is hereby amended to read as 2001 Ross Ave, Ste 4300, Dallas, TX 75201.
(n) The address set forth in Section 4.2 of the Original Deed of Trust is hereby amended to read in its entirety as follows:
Citibank, N.A., as Administrative Agent
2001 Ross Ave, Ste 4300
Dallas, TX 75201
(o) The notice information for Beneficiary set forth in Section 6.9 of the Original Deed of Trust is hereby amended to read in its entirety as follows:
If to Beneficiary: Citibank, N.A., as Administrative Agent
2001 Ross Ave, Ste 4300
Dallas, TX 75201
27. Notice of Removal of Trustee and Appointment of Successor Trustee. Effective as of the date hereof, the Beneficiary hereby removes, without cause, each of Dorothy E. Marchand and Danielle Farnham, as the Original Trustee under the Original Deed of Trust and any previously named substitute trustee, and designates and appoints, upon the contingency and in the manner authorized by the Original Deed of Trust, Mary C. Tucker as substitute Trustee in lieu and in place and stead of the aforesaid Original Trustee or any substitute Trustee heretofore appointed, with all the powers and authority delegated to the Original Trustee by the terms of the Original Deed of Trust, and does hereby authorize said substitute
FIFTH AMENDMENT Page 3
Trustee to take any action permitted to be taken under the Original Deed of Trust by the Original Trustee or any substitute Trustee heretofore appointed, including without limitation, the sale of any real property subject to the Original Deed of Trust for the purpose of collecting any of the Obligation pursuant to the provisions of the Original Deed of Trust and applicable law.
28. Certain Representations. Grantor represents and warrants that, as of the date hereof: (a) Grantor has full power and authority to execute this Amendment, and this Amendment constitutes the legal, valid and binding obligation of Grantor, enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting the enforcement of creditors rights generally; and (b) no authorization, approval, consent or other action by, notice to, or filing with, any governmental authority or other person is required for the execution and delivery by Grantor of this Amendment, or the performance of this Amendment.
29. Ratification and Confirmation. It is expressly agreed that the execution of this Amendment shall not alter or otherwise affect the terms, provisions and conditions of the Original Deed of Trust EXCEPT as expressly set out above. Grantor hereby RATIFIES, CONFIRMS AND AGREES that (a) the Original Deed of Trust, as amended hereby, shall continue to be in full force and effect to the same extent as provided therein, and (b) the Secured Obligations as defined in the Credit Agreement, including without limitation the Notes as defined in the Credit Agreement, are secured by the Original Deed of Trust, as amended hereby.
30. Limitation on Agreements. The modifications set forth herein are limited precisely as written and shall not be deemed (a) to be a consent under or a waiver of or an amendment to any other term or condition in the Original Deed of Trust, or (b) to prejudice any right or rights which Beneficiary now has or may have in the future under or in connection with the Original Deed of Trust, as amended hereby, or any of the other documents referred to herein or therein.
31. Effect of Amendment; Conflicts. This Amendment shall be construed as, and is hereby made a part of, the Original Deed of Trust, and such instruments (the Original Deed of Trust and this Amendment) shall be construed and interpreted together as a single instrument, excepting only that in the case of any inconsistency which cannot be reconciled, the terms of this Amendment shall be controlling.
32. Incorporation of Certain Provisions by Reference. The provisions of Section 6.10 of the Original Deed of Trust captioned Governing Law are incorporated herein by reference for all purposes.
33. Continued Effect of Original Deed of Trust. Nothing in this Amendment shall be construed as in any way releasing, affecting or impairing the lien created by the Original Deed of Trust against the oil and gas properties described therein. The Original Deed of Trust shall continue to be in full force and effect against all of the oil and gas properties described therein in order to secure the payment and performance of the indebtedness and obligations secured by the Original Deed of Trust.
34. Counterparts. This Amendment may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Amendment and all of which, when taken together, will be deemed to constitute one and the same agreement.
35. Entirety. THIS AGREEMENT AND ALL OF THE OTHER LOAN DOCUMENTS (AS DEFINED IN THE ORIGINAL DEED OF TRUST) REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
FIFTH AMENDMENT Page 4
36. Miscellaneous. This Amendment shall be considered as an amendment to and ratification of the Original Deed of Trust, and the Original Deed of Trust, as herein expressly amended, is hereby ratified, approved and confirmed in every respect. All liens created, extended or renewed by the Original Deed of Trust are hereby extended, renewed and carried forward by this instrument and incorporated herein. All references to the Original Deed of Trust in any documents heretofore or hereafter executed shall be deemed to refer to the Original Deed of Trust as amended by this Amendment.
[The rest of this page is intentionally left blank; the signature pages follow.]
FIFTH AMENDMENT Page 5
EXECUTED on the date(s) of the acknowledgment(s) below to be effective as of the date first set forth above.
GRANTOR: | ||
PRIMEENERGY RESOURCES CORPORATION, f/k/a PrimeEnergy Corporation | ||
By: | /s/ Beverly A. Cummings | |
Beverly A. Cummings | ||
Executive Vice President, Treasurer & Chief | ||
Financial Officer |
STATE OF TEXAS | § | |
§ | ||
COUNTY OF ___________ | § |
This instrument was acknowledged before me on the ____ day of December, 2021, by Beverly A. Cummings, Executive Vice President, Treasurer & Chief Financial Officer of PrimeEnergy Resources Corporation, a Delaware corporation (f/k/a PrimeEnergy Corporation), on behalf of said corporation.
Notary Public, State of Texas |
FIFTH AMENDMENT Signature Page
GRANTOR (CONTINUED): | ||
PRIMEENERGY MANAGEMENT CORPORATION | ||
By: | /s/ Beverly A. Cummings | |
Beverly A. Cummings | ||
Executive Vice President, Treasurer & Chief Financial Officer |
STATE OF TEXAS |
§ | |
§ | ||
COUNTY OF ____________ | § |
This instrument was acknowledged before me on the ____ day of December, 2021, by Beverly A. Cummings, Executive Vice President, Treasurer & Chief Financial Officer of PrimeEnergy Management Corporation, a New York corporation, on behalf of said corporation.
Notary Public, State of Texas |
FIFTH AMENDMENT Signature Page
BENEFICIARY: | ||
CITIBANK, N.A., as Administrative Agent, as Beneficiary | ||
By: |
/s/ Ryan Watson | |
Ryan Watson | ||
Senior Vice President |
STATE OF TEXAS |
§ | |
§ | ||
COUNTY OF ____________ | § |
This instrument was acknowledged before me on the ____ day of December, 2021, by Ryan Watson, Senior Vice President of Citibank, N.A., a national banking association, on behalf of said banking association.
Notary Public, State of Texas |
FIFTH AMENDMENT Signature Page
ORIGINAL BENEFICIARY: | ||
PNC BANK, successor to BBVA USA, as Original Beneficiary | ||
By: |
/s/ Julia Barnhill | |
Julia Barnhill | ||
Vice President |
STATE OF TEXAS | § | |
§ | ||
COUNTY OF ____________ | § |
This instrument was acknowledged before me on the ____ day of December, 2021, by Julia Barnhill, a Vice President of PNC Bank, successor to BBVA USA, a national banking association, on behalf of said banking association.
Notary Public, State of Texas |
FIFTH AMENDMENT Signature Page
SCHEDULE I
A. Amended, Restated and Consolidated Deed of Trust, Mortgage, Security Agreement, Assignment of Production and Financing Statement by PrimeEnergy Corporation and PrimeEnergy Management Corporation, as Grantor to Dorothy E. Marchand, as Trustee, and Compass Bank, as Administrative Agent for the benefit of the Secured Parties, dated as of May 5, 2017, which has been recorded as follows:
Location |
Recording Information |
Date Recorded | ||
Upton County, Texas |
Vol. 998, Page 750, Document No. 00171014 |
06/05/2017 |
B. First Amendment to Amended, Restated and Consolidated Deed of Trust, Mortgage, Security Agreement, Assignment of Production and Financing Statement to Dorothy E. Marchand, as Trustee, and Compass Bank, as Administrative Agent for the benefit of the Secured Parties, dated as of March 1, 2019 (the First Amendment), which has been recorded as follows:
Location |
Recording Information |
Date Recorded | ||
Upton County, Texas |
Vol. 1060, Page 740, Document No. 00178241 |
04/04/2019 |
C. Second Amendment to Amended, Restated and Consolidated Deed of Trust, Mortgage, Security Agreement, Assignment of Production and Financing Statement to Dorothy E. Marchand, as Trustee, and BBVA USA f/k/a Compass Bank, as Administrative Agent for the benefit of the Secured Parties, dated as of July 18, 2019 (the Second Amendment), which has been recorded as follows:
Location |
Recording Information |
Date Recorded | ||
Upton County, Texas |
Vol. 1078, Page 661, Document No. 00179990 |
08/23/2019 |
D. Third Amendment to Amended, Restated and Consolidated Deed of Trust, Mortgage, Security Agreement, Assignment of Production and Financing Statement to Danielle Farnham, as Trustee, and BBVA USA f/k/a Compass Bank, as Administrative Agent for the benefit of the Secured Parties, dated as of January 28, 2020 (the Third Amendment), which has been recorded as follows:
Location |
Recording Information |
Date Recorded | ||
Upton County, Texas |
Vol. 1095, Page 333, Document No. 00182049 |
02/21/2020 |
Schedule I Page 1
E. Fourth Amendment to Amended, Restated and Consolidated Deed of Trust, Mortgage, Security Agreement, Assignment of Production and Financing Statement to Danielle Farnham, as Trustee, and BBVA USA f/k/a Compass Bank, as Administrative Agent for the benefit of the Secured Parties, dated as of July 17, 2020 (the Fourth Amendment), which has been recorded as follows:
Location |
Recording Information |
Date Recorded | ||
Upton County, Texas |
Vol. 1109, Page 651, Document No. 00183466 |
08/18/2020 |
Schedule I Page 2
EXHIBIT 10.22.5.14.1
After recording, return to:
Winstead PC
2728 N. Harwood St., Suite 500
Dallas, Texas 75201
Attn: Bee Archaphorn
Caddo County, Oklahoma |
Lincoln County, Oklahoma | |
Comanche County, Oklahoma |
Logan County, Oklahoma | |
Dewey County, Oklahoma |
Major County, Oklahoma | |
Garfield County, Oklahoma |
Noble County, Oklahoma | |
Grant County, Oklahoma |
Roger Mills County, Oklahoma | |
Harper County, Oklahoma |
Woodward County, Oklahoma | |
Kingfisher County, Oklahoma |
FIRST AMENDMENT TO AMENDED, RESTATED AND
CONSOLIDATED MORTGAGE OF OIL
AND GAS PROPERTY, SECURITY AGREEMENT,
ASSIGNMENT OF PRODUCTION AND FINANCING STATEMENT
KNOW ALL MEN BY THESE PRESENTS:
THIS FIRST AMENDMENT TO AMENDED, RESTATED AND CONSOLIDATED MORTGAGE OF OIL AND GAS PROPERTY, SECURITY AGREEMENT, ASSIGNMENT OF PRODUCTION AND FINANCING STATEMENT (this Amendment) is made and entered into as of December 20, 2021, between PRIMEENERGY RESOURCES CORPORATION, a Delaware corporation, formerly known as PrimeEnergy Corporation (Prime) and PRIMEENERGY MANAGEMENT CORPORATION, a New York corporation (PEMC, and Prime and PEMC herein, individually and collectively, Mortgagor), and CITIBANK, N.A., as Administrative Agent for the benefit of the Secured Parties (in such capacity and together with its successors and assigns in such capacity, Mortgagee).
R E C I T A L S
A. Mortgagor has heretofore executed and delivered that certain Amended, Restated and Consolidated Mortgage of Oil and Gas Property, Security Agreement, Assignment of Production and Financing Statement set forth in Schedule 1 attached hereto (collectively, the Original Mortgage) , covering the real property described on Exhibit A hereto, and securing the indebtedness as described therein, to PNC BANK, NATIONAL ASSOCIATION, successor to BBVA USA, which was formerly known as Compass Bank, in its capacity as administrative agent for the Secured Parties and original beneficiary under the Original Mortgage (in such capacity, the Original Mortgagee).
B. The Original Mortgage secures, among other things, the payment of all of the indebtedness owed by Mortgagor under that certain Third Amended and Restated Credit Agreement dated as of February 15, 2017, by and among Borrower, Original Mortgagee as Administrative Agent and the lenders party thereto (as amended, restated, supplemented or otherwise modified prior to the date hereof, the Credit Agreement; each capitalized term which is defined in the Credit Agreement, but which is not defined in this Amendment, shall have the meaning ascribed such term in the Credit Agreement), including without limitation the Secured Obligations as therein defined.
FIRST AMENDMENT Page 1
C. Pursuant to that certain Resignation and Appointment Agreement dated as of December 20, 2021, the Original Mortgagee agreed to resign as administrative agent under the Credit Agreement and the other Loan Documents, and Citibank, N.A., has agreed to accept appointment as successor administrative agent thereunder (in such capacity, the Successor Administrative Agent or Administrative Agent, as applicable).
D. In connection with the foregoing, Mortgagee, Original Mortgagee, Borrower and Lenders have amended the Credit Agreement pursuant to the terms of the Seventh Amendment to Third Amended and Restated Credit Agreement between the parties dated as of December 20, 2021, and the parties hereto desire to amend the Original Mortgage as hereafter provided.
NOW THEREFORE, in consideration of these premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Mortgagor does hereby grant, bargain, sell, assign, mortgage with power of sale, transfer, and convey unto Mortgagee, with power of sale, the Mortgaged Properties (as defined in the Original Mortgage), to have and to hold such Mortgaged Properties unto Mortgagee and its successors and assigns, and the parties hereto agree as follows:
1. Same Terms. All terms used herein that are defined in the Original Mortgage shall have the same meanings when used herein, unless the context hereof otherwise requires or provides.
2. Amendments to Original Mortgage.
(a) Each reference to Compass Bank in the Original Mortgage is hereby deleted and the reference to Citibank, N.A. is hereby inserted in lieu thereof.
(b) The address of the Mortgagee set forth in cover page of the Original Mortgage is hereby amended to read as 2001 Ross Ave, Ste 4300, Dallas, TX 75201.
(c) The address set forth in Section 4.2 of the Original Mortgage is hereby amended to read in its entirety as follows:
Citibank, N.A., as Administrative Agent
2001 Ross Ave, Ste 4300
Dallas, TX 75201
(d) The notice information for Mortgagee set forth in Section 6.9 of the Original Mortgage is hereby amended to read in its entirety as follows:
If to Mortgagee: |
Citibank, N.A., as Administrative Agent 2001 Ross Ave, Ste 4300 Dallas, TX 75201 |
FIRST AMENDMENT Page 2
3. Certain Representations. Mortgagor represents and warrants that, as of the date hereof: (a) Mortgagor has full power and authority to execute this Amendment, and this Amendment constitutes the legal, valid and binding obligation of Mortgagor, enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting the enforcement of creditors rights generally; and (b) no authorization, approval, consent or other action by, notice to, or filing with, any governmental authority or other person is required for the execution and delivery by Mortgagor of this Amendment, or the performance of this Amendment.
4. Ratification and Confirmation. It is expressly agreed that the execution of this Amendment shall not alter or otherwise affect the terms, provisions and conditions of the Original Mortgage EXCEPT as expressly set out above. Mortgagor hereby RATIFIES, CONFIRMS AND AGREES that (a) the Original Mortgage, as amended hereby, shall continue to be in full force and effect to the same extent as provided therein, and (b) the Secured Obligations as defined in the Credit Agreement, including without limitation the Notes as defined in the Credit Agreement, are secured by the Original Mortgage, as amended hereby.
5. Limitation on Agreements. The modifications set forth herein are limited precisely as written and shall not be deemed (a) to be a consent under or a waiver of or an amendment to any other term or condition in the Original Mortgage, or (b) to prejudice any right or rights which Mortgagee now has or may have in the future under or in connection with the Original Mortgage, as amended hereby, or any of the other documents referred to herein or therein.
6. Effect of Amendment; Conflicts. This Amendment shall be construed as, and is hereby made a part of, the Original Mortgage, and such instruments (the Original Mortgage and this Amendment) shall be construed and interpreted together as a single instrument, excepting only that in the case of any inconsistency which cannot be reconciled, the terms of this Amendment shall be controlling.
7. Incorporation of Certain Provisions by Reference. The provisions of Section 6.10 of the Original Mortgage captioned Governing Law are incorporated herein by reference for all purposes.
8. Continued Effect of Original Mortgage. Nothing in this Amendment shall be construed as in any way releasing, affecting or impairing the lien created by the Original Mortgage against the oil and gas properties described therein. The Original Mortgage shall continue to be in full force and effect against all of the oil and gas properties described therein in order to secure the payment and performance of the indebtedness and obligations secured by the Original Mortgage.
9. Counterparts. This Amendment may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Amendment and all of which, when taken together, will be deemed to constitute one and the same agreement.
10. Entirety. THIS AGREEMENT AND ALL OF THE OTHER LOAN DOCUMENTS (AS DEFINED IN THE ORIGINAL MORTGAGE) REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
FIRST AMENDMENT Page 3
11. Miscellaneous. This Amendment shall be considered as an amendment to and ratification of the Original Mortgage, and the Original Mortgage, as herein expressly amended, is hereby ratified, approved and confirmed in every respect. All liens created, extended or renewed by the Original Mortgage are hereby extended, renewed and carried forward by this instrument and incorporated herein. All references to the Original Mortgage in any documents heretofore or hereafter executed shall be deemed to refer to the Original Mortgage as amended by this Amendment.
[The rest of this page is intentionally left blank. The signature pages follow.]
FIRST AMENDMENT Page 4
EXECUTED on the date(s) of the acknowledgment(s) below, to be effective as of the date first set forth above.
MORTGAGOR: | ||||
PRIMEENERGY RESOURCES CORPORATION, f/k/a PrimeEnergy Corporation | ||||
By: | /s/ Beverly A. Cummings | |||
Beverly A. Cummings Executive Vice President, Treasurer & Chief Financial Officer |
STATE OF TEXAS | § | |
§ | ||
COUNTY OF ____________ | § |
This instrument was acknowledged before me on the ____ day of December, 2021, by Beverly A. Cummings, Executive Vice President, Treasurer & Chief Financial Officer of PrimeEnergy Resources Corporation, a Delaware corporation (f/k/a PrimeEnergy Corporation), on behalf of said corporation.
Notary Public, State of Texas |
FIRST AMENDMENT Signature Page
MORTGAGOR (CONTINUED): | ||||
PRIMEENERGY MANAGEMENT CORPORATION | ||||
By: | /s/ Beverly A. Cummings | |||
Beverly A. Cummings Executive Vice President, Treasurer & Chief Financial Officer |
STATE OF TEXAS | § | |
§ | ||
COUNTY OF ____________ | § |
This instrument was acknowledged before me on the ____ day of December, 2021, by Beverly A. Cummings, Executive Vice President, Treasurer & Chief Financial Officer of PrimeEnergy Management Corporation, a New York corporation, on behalf of said corporation.
Notary Public, State of Texas |
FIRST AMENDMENT Signature Page
MORTGAGEE: | ||
CITIBANK, N.A., as Administrative Agent, as Mortgagee | ||
By: | /s/ Ryan Watson | |
Ryan Watson | ||
Senior Vice President |
STATE OF TEXAS | § | |
§ | ||
COUNTY OF ____________ | § |
This instrument was acknowledged before me on the ____ day of December, 2021, by Ryan Watson, Senior Vice President of Citibank, N.A., a national banking association, on behalf of said banking association.
Notary Public, State of Texas |
FIRST AMENDMENT Signature Page
ORIGINAL MORTGAGEE: | ||
PNC BANK, successor to BBVA USA, formerly known as Compass Bank, as Original Mortgagee | ||
By: | /s/ Julia Barnhill | |
Julia Barnhill | ||
Vice President |
STATE OF TEXAS | § | |
§ | ||
COUNTY OF ____________ | § |
This instrument was acknowledged before me on the ____ day of December, 2021, by Julia Barnhill, a Vice President of PNC Bank, successor to BBVA USA, a national banking association, on behalf of said banking association.
Notary Public, State of Texas |
FIRST AMENDMENT Signature Page
SCHEDULE I
A. Amended, Restated and Consolidated Mortgage of Oil and Gas Property, Security Agreement, Assignment of Production and Financing Statement by PrimeEnergy Corporation and PrimeEnergy Management Corporation, as Mortgagor to Compass Bank, as Administrative Agent and Mortgagee, for the benefit of the Secured Parties dated as of May 5, 2017, which has been recorded as follows:
|
Location |
Recording Information |
Date Recorded | |||
Caddo County, Oklahoma | Volume 3050, Page 452, Document No. 201700005988 |
06/17/2017 | ||||
Comanche County, Oklahoma | Book 7836, Page 46, Document No. I-2017-008505 |
06/05/2017 | ||||
Dewey County, Oklahoma | Book 1674, Page 288, Document No. I-2017-004915 |
06/06/2017 | ||||
Garfield County, Oklahoma | Book 2344, Page 971, Document No. 7072 |
07/05/2017 | ||||
Grant County, Oklahoma | Book 737, Page 44, Document No. I-2017-000883 |
06/06/2017 | ||||
Harper County, Oklahoma | Book 726, Page 588, Document No. I-2017-000605 |
06/05/2017 | ||||
Kingfisher County, Oklahoma | Book 3028, Page 397, Document No. I-2017-006670 |
06/06/2017 | ||||
Lincoln County, Oklahoma | Book 2255, Page 117, Document No. I-2017-004369 |
06/06/2017 | ||||
Logan County, Oklahoma | Book 2731, Page 421, Document No. I-2017-005402 |
06/05/2017 | ||||
Major County, Oklahoma | Book 1968, Page 74, Document No. I-2017-002833 |
06/06/2017 | ||||
Noble County, Oklahoma | Book 813, Page 872, Document No. I-2017-001519 |
06/05/2017 | ||||
Roger Mills County, Oklahoma | Book 2369, Page 122, Document No. I-2017-001167 |
06/06/2017 | ||||
Woodward County, Oklahoma | Book 2372, Page 235, Document No. I-2016-008855 |
06/06/2017 |
Schedule I Page 1
EXHIBIT A
[See attached.]
Exhibit A Cover Page
Exhibit 10.22.5.14.2
After recording, return to:
Winstead PC
2728 N. Harwood St., Suite 500
Dallas, Texas 75201
Attn: Bee Archaphorn
Canadian County, Oklahoma
Garvin County, Oklahoma
Grady County, Oklahoma
SECOND AMENDMENT TO AMENDED, RESTATED AND
CONSOLIDATED MORTGAGE OF OIL
AND GAS PROPERTY, SECURITY AGREEMENT,
ASSIGNMENT OF PRODUCTION AND FINANCING STATEMENT
KNOW ALL MEN BY THESE PRESENTS:
THIS SECOND AMENDMENT TO AMENDED, RESTATED AND CONSOLIDATED MORTGAGE OF OIL AND GAS PROPERTY, SECURITY AGREEMENT, ASSIGNMENT OF PRODUCTION AND FINANCING STATEMENT (this Amendment) is made and entered into as of December 20, 2021, between PRIMEENERGY RESOURCES CORPORATION, a Delaware corporation, formerly known as PrimeEnergy Corporation (Prime) and PRIMEENERGY MANAGEMENT CORPORATION, a New York corporation (PEMC, and Prime and PEMC herein, individually and collectively, Mortgagor), and CITIBANK, N.A., as Administrative Agent for the benefit of the Secured Parties (in such capacity and together with its successors and assigns in such capacity, Mortgagee).
R E C I T A L S
A. Mortgagor has heretofore executed and delivered that certain Amended, Restated and Consolidated Mortgage of Oil and Gas Property, Security Agreement, Assignment of Production and Financing Statement set forth in Schedule 1 attached hereto (collectively, the Original Mortgage) , covering the real property described on Exhibit A hereto, and securing the indebtedness as described therein, to PNC BANK, NATIONAL ASSOCIATION, successor to BBVA USA, which was formerly known as Compass Bank, in its capacity as administrative agent for the Secured Parties and original beneficiary under the Original Mortgage (in such capacity, the Original Mortgagee).
B. The Original Mortgage secures, among other things, the payment of all of the indebtedness owed by Mortgagor under that certain Third Amended and Restated Credit Agreement dated as of February 15, 2017, by and among Borrower, Original Mortgagee as Administrative Agent and the lenders party thereto (as amended, restated, supplemented or otherwise modified prior to the date hereof, the Credit Agreement; each capitalized term which is defined in the Credit Agreement, but which is not defined in this Amendment, shall have the meaning ascribed such term in the Credit Agreement), including without limitation the Secured Obligations as therein defined.
SECOND AMENDMENT Page 1
C. Pursuant to that certain Resignation and Appointment Agreement dated as of December 20, 2021, the Original Mortgagee agreed to resign as administrative agent under the Credit Agreement and the other Loan Documents, and Citibank, N.A., has agreed to accept appointment as successor administrative agent thereunder (in such capacity, the Successor Administrative Agent or Administrative Agent, as applicable).
D. In connection with the foregoing, Mortgagee, Original Mortgagee, Borrower and Lenders have amended the Credit Agreement pursuant to the terms of the Seventh Amendment to Third Amended and Restated Credit Agreement between the parties dated as of December 20, 2021, and the parties hereto desire to amend the Original Mortgage as hereafter provided.
NOW THEREFORE, in consideration of these premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Mortgagor does hereby grant, bargain, sell, assign, mortgage with power of sale, transfer, and convey unto Mortgagee, with power of sale, the Mortgaged Properties (as defined in the Original Mortgage), to have and to hold such Mortgaged Properties unto Mortgagee and its successors and assigns, and the parties hereto agree as follows:
1. Same Terms. All terms used herein that are defined in the Original Mortgage shall have the same meanings when used herein, unless the context hereof otherwise requires or provides.
2. Amendments to Original Mortgage.
(a) Each reference to Compass Bank in the Original Mortgage is hereby deleted and the reference to Citibank, N.A. is hereby inserted in lieu thereof.
(b) The address of the Mortgagee set forth in cover page of the Original Mortgage is hereby amended to read as 2001 Ross Ave, Ste 4300, Dallas, TX 75201.
(c) The address set forth in Section 4.2 of the Original Mortgage is hereby amended to read in its entirety as follows:
Citibank, N.A., as Administrative Agent
2001 Ross Ave, Ste 4300
Dallas, TX 75201
(d) The notice information for Mortgagee set forth in Section 6.9 of the Original Mortgage is hereby amended to read in its entirety as follows:
If to Mortgagee: |
Citibank, N.A., as Administrative Agent 2001 Ross Ave, Ste 4300 Dallas, TX 75201 |
3. Certain Representations. Mortgagor represents and warrants that, as of the date hereof: (a) Mortgagor has full power and authority to execute this Amendment, and this Amendment constitutes the legal, valid and binding obligation of Mortgagor, enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting the enforcement of creditors rights generally; and (b) no authorization, approval, consent or other action by, notice to, or filing with, any governmental authority or other person is required for the execution and delivery by Mortgagor of this Amendment, or the performance of this Amendment.
SECOND AMENDMENT Page 2
4. Ratification and Confirmation. It is expressly agreed that the execution of this Amendment shall not alter or otherwise affect the terms, provisions and conditions of the Original Mortgage EXCEPT as expressly set out above. Mortgagor hereby RATIFIES, CONFIRMS AND AGREES that (a) the Original Mortgage, as amended hereby, shall continue to be in full force and effect to the same extent as provided therein, and (b) the Secured Obligations as defined in the Credit Agreement, including without limitation the Notes as defined in the Credit Agreement, are secured by the Original Mortgage, as amended hereby.
5. Limitation on Agreements. The modifications set forth herein are limited precisely as written and shall not be deemed (a) to be a consent under or a waiver of or an amendment to any other term or condition in the Original Mortgage, or (b) to prejudice any right or rights which Mortgagee now has or may have in the future under or in connection with the Original Mortgage, as amended hereby, or any of the other documents referred to herein or therein.
6. Effect of Amendment; Conflicts. This Amendment shall be construed as, and is hereby made a part of, the Original Mortgage, and such instruments (the Original Mortgage and this Amendment) shall be construed and interpreted together as a single instrument, excepting only that in the case of any inconsistency which cannot be reconciled, the terms of this Amendment shall be controlling.
7. Incorporation of Certain Provisions by Reference. The provisions of Section 6.10 of the Original Mortgage captioned Governing Law are incorporated herein by reference for all purposes.
8. Continued Effect of Original Mortgage. Nothing in this Amendment shall be construed as in any way releasing, affecting or impairing the lien created by the Original Mortgage against the oil and gas properties described therein. The Original Mortgage shall continue to be in full force and effect against all of the oil and gas properties described therein in order to secure the payment and performance of the indebtedness and obligations secured by the Original Mortgage.
9. Counterparts. This Amendment may be executed in one or more counterparts, each of which will be deemed to be an original copy of this Amendment and all of which, when taken together, will be deemed to constitute one and the same agreement.
10. Entirety. THIS AGREEMENT AND ALL OF THE OTHER LOAN DOCUMENTS (AS DEFINED IN THE ORIGINAL MORTGAGE) REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
11. Miscellaneous. This Amendment shall be considered as an amendment to and ratification of the Original Mortgage, and the Original Mortgage, as herein expressly amended, is hereby ratified, approved and confirmed in every respect. All liens created, extended or renewed by the Original Mortgage are hereby extended, renewed and carried forward by this instrument and incorporated herein. All references to the Original Mortgage in any documents heretofore or hereafter executed shall be deemed to refer to the Original Mortgage as amended by this Amendment.
SECOND AMENDMENT Page 3
[The rest of this page is intentionally left blank. The signature pages follow.]
SECOND AMENDMENT Page 4
EXECUTED on the date(s) of the acknowledgment(s) below, to be effective as of the date first set forth above.
MORTGAGOR: | ||
PRIMEENERGY RESOURCES CORPORATION, f/k/a PrimeEnergy Corporation | ||
By: | /s/ Beverly A. Cummings | |
Beverly A. Cummings | ||
Executive Vice President, Treasurer & Chief Financial Officer |
STATE OF TEXAS | § | |
§ | ||
COUNTY OF ____________ | § |
This instrument was acknowledged before me on the ____ day of December, 2021, by Beverly A. Cummings, Executive Vice President, Treasurer & Chief Financial Officer of PrimeEnergy Resources Corporation, a Delaware corporation (f/k/a PrimeEnergy Corporation), on behalf of said corporation.
Notary Public, State of Texas |
SECOND AMENDMENT Signature Page
MORTGAGOR (CONTINUED): | ||
PRIMEENERGY MANAGEMENT CORPORATION | ||
By: |
/s/ Beverly A. Cummings | |
Beverly A. Cummings | ||
Executive Vice President, Treasurer & Chief Financial Officer |
STATE OF TEXAS | § | |
§ | ||
COUNTY OF ____________ | § |
This instrument was acknowledged before me on the ____ day of December, 2021, by Beverly A. Cummings, Executive Vice President, Treasurer & Chief Financial Officer of PrimeEnergy Management Corporation, a New York corporation, on behalf of said corporation.
Notary Public, State of Texas |
SECOND AMENDMENT Signature Page
MORTGAGEE: | ||
CITIBANK, N.A., as Administrative Agent, as Mortgagee | ||
By: | /s/ Ryan Watson | |
Ryan Watson | ||
Senior Vice President |
STATE OF TEXAS | § | |
§ | ||
COUNTY OF ____________ | § |
This instrument was acknowledged before me on the ____ day of December, 2021, by Ryan Watson, Senior Vice President of Citibank, N.A., a national banking association, on behalf of said banking association.
Notary Public, State of Texas |
SECOND AMENDMENT Signature Page
ORIGINAL MORTGAGEE: | ||
PNC BANK, successor to BBVA USA, formerly known as Compass Bank, as Original Mortgagee | ||
By: | /s/ Julia Barnhill | |
Julia Barnhill | ||
Vice President |
STATE OF TEXAS | § | |
§ | ||
COUNTY OF ____________ | § |
This instrument was acknowledged before me on the ____ day of December, 2021, by Julia Barnhill, a Vice President of PNC Bank, successor to BBVA USA, a national banking association, on behalf of said banking association.
Notary Public, State of Texas |
SECOND AMENDMENT Signature Page
SCHEDULE I
A. Amended, Restated and Consolidated Mortgage of Oil and Gas Property, Security Agreement, Assignment of Production and Financing Statement by PrimeEnergy Corporation and PrimeEnergy Management Corporation, as Mortgagor to Compass Bank, as Administrative Agent and Mortgagee, for the benefit of the Secured Parties dated as of May 5, 2017, which has been recorded as follows:
Location |
Recording Information |
Date Recorded | ||
Canadian County, Oklahoma |
Book RB 4587, Page 25, Document No. 2017 15598 |
06/05/2017 | ||
Garvin County, Oklahoma |
Book 2179, Page 188, Document No. I-2017-004768 |
06/05/2017 | ||
Grady County, Oklahoma |
Book 5232, Page 355, Document No. 2017-012760 |
06/05/2017 |
B. First Amendment to Amended, Restated and Consolidated Mortgage of Oil and Gas Property, Security Agreement, Assignment of Production and Financing Statement by PrimeEnergy Resources Corporation and PrimeEnergy Management Corporation, as Mortgagor to BBVA USA f/k/a Compass Bank, as Administrative Agent and Mortgagee, for the benefit of the Secured Parties dated as of February 10, 2020, which has been recorded as follows:
Location |
Recording Information |
Date Recorded | ||
Canadian County, Oklahoma |
Book RB 5027, Page 861, Document No. R 2020 4672 |
02/20/2020 | ||
Garvin County, Oklahoma |
Book 2300, Page 506, Document No. I-2020-001573 |
02/21/2020 | ||
Grady County, Oklahoma |
Book 5705, Page 121, Document No. I-2020-002392 |
02/20/2020 |
Schedule I Page 1
EXHIBIT A
[See attached.]
Exhibit A Cover Page
Exhibit 21
SUBSIDIARIES
PrimeEnergy Management Corporation, a New York corporation, 100% owned by PrimeEnergy Resources Corporation.
Prime Operating Company, a Texas corporation, 100% owned by PrimeEnergy Resources Corporation.
Eastern Oil Well Service Company, a West Virginia corporation, 100% owned by PrimeEnergy Resources Corporation.
E O W S Midland Company, a Texas corporation, 100% owned by PrimeEnergy Resources Corporation.
Prime Offshore L.L.C., a Delaware limited liability company, 100% owned by PrimeEnergy Resources Corporation.
EXHIBIT 23
|
||||||
TBPELS REGISTERED ENGINEERING FIRM F-1580 | ||||||
633 17TH STREET SUITE 1700 | DENVER, COLORADO 80202 | TELEPHONE (303) 339-8110 |
CONSENT OF RYDER SCOTT COMPANY, L.P.
We consent to the filing of our summary reserve report dated March 3, 2022, as Exhibit 23 to the PrimeEnergy Resources Corporation annual report on Form 10-K for the year ended December 31, 2021 and to any reference made to us on that form 10-K.
Very Truly Yours, |
/s/ Ryder Scott Company, L.P. |
RYDER SCOTT COMPANY, L.P. |
TBPELS Firm Registration No. F-1580 |
Denver, Colorado
April 20, 2022
EXHIBIT 31.1
CERTIFICATIONS
I, Charles E. Drimal, Jr., Chief Executive Officer of PrimeEnergy Resources Corporation, certify that:
1. | I have reviewed this Form 10-K for the year ended December 31, 2021, of PrimeEnergy Resources Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
April 21, 2022
/s/ Charles E. Drimal, Jr. |
Charles E. Drimal, Jr. |
Chief Executive Officer |
PrimeEnergy Resources Corporation |
EXHIBIT 31.2
CERTIFICATIONS
I, Beverly A. Cummings, Chief Financial Officer of PrimeEnergy Resources Corporation, certify that:
1. | I have reviewed this Form 10-K for the year ended December 31, 2021 of PrimeEnergy Resources Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrants other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and |
5. | The registrants other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting. |
April 21, 2022
/s/ Beverly A. Cummings |
Beverly A. Cummings |
Chief Financial Officer |
PrimeEnergy Resources Corporation |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of PrimeEnergy Resources Corporation (the Company) on Form 10-K for the period ending December 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Charles E. Drimal Jr., Chief Executive Officer of PrimeEnergy Resources Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
/s/ Charles E. Drimal, Jr. |
Charles E. Drimal, Jr. |
Chief Executive Officer |
April 21, 2022 |
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of PrimeEnergy Resources Corporation (the Company) on Form 10-K for the period ending December 31, 2021, as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Beverly A. Cummings, Chief Financial Officer of PrimeEnergy Resources Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(1) | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
/s/ Beverly A. Cummings |
Beverly A. Cummings |
Chief Financial Officer |
April 21, 2022 |
EXHIBIT 99.1
PrimeEnergy Resources Corporation
Estimated
Future Reserves and Income
Attributable to Certain
Leasehold and Royalty Interests
SEC Parameters
As of
December 31, 2021
/s/ Stephen G. Gardner |
Stephen E. Gardner, P.E. |
Colorado License No. 44720 |
Managing Senior Vice President |
[SEAL]
RYDER SCOTT COMPANY, L.P.
TBPELS Firm Registration No. F-1580
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
TBPELS REGISTERED ENGINEERING FIRM F-1580 | ||||||
633 17TH STREET SUITE 1700 | DENVER, COLORADO 80202 | TELEPHONE (303) 339-8110 |
March 3, 2022
Ms. Beverly A. Cummings
PrimeEnergy Resources Corporation
9821 Katy Freeway, Suite 1050
Houston, TX 77024
Dear Ms. Cummings,
At your request, Ryder Scott Company, L.P. (Ryder Scott) has prepared an estimate of the proved reserves, future production, and income attributable to certain leasehold and royalty interests of PrimeEnergy Resources Corporation and 100 percent of its Partnership Interests (PrimeEnergy) as of December 31, 2021. The subject properties are located in the states of Colorado, Kansas, Louisiana, Mississippi, Montana, New Mexico, North Dakota, Oklahoma, Pennsylvania, Texas, West Virginia and Wyoming. The reserves and income data were estimated based on the definitions and disclosure guidelines of the United States Securities and Exchange Commission (SEC) contained in Title 17, Code of Federal Regulations, Modernization of Oil and Gas Reporting, Final Rule released January 14, 2009 in the Federal Register (SEC regulations). Our third party study, completed on March 3, 2022 and presented herein, was prepared for public disclosure by PrimeEnergy in filings made with the SEC in accordance with the disclosure requirements set forth in the SEC regulations.
The properties evaluated by Ryder Scott represent 100 percent of the total net proved liquid hydrocarbon reserves and 100 percent of the total net proved gas reserves of PrimeEnergy as of December 31, 2021.
The estimated reserves and future net income amounts presented in this report, as of December 31, 2021 are related to hydrocarbon prices. The hydrocarbon prices used in the preparation of this report are based on the average prices during the 12-month period prior to the as of date of this report, determined as the unweighted arithmetic averages of the prices in effect on the first-day-of-the-month for each month within such period, unless prices were defined by contractual arrangements, as required by the SEC regulations. Actual future prices may vary considerably from the prices required by SEC regulations. The recoverable reserves volumes and the income attributable thereto have a direct relationship to the hydrocarbon prices actually received; therefore, volumes of reserves actually recovered and the amounts of income actually received may differ significantly from the estimated quantities presented in this report. The results of this study are summarized as follows.
1100 LOUISIANA, SUITE 4600 | HOUSTON, TEXAS 77002-5294 | TEL (713) 651-9191 | FAX (713) 651-0849 | |||
SUITE 2800, 350 7TH AVENUE, S.W. | CALGARY, ALBERTA T2P 3N9 | TEL (403) 262-2799 |
PrimeEnergy Resources Corporation
March 3, 2022
Page 2
SEC PARAMETERS
Estimated Net Reserves and Income Data
Certain Leasehold and Royalty Interests of
PrimeEnergy Resources Corporation and 100% of Partnership Interests
As of December 31, 2021 |
Proved | ||||||||||||
Developed | Total | |||||||||||
Producing | Non-Producing | Proved | ||||||||||
Net Reserves |
||||||||||||
Oil/Condensate Mbbl |
5,093 | 293 | 5,386 | |||||||||
Plant Products Mbbl |
2,805 | 77 | 2,882 | |||||||||
Gas MMcf |
22,661 | 1,241 | 23,902 | |||||||||
Income Data ($M) |
||||||||||||
Future Gross Revenue |
$ | 449,289 | $ | 24,208 | $ | 473,497 | ||||||
Deductions |
191,601 | 6,669 | 198,270 | |||||||||
|
|
|
|
|
|
|||||||
Future Net Income (FNI) |
$ | 257,688 | $ | 17,539 | $ | 275,227 | ||||||
Discounted FNI @ 10% |
$ | 160,444 | $ | 11,462 | $ | 171,906 |
Liquid hydrocarbons are expressed in standard 42 U.S. gallon barrels and shown herein as thousands of barrels (Mbbl). All gas volumes are reported on an as sold basis expressed in millions of cubic feet (MMcf) at the official temperature and pressure bases of the areas in which the gas reserves are located. In this report, the revenues, deductions, and income data are expressed as thousands of U.S. dollars ($M).
The estimates of the reserves, future production, and income attributable to properties in this report were prepared using the economic software package PHDWin Petroleum Economic Evaluation Software, a copyrighted program of TRC Consultants L.C. The program was used at the request of PrimeEnergy. Ryder Scott has found this program to be generally acceptable, but notes that certain summaries and calculations may vary due to rounding and may not exactly match the sum of the properties being summarized. Furthermore, one line economic summaries may vary slightly from the more detailed cash flow projections of the same properties, also due to rounding. The rounding differences are not material.
The future gross revenue is after the deduction of production taxes. The deductions incorporate the normal direct costs of operating the wells, ad valorem taxes, recompletion costs and certain abandonment costs net of salvage. The future net income is before the deduction of state and federal income taxes and general administrative overhead, and has not been adjusted for outstanding loans that may exist, nor does it include any adjustment for cash on hand or undistributed income.
Liquid hydrocarbon reserves account for approximately 86 percent and gas reserves account for the remaining 14 percent of total future gross revenue from proved reserves.
The discounted future net income shown above was calculated using a discount rate of 10 percent per annum compounded annually. Future net income was discounted at four other discount rates which were also compounded annually. These results are shown in summary form as follows.
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
PrimeEnergy Resources Corporation
March 3, 2022
Page 3
Discounted Future Net Income ($M) |
||||
As of December 31, 2021 | ||||
Discount Rate | Total | |||
Percent |
Proved | |||
5 |
$ | 209,332 | ||
9 |
$ | 178,040 | ||
15 |
$ | 147,724 | ||
20 |
$ | 130,732 |
The results shown above are presented for your information and should not be construed as our estimate of fair market value.
Reserves Included in This Report
The proved reserves included herein conform to the definition as set forth in the Securities and Exchange Commissions Regulations Part 210.4-10(a). An abridged version of the SEC reserves definitions from 210.4-10(a) entitled PETROLEUM RESERVES DEFINITIONS is included as an attachment to this report.
The various reserves status categories are defined in the attachment entitled PETROLEUM RESERVES STATUS DEFINITIONS AND GUIDELINES in this report. The proved developed non-producing reserves included herein consist of the shut-in and behind pipe categories.
No attempt was made to quantify or otherwise account for any accumulated gas production imbalances that may exist. The proved gas volumes presented herein do not include volumes of gas consumed in operations as reserves.
Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. All reserves estimates involve an assessment of the uncertainty relating the likelihood that the actual remaining quantities recovered will be greater or less than the estimated quantities determined as of the date the estimate is made. The uncertainty depends chiefly on the amount of reliable geologic and engineering data available at the time of the estimate and the interpretation of these data. The relative degree of uncertainty may be conveyed by placing reserves into one of two principal classifications, either proved or unproved. Unproved reserves are less certain to be recovered than proved reserves and may be further sub-categorized as probable and possible reserves to denote progressively increasing uncertainty in their recoverability. At PrimeEnergys request, this report addresses only the proved reserves attributable to the properties evaluated herein.
Proved oil and gas reserves are those quantities of oil and gas which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward. The proved reserves included herein were estimated using deterministic methods. The SEC has defined reasonable certainty for proved reserves, when based on deterministic methods, as a high degree of confidence that the quantities will be recovered.
Proved reserves estimates will generally be revised only as additional geologic or engineering data become available or as economic conditions change. For proved reserves, the SEC states that as changes due to increased availability of geoscience (geological, geophysical, and geochemical), engineering, and economic data are made to the estimated ultimate recovery (EUR) with time, reasonably
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
PrimeEnergy Resources Corporation
March 3, 2022
Page 4
certain EUR is much more likely to increase or remain constant than to decrease. Moreover, estimates of proved reserves may be revised as a result of future operations, effects of regulation by governmental agencies or geopolitical or economic risks. Therefore, the proved reserves included in this report are estimates only and should not be construed as being exact quantities, and if recovered, the revenues therefrom, and the actual costs related thereto, could be more or less than the estimated amounts.
PrimeEnergys operations may be subject to various levels of governmental controls and regulations. These controls and regulations may include, but may not be limited to, matters relating to land tenure and leasing, the legal rights to produce hydrocarbons drilling and production practices, environmental protection, marketing and pricing policies, royalties, various taxes and levies including income tax and are subject to change from time to time. Such changes in governmental regulations and policies may cause volumes of proved reserves actually recovered and amounts of proved income actually received to differ significantly from the estimated quantities.
The estimates of proved reserves presented herein were based upon a detailed study of the properties in which PrimeEnergy owns an interest; however, we have not made any field examination of the properties. No consideration was given in this report to potential environmental liabilities that may exist nor were any costs included for potential liabilities to restore and clean up damages, if any, caused by past operating practices.
Estimates of Reserves
The estimation of reserves involves two distinct determinations. The first determination results in the estimation of the quantities of recoverable oil and gas and the second determination results in the estimation of the uncertainty associated with those estimated quantities in accordance with the definitions set forth by the Securities and Exchange Commissions Regulations Part 210.4-10(a). The process of estimating the quantities of recoverable oil and gas reserves relies on the use of certain generally accepted analytical procedures. These analytical procedures fall into three broad categories or methods: (1) performance-based methods, (2) volumetric-based methods and (3) analogy. These methods may be used individually or in combination by the reserves evaluator in the process of estimating the quantities of reserves. Reserves evaluators must select the method or combination of methods, which in their professional judgment is most appropriate given the nature and amount of reliable geoscience and engineering data available at the time of the estimate, the established or anticipated performance characteristics of the reservoir being evaluated, and the stage of development or producing maturity of the property.
In many cases, the analysis of the available geoscience and engineering data and the subsequent interpretation of this data may indicate a range of possible outcomes in an estimate, irrespective of the method selected by the evaluator. When a range in the quantity of reserves is identified, the evaluator must determine the uncertainty associated with the incremental quantities of the reserves. If the reserves quantities are estimated using the deterministic incremental approach, the uncertainty for each discrete incremental quantity of the reserves is addressed by the reserves category assigned by the evaluator. Therefore, it is the categorization of reserves quantities as proved, probable and/or possible that addresses the inherent uncertainty in the estimated quantities reported. For proved reserves, uncertainty is defined by the SEC as reasonable certainty wherein the quantities actually recovered are much more likely to be achieved than not. The SEC states that probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered. The SEC states that possible reserves are those additional reserves that are less certain to be recovered than probable reserves and the total quantities ultimately recovered from a project have a low probability of exceeding proved plus probable plus possible reserves. All quantities of reserves within the same reserves category must meet the SEC definitions as noted above.
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
PrimeEnergy Resources Corporation
March 3, 2022
Page 5
Estimates of reserves quantities and their associated reserves categories may be revised in the future as additional geoscience or engineering data become available. Furthermore, estimates of reserves quantities and their associated reserves categories may also be revised due to other factors such as changes in economic conditions, results of future operations, effects of regulation by governmental agencies or geopolitical or economic risks as previously noted herein.
The proved reserves for the properties included herein were estimated by performance methods, the volumetric method, analogy, or a combination of methods. In general, all of the proved producing reserves attributable to producing wells and/or reservoirs were estimated by performance methods. These performance methods include, but may not be limited to, decline curve analysis and material balance, which utilized extrapolations of historical production and pressure data available through December 2021 in those cases where such data were considered to be definitive. The data utilized in this analysis were furnished to Ryder Scott by PrimeEnergy and were considered sufficient for the purpose thereof.
Approximately 72.5 percent of the proved developed non-producing reserves included herein were estimated by the volumetric method, while the remaining 27.5 percent were estimated by analogy. These analyses utilized pertinent data furnished to Ryder Scott by PrimeEnergy that were available through December 2021. The data utilized from the analogues as well as the well data incorporated into our volumetric analysis were considered sufficient for the purpose thereof.
To estimate economically recoverable proved oil and gas reserves and related future net cash flows, we consider many factors and assumptions including, but not limited to, the use of reservoir parameters derived from geological, geophysical and engineering data which cannot be measured directly, economic criteria based on current costs and SEC pricing requirements, and forecasts of future production rates. Under the SEC regulations 210.4-10(a)(22)(v) and (26), proved reserves must be anticipated to be economically producible from a given date forward based on existing economic conditions including the prices and costs at which economic producibility from a reservoir is to be determined. While it may reasonably be anticipated that the future prices received for the sale of production and the operating costs and other costs relating to such production may increase or decrease from those under existing economic conditions, such changes were, in accordance with rules adopted by the SEC, omitted from consideration in making this evaluation.
PrimeEnergy has informed us that they have furnished us all of the material accounts, records, geological and engineering data, and reports and other data required for this investigation. In preparing our forecast of future proved production and income, we have relied upon data furnished by PrimeEnergy with respect to property interests owned, production and well tests from examined wells, normal direct costs of operating the wells or leases, other costs such as transportation and/or processing fees, ad valorem and production taxes, recompletion costs, development plans, abandonment costs after salvage, product prices based on the SEC regulations, adjustments or differentials to product prices, geological structural and isochore maps, well logs, core analyses, and pressure measurements. Ryder Scott reviewed such factual data for its reasonableness; however, we have not conducted an independent verification of the data furnished by PrimeEnergy. We consider the factual data used in this report appropriate and sufficient for the purpose of preparing the estimates of reserves and future net revenues herein.
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
PrimeEnergy Resources Corporation
March 3, 2022
Page 6
In summary, we consider the assumptions, data, methods and analytical procedures used in this report appropriate for the purpose hereof, and we have used all such methods and procedures that we consider necessary and appropriate to prepare the estimates of reserves herein. The proved reserves included herein were determined in conformance with the United States Securities and Exchange Commission (SEC) Modernization of Oil and Gas Reporting; Final Rule, including all references to Regulation S-X and Regulation S-K, referred to herein collectively as the SEC Regulations. In our opinion, the proved reserves presented in this report comply with the definitions, guidelines and disclosure requirements as required by the SEC regulations.
Future Production Rates
For wells currently on production, our forecasts of future production rates are based on historical performance data. If no production decline trend has been established, future production rates were held constant, or adjusted for the effects of curtailment where appropriate, until a decline in ability to produce was anticipated. An estimated rate of decline was then applied until depletion of the reserves. If a decline trend has been established, this trend was used as the basis for estimating future production rates.
Test data and other related information were used to estimate the anticipated initial production rates for those wells that are not currently producing. For reserves not yet on production, sales were estimated to commence at an anticipated date furnished by PrimeEnergy. Wells that are not currently producing may start producing earlier or later than anticipated in our estimates due to unforeseen factors causing a change in the timing to initiate production. Such factors may include delays due to weather, the availability of rigs, the sequence of drilling, completing and/or recompleting wells and/or constraints set by regulatory bodies.
The future production rates from wells currently on production or wells that are not currently producing may be more or less than estimated because of changes including, but not limited to, reservoir performance, operating conditions related to surface facilities, compression and artificial lift, pipeline capacity and/or operating conditions, producing market demand and/or allowables or other constraints set by regulatory bodies.
Hydrocarbon Prices
The hydrocarbon prices used herein are based on SEC price parameters using the average prices during the 12-month period prior to the as of date of this report, determined as the unweighted arithmetic averages of the prices in effect on the first-day-of-the-month for each month within such period, unless prices were defined by contractual arrangements. For hydrocarbon products sold under contract, the contract prices, including fixed and determinable escalations, exclusive of inflation adjustments, were used until expiration of the contract. Upon contract expiration, the prices were adjusted to the 12-month unweighted arithmetic average as previously described.
Ryder Scott furnished the above mentioned average prices in effect on December 31, 2021. These initial SEC hydrocarbon prices were determined using the 12-month average first-day-of-the-month benchmark prices appropriate to the geographic area where the hydrocarbons are sold. These benchmark prices are prior to the adjustments for differentials as described herein. The table below summarizes the benchmark prices and price reference used for the geographic area included in the report.
The product prices which were actually used to determine the future gross revenue for each property reflect adjustments to the benchmark prices for gravity, quality, local conditions, gathering and transportation fees and/or distance from market, referred to herein as differentials. The differentials used in the preparation of this report were furnished to us by PrimeEnergy and accepted as factual data.
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
PrimeEnergy Resources Corporation
March 3, 2022
Page 7
In addition, the table below summarizes the net volume weighted benchmark prices adjusted for differentials and referred to herein as the average realized prices. The average realized prices shown in the table below were determined from the total future gross revenue before production taxes and the total net reserves for the geographic area and presented in accordance with SEC disclosure requirements for the geographic area included in the report.
Geographic Area |
Product |
Price Reference |
Average Benchmark Prices |
Average Prices | ||||
North America |
||||||||
United States |
Oil/Condensate | WTI Cushing | $66.56/bbl | $65.82/bbl | ||||
NGL | WTI Cushing | $66.56/bbl | $26.91/bbl | |||||
Gas | Henry Hub | $3.598/MMBTU | $2.90/Mcf |
The effects of derivative instruments designated as price hedges of oil and gas quantities are not reflected in our individual property evaluations.
Costs
Operating costs for the leases and wells in this report were furnished by PrimeEnergy and are based on the operating expense reports of PrimeEnergy and include only those costs directly applicable to the leases or wells. The operating costs include a portion of general and administrative costs allocated directly to the leases and wells. For operated properties, the operating costs include an appropriate level of corporate general administrative and overhead costs. The operating costs for non-operated properties include the COPAS overhead costs that are allocated directly to the leases and wells under terms of operating agreements. The operating costs furnished to us were accepted as factual data and reviewed by us for their reasonableness; however, we have not conducted an independent verification of the operating cost data used by PrimeEnergy. No deduction was made for loan repayments, interest expenses, or exploration and development prepayments that were not charged directly to the leases or wells.
Development costs were furnished to us by PrimeEnergy and are based on authorizations for expenditure for the proposed work or actual costs for similar projects. The development costs furnished to us were accepted as factual data and reviewed by us for their reasonableness; however, we have not conducted an independent verification of these costs. The estimated net cost of abandonment after salvage was included for properties where abandonment costs net of salvage were material. The estimates of the net abandonment costs furnished by PrimeEnergy were accepted without independent verification.
The proved developed non-producing reserves in this report have been incorporated herein in accordance with PrimeEnergys plans to develop these reserves as of December 31, 2021. The implementation of PrimeEnergys development plans as presented to us and incorporated herein is subject to the approval process adopted by PrimeEnergys management. As the result of our inquiries during the course of preparing this report, PrimeEnergy has informed us that the development activities included herein have been subjected to and received the internal approvals required by PrimeEnergys
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
PrimeEnergy Resources Corporation
March 3, 2022
Page 8
management at the appropriate local, regional and/or corporate level. In addition to the internal approvals as noted, certain development activities may still be subject to specific partner AFE processes, Joint Operating Agreement (JOA) requirements or other administrative approvals external to PrimeEnergy. Additionally, PrimeEnergy has informed us that they are not aware of any legal, regulatory, or political obstacles that would significantly alter their plans. While these plans could change from those under existing economic conditions as of December 31, 2021, such changes were, in accordance with rules adopted by the SEC, omitted from consideration in making this evaluation.
Current costs used by PrimeEnergy were held constant throughout the life of the properties.
Standards of Independence and Professional Qualification
Ryder Scott is an independent petroleum engineering consulting firm that has been providing petroleum consulting services throughout the world since 1937. Ryder Scott is employee-owned and maintains offices in Houston, Texas; Denver, Colorado; and Calgary, Alberta, Canada. We have approximately eighty engineers and geoscientists on our permanent staff. By virtue of the size of our firm and the large number of clients for which we provide services, no single client or job represents a material portion of our annual revenue. We do not serve as officers or directors of any privately-owned or publicly-traded oil and gas company and are separate and independent from the operating and investment decision-making process of our clients. This allows us to bring the highest level of independence and objectivity to each engagement for our services.
Ryder Scott actively participates in industry-related professional societies and organizes an annual public forum focused on the subject of reserves evaluations and SEC regulations. Many of our staff have authored or co-authored technical papers on the subject of reserves related topics. We encourage our staff to maintain and enhance their professional skills by actively participating in ongoing continuing education.
Prior to becoming an officer of the Company, Ryder Scott requires that staff engineers and geoscientists have received professional accreditation in the form of a registered or certified professional engineers license or a registered or certified professional geoscientists license, or the equivalent thereof, from an appropriate governmental authority or a recognized self-regulating professional organization. Regulating agencies require that, in order to maintain active status, a certain amount of continuing education hours be completed annually, including an hour of ethics training. Ryder Scott fully supports this technical and ethics training with our internal requirement mentioned above.
We are independent petroleum engineers with respect to PrimeEnergy. Neither we nor any of our employees have any financial interest in the subject properties and neither the employment to do this work nor the compensation is contingent on our estimates of reserves for the properties which were reviewed.
The results of this study, presented herein, are based on technical analysis conducted by teams of geoscientists and engineers from Ryder Scott. The professional qualifications of the undersigned, the technical person primarily responsible for overseeing, reviewing and approving the evaluation of the reserves information discussed in this report, are included as an attachment to this letter.
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
PrimeEnergy Resources Corporation
March 3, 2022
Page 9
Terms of Usage
The results of our third party study, presented in report form herein, were prepared in accordance with the disclosure requirements set forth in the SEC regulations and intended for public disclosure as an exhibit in filings made with the SEC by PrimeEnergy.
We have provided PrimeEnergy with a digital version of the original signed copy of this report letter. In the event there are any differences between the digital version included in filings made by PrimeEnergy and the original signed report letter, the original signed report letter shall control and supersede the digital version.
The data and work papers used in the preparation of this report are available for examination by authorized parties in our offices. Please contact us if we can be of further service.
Very truly yours, | ||
RYDER SCOTT COMPANY, L.P. | ||
TBPELS Firm Registration No. F-1580 | ||
/s/ Stephen G. Gardner | ||
Stephen E. Gardner, P.E. | ||
Colorado License No. 44720 | ||
Managing Senior Vice President [SEAL] |
SEG (LPC)/pl
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Professional Qualifications of Primary Technical Person
The conclusions presented in this report are the result of technical analysis conducted by teams of geoscientists and engineers from Ryder Scott Company, L.P. Mr. Stephen E. Gardner is the primary technical person responsible for the estimate of the reserves, future production and income.
Mr. Gardner, an employee of Ryder Scott Company, L.P. (Ryder Scott) since 2006, is a Managing Senior Vice President responsible for ongoing reservoir evaluation studies worldwide. Before joining Ryder Scott, Mr. Gardner served in a number of engineering positions with Exxon Mobil Corporation. For more information regarding Mr. Gardners geographic and job specific experience, please refer to the Ryder Scott Company website at https://ryderscott.com/employees/denver-employees.
Mr. Gardner earned a Bachelor of Science degree in Mechanical Engineering from Brigham Young University in 2001 (summa cum laude). He is a licensed Professional Engineer in the States of Colorado and Texas. Mr. Gardner is a member of the Society of Petroleum Engineers and a former chairperson of the Society of Petroleum Evaluation Engineers for the Denver Chapter. He also currently serves on the latter organizations board of directors at the international level.
In addition to gaining experience and competency through prior work experience, the Texas Board of Professional Engineers requires a minimum of 15 hours of continuing education annually, including at least one hour in the area of professional ethics, which Mr. Gardner fulfills. As part of his 2021 continuing education hours, Mr. Gardner attended the annual Ryder Scott Reserves Conference, which covered a variety of reserves topics including analysis techniques for unconventional reservoirs, ESG issues, reserves definitions and guidelines, SEC comment letter trends, and others. In addition, Mr. Gardner participated in various SPE and SPEE technical seminars, and other internal company training courses throughout the year covering topics such as reserves evaluation methods and evaluation software, ethics, regulatory issues, greenhouse gas management, and more.
Based on his educational background, professional training and more than 16 years of practical experience in the estimation and evaluation of petroleum reserves, Mr. Gardner has attained the professional qualifications as a Reserves Estimator set forth in Article III of the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers as of June 2019.
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
PETROLEUM RESERVES DEFINITIONS
As Adapted From:
RULE 4-10(a) of REGULATION S-X PART 210
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC)
PREAMBLE
On January 14, 2009, the United States Securities and Exchange Commission (SEC) published the Modernization of Oil and Gas Reporting; Final Rule in the Federal Register of National Archives and Records Administration (NARA). The Modernization of Oil and Gas Reporting; Final Rule includes revisions and additions to the definition section in Rule 4-10 of Regulation S-X, revisions and additions to the oil and gas reporting requirements in Regulation S-K, and amends and codifies Industry Guide 2 in Regulation S-K. The Modernization of Oil and Gas Reporting; Final Rule, including all references to Regulation S-X and Regulation S-K, shall be referred to herein collectively as the SEC regulations. The SEC regulations take effect for all filings made with the United States Securities and Exchange Commission as of December 31, 2009, or after January 1, 2010. Reference should be made to the full text under Title 17, Code of Federal Regulations, Regulation S-X Part 210, Rule 4-10(a) for the complete definitions (direct passages excerpted in part or wholly from the aforementioned SEC document are denoted in italics herein).
Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. All reserve estimates involve an assessment of the uncertainty relating the likelihood that the actual remaining quantities recovered will be greater or less than the estimated quantities determined as of the date the estimate is made. The uncertainty depends chiefly on the amount of reliable geologic and engineering data available at the time of the estimate and the interpretation of these data. The relative degree of uncertainty may be conveyed by placing reserves into one of two principal classifications, either proved or unproved. Unproved reserves are less certain to be recovered than proved reserves and may be further sub-classified as probable and possible reserves to denote progressively increasing uncertainty in their recoverability. Under the SEC regulations as of December 31, 2009, or after January 1, 2010, a company may optionally disclose estimated quantities of probable or possible oil and gas reserves in documents publicly filed with the SEC. The SEC regulations continue to prohibit disclosure of estimates of oil and gas resources other than reserves and any estimated values of such resources in any document publicly filed with the SEC unless such information is required to be disclosed in the document by foreign or state law as noted in §229.1202 Instruction to Item 1202.
Reserves estimates will generally be revised only as additional geologic or engineering data become available or as economic conditions change.
Reserves may be attributed to either natural energy or improved recovery methods. Improved recovery methods include all methods for supplementing natural energy or altering natural forces in the reservoir to increase ultimate recovery. Examples of such methods are pressure maintenance, natural gas cycling, waterflooding, thermal methods, chemical flooding, and the use of miscible and immiscible displacement fluids. Other improved recovery methods may be developed in the future as petroleum technology continues to evolve.
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
PETROLEUM RESERVES DEFINITIONS
Page 2
Reserves may be attributed to either conventional or unconventional petroleum accumulations. Petroleum accumulations are considered as either conventional or unconventional based on the nature of their in-place characteristics, extraction method applied, or degree of processing prior to sale. Examples of unconventional petroleum accumulations include coalbed or coalseam methane (CBM/CSM), basin-centered gas, shale gas, gas hydrates, natural bitumen and oil shale deposits. These unconventional accumulations may require specialized extraction technology and/or significant processing prior to sale.
Reserves do not include quantities of petroleum being held in inventory.
Because of the differences in uncertainty, caution should be exercised when aggregating quantities of petroleum from different reserves categories.
RESERVES (SEC DEFINITIONS)
Securities and Exchange Commission Regulation S-X §210.4-10(a)(26) defines reserves as follows:
Reserves. Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and gas or related substances to market, and all permits and financing required to implement the project.
Note to paragraph (a)(26): Reserves should not be assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir, or negative test results). Such areas may contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations).
PROVED RESERVES (SEC DEFINITIONS)
Securities and Exchange Commission Regulation S-X §210.4-10(a)(22) defines proved oil and gas reserves as follows:
Proved oil and gas reserves. Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically produciblefrom a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulationsprior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.
(i) The area of the reservoir considered as proved includes:
(A) The area identified by drilling and limited by fluid contacts, if any, and
(B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data.
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
PETROLEUM RESERVES DEFINITIONS
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(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.
(iii) Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty.
(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when:
(A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and
(B) The project has been approved for development by all necessary parties and entities, including governmental entities.
(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
PETROLEUM RESERVES STATUS DEFINITIONS AND GUIDELINES
As Adapted From:
RULE 4-10(a) of REGULATION S-X PART 210
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC)
and
2018 PETROLEUM RESOURCES MANAGEMENT SYSTEM (SPE-PRMS)
Sponsored and Approved by:
SOCIETY OF PETROLEUM ENGINEERS (SPE)
WORLD PETROLEUM COUNCIL (WPC)
AMERICAN ASSOCIATION OF PETROLEUM GEOLOGISTS (AAPG)
SOCIETY OF PETROLEUM EVALUATION ENGINEERS (SPEE)
SOCIETY OF EXPLORATION GEOPHYSICISTS (SEG)
SOCIETY OF PETROPHYSICISTS AND WELL LOG ANALYSTS (SPWLA)
EUROPEAN ASSOCIATION OF GEOSCIENTISTS & ENGINEERS (EAGE)
Reserves status categories define the development and producing status of wells and reservoirs. Reference should be made to Title 17, Code of Federal Regulations, Regulation S-X Part 210, Rule 4-10(a) and the SPE-PRMS as the following reserves status definitions are based on excerpts from the original documents (direct passages excerpted from the aforementioned SEC and SPE-PRMS documents are denoted in italics herein).
DEVELOPED RESERVES (SEC DEFINITIONS)
Securities and Exchange Commission Regulation S-X §210.4-10(a)(6) defines developed oil and gas reserves as follows:
Developed oil and gas reserves are reserves of any category that can be expected to be recovered:
(i) Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and
(ii) Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.
Developed Producing (SPE-PRMS Definitions)
While not a requirement for disclosure under the SEC regulations, developed oil and gas reserves may be further sub-classified according to the guidance contained in the SPE-PRMS as Producing or Non-Producing.
Developed Producing Reserves
Developed Producing Reserves are expected quantities to be recovered from completion intervals that are open and producing at the effective date of the estimate.
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
PETROLEUM RESERVES STATUS DEFINITIONS AND GUIDELINES
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Improved recovery reserves are considered producing only after the improved recovery project is in operation.
Developed Non-Producing
Developed Non-Producing Reserves include shut-in and behind-pipe Reserves.
Shut-In
Shut-in Reserves are expected to be recovered from:
(1) | completion intervals that are open at the time of the estimate but which have not yet started producing; |
(2) | wells which were shut-in for market conditions or pipeline connections; or |
(3) | wells not capable of production for mechanical reasons. |
Behind-Pipe
Behind-pipe Reserves are expected to be recovered from zones in existing wells that will require additional completion work or future re-completion before start of production with minor cost to access these reserves.
In all cases, production can be initiated or restored with relatively low expenditure compared to the cost of drilling a new well.
UNDEVELOPED RESERVES (SEC DEFINITIONS)
Securities and Exchange Commission Regulation S-X §210.4-10(a)(31) defines undeveloped oil and gas reserves as follows:
Undeveloped oil and gas reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.
(i) Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.
(ii) Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify a longer time.
(iii) Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, as defined in paragraph (a)(2) of this section, or by other evidence using reliable technology establishing reasonable certainty.
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
CONSOLIDATED BALANCE SHEET (Parenthetical) - $ / shares |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 10 | $ 10 |
Common stock, shares authorized | 2,810,000 | 2,810,000 |
Common stock, shares outstanding | 1,992,077 | 1,994,177 |
Treasury stock, shares | 817,923 | 815,823 |
CONSOLIDATED STATEMENT OF EQUITY - USD ($) |
Total |
Common Stock [Member] |
Additional Paid in capital |
Retained Earnings [Member] |
Treasury Stock [Member] |
Total Stockholders' Equity – PrimeEnergy [Member] |
Non-Controlling Interest [Member] |
Shares Outstanding [Member] |
---|---|---|---|---|---|---|---|---|
Balance at Dec. 31, 2019 | $ 103,363,000 | $ 281,000 | $ 7,505,000 | $ 129,120,000 | $ (36,792,000) | $ 100,114,000 | $ 3,249,000 | |
Balance, shares at Dec. 31, 2019 | 1,998,978 | |||||||
Repurchase shares of common stock | (710,000) | (710,000) | (710,000) | $ (4,801) | ||||
Net Income | (2,363,000) | (2,316,000) | (2,316,000) | (47,000) | ||||
Purchase of Non- controlling Interest | (22,000) | 36,000 | 36,000 | (58,000) | ||||
Distributions to non-controlling interest | (2,270,000) | (2,270,000) | ||||||
Balance at Dec. 31, 2020 | 97,998,000 | 281,000 | 7,541,000 | 126,804,000 | (37,502,000) | 97,124,000 | 874,000 | |
Balance, shares at Dec. 31, 2020 | 1,994,177 | |||||||
Repurchase shares of common stock | (145,000) | (145,000) | (145,000) | $ (2,100) | ||||
Net Income | 2,126,000 | 2,098,000 | 2,098,000 | 28,000 | ||||
Purchase of Non- controlling Interest | (44,000) | 14,000 | 0 | 14,000 | (58,000) | |||
Distributions to non-controlling interest | (844,000) | 0 | (844,000) | |||||
Balance at Dec. 31, 2021 | $ 99,091,000 | $ 281,000 | $ 7,555,000 | $ 128,902,000 | $ (37,647,000) | $ 99,091,000 | $ 0 | |
Balance, shares at Dec. 31, 2021 | 1,992,077 |
CONSOLIDATED STATEMENT OF EQUITY (Parenthetical) - shares |
12 Months Ended | |
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Dec. 31, 2021 |
Dec. 31, 2020 |
|
Repurchase of common stock, shares | 2,100 | 4,801 |
Description of Operations and Significant Accounting Policies |
12 Months Ended |
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Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Operations and Significant Accounting Policies | 1. Description of Operations and Significant Accounting Policies Nature of Operations: PrimeEnergy Resources Corporation (“PERC”), a Delaware corporation, was organized in March 1973 and is engaged in the development, acquisition and production of oil and natural gas properties. PrimeEnergy Resources Corporation and its subsidiaries are herein referred to as the “Company.” The Company owns leasehold, mineral and royalty interests in producing and non-producing oil and gas properties across the United States, primarily in Oklahoma, and Texas. The Company operates approximately 710 active wells and owns non-operating interests and royalties in approximately 822Effects of Coronavirus on Business: The COVID-19 pandemic resulted in a severe worldwide economic downturn, significantly disrupting the demand for oil, throughout the world, and created significant volatility, uncertainty and turmoil in the oil and gas industry. The decrease in demand for oil combined with pressures on the global supply-demand balance for oil and related products, resulted in oil prices declining significantly beginning in late February 2020. Since mid-2020, oil prices improved, with demand steadily increasing despite the uncertainties surrounding the COVID-19 variants, which have continued to inhibit a full global demand recovery. In addition, worldwide oil inventories are, from a historical perspective, very low and supply increases from OPEC, Russia and other oil producing nations are not expected to be sufficient to meet forecasted oil demand growth in 2022 and 2023, with many OPEC countries not able to produce at their OPEC agreed upon quota levels due to their lack of capital investments over the past few years in developing incremental oil supplies. Global oil price levels will ultimately depend on various factors and consequences beyond the Company’s control, such as (i) the effectiveness of responses to combat the COVID-19 virus and their impact on domestic and worldwide demand, (ii) the ability of OPEC, Russia and other oil producing nations to manage the global oil supply, (iii) the timing and supply impact of any Iranian sanction relief on Iran’s ability to export oil, (iv) additional actions by businesses and governments in response to the pandemic, (v) the global supply chain constraints associated with manufacturing delays, and (vi) political stability of oil consuming countries. The Company continues to assess the impact of the COVID-19 pandemic on the Company and may modify its response as the impact of COVID-19 continues to evolve. Effects of the Russian invasion of Ukraine: The invasion of Ukraine by Russian forces at the end of February 2022 has created increased volatility in both natural gas and oil markets, resulting in increased prices and supply demands. Changes in these markets will ultimately depend on various factors and consequences beyond the Company’s control. The Company continues to assess the impact of these changes on the Company and may modify its response as these changes continue to evolve. Consolidation and Presentation: The consolidated financial statements include the accounts of PrimeEnergy Resources Corporation, its subsidiaries and the Partnerships, using the full consolidation method for those partnerships which are controlled by the Company. The Company’s reserve estimates are based on the full consolidation method. DD&A expense and evaluation of impairment may differ from the Partnership as the Company’s cost basis for the Partnership interests acquired may be different than the cost basis at the Partnership level for properties acquired by the Partnership. All significant intercompany balances and transactions are eliminated in preparing the consolidated financial statements. Reclassifications: Certain reclassifications have been made to prior year statements to conform with the current year presentation. These reclassifications have no impact on net income and no material impact on any other financial statement captions. Subsequent Events: Subsequent events have been evaluated through the date that the consolidated financial statements were issued. During this period, there were no material subsequent items requiring disclosure other than as stated in footnotes 2 and 4 to these financial statements. Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates of oil and gas reserves, as determined by independent petroleum engineers, are continually subject to revision based on price, production history and other factors. Depletion expense, which is computed based on the units of production method, could be significantly impacted by changes in such estimates. Additionally, U.S. generally accepted accounting principles require that if the expected future undiscounted cash flows from an asset are less than its carrying cost, that asset must be written down to its fair market value. As the fair market value of an oil and gas property will usually be significantly less than the total undiscounted future net revenues expected from that asset, slight changes in the estimates used to determine future net revenues from an asset could lead to the necessity of recording a significant impairment of that asset. Property and Equipment: The Company follows the “successful efforts” method of accounting for its oil and gas properties. Under the successful efforts method, costs of acquiring undeveloped oil and gas leasehold acreage, including lease bonuses, brokers’ fees and other related costs are capitalized. Provisions for impairment of undeveloped oil and gas leases are based on periodic evaluations. Annual lease rentals and exploration expenses, including geological and geophysical expenses and exploratory dry hole costs, are charged against income as incurred. Costs of drilling and equipping productive wells, including development dry holes and related production facilities, are capitalized. All other property and equipment are carried at cost. Depreciation and depletion of oil and gas production equipment and properties are determined under the unit-of-production Capitalization of Interest: Interest costs related to financing major oil and gas projects in progress are capitalized until the projects are evaluated or until the projects are substantially complete and ready for their intended use if the projects are evaluated and successful. Impairment of Long-Lived Assets: The Company reviews long-lived assets, including oil and gas properties, for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recovered. If the carrying amounts are not expected to be recovered by undiscounted cash flows, the assets are impaired, and an impairment loss is recorded. The amount of impairment is based on the estimated fair value of the assets determined by discounting anticipated future net cash flows. Fair Value: The Company follows the authoritative guidance that establishes a formal framework for measuring fair values of assets and liabilities in financial statements that are already required by U.S. generally accepted accounting principles to be measured at fair value. The guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The transaction is based on a hypothetical transaction in the principal or most advantageous market considered from the perspective of the market participant that holds the asset or owes the liability. The Company utilizes market data or assumptions that market participants who are independent, knowledgeable and willing and able to transact would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. The Company attempts to utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The Company is able to classify fair value balances based on the observability of those inputs. The guidance establishes a formal fair value hierarchy based on the inputs used to measure fair value. The hierarchy gives the highest priority to Level 1 inputs, which consist of unadjusted quoted prices for identical instruments in active markets. Level 2 inputs consist of quoted prices for similar instruments. Level 3 valuations are derived from inputs that are significant and unobservable; hence, these valuations have the lowest priority. Asset Retirement Obligation: The asset retirement obligation primarily represents the estimated present value of the amount the Company will incur to plug, abandon and remediate producing properties at the end of their productive lives, in accordance with applicable state laws. The Company determined its asset retirement obligation by calculating the present value of estimated cash flows related to the liability. The asset retirement obligation is recorded as a liability at its estimated present value at its inception, with an offsetting increase to producing properties. Periodic accretion of discount of the estimated liability is recorded as an expense in the statement of operations. Income Taxes: The Company follows the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recorded for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the tax rate in effect for the year in which those temporary differences are expected to turn around. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the year of the enacted rate change. A valuation allowance is established to reduce deferred tax assets if it is more likely than not that the related tax benefits will not be realized. As of December 31, 2021, and 2020, The Compan y The Company is required to make judgments, including estimating reserves for potential adverse outcomes regarding tax positions that the Company has taken. The Company accounts for uncertainty in income taxes using a recognition and measurement threshold for tax positions taken or expected to be taken in a tax return. The effective tax rate and the tax basis of assets and liabilities reflect management’s estimates of the ultimate outcome of various tax uncertainties. General and Administrative Expenses: General and administrative expenses represent cost and expenses associated with the operation of the Company. Earnings Per Common Share: Basic earnings per share are computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect per share amounts that would have resulted if dilutive potential common stock had been converted to common stock in gain periods. Statements of Cash Flows: For purposes of the consolidated statements of cash flows, the Company considers short-term, highly liquid investments with original maturities of less than ninety days to be cash equivalents. Concentration of Credit Risk: The Company maintains significant banking relationships with financial institutions in the State of Texas. The Company limits its risk by periodically evaluating the relative credit standing of these financial institutions. The Company’s oil and gas production purchasers consist primarily of independent marketers and major gas pipeline companies. Hedging: The Company periodically enters into oil and gas financial instruments to manage its exposure to oil and gas price volatility. The oil and gas reference prices upon which the price hedging instruments are based reflect various market indices that have a high degree of historical correlation with actual prices received by the Company. The financial instruments are accounted for in accordance with applicable accounting standards for derivative instruments and hedging activities. Such standards require that applicable derivative instruments be measured at fair market value and recognized as assets or liabilities in the balance sheet. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation is generally established at the inception of a derivative. For derivatives designated as cash flow hedges and meeting applicable effectiveness guidelines, changes in fair value, to the extent effective, are recognized in other comprehensive income until the hedged item is recognized in earnings. Hedge effectiveness is measured at least quarterly based on the relative changes in fair value between the derivative contract and the hedged item over time. Any change in fair value of a derivative resulting from ineffectiveness or an excluded component of the gain/loss is recognized immediately in the statement of operations. Pronouncements Issued But Not Yet Adopted: In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard’s main goal is to improve financial reporting by requiring earlier recognition of credit losses on financing receivables and other financial assets in scope. This guidance is effective for Smaller Reporting Companies for fiscal years beginning after December 15, 2022 , including interim periods within those fiscal periods. The adoption and implementation of this ASU will not have a material impact on the Company’s financial statements. |
Acquisitions and Dispositions |
12 Months Ended |
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Dec. 31, 2021 | |
Business Combinations [Abstract] | |
Acquisitions and Dispositions | 2. Acquisitions and Dispositions Historically, the non-controlling interests of the partners and trust unit holders in certain of the Partnerships, which consist primarily of oil and gas interests. The Company purchased such non-controlling interests in an amount totaling $44,000 in 2021 and $22,000 in 2020. Such purchases resulted in the non-cash acquisition of non-controlling equity interests of $14,000 and $36,000 respectively. During 2021 and 2020 the Company liquidated partnerships for total cash payments of $632,000 and $720,000 respectively, resulting in the non-cash distribution of non-controlling interest of $647,000 and $1,550 million, respectively. Effective December 31, 2021, all managed partnerships and trusts have been liquidated. During 2020 the Company acquired 232 net acres, along with 15% to 16.6% working interest ownership in 53 oil and gas wells and one commercial salt water disposal well operated by the Company, all located in Reagan County, Texas, for $343,000. In addition, we acquired 9.36 net acre in Upton County, Texas at a cost of $5,100. During 2021 the Company acquired 5.9 net acres, located in Midland county, Texas, for approximately and sold or farmed out interests in certain $1.45non-core undeveloped and developed oil and natural gas properties in Oklahoma. In Texas, the Company divested approximately 116 net mineral acres (NMA) located in Martin County, Texas for proceeds of million. In the first quarter of 2022, the Company has sold 1809 net leasehold acres in Reagan and Midland Counties, Texas through two separate transactions receiving gross proceeds of $14.1 million. |
Additional Balance Sheet Information |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Additional Balance Sheet Information | 3. Additional Balance Sheet Information Accounts receivable at December 31, 2021 and 2020 consisted of the following:
Accounts payable at December 31, 2021 and 2020 consisted of the following:
Accrued liabilities at December 31, 2021 and 2020 consisted of the following:
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Long-Term Debt |
12 Months Ended |
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Dec. 31, 2021 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | 4. Long-Term Deb t Bank Debt: On February 15, 2017, the Company and its lenders entered into a Third Amended and Restated Credit Agreement (the “2017 Credit Agreement”) with a maturity date of February 15, 2021. Under the 2017 Credit Agreement, the Company has a revolving line of credit and letter of credit facility of up to $300 million subject to a borrowing base that is determined semi-annually by the lenders based upon the Company’s financial statements and the estimated value of the Company’s oil and gas properties, in accordance with the Lenders’ customary practices for oil and gas loans. The credit facility is secured by substantially all of the Company’s oil and gas properties. The 2017 Credit Agreement includes terms and covenants that require the Company to maintain a minimum current ratio and total indebtedness to EBITDAX (earnings before depreciation, depletion, amortization, taxes, interest expense and exploration costs) ratio, as defined, and restrictions are placed on the payment of dividends, the amount of treasury stock the Company may purchase, commodity hedge agreements, and loans and investments in its consolidated subsidiaries and limited partnerships. During 2020, the 2017 Credit Agreement was amended to add loans under the Paycheck Protection Program to the Permitted loans, as defined in the agreement. On February 11, 2021, the Company and its lenders entered into a Sixth Amendment to the 2017 Credit Agreement. Under this amendment the Company’s borrowing base is $40 million. Borrowings under the 2017 Credit Agreement will bear interest at a base rate plus an applicable margin ranging from 2.00% to 3.00% or at the Company’s option, at LIBOR plus an applicable margin ranging from 3.00% to 4.00%. The 2017 Credit Agreement will mature on February 11, 2023. The Company’s borrowings under this credit facility approximates fair value because the interest rates are variable and reflective of market rates. On December 20, 2021 the company entered into a Seventh Amendment to the 2017 Credit Agreement. At this time , Citibank N.A agreed to accept appointment as successor administrative agent from PNC Bank which was the successor to BBVA USA effective October 12, 2021. Under this amendment the Company’s borrowing base is $50 million. Borrowings under the 2017. On December 31, 2021, the Company had a total of $36 million of borrowings outstanding under its revolving credit facility at a weighted-average interest rate of 5.38% and $14 million was available for future borrowings. The combined weighted average interest rate paid on outstanding bank borrowings subject to ABR base rate and SOFR interest was 5.29% for the year ended December 31, 2021 as compared to 3.95% for the year ended December 31, 2020. On March 31, 2022, the outstanding borrowings under the Company’s revolving credit facility were $9,000,000. Paycheck Protection Program Loans During May 2020, Prime Operating Company and Eastern Oil Well Services Corporation, subsidiaries of the Company received loan proceeds in the amount of $1.28 million and $0.47 million, respectively, under the Paycheck Protection Program (the “PPP”) of the CARES Act, which was enacted March 27, 2020. The PPP Loans are evidenced by a promissory note in favor of the Lender, which bears interest at the rate of 1.00% per annum. No payments of principal or interest are due under the note until the date on which the amount of loan forgiveness (if any) under the CARES Act, which can be up to 10 months after the end of the related notes covered period (which is defined as 24 weeks after the date of the loan) (the “Deferral Period”). The note may be prepaid at any time prior to maturity with no prepayment penalties. Funds from the PPP Loans may be used only for payroll and related costs, costs used to continue group health care benefits, mortgage payments, rent, utilities, and interest on other debt obligations that were incurred prior to February 15, 2020 (the “Qualifying Expenses”). Under the terms of the PPP Loans, certain amounts thereunder may be forgiven if they are used for Qualifying Expenses as described in and in compliance with the CARES Act. The Company utilized the PPP Loan proceeds exclusively for Qualifying Expenses during the 24-week coverage period and has submitted its application for forgiveness in accordance with the terms of the CARES Act and related guidance. In the event the PPP Loan or any portion thereof is forgiven, the amount forgiven is applied to the outstanding principalThe PPP loans have been approved for forgiveness by the Small Business Administration ( SBA) in conjunction with our lender PNC Bank. The effective date of February 18, 2022 for Eastern Oil Well Service Company in the amount of $ 481 thousand in , PPP debt and any accrued interest were reclassed from the consolidated balance sheet and recorded in other income on the consolidated statement of operations. |
Commitments |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments | 5. Commitments Operating Leases: The Company leases office facilities under operating leases and recognizes lease expense on a straight-line basis over the lease term. Leases assets and liabilities are initially recorded at commencement date based on the present value of lease payments over the lease term. A new finance lease for office equipment is included in property and equipment, other current liabilities and other long-term liabilities this quarter. As most of the Company’s lease contracts do not provide an implicit discount rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The weighted average discount rate used was 5.5%. Certain leases may contain variable costs above the minimum required payments and are not included in the right-of-use Operating lease The Company amended certain leases for office space in Texas providing for payments of $599,000 in 2021, $601,000 in 2022 and $150,000 in 2023. Rent expense for office space the year s ended December 31, 2021 and 2020 was $653,000 and $663,000, respectively.The payment schedule for the Company’s operating lease obligations as of December 31, 2021 is as follows:
Asset Retirement Obligation: A reconciliation of the liability for plugging and abandonment costs for the years ended December 31, 2021 and 2020 is as follows:
The Company’s liability is determined using significant assumptions, including current estimates of plugging and abandonment costs, annual inflation of these costs, the productive life of wells and a risk-adjusted interest rate. Changes in any of these assumptions can result in significant revisions to the estimated asset retirement obligation. Revisions to the asset retirement obligation are recorded with an offsetting change to producing properties, resulting in prospective changes to depreciation, depletion and amortization expense and accretion of discount. Because of the subjectivity of assumptions and the relatively long life of most of the Company’s wells, the costs to ultimately retire the wells may vary significantly from previous estimates.
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Contingent Liabilities |
12 Months Ended |
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Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingent Liabilities | 6. Contingent Liabilities The Company is subject to environmental laws and regulations. Management believes that future expenses, before recoveries from third parties, if any, will not have a material effect on the Company’s financial condition. This opinion is based on expenses incurred to date for remediation and compliance with laws and regulations, which have not been material to the Company’s results of operations. From time to time, the Company is party to certain legal actions arising in the ordinary course of business. While the outcome of these events cannot be predicted with certainty, management does not expect these matters to have a materially adverse effect on the financial position or results of operations of the Company.
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Stock Options and Other Compensation |
12 Months Ended |
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Dec. 31, 2021 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Options and Other Compensation | 7. Stock Options and Other Compensation In May 1989,
non-statutory stock options were granted by the Company to four key executive officers for the purchase of shares of common stock. At December 31, 2021 and 2020, options on 767,500 shares were outstanding and exercisable at prices ranging from $1.00 to $1.25. According to their terms, the options have no expiration date. |
Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | 8. Income Taxes The components of the provision (benefit) for income taxes for the years ended December 31, 2021 and 2020 are as follows:
The total provision (benefit) for income taxes for the years ended December 31, 2021 and 2020 varies from the federal statutory tax rate as a result of the following:
Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes. On December 22, 2017, the U.S. enacted into legislation the Tax Cuts and Jobs Act (2017 Tax Act). Under the 2017 Tax Act, the company may use alternative minimum tax (AMT) credits to fully offset any regular tax l The Company is entitled to percentage depletion on certain of its wells, which is calculated without reference to the basis of the property. To the extent that such depletion exceeds a property’s basis, it creates a permanent difference, which lowers the Company’s effective rate. The availability of the percentage depletion deduction is phased out as an entity’s production exceeds certain levels, and based on the Company’s increasing production the percentage depletion deduction is becoming less significant. The Company is allowed a credit against the Texas Franchise Tax based on net operating losses incurred in prior periods. The credits allowed are $89 thousand in the years 2020 through 2026. Any credits not utilized in a given year due to the allowable credit exceeding the tax liability may be carried forward. No credit may be carried forward past 2026. The value of the credit is calculated net of the federal income tax effect. The Company has not recorded any provision for uncertain tax positions. The Company files income tax returns in the U.S. federal jurisdiction and various state and local jurisdictions. The 2004, 2005, 2006, 2009 and 2017 federal income tax returns have been audited by the Internal Revenue Service. Returns for unexamined earlier years may be examined and adjustments made to the amount of percentage depletion and AMT credit carryforwards flowing from those years into an open tax year, although in general no assessment of income tax may be made for those years on which the statute has closed. State returns for the years 201
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Segment Information and Major Customers |
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Segment Information and Major Customers | 9. Segment Information and Major Customers The Company operates in one industry – oil and gas exploration, development, operation and servicing. The Company’s oil and gas activities are entirely in the United States. The Company sells its oil and natural gas and liquids production to a number of direct purchasers under direct contracts or through other operators under joint operating agreements. Listed below are the purchasers of the Company’s production which represented more than 10 % of the Company’s sales in the year 2021.
Although there are no long-term oil and gas purchasing agreements with these purchasers, the Company believes that they will continue to purchase its oil and gas products and, if not, could be replaced by other purchasers.
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Financial Instruments |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | 10. Financial Instruments Fair Value Measurements: Authoritative guidance on fair value measurements defines fair value, establishes a framework for measuring fair value and stipulates the related disclosure requirements. The Company follows a three-level hierarchy, prioritizing and defining the types of inputs used to measure fair value. The fair values of the Company’s interest rate swaps, natural gas and crude oil price collars and swaps are designated as Level 3. The following fair value hierarchy table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2021 and December 31, 2020:
The derivative contracts were measured based on quotes from the Company’s counterparties. Such quotes have been derived using valuation models that consider various inputs including current market and contractual prices for the underlying instruments, quoted forward prices for natural gas and crude oil, volatility factors and interest rates, such as a LIBOR curve for a similar length of time as the derivative contract term as applicable. These estimates are verified using comparable NYMEX futures contracts or are compared to multiple quotes obtained from counterparties for reasonableness. The significant unobservable inputs for Level 3 derivative contracts include basis differentials and volatility factors. An increase (decrease) in these unobservable inputs would result in an increase (decrease) in fair value, respectively. The Company does not have access to the specific assumptions used in its counterparties’ valuation models. Consequently, additional disclosures regarding significant Level 3 unobservable inputs were not provided. The following table sets forth a reconciliation of changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy for the year ended December 2021.
Derivative Instruments: The Company is exposed to commodity price and interest rate risk, and management considers periodically the Company’s exposure to cash flow variability resulting from the commodity price changes and interest rate fluctuations. Futures, swaps and options are used to manage the Company’s exposure to commodity price risk inherent in the Company’s oil and gas production operations. The Company does not apply hedge accounting to any of its commodity-based derivatives. Both realized and unrealized gains and losses associated with commodity derivative instruments are recognized in earnings. The following table sets forth the effect of derivative instruments on the consolidated balance sheets at December 31, 2021 and 2020:
The following table sets forth the effect of derivative instruments on the consolidated statements of operations for the years ended December 31, 2021 and 2020:
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Related Party Transactions |
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Dec. 31, 2021 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 11. Related Party Transactions The Company, as managing general partner or managing trustee, makes an annual offer to repurchase the interests of the partners and trust unit holders in certain of the Partnerships or Trusts. The Company purchased such interests in an amount totaling $676,000 during 2021 and $742,000 during 2020. Payables owed to related parties primarily represent receipts collected by the Company as agent for the joint venture partners, which may include members of the Company’s Board of Directors, during a specific reporting year, for oil and gas sales net of expenses.
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Salary Deferral Plan |
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Dec. 31, 2021 | |
Retirement Benefits [Abstract] | |
Salary Deferral Plan | 12. Salary Deferral Plan The Company maintains a salary deferral plan (the “Plan”) in accordance with Internal Revenue Code Section 401(k), as amended. The Plan provides for matching contributions, of which $ 304,955 and $ 341,000 were made in 2021 and 2020, respectively |
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Earnings per Share | 13. Earnings per Share Basic earnings per share are computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect per share amounts that would have resulted if dilutive potential common stock had been converted to common stock in gain periods. The following reconciles amounts reported in the financial statements:
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Supplementary Information |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplementary Information | PRIMEENERGY RESOURCES CORPORATION AND SUBSIDIARIES SUPPLEMENTARY INFORMATION CAPITALIZED COSTS RELATING TO OIL AND GAS PRODUCING ACTIVITIES (Unaudited)
COSTS INCURRED IN OIL AND GAS PROPERTY ACQUISITION, EXPLORATION AND DEVELOPMENT ACTIVITIES (Unaudited) cash flow sched
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL AND GAS RESERVES (Unaudited)
See accompanying Notes to Supplementary Information STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS AND CHANGES THEREIN RELATING TO PROVED OIL AND GAS RESERVES (Unaudited) The following are the principal sources of change in the standardized measure of discounted future net cash flows during 2021 and 2020:
PRIMEENERGY RESOURCES CORPORATION AND SUBSIDIARIES SUPPLEMENTARY INFORMATION RESERVE QUANTITY INFORMATION Years Ended December 31, 2021 and 2020 (Unaudited)
RESULTS OF OPERATIONS FROM OIL AND GAS PRODUCING ACTIVITIES Years Ended December 31, 2021 and 2020 (Unaudited)
NOTES TO SUPPLEMENTARY INFORMATION (Unaudited) 1. Presentation of Reserve Disclosure Information Reserve disclosure information is presented in accordance with U.S. generally accepted accounting principles. The Company’s reserves include amounts attributable to non-controlling interests in the Partnerships. These interests represent less than 10% of the Company’s reserves. 2. Determination of Proved Reserves The estimates of the Company’s proved reserves were determined by an independent petroleum engineer in accordance with U.S. generally accepted accounting principles. The estimates of proved reserves are inherently imprecise and are continually subject to revision based on production history, results of additional exploration and development and other factors. Estimated future net revenues were computed by reserves, less estimated future development and production costs based on current costs. Proved reserve quantity estimates are subject to numerous uncertainties inherent in the estimation of quantities of proved reserves and in the projection of future rates of production and the timing of development expenditures. The accuracy of such estimates is a function of the quality of available data and of engineering and geological interpretation and judgment. Results of subsequent drilling, testing and production may cause either upward or downward revision of previous estimates. Further, the volumes considered to be commercially recoverable fluctuate with changes in prices and operating costs. The Company emphasizes that proved reserve estimates are inherently imprecise and that estimates of new discoveries are more imprecise than those of currently producing oil and gas properties. Accordingly, these estimates are expected to change as additional information becomes available in the future. 3. Results of Operations from Oil and Gas Producing Activities The results of operations from oil and gas producing activities were prepared in accordance with U.S. generally accepted accounting principles. General and administrative expenses, interest costs and other unrelated costs are not deducted in computing results of operations from oil and gas activities. 4. Standardized Measure of Discounted Future Net Cash Flows and Changes Therein Relating to Proved Oil and Gas Reserves The standardized measure of discounted future net cash flows relating to proved oil and gas reserves and the changes of standardized measure of discounted future net cash flows relating to proved oil and gas reserves were prepared in accordance with U.S. generally accepted accounting principles. Future cash inflows are computed as described in Note 2 by applying current prices to year-end quantities of proved reserves. Future production and development costs are computed estimating the expenditures to be incurred in developing and producing the oil and gas reserves at year-end, based on year-end costs and assuming continuation of existing economic conditions. Future income tax expenses are calculated by applying the U.S. tax rate to future pre-tax cash inflows relating to proved oil and gas reserves, less the tax basis of properties involved. Future income tax expenses give effect to permanent differences and tax credits and allowances relating to the proved oil and gas reserves. Future net cash flows are discounted at a rate of 10% annually (pursuant to applicable guidance) to derive the standardized measure of discounted future net cash flows. This calculation does not necessarily represent an estimate of fair market value or the present value of such cash flows since future prices and costs can vary substantially from year-end and the use of a 10% discount figure is arbitrary. 5. Changes in Reserves The 2021 and 2020 extensions and discoveries reflect the drilling activity in the Company’s West Texas and
Mid-Continent areas. The Company is employing technologies to establish proved reserves that have been demonstrated to provide consistent results capable of repetition. The technologies and economic data being used in the estimation of its proved reserves include, but are not limited to, electrical logs, radioactivity logs, geologic maps, production data and well test data. The estimated reserves of wells with sufficient production history are estimated using appropriate decline curves. Estimated reserves of producing wells with limited production history and for undeveloped locations are estimated using performance data from analogous wells in the area. These wells are considered analogous based on production performance from the same formation and with similar completion techniques. Future development plans are reflective of the current commodity prices and have been established based on an expectation of available cash flows from operations and availability under our revolving credit facility. |
Description of Operations and Significant Accounting Policies (Policies) |
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Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | Nature of Operations: PrimeEnergy Resources Corporation (“PERC”), a Delaware corporation, was organized in March 1973 and is engaged in the development, acquisition and production of oil and natural gas properties. PrimeEnergy Resources Corporation and its subsidiaries are herein referred to as the “Company.” The Company owns leasehold, mineral and royalty interests in producing and
non-producing oil and gas properties across the United States, primarily in Oklahoma, and Texas. The Company operates approximately 710 active wells and owns non-operating interests and royalties in approximately 822 |
Effects of Coronavirus on Business | Effects of Coronavirus on Business: The COVID-19 pandemic resulted in a severe worldwide economic downturn, significantly disrupting the demand for oil, throughout the world, and created significant volatility, uncertainty and turmoil in the oil and gas industry. The decrease in demand for oil combined with pressures on the global supply-demand balance for oil and related products, resulted in oil prices declining significantly beginning in late February 2020. Since mid-2020, oil prices improved, with demand steadily increasing despite the uncertainties surrounding the COVID-19 variants, which have continued to inhibit a full global demand recovery. In addition, worldwide oil inventories are, from a historical perspective, very low and supply increases from OPEC, Russia and other oil producing nations are not expected to be sufficient to meet forecasted oil demand growth in 2022 and 2023, with many OPEC countries not able to produce at their OPEC agreed upon quota levels due to their lack of capital investments over the past few years in developing incremental oil supplies. Global oil price levels will ultimately depend on various factors and consequences beyond the Company’s control, such as (i) the effectiveness of responses to combat the COVID-19 virus and their impact on domestic and worldwide demand, (ii) the ability of OPEC, Russia and other oil producing nations to manage the global oil supply, (iii) the timing and supply impact of any Iranian sanction relief on Iran’s ability to export oil, (iv) additional actions by businesses and governments in response to the pandemic, (v) the global supply chain constraints associated with manufacturing delays, and (vi) political stability of oil consuming countries. The Company continues to assess the impact of the COVID-19 pandemic on the Company and may modify its response as the impact of COVID-19 continues to evolve. |
Effects of the Russian invasion of Ukraine | Effects of the Russian invasion of Ukraine: The invasion of Ukraine by Russian forces at the end of February 2022 has created increased volatility in both natural gas and oil markets, resulting in increased prices and supply demands. Changes in these markets will ultimately depend on various factors and consequences beyond the Company’s control. The Company continues to assess the impact of these changes on the Company and may modify its response as these changes continue to evolve. |
Consolidation and Presentation | Consolidation and Presentation: The consolidated financial statements include the accounts of PrimeEnergy Resources Corporation, its subsidiaries and the Partnerships, using the full consolidation method for those partnerships which are controlled by the Company. The Company’s reserve estimates are based on the full consolidation method. DD&A expense and evaluation of impairment may differ from the Partnership as the Company’s cost basis for the Partnership interests acquired may be different than the cost basis at the Partnership level for properties acquired by the Partnership. All significant intercompany balances and transactions are eliminated in preparing the consolidated financial statements. |
Reclassifications | Reclassifications: Certain reclassifications have been made to prior year statements to conform with the current year presentation. These reclassifications have no impact on net income and no material impact on any other financial statement captions. |
Subsequent Events | Subsequent Events: Subsequent events have been evaluated through the date that the consolidated financial statements were issued. During this period, there were no material subsequent items requiring disclosure other than as stated in footnotes 2 and 4 to these financial statements. |
Use of Estimates | Use of Estimates: The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates of oil and gas reserves, as determined by independent petroleum engineers, are continually subject to revision based on price, production history and other factors. Depletion expense, which is computed based on the units of production method, could be significantly impacted by changes in such estimates. Additionally, U.S. generally accepted accounting principles require that if the expected future undiscounted cash flows from an asset are less than its carrying cost, that asset must be written down to its fair market value. As the fair market value of an oil and gas property will usually be significantly less than the total undiscounted future net revenues expected from that asset, slight changes in the estimates used to determine future net revenues from an asset could lead to the necessity of recording a significant impairment of that asset.
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Property and Equipment | Property and Equipment: The Company follows the “successful efforts” method of accounting for its oil and gas properties. Under the successful efforts method, costs of acquiring undeveloped oil and gas leasehold acreage, including lease bonuses, brokers’ fees and other related costs are capitalized. Provisions for impairment of undeveloped oil and gas leases are based on periodic evaluations. Annual lease rentals and exploration expenses, including geological and geophysical expenses and exploratory dry hole costs, are charged against income as incurred. Costs of drilling and equipping productive wells, including development dry holes and related production facilities, are capitalized. All other property and equipment are carried at cost. Depreciation and depletion of oil and gas production equipment and properties are determined under the
unit-of-production |
Capitalization of Interest | Capitalization of Interest: Interest costs related to financing major oil and gas projects in progress are capitalized until the projects are evaluated or until the projects are substantially complete and ready for their intended use if the projects are evaluated and successful. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets: The Company reviews long-lived assets, including oil and gas properties, for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recovered. If the carrying amounts are not expected to be recovered by undiscounted cash flows, the assets are impaired, and an impairment loss is recorded. The amount of impairment is based on the estimated fair value of the assets determined by discounting anticipated future net cash flows. |
Fair Value | Fair Value: The Company follows the authoritative guidance that establishes a formal framework for measuring fair values of assets and liabilities in financial statements that are already required by U.S. generally accepted accounting principles to be measured at fair value. The guidance defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The transaction is based on a hypothetical transaction in the principal or most advantageous market considered from the perspective of the market participant that holds the asset or owes the liability. The Company utilizes market data or assumptions that market participants who are independent, knowledgeable and willing and able to transact would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated or generally unobservable. The Company attempts to utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The Company is able to classify fair value balances based on the observability of those inputs. The guidance establishes a formal fair value hierarchy based on the inputs used to measure fair value. The hierarchy gives the highest priority to Level 1 inputs, which consist of unadjusted quoted prices for identical instruments in active markets. Level 2 inputs consist of quoted prices for similar instruments. Level 3 valuations are derived from inputs that are significant and unobservable; hence, these valuations have the lowest priority. |
Asset Retirement Obligation | Asset Retirement Obligation: The asset retirement obligation primarily represents the estimated present value of the amount the Company will incur to plug, abandon and remediate producing properties at the end of their productive lives, in accordance with applicable state laws. The Company determined its asset retirement obligation by calculating the present value of estimated cash flows related to the liability. The asset retirement obligation is recorded as a liability at its estimated present value at its inception, with an offsetting increase to producing properties. Periodic accretion of discount of the estimated liability is recorded as an expense in the statement of operations.
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Income Taxes | Income Taxes: The Company follows the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recorded for the estimated future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using the tax rate in effect for the year in which those temporary differences are expected to turn around. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the year of the enacted rate change. A valuation allowance is established to reduce deferred tax assets if it is more likely than not that the related tax benefits will not be realized. As of December 31, 2021, and 2020, The Compan y The Company is required to make judgments, including estimating reserves for potential adverse outcomes regarding tax positions that the Company has taken. The Company accounts for uncertainty in income taxes using a recognition and measurement threshold for tax positions taken or expected to be taken in a tax return. The effective tax rate and the tax basis of assets and liabilities reflect management’s estimates of the ultimate
outcome of various tax uncertainties. |
General and Administrative Expenses | General and Administrative Expenses: General and administrative expenses represent cost and expenses associated with the operation of the Company.
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Earnings Per Common Share | Earnings Per Common Share: Basic earnings per share are computed by dividing earnings available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect per share amounts that would have resulted if dilutive potential common stock had been converted to common stock in gain periods.
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Statements of Cash Flows | Statements of Cash Flows: For purposes of the consolidated statements of cash flows, the Company considers short-term, highly liquid investments with original maturities of less than ninety days to be cash equivalents.
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Concentration of Credit Risk | Concentration of Credit Risk: The Company maintains significant banking relationships with financial institutions in the State of Texas. The Company limits its risk by periodically evaluating the relative credit standing of these financial institutions. The Company’s oil and gas production purchasers consist primarily of independent marketers and major gas pipeline companies.
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Hedging | Hedging: The Company periodically enters into oil and gas financial instruments to manage its exposure to oil and gas price volatility. The oil and gas reference prices upon which the price hedging instruments are based reflect various market indices that have a high degree of historical correlation with actual prices received by the Company. The financial instruments are accounted for in accordance with applicable accounting standards for derivative instruments and hedging activities. Such standards require that applicable derivative instruments be measured at fair market value and recognized as assets or liabilities in the balance sheet. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation is generally established at the inception of a derivative. For derivatives designated as cash flow hedges and meeting applicable effectiveness guidelines, changes in fair value, to the extent effective, are recognized in other comprehensive income until the hedged item is recognized in earnings. Hedge effectiveness is measured at least quarterly based on the relative changes in fair value between the derivative contract and the hedged item over time. Any change in fair value of a derivative resulting from ineffectiveness or an excluded component of the gain/loss is recognized immediately in the statement of operations.
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Pronouncements Issued But Not Yet Adopted | Pronouncements Issued But Not Yet Adopted: In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The standard’s main goal is to improve financial reporting by requiring earlier recognition of credit losses on financing receivables and other financial assets in scope. This guidance is effective for Smaller Reporting Companies for fiscal years beginning after December 15, 2022 , including interim periods within those fiscal periods. The adoption and implementation of this ASU will not have a material impact on the Company’s financial statements. |
Additional Balance Sheet Information (Tables) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Balance Sheet Amounts | Accounts receivable at December 31, 2021 and 2020 consisted of the following:
Accounts payable at December 31, 2021 and 2020 consisted of the following:
Accrued liabilities at December 31, 2021 and 2020 consisted of the following:
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Commitments (Tables) |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Operating and Financing Lease Obligation | The payment schedule for the Company’s operating lease obligations as of December 31, 2021 is as follows:
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Reconciliation of Liability for Plugging and Abandonment Costs | A reconciliation of the liability for plugging and abandonment costs for the years ended December 31, 2021 and 2020 is as follows:
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Income Taxes (Tables) |
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Provision (Benefit) for Income Taxes | The components of the provision (benefit) for income taxes for the years ended December 31, 2021 and 2020 are as follows:
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Components of Net Deferred Tax Assets and Liabilities |
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Provision for Income Taxes Varies from Federal Statutory Tax Rate | The total provision (benefit) for income taxes for the years ended December 31, 2021 and 2020 varies from the federal statutory tax rate as a result of the following:
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Segment Information and Major Customers (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||
Segment Information by Major Customers | The Company sells its oil and natural gas and liquids production to a number of direct purchasers under direct contracts or through other operators under joint operating agreements. Listed below are the purchasers of the Company’s production which represented more than 10 % of the Company’s sales in the year 2021.
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Financial Instruments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis | The following fair value hierarchy table presents information about the Company’s assets and liabilities measured at fair value on a recurring basis at December 31, 2021 and December 31, 2020:
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Schedule of Changes in Fair Value of Financial Assets and Liabilities Classified as Level 3 | The following table sets forth a reconciliation of changes in the fair value of financial assets and liabilities classified as Level 3 in the fair value hierarchy for the year ended December 2021.
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Effect of Derivative Instruments on Consolidated Balance Sheets | The following table sets forth the effect of derivative instruments on the consolidated balance sheets at December 31, 2021 and 2020:
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Effect of Derivative Instruments on Consolidated Statements of Operations | The following table sets forth the effect of derivative instruments on the consolidated statements of operations for the years ended December 31, 2021 and 2020:
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Earnings per Share (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of Basic and Diluted Earnings (Loss) per Share | The following reconciles amounts reported in the financial statements:
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Supplementary Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capitalized Costs Relating to Oil and Gas Producing Activities | CAPITALIZED COSTS RELATING TO OIL AND GAS PRODUCING ACTIVITIES (Unaudited)
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Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development Activities | COSTS INCURRED IN OIL AND GAS PROPERTY ACQUISITION, EXPLORATION AND DEVELOPMENT ACTIVITIES (Unaudited) cash flow sched
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Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves | STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL AND GAS RESERVES (Unaudited)
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Standardized Measure of Discounted Future Net Cash Flows and Changes therein Relating to Proved Oil and Gas Reserves | STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS AND CHANGES THEREIN RELATING TO PROVED OIL AND GAS RESERVES (Unaudited) The following are the principal sources of change in the standardized measure of discounted future net cash flows during 2021 and 2020:
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Reserve Quantity Information | RESERVE QUANTITY INFORMATION Years Ended December 31, 2021 and 2020 (Unaudited)
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Results of Operations from Oil and Gas Producing Activities | RESULTS OF OPERATIONS FROM OIL AND GAS PRODUCING ACTIVITIES Years Ended December 31, 2021 and 2020 (Unaudited)
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Description of Operations and Significant Accounting Policies - Additional Information (Detail) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2021
USD ($)
Well
|
Dec. 31, 2020
USD ($)
|
|
Property, Plant and Equipment [Line Items] | ||
Number of wells under non-operating interests | 822 | |
Valuation allowance | $ | $ 0 | $ 0 |
Maximum maturity period of cash and cash equivalents | 90 days | |
Minimum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Number of wells operating by the company | 710 | |
Depreciation period of equipment | 5 years | |
Maximum [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Depreciation period of equipment | 10 years |
Additional Balance Sheet Information - Components of Balance Sheet Amounts (Detail) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Accounts Receivable: | ||
Joint interest billings | $ 1,902 | $ 2,475 |
Trade receivables | 1,429 | 1,073 |
Oil and gas sales | 11,154 | 3,469 |
Other | 94 | 802 |
Accounts Receivable, Gross | 14,579 | 7,819 |
Less: Allowance for doubtful accounts | (371) | (598) |
Total | 14,208 | 7,221 |
Accounts Payable: | ||
Trade | 2,390 | 876 |
Royalty and other owners | 2,802 | 3,569 |
Partner advances | 1,209 | 193 |
Other | 881 | 579 |
Total | 7,282 | 5,217 |
Accrued Liabilities: | ||
Compensation and related expenses | 3,919 | 3,331 |
Property costs | 2,901 | 2,056 |
Taxes | 893 | 1,016 |
Other | 108 | 384 |
Total | $ 7,821 | $ 6,787 |
Commitments - Additional Information (Detail) - USD ($) |
12 Months Ended | |
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Dec. 31, 2021 |
Dec. 31, 2020 |
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Lease period description | The Company leases office facilities under operating leases and recognizes lease expense on a straight-line basis over the lease term. Leases assets and liabilities are initially recorded at commencement date based on the present value of lease payments over the lease term | |
Rent expense for office space | $ 653,000 | $ 663,000 |
Lease Payments Due Next year | 599,000 | |
Lease payments due next two years | 601,000 | |
Lessee, Operating Lease, Liability, to be Paid, Year Three | $ 150,000 | |
Weighted-average discount rate | 5.50% | |
Operating lease weighted-average remaining lease term | 15 months | |
Operating Lease Payments | $ 599,000 | |
Operating Lease, Cost | $ 577,000 |
Commitments - Summary of Operating and Financing Lease Obligation (Detail) |
Dec. 31, 2021
USD ($)
|
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Commitments and Contingencies Disclosure [Abstract] | |
2022 | $ 601,000 |
2023 | 150,000 |
Total undiscounted lease payments | 751,000 |
Less: Amount associated with discounting | (59,000) |
Net operating lease liabilities | $ 692,000 |
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Net operating lease liabilities |
Commitments - Reconciliation of Liability for Plugging and Abandonment Costs (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Commitments and Contingencies Disclosure [Abstract] | ||
Asset retirement obligation | $ 13,660 | $ 21,118 |
Liabilities incurred | 724 | 4 |
Liabilities settled | (1,047) | (1,286) |
Liabilities divested | (52) | (5,731) |
Accretion expense | 642 | 856 |
Revisions in estimated liabilities | 368 | (1,301) |
Asset retirement obligation | $ 14,295 | $ 13,660 |
Stock Options and Other Compensation - Additional Information (Detail) |
Dec. 31, 2021
$ / shares
shares
|
Dec. 31, 2020
$ / shares
shares
|
May 31, 1989
Officers
|
---|---|---|---|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options outstanding, shares | shares | 767,500 | 767,500 | |
Number of key executive officers to whom non-statutory stock options granted | Officers | 4 | ||
Minimum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Average exercise price | $ / shares | $ 1.00 | $ 1.00 | |
Maximum [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Average exercise price | $ / shares | $ 1.25 | $ 1.25 | |
Nonstatutory Stock Options [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Options exercisable, shares | shares | 767,500 | 767,500 |
Income Taxes - Components of Provision (Benefit) for Income Taxes (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Current: | ||
Federal | $ 81 | $ 950 |
State | 59 | 80 |
Total current | 140 | 1,030 |
Deferred: | ||
Federal | 1,802 | (1,491) |
State | 574 | (56) |
Total deferred | 2,376 | (1,547) |
Total income tax provision (benefit) | $ 2,516 | $ (517) |
Income Taxes - Components of Net Deferred Tax Assets and Liabilities (Detail) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Deferred Tax Assets: | ||
Accrued liabilities | $ (80) | $ 584 |
Allowance for doubtful accounts | 85 | 136 |
Derivative Contracts | 1,272 | 153 |
State Net operating loss carry-forwards | 470 | 760 |
Total deferred tax assets | 1,907 | 465 |
Deferred Tax Liabilities: | ||
Partnership basis difference | (98) | 544 |
Depletion and depreciation | 40,748 | 36,288 |
Total deferred tax liabilities | 40,650 | 36,832 |
Net deferred tax liabilities | $ 38,743 | $ 36,367 |
Income Taxes - Provision for Income Taxes Varies from Federal Statutory Tax Rate (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Income Tax Disclosure [Abstract] | ||
Expected tax expense | $ 975 | $ (595) |
Net changes in deferred assets and liabilities | 2,376 | (1,547) |
Permanent differences | (677) | 521 |
State income tax, net of federal benefit | 47 | 63 |
Provision to return adjustment | 744 | 1,547 |
Tax Credits | (948) | (502) |
Other, net | (1) | (4) |
Total income tax provision (benefit) | $ 2,516 | $ (517) |
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Mar. 27, 2020 |
Dec. 31, 2021 |
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Income Taxes And Tax Related [Line Items] | ||||
Percentage of AMT credit refundable | 100.00% | 50.00% | ||
Expected credits against regular tax and refunds of previously paid taxes | $ 1,720 | |||
Tax credit operating carry forward losses allowed after the period, Description | No credit may be carried forward past 2026 | |||
Percentage Of Increase In Refundable Portion Of AMT Credits | 100.00% | |||
Tax Year 2018 [Member] | ||||
Income Taxes And Tax Related [Line Items] | ||||
Income Tax Refundable | $ 1,720 | |||
Texas Franchise Tax [Member] | 2019 through 2026 [Member] | ||||
Income Taxes And Tax Related [Line Items] | ||||
Expected credits against regular tax and refunds of previously paid taxes | $ 89 |
Segment Information and Major Customers - Additional Information (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2021 | |
Sales [Member] | Minimum [Member] | Customer Concentration Risk [Member] | |
Revenue, Major Customer [Line Items] | |
Customer purchases with respect of company's sales | 10.00% |
Segment Information and Major Customers - Segment Information by Major Customers (Detail) - Sales [Member] - Customer Concentration Risk [Member] |
12 Months Ended |
---|---|
Dec. 31, 2021 | |
Oil Purchasers [Member] | Apache Corporation [Member] | |
Revenue, Major Customer [Line Items] | |
Revenue by major customers | 48.00% |
Oil Purchasers [Member] | Plains All American Inc.[Member] | |
Revenue, Major Customer [Line Items] | |
Revenue by major customers | 18.00% |
Natural gas and liquids [Member] | Apache Corporation [Member] | |
Revenue, Major Customer [Line Items] | |
Revenue by major customers | 52.00% |
Natural gas and liquids [Member] | Targa Pipeline Mid-Continent West Tex, LLC [Member] | |
Revenue, Major Customer [Line Items] | |
Revenue by major customers | 19.00% |
Financial Instruments - Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Assets | ||
Derivative assets | $ 97 | |
Liabilities | ||
Derivative liabilities | $ (5,585) | (768) |
Fair Value, Measurements, Recurring [Member] | ||
Assets | ||
Derivative assets | 0 | 97 |
Liabilities | ||
Derivative liabilities | (5,585) | (768) |
Commodity Contract [Member] | Fair Value, Measurements, Recurring [Member] | ||
Assets | ||
Derivative assets | 0 | 97 |
Liabilities | ||
Derivative liabilities | (5,585) | (768) |
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | ||
Assets | ||
Derivative assets | 0 | 97 |
Liabilities | ||
Derivative liabilities | (5,585) | (768) |
Significant Unobservable Inputs (Level 3) [Member] | Commodity Contract [Member] | Fair Value, Measurements, Recurring [Member] | ||
Assets | ||
Derivative assets | 0 | 97 |
Liabilities | ||
Derivative liabilities | $ (5,585) | $ (768) |
Financial Instruments - Schedule of Changes in Fair Value of Financial Assets and Liabilities Classified as Level 3 (Detail) - Significant Unobservable Inputs (Level 3) [Member] $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Dec. 31, 2021
USD ($)
| ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Net Liabilities at beginning of period | $ (671) | |||
Total realized and unrealized (gains) losses: | ||||
Included in earnings | (9,959) | [1] | ||
Purchases, sales, issuances and settlements | 5,045 | |||
Net Liabilities end of period | $ (5,585) | |||
|
Related Party Transactions - Additional Information (Detail) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Related Party Transaction [Line Items] | ||
Purchase of non-controlling interests | $ 44,000 | $ 22,000 |
Partnership And Trust [Member] | ||
Related Party Transaction [Line Items] | ||
Purchase of non-controlling interests | $ 676,000 | $ 742,000 |
Salary Deferral Plan - Additional Information (Detail) - USD ($) |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Retirement Benefits [Abstract] | ||
Salary deferral plan, discretionary and matching contribution | $ 304,955 | $ 341,000 |
Earnings per Share - Computation of Basic and Diluted Earnings (Loss) Per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Earnings Per Share [Abstract] | ||
Net (Loss) Income, Basic | $ 2,098 | $ (2,316) |
Net (Loss) Income, Diluted | $ 2,098 | $ (2,316) |
Weighted Average Number of Shares Outstanding, Basic | 1,992,077 | 1,994,425 |
Weighted Average Number of Shares Outstanding, Options | 752,085 | |
Weighted Average Number of Shares Outstanding, Diluted | 2,744,162 | 1,994,425 |
Per Share Amount, Basic | $ 1.05 | $ (1.16) |
Per Share Amount, Diluted | $ 0.76 | $ (1.16) |
Earnings per Share - Additional Information (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2021
shares
| |
Share-based Payment Arrangement, Option [Member] | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 767,000 |
Supplementary Information - Capitalized Costs Relating to Oil and Gas Producing Activities (Detail) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Proved Developed oil and gas properties | $ 539,484 | $ 520,488 |
Proved Undeveloped oil and gas properties | 0 | |
Total Capitalized Costs | 539,484 | 520,488 |
Accumulated depreciation, depletion and valuation allowance | (359,742) | (335,390) |
Net Capitalized Costs | $ 179,742 | $ 185,098 |
Supplementary Information - Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development Activities (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Development Costs | $ 18,678 | $ 9,339 |
Supplementary Information - Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves (Detail) - USD ($) $ in Thousands |
Dec. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Future cash inflows | $ 501,431 | $ 221,090 |
Future production costs | (207,697) | (100,691) |
Future development costs | (18,507) | (39,167) |
Future income tax expenses | (57,798) | (15,135) |
Future Net Cash Flows | 217,429 | 66,097 |
10% annual discount for estimated timing of cash flows | (81,623) | (24,479) |
Standardized Measure of Discounted Future Net Cash Flows | $ 135,806 | $ 41,619 |
Supplementary Information - Standardized Measure of Discounted Future Net Cash Flows and Changes therein Relating to Proved Oil and Gas Reserves (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Sales of oil and gas produced, net of production costs | $ (45,322) | $ (13,945) |
Net changes in prices and production costs | 143,750 | (16,578) |
Extensions, discoveries and improved recovery | 6,440 | 314 |
Revisions of previous quantity estimates | 18,991 | (36,919) |
Net change in development costs | (12,904) | 20,724 |
Reserves sold | (136) | (874) |
Reserves purchased | 0 | 218 |
Accretion of discount | 4,162 | 8,161 |
Net change in income taxes | (21,180) | 5,386 |
Changes in production rates (timing) and other | 386 | (6,480) |
Net change | 94,187 | (39,993) |
Standardized measure of discounted future net cash flow: | ||
Beginning of year | 41,619 | 81,612 |
End of year | $ 135,806 | $ 41,619 |
Supplementary Information - Results of Operations from Oil and Gas Producing Activities (Detail) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2021 |
Dec. 31, 2020 |
|
Revenue: | ||
Oil and gas sales | $ 73,126 | $ 36,973 |
Costs and Expenses: | ||
Lease operating expenses | 27,804 | 23,028 |
Depreciation, depletion and accretion | 26,325 | 25,921 |
Income tax expense | 3,989 | (2,515) |
Total Costs and Expenses | 58,118 | 46,434 |
Results of Operations from Producing Activities (excluding corporate overhead and interest costs) | $ 15,008 | $ (9,461) |
Supplementary Information - Additional Information (Detail) |
12 Months Ended |
---|---|
Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Interest rate of Company's reserves | 10.00% |
Rate of discounted future net cash flows | 10.00% |
Percentage of discounted future prices | 10.00% |
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