COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure

NOTE 12 - COMMITMENTS AND CONTINGENCIES

The following table presents our firm transportation, sales and processing, water delivery and disposal and purchase commitments:

	Year Ending December 31,
(in thousands)	2023		2024		2025		2026		2027		Thereafter		Total
Firm transportation	$	96,567	$	64,403	$	49,187	$	36,692	$	10,388	$	28,364	$	285,601
Gas gathering and processing agreements	117,828		117,509		101,553		61,633		35,608		43,801		477,932
	$	214,395	$	181,912	$	150,740	$	98,325	$	45,996	$	72,165	$	763,533

Firm Transportation and Processing Agreements. We enter into certain contracts that provide firm transportation and processing on pipeline systems through which we transport or sell crude oil and natural gas. Under certain of these agreements, we are obligated to ship minimum daily quantities of crude oil or natural gas or pay for any deficiencies at a specified rate or incremental charges. Satisfaction of the volume requirements includes volumes produced by us and purchased from third parties and produced by other third-party working, royalty and overriding royalty interest owners, whose volumes we market on their behalf. We may from time to time find ourselves unable to market our commodities at prices acceptable to us, or at all, which could cause us to be unable to meet these obligations. In such cases, we may be subject to fees, minimum margins or other payments. Our consolidated statements of operations reflect our share of these firm transportation and processing costs. Payments related to our long-term transportation and processing agreements, net of interests, were $64.1 million, $31.3 million, and $21.4 million for the years ended December 31, 2022, 2021, and 2020, respectively. For the years ended December 31, 2022 and 2021, we did not incur material transportation reservation charges under these agreements.

Gas Gathering and Processing Agreements. We entered into certain long-term gas gathering and processing agreements pursuant to which we are obligated to deliver minimum daily quantities of natural gas to certain gas gathering and processing plants for processing or pay for any deficiencies at a specified rate or margin. If we ceased operations in the areas subject to these agreements at December 31, 2022, the total deficiencies required to be paid by the Company under these agreements are reflected in the table presented above. Our consolidated statements of operations reflect our share of these processing costs.

Firm sales agreement. As of December 31, 2022 we had a firm sales agreement with an integrated marketing company for our crude oil production in the Delaware Basin through 2023. This agreement is expected to provide price diversification through realization of export market pricing via a Corpus Christi terminal and exposure to Brent-weighted prices. This agreement does not require physical delivery of the minimum volumes of crude oil over the contractual term. However, if we do not sell and deliver at least the minimum contract volume pursuant to the agreement, we are required to pay transportation reservation charges related to the undelivered volume. For the years ended December 31, 2022 and 2021, we did not incur material transportation reservation charges under this agreement.

Litigation and Legal Items. We are involved in various legal proceedings. We review the status of these proceedings on an ongoing basis and, from time to time, may settle or otherwise resolve these matters on terms and conditions that management believes are in our best interests. We have provided the necessary estimated accruals in the accompanying consolidated balance sheets where deemed appropriate for litigation and legal related items that are ongoing and not yet concluded. Although the results cannot be known with certainty, we currently believe that the ultimate results of such proceedings will not have a material adverse effect on our financial position, results of operations or liquidity.