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exarotec.com

About Exaro

Exaro is a medical device company. It had developed the Portable X-ray System, Model Dxr -1.EXARO Technologies Corporation was incorporated in San Francisco, California March 22, 2005. EXARO broke ground on its first project July 1st, 2005. EXARO quickly grew to be one of the leading providers of our services.

Exaro Headquarter Location

215 S. State Street # 100b

Salt Lake City, Utah, 84111,

United States

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Crescent Energy : REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM - Form 8-K

Apr 8, 2022

04/08/2022 | 05:59pm EDT Message : Board of Directors and Shareholders Contango Oil & Gas Company Opinion on the financial statements We have audited the accompanying consolidated balance sheets of Contango Oil & Gas Company (a Texas corporation) and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, cash flows, and shareholders' equity for each of the two years in the period ended December 31, 2020, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America. Basis for opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical audit matter The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Depletion expense and impairment of oil and gas properties impacted by the Company's estimation of proved reserves As described further in Notes 2 and 5 to the financial statements, the Company accounts for its oil and gas properties using the successful efforts method of accounting which requires management to estimate reserve volumes and future net revenues to record depletion expense and to assess if there are indications the carrying value of certain properties exceed the fair value and if so, determine the fair value of its oil and gas properties to measure impairment. To estimate the volume of reserves and future net revenues, management makes significant estimates and assumptions including forecasting the production decline rate of producing properties, and forecasting the timing and volume of production associated with the Company's development plan for undeveloped properties. In addition, the estimation of reserves is also impacted by management's judgments and estimates regarding the 1 financial performance of wells associated with reserves to determine if wells are expected, with reasonable certainty, to be economical under the pricing assumptions required in the estimation of depletion expense and impairment evaluation and measurements. We identified the estimation of proved reserves of oil and gas properties, due to its impact on depletion expense and the evaluation and measurement of impairment, as a critical audit matter. The principal consideration for our determination that the estimation of reserves is a critical audit matter is that relatively minor changes in certain inputs and assumptions, which require a high degree of subjectivity necessary to estimate the volume and future revenues of the Company's reserves, could have a significant impact on the measurement of depletion or impairment expense. In turn, auditing those inputs and assumptions required subjective and complex auditor judgment. Our audit procedures related to the estimation of proved reserves included the following, among others. • We evaluated the level of knowledge, skill and ability of the Company's reservoir engineering specialists and their relationship to the Company, made inquiries of those reservoir engineers regarding the process followed and judgments made to estimate the Company's proved reserves, and read the reserve reports prepared by the Company's reservoir engineering specialists. • We tested the accuracy of the Company's depletion calculations and impairment evaluation and measurement that included these proved reserve reports. • We evaluated sensitive inputs and assumptions used to determine reserve volumes and other cash flow inputs and assumptions derived from the Company's accounting records. These assumptions included historical pricing differentials, current and future operating costs, estimated future capital costs, and ownership interests. We tested management's process for determining the assumptions, including examining the underlying support on a sample basis for reasonableness and accuracy. Specifically, our audit procedures involved testing management's assumptions as follows: • Compared the estimated pricing differentials used in the reserve reports to realized prices related to revenue transactions recorded in the current year and examined contractual support for the pricing differentials; • Evaluated models used to estimate the future operating costs in the reserve reports and compared amounts to historical operating costs; • Evaluated the method used to determine the future capital costs and compared estimated future capital costs used in the reserve reports to amounts expended for recently drilled and completed wells; • • Evaluated the Company's evidence supporting the amount of proved undeveloped properties reflected in the reserve reports by examining historical conversion rates and support for the Company's ability to fund and intent to develop the proved undeveloped properties; and • Applied analytical procedures to the forecasted production in the reserve reports by comparing to historical actual results and to the prior year or preceding period reserve reports. /s/ GRANT THORNTON LLP Houston, Texas 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Organization and Business Contango Oil & Gas Company (collectively with its subsidiaries, "Contango" or the "Company") is a Fort Worth, Texas based independent oil and natural gas company. The Company's business is to maximize production and cash flow from its offshore properties in the shallow waters of the Gulf of Mexico ("GOM") and onshore properties primarily located in Oklahoma, Texas, Wyoming and Louisiana and use that cash flow to explore, develop and acquire oil and natural gas properties across the United States. The following table lists the Company's primary producing areas as of December 31, 2020: Location Woodbine, Lewisville, Buda, Georgetown, Eagleford, and Muddy Sandstone Impact of the COVID-19 Pandemic A novel strain of the coronavirus ("COVID-19") surfaced in late 2019 and has spread, and continues to spread, around the world, including to the United States. In March 2020, the World Health Organization declared COVID-19 a pandemic, and the President of the United States declared the COVID-19 pandemic a national emergency. The COVID-19 pandemic has significantly affected the global economy, disrupted global supply chains and created significant volatility in the financial markets. In addition, the COVID-19 pandemic has resulted in travel restrictions, business closures and other restrictions that have disrupted the demand for oil throughout the world and, when combined with the oil supply increase attributable to the battle for market share among the Organization of Petroleum Exporting Countries ("OPEC"), Russia and other oil producing nations, resulted in oil prices declining significantly beginning in late February 2020. While there has been a modest recovery in oil prices, the length of this demand disruption is unknown, and there is significant uncertainty regarding the long-term impact to global oil demand, which negatively impacted the Company's results of operations and planned 2020 capital activities. Due to the extreme volatility in oil prices and the impact of COVID-19 on the financial condition of our upstream peers, the Company suspended its drilling program in the Southern Delaware Basin in the first quarter of 2020 and focused on certain measures that included, but were not limited to, the following: • • pursuit of additional "fee for service" opportunities similar to the Management Services Agreement entered into in June 2020 with Mid-Con Energy Partners, LP ("Mid-Con") (NASDAQ:MCEP), which was terminated at the closing of the Mid-Con Acquisition (as defined below) between the Company and Mid-Con on January 21, 2021); and • potential acquisitions of PDP-heavy assets, with attractive, discounted valuations, in stressed/distressed scenarios or from non-industry owners, such as the Silvertip Acquisition (as defined below). 8 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) From the Company's initial entry into the Southern Delaware Basin in 2016 and through early 2019, the Company was focused on the development of its initial 6,500 net acre position in Pecos County, Texas ("Bullseye"), and in December 2018, the Company purchased an additional 4,200 gross operated (1,700 net) acres and 4,000 gross non-operated (200 net) acres to the northeast of its existing acreage ("NE Bullseye"). Contango's 2019 drilling program included the completion of one well previously drilled in the Bullseye area, the drilling and completion of a second Bullseye well, and the drilling and completion of three wells in the NE Bullseye area. In December 2019, the Company began completion operations on its fourth NE Bullseye well, which began producing in January 2020, and then suspended further drilling in the area in response to the dramatic decline in oil prices. As of December 31, 2020, the Company was producing from 18 wells over its approximate 16,200 gross operated (7,500 company net) acre position in West Texas, prospective for the Wolfcamp A, Wolfcamp B and Second Bone Spring formations. In September 2019, the Company entered into unrelated purchase agreements with Will Energy Corporation ("Will Energy") and White Star Petroleum, LLC and certain of its affiliates (collectively, "White Star") to purchase certain producing assets and undeveloped acreage, primarily in Oklahoma. These transactions closed during the three months ended December 31, 2019, (the "Will Energy Acquisition" and "White Star Acquisition") and were transformative, as production from these acquisitions represented approximately 70% of the Company's total net production for the year ended December 31, 2020. See Note 4 - "Acquisitions and Dispositions" for more information. In conjunction with the White Star Acquisition, the Company entered into a new revolving credit agreement with JPMorgan Chase Bank, N.A. and other lenders (the "Credit Agreement"). In connection with the entry into the Credit Agreement, the Company repaid all obligations outstanding on, and terminated, its previous credit agreement with Royal Bank of Canada, which matured on October 1, 2019. The Credit Agreement has since been amended to increase the number of lenders from three to nine, and among other things, to adjust the borrowing base to $130.0 million on January 21, 2021 and $120.0 million on March 31, 2021. See Note 13 - "Long-Term Debt" for more information. The Company completed two stock offerings in the third quarter of 2019. The Company completed an underwritten public offering (the "September 2019 Public Offering") of 51,447,368 shares of common stock (of which 5,524,498 were reissued treasury shares) for net proceeds of approximately $46.2 million, after deducting the underwriting discount and fees and expenses. Net proceeds from the September 2019 Public Offering were used to fund the cash portion of the purchase price for the Will Energy Acquisition and to repay borrowings outstanding under the Company's former revolving credit facility to provide incremental liquidity to support the Company's planned acquisition efforts. In conjunction with the September 2019 Public Offering, the Company also entered into a purchase agreement with affiliates of John C. Goff, a director and significant shareholder, and current chairman of the Company, to issue and sell in a private placement (the "Series A Private Placement") 789,474 shares of Series A contingent convertible preferred stock, which resulted in net proceeds of approximately $7.5 million. The Company completed two additional stock offerings in the fourth quarter of 2019. In connection with the closing of the White Star Acquisition in November 2019, the Company completed a private placement of 1,102,838 shares of Series B contingent convertible preferred stock of the Company, which resulted in net proceeds of approximately $21.0 million (the "Series B Private Placement"). Net proceeds from the Series A Private Placement were used to fund a portion of the purchase price and related transaction expenses for the Will Energy Acquisition, and net proceeds from the Series B Private Placement were used to fund a portion of the purchase price and related transaction expenses for the White Star Acquisition. In December 2019, the Company also completed a private placement of 19,000,000 shares of common stock for net proceeds of approximately $45.7 million, after deducting the underwriting discount and fees and expenses (the "December 2019 Offering"). In conjunction with the December 2019 Offering, the Company also completed a private placement of 2,340,000 shares of Series C contingent convertible preferred stock (the "Series C Private Placement") with affiliates of Mr. Goff, Wilkie S. Colyer, Jr., the Company's chief executive officer, and others, which resulted in net proceeds of approximately $5.6 million. An additional 360,000 Series C contingent convertible preferred shares were issued in a private placement to the placement agents for the December 2019 Offering and Series C Private Placement, as partial consideration for their services in those offerings. Net proceeds from the December 2019 Offering and Series C Private Placement were used for general corporate purposes, including capital expenditures under the Company's Joint Development Agreement with Juneau Oil & Gas, LLC (discussed below). 9 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) In December 2019, the Company obtained approval from the holders of a majority of the voting power of the Company's capital stock to increase the number of common shares authorized for issuance from 100,000,000 to 200,000,000 common shares, at which time the Series A preferred shares automatically converted into 7,894,740 shares of common stock, the Series B preferred shares automatically converted into 11,028,380 shares of common stock, and the outstanding preferred shares were cancelled. In December 2019, the Company entered into a Joint Development Agreement with Juneau Oil & Gas, LLC ("Juneau"), which provides the Company the right to acquire an interest in up to six of Juneau's exploratory prospects located in the Gulf of Mexico. The first such exploratory prospect acquired by the Company, located in the Grand Isle Block 45 Area in the shallow waters off of the Louisiana coastline, was determined to be unsuccessful in June 2020. The Company is currently evaluating for future testing a number of exploratory prospects included in the Joint Development Agreement, including its Boss Hogg prospect located in the Eugene Island 298 Area in the shallow waters off of the Louisiana coastline. The Company's strategy and timing on the testing of the Boss Hogg will be determined during the year based on regulatory considerations, some of which are fluid at this time, and on operational considerations, including the availability of appropriate equipment. Following the reduction in the Company's drilling program in the latter half of 2019, which then led to the suspension of onshore drilling in the first quarter of 2020, the Company continued to identify opportunities for cost reductions and operating efficiencies in all areas of its operations, while also searching for new resource acquisition opportunities. Acquisition efforts have been, and will continue to be, focused on PDP-heavy assets where the Company might also be able to leverage its geological and operational experience and expertise to reduce operating expenses, enhance production and identify and develop additional drilling opportunities that the Company believes will enable it to economically grow production and add reserves. On June 5, 2020, the Company announced the addition of a new corporate business line that includes offering a property management service (or a "fee for service") for oil and natural gas companies with distressed or stranded assets, or companies with a desire to reduce administrative costs by engaging a contract operator of its oil and natural gas assets. As part of this service offering, the Company entered into a Management Services Agreement ("MSA") with Mid-Con, effective July 1, 2020, to provide services as contract operator of record on Mid-Con's oil and natural gas properties, along with certain administrative and management services, in exchange for an annual services fee of $4 million, paid ratably over the twelve month period, plus reimbursement of certain costs and expenses, a deferred fee of $166,666 per month for each month that the agreement is in effect (not to exceed $2 million), to be paid in a lump sum upon termination of the agreement, and warrants to purchase a minority equity ownership in Mid-Con. In connection with the Company's acquisition of Mid-Con on January 21, 2021, the MSA was terminated, the deferred fee obligation was forgiven, and the warrants were cancelled. See Note 4 - "Acquisitions and Dispositions" for more information. The Company recorded $2.0 million in revenue during the year ended December 31, 2020 related to this MSA with Mid-Con, which is included in "Fee for services revenue" in the Company's consolidated statements of operations. On June 8, 2020, the stockholders of the Company, at the Company's 2020 Annual Meeting of Stockholders, approved an amendment (the "Charter Amendment") to its Amended and Restated Certificate of Formation with the Secretary of State of the State of Texas to increase the number of authorized shares of common stock, par value of $0.04 per share, of the Company from 200,000,000 shares to 400,000,000 shares, and also approved the conversion of the 2,700,000 shares of the Series C contingent convertible preferred stock, par value $0.04 per share, into 2,700,000 shares of the Company's common stock. On June 10, 2020, the Company filed the Charter Amendment with the Secretary of State of the State of Texas. On June 24, 2020, the Company entered into an Open Market Sale Agreement (the "Sale Agreement") among the Company and Jefferies LLC (the "Sales Agent"). Pursuant to the terms of the Sale Agreement, the Company may sell, from time to time through the Sales Agent in the open market, subject to satisfaction of certain conditions, shares of the Company's common stock, having an aggregate public offering price of up to $100,000,000 (the "Shares") (the "ATM Program"). The Company intends to use the net proceeds from any sales through the ATM Program, after deducting the Sales Agent's commission and the Company's offering expenses, to repay borrowings under its Credit Agreement and for general corporate purposes, including, but not limited to, acquisitions and exploratory drilling. Under the ATM Program, the Company sold 163,929 shares during the year ended December 31, 2020 for net proceeds of $0.5 million. 10 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) On October 25, 2020, the Company and Mid-Con entered into an agreement and plan of merger providing for the acquisition by the Company of Mid-Con in an all-stock merger transaction in which Mid-Con would become a direct, wholly owned subsidiary of Contango (the "Mid-Con Acquisition"). On October 30, 2020, the Company entered into the Third Amendment (the "Third Amendment") to its Credit Agreement under which, among other things, would increase the Company's borrowing base from $75 million to $130.0 million, effective upon the closing of the Mid-Con Acquisition, with an automatic $10.0 million reduction in the borrowing base on March 31, 2021. The Mid-Con acquisition closed on January 21, 2021, with a total of 25,409,164 shares of Contango common stock issued. Upon closing of the Mid-Con Acquisition, the MSA was terminated, and the Company's borrowing base was increased to $130.0 million. See Note 4 - "Acquisitions and Dispositions" and Note 13 - "Long-Term Debt" for further details. Concurrently with the announcement of the Mid-Con Acquisition, the Company announced the execution of an agreement with a select group of institutional and accredited investors to sell 26,451,988 shares of common stock, which was completed on October 27, 2020. After deducting the underwriting discount and fees and expenses, the net proceeds were approximately $38.8 million, which were used for the Mid-Con Acquisition and for general corporate purposes, including the repayment of debt outstanding under the Company's Credit Agreement. On November 27, 2020, the Company entered into a purchase and sale agreement (the "Purchase Agreement") with an undisclosed seller to acquire certain oil and natural gas properties located in the Big Horn Basin in Wyoming and Montana, in the Powder River Basin in Wyoming and in the Permian Basin in Texas and New Mexico (collectively the "Silvertip Acquisition") for aggregate consideration of approximately $58 million. In connection with the execution of the Purchase Agreement, the Company paid $7.0 million as a deposit for its obligations under the Purchase Agreement, which is included in the consolidated balance sheet as of December 31, 2020. The Silvertip Acquisition closed on February 1, 2021, for a net consideration of approximately $53.2 million (including the $7.0 million deposit previously paid), after customary closing adjustments, including the results of operations during the period between the effective date of August 1, 2020 and the closing date. See Note 4 - "Acquisitions and Dispositions" for more information. On December 1, 2020, the Company completed another private placement of 14,193,903 shares of common stock for net proceeds of approximately $21.7 million, after deducting the underwriting discount and fees and expenses. The net proceeds were used to fund the Silvertip Acquisition and for general corporate purposes, including the repayment of debt outstanding under the Company's Credit Agreement. 2. Summary of Significant Accounting Policies Basis of Presentation The Company's consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and include the accounts of Contango Oil & Gas Company and its subsidiaries, after elimination of all material intercompany balances and transactions. All wholly-owned subsidiaries are consolidated. Other Investments The Company has two seats on the board of directors of Exaro and has significant influence, but not control, over the company. As a result, the Company's 37% ownership in Exaro is accounted for using the equity method. Under the equity method, the Company's proportionate share of Exaro's net income increases the balance of its investment in Exaro, while a net loss or payment of dividends decreases its investment. In the consolidated statements of operations, the Company's proportionate share of Exaro's net income is reported as a single line-item in "Gain from investment in affiliates" (net of income taxes). 11 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Revenue Recognition Sales of oil, condensate, natural gas and natural gas liquids ("NGLs") are recognized at the time control of the products are transferred to the customer. Based upon the Company's past experience with its current purchasers and expertise in the market, collectability is probable, and there have not been payment issues with the Company's purchasers over the past year or currently. Generally, the Company's gas processing and purchase agreements indicate that the processors take control of the Company's gas at the inlet of the plant, and that control of residue gas is returned to the Company at the outlet of the plant. The midstream processing entity gathers and processes the natural gas and remits proceeds to the Company for the resulting sales of NGLs. The Company delivers oil and condensate to the purchaser at a contractually agreed-upon delivery point at which the purchaser takes custody, title and risk of loss of the product. When sales volumes exceed the Company's entitled share, a production imbalance occurs. If production imbalance exceeds the Company's share of the remaining estimated proved natural gas reserves for a given property, the Company records a liability. Production imbalances have not had and currently do not have a material impact on the financial statements. Generally, the Company's contracts have an initial term of one year or longer but continue month to month unless written notification of termination in a specified time period is provided by either party to the contract. The Company receives purchaser statements from the majority of its customers, but there are a few contracts where the Company prepares the invoice. Payment is unconditional upon receipt of the statement or invoice. The Company records revenue in the month production is delivered to the purchaser. Settlement statements may not be received for 30 to 90 days after the date production is delivered, and therefore the Company is required to estimate the amount of production delivered to the purchaser and the price that will be received for the sale of the product. Differences between the Company's estimates and the actual amounts received for product sales are generally recorded in the following month that payment is received. Any differences between the Company's revenue estimates and actual revenue received historically have not been significant. The Company has internal controls in place for its revenue estimation accrual process. The Company will continue to review all new or modified revenue contracts on a quarterly basis for proper treatment. Cash Equivalents Cash equivalents are considered to be highly liquid investment grade debt investments having an original maturity of 90 days or less. As of December 31, 2020, the Company had $1.4 million in cash and cash equivalents, after transferring cash balances at the end of each day to reduce outstanding debt under the Company's revolving Credit Agreement to minimize debt service costs. Under the Company's cash management system, checks issued but not yet presented to banks by the payee frequently result in book overdraft balances for accounting purposes and are classified in accounts payable in the consolidated balance sheets. At December 31, 2020, accounts payable included $2.9 million in outstanding checks that had not been presented for payment. At December 31, 2019, accounts payable included $6.1 million in outstanding checks that had not been presented for payment. Accounts Receivable The Company sells oil, natural gas and NGLs to a limited number of customers. In addition, the Company participates with other parties in the operation of oil and natural gas wells. Substantially all of the Company's accounts receivables are due from either purchasers of oil, natural gas and NGLs or participants in oil and natural gas wells for which the Company serves as the operator. Generally, operators of oil and natural gas properties have the right to offset future revenues against unpaid charges related to operated wells. 12 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) The allowance for doubtful accounts is an estimate of the losses in the Company's accounts receivable. The Company periodically reviews the accounts receivable from customers for any collectability issues. An allowance for doubtful accounts is established based on reviews of individual customer accounts, recent loss experience, current economic conditions and other pertinent factors. Amounts deemed uncollectible are charged to the allowance. Accounts receivable allowance for doubtful accounts was $2.3 million and $1.0 million as of December 31, 2020 and 2019, respectively. At December 31, 2020 and 2019, the carrying value of the Company's accounts receivable approximated fair value. Oil and Natural Gas Properties - Successful Efforts The Company follows the successful efforts method of accounting for its oil and natural gas activities. The Company's application of the successful efforts method of accounting for its oil and natural gas exploration and production activities requires judgment as to whether particular wells are developmental or exploratory, since lease acquisition costs and all developmental costs are capitalized, whereas exploratory drilling costs are continuously capitalized until the results are determined. If proved reserves are not discovered, the drilling costs are expensed as exploration costs. Other exploratory costs, such as seismic costs and other geological and geophysical expenses, are expensed as incurred. The results from a drilling operation can take considerable time to analyze, and the determination that commercial reserves have been discovered requires both judgment and application of industry experience. Wells may be completed that are assumed to be productive and actually deliver oil and natural gas in quantities insufficient to be economic, which may result in the abandonment of the wells at a later date. On occasion, wells are drilled which have targeted geologic structures that are both developmental and exploratory in nature, and in such instances an allocation of costs is required to properly account for the results. Delineation seismic costs incurred to select development locations within a productive oil or natural gas field are typically treated as development costs and capitalized, but often these seismic programs extend beyond the proved reserve areas, and therefore, management must estimate the portion of seismic costs to expense as exploratory. During the quarter ended June 30, 2020, the Company drilled an unsuccessful exploratory well in the Gulf of Mexico, resulting in a charge of $10.5 million for drilling and prospect costs included in "Exploration expenses" in the Company's consolidated statements of operations for the year ended December 31, 2020. The evaluation of oil and natural gas leasehold acquisition costs included in unproved properties requires management's judgment of exploratory costs related to drilling activity in a given area. Drilling activities in an area by other companies may also effectively condemn leasehold positions. Depreciation, depletion and amortization ("DD&A") is calculated on a field basis using the unit of production method. Lease acquisition costs are amortized over remaining total proved reserves, and capitalized drilling and development costs of producing oil and natural gas properties, including related support equipment and facilities net of salvage value, are amortized over estimated proved developed oil and natural gas reserves. Upon sale or retirement of properties, the cost and related accumulated DD&A are eliminated from the accounts, and the resulting gain or loss, if any, is recognized. Unit of production rates are revised whenever there is an indication of a need, but at least annually. Revisions are accounted for prospectively as changes in accounting estimates. Other property and equipment are depreciated using the straight-line method over their estimated useful lives which range between three and 10 years. Impairment of Oil and Natural Gas Properties Pursuant to GAAP, when circumstances indicate that proved properties may be impaired, the Company compares expected undiscounted future cash flows on a field-by-field basis to the unamortized capitalized cost of 13 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) the assets in that field. If the estimated future undiscounted cash flows, based on the Company's estimate of future reserves, oil and natural gas prices, operating costs and production levels from oil and natural gas reserves, are lower than the unamortized capitalized cost, then the capitalized cost is reduced to its fair value. The factors used to determine fair value include, but are not limited to, estimates of proved, probable and possible reserves, future commodity prices, the timing of future production and capital expenditures and a discount rate commensurate with the risk reflective of the lives remaining for the respective oil and natural gas properties. Additionally, the Company may use appropriate market data to determine fair value. In the first quarter of 2020, the COVID-19 pandemic and the resulting deterioration in the global demand for oil, combined with the failure by OPEC and Russia to reach an agreement on lower production quotas until April 2020, caused a dramatic increase in the supply of oil, a corresponding decrease in commodity prices, and reduced the demand for all commodity products. The remainder of 2020 was further adversely affected by the continuation of the COVID-19 pandemic and the actions and measures that countries, states, localities, central banks, international financing and funding organizations, stock markets, businesses and individuals have taken to address the spread of the coronavirus and associated illnesses, the continued volatility of the oil and gas market, and the failure of OPEC and Russia to consistently and fully adhere to the quotas delineated in their agreement. Consequently, during the three months ended March 31, 2020, the Company recorded a $143.3 million non-cash charge for proved property impairment of its onshore properties related to the dramatic decline in commodity prices, the "PV-10" (present value, discounted at a 10% rate) of its proved reserves, and the associated change in its current development plans for its proved undeveloped locations. In the fourth quarter of 2020, the Company recorded an additional $21.1 million non-cash charge for proved property impairment, of which $15.6 million related to its offshore properties as a result of performance revisions in reserves and the decline in gas prices and production yield. The total non-cash proved property impairment recorded during the year ended December 31, 2020 was $164.4 million. For the year ended December 31, 2019, the Company recognized non-cash proved property impairment expense of $117.8 million due to reserve revisions which resulted from the negative impact of performance and price related revisions to the present value of the Company's year-end proved reserves, and the relationship of that value to the historical carrying cost of its assets on the balance sheet. Included in the impairment charge was $34.5 million related to the Company's proved offshore Gulf of Mexico properties, primarily a result of performance revisions associated with the re-evaluation of the projected field costs and recoverable condensate volumes. In addition, the Company recognized onshore proved property impairment expense of $83.3 million. The onshore impairment was due primarily to price and performance revisions, which led to the re-evaluation of the economics and future drilling plans for the proved undeveloped locations, which then resulted in the elimination of certain proved undeveloped locations due to the SEC's five-year development rule for such locations. Unproved properties are reviewed quarterly to determine if there has been an impairment of the carrying value, with any such impairment charged to expense in the period. During the year ended December 31, 2020, the Company recorded a $4.3 million non-cash charge for unproved impairment expense related to undeveloped leases in its Central Oklahoma, Western Anadarko and Other Onshore regions. The Company recorded $2.6 million of this impairment expense in the first quarter of 2020, primarily related to leases the Company acquired from White Star and Will Energy in the fourth quarter of 2019, which were expiring in 2020, and the remaining $1.7 million of the impairment expense was recorded in the fourth quarter of 2020, due to leases expiring in 2021, all of which the Company has no plans to extend or develop as a result of the current commodity price environment and the Company's continued focus on cost saving and production enhancing strategic initiatives. During the year ended December 31, 2019, the Company recognized impairment expense of approximately $9.2 million related primarily to lease expirations, and near-term expirations, in the Company's West Texas region. Asset Retirement Obligations Asset Retirement and Environmental Obligations ("ASC 410") requires that the fair value of an asset retirement cost, and corresponding liability, should be recorded as part of the cost of the related long-lived asset and subsequently allocated to expense using a systematic and rational method. The Company records an asset retirement obligation ("ARO") to reflect the Company's legal obligation related to future plugging and abandonment of its oil 14 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) and natural gas wells, platforms and associated pipelines and equipment. The Company estimates the expected cash flows associated with the obligation and discounts the amounts using a credit-adjusted, risk-free interest rate. At least annually, the Company reassesses the obligation to determine whether a change in the estimated obligation is necessary. The Company evaluates whether there are indicators that suggest the estimated cash flows underlying the obligation have materially changed. Should these indicators suggest the estimated obligation may have materially changed on an interim basis, the Company will accordingly update its assessment. Additional retirement obligations increase the liability associated with new oil and natural gas wells, platforms, and associated pipelines and equipment as these obligations are incurred. The liability is accreted to its present value each period, and the capitalized cost is depleted over the useful life of the related asset. The accretion expense is included in DD&A expense. The estimated liability is based on historical experience in plugging and abandoning wells. The estimated remaining lives of the wells is based on reserve life estimates and federal and state regulatory requirements. The liability is discounted using an assumed credit-adjusted risk-free rate. Revisions to the liability could occur due to changes in estimates of plugging and abandonment costs, changes in the risk-free rate, changes in the remaining lives of the wells or if federal or state regulators enact new plugging and abandonment requirements. At the time of abandonment, the Company recognizes a gain or loss on abandonment to the extent that actual costs do not equal the estimated costs. This gain or loss on abandonment is included in impairment and abandonment of oil and natural gas properties expense. See Note 12 - "Asset Retirement Obligation" for additional information. Income Taxes The Company follows the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for the future tax consequences of (i) temporary differences between the tax basis of assets and liabilities and their reported amounts in the financial statements and (ii) operating loss and tax credit carryforwards for tax purposes. Deferred tax assets are reduced by a valuation allowance when, based upon management's estimates, it is more likely than not that a portion of the deferred tax assets will not be realized in a future period. The Company reviews its tax positions quarterly for tax uncertainties. The Company did not have significant uncertain tax positions as of December 31, 2020. As described in Note 16 - "Income Taxes" with respect to Section 382 Ownership Change, the amount of unrecognized tax benefits did not change materially from December 31, 2019. The amount of unrecognized tax benefits may change in the next twelve months; however, the Company does not expect the change to have a significant impact on its financial position or results of operations. The Company includes interest and penalties in interest income and general and administrative expenses, respectively, in its consolidated statements of operations. The Company files income tax returns in the United States and various state jurisdictions. The Company's federal and state tax returns for 2009 - 2020 remain open for examination by the taxing authorities in the respective jurisdictions where those returns were filed. Concentration of Credit Risk Substantially all of the Company's accounts receivable result from oil and natural gas sales or joint interest billings to a limited number of third parties in the oil and natural gas industry. This concentration of customers and joint interest owners may impact the Company's overall credit risk in that these entities may be similarly affected by changes in economic and other conditions. See Note 3 - "Concentration of Credit Risk" for additional information. Debt Issuance Costs Debt issuance costs incurred are capitalized and subsequently amortized over the term of the related debt. On September 17, 2019, the Company entered into the new revolving Credit Agreement with JPMorgan Chase Bank, N.A. and other lenders and incurred $1.8 million of arrangement and upfront fees in connection with the Credit Agreement. On November 1, 2019, the Credit Agreement was amended to add two additional lenders and increase the borrowing base thereunder, and the Company incurred an additional $1.6 million of debt issuance costs. 15 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) On June 9, 2020, the Credit Agreement was amended to, among other things, reduce the borrowing base. No fees were incurred for the Second Amendment; however, during the three months ended June 30, 2020, the Company expensed $1.0 million of the debt issuance costs discussed above which originally were to be amortized over the life of the loan, due to the reduction in the borrowing base per the Second Amendment. On October 30, 2020, the Company entered into the Third Amendment to the Credit Agreement under which, among other things, increased the Company's borrowing base from $75.0 million to $130.0 million, effective upon the closing of the Mid-Con Acquisition on January 21, 2021. The Company initially incurred $0.1 million in fees related to the Third Amendment during the three months ended December 31, 2020. During the year ended December 31, 2020, the Company amortized debt issuance costs of $1.6 million related to its Credit Agreement, including the $1.0 million mentioned above. As of December 31, 2020, the remaining balance of these debt issuance costs was $1.8 million, which will be amortized through September 17, 2024, with amortization expense included in the interest expense line item in the Company's consolidated statements of operations. In January 2021, the Company incurred an additional $0.9 million in fees related to the Third Amendment becoming effective on January 21, 2021, in connection with the closing of the Mid-Con Acquisition. These fees will also be amortized over the remaining term of the loan. Stock-Based Compensation The Company applies the fair value based method to account for stock based compensation. Under this method, compensation cost is measured at the grant date based on the fair value of the award and is recognized over the requisite service period, which generally aligns with the award vesting period. The Company classifies the benefits of tax deductions in excess of the compensation cost recognized for the options (excess tax benefit) as financing cash flows. The fair value of each restricted stock award is estimated as of the date of grant. The fair value of the performance stock units is estimated as of the date of grant using the Monte Carlo simulation pricing model. Inventory Inventory consists primarily of casing and tubing stored temporarily, which will be used for drilling or completion of wells. Inventory is recorded at the lower of cost or market using specific identification method. Derivative Instruments and Hedging Activities The Company accounts for its derivative activities under the provisions of ASC 815, Derivatives and Hedging ("ASC 815"). ASC 815 establishes accounting and reporting requirements that every derivative instrument be recorded on the balance sheet as either an asset or liability measured at fair value. From time to time, the Company hedges a portion of its forecasted oil and natural gas production. Derivative contracts entered into by the Company have consisted of transactions in which the Company hedges the variability of cash flow related to a forecasted transaction using variable to fixed swaps and collars. The Company elected to not designate any of its derivative positions for hedge accounting. Accordingly, the net change in the mark-to-market valuation of these positions as well as all payments and receipts on settled derivative contracts are recognized in "Gain (loss) on derivatives, net" on the consolidated statements of operations for the years ended December 31, 2020 and 2019. Derivative instruments with settlement dates within one year are included in current assets or liabilities, whereas derivative instruments with settlement dates exceeding one year are included in non-current assets or liabilities. The Company calculates the asset or liability for current and non-current derivative instruments for each counterparty based on the settlement dates within the respective contracts. See Note 6 - "Derivative Instruments" for additional information. Subsidiary Guarantees Contango Oil & Gas Company, as the parent company (the "Parent Company"), filed a registration statement on Form S-3 with the SEC to register, among other securities, debt securities that the Parent Company may issue from time to time. Contango Resources, Inc., Contango Midstream Company, Contango Operators, Inc., Contaro Company, Contango Alta Investments, Inc. and any other of the Company's future subsidiaries specified in the prospectus supplement (each a "Subsidiary Guarantor") are Co-Registrants with the Parent Company under the registration statement, and the registration statement also registered guarantees of debt securities by the Subsidiary 16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Guarantors. The Subsidiary Guarantors are wholly-owned by the Parent Company, either directly or indirectly, and any guarantee by the Subsidiary Guarantors will be full and unconditional. The Parent Company has no assets or operations independent of the Subsidiary Guarantors, and there are no significant restrictions upon the ability of the Subsidiary Guarantors to distribute funds to the Parent Company. Finally, the Parent Company's wholly-owned subsidiaries do not have restricted assets that exceed 25% of net assets as of the most recent fiscal year end that may not be transferred to the Parent Company in the form of loans, advances or cash dividends by such subsidiary without the consent of a third party. Leases The Company recognizes a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and a right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term on the Company's consolidated balance sheet. The Company does not include leases with an initial term of twelve months or less on the balance sheet. The Company recognizes payments on these leases within "Operating expenses" on its consolidated statements of operations. The Company accounts for lease and non-lease contract components as a lease. The Company has procedures to review any new or modified contracts which contain a physical asset on a quarterly basis and determine if an arrangement is, or contains, a lease and determines the proper treatment. See Note 9 - "Leases" for additional information. Recent Accounting Pronouncements In June 2016, the FASB issued ASU 2016-13 - Financial Instruments - Credit Losses ("Topic 326"): Measurement of Credit Losses on Financial Instruments ("ASU 2016-13") related to the calculation of credit losses on financial instruments. All financial instruments not accounted for at fair value will be impacted, including the Company's trade and joint interest billing receivables. Allowances are to be measured using a current expected credit loss model as of the reporting date that is based on historical experience, current conditions and reasonable and supportable forecasts. This is significantly different from the current model that increases the allowance when losses are probable. Initially, ASU 2016-13 was effective for all public companies for fiscal years beginning after December 15, 2019. The FASB subsequently issued ASU 2019-04 ("ASU 2019-04"): Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives, and Topic 825, Financial Instruments and ASU 2019-05 ("ASU 2019-05"): Financial Instruments - Credit Losses (Topic 326) - Targeted Transition Relief. ASU 2019-04 and ASU 2019-05 provide certain codification improvements related to the implementation of ASU 2016-13 and targeted transition relief consisting of an option to irrevocably elect the fair value option for eligible instruments. In November 2019, the FASB issued ASU 2019-10 - Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates. This amendment deferred the effective date of ASU 2016-13 from January 1, 2020 to January 1, 2023 for calendar year-end smaller reporting companies, which includes the Company. The Company plans to defer the implementation of ASU 2016-13, and the related updates. In November 2019, the FASB issued ASU 2019-12 - Income Taxes ("Topic 740"): Simplifying the Accounting for Income Taxes ("ASU 2019-12"). The amendments in ASU 2019-12 are part of an initiative to reduce complexity in accounting standards and simplify the accounting for income taxes by removing certain exceptions from Topic 740 and making minor improvements to the codification. The amendments in this update are effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The provisions of this update are not expected to have a material impact on the Company's financial position or results of operations. In March 2020, the FASB issued ASU 2020-04 - Reference Rate Reform ("Topic 848"): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ("ASU 2020-04"). ASU 2020-04 provides optional guidance, for a limited period of time, to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The amendments in ASU 2020-04 provide optional expedients and exceptions for applying US GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU apply only to contracts, hedging relationships and other transactions that reference LIBOR, or another reference rate, expected to be discontinued because of reference rate reform. The Company is currently assessing the potential impact of ASU 2020-04 on its consolidated financial statements. 17 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) 3. Concentration of Credit Risk The customer base for the Company is concentrated in the oil and natural gas industry. The Company's largest three purchasers contributed approximately 36% of the Company's total production revenues for the year ended December 31, 2020. The Company's sales to these purchasers are not secured with letters of credit, and in the event of non-payment, the Company could lose up to two months of revenues. The loss of two months of revenues would have a material adverse effect on the Company's financial position. However, we believe our current purchasers could be replaced by other purchasers under contracts with similar terms and conditions. 4. Acquisitions and Dispositions Mid-Con Acquisition On October 25, 2020, the Company entered into an Agreement and Plan of Merger (the "Merger Agreement') with Mid-Con and Mid-Con Energy GP, LLC, the general partner of Mid-Con("Mid-Con GP"), pursuant to which Mid-Con will merge with and into Michael Merger Sub LLC, a Delaware limited liability company and a wholly-owned, direct subsidiary of the Company. The Mid-Con Acquisition, which closed on January 21, 2021, was unanimously approved by the conflicts committee of the board of directors of Mid-Con, by the full board of directors of Mid-Con, by the disinterested directors of the board of directors of the Company and was subject to shareholder and unitholder approvals and other customary conditions to closing. At the effective time of the Mid-Con Acquisition (the "Effective Time"), each common unit representing limited partner interests in Mid-Con issued and outstanding immediately prior to the Effective Time (other than treasury units or units held by Mid-Con GP) was converted automatically into the right to receive 1.75 shares of the Company's common stock. A total of 25,409,164 shares of Contango common stock were issued at the closing of the Mid-Con Acquisition. As of January 21, 2021, John C. Goff, Chairman of the Board of Directors of the Company, beneficially owned approximately 56.4% of the common units of Mid-Con, and Travis Goff, John C. Goff's son and the President of Goff Capital, Inc., served on the board of directors of the general partner of Mid-Con. The Company's senior management team will run the combined company, and Contango's board of directors will remain intact as the board of directors of the combined company. The combined company is headquartered in Fort Worth, Texas. The Mid-Con acquisition will be accounted for as a business combination. Therefore, the purchase price will be allocated to the assets acquired and the liabilities assumed based on their estimated acquisition date fair values based on then currently available information. A combination of a discounted cash flow model and market data was used by the Company in determining the fair value of the oil and gas properties. Significant inputs into the calculation included future commodity prices, estimated volumes of oil and gas reserves, expectations for the timing and amount of future development and operating costs, future plugging and abandonment costs, and a risk adjusted discount rate. The Company expects to complete the purchase price allocation during the twelve-month period following the acquisition date. The following table sets forth the Company's preliminary allocation of the purchase price to the assets acquired and liabilities assumed as of the acquisition date. Purchase Price Allocation 183,311 The following unaudited pro forma combined condensed financial data for the years ended December 31, 2020 was derived from the historical financial statements of the Company after giving effect to the Mid-Con acquisition, as if it had occurred on January 1, 2020. The below information reflects pro forma adjustments based on available information and certain assumptions that the Company believes are reasonable, including the depletion of the fair-valued proved oil and natural gas properties acquired from Mid-Con. The pro forma results of operations do not include any cost savings or other synergies that may result from the acquisition or any estimated costs that have been or will be incurred by the Company to integrate the assets acquired. The pro forma consolidated statement of operations data has been included for comparative purposes only, is not necessarily indicative of the results that might have occurred had the acquisition taken place on January 1, 2020 and is not intended to be a projection of future results. (In thousands except for per share amounts) Year Ended December 31, 2020 Revenues Silvertip Acquisition On November 27, 2020, the Company entered into the Purchase Agreement with an undisclosed seller to acquire certain oil and natural gas properties located in the Big Horn Basin in Wyoming and Montana, in the Powder River Basin in Wyoming and in the Permian Basin in Texas and New Mexico, for aggregate consideration of approximately $58 million in cash. In connection with the execution of the Purchase Agreement, the Company paid $7.0 million as a deposit for its obligations under the Purchase Agreement, which is included in the consolidated balance sheet as of December 31, 2020. The Silvertip Acquisition closed on February 1, 2021, and a balance of $46.2 million was paid upon closing, after customary closing adjustments, including the results of operations during the period between the effective date of August 1, 2020 and the closing date. Juneau Joint Development Agreement On December 23, 2019, the Company entered into a Joint Development Agreement with Juneau for aggregate consideration of $6.0 million, consisting of $1.69 million in cash and 1,725,000 shares of common stock of the Company. This agreement provides the Company the right to acquire an interest in up to six of Juneau's exploratory prospects located in the Gulf of Mexico. The first such exploratory prospect acquired by the Company was the Iron Flea prospect located in the Grand Isle Block 45 Area in the shallow waters off of the Louisiana coastline, which was determined to be unsuccessful in June 2020. The Company is currently evaluating for future testing a number of exploratory prospects included in the Joint Development agreement, including the Boss Hogg prospect, located in the Eugene Island 298 Area in the shallow waters off of the Louisiana coastline. Management considers this Boss Hogg prospect to be an excellent complement to its PDP-oriented acquisition strategy and believes it could provide a very compelling economic value proposition, even in the current low oil price environment. The Company is currently working through regulatory considerations and operational factors, including the availability of appropriate equipment, in determining the ultimate strategy for, and timing on, the testing of that prospect. 19 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) White Star Acquisition On September 30, 2019, the Company entered into an asset purchase and sale agreement with White Star to acquire certain assets and liabilities, including approximately 306,000 net acres located in the STACK, Anadarko and Cherokee operating districts in Oklahoma. The closing of the White Star Acquisition occurred on November 1, 2019, for a total aggregate consideration of $132.5 million. Following adjustments for the results of operations for the period between the effective and closing dates, and other estimated, customary closing adjustments, the net consideration paid was approximately $95.7 million in cash. The White Star Acquisition was accounted for as a business combination. Therefore, the purchase price was allocated to the assets acquired and the liabilities assumed based on their estimated acquisition date fair values based on then currently available information. A combination of a discounted cash flow model and market data was used by a third-party specialist in determining the fair value of the oil and natural gas properties. Significant inputs into the calculation included future commodity prices, estimated volumes of oil and natural gas reserves, expectations for the timing and amount of future development and operating costs, future plugging and abandonment costs, and a risk adjusted discount rate. The following table sets forth the Company's allocation of the purchase price to the assets acquired and liabilities assumed as of the acquisition date. Purchase Price Allocation 139,130 The purchase price allocated to the assets acquired increased to $139.1 million from the previously reported $138.5 million due to an increase in the value of inventory acquired of $1.0 million and a decrease in the value of unevaluated properties acquired of $0.4 million. Approximately $21.4 million of revenues and $16.3 million of direct operating expenses attributed to the White Star Acquisition are included in the Company's consolidated statements of operations for the period of the closing date on November 1, 2019 through December 31, 2019. The following unaudited pro forma combined condensed financial data for the year ended December 31, 2019 was derived from the historical financial statements of the Company after giving effect to the White Star Acquisition, as if it had occurred on January 1, 2018. The below information reflects pro forma adjustments for the private placement of the Company's Series B contingent convertible preferred stock and an increase in borrowings under the Company's Credit Agreement, the proceeds of which were used to pay the purchase price of the White Star Acquisition, as well as pro forma adjustments based on then currently available information and certain assumptions that the Company believed were reasonable, including the depletion of the fair-valued proved oil and natural gas properties acquired from White Star and the exclusion of acquisition-related costs incurred by the 20 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) Company of approximately $1.9 million for the year ended December 31, 2019. The pro forma results of operations do not include any cost savings or other synergies that may have resulted from the acquisition or any estimated costs that have been or will be incurred by the Company to integrate the assets acquired. In addition, the results of operations include non-cash impairment expense for White Star based on historical costs and not the fair value of the oil and natural gas properties acquired as reflected in the allocation of the purchase price. The pro forma financial data does not include the pro forma results of operations for any other acquisitions made during the periods presented, as they were not deemed material. The pro forma consolidated statements of operations data has been included for comparative purposes only, is not necessarily indicative of the results that might have occurred had the acquisition taken place on January 1, 2018 and is not intended to be a projection of future results. (In thousands except for per share amounts) Year Ended December 31, 2019 Revenues Will Energy Acquisition On September 12, 2019, the Company announced it entered into a contribution and purchase agreement with Will Energy to acquire approximately 155,900 net acres located in North Louisiana (8,000 net acres) and the Western Anadarko Basin in Western Oklahoma and the Texas Panhandle (147,900 net acres). Closing of the Will Energy Acquisition occurred on October 25, 2019, for a total aggregate consideration of $23 million. Following adjustments for sales of non-core,non-operated Louisiana properties by Will Energy prior to cl

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