Quarterly report pursuant to Section 13 or 15(d)

Property and Equipment, Net (Full Cost Method)

v3.22.2
Property and Equipment, Net (Full Cost Method)
6 Months Ended
Jun. 30, 2022
Property, Plant and Equipment [Abstract]  
Property and Equipment, Net (Full Cost Method)
Note 6 – Property and Equipment, Net (Full Cost Method)
The following table summarizes our property and equipment as of the dates presented: 
  June 30, 2022 December 31, 2021
Oil and gas properties:    
Proved $ 2,587,851  $ 2,327,686 
Unproved 54,007  57,900 
Total oil and gas properties 2,641,858  2,385,586 
Other property and equipment 1
31,205  31,055 
Total properties and equipment 2,673,063  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 
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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.