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| Revenues | Revenues The sales of crude oil, natural gas, and NGLs presented in the unaudited condensed consolidated statements of operations represent the Company’s share of the revenues net of royalties and exclude revenue interests by others. When marketing production on behalf of royalty or working interest owners, the Company acts as an agent and, therefore, reports the revenue on a net basis. Crude oil, natural gas, and NGL sales are recognized at the point in time when control of the product is transferred to the customer. Virtually all of our contract pricing provisions are based on market indices, with adjustments for transportation costs, quality differentials, and other contractual factors. The table below provides disaggregated information on the Company’s oil, natural gas, and NGL revenues included in the unaudited condensed consolidated statements of operations:
Oil Sales Our crude oil sales contracts are generally structured such that oil is delivered to the customer at a contractually agreed-upon delivery point, typically at the tank. Revenue is recognized when control and legal title transfers to the customer at the delivery point based on the net price received. Downstream transportation or marketing costs incurred by purchasers are reflected in the price received and are presented as a net reduction to oil sales revenues. Natural Gas and NGL Sales Under the Company’s natural gas processing contracts, liquids rich natural gas is delivered to a midstream gathering and processing entity at an agreed upon delivery point. The midstream entity gathers and processes the raw gas and then remits proceeds to the Company. The Company evaluates when control of the residue gas and NGLs transfers to determine whether revenues should be recognized on a gross or net basis. Fees incurred after transfer of control are recorded as gathering, processing and transportation expense, while fees incurred prior to transfer of control are reflected as a net reduction to natural gas and NGL revenues. Midstream and Other Revenue The Company owns and operates certain gathering and related midstream infrastructure that supports its oil and natural gas operations. Midstream and other revenue primarily consists of (i) gathering revenues earned from third-party and working interest owner volumes transported through the Company’s gathering systems (ii) revenues earned from water midstream activities, including the provision of fresh water and produced water gathering, recycling and handling and (iii) amounts earned from transportation optimization activities, including asset management arrangements (“AMAs”), capacity utilization fees, spread-share arrangements, transportation reimbursements and similar activities associated with the Company’s firm transportation capacity. Amounts received from these activities are recognized within Midstream and other revenue in the unaudited condensed consolidated statements of operations. Costs associated with the Company’s underlying firm transportation commitments continue to be recognized within the gathering, processing and transportation expense line item. Performance Obligations The Company has certain commodity sales contracts that contemplate the delivery of products over time. Under the Company’s revenue agreements, each individual delivery generally represents a separate performance obligation that is satisfied upon delivery. As a result, future volumes to be delivered under these contracts represent wholly unsatisfied performance obligations, and disclosure of the transaction price allocated to remaining performance obligations is not required. For all commodity products, the Company recognizes revenue in the month production is delivered to the purchaser. Settlement statements for crude oil sales are generally received within 30 days following delivery, while settlement statements for natural gas and NGL sales may be received approximately 30 to 60 days after delivery. Payment is unconditional once the performance obligations have been satisfied. At that time, the delivered volumes and applicable sales prices can be reasonably estimated and amounts due from customers are accrued in Accounts receivable – oil and natural gas sales, net in the unaudited condensed consolidated balance sheets. As of June 30, 2026 and December 31, 2025, such receivable balances were $69.7 million and $54.8 million, respectively.
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