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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________________________________________
 FORM 10-Q
______________________________________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to              
 Commission file number: 1-13283
rocc-20220630_g1.jpg
RANGER OIL CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 23-1184320
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)
16285 Park Ten Place, Suite 500
Houston, TX 77084
(Address of principal executive offices) (Zip Code)
(713722-6500
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.01 Par ValueROCCThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes    No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No  

As of July 29, 2022, there were 42,359,125 shares of common stock outstanding, including 19,810,127 shares of Class A Common Stock and 22,548,998 shares of Class B Common Stock.



RANGER OIL CORPORATION
QUARTERLY REPORT ON FORM 10-Q
 For the Quarterly Period Ended June 30, 2022
 Table of Contents
 Page
 
 
 
 
 
 
 



Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
RANGER OIL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS UNAUDITED
(in thousands, except per share data) 
Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Revenues and other
Crude oil$273,589 $116,314 $500,321 $198,227 
Natural gas liquids18,818 4,388 35,558 7,950 
Natural gas21,037 3,087 33,164 5,920 
Other operating income, net1,047 910 1,903 1,157 
Total revenues and other314,491 124,699 570,946 213,254 
Operating expenses
Lease operating18,908 9,728 37,010 18,553 
Gathering, processing and transportation8,638 5,173 17,678 9,847 
Production and ad valorem taxes16,774 6,721 29,914 12,234 
General and administrative10,635 6,985 20,414 20,162 
Depreciation, depletion and amortization54,290 28,795 105,183 52,679 
Impairments of oil and gas properties   1,811 
Total operating expenses109,245 57,402 210,199 115,286 
Operating income205,246 67,297 360,747 97,968 
Other income (expense)
Interest expense, net of amounts capitalized(11,038)(5,303)(21,735)(10,700)
Gain (loss) on extinguishment of debt  2,157 (1,231)
Derivative losses(44,942)(54,227)(212,829)(98,595)
Other, net82  158 (6)
Income (loss) before income taxes149,348 7,767 128,498 (12,564)
Income tax benefit (expense)(1,308)(171)(1,119)139 
Net income (loss)148,040 7,596 127,379 (12,425)
Net (income) loss attributable to Noncontrolling interest(76,856)(4,551)(66,180)1,898 
Net income (loss) attributable to common shareholders$71,184 $3,045 $61,199 $(10,527)
Net income (loss) per share attributable to common shareholders:
Basic$3.41 $0.20 $2.91 $(0.69)
Diluted$3.33 $0.20 $2.85 $(0.69)
Weighted average shares outstanding – basic20,887 15,311 20,996 15,287 
Weighted average shares outstanding – diluted21,514 38,372 21,604 15,287 

See accompanying notes to condensed consolidated financial statements.

3


RANGER OIL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) UNAUDITED
(in thousands) 
 
 Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Net income (loss)$148,040 $7,596 $127,379 $(12,425)
Other comprehensive income:
Change in pension and postretirement obligations, net of tax 2  4 
Comprehensive income (loss)148,040 7,598 127,379 (12,421)
Net (income) loss attributable to Noncontrolling interest(76,856)(4,551)(66,180)1,898 
Other comprehensive income attributable to Noncontrolling interest (1) (2)
Comprehensive income (loss) attributable to common shareholders$71,184 $3,046 $61,199 $(10,525)

See accompanying notes to condensed consolidated financial statements.
4


RANGER OIL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS UNAUDITED
(in thousands, except share data)
 June 30, 2022December 31, 2021
Assets  
Current assets  
Cash and cash equivalents$34,450 $23,681 
Accounts receivable, net of allowance for credit losses201,357 118,594 
Derivative assets15,006 11,478 
Prepaid and other current assets13,501 20,998 
Assets held for sale11,400 11,400 
Total current assets275,714 186,151 
Property and equipment, net (full cost method)1,534,492 1,383,348 
Derivative assets5,597 2,092 
Other assets10,735 5,017 
Total assets$1,826,538 $1,576,608 
Liabilities and Equity  
Current liabilities  
Accounts payable and accrued liabilities$299,221 $214,381 
Derivative liabilities144,541 50,372 
Current portion of long-term debt1,897 4,129 
Total current liabilities445,659 268,882 
Deferred income taxes2,937 2,793 
Derivative liabilities28,604 23,815 
Other non-current liabilities9,858 10,358 
Long-term debt, net565,329 601,252 
Commitments and contingencies (Note 11)
Equity  
Preferred stock of $0.01 par value – 5,000,000 shares authorized; none issued as of June 30, 2022 and December 31, 2021
  
Class A common stock, $0.01 par value – 110,000,000 shares authorized; 20,483,112 and 21,090,259 issued and outstanding as of June 30, 2022 and December 31, 2021, respectively
205 729 
Class B common stock, $0.01 par value – 30,000,000 shares authorized; 22,548,998 shares issued and outstanding as of June 30, 2022 and December 31, 2021
2 2 
Paid-in capital257,615 273,329 
Retained earnings110,782 49,583 
Accumulated other comprehensive loss(111)(111)
Ranger Oil shareholders’ equity368,493 323,532 
Noncontrolling interest405,658 345,976 
Total equity774,151 669,508 
Total liabilities and equity$1,826,538 $1,576,608 

See accompanying notes to condensed consolidated financial statements.
5


RANGER OIL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS UNAUDITED
(in thousands)
 Six Months Ended June 30,
 20222021
Cash flows from operating activities  
Net income (loss)$127,379 $(12,425)
Adjustments to reconcile net income (loss) to net cash provided by operating activities: 
(Gain) loss on extinguishment of debt(2,157)1,231 
Depreciation, depletion and amortization105,183 52,679 
Impairments of oil and gas properties 1,811 
Derivative contracts:
Net losses212,829 98,595 
Cash settlements and premiums paid, net(103,922)(23,803)
Deferred income tax expense (benefit)144 (249)
Non-cash interest expense1,671 1,179 
Share-based compensation 2,973 3,208 
Other, net(187)9 
Changes in operating assets and liabilities, net(45,029)990 
Net cash provided by operating activities298,884 123,225 
Cash flows from investing activities  
Capital expenditures(174,244)(95,706)
Acquisitions of oil and gas properties(45,976) 
Deposits for the acquisitions of oil and gas properties(6,411) 
Proceeds from sales of assets, net622 153 
Net cash used in investing activities(226,009)(95,553)
Cash flows from financing activities  
Proceeds from credit facility borrowings243,000 20,000 
Repayments of credit facility borrowings(280,000)(95,500)
Repayments of second lien term loan (55,015)
Repayments of acquired debt(175) 
Payments for share repurchases(24,127) 
Proceeds from redeemable common units 151,160 
Proceeds from redeemable preferred stock 2 
Transaction costs paid on behalf of Noncontrolling interest (5,543)
Issuance costs paid for Noncontrolling interest securities (3,758)
Withholding taxes for share-based compensation(650)(514)
Debt issuance costs paid(154)(1,830)
Net cash (used in) provided by financing activities(62,106)9,002 
Net increase in cash and cash equivalents10,769 36,674 
Cash and cash equivalents – beginning of period23,681 13,020 
Cash and cash equivalents – end of period$34,450 $49,694 
Supplemental disclosures:  
Cash paid for:  
Interest, net of amounts capitalized$21,096 $9,638 
Non-cash investing and financing activities:
Changes in property and equipment related to capital contributions$ $(38,561)
Changes in accrued liabilities related to capital expenditures$30,461 $22,891 
 
See accompanying notes to condensed consolidated financial statements.
6


RANGER OIL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY - UNAUDITED
(in thousands)
Shares
Class A Common Shares OutstandingClass B Common Shares OutstandingClass A Common StockClass B Common StockPaid-in CapitalRetained EarningsAccumulated Other Comprehensive LossNoncontrolling interestTotal Equity
Balance as of December 31, 202121,090 22,549 $729 $2 $273,329 $49,583 $(111)$345,976 $669,508 
Net loss— — — — — (9,985)— (10,676)(20,661)
Common stock issued related to share-based compensation and other, net56 — — — 478 — — — 478 
Balance as of March 31, 202221,146 22,549 $729 $2 $273,807 $39,598 $(111)$335,300 $649,325 
Net income— — — — — 71,184 — 76,856 148,040 
Repurchase of Class A Common Stock(681)— (7)— (25,052)— — — (25,059)
Change in ownership, net— — — — 6,498 — — (6,498) 
Common stock issued related to share-based compensation and other, net18 — (517)— 2,362 — — — 1,845 
Balance as of June 30, 202220,483 22,549 $205 $2 $257,615 $110,782 $(111)$405,658 $774,151 

Shares
Common Shares OutstandingPreferred StockCommon StockPaid-in CapitalRetained Earnings/(Accumulated Deficit)Accumulated Other Comprehensive LossNoncontrolling interestTotal Equity
Balance as of December 31, 202015,200 $ $152 $203,463 $9,354 $(131)$ $212,838 
Net loss— — — — (13,572)— (6,449)(20,021)
Issuance of preferred stock— 2 — — — — — 2 
Issuance of Noncontrolling interest
— — — (50,068)— — 229,620 179,552 
Common stock issued related to share-based compensation and other, net110 — 1 1,769 — 1 1 1,772 
Balance as of March 31, 202115,310 $2 $153 $155,164 $(4,218)$(130)$223,172 $374,143 
Net income— — — — 3,045 — 4,551 7,596 
Common stock issued related to share- based compensation and other, net2 — — 922 — 1 1 924 
Balance as of June 30, 202115,312 $2 $153 $156,086 $(1,173)$(129)$227,724 $382,663 
_______________________
In October 2021, the Company effected a recapitalization, pursuant to which, among other things, the Company’s common stock was renamed and reclassified as Class A common stock, par value $0.01 per share (“Class A Common Stock”), a new class of capital stock of the Company, Class B Common Stock, par value $0.01 per share (“Class B Common Stock”) was authorized, and the designation of the Series A Preferred Stock was cancelled. See Note 12 in the notes to condensed consolidated financial statements for further details.

See accompanying notes to condensed consolidated financial statements.
7


RANGER OIL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS UNAUDITED
For the Quarterly Period Ended June 30, 2022
(in thousands, except per share amounts or where otherwise indicated)

Note 1 – Organization and Description of Business
Ranger Oil Corporation (together with its consolidated subsidiaries, unless the context otherwise requires, “Ranger Oil,” the “Company,” “we,” “us” or “our”) is an independent oil and gas company focused on the onshore development and production of oil, natural gas liquids (“NGLs”) and natural gas. Our current operations consist of drilling unconventional horizontal development wells and operating our producing wells in the Eagle Ford Shale (the “Eagle Ford”) in South Texas. We operate in and report our financial results and disclosures as one segment, which is the development and production of crude oil, NGLs and natural gas.
On January 15, 2021, the Company consummated the transactions (collectively, the “Juniper Transactions”) contemplated by: (i) the Contribution Agreement, dated November 2, 2020, by and among the Company, ROCC Energy Holdings, L.P. (formerly PV Energy Holdings, L.P., the “Partnership”) and JSTX Holdings, LLC (“JSTX”), an affiliate of Juniper Capital Advisors, L.P. (“Juniper Capital” and, together with JSTX and Rocky Creek Resources, LLC, “Juniper”); and (ii) the Contribution Agreement, dated November 2, 2020, by and among Rocky Creek Resources, LLC, an affiliate of Juniper Capital (“Rocky Creek”), the Company and the Partnership pursuant to which Juniper contributed $150 million in cash and certain oil and gas assets in South Texas in exchange for equity. See Note 2 for further discussion.
Note 2 – Summary of Significant Accounting Policies
Basis of Presentation
Our unaudited condensed consolidated financial statements include the accounts of Ranger Oil and all of our subsidiaries as of the relevant dates. Intercompany balances and transactions have been eliminated. A substantial noncontrolling interest in our subsidiaries is provided for in our condensed consolidated statements of operations and comprehensive income (loss) and our condensed consolidated balance sheets for the periods presented. Our condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities Exchange Commission (the “SEC”). Preparation of these statements involves the use of estimates and judgments where appropriate. In the opinion of management, all adjustments considered necessary for a fair presentation of our condensed consolidated financial statements have been included. Certain reclassifications have been made to prior period amounts to conform to the current period presentation. Such reclassifications did not have a material impact on prior period financial statements. Our condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2021. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year.
Significant Accounting Policies
The Company’s significant accounting policies are described in “Note 3 – Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements in its Annual Report on Form 10-K for the year ended December 31, 2021 (“2021 Annual Report”) and are supplemented by the notes included in this Quarterly Report on Form 10-Q. The financial statements and related notes included in this report should be read in conjunction with the Company’s 2021 Annual Report.
Principles of Consolidation
In January 2021, Ranger Oil completed a reorganization into an Up-C structure with JSTX and Rocky Creek. Under the Up-C structure, Juniper owns all of the shares of Class B Common Stock which are non-economic voting only shares of the Company. Juniper’s economic interest in the Company is held through its ownership of limited partner interests (the “Common Units”) in the Partnership. Pursuant to the amended and restated limited partnership agreement of the Partnership (the “Partnership Agreement”), the Company’s ownership of Common Units in the Partnership at all times equals the number of shares of the Company’s Class A Common Stock then outstanding, and Juniper’s ownership of Common Units in the Partnership at all times equals the number of shares of Class B Common Stock then outstanding. The Partnership was formed for the purpose of executing the Company’s reorganization with Juniper into an Up-C structure. The Partnership, through its subsidiaries, owns, operates, and manages oil and gas properties in Texas and manages the Company’s outstanding debt and derivative instruments. The Company’s wholly-owned subsidiary, ROCC Energy Holdings GP LLC (formerly, PV Energy Holdings GP, LLC, the “GP”), is the general partner of the Partnership. Subsidiaries of the Partnership own and operate all our oil and gas assets. Ranger Oil and the Partnership are holding companies with no other operations, material cash flows, or material assets or liabilities other than the equity interests in their subsidiaries.
The Common Units are redeemable (concurrently with the cancellation of an equivalent number of shares of Class B Common Stock) by Juniper at any time on a one-for-one basis in exchange for shares of Class A Common Stock or, if the Partnership elects,
8


cash based on the 5-day average volume-weighted closing price for the Class A Common Stock immediately prior to the redemption. In determining whether to make a cash election, the Company would consider the interests of the holders of the Class A Common Stock, the Company’s financial condition, results of operations, earnings, projections, liquidity and capital requirements, management’s assessment of the intrinsic value of the Class A Common Stock, the trading price of the Class A Common Stock, legal requirements, covenant compliance, restrictions in the Company’s debt agreements and other factors it deems relevant. The Partnership is considered a variable interest entity for which the Company is the primary beneficiary. The Company has benefits in the Partnership through the Common Units, and it has power over the activities most significant to the Partnership’s economic performance through its 100% controlling interest in the GP (which, accordingly, is acting as an agent on behalf of the Company). This conclusion was based on a qualitative analysis that considered the Partnership’s governance structure and the GP’s control over operations of the Partnership. The GP manages the business and affairs of the Partnership, including key Partnership decision-making, and the limited partners do not possess any substantive participating or kick-out rights that would allow Juniper to block or participate in certain operational and financial decisions that most significantly impact the Partnership’s economic performance or that would remove the GP. As such, because the Company has both power and benefits in the Partnership, the Company determined it is the primary beneficiary of the Partnership and consolidates the Partnership in the Company’s consolidated financial statements. The Company reflects a noncontrolling interest in the consolidated financial statements based on the proportion of Common Units owned by Juniper relative to the total number of Common Units outstanding. The noncontrolling interest is presented as a component of equity in the accompanying condensed consolidated financial statements and represents the ownership interest held by Juniper in the Partnership.
Noncontrolling Interest
The noncontrolling interest percentage may be affected by the issuance of shares of Class A Common Stock, repurchases or cancellation of Class A Common Stock, the exchange of Class B Common Stock and the redemption of Common Units (and concurrent cancellation of Class B Common Stock), among other things. The percentage is based on the proportionate number of Common Units held by Juniper relative to the total Common Units outstanding. As of June 30, 2022, the Company owned 20,483,112 Common Units, representing a 47.6% limited partner interest in the Partnership, and Juniper owned 22,548,998 Common Units, representing the remaining 52.4% limited partner interest. As of December 31, 2021, the Company owned 21,090,259 Common Units, representing a 48.3% limited partner interest in the Partnership, and Juniper owned 22,548,998 Common Units, representing the remaining 51.7% limited partner interest. During the three months ended June 30, 2022, changes in the ownership interests were the result of share repurchases and issuances of Class A Common Stock in connection with the vesting of employees’ share-based compensation. See Note 12 for information regarding share repurchases and Note 13 for vesting of share-based compensation.
When the Company’s relative ownership interest in the Partnership changes, adjustments to Noncontrolling interest and Paid-in capital, tax effected, will occur. Because these changes in the ownership interest in the Partnership do not result in a change of control, the transactions are accounted for as equity transactions under Accounting Standards Codification Topic 810, Consolidation, which requires that any differences between the carrying value of the Company’s basis in the Partnership and the fair value of the consideration received are recognized directly in equity and attributed to the controlling interest. Additionally, based on the Partnership Agreement, there are no substantive profit sharing arrangements that would cause distributions to be other than pro rata. Therefore, profits and losses are attributed to the common shareholders and noncontrolling interest pro rata based on ownership interests in the Partnership.
Recent Accounting Pronouncements
We consider the applicability and impact of all Accounting Standard Updates (“ASUs”). ASUs not listed below were assessed and determined to be not applicable.
Recently Issued Accounting Pronouncements Not Yet Adopted
In October 2021, the Financial Accounting Standards Board issued ASU 2021-08, Business Combinations (Topic 805): (“ASU 2021-08”): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. ASU 2021-08 amends Topic 805 to require the acquirer in a business combination to record contract assets and contract liabilities in accordance with Revenue from Contracts with Customers (Topic 606) at acquisition as if it had originated the contract, rather than at fair value. This update is effective for public companies beginning after December 15, 2022, with early adoption permitted. Adoption should be applied prospectively to business combinations occurring on or after the effective date of the amendments unless early adoption occurs during an interim period in which other application rules apply. We do not expect the adoption of this update to have a material impact to our financial statements.
9


Note 3 – Acquisitions
2022 Acquisitions
In June 2022, we completed acquisitions of additional working interests in Ranger-operated wells along with certain contiguous oil and gas producing assets and undeveloped acreage in the Eagle Ford shale. The aggregate cash consideration for these acquisitions was $46.0 million and are subject to customary post-closing adjustments. These transactions were accounted for as asset acquisitions. See Note 15 for discussion of acquisitions that closed subsequent to June 30, 2022.
Acquisition of Lonestar Resources
On October 5, 2021 (the “Closing Date”), the Company acquired Lonestar Resources US Inc., a Delaware corporation (“Lonestar”), as a result of which Lonestar and its subsidiaries became wholly-owned subsidiaries of the Company (the “Lonestar Acquisition”). The Lonestar Acquisition was effected pursuant to the Agreement and Plan of Merger (the “Merger Agreement”), dated July 10, 2021, by and between the Company and Lonestar. In accordance with the terms of the Merger Agreement, Lonestar shareholders received 0.51 shares of the Company’s common stock for each share of Lonestar common stock held immediately prior to the effective time of the Lonestar Acquisition. Based on the closing price of the Company’s common stock on October 5, 2021 of $30.19, and in connection with the Lonestar Acquisition, the total value of the Company’s common stock issued to holders of Lonestar common stock, warrants and restricted stock units as applicable, was approximately $173.6 million.
The Lonestar Acquisition constituted a business combination and was accounted for using the acquisition method of accounting, with Ranger Oil being treated as the accounting acquirer. Under the acquisition method of accounting, the assets and liabilities of Lonestar and its subsidiaries were recorded at their respective preliminary fair values as of the date of completion of the Lonestar Acquisition. Although the purchase price allocation is substantially complete as of June 30, 2022, there may be further adjustments to oil and gas properties as we continue to gather information related to the evaluation of certain properties. We will finalize these amounts within one year subsequent to the closing date of the Lonestar Acquisition. During the six months ended June 30, 2022, there were no material changes to the allocation presented in the 2021 Form 10-K.
We expensed $2.0 million in acquisition-related costs for the six months ended June 30, 2022 related to employee severance and change-in-control compensation costs and other integration related costs.
Pro Forma Operating Results (Unaudited)
The following unaudited pro forma condensed financial data for the three months and six months ended June 30, 2021 was derived from the historical financial statements of the Company giving effect to the Lonestar Acquisition, as if it had occurred on January 1, 2020.
Three Months Ended June 30, 2021Six Months Ended June 30, 2021
Total revenues$170,726 $299,092 
Net loss attributable to common shareholders$(10,168)$(31,705)
Note 4 – Revenue Recognition
Revenue from Contracts with Customers
Crude oil. We sell our crude oil production to our customers at either the wellhead or a contractually agreed-upon delivery point, including certain regional central delivery point terminals or pipeline inter-connections. We recognize revenue when control transfers to the customer considering factors associated with custody, title, risk of loss and other contractual provisions as appropriate. Pricing is based on a market index with adjustments for product quality, location differentials and, if applicable, deductions for intermediate transportation. Costs incurred by us for gathering and transporting the products to an agreed-upon delivery point are recognized as a component of gathering, processing and transportation expense (“GPT”) in our condensed consolidated statements of operations.
NGLs. We have natural gas processing contracts in place with certain midstream processing vendors. We deliver “wet” natural gas to our midstream processing vendors at the inlet of their processing facilities through gathering lines, certain of which we own and others which are owned by gathering service providers. Subsequent to processing, NGLs are delivered or transported to a third-party customer. Depending upon the nature of the contractual arrangements with the midstream processing vendors regarding the marketing of the NGL products, we recognize revenue for NGL products on either a gross or net basis. For those contracts where we have determined that we are the principal, and the ultimate third party is our customer, we recognize revenue on a gross basis, with associated processing costs presented as GPT expenses. For those contracts where we have determined that we are the agent and the midstream processing vendor is our customer, we recognize NGL product revenues on a net basis with processing costs presented as a reduction of revenue.
10


Natural gas. Subsequent to the processing of “wet” natural gas and the separation of NGL products, the “dry” or residue gas is purchased by the processor or delivered to us at the tailgate of the midstream processing vendors’ facilities and sold to a third-party customer. We recognize revenue when control transfers to the customer considering factors associated with custody, title, risk of loss and other contractual provisions as appropriate. Pricing is based on a market index with adjustments for product quality and location differentials, as applicable. Costs incurred by us for gathering and transportation from the wellhead through the processing facilities are recognized as a component of GPT in our condensed consolidated statements of operations.
Performance obligations
We record revenue in the month that our oil and gas production is delivered to our customers. However, the collection of revenues from oil and gas production may take up to 60 days following the month of production. Therefore, we make accruals for revenues and accounts receivable based on estimates of our share of production sold. We record any differences, which historically have not been significant, between the actual amounts ultimately received and the original estimates in the period they become finalized.
We apply a practical expedient which provides for an exemption from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less. Under our commodity product sales contracts, we bill our customers and recognize revenue when our performance obligations have been satisfied. At that time, we have determined that payment is unconditional. Accordingly, our commodity sales contracts do not create contract assets or liabilities.
Accounts Receivable from Contracts with Customers
Our accounts receivable consists mainly of trade receivables from commodity sales and joint interest billings due from partners on properties we operate. Our allowance for credit losses is entirely attributable to receivables from joint interest partners. We generally have the right to withhold future revenue distributions to recover past due receivables from joint interest owners. Generally, our oil, natural gas, and NGL receivables are collected within 30 to 90 days. The following table summarizes our accounts receivable by type as of the dates presented:
 June 30, 2022December 31, 2021
Customers$170,319 $96,195 
Joint interest partners26,052 21,755 
Derivative settlements from counterparties1,075 1,037 
Other4,260 18 
Total201,706 119,005 
Less: Allowance for credit losses(349)(411)
Accounts receivable, net of allowance for credit losses$201,357 $118,594 
Note 5 – Derivative Instruments
We utilize derivative instruments, typically swaps, put options and call options which are placed with financial institutions that we believe are acceptable credit risks, to mitigate our financial exposure to commodity price volatility associated with anticipated sales of our future production and volatility in interest rates attributable to our variable rate debt instruments. Our derivative instruments are not formally designated as hedges for accounting purposes. While the use of derivative instruments limits the risk of adverse commodity price and interest rate movements, such use may also limit the beneficial impact of future product revenues and interest expense from favorable commodity price and interest rate movements. From time to time, we may enter into incremental derivative contracts in order to increase the notional volume of production we are hedging, restructure existing derivative contracts or enter into other derivative contracts resulting in modification to the terms of existing contracts. In accordance with our internal policies, we do not utilize derivative instruments for speculative purposes.

11


For our commodity derivatives, we typically combine swaps, purchased put options, purchased call options, sold put options and sold call options in order to achieve various hedging objectives. Certain of these objectives result in combinations that operate as collars which include purchased put options and sold call options, three-way collars, which include purchased put options, sold put options and sold call options, and enhanced swaps, which include either sold put options or sold call options with the associated premiums rolled into an enhanced fixed price swap, among others.
Commodity Derivatives 1
The following table sets forth our commodity derivative positions, presented on a net basis by period of maturity, as of June 30, 2022:
3Q20224Q20221Q20232Q20233Q20234Q20231Q20242Q2024
NYMEX WTI Crude Swaps
Average Volume Per Day (bbl)3,000 3,000 2,500 2,400 2,807 2,657 462 462 
Weighted Average Swap Price ($/bbl)$73.01 $69.20 $54.40 $54.26 $54.92 $54.93 $58.75 $58.75 
NYMEX WTI Crude Collars
Average Volume Per Day (bbl)15,625 12,636 7,917 6,181 4,891 2,446 
Weighted Average Purchased Put Price ($/bbl)$59.22 $58.06 $55.79 $50.67 $70.00 $65.00 
Weighted Average Sold Call Price ($/bbl)$84.70 $82.23 $74.85 $65.65 $92.37 $85.75 
NYMEX WTI Crude CMA Roll Basis Swaps
Average Volume Per Day (bbl)7,337 1,630 
Weighted Average Swap Price ($/bbl)$1.172 $1.020 
NYMEX HH Swaps
Average Volume Per Day (MMBtu)12,500 12,500 10,000 7,500 
Weighted Average Swap Price ($/MMBtu)$3.745 $3.793 $3.620 $3.690 
NYMEX HH Collars
Average Volume Per Day (MMBtu)15,679 14,511 6,417 11,538 11,413 11,413 11,538 11,538 
Weighted Average Purchased Put Price ($/MMBtu)$3.088 $2.854 $6.000 $2.500 $2.500 $2.500 $2.500 $2.328 
Weighted Average Sold Call Price ($/MMBtu)$4.141 $3.791 $10.000 $2.682 $2.682 $2.682 $3.650 $3.000 
OPIS Mt Belv Ethane Swaps
Average Volume per Day (gal)27,717 27,717 98,901 34,239 34,239 34,615 
Weighted Average Fixed Price ($/gal)$0.2500 $0.2500 $0.2288 $0.2275 $0.2275 $0.2275 
_______________________
1    NYMEX WTI refers to New York Mercantile Exchange West Texas Intermediate that serves as the benchmark for crude oil. NYMEX HH refers to NYMEX Henry Hub that serves as the benchmark for natural gas. OPIS Mt Belv refers to Oil Price Information Service Mt. Belvieu that serves as the benchmark for ethane which represents a commodity proxy for NGLs. As of June 30, 2022, we also had 50,000 bbls/month of incremental WTI Long Calls at $125/bbl in August and September 2022 as well as 25,000 bbls/month of incremental WTI Long Puts at $85/bbl in August and September 2022.

Interest Rate Derivatives
Through May 2022, we had a series of interest rate swap contracts (the “Interest Rate Swaps”) establishing fixed interest rates on a portion of our variable interest rate indebtedness. The notional amount of the Interest Rate Swaps totaled $300 million, with us paying a weighted average fixed rate of 1.36% on the notional amount, and the counterparties paying a variable rate equal to LIBOR. As of June 30, 2022, we did not have any interest rate derivatives.

12


Financial Statement Impact of Derivatives
The impact of our derivative activities on income is included within Derivatives on our condensed consolidated statements of operations. Derivative contracts that have expired at the end of a period, but for which cash had not been received or paid as of the balance sheet date, have been recognized as components of Accounts receivable (see Note 4) and Accounts payable and accrued liabilities (see Note 9) on the condensed consolidated balance sheets. The effects of derivative gains and (losses) and cash settlements are reported as adjustments to reconcile net income (loss) to net cash provided by operating activities. These items are recorded within the Derivative contracts section of our condensed consolidated statements of cash flows under Net losses and Cash settlements and premiums paid, net.
The following table summarizes the effects of our derivative activities for the periods presented:
Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Interest Rate Swap gains (losses) recognized in the condensed consolidated statements of operations$(19)$4 $64 $36 
Commodity losses recognized in the condensed consolidated statements of operations(44,923)(54,231)(212,893)(98,631)
$(44,942)$(54,227)$(212,829)$(98,595)
Interest rate cash settlements recognized in the condensed consolidated statements of cash flows$(477)$(956)$(1,415)$(1,878)
Commodity cash settlements and premiums paid recognized in the condensed consolidated statements of cash flows(74,037)(15,678)(102,507)(21,925)
$(74,514)$(16,634)$(103,922)$(23,803)
The following table summarizes the fair values of our derivative instruments, which we elect to present on a gross basis, as well as the locations of these instruments on our condensed consolidated balance sheets as of the dates presented:
Fair Values
  June 30, 2022December 31, 2021
  DerivativeDerivativeDerivativeDerivative
TypeBalance Sheet LocationAssetsLiabilitiesAssetsLiabilities
Interest rate contractsDerivative assets/liabilities – current$ $ $ $1,480 
Commodity contractsDerivative assets/liabilities – current15,006 144,541 11,478 48,892 
Interest rate contractsDerivative assets/liabilities – non-current    
Commodity contractsDerivative assets/liabilities – non-current5,597 28,604 2,092 23,815 
  $20,603 $173,145 $13,570 $74,187 
As of June 30, 2022, we reported net commodity derivative liabilities of $152.5 million. The contracts associated with these positions are with eight counterparties for commodity derivatives, all of which are investment grade financial institutions and are participants in our revolving credit facility (the “Credit Facility”). This concentration may impact our overall credit risk in that these counterparties may be similarly affected by changes in economic or other conditions. Non-performance risk is incorporated by utilizing discount rates adjusted for the credit risk of our counterparties if the derivative is in an asset position, and our own credit risk if the derivative is in a liability position.
The agreements underlying our derivative instruments include provisions for the netting of settlements with the counterparties for contracts of similar type. We have neither paid to, nor received from, our counterparties any cash collateral in connection with our derivative positions. Furthermore, our derivative contracts are not subject to margin calls or similar accelerations. No significant uncertainties exist related to the collectability of amounts that may be owed to us by these counterparties.
See Note 10 for information regarding the fair value of our derivative instruments.
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Note 6 – Property and Equipment, Net (Full Cost Method)
The following table summarizes our property and equipment as of the dates presented: 
 June 30, 2022December 31, 2021
Oil and gas properties:  
Proved$2,587,851 $2,327,686 
Unproved54,007 57,900 
Total oil and gas properties2,641,858 2,385,586 
Other property and equipment 1
31,205 31,055 
Total properties and equipment2,673,063 2,416,641 
Accumulated depreciation, depletion, amortization and impairments(1,138,571)(1,033,293)
Total property and equipment, net$1,534,492 $1,383,348 
_______________________
1     Excludes the corporate office building and related assets acquired in connection with the Lonestar Acquisition that were classified as Assets held for sale on the condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021. We closed on the sale of the corporate office building in July 2022. See Note 15 for additional information on the sale.
Unproved property costs of $54.0 million and $57.9 million have been excluded from amortization as of June 30, 2022 and December 31, 2021, respectively. We transferred $7.7 million and $13.5 million of undeveloped leasehold costs, including capitalized interest, associated with proved undeveloped reserves, acreage unlikely to be drilled or expiring acreage, from unproved properties to the full cost pool during the six months ended June 30, 2022 and 2021, respectively. We capitalized internal costs of $2.6 million and $1.7 million and interest of $2.2 million and $1.6 million during the six months ended June 30, 2022 and 2021, respectively, in accordance with our accounting policies. Average depreciation, depletion and amortization per barrel of oil equivalent of proved oil and gas properties was $15.25 and $12.82 for the six months ended June 30, 2022 and 2021, respectively.
Ceiling Test
Beginning in early 2020, certain events such as the COVID-19 pandemic and the decisions by the Organization of the Petroleum Exporting Countries (“OPEC”) and Russia (together with OPEC, collectively “OPEC+”) negatively impacted the oil and gas industry with significant declines in crude oil prices and oversupply of crude oil. Over the past year, however, increased mobility, deployment of vaccines and other factors have resulted in increased oil demand and commodity prices. A high level of uncertainty remains regarding the volatility of energy supply and demand as a result of OPEC’s continued strategy to increase production as well as the Russia-Ukraine conflict and related sanctions which began in the first quarter of 2022. WTI crude oil and natural gas prices have surged with prices over $120 per bbl and over $9 per Mcf, respectively, during the first half of 2022 due to oil supply shortage concerns.
At the end of each quarterly reporting period, the unamortized cost of our oil and gas properties, net of deferred income taxes, is limited to the sum of the estimated after-tax discounted future net revenues from proved properties adjusted for costs excluded from amortization (the “Ceiling Test”). Because the Ceiling Test utilizes commodity prices based on a trailing 12-month average, the first quarter of 2021 was impacted by the decline in commodity prices as a result of the COVID-19 and macroeconomic factors as discussed, resulting in an impairment of our oil and gas properties of $1.8 million during the three months ended March 31, 2021. No further impairments were recorded during the remainder of 2021. We did not record any impairments of our oil and gas properties during the three and six months ended June 30, 2022.
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Note 7 – Long-Term Debt
The following table summarizes our debt obligations as of the dates presented:
June 30, 2022December 31, 2021
Credit Facility $171,000 $208,000 
9.25% Senior Notes due 2026
400,000 400,000 
Mortgage debt 1
8,304 8,438 
Other 2
318 2,516 
Total579,622 618,954 
Less: Unamortized discount 3
(3,395)(3,720)
Less: Unamortized deferred issuance costs 3, 4
(9,001)(9,853)
Total, net567,226 605,381 
Less: Current portion(1,897)(4,129)
Long-term debt$565,329 $601,252 
_______________________
1     The mortgage debt relates to the corporate office building and related assets acquired in connection with the Lonestar Acquisition for which assets were held as collateral for such debt. As of June 30, 2022 and December 31, 2021, these assets met the held for sale criteria and were classified as Assets held for sale on the condensed consolidated balance sheets. In July 2022, the mortgage debt was fully repaid in connection with the sale of the corporate office building. See Note 15 for additional information on the sale.
2     Other debt of $2.2 million was extinguished during the six months ended June 30, 2022 and recorded as a gain on extinguishment of debt.
3     The discount and issuance costs of the 9.25% Senior Notes due 2026 are being amortized over its respective term using the effective-interest method.
4     Excludes issuance costs associated with the Credit Facility, which represents costs attributable to the access to credit over its contractual term, that have been presented as a component of Other assets (see Note 9) and are being amortized over the term of the Credit Facility using the straight-line method.
Credit Facility
As of June 30, 2022, the Credit Facility had a $1.0 billion revolving commitment and an $875 million borrowing base with aggregate elected commitments of $400 million, and a $25 million sublimit for the issuance of letters of credit. Availability under the Credit Facility may not exceed the lesser of the aggregate elected commitments or the borrowing base less outstanding advances and letters of credit. The borrowing base under the Credit Facility is redetermined semi-annually, generally in the Spring and Fall of each year. Our next borrowing base redetermination is expected to be in August 2022. Additionally, we and the Credit Facility lenders may, upon request, initiate a redetermination at any time during the six-month period between scheduled redeterminations. The Credit Facility is available to us for general corporate purposes, including working capital.
In June 2022, we entered into the Agreement and Amendment No. 12 to Credit Agreement (the “Twelfth Amendment”). The Twelfth Amendment, in addition to other changes described therein, amended the Credit Facility to, effective on June 1, 2022, (1) increase the borrowing base from $725 million to $875 million, with aggregate elected commitments remaining at $400 million and (2) replaced LIBOR with the Secured Overnight Financing Rate (“SOFR”), an index supported by short-term Treasury repurchase agreements.
The outstanding borrowings under the Credit Facility bear interest at a rate equal to, at our option, either (a) a customary reference rate plus an applicable margin ranging from 1.50% to 2.50%, determined based on the utilization level under the Credit Facility or (b) effective June 1, 2022, a term SOFR reference rate (a Eurodollar rate, including LIBOR prior to June 1, 2022), plus an applicable margin ranging from 2.50% to 3.50%, determined based on the utilization level under the Credit Facility. Interest on reference rate borrowings is payable quarterly in arrears and is computed on the basis of a year of 365/366 days, and interest on Eurodollar borrowings is payable every one, three or six months, at the election of the borrower, and is computed on the basis of a year of 360 days. As of June 30, 2022, the actual weighted-average interest rate on the outstanding borrowings under the Credit Facility was 4.98%. Unused commitment fees are charged at a rate of 0.50%.

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The Credit Facility requires us to maintain (1) a minimum current ratio (as defined in the Credit Facility, which considers the unused portion of the total commitment as a current asset), measured as of the last day of each fiscal quarter of 1.00 to 1.00 and (2) a maximum leverage ratio (consolidated indebtedness to adjusted earnings before interest, taxes, depreciation, depletion, amortization and exploration expenses, both as defined in the Credit Facility), measured as of the last day of each fiscal quarter of 3.50 to 1.00.
The Credit Facility also contains other customary affirmative and negative covenants as well as events of default and remedies. If we do not comply with the financial and other covenants in the Credit Facility, the lenders may, subject to customary cure rights, require immediate payment of all amounts outstanding under the Credit Facility.
As of June 30, 2022, we had $171.0 million in outstanding borrowings and $