Quarterly report pursuant to Section 13 or 15(d)

Property and Equipment, Net

v3.22.2.2
Property and Equipment, Net
9 Months Ended
Sep. 30, 2022
Property, Plant and Equipment [Abstract]  
Property and Equipment, Net
Note 6 – Property and Equipment, Net
The following table summarizes our property and equipment as of the dates presented: 
  September 30, 2022 December 31, 2021
Oil and gas properties (full cost accounting method):    
Proved $ 2,828,400  $ 2,327,686 
Unproved 55,429  57,900 
Total oil and gas properties 2,883,829  2,385,586 
Other property and equipment 1
32,156  31,055 
Total properties and equipment 2,915,985  2,416,641 
Accumulated depreciation, depletion, amortization and impairments (1,204,618) (1,033,293)
Total property and equipment, net $ 1,711,367  $ 1,383,348 
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1     Excludes the corporate office building and related other assets acquired in connection with the Lonestar Acquisition that were classified as Assets held for sale on the condensed consolidated balance sheets as of December 31, 2021. We closed on the sale of the corporate office building in July 2022. See Note 3 for additional information. As of September 30, 2022, we had $1.2 million remaining other assets classified as Assets held for sale excluded from above.
Unproved property costs of $55.4 million and $57.9 million have been excluded from amortization as of September 30, 2022 and December 31, 2021, respectively. We transferred $8.7 million and $13.8 million of unproved 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 nine months ended September 30, 2022 and 2021, respectively. We capitalized internal costs of $4.0 million and $2.8 million and interest of $3.3 million and $2.6 million during the nine months ended September 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 $15.84 and $12.96 for the nine months ended September 30, 2022 and 2021, respectively.
Ceiling Test
Beginning in early 2020, certain events such as the COVID-19 pandemic coupled with 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, the deployment of vaccines and resulting increased mobility and global economic activity, and other factors have resulted in increased oil demand and commodity prices. Prior to the announced significant production cut to take effect in November 2022, OPEC+ had previously employed a strategy to gradually increase production. These shifts in OPEC+ production levels as well as the Russia-Ukraine war and related sanctions, which began in the first quarter of 2022, continue to contribute to a high level of uncertainty surrounding energy supply and demand resulting in volatile commodity prices. WTI crude oil and natural gas prices 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. During the third quarter of 2022, WTI crude oil and natural gas prices dropped to lows under $77 per bbl and $6 per Mcf, respectively.
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”). The Ceiling Test utilizes commodity prices based on a trailing 12-month average based on the closing prices on the first day of each month. We did not record any impairments of our oil and gas properties during the three and nine months ended September 30, 2022. The first quarter of 2021 was impacted by the decline in commodity prices as a result of COVID-19 and macroeconomic factors as discussed above, 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.