UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2024 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 0-7406 PrimeEnergy Resources Corporation (Exact name of registrant as specified in its charter) Delaware 84-0637348 (State or other jurisdictio ...

Financial Performance - The company reported a net income of $28.1 million for 2023, or $15.19 per share, compared to $48.7 million, or $24.91 per share for 2022, reflecting production increases offset by commodity price decreases [269]. - Oil, NGL, and gas sales decreased by $16.4 million, or 13.19%, to $107.7 million for the year ended December 31, 2023, from $124.1 million for the year ended December 31, 2022 [270]. - Total oil and gas revenue decreased by $16,376,000, or 13.19%, to $107,742,000 in 2023 from $124,118,000 in 2022 [273]. Production Metrics - Crude oil production increased by 205,000 barrels, or 21.83%, to 1,144,000 barrels for the year ended December 31, 2023, from 939,000 barrels for the year ended December 31, 2022 [271]. - NGL production increased by 189,000 barrels, or 45.32%, to 606,000 barrels for the year ended December 31, 2023, from 417,000 barrels for the year ended December 31, 2022 [271]. - Natural gas production increased by 802 MMcf, or 24.12%, to 4,127 MMcf for the year ended December 31, 2023, from 3,325 MMcf for the year ended December 31, 2022 [271]. - Gas sold increased by 802,000 Mcf, or 24.12%, to 4,127,000 Mcf in 2023 from 3,325,000 Mcf in 2022 [273]. Price Changes - The average realized price for crude oil decreased by $19.86 per barrel, or 20.54%, for 2023 compared to 2022, while NGL prices decreased by $16.06 per barrel, or 44.99%, and natural gas prices decreased by $3.62 per Mcf, or 65.34% [270]. - Average price received for oil decreased by $19.86, or 20.54%, to $76.84 in 2023 from $96.70 in 2022 [273]. - Average price received for gas decreased by $3.62, or 65.34%, to $1.92 in 2023 from $5.54 in 2022 [273]. Expenses and Investments - General and administrative expenses decreased by $4.6 million, or 22.7%, to $15.6 million in 2023 from $20.2 million in 2022 [280]. - Depreciation, depletion, and amortization increased by $3.6 million, or 13.1%, to $31 million in 2023 from $27.4 million in 2022 [279]. - Interest expense decreased by $0.4 million, or 41.0%, to $0.5 million in 2023 from $0.9 million in 2022 [282]. - Tax expense decreased to $6.1 million in 2023 from $10.3 million in 2022, primarily due to a decrease in pre-tax income [282]. - The company invested approximately $91 million in 35 wells during 2023, focusing on horizontal development in West Texas [261]. - For 2024, the company expects to invest $140 million in 54 wells and $95 million in an additional 23 wells in West Texas in 2025 [261]. Stock and Credit Facilities - The company maintains a credit facility totaling $300 million, with a borrowing base of $85 million, and had $4 million in outstanding borrowings as of March 31, 2024 [258]. - The company has a stock repurchase program, spending $7.5 million in 2023 and expects continued spending in 2024 [267]. Field Service Income - Field service income increased by $2.4 million, or 18.5%, to $15.4 million in 2023 from $13.0 million in 2022 [277].

[Definitions of Certain Terms and Conventions Used Herein](index=4&type=section&id=Definitions%20of%20Certain%20Terms%20and%20Conventions%20Used%20Herein) This section defines key measurements and general terms essential for understanding the company's oil and gas operations and financial reporting - Key measurements defined include **Bbl** (standard barrel), **BOE** (barrel of oil equivalent), **BOEPD** (BOE per day), **MBbl** (one thousand Bbls), **MBOE** (one thousand BOEs), **Mcf** (one thousand cubic feet), and **MMcf** (one million cubic feet)[12](index=12&type=chunk) - General terms defined include **DD&A** (depletion, depreciation and amortization), **ESG** (environmental, social and governance), **GAAP** (accounting principles generally accepted in the United States of America), **LNG** (liquefied natural gas), **NGLs** (natural gas liquids), **NYMEX** (New York Mercantile Exchange), **OPEC** (Organization of Petroleum Exporting Countries), and **SEC** (United States Securities and Exchange Commission)[12](index=12&type=chunk)[14](index=14&type=chunk) - Reserve definitions include **Proved reserves** (economically producible with reasonable certainty), **Proved developed reserves** (recoverable through existing wells), and **Proved undeveloped reserves** (recoverable from new wells or major recompletion)[12](index=12&type=chunk)[14](index=14&type=chunk)[99](index=99&type=chunk) [Cautionary Statement Concerning Forward-Looking Statements](index=6&type=section&id=Cautionary%20Statement%20Concerning%20Forward-Looking%20Statements) This section cautions readers that forward-looking statements are subject to significant risks and uncertainties, advising against undue reliance - Forward-looking statements are identified by terms such as 'believes,' 'plans,' 'expects,' 'anticipates,' and are based on current expectations, assumptions, estimates, and projections[16](index=16&type=chunk) - Key risks and uncertainties include **volatility of commodity prices**, product supply and demand, impact of armed conflict, competition, regulatory actions, cost increases, and environmental risks[17](index=17&type=chunk) - Readers are cautioned not to place undue reliance on forward-looking statements, as actual events and results may differ materially from anticipated results[18](index=18&type=chunk) [Part I—Financial Information](index=7&type=section&id=Part%20I%E2%80%94Financial%20Information) [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) This section presents PrimeEnergy's unaudited consolidated financial statements and notes for the period ended September 30, 2023 [Consolidated Balance Sheets –September 30, 2023 and December 31, 2022](index=7&type=section&id=Consolidated%20Balance%20Sheets) This section details the company's assets, liabilities, and equity as of September 30, 2023, and December 31, 2022 Consolidated Balance Sheets (Thousands) | Metric (Thousands) | Sep 30, 2023 | Dec 31, 2022 | | :----------------- | :----------- | :----------- | | Total Assets | $253,575 | $247,137 | | Total Liabilities | $97,574 | $106,784 | | Total Equity | $156,001 | $140,353 | | Cash & Equivalents | $19,790 | $26,543 | | Long-term bank debt| $— | $11,000 | [Consolidated Statements of Operations – For the three and nine months ended September 30, 2023 and 2022](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) This section presents the company's financial performance, including revenues, costs, and net income for the periods ended September 30 Consolidated Statements of Operations (Three Months Ended September 30, Thousands) | Metric (Thousands) | 2023 | 2022 | Change | % Change | | :----------------- | :---------- | :---------- | :---------- | :------- | | Total Revenues | $35,360 | $39,314 | $(3,954) | -10.1% | | Total Costs & Exp. | $24,330 | $21,532 | $2,798 | +13.0% | | Income from Ops | $13,132 | $18,276 | $(5,144) | -28.1% | | Net Income | $10,720 | $13,154 | $(2,434) | -18.5% | | Basic EPS | $5.84 | $6.79 | $(0.95) | -14.0% | | Diluted EPS | $4.13 | $4.88 | $(0.75) | -15.4% | Consolidated Statements of Operations (Nine Months Ended September 30, Thousands) | Metric (Thousands) | 2023 | 2022 | Change | % Change | | :----------------- | :---------- | :---------- | :---------- | :------- | | Total Revenues | $87,617 | $100,738 | $(13,121) | -13.0% | | Total Costs & Exp. | $67,672 | $68,808 | $(1,136) | -1.6% | | Income from Ops | $28,151 | $47,260 | $(19,109) | -40.4% | | Net Income | $22,220 | $35,279 | $(13,059) | -37.0% | | Basic EPS | $11.95 | $17.95 | $(6.00) | -33.4% | | Diluted EPS | $8.49 | $12.96 | $(4.47) | -34.5% | [Consolidated Statements of Equity – For the three and nine months ended September 30, 2023 and 2022](index=9&type=section&id=Consolidated%20Statements%20of%20Equity) This section details changes in the company's equity, including retained earnings and treasury stock, for the periods ended September 30 Consolidated Statements of Equity (Thousands) | Metric (Thousands) | Sep 30, 2023 | Dec 31, 2022 | Change | | :----------------- | :----------- | :----------- | :----- | | Total Equity | $156,001 | $140,353 | +$15,648 | | Retained Earnings | $199,786 | $177,566 | +$22,220 | | Treasury Stock | $(51,621) | $(45,049) | $(6,572)| - Net income for the nine months ended September 30, 2023, contributed **$22,220 thousand** to retained earnings[28](index=28&type=chunk) - Treasury stock purchases totaled **$6,572 thousand** for the nine months ended September 30, 2023[28](index=28&type=chunk) [Consolidated Statements of Cash Flows – For the nine months ended September 30, 2023 and 2022](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's cash flows from operating, investing, and financing activities for the nine months ended September 30 Consolidated Statements of Cash Flows (Nine Months Ended September 30, Thousands) | Metric (Thousands) | 2023 | 2022 | Change | | :----------------- | :---------- | :---------- | :---------- | | Net Cash from Ops | $70,724 | $47,346 | +$23,378 | | Net Cash from Inv | $(59,635) | $7,358 | $(66,993) | | Net Cash from Fin | $(17,842) | $(40,992) | +$23,150 | | Net (Decrease) Inc | $(6,753) | $13,712 | $(20,465) | | Cash End of Period | $19,790 | $24,059 | $(4,269) | - Capital expenditures significantly increased to **$67,069 thousand** in 2023 from **$7,972 thousand** in 2022[31](index=31&type=chunk) - Repayment of long-term bank debt decreased to **$11,270 thousand** in 2023 from **$36,000 thousand** in 2022[31](index=31&type=chunk) [Notes to Consolidated Financial Statements – September 30, 2023](index=11&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed explanations of accounting policies, significant transactions, debt, and financial instruments - The unaudited interim financial statements are prepared by management, consistent with the 2022 Form 10-K, and include normal recurring adjustments[33](index=33&type=chunk)[34](index=34&type=chunk) - Significant acquisitions and dispositions in 2023 included selling **7.8 surface acres** in Midland County, TX for **$436K**, acquiring **55 net acres** in Reagan County, TX for **$605K**, selling **320 non-core acres** in Reagan County for **$6M**, divesting interest in **39 Oklahoma wells** reducing plugging liability by **~$1.5M**, and acquiring operations of **36 wells** and **114.52 net acres** in Reagan County, TX from DE Permian[35](index=35&type=chunk)[36](index=36&type=chunk)[37](index=37&type=chunk) - The company's revolving corporate credit facility has **$300 million** in aggregate loan commitments, with the borrowing base adjusted from **$75 million** to **$60 million** in January 2023, then increased to **$65 million** in July 2023, with no outstanding borrowings as of September 30, 2023, or November 15, 2023[44](index=44&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) - The company uses futures, swaps, and options to manage commodity price risk but does not apply hedge accounting, with all derivative instruments expiring in March 2023 and no current intent for future contracts unless required by its bank line of credit[64](index=64&type=chunk)[70](index=70&type=chunk)[71](index=71&type=chunk) Fair Value of Commodity Derivative Contracts (Thousands) | (Thousands of dollars) | Sep 30, 2023 | Dec 31, 2022 | | :--------------------- | :----------- | :----------- | | Commodity derivative contracts (Assets) | $— | $210 | | Commodity derivative contracts (Liabilities) | $— | $(1,190) | | Total derivative instruments | $— | $(980) | [Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operation](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Conditions%20and%20Results%20of%20Operation) Management discusses financial performance, condition, and operational results, focusing on revenues, expenses, and liquidity [OVERVIEW](index=17&type=section&id=OVERVIEW) This section provides an overview of PrimeEnergy's business, asset portfolio, strategic objectives, and cash flow drivers - PrimeEnergy is an independent oil and natural gas company focused on acquiring, developing, and producing oil and natural gas primarily in Texas and Oklahoma[68](index=68&type=chunk) - The company's asset portfolio includes mature and horizontal oil and gas properties, a **12.5% overriding royalty interest** in West Virginia, well-servicing equipment in Texas, an idle offshore pipeline, land in Oklahoma, and a **33.3% interest** in a retail shopping center in Alabama[68](index=68&type=chunk) - The company's strategy involves actively acquiring producing properties, assuming operator positions, and evaluating leasehold acquisition, exploration, and development to build stockholder value[69](index=69&type=chunk) - Cash flows are dependent on oil and gas prices, success of acquisition and drilling activities, and operational performance, with derivative instruments used to manage commodity price risk, though recent contracts expired in March 2023 with no current intent for future contracts unless required by the bank[70](index=70&type=chunk)[71](index=71&type=chunk) - The company is actively developing non-producing reserves in the Permian Basin of West Texas (**9,266 net acres**, potential for **250+ horizontal wells**) and Oklahoma (**4,113 net acres**, potential for **43 new horizontal wells**)[73](index=73&type=chunk) [District Information](index=18&type=section&id=District%20Information) This section details proved reserves, daily production, and development plans across operating regions, especially West Texas Proved Reserves and Average Net Daily Production (as of Dec 31, 2022) | Region | Proved Reserves (MBoe) | % of Total | Avg Net Daily Production (Boe/day) | | :------------ | :--------------------- | :--------- | :--------------------------------- | | Gulf Coast | 790 | 4.7% | 227 | | Mid-Continent | 2,659 | 16.0% | 897 | | West Texas | 13,257 | 79.3% | 3,257 | | Other | 13 | 0.1% | 4 | | **Total** | **16,719** | **100%** | **4,385** | - The West Texas region, primarily in the Permian Basin, accounts for **79.3% of total proved reserves** and is the primary source of natural gas liquids, with significant potential for additional horizontal drilling[76](index=76&type=chunk)[81](index=81&type=chunk) - In the first three quarters of 2023, the company added **22 completed horizontal wells** in West Texas (15 in Reagan, 5 in Martin, 2 in Upton counties), investing approximately **$78 million** with an average **32.2% working interest**[82](index=82&type=chunk) - Future development plans include participating in **18 additional horizontal wells** in Reagan County (expected production by Feb 2024, **~$27M investment**), **34 more wells** (20 with Double Eagle, 14 with Civitas) in Reagan County (expected production by Q2 2024, **~$84M investment**), and **12 more horizontal wells** in Q1 2024 (**~$48M investment**), totaling approximately **$159 million** in capital commitment by Q1 2024[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) [Reserves](index=19&type=section&id=Reserves) This section presents oil and gas reserve estimates, including proved developed and undeveloped reserves, and their PV10 values Oil and Gas Reserves (MBoe) | As of Dec 31, | Proved Developed | Proved Undeveloped | Total Proved | | :------------ | :--------------- | :----------------- | :----------- | | 2020 | 7,214 | 3,221 | 10,435 | | 2021 | 12,252 | — | 12,252 | | 2022 | 10,353 | 6,366 | 16,719 | PV10 Value and Standardized Measure (Thousands) | As of Dec 31, | Proved Developed PV10 | Proved Undeveloped PV10 | Total PV10 | Standardized Measure | | :------------ | :-------------------- | :---------------------- | :--------- | :------------------- | | 2020 | $34,717 | $21,823 | $56,539 | $41,619 | | 2021 | $171,906 | $— | $171,906 | $135,806 | | 2022 | $192,688 | $118,081 | $310,769 | $244,536 | - Reserve estimates are evaluated by Ryder Scott Company, L.P. and overseen by the company's Engineering Data manager, with all reserves located within the continental United States[87](index=87&type=chunk) Average Commodity Prices Used for Reserve Evaluation (12-month average) | Year | Natural Gas (per MMBtu) | Oil (per barrel) | | :--- | :---------------------- | :--------------- | | 2020 | $1.985 | $39.57 | | 2021 | $3.598 | $66.56 | | 2022 | $6.358 | $93.67 | [RECENT ACTIVITIES](index=21&type=section&id=RECENT%20ACTIVITIES) This section highlights recent operational activities, focusing on horizontal drilling and planned capital investments - The company's strategy focuses on developing oil and gas reserves primarily through horizontal drilling, targeting reservoirs with high initial production rates and strong expected returns[103](index=103&type=chunk) - Through the third quarter of 2023, **25 new horizontal wells** have been brought into production, with an approximate total investment of **$78 million**[105](index=105&type=chunk)[108](index=108&type=chunk)[111](index=111&type=chunk) - Planned capital investments for horizontal development over the next several years total approximately **$400 million**, including **$27 million** for 18 wells currently being completed, **$84 million** for 34 near-term development wells, **$143 million** for 35 wells expected to spud in 2024, **$100 million** for 27 drill-sites in 2025-2026, and **$40 million** for additional proved and probable drill-sites[109](index=109&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) [RESULTS OF OPERATIONS:](index=22&type=section&id=RESULTS%20OF%20OPERATIONS%3A) This section analyzes financial results, including net income, sales, production volumes, and expenses for the reporting periods - Net income for the nine months ended September 30, 2023, decreased by **37%** to **$22.2 million** (**$11.95/share**) from **$35.3 million** (**$17.95/share**) in 2022[112](index=112&type=chunk) - Total oil, gas, and NGL sales (excluding derivatives) decreased by **26.4%** to **$75.7 million** for the nine months ended September 30, 2023, compared to **$102.8 million** in 2022[113](index=113&type=chunk) Production Volumes and Average Sales Prices (Nine Months Ended Sep 30) | Metric | 2023 | 2022 | Change | % Change | | :---------------------- | :---------- | :---------- | :---------- | :------- | | Barrels of Oil Produced | 813,561 | 752,500 | +61,061 | +8.1% | | Avg Oil Price Received | $76.14 | $100.39 | $(24.25) | -24.2% | | Mcf of Gas Sold | 2,766,128 | 2,456,800 | +309,328 | +12.6% | | Avg Gas Price Received | $1.97 | $6.01 | $(4.04) | -67.2% | | Barrels of NGLs Sold | 412,487 | 332,400 | +80,087 | +24.1% | | Avg NGLs Price Received | $20.18 | $37.54 | $(17.36) | -46.2% | Production Volumes and Average Sales Prices (Three Months Ended Sep 30) | Metric | 2023 | 2022 | Change | % Change | | :---------------------- | :---------- | :---------- | :---------- | :------- | | Barrels of Oil Produced | 323,188 | 244,500 | +78,688 | +32.2% | | Avg Oil Price Received | $81.69 | $95.72 | $(14.03) | -14.7% | | Mcf of Gas Sold | 1,080,588 | 879,800 | +200,788 | +22.8% | | Avg Gas Price Received | $2.29 | $7.23 | $(4.94) | -68.3% | | Barrels of NGLs Sold | 161,003 | 122,400 | +38,603 | +31.5% | | Avg NGLs Price Received | $19.56 | $34.35 | $(14.79) | -43.1% | - Oil and gas production expense increased by **21.5%** for the three months and **1.4%** for the nine months ended September 30, 2023, reflecting rising service costs and new wells, partially offset by cost savings from plugged wells[116](index=116&type=chunk) - Interest expense decreased by **50.0%** for the nine months and **66.7%** for the three months ended September 30, 2023, due to lower current borrowings under the revolving credit agreement[122](index=122&type=chunk) [LIQUIDITY AND CAPITAL RESOURCES](index=24&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) This section discusses financial flexibility, cash flow, credit facilities, and capital allocation strategies, including stock repurchases - The company's business strategy emphasizes maintaining a strong balance sheet, ample liquidity, and financial flexibility, with the 2023 capital budget based on expected cash flows and potential credit facility borrowings[124](index=124&type=chunk) - Net cash provided by operating activities and proceeds from property sales for the nine months ended September 30, 2023, was **$78.1 million**, an increase from **$62.7 million** in the prior year[126](index=126&type=chunk) - The company maintains a **$300 million** reserves-based line of credit with a current borrowing base of **$65 million**, with no outstanding borrowings as of November 15, 2023, and the next borrowing base review scheduled for December 2023[130](index=130&type=chunk) - The company spent **$6.6 million** on its stock repurchase program during the first nine months of 2023 and expects continued spending[132](index=132&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, PrimeEnergy is exempt from providing market risk disclosures in this report - The Company is a smaller reporting company and is exempt from providing quantitative and qualitative disclosures about market risk[133](index=133&type=chunk) [Item 4. Controls and Procedures](index=25&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of September 30, 2023, with no material changes - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of September 30, 2023[134](index=134&type=chunk) - There were no material changes in the company's internal control over financial reporting during the first nine months of 2023[135](index=135&type=chunk) [Part II - Other Information](index=26&type=section&id=Part%20II%20-%20Other%20Information) [Item 1. Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) The company reported no legal proceedings during the period covered by this report - No legal proceedings were reported for the period covered by this report[137](index=137&type=chunk) [Item 1A. Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, PrimeEnergy is exempt from providing a detailed discussion of risk factors in this report - The Company is a smaller reporting company and is exempt from providing a detailed discussion of risk factors[138](index=138&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities but detailed its ongoing stock repurchase program - There were no unregistered sales of equity securities or purchases of equity securities by the company during the period covered by this report[139](index=139&type=chunk) Stock Repurchase Program (2023 Month-by-Month) | 2023 Month | Number of Shares | Average Price Paid per share | | :-------- | :--------------- | :--------------------------- | | January | 9,500 | $90.36 | | February | 3,000 | $90.32 | | March | 18,940 | $85.44 | | April | 10,560 | $86.21 | | May | 11,000 | $86.69 | | June | 7,500 | $100.35 | | July | 4,000 | $94.00 | | August | 4,000 | $98.09 | | September | 4,000 | $109.73 | | **Total/Average** | **72,500** | **$90.64** | - A total of **4,000,000 shares** have been authorized under the stock repurchase program to date, with **3,717,956 shares** repurchased for **$89,053,479** at an average price of **$23.95 per share** through September 30, 2023[140](index=140&type=chunk) [Item 3. Defaults Upon Senior Securities](index=26&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - No defaults upon senior securities were reported[141](index=141&type=chunk) [Item 4. Reserved](index=26&type=section&id=Item%204.%20Reserved) This item is reserved and contains no information - This item is reserved and contains no information[141](index=141&type=chunk) [Item 5. Other Information](index=26&type=section&id=Item%205.%20Other%20Information) No other information was reported for this item - No other information was reported for this item[141](index=141&type=chunk) [Item 6. Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q report, including corporate governance and certifications - Exhibits include corporate governance documents (Certificate of Incorporation, Bylaws), agreements (Non-Statutory Option Agreements, Credit Agreements), Code of Business Conduct and Ethics, and certifications from the CEO and CFO[142](index=142&type=chunk) - XBRL-related documents such as the Instance Document, Taxonomy Extension Schema, Calculation Linkbase, Definition Linkbase, Label Linkbase, Presentation Linkbase, and Cover Page Interactive Data File are also filed[142](index=142&type=chunk) [Signatures](index=28&type=section&id=Signatures) This section contains the required signatures of authorized officers, certifying the Form 10-Q filing - The report was signed by Charles E. Drimal, Jr., President and Principal Executive Officer, and Beverly A. Cummings, Executive Vice President and Principal Financial Officer[145](index=145&type=chunk)[146](index=146&type=chunk) - The signing date for the report was November 17, 2023[145](index=145&type=chunk)[146](index=146&type=chunk)

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended June 30, 2023 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 0-7406 PrimeEnergy Resources Corporation (Exact name of registrant as specified in its charter) (713) 735-0000 (Registrant's t ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q For the Quarterly Period Ended March 31, 2023 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 0-7406 PrimeEnergy Resources Corporation (Exact name of registrant as specified in its charter) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Delaware 84-0637348 (State or ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K For the Transition Period From to . is Commission File Number 0-7406 PrimeEnergy Resources Corporation (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 Or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (Exact name of registrant as specified in its charter) | Delaware | 84-06 ...

Part I [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the period ended September 30, 2022, including balance sheets, statements of operations, equity, and cash flows, along with accompanying notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | | **Total Assets** | **$212,899** | **$210,914** | | Cash and cash equivalents | $24,059 | $10,347 | | Total Property and Equipment, Net | $170,030 | $184,663 | | **Total Liabilities** | **$83,521** | **$111,823** | | Long-Term Bank Debt | $0 | $36,000 | | **Total Equity** | **$129,378** | **$99,091** | - The company significantly increased its cash position to **$24.1 million** and eliminated its long-term bank debt of **$36.0 million** by September 30, 2022[11](index=11&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Statement of Operations Summary (in thousands, except per share amounts) | Metric | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | **$101,562** | **$42,292** | **$39,651** | **$17,311** | | Oil sales | $75,546 | $30,376 | $23,403 | $10,442 | | Natural gas sales | $14,762 | $7,948 | $6,359 | $3,998 | | **Income (Loss) from Operations** | **$47,260** | **($5,248)** | **$18,276** | **($872)** | | **Net Income (Loss) Attributable to PrimeEnergy** | **$35,279** | **($5,021)** | **$13,154** | **($1,163)** | | **Diluted EPS** | **$12.96** | **($2.52)** | **$4.88** | **($0.58)** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary for Nine Months Ended Sep 30 (in thousands) | Cash Flow Category | 2022 | 2021 | | :--- | :--- | :--- | | **Net Cash Provided by Operating Activities** | **$47,346** | **$18,824** | | Net Cash Provided by (Used in) Investing Activities | $7,358 | ($11,190) | | Net Cash (Used in) Financing Activities | ($40,992) | ($5,006) | | **Net Increase in Cash and Cash Equivalents** | **$13,712** | **$2,628** | | Cash and Cash Equivalents at End of Period | $24,059 | $3,624 | - Financing activities in the first nine months of 2022 were primarily driven by the repayment of **$36.0 million** in long-term bank debt and **$5.0 million** in treasury stock purchases[16](index=16&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - During the first three quarters of 2022, the company sold a total of **1,809 net leasehold acres** in Texas and **354 net acres** in Oklahoma, generating gross proceeds of approximately **$15.3 million**[20](index=20&type=chunk)[21](index=21&type=chunk)[22](index=22&type=chunk) - On July 5, 2022, the company entered into a new Fourth Amended and Restated Credit Agreement with a maturity date of June 1, 2026, providing a revolving line of credit up to **$300 million** with an initial borrowing base of **$75 million**, with no borrowings outstanding as of September 30, 2022[28](index=28&type=chunk)[29](index=29&type=chunk) - As of September 30, 2022, the company had net derivative liabilities of **$3.67 million**, a reduction from **$5.59 million** at the end of 2021[43](index=43&type=chunk)[46](index=46&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=14&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Conditions%20and%20Results%20of%20Operation) Management provides an overview of the company's business, operational focus, and financial performance, detailing its asset base, development plans, reserve information, liquidity position, and a comparative analysis of operating results for 2022 versus 2021, highlighting significant increases in revenue and net income driven by higher commodity prices and production, as well as strategic asset sales and debt repayment [Overview and Strategy](index=14&type=section&id=Overview%20and%20Strategy) - The company is an independent oil and natural gas producer with properties primarily in Texas and Oklahoma, focusing on developing existing properties, actively pursuing acquisitions, and managing commodity price risk through derivatives[50](index=50&type=chunk)[51](index=51&type=chunk) - Existing derivative instruments are set to expire in March 2023, and the company does not intend to enter into new contracts unless required for its bank line of credit[52](index=52&type=chunk)[53](index=53&type=chunk) [District and Reserve Information](index=15&type=section&id=District%20and%20Reserve%20Information) Proved Reserves by Region as of Dec 31, 2021 (MBoe) | Region | Developed | Undeveloped | Total | | :--- | :--- | :--- | :--- | | Gulf Coast | 906 | 0 | 906 | | Mid-Continent | 2,383 | 0 | 2,383 | | West Texas | 8,957 | 0 | 8,957 | | **Total** | **12,252** | **0** | **12,252** | - The West Texas region, primarily in the Permian Basin, holds **73%** of the company's total proved reserves as of year-end 2021 and is the focus of current horizontal drilling activities[56](index=56&type=chunk)[64](index=64&type=chunk) Standardized Measure of Discounted Future Net Cash Flows (in thousands) | As of December 31, | 2021 | 2020 | | :--- | :--- | :--- | | Future Net Revenue | $275,227 | $81,232 | | Present Value of Future Net Revenue (PV10) | $171,906 | $56,539 | | **Standardized Measure (after tax)** | **$135,806** | **$41,619** | [Development and Drilling Activities](index=19&type=section&id=Development%20and%20Drilling%20Activities) - In Q4 2022, the company plans to participate in drilling **15 new horizontal wells** in West Texas and expects to invest approximately **$87 million** in a total of **26 new wells** with completions expected by mid-year 2023[68](index=68&type=chunk) - The company completed an acreage exchange in the Midland Basin, creating a **1,200-acre** contiguous block, then entered a joint development agreement to form a **2,560-acre** AMI, divesting a portion of its interest for **$16.1 million** to fund the drilling of up to **18 new wells**[67](index=67&type=chunk)[98](index=98&type=chunk) - In Oklahoma, the company participated in drilling four horizontal wells in Q2 2022, which were placed on production in August, and believes its **5,800 net acres** in the Scoop/Stack play could support up to **50 new horizontal wells**[100](index=100&type=chunk)[101](index=101&type=chunk) [Liquidity and Capital Resources](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) - Primary sources of liquidity are cash from operations, property sales, and its credit facility, with net cash from operations for the first nine months of 2022 at **$47.3 million**, up from **$18.8 million** in the prior year period[103](index=103&type=chunk) - The company has a **$300 million** credit facility with a current borrowing base of **$75 million**, with no outstanding borrowings as of August 15, 2022[109](index=109&type=chunk) - The company spent **$5.0 million** on its stock repurchase program in the first nine months of 2022 and expects continued spending under the program[114](index=114&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) - The company reported net income of **$35.3 million** for the nine months ended Sep 30, 2022, a significant turnaround from a net loss of **$5.0 million** in the same period of 2021, driven by higher production and commodity prices[115](index=115&type=chunk) Production and Revenue Analysis (Nine Months Ended Sep 30) | Metric | 2022 | 2021 | % Change | | :--- | :--- | :--- | :--- | | Oil Production (Bbls) | 752,500 | 480,000 | 56.8% | | Avg. Oil Price ($/Bbl) | $100.39 | $63.28 | 58.6% | | Oil Revenue (in 000's) | $75,546 | $30,376 | 148.7% | | Gas Production (Mcf) | 2,456,800 | 2,395,000 | 2.6% | | Avg. Gas Price ($/Mcf) | $6.01 | $3.32 | 81.0% | | Gas Revenue (in 000's) | $14,762 | $7,948 | 85.7% | | **Total Oil & Gas Revenue (in 000's)** | **$102,785** | **$46,105** | **122.9%** | - Lease operating expense increased **73.9%** for the nine months of 2022 compared to 2021, primarily due to higher production taxes related to increased commodity prices and workover expenses[119](index=119&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company, as a smaller reporting company, is not required to provide a response for this item - As a smaller reporting company, no response is required for this item[125](index=125&type=chunk) [Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of the end of the reporting period and concluded they were effective, with no material changes to internal controls over financial reporting occurring during the first nine months of 2022 - Based on an evaluation, the CEO and CFO concluded that the company's disclosure controls and procedures are effective[126](index=126&type=chunk) - No changes in internal control over financial reporting occurred during the first nine months of 2022 that have materially affected, or are reasonably likely to materially affect, the company's internal controls[127](index=127&type=chunk) Part II—Other Information [Legal Proceedings](index=24&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no legal proceedings during the period - None[129](index=129&type=chunk) [Risk Factors](index=24&type=section&id=Item%201A.%20Risk%20Factors) As a smaller reporting company, PrimeEnergy is not required to provide a response regarding risk factors in its Form 10-Q - As a smaller reporting company, no response is required for this item[130](index=130&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=24&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities and provides details of its stock repurchase program, under which it purchased 61,377 shares for approximately $5.0 million during the nine months ended September 30, 2022 Common Stock Purchases (Nine Months Ended Sep 30, 2022) | Period | Number of Shares | Average Price Paid per share | | :--- | :--- | :--- | | **Total** | **61,377** | **$81.33** | - The Board of Directors has authorized a total of **3,700,000 shares** for the stock repurchase program, with **3,615,756 shares** repurchased through September 30, 2022[133](index=133&type=chunk) [Defaults Upon Senior Securities](index=24&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - None[134](index=134&type=chunk) [Exhibits](index=25&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the 10-Q report, including corporate governance documents, credit agreements, and required certifications by the CEO and CFO - Key exhibits filed with the report include: * Fourth Amended and Restated Credit Agreement (10.22.6) * Certifications of the CEO and CFO pursuant to Rule 13(a)-14(a)/15d-14(a) (31.1, 31.2) * Certifications of the CEO and CFO pursuant to Sarbanes-Oxley Act Section 906 (32.1, 32.2) * Inline XBRL documents (101 series)[136](index=136&type=chunk)

Table of Contents (Exact name of registrant as specified in its charter) UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ 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 0-7406 PrimeEnergy Resources Corporation Delaware 84-0637348 (State or ...

Part I—Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The company's Q1 2022 financials show a significant turnaround to a net income of $11.1 million from a prior-year loss [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly decreased to $205.5 million while total equity increased to $109.4 million due to debt reduction Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | **Total Current Assets** | $24,999 | $25,328 | | **Total Assets** | **$205,487** | **$210,914** | | **Total Current Liabilities** | $30,189 | $21,720 | | **Long-Term Bank Debt** | $9,000 | $36,000 | | **Total Liabilities** | **$96,087** | **$111,823** | | **Total Equity** | **$109,400** | **$99,091** | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported a net income of $11.1 million in Q1 2022, a reversal from a $1.5 million loss in Q1 2021 Q1 Statement of Operations Summary (in thousands, except per share amounts) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Total Revenues | $26,213 | $13,004 | | Total Costs and Expenses | $25,571 | $14,398 | | Gain on Sale of Assets | $13,991 | $— | | Income (Loss) from Operations | $14,633 | $(1,394) | | **Net Income (Loss)** | **$11,142** | **$(1,457)** | | **Basic EPS** | **$5.62** | **$(0.73)** | | **Diluted EPS** | **$4.07** | **$(0.73)** | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow nearly doubled to $9.4 million, while financing activities used $27.8 million for debt repayment Q1 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $9,355 | $4,732 | | Net Cash from Investing Activities | $12,207 | $(660) | | Net Cash from Financing Activities | $(27,833) | $(1,050) | | **Net (Decrease) Increase in Cash** | **$(6,271)** | **$3,022** | | **Cash at End of Period** | **$4,076** | **$4,018** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Key notes detail a $14.0 million asset sale, credit facility status, and a significant increase in derivative liabilities - In Q1 2022, the company sold 1,809 net leasehold acres in Reagan and Midland Counties, Texas, for **gross proceeds of $14.0 million**[22](index=22&type=chunk) - As of March 31, 2022, the company had **$9 million outstanding** on its revolving credit facility at a weighted-average interest rate of 6.74%, with **$41 million available** for future borrowings[26](index=26&type=chunk)[27](index=27&type=chunk) Fair Value of Derivative Instruments (in thousands) | Type | Balance Sheet Location | March 31, 2022 | Dec 31, 2021 | | :--- | :--- | :--- | :--- | | Asset Derivatives | Derivative asset short-term | $36 | $— | | Liability Derivatives | Derivative liability short/long-term | $(12,761) | $(5,585) | | **Total Net Derivative Instruments** | | **$(12,725)** | **$(5,585)** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation](index=15&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Conditions%20and%20Results%20of%20Operation) Higher production and commodity prices drove a 167% increase in oil and gas sales, funding a $76 million drilling program [Overview and Strategy](index=15&type=section&id=Overview%20and%20Strategy) The company focuses on developing long-lived oil and gas reserves in Texas and Oklahoma through horizontal drilling - The company is engaged in acquiring, developing, and producing oil and natural gas, with properties primarily in **Texas and Oklahoma**[51](index=51&type=chunk) - The company's strategy is to build stockholder value by **growing its oil and gas reserve base cost-efficiently**, assuming the role of operator where possible[52](index=52&type=chunk) - Acreage in the Permian Basin and Oklahoma holds significant potential for horizontal drilling, with plans for up to **250 additional wells in Texas** and **5 in Oklahoma**[56](index=56&type=chunk) [District and Reserve Information](index=16&type=section&id=District%20and%20Reserve%20Information) Total proved reserves were 12,252 MBoe as of year-end 2021, with the West Texas region accounting for 73% Proved Reserves by Region (as of Dec 31, 2021) | Region | Proved Reserves (MBoe) | % of Total | Average Net Daily Production (Boe/day) | | :--- | :--- | :--- | :--- | | Gulf Coast | 906 | 7% | 336 | | Mid-Continent | 2,383 | 20% | 747 | | West Texas | 8,957 | 73% | 2,878 | | **Total** | **12,252** | **100%** | **3,964** | Total Proved Reserves (MBoe) | Year-End | Proved Developed | Proved Undeveloped | Total | | :--- | :--- | :--- | :--- | | 2019 | 10,268 | 3,608 | 14,235 | | 2020 | 7,214 | 3,221 | 10,435 | | 2021 | 12,252 | — | 12,252 | Standardized Measure of Discounted Cash Flow (in thousands) | As of December 31, | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Standardized Measure | $135,806 | $41,619 | $81,612 | [Recent Activities and Drilling Program](index=19&type=section&id=Recent%20Activities%20and%20Drilling%20Program) The 2022 drilling program includes 31 horizontal wells across Texas and Oklahoma with various partners - The company's strategy is to develop its extensive oil and gas reserves primarily through **horizontal drilling**[84](index=84&type=chunk) - To date in 2022, the company has participated in drilling **eight horizontal wells** (four in Texas, four in Oklahoma), with an additional **23 wells planned** for the second half of 2022[88](index=88&type=chunk) - The company is developing a 3,260-acre block in Upton County, Texas, with partner Apache Corporation, with potential for up to **54 additional horizontal wells**[89](index=89&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Q1 2022 net income reached $11.1 million, driven by a 167% increase in oil and gas sales Q1 Production Volumes and Average Sales Prices | Metric | Q1 2022 | Q1 2021 | % Change | | :--- | :--- | :--- | :--- | | Barrels of Oil Produced (thousands) | 273 | 163 | 67.5% | | Average Oil Price Received | $96.36 | $56.87 | 69.4% | | Mcf of Gas Sold (thousands) | 777 | 665 | 16.8% | | Average Gas Price Received | $4.82 | $2.49 | 93.4% | | **Total Oil & Gas Revenue (in 000's)** | **$33,902** | **$12,673** | **167.5%** | - The company recorded total **derivative losses of $11.0 million** in Q1 2022, consisting of $7.1 million in unrealized losses and $3.8 million in realized losses[100](index=100&type=chunk)[101](index=101&type=chunk) - General and administrative expense **increased 235% to $6.7 million** in Q1 2022 from $2.0 million in Q1 2021, primarily due to increased employee compensation and benefits[106](index=106&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is supported by operating cash flow, asset sales, and a $50 million credit facility - Primary sources of liquidity are cash from operations, field services, and sales of acreage, providing **$23.3 million in Q1 2022**[109](index=109&type=chunk) - The company maintains a credit agreement with a current **borrowing base of $50 million**, which is expected to increase by ~50% in the June 2022 review[115](index=115&type=chunk) - The company plans to invest approximately **$76 million in 31 horizontal wells** in 2022 and repurchased **$833 thousand of its stock** in Q1 2022[114](index=114&type=chunk)[118](index=118&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=23&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, no disclosure is required for this item - The Company is a **smaller reporting company** and no response is required pursuant to this Item[119](index=119&type=chunk) [Item 4. Controls and Procedures](index=23&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures are effective with no material changes - Management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures are **effective**[120](index=120&type=chunk) - **No material changes** occurred in the Company's internal control over financial reporting during the first three months of 2022[121](index=121&type=chunk) Part II - Other Information [Item 1. Legal Proceedings & Item 1A. Risk Factors](index=24&type=section&id=Item%201.%20Legal%20Proceedings%20%26%20Item%201A.%20Risk%20Factors) The company reports no legal proceedings and is exempt from providing risk factor disclosures - There are **no legal proceedings** to report[124](index=124&type=chunk) - As a **smaller reporting company**, no response is required for Risk Factors[125](index=125&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=24&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 11,188 shares for approximately $833,000 in Q1 2022 under its buyback program Q1 2022 Stock Repurchase Activity | Month (2022) | Number of Shares | Average Price Paid per share | | :--- | :--- | :--- | | January | 2,981 | $76.21 | | February | 5,948 | $73.26 | | March | 2,259 | $75.36 | | **Total/Average** | **11,188** | **$74.48** | - Through March 31, 2022, a total of **3,565,567 shares have been repurchased** under the program for **$75.9 million** at an average price of $21.29 per share[127](index=127&type=chunk) [Other Items (3, 4, 5, 6)](index=24&type=section&id=Other%20Items%20(3,%204,%205,%206)) No defaults upon senior securities were reported, and exhibits filed with the report are listed - There were **no defaults upon senior securities** or other information to report[128](index=128&type=chunk) - Item 6 lists all exhibits filed with the Form 10-Q, including corporate governance documents, credit agreements, and officer certifications[129](index=129&type=chunk)

PART I [Business Overview](index=4&type=section&id=Item%201.%20Business) PrimeEnergy is an independent oil and gas company focused on acquiring, developing, and producing resources in Texas and Oklahoma [General](index=4&type=section&id=General) - PrimeEnergy Resources Corporation was incorporated in Delaware in March 1973 as an independent oil and gas company[15](index=15&type=chunk) - The company's principal business is the acquisition, development, and production of oil and gas resources, with assets in Texas and Oklahoma[16](index=16&type=chunk) - Through its subsidiaries, the company provides operational and well servicing support for its own and third-party onshore oil and gas wells[16](index=16&type=chunk) [Exploration, Development and Recent Activities](index=4&type=section&id=Exploration%2C%20Development%20and%20Recent%20Activities) - The company's strategy is to develop its extensive oil and gas reserves through horizontal drilling, targeting reservoirs with high initial production and cash flow[17](index=17&type=chunk) - In 2022, the company will continue to focus on maintaining financial flexibility and sufficient liquidity, with a capital budget based on expected cash flow[18](index=18&type=chunk) 2021 Completed Horizontal Wells | Location | Operator | Wells | Company Interest | | :--- | :--- | :--- | :--- | | Upton County, TX | Apache | 9 | Average 47.5% | | Canadian County, OK | Ovintiv Mid-Continent Inc. | 3 | 11.25% | - Since initiating its West Texas horizontal drilling program in 2015, the company has participated in **77 horizontal wells** in the Permian Basin with a total investment of approximately **$129 million** as of Q4 2021[20](index=20&type=chunk) - The company plans to develop up to **54 additional horizontal wells** on its 3,260-acre block in Upton County, Texas, with an estimated company share cost of approximately **$170.8 million**[21](index=21&type=chunk) - In Oklahoma's Scoop/Stack Play, the company holds approximately 6,200 net leasehold acres, which could support up to **54 new horizontal wells** with a company share capital expenditure of about **$36 million**[25](index=25&type=chunk)[26](index=26&type=chunk) [Significant Activity](index=6&type=section&id=Significant%20Activity) Key Oil and Gas Asset Data for 2021 | Metric | Amount/Quantity | | :--- | :--- | | Net Capitalized Cost of Proved Oil and Gas Properties | $179.7 million | | Total 2021 Expenditures for Acquisition, Exploration, and Development | $18.7 million | | Proved Reserves at December 31, 2021 | 12.5 MMBOE (100% developed) | | Horizontal Wells Participated in Drilling in 2021 | 7 (Gross) | | Horizontal Wells Completed in 2021 | 12 (Gross) | - In 2021, the company sold 116 net acres in Martin County, Texas, for total proceeds of approximately **$1.45 million**[30](index=30&type=chunk) - In Q1 2022, the company sold 1,809 net leasehold acres in Reagan and Midland Counties, Texas, for **$14.1 million**, reducing bank debt to **$9 million**[31](index=31&type=chunk) - The company aims to be the operator in all producing property acquisitions and actively seeks to acquire income-producing properties to grow its net asset and reserve base[33](index=33&type=chunk) [Well Operations](index=7&type=section&id=Well%20Operations) - The company currently operates **710 wells**, including producing, saltwater disposal, injection, and water supply wells, managed primarily from its Houston, Midland, and Oklahoma City offices[38](index=38&type=chunk) - As an operator, the company receives monthly fees and reimbursements for well operating expenses under operating agreements[39](index=39&type=chunk) [The Partnerships, Trusts and Joint Ventures](index=7&type=section&id=The%20Partnerships%2C%20Trusts%20and%20Joint%20Ventures) - As of 2021, all of the company's remaining partnerships and trusts have been liquidated[40](index=40&type=chunk) [Regulation](index=7&type=section&id=Regulation) - The company's operations are heavily impacted by federal, state, and local laws, with non-compliance potentially leading to substantial penalties and increased operating costs[41](index=41&type=chunk) - Oil and gas production is subject to regulations governing price controls, taxes, drilling permits, well spacing, drilling methods, water use, and well abandonment[42](index=42&type=chunk) - Commodity sales prices are currently unregulated, but transportation prices and conditions are extensively regulated by FERC and state authorities[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk) - Operations must comply with strict environmental, emissions, and occupational safety laws, which may require permits, limit discharges, and impose liability for pollution[58](index=58&type=chunk) - Hydraulic fracturing activities face increasing federal and state regulatory scrutiny, which could lead to increased costs, operational restrictions, or drilling delays[75](index=75&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk) - Regulation of greenhouse gas (GHG) emissions could result in increased operating costs, reduced demand for oil and gas, and limited access to financing[71](index=71&type=chunk)[73](index=73&type=chunk)[74](index=74&type=chunk) [Competition and Markets](index=16&type=section&id=Competition%20and%20Markets) - The business of acquiring oil and gas properties and leases is highly competitive, with many competitors possessing greater financial and personnel resources[86](index=86&type=chunk) - Market prices for oil and gas are volatile, influenced by supply and demand, domestic production, imports, pipeline availability, and global economic conditions[87](index=87&type=chunk)[88](index=88&type=chunk) - The company uses a hedging program to mitigate cash flow risk, which may also limit potential gains from rising oil and gas prices[89](index=89&type=chunk) [Major Customers](index=17&type=section&id=Major%20Customers) Major Oil and Gas Purchasers in 2021 | Purchaser | Share of 2021 Oil Sales | Share of 2021 Gas Sales | | :--- | :--- | :--- | | Apache Corporation | 48% | 52% | | Plains All American Inc. | 18% | - | | Targa Pipeline Mid-Continent West Tex, LLC | - | 19% | - Despite having no long-term purchase agreements, the company believes these purchasers will continue to buy its products and can be replaced by others if necessary[91](index=91&type=chunk) [Employees](index=17&type=section&id=Employees) - As of December 31, 2021, the company had **113 full-time employees**, with 31 in corporate offices and 82 in field operations[92](index=92&type=chunk) [Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) The company faces risks from commodity price volatility, operational hazards, regulatory changes, and market competition - **Highly volatile oil and gas prices** significantly impact revenue, operating results, and financing capabilities, with sustained declines potentially leading to reserve write-downs[93](index=93&type=chunk)[94](index=94&type=chunk)[98](index=98&type=chunk) - Global economic uncertainty, energy costs, geopolitical issues, and inflation could adversely affect the company's operating results, liquidity, and financial condition[99](index=99&type=chunk) - Drilling oil and gas wells is a **high-risk activity** that may result in non-commercial reservoirs and can be delayed or canceled due to uncontrollable factors[107](index=107&type=chunk)[108](index=108&type=chunk][109](index=109&type=chunk) - **Reserve estimates are subjective and uncertain**, and significant inaccuracies could lead to an overstatement of reserve quantities and their net present value[112](index=112&type=chunk)[115](index=115&type=chunk) - The company has substantial capital requirements and may be unable to obtain necessary financing on satisfactory terms, potentially limiting liquidity[121](index=121&type=chunk)[123](index=123&type=chunk) - **Negative public perception** regarding hydraulic fracturing, oil spills, and GHG emissions may lead to increased regulatory scrutiny, operational delays, and litigation risk[126](index=126&type=chunk) - Operations are subject to stringent environmental, oil and gas, and occupational health and safety laws, which can cause delays, restrictions, and significant costs[138](index=138&type=chunk)[142](index=142&type=chunk) - **Climate change risks**, including regulatory, political, and financial factors, could increase operating costs, limit production areas, and reduce demand for oil and gas[147](index=147&type=chunk)[152](index=152&type=chunk) - The company has limited control over non-operated properties, and operator failures could reduce production and revenue[157](index=157&type=chunk) - The industry is **highly competitive**, with many rivals possessing superior financial and technical resources that could adversely affect the company's competitive position[160](index=160&type=chunk) - **Technology system failures or cyber-attacks** could severely impact operations by delaying transactions, compromising confidential data, or damaging the company's reputation[166](index=166&type=chunk)[167](index=167&type=chunk) [Unresolved Staff Comments](index=31&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) As a smaller reporting company, no response is required for this item - The company is a smaller reporting company and is therefore not required to respond to this item[168](index=168&type=chunk) [Properties](index=31&type=section&id=Item%202.%20Properties) The company holds oil and gas assets in Texas and Oklahoma, with detailed disclosures on drilling, production, and reserves [Exploratory and Development Drilling Experience](index=32&type=section&id=Exploratory%20and%20Development%20Drilling%20Experience) Exploratory and Development Drilling Activity 2019-2021 (Gross and Net Wells) | Category | 2021 Gross Wells | 2021 Net Wells | 2020 Gross Wells | 2020 Net Wells | 2019 Gross Wells | 2019 Net Wells | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Exploratory: Oil | — | — | — | — | — | — | | Exploratory: Gas | — | — | — | — | — | — | | Exploratory: Dry | — | — | — | — | — | — | | Development: Oil | 12 | 4.61 | 1 | 0.1 | 18 | 1.6 | | Development: Gas | — | — | — | — | — | — | | Development: Dry | — | — | — | — | — | — | | **Total** | **12** | **4.61** | **1** | **0.1** | **18** | **1.6** | [Oil and Gas Production](index=32&type=section&id=Oil%20and%20Gas%20Production) Productive Well Ownership at December 31, 2021 | Well Type | Gross Wells | Net Wells | | :--- | :--- | :--- | | Oil Wells | 926 | 498 | | Gas Wells | 281 | 66 | Net Production of Oil, NGLs, and Natural Gas 2019-2021 | Product | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Oil (Bbls) | 738,000 | 726,996 | 1,242,000 | | NGLs (Bbls) | 416,000 | 435,260 | 574,000 | | Natural Gas (Mcf) | 3,236,000 | 3,374,397 | 4,397,000 | Average Sales Prices and Production Costs 2019-2021 | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Average Oil Sales Price ($/Bbl) | $68.39 | $38.02 | $55.04 | | Average NGL Sales Price ($/Bbl) | $26.97 | $11.22 | $15.87 | | Average Gas Sales Price ($/Mcf) | $3.53 | $1.24 | $1.49 | | Average Production Cost ($/BOE) | $13.76 | $12.25 | $11.52 | Average Sales Prices Including Derivative Effects 2019-2021 | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Average Oil Sales Price ($/Bbl) | $64.04 | $45.79 | $53.58 | | Average NGL Sales Price ($/Bbl) | $26.97 | $11.22 | $16.49 | | Average Gas Sales Price ($/Mcf) | $2.97 | $1.38 | $1.51 | [Acreage](index=33&type=section&id=Acreage) Developed and Undeveloped Acreage at December 31, 2021 | Category | Gross Acres | Net Acres | | :--- | :--- | :--- | | Developed Leases | 90,933 | 25,358 | | Developed Mineral Interests | 1,640 | 117 | | Undeveloped Leases | — | — | | Undeveloped Mineral Interests | 19,257 | 417 | | **Total** | **111,830** | **25,892** | [Total Net Undeveloped Acreage Expiration](index=33&type=section&id=Total%20Net%20Undeveloped%20Acreage%20Expiration) - As of December 31, 2021, zero net undeveloped acres are set to expire in the next three years (2022-2024)[182](index=182&type=chunk) [Reserves](index=33&type=section&id=Reserves) - The company's proved developed and undeveloped oil and gas reserves are evaluated by Ryder Scott Company, L.P., and overseen by an internal team of experienced engineers and geologists[183](index=183&type=chunk)[184](index=184&type=chunk) Proved Reserves Summary 2019-2021 | Reserve Category | 2021 (MBOE) | 2020 (MBOE) | 2019 (MBOE) | | :--- | :--- | :--- | :--- | | Proved Developed | 12,252 | 7,214 | 10,268 | | Proved Undeveloped | — | 3,221 | 3,608 | | **Total** | **12,252** | **10,435** | **14,235** | - In 2021, the company drilled and completed 3 horizontal wells and completed 6 wells drilled in 2020 in partnership with Apache on the Kashmir block in Upton County, Texas, holding an average **47.8% interest** with an investment of approximately **$30 million**[188](index=188&type=chunk) - As of December 31, 2021, the company had **159 MBOE** of proved developed non-producing reserves, primarily from 3 horizontal wells in Canadian County, Oklahoma[193](index=193&type=chunk) PV-10 of Proved Reserves 2019-2021 | Metric | 2021 ($ thousands) | 2020 ($ thousands) | 2019 ($ thousands) | | :--- | :--- | :--- | :--- | | Future Net Revenues | 275,227 | 81,232 | 159,292 | | Present Value of Future Net Revenues at 10% (PV-10) | 171,906 | 56,539 | 100,031 | | Standardized Measure of Discounted Future Net Cash Flows | 135,806 | 41,619 | 81,612 | [District Information](index=36&type=section&id=District%20Information) Reserves and Well Information by District at December 31, 2021 | District | Proved Reserves (MBOE) | Avg. Daily Net Production (BOE/d) | Gross Producing Wells (WI and ORRI) | Net Producing Wells (WI only) | | :--- | :--- | :--- | :--- | :--- | | Gulf Coast | 906 | 336 | 207 | 105 | | Mid-Continent | 2,383 | 747 | 549 | 189 | | West Texas | 8,957 | 2,878 | 576 | 263 | | Other | 6 | 3 | 200 | 6 | | **Total** | **12,252** | **3,964** | **1,532** | **564** | - The Gulf Coast district is concentrated in southeast Texas, with over 11,500 gross acres (3,967 net acres) and operates a field service team[203](index=203&type=chunk)[204](index=204&type=chunk)[205](index=205&type=chunk) - The Mid-Continent district is focused in central Oklahoma, with approximately 48,400 gross acres (10,802 net acres), and participates in third-party horizontal development[206](index=206&type=chunk) - The West Texas district is centered in the Permian Basin, with approximately 17,148 gross acres (10,639 net acres) and significant horizontal drilling potential for up to **180 additional wells**[208](index=208&type=chunk)[242](index=242&type=chunk) - As of March 31, 2022, the company plans to participate in drilling **4 horizontal wells** in the Mid-Continent district and **17 new horizontal wells** in the West Texas district[207](index=207&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk) [Legal Proceedings](index=38&type=section&id=Item%203.%20Legal%20Proceedings) The company currently has no legal proceedings to disclose - The company currently has no legal proceedings to disclose[211](index=211&type=chunk) [Mine Safety Disclosures](index=38&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable - This item is not applicable[212](index=212&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=39&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under "PNRG," with a stock repurchase program in place - The company's common stock is listed and traded on The Nasdaq Stock Market under the symbol "PNRG"[214](index=214&type=chunk) High and Low Prices for Common Stock 2020-2021 | Year | Quarter | High ($) | Low ($) | | :--- | :--- | :--- | :--- | | 2021 | First | 98.00 | 34.33 | | 2021 | Second | 53.72 | 39.89 | | 2021 | Third | 73.80 | 45.20 | | 2021 | Fourth | 71.71 | 58.50 | | 2020 | First | 154.38 | 47.68 | | 2020 | Second | 110.79 | 49.70 | | 2020 | Third | 79.13 | 62.60 | | 2020 | Fourth | 71.80 | 42.39 | - As of April 20, 2022, there were **224 registered holders** of the company's common stock[216](index=216&type=chunk) - The terms of the company's credit agreement restrict its ability to pay dividends[216](index=216&type=chunk) - The Board of Directors has authorized a stock repurchase program for a total of 3,700,000 shares; as of December 31, 2021, **3,554,379 shares** had been repurchased for **$75,079,717**[217](index=217&type=chunk) Issuer Purchases of Equity Securities in 2021 | Month | Shares Repurchased | Average Price per Share ($) | Shares Remaining in Plan | | :--- | :--- | :--- | :--- | | Jan-Nov | — | — | 147,721 | | Dec | 2,100 | 69.04 | 145,621 | | **Total/Average** | **2,100** | **69.04** | | [Selected Financial Data](index=40&type=section&id=Item%206.%20Selected%20Financial%20Data) As a smaller reporting company, no response is required for this item - The company is a smaller reporting company and is therefore not required to respond to this item[220](index=220&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company achieved profitability in 2021 due to higher commodity prices and actively manages liquidity to fund its capital programs [Overview](index=40&type=section&id=Overview) - The company is an independent oil and gas entity with producing and non-producing assets primarily in Texas and Oklahoma, along with substantial well servicing equipment[222](index=222&type=chunk) - The company aims to grow its oil and gas reserve base cost-effectively through the acquisition of income-producing properties to enhance shareholder value[223](index=223&type=chunk) - Cash flow is influenced by commodity prices, acquisition and drilling success, and operational performance, with derivative instruments used to manage price risk[224](index=224&type=chunk) [Market Conditions and Commodity Prices](index=41&type=section&id=Market%20Conditions%20and%20Commodity%20Prices) - The company's financial performance is primarily dependent on natural gas and crude oil prices and its ability to market production on economically favorable terms[226](index=226&type=chunk) - Commodity prices are affected by numerous external factors, and the company's realized prices are further influenced by derivative and hedging activities[226](index=226&type=chunk) [Critical Accounting Estimates](index=41&type=section&id=Critical%20Accounting%20Estimates) - Proved oil and gas reserves directly impact financial accounting estimates like DD&A, and their estimation is a complex and subjective process that may lead to material revisions[227](index=227&type=chunk) - Depreciation, depletion, and amortization (DD&A) of oil and gas properties are calculated using the units-of-production method, and revisions to reserve estimates will alter future expense rates[228](index=228&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) - The company's primary sources of liquidity are cash flows from operating activities, its well servicing business, and asset sales[229](index=229&type=chunk) Cash Flow from Operating Activities 2020-2021 | Metric | 2021 ($ millions) | 2020 ($ millions) | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | 28.6 | 16.4 | - Maintaining a strong balance sheet and ample liquidity is a key component of the company's business strategy, with the 2022 capital budget funded by expected cash flow[234](index=234&type=chunk) - The company's credit agreement, maturing February 11, 2023, provides a **$300 million** credit facility with a **$50 million** borrowing base; as of March 31, 2022, **$9 million** was outstanding[235](index=235&type=chunk) Commodity Swap Agreements 2022-2023 | Product | 2022 Volume | 2023 Volume | 2022 Price ($) | 2023 Price ($) | | :--- | :--- | :--- | :--- | :--- | | Natural Gas (MMBTU) | 1,528,000 | 377,000 | 3.15 | 3.87 | | Oil (Bbls) | 530,600 | 114,200 | 66.20 | 74.07 | - The company plans to develop up to **54 additional horizontal wells** in West Texas at a company share cost of approximately **$170 million** and drill multiple wells in other counties with a total investment of about **$57.85 million**[237](index=237&type=chunk)[239](index=239&type=chunk)[240](index=240&type=chunk)[241](index=241&type=chunk) - In 2021, the company generated approximately **$1.45 million** from leasehold sales; in Q1 2022, it sold 1,809 net leasehold acres for **$14.1 million**[245](index=245&type=chunk) [Results of Operations](index=44&type=section&id=Results%20of%20Operations) - The company reported **net income of $2.1 million** ($1.05 per share) in 2021, compared to a net loss of $2.3 million ($1.16 per share) in 2020, primarily due to higher commodity prices[249](index=249&type=chunk) Oil, NGL, and Gas Sales and Price Changes 2020-2021 | Metric | 2021 | 2020 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | Oil Sales ($ thousands) | 50,474 | 27,865 | 22,609 | 81.14% | | Gas Sales ($ thousands) | 11,432 | 4,202 | 7,230 | 172.06% | | NGL Sales ($ thousands) | 11,220 | 4,906 | 6,314 | 128.70% | | **Total Oil and Gas Sales ($ thousands)** | **73,126** | **36,973** | **36,153** | **97.78%** | | Average Oil Price ($/Bbl) | 68.39 | 38.02 | 30.38 | 79.91% | | Average Gas Price ($/Mcf) | 3.53 | 1.24 | 2.29 | 184.25% | | Average NGL Price ($/Bbl) | 26.97 | 11.22 | 15.75 | 140.36% | Gains and Losses on Derivative Instruments 2020-2021 | Derivative Type | 2021 ($ thousands) | 2020 ($ thousands) | | :--- | :--- | :--- | | Oil Derivatives – Realized (Loss) Gain | (3,212) | 5,697 | | Oil Derivatives – Unrealized (Loss) Gain | (4,055) | 161 | | **Total Oil Derivative Loss (Gain)** | **(7,267)** | **5,858** | | Gas Derivatives – Realized (Loss) Gain | (1,833) | 476 | | Gas Derivatives – Unrealized (Loss) | (859) | (351) | | **Total Gas Derivative Loss (Gain)** | **(2,692)** | **125** | | **Total Oil and Gas Derivative Loss (Gain)** | **(9,959)** | **5,983** | - Field service revenues **increased 6.3% to $11.8 million** in 2021, driven by higher equipment utilization and rates due to improved commodity prices[255](index=255&type=chunk) - Lease operating expenses **increased 20.9% to $27.8 million** in 2021, mainly due to bringing higher-cost properties back online and increased production taxes[256](index=256&type=chunk) - General and administrative expenses **decreased 30.7% to $10.4 million** in 2021, reflecting cost-cutting measures implemented in 2020 in response to the commodity price downturn[259](index=259&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, no response is required for this item - The company is a smaller reporting company and is therefore not required to respond to this item[263](index=263&type=chunk) [Financial Statements and Supplementary Data](index=46&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) The consolidated financial statements and supplementary information are included in this report, indexed on page F-1 - The consolidated financial statements and supplementary information can be found in the index on page F-1 of this report[264](index=264&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosures](index=46&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosures) The company has had no changes in or disagreements with its accountants - The company has had no changes in or disagreements with its accountants on accounting and financial disclosures[265](index=265&type=chunk) [Controls and Procedures](index=46&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2021 - As of December 31, 2021, the company's CEO and CFO evaluated and concluded that its disclosure controls and procedures were effective[268](index=268&type=chunk) - Management is responsible for and has assessed the effectiveness of its internal control over financial reporting, concluding it was effective as of December 31, 2021[269](index=269&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk) - This annual report does not include an attestation report from the company's registered public accounting firm regarding internal control over financial reporting[273](index=273&type=chunk) - There were no material changes in the company's internal control over financial reporting during the fourth fiscal quarter of 2021[274](index=274&type=chunk) [Other Information](index=47&type=section&id=Item%209B.%20Other%20Information) The company has no other information to disclose - The company has no other information to disclose[275](index=275&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=48&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors and executive officers is incorporated by reference from the company's proxy statement - Information concerning the company's directors, director nominees, and executive officers is incorporated by reference from the definitive proxy statement for the Annual Meeting of Stockholders to be held in June 2022[277](index=277&type=chunk) [Executive Compensation](index=48&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation is incorporated by reference from the company's proxy statement - Information concerning executive compensation is incorporated by reference from the definitive proxy statement for the Annual Meeting of Stockholders to be held in June 2022[278](index=278&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=48&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Information regarding security ownership is incorporated by reference from the company's proxy statement - Information concerning security ownership of certain beneficial owners and management is incorporated by reference from the definitive proxy statement for the Annual Meeting of Stockholders to be held in June 2022[279](index=279&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=48&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related transactions is incorporated by reference from the company's proxy statement - Information concerning certain transactions with the company's directors and executive officers is incorporated by reference from the definitive proxy statement for the Annual Meeting of Stockholders to be held in June 2022[280](index=280&type=chunk) [Principal Accountant Fees and Services](index=48&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding accountant fees is incorporated by reference from the company's proxy statement - Information concerning principal accountant fees and services is incorporated by reference from the definitive proxy statement for the Annual Meeting of Stockholders to be held in June 2022[281](index=281&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=49&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all documents filed as part of the report, including financial statements, schedules, and various exhibits - This report includes financial statements, financial statement schedules, and numerous exhibits, such as articles of incorporation, credit agreements, codes of conduct, and executive certifications[283](index=283&type=chunk)[284](index=284&type=chunk)[285](index=285&type=chunk)[286](index=286&type=chunk) [SIGNATURES](index=53&type=section&id=SIGNATURES) The report was duly signed on April 21, 2022, by authorized representatives of the company - This report has been signed by authorized representatives of the company on April 21, 2022[289](index=289&type=chunk) - Signatories include Charles E. Drimal, Jr., Chairman, CEO, and President, and Beverly A. Cummings, Director, Executive Vice President, and Treasurer, among other board members[290](index=290&type=chunk) [FINANCIAL STATEMENTS](index=54&type=section&id=FINANCIAL%20STATEMENTS) This section contains the consolidated financial statements for 2021 and 2020, accompanied by an unqualified audit opinion [Report of Independent Registered Public Accounting Firm](index=55&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) - Grassi & Co., CPAs, P.C. issued an **unqualified opinion** on the company's consolidated financial statements for the years ended December 31, 2021 and 2020, stating they are fairly presented in all material respects[294](index=294&type=chunk) - **Key audit matters** included depreciation, depletion, and amortization (DD&A), impairment of properties and equipment, and the accounting for asset retirement obligations, all involving significant management estimates[298](index=298&type=chunk)[305](index=305&type=chunk)[306](index=306&type=chunk) [Consolidated Balance Sheet](index=58&type=section&id=Consolidated%20Balance%20Sheet) Consolidated Balance Sheet Summary 2021 vs 2020 ($ thousands) | Metric | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Cash and Cash Equivalents | 10,347 | 996 | | Accounts Receivable, net | 14,208 | 7,221 | | Total Current Assets | 25,328 | 8,911 | | Oil and Gas Properties, net | 179,742 | 185,098 | | Field and Office Equipment, net | 4,921 | 5,955 | | **Total Assets** | **210,914** | **200,484** | | Accounts Payable | 7,282 | 5,217 | | Accrued Liabilities | 7,821 | 6,787 | | Total Current Liabilities | 21,720 | 14,120 | | Long-term Bank Debt | 36,000 | 38,267 | | Asset Retirement Obligations | 13,222 | 12,891 | | Deferred Income Taxes | 38,743 | 36,367 | | **Total Liabilities** | **111,823** | **102,486** | | Stockholders' Equity Attributable to PrimeEnergy | 99,091 | 97,124 | | **Total Liabilities and Equity** | **210,914** | **200,484** | [Consolidated Statement of Operations](index=59&type=section&id=Consolidated%20Statement%20of%20Operations) Consolidated Statement of Operations Summary 2021 vs 2020 ($ thousands) | Metric | Year Ended Dec 31, 2021 | Year Ended Dec 31, 2020 | | :--- | :--- | :--- | | Oil Sales | 50,474 | 27,865 | | Gas Sales | 11,432 | 4,202 | | Natural Gas Liquids Sales | 11,220 | 4,906 | | Net Realized Gain (Loss) on Derivative Instruments | (5,045) | 6,173 | | Field Service Revenues | 11,806 | 11,120 | | Unrealized Loss on Derivative Instruments | (4,914) | (190) | | **Total Revenues** | **79,613** | **58,421** | | Lease Operating Expenses | 27,804 | 23,028 | | Field Service Expenses | 11,580 | 9,006 | | DD&A and Accretion of Discounted Liabilities | 26,325 | 28,176 | | General and Administrative Expenses | 10,426 | 15,027 | | **Total Costs and Expenses** | **76,135** | **75,237** | | Gain on Sale and Exchange of Assets | 1,478 | 15,836 | | **Operating Income (Loss)** | **4,956** | **(980)** | | Interest Expense | (2,007) | (1,902) | | Forgiveness of PPP Loan | 1,693 | — | | **Income (Loss) Before Income Taxes** | **4,642** | **(2,880)** | | Income Tax Expense (Benefit) | 2,516 | (517) | | **Net Income (Loss)** | **2,126** | **(2,363)** | | Net Income (Loss) Attributable to PrimeEnergy | 2,098 | (2,316) | | Basic Earnings (Loss) Per Share | 1.05 | (1.16) | | Diluted Earnings (Loss) Per Share | 0.76 | (1.16) | [Consolidated Statement of Equity](index=60&type=section&id=Consolidated%20Statement%20of%20Equity) Consolidated Statement of Equity Summary 2021 vs 2020 ($ thousands) | Metric | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Common Stock | 281 | 281 | | Additional Paid-in Capital | 7,555 | 7,541 | | Retained Earnings | 128,902 | 126,804 | | Treasury Stock | (37,647) | (37,502) | | **Total Stockholders' Equity Attributable to PrimeEnergy** | **99,091** | **97,124** | | Non-controlling Interests | — | 874 | | **Total Equity** | **99,091** | **97,998** | - In 2021, the company repurchased 2,100 shares of common stock, increasing treasury stock by **$145,000**[313](index=313&type=chunk) - The company reported **net income of $2.098 million** in 2021, with $28,000 attributable to non-controlling interests[313](index=313&type=chunk) [Consolidated Statement of Cash Flows](index=61&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) Consolidated Statement of Cash Flows Summary 2021 vs 2020 ($ thousands) | Cash Flow Category | Year Ended Dec 31, 2021 | Year Ended Dec 31, 2020 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | 28,617 | 16,379 | | Net Cash Provided by (Used in) Investing Activities | (19,248) | 339 | | Net Cash (Used in) Financing Activities | (18) | (16,737) | | Net Increase (Decrease) in Cash and Cash Equivalents | 9,351 | (19) | | Cash and Cash Equivalents at Beginning of Period | 996 | 1,015 | | **Cash and Cash Equivalents at End of Period** | **10,347** | **996** | - In 2021, the company paid **$343,000** in income taxes and **$1.957 million** in interest[315](index=315&type=chunk) - Capital expenditures, including exploration costs, totaled **$20.726 million** in 2021, while proceeds from asset sales were **$1.478 million**[315](index=315&type=chunk) [Notes to Consolidated Financial Statements](index=62&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - The company uses the **"successful efforts" method** of accounting for its oil and gas properties, capitalizing acquisition and successful well costs while expensing dry hole and exploration costs[326](index=326&type=chunk) - Long-lived assets are reviewed for impairment, and a loss is recorded if the carrying amount is not expected to be recoverable through undiscounted cash flows[328](index=328&type=chunk) - **Asset retirement obligations** represent the present value of estimated future costs to plug, abandon, and remediate properties at the end of their productive lives[331](index=331&type=chunk) - The company accounts for income taxes using the asset and liability method, recognizing deferred tax assets and liabilities for future tax consequences[332](index=332&type=chunk) - Derivative financial instruments are used to manage commodity price risk but are not designated as hedges for accounting purposes, with gains and losses recognized in current earnings[339](index=339&type=chunk)[379](index=379&type=chunk) - In 2021, the company repurchased non-controlling interests for **$44,000** and liquidated partnerships, paying out **$632,000** in cash[343](index=343&type=chunk)[344](index=344&type=chunk) - The company acquired 5.9 net acres in Midland County, Texas, and sold 116 net mineral acres in Martin County for a **gain of $1.45 million** in 2021[346](index=346&type=chunk) - The company's credit agreement matures on February 11, 2023, with a borrowing base of **$50 million**; as of December 31, 2021, **$36 million** was outstanding[352](index=352&type=chunk)[354](index=354&type=chunk) - PPP loans totaling **$1.693 million** received by the company's subsidiaries in 2020 were forgiven by the SBA in February and March 2022[356](index=356&type=chunk)[357](index=357&type=chunk) - As of December 31, 2021, the total asset retirement obligation was **$14.295 million**, based on significant assumptions about future costs and economic conditions[362](index=362&type=chunk) - The company reported **basic EPS of $1.05** and **diluted EPS of $0.76** for 2021, compared to a loss per share of $1.16 in 2020[384](index=384&type=chunk) [Supplementary Information](index=77&type=section&id=Supplementary%20Information) Capitalized Costs Relating to Oil and Gas Producing Activities 2021 vs 2020 ($ thousands) | Metric | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Proved Developed Oil and Gas Properties | 539,484 | 520,488 | | Proved Undeveloped Oil and Gas Properties | — | — | | **Total Capitalized Costs** | **539,484** | **520,488** | | Accumulated DD&A and Valuation Allowances | (359,742) | (335,390) | | **Net Capitalized Costs** | **179,742** | **185,098** | Costs Incurred in Oil and Gas Property Acquisition, Exploration, and Development Activities 2021 vs 2020 ($ thousands) | Category | Year Ended Dec 31, 2021 | Year Ended Dec 31, 2020 | | :--- | :--- | :--- | | Development Costs | 18,678 | 9,339 | Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves 2021 vs 2020 ($ thousands) | Metric | Dec 31, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | Future Cash Inflows | 501,431 | 221,090 | | Future Production Costs | (207,697) | (100,691) | | Future Development Costs | (18,507) | (39,167) | | Future Income Tax Expenses | (57,798) | (15,135) | | **Future Net Cash Flows** | **217,429** | **66,097** | | 10% Annual Discount | (81,623) | (24,479) | | **Standardized Measure of Discounted Future Net Cash Flows** | **135,806** | **41,619** | Principal Sources of Change in the Standardized Measure of Discounted Future Net Cash Flows 2021 vs 2020 ($ thousands) | Source of Change | Year Ended Dec 31, 2021 | Year Ended Dec 31, 2020 | | :--- | :--- | :--- | | Net Sales of Oil and Gas Produced (less production costs) | (45,322) | (13,945) | | Net Change in Prices and Production Costs | 143,750 | (16,578) | | Revisions of Previous Quantity Estimates | 18,991 | (36,919) | | Accretion of Discount | 4,162 | 8,161 | | Net Change in Income Taxes | (21,180) | 5,386 | | **Net Change** | **94,187** | **(39,993)** | | **Standardized Measure at End of Year** | **135,806** | **41,619** | Reserve Quantity Information 2021 vs 2020 | Reserve Category | 2021 Oil (MBbls) | 2021 NGL (MBbls) | 2021 Gas (MMcf) | 2020 Oil (MBbls) | 2020 NGL (MBbls) | 2020 Gas (MMcf) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Proved Developed, Beginning of Year | 2,684 | 2,258 | 13,633 | 4,381 | 2,914 | 19,995 | | Extensions, Discoveries, and Improved Recovery | 69 | 1 | 628 | 11 | 7 | 36 | | Revisions of Previous Estimates | 133 | (29) | 5,312 | (995) | (239) | (1,721) | | Transferred from Undeveloped | 1,747 | 231 | 1,067 | 25 | 5 | 66 | | Production | 738 | 416 | 3,236 | (733) | (437) | (3,381) | | **Proved Developed, End of Year** | **5,386** | **2,882** | **23,902** | **2,684** | **2,258** | **13,633** | | Proved Undeveloped, Beginning of Year | 1,784 | 787 | 3,897 | 1,833 | 1,017 | 4,547 | | **Proved Undeveloped, End of Year** | **—** | **—** | **—** | **1,784** | **787** | **3,897** | | **Total Proved Reserves, End of Year** | **5,386** | **2,882** | **23,902** | **4,468** | **3,045** | **17,530** | Results of Operations for Oil and Gas Producing Activities 2021 vs 2020 ($ thousands) | Metric | Year Ended Dec 31, 2021 | Year Ended Dec 31, 2020 | | :--- | :--- | :--- | | Oil and Gas Sales Revenue | 73,126 | 36,973 | | Lease Operating Expenses | 27,804 | 23,028 | | DD&A and Accretion | 26,325 | 25,921 | | Income Tax Expense | 3,989 | (2,515) | | **Results of Operations for Producing Activities** | **15,008** | **(9,461)** |