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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(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, 2025
OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For transition period from         to
Commission File Number 001-41132
Crescent Energy Company
(Exact name of registrant as specified in its charter)
Delaware87-1133610
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
600 Travis Street, Suite 7200
Houston, Texas 77002
(713) 332-7001
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Class A Common Stock, par value $0.0001CRGYNew York Stock Exchange
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act Yes ☐ No ☒

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐
1
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

The aggregate market value of Class A common stock outstanding held by non-affiliates of the registrant on June 30, 2025, based on the closing price of $8.60 for shares of the registrant’s Class A common stock as reported by the New York Stock Exchange, was approximately $1.3 billion.

As of January 30, 2026, there were approximately 327,900,272 of the registrant's Class A common stock outstanding.


Where You Can Find More Information

Crescent Energy Company ("we," "us," or the "Company") files annual, quarterly and current reports with the SEC. The SEC maintains an internet site at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC, including the Company.

Investors can also access financial and other information via our website at www.crescentenergyco.com. The Company makes available, free of charge through the website, copies of Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to such reports, our sustainability reports and all reports filed by executive officers and directors under Section 16 of the Exchange Act reporting transactions in the Company's securities. Access to these reports is provided as soon as reasonably practical after such reports are electronically filed with the SEC. In addition to its reports filed or furnished with the SEC, the Company publicly discloses material information from time to time in its press releases, in publicly accessible conferences and investor presentations, and through its website. Crescent Energy Company's website also can be used to access copies of charters for its board committees, including the Nominating & Governance Committee, Compensation Committee and Audit Committee, and governance documents, including our Corporate Governance Guidelines and our Code of Business Conduct and Ethics, free of charge. Information contained on or connected to our website which is not directly incorporated by reference into this Annual Report on Form 10-K (this "Annual Report") should not be considered part of this report or any other filing made with the SEC.

You may request a copy of filings other than an exhibit to a filing unless that exhibit is specifically incorporated by reference into that filing, at no cost by writing or calling Crescent Energy Company, 600 Travis Street, Suite 7200, Houston, TX 77002 (telephone number: 713-332-7001).

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Cautionary Statement Regarding Forward-Looking Statements

The information in this Annual Report contains or incorporates by reference information that includes or is based upon "forward-looking statements" within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act. All statements, other than statements of historical facts, included herein concerning, among other things, planned capital expenditures, increases in oil, natural gas and NGL production, the number of anticipated wells to be drilled or completed after the date hereof, future cash flows and borrowings, pursuit of potential acquisition opportunities, our financial position, business strategy and other plans and objectives for future operations, are forward-looking statements. These forward-looking statements are identified by their use of terms and phrases such as “may,” “expect,” “estimate,” “project,” “plan,” “believe,” “intend,” “achievable,” “anticipate,” “will,” “continue,” “potential,” “should,” “could,” and similar terms and phrases. Although we believe that the expectations reflected in these forward-looking statements are reasonable, they do involve certain assumptions, risks and uncertainties. Our results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, among others:

•commodity price volatility;
•our business strategy;
•our ability to integrate operations or realize any anticipated operational or corporate synergies and other benefits of our acquisitions, including the Vital Energy Merger;
•the risk that the Vital Energy Merger may not be accretive, and may be dilutive, to Crescent’s earnings per share, which may negatively affect the market price of Crescent common stock;
•our ability to identify and select opportunities for additional acquisitions, dispositions and other strategic transactions;
•capital requirements and uncertainty of obtaining additional funding on terms acceptable to us;
•risks and restrictions related to our debt agreements and the level of our indebtedness;
•our reliance on the Manager as our external manager;
•our hedging strategy and results;
•realized oil, natural gas and NGL prices;
•political and economic conditions and events in the U.S. and in foreign oil, natural gas and NGL producing countries, including embargoes, political and regulatory changes implemented by the Trump Administration, continued hostilities in the Middle East, including the Israel-Hamas conflict, and conflict with Iran, and other sustained military campaigns, the armed conflict in Ukraine and associated economic sanctions on Russia, conditions in South America, including most recently in Venezuela, Central America and China and acts of terrorism or sabotage;
•changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements, including such changes that may be implemented by the Trump Administration and foreign governments;
•general economic conditions, including the impact of inflation, elevated interest rates and associated changes in monetary policy;
•the impact of central bank policy actions and disruptions in the banking industry and capital markets;
•the severity and duration of public health crises and any resultant impact on governmental actions, commodity prices, supply and demand considerations, and storage capacity;
•timing and amount of our future production of oil, natural gas and NGLs;
•a decline in oil, natural gas and NGL production, and the impact of general economic conditions on the demand for oil, natural gas and NGLs and the availability of capital;
•unsuccessful drilling and completion (“D&C”) activities and the possibility of resulting write downs;
•our ability to meet our proposed drilling schedule and to successfully drill wells that produce oil, natural gas and NGLs in commercially viable quantities;
•shortages of equipment, supplies, services and qualified personnel and increased costs for such equipment, supplies, services and personnel, including any delays and/or supply chain disruptions due to increased hostilities in the Middle East and international trade rules and regulations;
•adverse variations from estimates of reserves, production, prices and expenditure requirements, and our inability to replace our reserves through exploration and development activities;
•incorrect estimates associated with properties we acquire, relating to estimated proved reserves, the presence or recoverability of estimated oil, natural gas and NGL reserves and the actual future production rates and associated costs of such acquired properties;
•hazardous, risky drilling operations, including those associated with the employment of horizontal drilling techniques, and adverse weather and environmental conditions;
•limited control over non-operated properties;
•title defects to our properties and inability to retain our leases;
•our ability to successfully develop our large inventory of undeveloped acreage;
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•our ability to retain key members of our senior management and key technical employees;
•risks relating to managing our growth, particularly in connection with the integration of significant acquisitions;
•our ability to successfully execute our growth strategies;
•impact of environmental, occupational health and safety, and other governmental regulations, and of current or pending legislation that may negatively impact the future production of oil and natural gas or drive the substitution of renewable forms of energy for oil and natural gas;
•federal and state regulations and laws, including the One Big Beautiful Bill Act (the "OBBBA"), the Inflation Reduction Act of 2022 (the "IRA 2022") and any impact thereon by the OBBBA, taxes, tariffs and international trade, safety and the protection of the environment;
•our ability to predict and manage the effects of actions of OPEC and agreements to set and maintain production levels, including as a result of recent production cuts by OPEC, which may be exacerbated by the continued hostilities in the Middle East, including with Iran, and recent developments in Venezuela;
•information technology failures or cyberattacks;
•changes in tax laws and the impact of those changes on us;
•effects of competition; and
•seasonal weather conditions.

We caution you that these forward-looking statements are subject to all of the risks and uncertainties incident to the development, production, gathering and sale of oil, natural gas and NGLs, most of which are difficult to predict and many of which are beyond our control. These risks include, but are not limited to, commodity price volatility, tariffs, inflation, lack of availability and cost of drilling and production equipment and services, project construction delays, environmental risks, drilling and other operating risks, lack of availability or capacity of midstream gathering and transportation infrastructure, regulatory changes, the uncertainty inherent in estimating reserves and in projecting future rates of production, cash flow and access to capital, including restrictions due to elevated interest rates, the timing of development expenditures and the other risks described under “Risk Factors.”

Reserve engineering is a process of estimating underground accumulations of hydrocarbons that cannot be measured in an exact way. The accuracy of any reserve estimates depends on the quality of available data, the interpretation of such data and price and cost assumptions made by reserve engineers. In addition, the results of drilling, testing and production activities may justify revisions of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development program. Accordingly, reserve estimates may differ significantly from the quantities of oil, natural gas and NGLs that are ultimately recovered.

Should one or more of the risks or uncertainties described in this Annual Report occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. All forward-looking statements, expressed or implied, included in this Annual Report are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this Annual Report.

Risk Factors Summary

The following is a summary of the principal risks that could adversely affect our business, operations and financial results. Please refer to "Part I., Item 1A. Risk Factors" of this Annual Report below for additional discussion of the risks summarized in this Risk Factors Summary.

Risks related to the oil and natural gas industry and our operations

•Oil, natural gas and NGL prices are volatile. A sustained decline in prices could adversely affect our business, financial condition and results of operations, liquidity and our ability to meet our financial commitments or cause us to delay our planned capital expenditures.
•Reserve estimates depend on many assumptions that may turn out to be inaccurate. Any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.
•Inflationary issues and associated changes in monetary policy have resulted in and may result in additional increases to the cost of our goods, services and personnel, which in turn could cause our capital expenditures and operating costs to rise.
•The unavailability or high cost of equipment, supplies, personnel and oilfield services, due to among other things, potential tariffs, commodity price volatility or supply constraints as a result of the conflicts in Ukraine, Venezuela and
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the Middle East, elevated interest rates and associated policies of the Federal Reserve or otherwise could adversely affect our ability to execute development and exploitation plans on a timely basis and within budget, and consequently could materially and adversely affect our anticipated cash flow.
•We are not the operator on all of our acreage or drilling locations, and, therefore, we will not be able to control the timing of exploration or development efforts, associated costs, or the rate of production of any non-operated assets and could be liable for certain financial obligations of the operators or any of our contractors to the extent such operators or contractors are unable to satisfy such obligations.
•We have consolidated our business over time through acquisitions, and there are risks associated with integration of all of these assets, operations and our ability to manage those risks. In addition, we may be unable to make attractive acquisitions or successfully integrate acquired businesses, assets or properties, and any inability to do so may disrupt our business and hinder our ability to grow.
•Through the Management Agreement, we depend on the Manager and its personnel to manage and operate our business, the loss of any of whom would materially and adversely affect future operations. Additionally, operational risks affecting the Manager, and our ability to work collaboratively with the Manager, including with respect to the allocation of corporate opportunities and other conflicts of interest, may impact our business and have a material effect on our business, financial results and prospects.

Risks related to regulatory matters

•Our drilling and production programs may not be able to obtain access on commercially reasonable terms or otherwise to truck transportation, pipelines, transmission, storage and processing facilities to market our production, and our initiatives to expand our access to midstream and operational infrastructure may be unsuccessful.
•Our operations are substantially dependent on the availability of water. Restrictions on our ability to obtain water may have a material and adverse effect on our financial condition, results of operations and cash flows.
•Our ability to pursue our business strategies may be adversely affected if we incur costs and liabilities due to a failure to comply with environmental laws or regulations or a release of hazardous substances or other wastes into the environment.
•Unless we replace our reserves with new reserves and develop those reserves, our reserves and production will decline, which may adversely affect our future cash flows.
•Our operations are subject to a series of risks arising from climate change.
•Federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing as well as governmental reviews of such activities could result in increased costs and additional operating restrictions or delays in the completion of oil and natural gas wells and adversely affect our production.

Risks related to our indebtedness

•We are partially dependent on our Revolving Credit Facility and continued access to capital markets to successfully execute our operating strategies.
•We have incurred significant additional indebtedness during recent periods, which may impair our ability to raise further capital or impact our ability to service our debt.

Risks related to our common stock

•Future sales of our Class A Common Stock in the public market, or the perception that such sales may occur, could reduce the price of our Class A Common Stock, and any additional capital raised by the Company through the sale of equity or convertible securities may dilute your ownership in Crescent.

Risks related to our financial condition

•Our hedging activities could result in financial losses or could reduce our net income.
•Certain employees of our operating subsidiaries have profits interests that may require substantial payouts and result in substantial accounting charges.
•Our only principal asset is our interest in OpCo; accordingly, we depend on distributions and other payments from OpCo to pay taxes, make payments under the Management Agreement and cover our corporate and other overhead expenses.
•Changes to applicable tax laws and regulations or exposure to additional tax liabilities could adversely affect our business, results of operations, financial condition and cash flows.

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Risks related to our governance structure

•Our Preferred Stockholder’s significant voting power limits the ability of holders of our common stock to influence our business.
•The Preferred Stockholder’s controlling ownership position may have the effect of delaying or preventing changes in control or changes in management and may adversely affect the trading price of our Class A Common Stock to the extent investors perceive a disadvantage in owning stock of a company with a controlling shareholder.
•Our Certificate of Incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.
•Our Certificate of Incorporation provides that the Preferred Stockholder is, to the fullest extent permitted by law, under no obligation to consider the separate interests of the other stockholders and will contain provisions limiting the liability of the Preferred Stockholder.

Glossary of Terms

“ARO” means an asset retirement obligation.

“Bbl” means 42 U.S. gallons liquid volume per stock tank barrel.

“BLM” means the federal Bureau of Land Management.

"Board" means the Board of Directors of Crescent Energy Company.

“Boe” means barrels of oil equivalent.

“Btu” means British thermal unit, which is the heat required to raise the temperature of a one-pound mass of water one degree Fahrenheit.

“CAA” means the federal Clean Air Act, as amended, and the rules and regulations promulgated thereunder.

“CARB” means the California Air Resources Board.

“Central Eagle Ford Acquisition” means the October 2024 acquisition, in which we acquired from unaffiliated third parties certain interests in oil and gas properties, rights and related assets located in Atascosa, Frio, La Salle and McMullen Counties, Texas for aggregate consideration of approximately $156.0 million, including certain customary purchase price adjustments.

“CERCLA” means the federal Comprehensive Environmental Response, Compensation, and Liability Act, as amended, and the rules and regulations promulgated thereunder.

“CFTC” means the Commodity Futures Trading Commission.

“Class A Common Stock” means the shares of Class A common stock, par value $0.0001 per share, of the Company.

“Class B Common Stock” means the shares of Class B common stock, par value $0.0001 per share, of the Company.

“Code” means the Internal Revenue Code of 1986, as amended.

“Company Group” means the Company and each of its subsidiaries (other than OpCo and its subsidiaries).

"Contango" means Contango Oil & Gas Company, a Texas corporation.

“CWA” means the Federal Water Pollution Control Act, as amended, and the rules and regulations promulgated thereunder.

“Decontrol Act” means the Natural Gas Wellhead Decontrol Act, effective January 1, 1993.

“DJ” means Denver Julesburg.
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“Dodd-Frank” means the Dodd-Frank Wall Street Reform and Consumer Protection Act.

“DOI” means the U.S. Department of the Interior.

“DOT” means the U.S. Department of Transportation.

“EHS” means Environment, Health and Safety.

“EIGF II” means Energy Income and Growth Fund II, formed in 2018 as a KKR energy investment fund.

“EPA” means the U.S. Environmental Protection Agency.

“Equity Incentive Plan” means the Crescent Energy Company 2021 Equity Incentive Plan.

“ESA” means the federal Endangered Species Act, as amended, and the rules and regulations promulgated thereunder.

“ESG” means Environmental, Social and Governance.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“FERC” means the Federal Energy Regulatory Commission.

“FRA” means the Federal Railroad Administration.

“FTC” means the Federal Trade Commission.

“FWS” means the U.S. Fish and Wildlife Service.

“GAAP” means U.S. generally accepted accounting principles.

“GHGs” means greenhouse gases.

“ICA” means the Interstate Commerce Act of 1887 and the rules and regulations promulgated thereunder.

“Independence” means Independence Energy LLC, a Delaware limited liability company.

“IRS” means the United States Internal Revenue Service.

“IT” means Information Technology.

“KKR” means the Manager and its affiliates, which includes the Preferred Stockholder and EIGF II.

“KKR Funds” means EIGF II and/or other KKR funds.

“KKR Group” means KKR & Co. Inc. and its subsidiaries.

“LCFS” means low carbon fuel standard.

“LNG” means liquefied natural gas.

“M" means in thousands.

"MM" means in millions.

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“Management Agreement” means the management agreement, dated as of December 7, 2021, by and between the Company and the Manager, whereby the Manager manages the business and operations of the Company and its subsidiaries and provides the executive management team for the benefit of the Company and its subsidiaries.

“Manager” means KKR Energy Assets Manager LLC, a Delaware limited liability company.

"Manager Incentive Plan” means the Crescent Energy Company 2021 Manager Incentive Plan.

“MBTA” means the Migratory Bird Treaty Act, as amended, and the rules and regulations promulgated thereunder.

“MBbls” means thousand barrels of oil or NGL.

“MBoe” means thousand Boe.

“Mcf” means thousand cubic feet of natural gas.

“MMBoe” means million Boe.

“MMBtu” means million British thermal units.

“MMcf” means million cubic feet of natural gas.

“NAAQS” means National Ambient Air Quality Standard.

“NEPA” means the National Environmental Policy Act, as amended, and the rules and regulations promulgated thereunder.

"Non-Economic Series I Preferred Stock” means the 1,000 shares of the Company's Preferred Stock that are designated as “Series I Preferred Stock,” which have no economic rights.

“NGA” means the Natural Gas Act of 1938 and the rules and regulations promulgated thereunder.

“NGFS” means the Network for Greening the Financial System.

“NGL” means natural gas liquids.

“NGPA” means the Natural Gas Policy Act of 1978, as amended, and the rules and regulations promulgated thereunder.

“NYMEX” means the New York Mercantile Exchange.

“Henry Hub Index” means the major exchange for pricing natural gas futures on the New York Mercantile Exchange.
“NYSE” means the New York Stock Exchange.

“oil equivalent” means natural gas is converted to a crude oil equivalent at the ratio of six Mcf of natural gas to one Boe.

“OPA” means the federal Oil Pollution Act of 1990, as amended, and the rules and regulations promulgated thereunder.

“OpCo” means Crescent Energy OpCo LLC (f/k/a IE OpCo LLC), a Delaware limited liability company.

“OpCo LLC Agreement” means the Amended and Restated Limited Liability Company Agreement of OpCo.

“OpCo Units” means the units representing economic limited liability company interests in OpCo.

“OPEC” means the Organization of Petroleum Exporting Countries.

“OSHA” means the federal Occupational Safety and Health Act, as amended, and the rules and regulations promulgated thereunder.

“OT” means Operational Technology.
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“PDP” means proved developed producing.

“PHMSA” means the Pipeline and Hazardous Materials Safety Administration.

“Preferred Stockholder” means Independence Energy Aggregator LP, the initial holder of the Non-Economic Series I Preferred Stock, and, as applicable, any successor thereto.

“PT Independence” means PT Independence Energy Holdings, LLC, a Delaware limited liability company.

“PUD” means proved undeveloped reserve.

“PV-0 value” means the present value of estimated future oil and gas revenues, net of estimated direct expenses, discounted at an annual discount rate of 0% used to estimate the present value of proved oil and natural gas reserves.

“PV-10 value” means the present value of estimated future oil and gas revenues, net of estimated direct expenses, discounted at an annual discount rate of 10% used to estimate the present value of proved oil and natural gas reserves.

“RCRA” means the federal Resource Conservation and Recovery Act, as amended, and the rules and regulations promulgated thereunder.

“Revolving Credit Facility” means the credit agreement, by and between Independence Energy Finance LLC (n/k/a Crescent Energy Finance LLC), Wells Fargo Bank, N.A., as administrative agent, the guarantor parties thereto and the lender parties thereto.

“Ridgemar Acquisition” means the transactions contemplated by the Membership Interest Purchase Agreement, dated December 3, 2024 (the “Ridgemar Acquisition Agreement”), by and between Crescent Energy Finance LLC, Crescent Energy Company, Ridgemar Energy Operating, LLC and Ridgemar (Eagle Ford) LLC (“Ridgemar”).

“SDWA” means the federal Safe Drinking Water Act, as amended, and the rules and regulations promulgated thereunder.

“SEC” means the United States Securities and Exchange Commission.

“SEC Pricing” means the unweighted average first-day-of-the-month commodity price for crude oil or natural gas for the period beginning January 1, 2025 and ending December 1, 2025, adjusted by lease for market differentials (quality, transportation, fees, energy content, and regional price differentials). The SEC provides a complete definition of prices in “Modernization of Oil and Gas Reporting” (Final Rule, Release Nos. 33-8995; 34-59192).

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“SilverBow Merger” means the transactions contemplated by the Agreement and Plan of Merger, dated May 15, 2024, between Crescent, SilverBow Resources, Inc. (“SilverBow”), Artemis Acquisition Holdings Inc. ("Artemis Holdings"), Artemis Merger Sub Inc. ("Artemis MS Inc.") and Artemis Merger Sub II LLC ("Artemis MS LLC").

"Standardized Measure" means the standardized measure of discounted future net cash flows developed utilizing procedures prescribed by Accounting Standards Codification (“ASC”) Topic 932, Extractive Industries – Oil and Gas ,of the Financial Accounting Standards Board (“FASB”) and based on crude oil, natural gas, and NGL reserves and production volumes estimated by our engineering staff.

“TRC” means the Texas Railroad Commission.

“UIC” means the Underground Injection Control program administered by the SDWA.

"Vital Energy Merger" means the transactions contemplated by the Agreement and Plan of Merger, dated as of August 24, 2025 (the "Vital Energy Merger Agreement"), between Crescent, Venus Merger Sub I Inc. ("Venus MS Inc."), Venus Merger Sub II LLC ("Venus MS LLC") and Vital Energy, Inc. ("Vital").

“WTI” or “West Texas Intermediate” means a light crude oil produced in the United States with an American Petroleum Institute gravity of approximately 38 to 40 and the sulfur content is approximately 0.3%.
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Part I
Except as noted in this Annual Report, we refer to Crescent Energy Company as "Crescent", "we", "us", "our", or the "Company." This Annual Report includes certain terms commonly used in the oil and natural gas industry, which are defined above in the "Glossary of Terms."

Items 1 and 2. Business and Properties


Business Overview

Crescent is a differentiated energy company committed to delivering value through a disciplined, returns-driven growth through acquisition strategy and consistent return of capital. Our long-life, balanced portfolio combines significant cash flow from stable production with a deep, high-quality development inventory. Our activities are focused in the Eagle Ford, Permian and Uinta Basins, and we own minerals and royalty interests across premier U.S. oil and natural gas basins, primarily operated by large, well-capitalized companies, with a core focus in the Eagle Ford. Our Class A Common Stock trades on the NYSE under the symbol “CRGY.”

Our free cash flow-focused portfolio includes a balanced set of proven onshore oil and natural gas assets, in which we hold working interests, characterized by a stable production base, a lower decline rate and an acreage position that is approximately 96% held by production as of December 31, 2025. As a result of this overall lower decline profile, we require relatively modest capital expenditures to maintain production levels and cash flows. We maintain a robust inventory of attractive operated undeveloped locations, providing flexibility to sustain or grow our production base in a disciplined manner. While many operators in our industry have historically pursued capital intensive production growth, our management team has focused on selectively acquiring cash flow-oriented assets, operating them more efficiently and making disciplined, returns-focused reinvestment decisions to drive sustainable free cash flow generation. Our portfolio is further enhanced by our mineral interests in the core areas of major onshore oil and natural gas basins, which are primarily operated by large, well-capitalized operators, as well as midstream infrastructure investments, which provide operational advantages and contribute to enhanced cash flow margins.

We have built a portfolio of assets with substantial reserves, production, cash flows and reinvestment opportunities. Our portfolio of assets:
•at December 31, 2025 consisted of 975.5 net MMBoe of proved reserves, of which approximately 61% were liquids, reflecting $7.8 billion in Standardized Measure and $8.6 billion and $7.5 billion, respectively, in net proved and net proved developed ("PD") present value discounted at a 10% discount rate;

•during the year ended December 31, 2025 produced 260 net MBoe/d; and

•during the year ended December 31, 2025, generated $167.2 million of net income, $1.7 billion of net cash provided by operating activities, $2.1 billion of Adjusted EBITDAX and $856.1 million of levered free cash flow;

See “—Non-GAAP financial measures” and "—Results of Operations" in "Part II., Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" for definitions of Adjusted EBITDAX and Levered Free Cash Flow and reconciliations to the nearest comparable GAAP metrics.

Free cash flow-focused portfolio

Our asset base, which is primarily located in Texas and Utah, includes oil and natural gas assets in key established onshore U.S. basins, which include the Eagle Ford, Permian and Uinta Basins. Our long-life, balanced portfolio combines significant cash flow from stable production with a deep, high-quality development inventory. Our lower-decline production base results in lower capital intensity and a reduced reinvestment rate required to maintain production levels. While many of our peers have historically outspent their cash flows in pursuit of production growth and left themselves particularly vulnerable to commodity price volatility, we have maintained an average reinvestment rate of approximately 45% of Adjusted EBITDAX since 2021.

Long-life, stable production base

Our PDP reserves as of December 31, 2025 have estimated average five-year and ten-year annual decline rates of approximately 12% and 8%, respectively, and an estimated 2026 PDP decline rate of 29%, based on forecasts used in our
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reserve reports. These decline rates are generally lower than those of many industry peers. As a result of this lower decline profile, we require relatively less capital expenditures to maintain our production and cash flows compared to industry peers. Our properties located in the Eagle Ford, Permian, and Uinta Basins represent approximately 96% of our proved reserves as of December 31, 2025, and provide us with an attractive balance across regions and commodities and certain downside protection from commodity-specific pressures, isolated infrastructure constraints or severe weather events. In addition to our leasehold acreage, we own mineral and royalty interests that represent approximately 3% of our proved reserves as of December 31, 2025. The table below illustrates the aggregate leasehold acreage positions, reserve volumes and weighted average decline profiles associated with our proved assets as of December 31, 2025 by our major operating areas.

Net Acres
Net Proved Reserves (1)
% Oil & Liquids (1)
Net PD Reserves (1)
2025 Total Net Production
Net Proved PV-10 (1)(2)
Net PD PV-10 (1)(2)
Operating Area
(M)(MMBoe)(MMBoe)(MBoe)(MM)(MM)
Working interest
Eagle Ford53253756 %386 62,702 $4,550 $3,830 
Permian33635069 %323 3,983 $3,066 $2,901 
Uinta1395157 %37 8,530 $528 $444 
Total Working interest
1,01995061 %758 92,383 $8,213 $7,244 
Minerals and royalties4432659 %18 2,634 $420 $273 

(1)Our reserves and present value (discounted at ten percent, or PV-10) were determined using average first-day-of-the-month prices for the prior 12 months in accordance with SEC guidance. For oil and NGL volumes, the average WTI posted price of $65.34 per barrel as of December 31, 2025, was adjusted for items such as gravity, quality, local conditions, gathering, transportation fees and distance from market. For natural gas volumes, the average Henry Hub Index spot price of $3.39 per MMBtu as of December 31, 2025, was similarly adjusted for items such as quality, local conditions, gathering, transportation fees and distance from market. All prices are held constant throughout the lives of the properties. The average adjusted realized product prices over the remaining lives of the properties are $64.42 per barrel of oil, $2.24 per Mcf of natural gas and $19.36 per barrel of NGLs.
(2)Reflects the Net Proved and Net PD present values reflected in our proved reserve estimates as of December 31, 2025. PV-10 is not a financial measure prepared in accordance with GAAP because it does not include the effects of income taxes on future revenues. Our Standardized Measure was $7.8 billion as of December 31, 2025. See “Oil, natural gas and NGL reserve data” for additional discussion.

Our Relationship with the KKR Group

We are a party to a Management Agreement that engages the Manager to provide certain management and investment advisory services to us and our subsidiaries. The Manager is an indirect subsidiary of the KKR Group. The KKR Group is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions.

Pursuant to the Management Agreement, the Manager has agreed to provide us with management services, including our senior executive management team, and other assistance, including with respect to strategic planning, risk management, identifying and screening potential acquisitions, identifying and analyzing sustainability-related issues and providing such other assistance as we may require.

Through our integration with the KKR Group’s global platform, we believe that we benefit from: the power of the “KKR Brand;” KKR Capstone, which creates value by assisting with due diligence and identifying and delivering sustainable operational performance improvements within the KKR Group’s portfolio companies; KKR Global Macro and Asset Allocation, which assists with assessing the impact of macroeconomic factors on potential investments and helps identify market opportunities; KKR Capital Markets LLC ("KCM"), which assists with optimizing the capital structure of investments and underwrites and arranges debt, equity and other forms of financing for both KKR portfolio companies and independent clients, and KKR Public Affairs, which, together with the KKR Global Institute, provides insight into sustainability, regulatory, geopolitical, and reputational issues, including experience working with key stakeholders, such as labor unions, industry and trade associations and non-governmental organizations.

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For additional information regarding our Management Agreement and our relationship with the KKR Group, see "Item 1A. Risk Factors, Risks related to the oil and natural gas industry and our operations—Through the Management Agreement, we depend on the Manager and its personnel to manage and operate our business, the loss of any of whom would materially and adversely affect future operations. Additionally, operational risks affecting the Manager, and our ability to work collaboratively with the Manager, including with respect to the allocation of corporate opportunities and other conflicts of interest, may impact our business and have a material effect on our business, financial results and prospects."

Management Agreement

We are a party to a Management Agreement pursuant to which we have engaged the Manager to manage the strategy, assets and day-to-day business and affairs of us and our subsidiaries, subject at all times to applicable law, the further terms and conditions set forth in the Management Agreement and to the supervision of our Board. Pursuant to the Management Agreement, the Manager will provide us with our senior executive management team. Additionally, pursuant to the Management Agreement:

•The Manager shall ensure that at least 70% of any investment amounts related to upstream oil and gas opportunities are allocated to us. Follow-on investment amounts will be generally allocated between us and EIGF II in proportion to the relative amount such vehicle initially invested in the applicable investment.

•From time to time, investment opportunities outside of upstream oil and gas assets may arise that are suitable for investment by us, on the one hand, and by EIGF II (and any successor fund) or other KKR Funds, on the other that are (A) engaged in an investment strategy that is materially different from us (such as distressed debt or special situations investment vehicles) and (B) have pre-existing defined allocation rights pursuant to KKR’s allocation policies or contractual undertakings agreed with the investors in such other KKR Funds. In such cases, we may elect to co-invest alongside EIGF II and/or such other KKR Funds in such investments, in which case KKR will allocate such investment opportunities among us, on the one hand, and EIGF II and/or such other KKR Funds, on the other hand, in a manner consistent with the priority investment rights of such KKR Funds, taking into account such factors as KKR deems appropriate. We shall have no obligation to make any such co-investment.

•As consideration for the services rendered pursuant to the Management Agreement and the Manager’s overhead, including compensation of the executive management team, the Manager is entitled to receive:

(i) compensation from us equal to $78.5 million per annum (the "Manager Compensation"), as of December 31, 2025. Such compensation expense is included in General and administrative expenses on our consolidated statements of operations. As our business and assets expand, the Manager Compensation will increase by an amount equal to 1.5% per annum of the net proceeds from all future issuances of primary equity securities by us (including in connection with acquisitions).

(ii) a performance-based incentive grant pursuant to which the Manager is targeted to receive up to 10% of outstanding Class A Common Stock based on the achievement of certain performance-based measures (the "Incentive Compensation"). The Incentive Compensation consists of five tranches that settle over a five-year period beginning in 2024, and each tranche relates to a target number of shares of Class A Common Stock equal to 2% of the outstanding Class A Common Stock as of the time such tranche is settled. Performance goals are evaluated on absolute stock price performance and relative stock price performance versus a set of our peers and there is no vesting based solely on time. Based on the level of achievement with respect to the performance goals applicable to such tranche, the Manager is entitled to settlement of such tranche with respect to a number of shares of Class A Common Stock ranging from 0% to 4.8% of the outstanding Class A Common Stock at the time each tranche is settled so long as the Manager continuously provides services to us until the end of the performance period applicable to a tranche.

(iii) reimbursement for the Manager's documented costs or expenses incurred by the Manager on behalf of us (other than normal overhead expenses relating to the business or operations of the Manager). These costs and expenses include, among other things, rent, taxes, fees related to regulatory compliance, costs related to IT services and other costs related to identifying, evaluating and structuring investments.

•The Management Agreement was amended in 2025 and 2024 to cap the increase of the Manager Compensation in connection with the Vital Energy Merger, SilverBow Merger and Ridgemar Acquisition.

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•The Management Agreement has a three-year term ending December 7, 2027 and will have automatic three-year renewals thereafter. Upon the written notice to the Manager at least 180 days prior to the expiration of the initial term or any automatic renewal term, we may, without cause, decline to renew the Management Agreement upon the affirmative determination by at least two-thirds of our independent directors reasonably and in good faith that (1) there has been unsatisfactory long-term performance by the Manager that is materially detrimental to us and our subsidiaries taken as a whole or (2) the fees payable to the Manager, in the aggregate, are materially unfair and excessive compared to those that would be charged by a comparable asset manager managing assets comparable to our assets, subject to the Manager’s right to renegotiate the fees. In the event of such a termination, we shall pay the Manager a termination fee equal to three (3) times the sum of (i) the average annual Manager Compensation and (ii) the average of the Incentive Compensation (but only with respect to the fully vested portion thereof as of the termination date), in each case earned by the Manager during the 24-month period immediately preceding the most recently completed calendar quarter prior to the termination.

Properties

Summary of our assets

Leasehold acreage
Our long-life, balanced portfolio combines significant cash flow from stable production with a deep, high-quality development inventory located in the Eagle Ford, Permian and Uinta Basins. We believe that our leasehold acreage position is further enhanced and complemented by our additional interests in mineral and royalty acreage across premier U.S. oil and natural gas basins, primarily operated by large, well-capitalized companies, with a core focus in the Eagle Ford. We had leasehold interests in an aggregate of 1.0 million net acres as of December 31, 2025, 960 thousand of which we were designated as operator. We are responsible for our pro rata share of capital expenditures and lease operating expenses for the operated and non-operated working interests within our leasehold acreage based on our percentage working interest and we are entitled to revenues derived from such interest based on our net revenue interest, which generally equals our working interest in such property less any royalties and production payments and any overriding royalty and net profits interests burdening the property.

Mineral and royalty interests
In addition to our leasehold acreage, we own mineral and royalty interests. As of December 31, 2025, we owned mineral and royalty interests in 1.2 million gross acres across premier U.S oil and natural gas basins, primarily operated by large, well-capitalized oil and natural gas companies, with a core focus in the Eagle Ford. As of December 31, 2025, approximately 76% of our mineral acres in oil and gas producing basins are leased, and as part of those lease agreements, we have retained a royalty interest, which is a cost-free percentage of production revenue that expires upon termination of the lease, at which time the entire mineral interest reverts to us. These interests and our overriding royalty interests entitle us to receive a royalty on all production from such acreage with no additional future capital or operating costs required.

Midstream infrastructure
We own midstream assets, which provide services to our upstream assets and other customers. This includes a 12.0% interest in the Springfield Gathering System in the Eagle Ford Shale in Dimmit, La Salle and Webb Counties of southeast Texas, which is operated by Western Midstream Partners, LP (NYSE: WES) and includes both oil and gas gathering systems.

Our operating areas
Our main operating areas include the Eagle Ford, Permian, Uinta and Minerals and Royalties. The table below describes the net acreage, net productive wells, production and proved reserve amounts for each of our major geographic areas for the year ended and as of December 31, 2025:

Geographic AreaNet AcresNet Productive Wells2025 ProductionProved Reserves
(M)(MBoe)(MMBoe)
Working interest
Eagle Ford532 3,600 62,702 537 
Permian
336 3,735 3,983 350 
Uinta
139 387 8,530 51 
Total Working interest
1,019 7,945 92,383 950 
Minerals and royalties
443 103 2,634 26 
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Oil, natural gas and NGL reserve data

The following table summarizes our estimated net proved reserves as of December 31, 2025 based on evaluations prepared in accordance with SEC Pricing, including the provisions of the SEC rule regarding reserve estimation regarding a historical twelve month pricing average applied prospectively.

As of December 31,
2025 (1)
2024 (1)
Net Proved Reserves:
Oil (MBbls)359,695 297,690 
Natural gas (MMcf)2,278,059 1,595,059 
NGLs (MBbls)236,146 145,716 
Total Proved Reserves (MBoe)975,518 709,251 
Standardized Measure (millions) (2)
$7,756 $5,704 
PV-0 (millions) (2)
$14,462 $11,108 
PV-10 (millions) (2)
$8,633 $6,459 
Net Proved Developed Reserves:
Oil (MBbls)275,734 193,611 
Natural gas (MMcf)1,819,476 1,342,718 
NGLs (MBbls)197,366 109,223 
Total Proved Developed Reserves (MBoe)776,346 526,622 
PV-0 (millions) (2)
$11,774 $7,651 
PV-10 (millions) (2)
$7,517 $4,867 
Net Proved Undeveloped Reserves:
Oil (MBbls)83,961 104,079 
Natural gas (MMcf)458,583 252,341 
NGLs (MBbls)38,780 36,493 
Total Proved Undeveloped Reserves (MBoe)199,172 182,629 
PV-0 (millions) (2)
$2,688 $3,457 
PV-10 (millions) (2)
$1,116 $1,592 
(1)Our reserves and present value (discounted at ten percent, or PV-10) were determined using average first-day-of-the-month prices for the prior 12 months in accordance with SEC guidance. For oil and NGL volumes, the average WTI posted price of $65.34 per barrel and $75.48 per barrel as of December 31, 2025 and 2024, was adjusted for items such as gravity, quality, local conditions, gathering, transportation fees and distance from market. For natural gas volumes, the average Henry Hub Index spot price of $3.39 per MMBtu and $2.13 per MMBtu as of December 31, 2025 and 2024, was similarly adjusted for items such as quality, local conditions, gathering, transportation fees and distance from market. All prices are held constant throughout the lives of the properties. The average adjusted realized product prices over the remaining lives of the properties are $64.42 per barrel of oil, $2.24 per Mcf of natural gas and $19.36 per barrel of NGLs as of December 31, 2025. The average adjusted product prices over the remaining lives of the properties were $72.69 per barrel of oil, $1.74 per Mcf of natural gas and $23.81 per barrel of NGLs as of December 31, 2024.
(2)Present value (discounted at PV-0 and PV-10) is not a financial measure calculated in accordance with GAAP because it does not include the effects of income taxes on future net revenues. None of PV-0, PV-10 and Standardized Measure represent an estimate of the fair market value of our oil and natural gas properties. Our PV-0 measurement does not provide a discount rate to estimated future cash flows. PV-0 therefore does not reflect the risk associated with future cash flow projections like PV-10 does. PV-0 should therefore only be evaluated in connection with an evaluation of our PV-10 and Standardized Measure. We believe that the presentation of PV-0 and PV-10 is relevant and useful to its investors as supplemental disclosure to the Standardized Measure because they present future net cash flows attributable to our reserves prior to taking into account future income taxes and our current tax structure. The PV-0 and PV-10 income tax amounts included in the Standardized Measure but not included in PV-0 and PV-10 were $1,308.2 million and $877.5 million, respectively. We and others in our industry use PV-0 and PV-10 as a measure to compare the relative size and value of
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proved reserves held by companies without regard to the specific tax characteristics of such entities. Investors should be cautioned that none of PV-0, PV-10 and Standardized Measure represent an estimate of the fair market value of our proved reserves.

Preparation of reserve estimates

Our reserve estimates as of December 31, 2025 are based on evaluations either prepared or audited by Ryder Scott Company, L.P. Our Independent Reserve Engineers were selected for their historical experience and geographic expertise in engineering similar resources. Our reserve estimation process is a collaborative effort overseen by our Vice President of Corporate Reserves, who has over 19 years of experience in the estimation and evaluation of petroleum reserves. Our technical staff uses historical information for our properties such as ownership interest, oil and natural gas production, well test data, commodity prices and operating and development costs to formulate our reserves estimates. The preparation of our proved reserve estimates is completed in accordance with our internal control procedures. These procedures, which are intended to ensure reliability of reserve estimations, include the following:
    
•review and verification of historical production, cost and capital expenditures data;

•verification of property ownership by our land department;

•preparation of reserves estimates by our lead reservoir engineers;

•review by our management, including our Chief Executive Officer and Chief Financial Officer, of all significant reserve changes and all new PUD additions; and

•no employee’s compensation is tied to the amount of reserves booked.

The technical leads responsible for preparing our reserves estimates at December 31, 2025 from Ryder Scott Company, L.P. have over 24 years of industry experience.

Proved reserves are reserves which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time. The term “reasonable certainty” implies a high degree of confidence that the quantities of oil or natural gas actually recovered will equal or exceed the estimate. To achieve reasonable certainty, we and the Independent Reserve Engineers employed technologies that have been demonstrated to yield results with consistency and repeatability. The technologies and economic data used in the estimation of our proved reserves include, but are not limited to, well logs, geologic maps and available downhole and production data and well-test data.

Reserve engineering is and must be recognized as a subjective process of estimating volumes of economically recoverable oil and natural gas that cannot be measured in an exact manner. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation. As a result, the estimates of different engineers often vary. In addition, the results of drilling, testing and production may justify revisions of such estimates. Accordingly, reserve estimates often differ from the quantities of oil and natural gas that are ultimately recovered. Estimates of economically recoverable oil and natural gas and of future net cash flows are based on a number of variables and assumptions, all of which may vary from actual results, including geologic interpretation, prices and future production rates and costs. See "Item 1A. Risk Factors" appearing elsewhere in this Annual Report.

Proved undeveloped reserves (PUDs)

Our PUDs will be converted from undeveloped to developed as the applicable wells have been drilled or completed and have minimal capital remaining to bring the well onto production. The changes to our PUDs that occurred during the year are summarized in the table below:

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2025
(MBoe)
Balance at December 31, 2024
182,629 
Purchases of reserves in place31,240 
Extensions and discoveries64,791 
Revisions of previous estimates(34,239)
Sales of reserves in place(3,813)
Transfers to proved developed(41,436)
Balance at December 31, 2025
199,172 

Purchases of reserves in place of 31.2 MMBoe during the year ended December 31, 2025 primarily relate to PUD locations added as part of the Vital Energy Merger, the Ridgemar Acquisition and the Minerals Acquisition. Revisions of previous estimates during the year ended December 31, 2025 were primarily due to changes in the drill plan driven by commodity prices and revisions to PUD locations on acquired assets, which created a reprioritization of our capital program and adjustments to our five-year development plan. Our extensions of 64.8 MMBoe primarily relate to operatorship enhancements and positive results from acreage expansion, development optimization, reprioritization of drilling in response to commodity pricing and expanding our Austin Chalk formation. Additionally, during the year ended December 31, 2025, we spent $399.9 million to convert 41.4 MMBoe to proved developed reserves.

All such PUD reserves are scheduled to be developed within five years from their booking date. The PUD reserves are spread across multiple assets primarily in Texas and Utah. Our PUD reserves represent only reserves that are scheduled, based on such plan, to be developed within five years from the date such locations were initially disclosed as PUDs; however, our five-year development plan may not contemplate a uniform (i.e., 20% per year) conversion of PUD reserves. At December 31, 2025, we estimate that our future development costs relating to the development of PUD reserves are $820 million in 2026, $625 million in 2027 and $441 million in 2028, $362 million in 2029 and $73 million in 2030. We believe cash flow from operations and availability under the Revolving Credit Facility will be sufficient to cover these estimated future development costs.

Oil, natural gas and NGL production prices and operating costs

Production and price history

The following table sets forth production, price and cost data for the years ended December 31, 2025, 2024, and 2023.

Year Ended December 31,
202520242023
Net Production:
Working interest Eagle Ford
Oil (MBbls)25,037 15,813 8,746 
Natural gas (MMcf)146,635 82,394 22,938 
NGLs (MBbls)13,226 8,778 3,271 
Total (MBoe)62,702 38,323 15,840 
Average daily production (MBoe/d)172 105 43 
Working interest Uinta
Oil (MBbls)5,227 5,828 6,499 
Natural gas (MMcf)19,819 19,061 18,954 
Total (MBoe)8,530 9,005 9,658 
Average daily production (MBoe/d)23 25 26 
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Year Ended December 31,
202520242023
Working interest Permian
Oil (MBbls)1,876 1,340 1,585 
Natural gas (MMcf)6,579 5,098 6,537 
NGLs (MBbls)1,011 687 859 
Total (MBoe)3,983 2,877 3,534 
Average daily production (MBoe/d)11 8 10 
Minerals and royalties
Oil (MBbls)875 778 619 
Natural gas (MMcf)7,751 6,986 7,790 
NGLs (MBbls)467 440 408 
Total (MBoe)2,634 2,382 2,325 
Average daily production (MBoe/d)7 7 6 
Total
Oil (MBbls)38,139 29,945 24,287 
Natural gas (MMcf)236,978 183,227 130,629 
NGLs (MBbls)17,382 13,154 8,475 
Total (MBoe)95,017 73,637 54,533 
Average daily production (MBoe/d)260 201 149 
Average Realized Prices (before effects of derivatives):
Working interest Eagle Ford
Oil (per Bbl)$64.34 $74.07 $75.22 
Natural gas (per Mcf)$3.05 $1.91 $2.26 
NGLs (per Bbl)$23.20 $24.79 $25.89 
Working interest Uinta
Oil (per Bbl)$52.96 $60.91 $61.87 
Natural gas (per Mcf)$1.52 $1.25 $3.65 
Working interest Permian
Oil (per Bbl)$59.73 $75.99 $74.97 
Natural gas (per Mcf)$0.84 $0.68 $1.77 
NGLs (per Bbl)$14.35 $20.55 $18.67 
Minerals and royalties
Oil (per Bbl)$61.90 $74.06 $76.19 
Natural gas (per Mcf)$2.99 $1.85 $2.65 
NGLs (per Bbl)$22.62 $25.66 $22.07 
Total
Oil (per Bbl)$62.21 $71.14 $72.09 
Natural gas (per Mcf)$2.84 $1.91 $2.84 
NGLs (per Bbl)$22.47 $24.10 $22.76 
Average Production Costs per Boe:
Working interest Eagle Ford$12.87 $13.98 $19.70 
Working interest Uinta$8.79 $7.55 $10.11 
Working interest Permian$16.51 $19.26 $20.06 
Minerals and royalties$3.60 $4.14 $4.64 
Total$15.48 $15.86 $19.04 

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Wells

The following table sets forth information regarding our productive wells as of December 31, 2025:

Working Interest AssetsMineral and Royalty Interests
GrossNetAverage Working InterestGrossNetAverage Net Revenue Interest
Natural gas2,942 1,821.3 62 %2,435 26.6 1 %
Oil9,757 6,123.7 63 %3,246 76.4 2 %
Total12,699 7,945.0 63 %5,681 103.0 2 %
Leasehold acreage

The following table sets forth certain information regarding the total developed and undeveloped acreage in which we owned an interest as of December 31, 2025.

GrossNet
(in thousands)
Working interest
Developed Acres1,367 896 
Undeveloped Acres246 123 
Total Net Acres1,613 1,019 
Mineral Acres (1)
1,118 443 
(1)Mineral acres exclude 119 thousand gross acres in which we have an overriding royalty interest.

Our undeveloped acreage, as used herein, means acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of oil or natural gas, regardless of whether or not the acreage contains proven reserves or is held by production.

Undeveloped acreage expirations

The following table sets forth the number of total net undeveloped acres as of December 31, 2025 that will expire in 2026, 2027, 2028 and 2029 unless production is established within the spacing units covering the acreage prior to the expiration dates or unless such leasehold rights are extended or renewed.

2026202720282029
(in thousands)
Net undeveloped acres8 14 5 3 

The leases comprising the acreage that is subject to expiration as set forth in the table above will generally expire at the end of their respective primary terms unless production from the leasehold acreage has been established prior to such date, in which case the lease will remain in effect until the cessation of production. Upon expiration of the primary term, we will lose our interests in the associated acreage unless fully held by production, maintained through our delivery of a lease extension payment or, in the case of many of our leases, we utilize the “continuous development clause” that permits us to continue to hold such acreage if we initiate additional development activities within 120-180 days after the completion of the last well drilled on such lease. Thereafter, the lease remains held under the continuous development clause so long as we undertake additional development activities every 120 to 180 days or until the entire lease is held by production. There can be no assurances as to our ability to maintain such acreage. For more information, see "Item 1A. Risk Factors" appearing elsewhere in this Annual Report.

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Drilling and other exploration and development activities

The table below sets forth the results of our drilling activities, including wells in which we have a working or royalty interest but are not the operator, for the periods indicated. The information should not be considered indicative of future performance, nor should it be assumed that there is necessarily any correlation among the number of productive wells drilled, quantities of reserves found or economic value. Productive wells are those that produce, or are capable of producing, commercial quantities of hydrocarbons, regardless of whether they produce a reasonable rate of return. Dry wells are those that prove to be incapable of producing hydrocarbons in sufficient quantities to justify completion.

Year Ended December 31,
202520242023
GrossNetGrossNetGrossNet
Development Wells:
Productive380 108.1 297 79.4 242 67.5 
Dry holes— — — — — — 
Total Development380 108.1 297 79.4 242 67.5 
Exploratory Wells:
Productive— — — — — — 
Dry holes— — — — — — 
Total Exploratory— — — — — — 
Total Wells:
Productive380 108.1 297 79.4 242 67.5 
Dry holes— — — — — — 
Total380 108.1 297 79.4 242 67.5 

As of December 31, 2025, we were not a party to any long-term drilling rig contracts. The following table provides our wells in progress, as well as the various stages of such progress, at December 31, 2025 and includes wells in which we have a working interest but are not the operator.

GrossNet
Well Status:
Drilling22 14.7 
Waiting on completion37 28.4 
Being completed, not producing14 7.4 

Delivery commitments

We are party to various long-term agreements that require us to physically deliver crude oil and natural gas. These delivery commitments require us to deliver 55 MMBoe in 2026 and 151 MMBoe thereafter. These commitments are contracted marketing and gathering arrangements that require delivery of a fixed and determinable quantity of crude oil, natural gas, or NGLs in the future. We believe that our current production and reserves are sufficient to satisfy the majority of these commitments and alternatively we could purchase sufficient volumes of oil, natural gas and NGL in the market at prevailing index-related prices to satisfy the commitments, if needed. We incurred shortfalls related to some of our gathering and transportation commitments and as a result paid $2.0 million, $6.6 million and $15.6 million for the years ended December 31, 2025, 2024 and 2023, respectively.

Marketing and customers

Production from our oil and natural gas properties is marketed using methods that are consistent with industry practices. Sales prices for oil and natural gas production, including natural gas with recoverable NGLs, are negotiated based on factors normally considered in the industry, such as an index or spot price, price regulations, distance from the well to the pipeline, commodity quality and prevailing supply and demand conditions. In areas where there is no practical or commercial access to pipelines, oil is transported to storage facilities by truck. Our marketing of oil and natural gas can be affected by factors beyond our control, the effects of which cannot be accurately predicted.
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During the years ended December 31, 2025, 2024 and 2023, we sold oil and natural gas production representing 10% or more of total revenues to the following purchasers:

Year Ended December 31,
202520242023
Shell Trading US Company21.4%23.7%18.3%
ConocoPhillips13.5%16.5%*
Enterprise Products Partners L.P.11.7%**
*Purchaser did not account for greater than 10% of revenue for the year.

While the loss of a significant purchaser could result in a temporary interruption in sales of, or a lower price for, our production, we believe that the loss of any such purchasers would not have a material adverse effect on our operations because there are other purchasers in our producing regions.

We have entered into certain oil and natural gas transportation and gathering agreements with various pipeline carriers. Under these agreements, we are obligated to ship minimum daily quantities or pay for any deficiencies at a specified rate. We are also obligated under certain of these arrangements to pay a demand charge for firm capacity rights on pipeline systems regardless of the amount of pipeline capacity that we utilize. If we do not utilize the capacity, we can release it to others, thus reducing our potential liability.

Competition

The oil and natural gas industry is intensely competitive, and we compete with other companies that have greater resources. Many of these companies not only explore for and produce oil or natural gas, but also carry on midstream and refining operations and market petroleum and other products on a regional, national or worldwide basis. These companies may be able to pay more for productive oil and natural gas properties or to define, evaluate, bid for and purchase a greater number of properties and prospects than our financial or human resources permit. In addition, these companies may have a greater ability to continue exploration activities during periods of low oil and natural gas market prices. Our ability to acquire additional properties and to discover reserves in the future will be dependent upon our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment. In addition, because we have fewer financial and human resources than some of the larger companies in our industry, we may be at a disadvantage in evaluating and bidding for oil and natural gas properties.

There is also competition between oil and natural gas producers and other industries producing energy and fuel. Furthermore, competitive conditions may be substantially affected by various forms of energy legislation and/or regulation considered from time to time by the governments of the United States and the jurisdictions in which we operate. It is not possible to predict the nature of any such legislation or regulation which may ultimately be adopted or its effects upon our future operations. Such laws and regulations may substantially increase the costs of developing oil or natural gas and may prevent or delay the commencement or continuation of a given operation. Our larger or more integrated competitors may be able to absorb the burden of existing, and any changes to, federal, state and local laws and regulations more easily than we can, which would adversely affect our competitive position.

Seasonality of business

Generally, demand for oil, natural gas and NGL decreases during the spring and fall months and increases during the summer and winter months. However, certain natural gas and NGL markets utilize storage facilities and purchase some of their anticipated winter requirements during the summer, which can lessen seasonal demand fluctuations. In addition, seasonal anomalies such as mild winters or mild summers can have a significant impact on prices. These seasonal anomalies can increase competition for equipment, supplies and personnel during the spring and summer months, which could lead to shortages, increased costs or delay operations.

Title to properties

As is customary in the oil and natural gas industry, we initially conduct only a cursory review of the title to our properties in connection with acquisition of leasehold acreage. At such time as we determine to conduct drilling operations on those properties, we conduct a thorough title examination and perform curative work with respect to significant defects prior to
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commencement of drilling operations. To the extent title opinions or other investigations reflect title defects on those properties, we are typically responsible for curing any title defects at our expense. We generally will not commence drilling operations on a property until we have cured any material title defects on such property. We have obtained title opinions on substantially all of our producing properties and believe that we have satisfactory title to our producing properties in accordance with standards generally accepted in the oil and natural gas industry.

Prior to completing an acquisition of producing leases, we perform title reviews on the most significant leases and, depending on the materiality of properties, we may obtain a title opinion, obtain an updated title review or opinion or review previously obtained title opinions. Our oil and natural gas properties are subject to customary royalty and other interests, liens for current taxes and other burdens which we believe do not materially interfere with the use of or affect our carrying value of the properties.

We believe that we have satisfactory title to all of our material assets. Although title to these properties is subject to encumbrances in some cases, such as customary interests generally retained in connection with the acquisition of real property, customary royalty interests and contract terms and restrictions, liens under operating agreements, liens related to environmental liabilities associated with historical operations, liens for current taxes and other burdens, easements, restrictions and minor encumbrances customary in the oil and natural gas industry, we believe that none of these liens, restrictions, easements, burdens and encumbrances will materially detract from the value of these properties or from our interest in these properties or materially interfere with our use of these properties in the operation of our business. In addition, we believe that we have obtained sufficient rights-of-way grants and permits from public authorities and private parties for us to operate our business in all material respects as described in this Annual Report.

Human Capital Measures

Employees

We manage our operations through (i) management and corporate-level services provided by the Manager and (ii) asset-level services and operations provided by our approximately 1,066 employees, as of December 31, 2025, that dedicate all or substantially all of their time to our business. We hire independent contractors on an as-needed basis. We have no collective bargaining agreements with our employees. We believe that our employee relationships are satisfactory.

Values and Culture

We believe our company values of Stewardship, Integrity, Teamwork and Excellence provide the foundation for our culture. Our focus on working together as a team to achieve outstanding results is key to attracting and retaining talented people. The Company’s human resources department manages our human capital initiatives with support and direction from the Company’s senior leadership. Our culture is reinforced by the Company’s senior leadership though holding quarterly town halls, communicating regularly with the workforce and working to foster a culture of open communication.

Safety

Working safely and responsibly is a priority across all business units with a focus on protecting the well-being of our team, partners and communities. Workplace safety procedures and programs include but not limited to confined space entry, emergency response, fall protection, hearing conservation, hot work, hydrogen sulfide, incident reporting and investigation, personal protective equipment and spill prevention. Safety performance is tracked on a monthly basis across operations and trends guide safety program improvements.

Recruitment, development and training

The Company understands that recruitment, development and training are essential to preparing a workforce to deliver on its long-term strategy. We implement a dynamic recruiting process that utilizes online recruiting platforms, referrals and professional recruiters. We foster the growth and professional development of our employees through the use of a robust performance review process, which includes the creation of performance development goals and plans to achieve those goals in order to help our employees reach their full potential. We also incorporate training during our on-boarding process focused on safety and compliance. Additional training offerings are held throughout the year to address the specific needs of our business and workforce.

Total rewards programs
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The Company routinely benchmarks its compensation and benefits program with the goal of retaining and attracting industry talent while meeting the varied and evolving needs of a multi-faceted workforce. We provide employees with the ability to participate in subsidized health and welfare plans, including medical, dental, life and short-term and long-term disability insurance plans. We also offer a retirement plan with employer match, paid time off, paid parental leave and a wellness stipend.

Community & social engagement

We are committed to supporting and giving back to the communities in which we operate and live. We recognize the link between local communities, the success of our employees and, ultimately, the success of our business.

Legislative and regulatory environment

Our oil, natural gas and NGL exploration, development, production, gathering, transportation, sales and related operations and activities are subject to extensive federal, state and local laws, rules and regulations. Failure to comply with such rules and regulations can result in administrative, civil or criminal penalties, compulsory remediation and imposition of natural resource damages or other liabilities. Because such rules and regulations are frequently amended or reinterpreted, we are unable to predict the future cost or impact of complying with such requirements. Although the regulatory burden on the oil and natural gas industry increases our cost of doing business and, consequently, affects our profitability, we believe these obligations generally do not impact us differently or to any greater or lesser extent than they affect other operators in the oil and natural gas industry with similar operations and types, quantities and locations of production.

Regulation of production

In many states oil and natural gas companies are generally required to obtain permits for drilling operations, provide drilling bonds, file reports concerning operations and meet other requirements related to the exploration, development and production of oil, natural gas and NGL. Such states also have statutes and regulations addressing conservation matters, including provisions for unitization or pooling of oil and natural gas interests, rights and properties, the surface use and restoration of properties upon which wells are drilled and disposal of water produced or used in the D&C process. These regulations include the establishment of maximum rates of production from oil and natural gas wells, rules as to the spacing, plugging and abandoning of such wells, restrictions on venting or flaring oil and natural gas and requirements regarding the ratability of production, as well as rules governing the surface use and restoration of properties upon which wells are drilled.

These laws and regulations may limit the amount of oil, natural gas and NGL that can be produced from wells in which we own an interest and may limit the number of wells, the locations in which wells can be drilled or the method of drilling wells. Additionally, the procedures that must be followed under these laws and regulations may result in delays in obtaining permits and approvals necessary for our operations and therefore our expected timing of drilling, completion and production may be negatively impacted. These regulations apply to us directly as the operator of our leasehold. The failure to comply with these rules and regulations can result in substantial penalties.

Regulation of sales and transportation of liquids

Sales of condensate and NGLs are not currently regulated and are made at negotiated prices. Nevertheless, the U.S. Congress could reenact price controls in the future.

Our sales of NGLs are affected by the availability, terms and cost of transportation. The transportation of NGLs in common carrier pipelines is also subject to rate and access regulation. FERC regulates interstate oil, NGL and other liquid pipeline transportation rates under the ICA. In general, interstate liquids pipeline rates must be cost-based, although settlement rates agreed to by all shippers are permitted and market-based rates may be permitted in certain circumstances.

Intrastate liquids pipeline transportation rates are subject to regulation by state regulatory commissions. The basis for intrastate liquids pipeline regulation, and the degree of regulatory oversight and scrutiny given to intrastate liquids pipeline rates, varies from state to state. Insofar as effective interstate and intrastate rates and regulations regarding access are equally applicable to all comparable shippers, we believe that the regulation of liquids transportation will not affect our operations in any way that is of material difference from those of our competitors who are similarly situated.

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Regulation of transportation and sales of oil and natural gas

Historically, the transportation and sale for resale of oil and natural gas in interstate commerce have been regulated by agencies of the U.S. federal government, primarily FERC. In the past, the federal government has regulated the prices at which natural gas could be sold. While sales by producers of natural gas can currently be made at uncontrolled market prices, the U.S. Congress could reenact price controls in the future. Deregulation of wellhead natural gas sales began with the enactment of the NGPA, and culminated in adoption of the Decontrol Act which removed controls affecting wellhead sales of natural gas effective January 1, 1993. The transportation and sale for resale of natural gas in interstate commerce is regulated primarily under the NGA, and by regulations and orders promulgated under the NGA by FERC. In certain limited circumstances, intrastate transportation and wholesale sales of natural gas may also be affected directly or indirectly by laws enacted by the U.S. Congress and by FERC regulations.

The EP Act of 2005 is a comprehensive compilation of tax incentives, authorized appropriations for grants and guaranteed loans, and significant changes to the statutory policy that affects all segments of the energy industry. Among other matters, the EP Act of 2005 amends the NGA to add an anti-market manipulation provision which makes it unlawful for any entity to engage in prohibited behavior to be prescribed by FERC. The EP Act of 2005 also provided FERC with the power to assess civil penalties of up to $1,000,000 per day for violations of the NGA and increased FERC’s civil penalty authority under the NGPA from $5,000 per violation per day to $1,000,000 per violation per day. In January 2025, the maximum penalty increased to $1,584,648 per violation per day to account for inflation. The civil penalty provisions are applicable to entities that engage in the sale and transportation of natural gas for resale in interstate commerce.

On January 19, 2006, FERC issued Order No. 670, a rule implementing the anti-market manipulation provision of the EP Act of 2005, and subsequently denied rehearing. The rules make it unlawful: (i) in connection with the purchase or sale of natural gas subject to the jurisdiction of FERC, or the purchase or sale of transportation services subject to the jurisdiction of FERC, for any entity, directly or indirectly, to use or employ any device, scheme or artifice to defraud; (ii) to make any untrue statement of material fact or omit to make any such statement necessary to make the statements made not misleading; or (iii) to engage in any act or practice that operates as a fraud or deceit upon any person. The anti-market manipulation rule does not apply to activities that relate only to intrastate or other non-jurisdictional sales or gathering, but does apply to activities of gas pipelines and storage companies that provide interstate services, as well as otherwise non-jurisdictional entities to the extent the activities are conducted “in connection with” gas sales, purchases or transportation subject to FERC jurisdiction, which now includes the annual reporting requirements under Order No. 704, described below. The anti-market manipulation rule and enhanced civil penalty authority reflect an expansion of FERC’s NGA enforcement authority.

On December 26, 2007, FERC issued Order No. 704, a final rule on the annual natural gas transaction reporting requirements, as amended by subsequent orders on rehearing. Under Order No. 704, wholesale buyers and sellers of more than 2.2 million MMBtus of physical natural gas in the previous calendar year, including natural gas producers, gatherers and marketers, are now required to report, on May 1 of each year, aggregate volumes of natural gas purchased or sold at wholesale in the prior calendar year to the extent such transactions utilize, contribute to, or may contribute to the formation of price indices. It is the responsibility of the reporting entity to determine which individual transactions should be reported based on the guidance of Order No. 704. Order No. 704 also requires market participants to indicate whether they report prices to any index publishers, and if so, whether their reporting complies with FERC’s policy statement on price reporting.

Gathering service, which occurs upstream of jurisdictional transportation services, is regulated by the states onshore and in state waters. Section 1(b) of the NGA exempts natural gas gathering facilities from regulation by FERC as a natural gas company under the NGA. Although FERC has set forth a general test for determining whether facilities perform a non-jurisdictional gathering function or a jurisdictional transportation function, FERC’s determinations as to the classification of facilities are done on a case-by-case basis. To the extent that FERC issues an order that reclassifies certain jurisdictional transportation facilities as non-jurisdictional gathering facilities, and depending on the scope of that decision, our costs of getting gas to point of sale locations may increase. We believe that the natural gas pipelines in our gathering systems meet the traditional tests FERC has used to establish a pipeline’s status as a gatherer not subject to regulation as a natural gas company. However, the distinction between FERC-regulated transportation services and federally unregulated gathering services could be the subject of ongoing litigation, so the classification and regulation of our gathering facilities could be subject to change based on future determinations by FERC, the courts or the U.S. Congress. State regulation of natural gas gathering facilities generally includes various occupational safety, environmental and, in some circumstances, nondiscriminatory-take requirements. Although such regulation has not generally been affirmatively applied by state agencies, natural gas gathering may receive greater regulatory scrutiny in the future.

We own an interstate liquids pipeline through a consolidated subsidiary that is considered a common carrier pipeline subject to regulation by FERC under the ICA. Unless we obtain a waiver of the applicable provisions, the ICA requires that we maintain
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tariffs on file with FERC for interstate movements of liquids on our pipelines. Those tariffs set forth the rates we charge for providing transportation services as well as the rules and regulations governing these services. The ICA requires that tariff rates for liquids pipelines, which include both crude oil pipelines and refined products pipelines, be just and reasonable and non-discriminatory. Many FERC-regulated liquids pipelines, including ours, use the FERC indexing methodology to change its rates. FERC, however, retained cost-of-service ratemaking, market-based rates and settlement rates as alternatives to the indexing approach that may be used in certain specified circumstances. For those pipelines that use the FERC indexing methodology, FERC reviews the index formula every five years to determine whether a change in the methodology is required or, if not, to determine the appropriate index for the subsequent five-year period. On January 20, 2022, FERC issued an order on rehearing of its December 17, 2020 Order Establishing Index Level in which the FERC reduced the oil pricing index factor for oil pipelines to use for the current five-year period (the “Rehearing Order”). On July 26, 2024, the D.C. Circuit vacated the Rehearing Order, and, on September 17, 2024, the FERC issued its September 17, 2024 Order Reinstating Index Level, which reinstated the original PPI-FG+0.78% index level and indicated the FERC will address additional issues related to the D.C. Circuit decision in a subsequent order.

On October 17, 2024, the FERC issued a supplemental notice of proposed rulemaking in which the FERC proposed to prospectively adopt the PPI-FG-0.21% index that was vacated by the D.C. Circuit and instituted a notice-and-comment process. On November 20, 2025, the FERC withdrew the October 17, 2024 supplemental notice of proposed rulemaking and confirmed that the PPI-FG+0.78% index established in December 2020 will remain in place through June 30, 2026. On the same day, the FERC approved limited relief for pipelines. Oil pipelines with index-based rates may recover applicable rate differences from March 1, 2022 to September 17, 2024 but only if such pipelines charged the maximum rate allowed under the applicable index ceiling during the relevant time period. Parties have since filed requests for clarification or rehearing to determine whether pipelines may recover rate differences in other scenarios.

From time to time, we might enter into arrangements to transport liquids on an affiliated ICA-jurisdictional pipeline, and FERC may more heavily scrutinize agreements between ICA jurisdictional pipelines and their affiliates. On December 15, 2022, FERC issued a Proposed Policy Statement on Oil Pipeline Affiliate Committed Service seeking comments on a new framework for FERC to analyze agreements between an ICA-jurisdictional pipeline and an affiliated shipper. Under the Proposed Policy Statement, if following an open season, the only shipper agreeing to the noticed service is an affiliate of the pipeline, then FERC would presume the contract is unduly discriminatory and not just and reasonable and require the affiliates to rebut that presumption with additional evidence supporting the justness and reasonableness of the agreement. Comments on the Proposed Policy Statement were due in the spring of 2023. Notices of proposed policy statements are not final rules and FERC’s determination regarding changes to current practices are not required to be completed within a specific timeframe or at all. Additionally, on December 16, 2022, FERC issued an order in FERC Docket No. OR17-2-001 that clarified FERC’s rules and practices enforcing the ICA’s prohibition on certain transactions on ICA jurisdictional pipelines and affiliated shippers. Under FERC’s clarification of the ICA, FERC also will scrutinize transactions between jurisdictional pipelines and affiliated shippers to ensure a common parent company is not subsidizing transportation service on the pipeline. FERC’s treatment of contracts between affiliates on ICA jurisdictional pipelines has been changing in recent years, and it is difficult to predict the level and type of scrutiny that will be applied in the future and the extent to which affiliate contracts may be limited.

The price at which we sell natural gas is not currently subject to federal rate regulation and, for the most part, is not subject to state regulation. However, with regard to our physical and financial sales of these energy commodities, we are required to observe anti-market manipulation laws and related regulations enforced by FERC under the EP Act of 2005 and under the Commodity Exchange Act (“CEA”), and regulations promulgated thereunder enforced by the CFTC. The CEA prohibits any person from manipulating or attempting to manipulate the price of any commodity in interstate commerce or futures on such commodity. The CEA also prohibits knowingly delivering or causing to be delivered false or misleading or knowingly inaccurate reports concerning market information or conditions that affect or tend to affect the price of a commodity as well as certain disruptive trading practices. The CFTC also has statutory authority to seek civil penalties of up to the greater of approximately $1,487,712 (adjusted annually for inflation) or triple the monetary gain to the violator for violations of the anti-market manipulation sections of the CEA. Should we violate the anti-market manipulation laws and regulations, we could also be subject to related third-party damage claims by, among others, sellers, royalty owners and taxing authorities.

Further, the FTC has the authority under the Federal Trade Commission Act (“FTCA”) and the Energy Independence and Security Act of 2007 (“EISA”) to regulate wholesale petroleum markets. The FTC has adopted anti-market manipulation rules, including prohibiting fraud and deceit in connection with the purchase or sale of certain petroleum products, and prohibiting omissions of material information which distort or are likely to distort market conditions for such products. In addition to other enforcement powers it has under the FTCA, the FTC can sue violators under EISA and request that a court impose fines of approximately $1,510,803 (adjusted annually for inflation) per violation per day.

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Intrastate natural gas transportation is also subject to regulation by state regulatory agencies. The basis for intrastate regulation of natural gas transportation and the degree of regulatory oversight and scrutiny given to intrastate natural gas pipeline rates and services varies from state to state. As such regulation within a particular state will generally affect all intrastate natural gas shippers within the state on a comparable basis, we believe that the regulation of similarly situated intrastate natural gas transportation in any states in which we operate and ship natural gas on an intrastate basis will not affect our operations in any way that is of material difference from those of our competitors. Like the regulation of interstate transportation rates, the regulation of intrastate transportation rates affects the marketing of natural gas that we produce, as well as the revenues we receive for sales of our natural gas.

Changes in law and to FERC or state policies and regulations may adversely affect the availability and reliability of firm and/or interruptible transportation service on interstate and intrastate pipelines, and we cannot predict what future action FERC or state regulatory bodies will take. We do not believe, however, that any regulatory changes will affect us in a way that materially differs from the way they will affect other natural gas producers and marketers with which we compete.

Regulation of environmental and occupational safety and health matters general

Our operations are subject to numerous stringent federal, regional, state and local statutes and regulations governing environmental protection, occupational safety and health, and the release, discharge or disposal of materials into the environment, some of which carry substantial administrative, civil and criminal penalties for failure to comply. Applicable U.S. federal environmental laws include, but are not limited to, RCRA, CERCLA, OPA, the CWA, the CAA, the SDWA, the ESA, and the MBTA. In addition, state and local laws and regulations set forth specific standards for drilling wells, the maintenance of bonding requirements in order to drill or operate wells, the spacing and location of wells, the method of drilling and casing wells, the surface use and restoration of properties upon which wells are drilled, the plugging and abandoning of wells, the prevention and cleanup of pollutants, and other matters. These laws and regulations may, among other things, require the acquisition of permits to conduct exploration, drilling, and production operations; restrict the types, quantities and concentrations of various substances that can be released into the environment in connection with drilling, production and transporting through pipelines; govern the sourcing and disposal of water used in the D&C process; limit or prohibit construction or drilling activities in sensitive areas such as wilderness, wetlands, critical habitat of protected species, frontier and other protected areas; require investigatory or remedial actions to prevent or mitigate pollution conditions caused by our operations; impose obligations to reclaim and abandon well sites and pits; establish specific safety and health criteria addressing worker protection; and impose substantial liabilities for pollution resulting from operations or failure to comply with regulatory filings. Additionally, the U.S. Congress and federal and state agencies frequently revise environmental laws and regulations, and any changes that result in delay or more stringent and costly permitting, waste handling, disposal and clean-up requirements for the oil and gas industry could have a significant impact on our operating costs. Although environmental obligations have not historically had a material adverse impact on the results of our operations or financial condition, there can be no assurance that future developments, such as increasingly stringent environmental laws or enforcement thereof, will not cause us to incur material environmental liabilities or costs.

Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal fines and penalties, loss of permits or leases, the imposition of investigatory or remedial obligations and the issuance of orders enjoining some or all of our operations in affected areas. These laws and regulations may also restrict the rate of oil and natural gas production below the rate that would otherwise be possible. The regulatory burden on the oil and gas industry increases the cost of doing business in the industry and consequently affects profitability. The general trend, over time, is that environmental regulations are evolving to place more restrictions and limitations on activities that may affect the environment, and any changes in environmental laws and regulations or reinterpretation of enforcement policies that result in more stringent and costly well drilling, construction, completion or water management activities or waste handling, storage, transport, disposal, or remediation requirements could require us to make significant expenditures to attain and maintain compliance and may otherwise have a material adverse effect on our results of operations and financial position. We may be unable to pass on such increased compliance costs to our customers. Moreover, accidental releases or spills may occur in the course of our operations, and we cannot be sure that we will not incur significant costs and liabilities as a result of such releases or spills, including any third-party claims for damage to property, natural resources or persons. Although we believe that we are in substantial compliance with applicable environmental laws and regulations and that continued compliance with existing requirements will not have a material adverse impact on our business, there can be no assurance that this will continue in the future.

The following is a summary of the more significant existing environmental and occupational health and safety laws and regulations, as amended from time to time, to which our business operations are subject and for which compliance may have a material adverse impact on its capital expenditures, results of operations or financial position.

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Hazardous substances and wastes

CERCLA, also known as the “Superfund” law, and comparable state laws, impose liability without regard to fault or the legality of the original conduct, on certain classes of persons with respect to the release of a “hazardous substance” into the environment. These classes of persons, or, as termed in CERCLA, potentially responsible parties, include the current and past owners or operators of a disposal site or site where the release occurred and anyone who disposed or arranged for the disposal of the hazardous substances found at such sites. Under CERCLA, such persons may be subject to joint and several, strict liability for the costs of cleaning up the hazardous substances that have been released into the environment and for damages to natural resources. It is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by hazardous substances released into the environment. We are able to control directly the operation of only those wells with respect to which we act as operator. Notwithstanding our lack of direct control over wells operated by others, the failure of an operator other than us to comply with applicable environmental regulations may, in certain circumstances, be attributed to us. We generate materials in the course of our operations that may be regulated as hazardous substances under CERCLA and other environmental laws but we are unaware of any liabilities for which we may be held responsible that would materially and adversely affect our business operations. While petroleum and crude oil fractions are generally not considered hazardous substances under CERCLA and its analogues because of the so-called “petroleum exclusion,” adulterated petroleum products containing other hazardous substances have been treated as hazardous substances in the past.

We also generate solid and hazardous wastes that may be subject to the requirements of the RCRA, and analogous state laws. RCRA regulates the generation, handling, storage, treatment, transport and disposal of nonhazardous and hazardous solid wastes. RCRA specifically excludes “drilling fluids, produced waters and other wastes associated with the development or production of oil, natural gas or geothermal energy” from regulation as hazardous wastes. With the approval of the EPA, individual states can administer some or all of the provisions of RCRA and some states have adopted their own, more stringent requirements. However, legislation has been proposed from time to time and various environmental groups have filed lawsuits that, if successful, could result in the reclassification of certain oil and natural gas exploration and production wastes as “hazardous wastes,” which would make such wastes subject to much more stringent handling, disposal and clean-up requirements. Any future loss of the RCRA exclusion for drilling fluids, produced waters and related wastes could result in an increase in our costs to manage and dispose of generated wastes, which could have a material adverse effect on our results of operations and financial position. In addition, in the course of our operations, we generate some amounts of ordinary industrial wastes, such as paint wastes, waste solvents, laboratory wastes and waste compressor oils that may be regulated as hazardous wastes if such wastes are determined to have hazardous characteristics. Although the costs of managing hazardous waste may be significant, we do not believe that our costs in this regard are materially more burdensome than those for similarly situated companies.

We currently own, lease or operate numerous properties that may have been used by prior owners or operators for oil and natural gas development and production activities for many years. Although we believe that we have utilized operating and waste disposal practices that were standard in the industry at the time, hazardous substances, wastes or petroleum hydrocarbons may have been released on, under or from the properties owned or leased by us, or on, under or from other locations, including off-site locations where such substances have been taken for recycling or disposal. In addition, some of our properties may have been operated by third parties or by previous owners or operators whose treatment and disposal of hazardous substances, wastes or petroleum hydrocarbons was not under our control. These properties and the substances disposed or released on, under or from them may be subject to CERCLA, RCRA and/or analogous state laws. Under such laws, we could be required to undertake response or corrective measures, which could include removal of previously disposed substances and wastes, cleanup of contaminated property or performance of remedial plugging or pit closure operations to prevent future contamination.

Water discharges

The CWA and comparable state laws impose restrictions and strict controls regarding the discharge of pollutants, including spills and leaks of oil and other natural gas wastes, into or near waters of the United States or state waters. The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the EPA or an analogous state agency. The discharge of dredge and fill material into regulated waters, including wetlands, is also prohibited, unless authorized by a permit issued by the U.S. Army Corps of Engineers (the “Corps”). The scope of these regulated waters has been subject to controversy in recent years, with the Corps and the EPA pursuing several rulemakings since 2015 in an attempt to define the scope of waters of the United States (“WOTUS”). In September 2023, the EPA published a final rule incorporating the Supreme Court of the United States’ decision in Sackett v. EPA, which adopted the “continuous surface connection” test to determine if wetlands are WOTUS. However, the September 2023 rule did not define the term “continuous surface connection.” In November 2025, the EPA and the Corps proposed a rule to further update and narrow the September 2023 definition of WOTUS, again guided by the Sackett v. EPA decision. To the extent any judicial ruling, administrative
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rulemaking or other action further changes the scope of the CWA’s jurisdiction, we could face increased costs and delays with respect to obtaining permits, including for dredge and fill activities in wetland areas.

The process for obtaining permits also has the potential to delay our operations. Additionally, spill prevention, control and countermeasure plans, also referred to as “SPCC plans,” are required by federal law in connection with on-site storage of significant quantities of oil. Compliance may require appropriate containment berms and similar structures to help prevent the contamination of navigable waters by a petroleum hydrocarbon tank spill, rupture or leak.

Safe Drinking Water Act

The SDWA grants the EPA broad authority to take action to protect public health when an underground source of drinking water is threatened with pollution that presents an imminent and substantial endangerment to humans. The SDWA also regulates saltwater disposal wells under the UIC program. The EP Act of 2005 amended the UIC provisions of the SDWA to expressly exclude certain hydraulic fracturing from the definition of “underground injection,” but disposal of hydraulic fracturing fluids and produced water or their injection for enhanced oil recovery is not excluded. In 2014, the EPA issued permitting guidance governing hydraulic fracturing with diesel fuels. While we do not currently use diesel fuels in our hydraulic fracturing fluids, we may become subject to federal permitting under SDWA if our fracturing formula changes. Additionally, we may incur significant costs to comply with disposal requirements for hydraulic fracturing fluids and produced water. For more information, see "Item 1A. Risk Factors."

Air emissions

The CAA and comparable state laws restrict the emission of air pollutants from many sources, including compressor stations, through the issuance of permits and other requirements. These laws and regulations may require us to obtain pre-approval for the construction or modification of certain projects or facilities expected to produce or significantly increase air emissions, obtain and strictly comply with stringent air permit requirements or utilize specific equipment or technologies to control emissions of certain pollutants. The need to obtain permits has the potential to delay the development of oil and natural gas projects. Over the next several years, we may be required to incur certain capital expenditures for air pollution control equipment or other air emissions related issues. For example, in October 2015, the EPA lowered the NAAQS for ozone from 75 to 70 parts per billion and completed attainment/non-attainment designations in 2018. In December 2020, the EPA announced its intention to leave the ozone NAAQS unchanged at 70 parts per billion; however, several groups filed litigation and in October 2021, the EPA announced that it would reconsider the 2020 decision. In August 2023, the EPA announced a new review of the ozone NAAQS to reflect updated ozone science in combination with the reconsideration of the December 2020 decision. The EPA announced an updated reconsideration of the ozone NAAQS in March 2025. To the extent more stringent standards are implemented, we could be required to incur further costs for pollution control equipment or other compliance measures.

State implementation of the revised NAAQS could result in stricter permitting requirements, delay or prohibit our ability to obtain such permits, and result in increased expenditures for pollution control equipment, the costs of which could be significant. In addition, in December 2023, the EPA issued a final rule that established OOOOb as a more stringent new source and OOOOc as first-time existing source standards of performance for methane and VOC emissions for the crude oil and natural gas source category. However, in March 2025, the EPA announced plans to reconsider OOOOb and OOOOc, in line with the Trump Administration’s deregulatory agenda. Additionally, in November 2025, the EPA finalized an interim rule extending the compliance deadlines for certain provisions provided in OOOOb and OOOOc. Litigation challenging the EPA’s final interim rule extending such compliance deadlines for new and existing oil and gas sources remains pending. Separately, in August 2022, the IRA 2022 was signed into law, which amended the CAA to establish the first ever federal fee on excess methane emissions from sources required to report their GHG emissions to the EPA, including certain oil and gas operations. In November 2024, the EPA issued a final rule implementing the methane emissions charge, although in February 2025, Congress repealed the rule under the Congressional Review Act. Additionally, under the One Big Beautiful Bill Act, Congress delayed the implementation of the methane emissions fee until 2034. Compliance with the methane emissions charge and other air pollution control and permitting requirements has the potential to delay the development of natural gas projects and increase our costs of development, which costs could be significant.

Additionally, in March 2025, the EPA announced formal reconsideration of the 2009 “Endangerment Finding”—a declaration that various greenhouse gases endanger public health and welfare and welfare and the basis for the majority of the EPA’s GHG-related regulations. In February 2026, the Trump administration finalized a rule repealing the Endangerment Finding. It is uncertain at this time what impact the repeal of the Endangerment Finding will have on such regulations.

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Climate change

Climate change continues to attract considerable public and scientific attention. As a result, our operations as well as the operations in which we have a working interest but are not the operator are subject to a series of regulatory, political, litigation, and financial risks associated with the production and processing of fossil fuels and emission of GHG. At the federal level, no comprehensive climate change law or regulation has been implemented to date. However, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of GHG emissions. For example, California, through CARB has implemented a cap and trade program for GHG emissions that sets a statewide maximum limit on covered GHG emissions, and this cap declines annually to reach 40% below 1990 levels by 2030. Covered entities must either reduce their GHG emissions or purchase allowances to account for such emissions. Separately, California has implemented LCFS and associated tradable credits that require a progressively lower carbon intensity of the state’s fuel supply than baseline gasoline and diesel fuels. Such programs work alongside increased regulation by California seeking to reduce both the supply and demand for fossil fuels in the state, to include, for example, the phasing out of the sale of vehicles with internal combustion engines. CARB has also promulgated regulations regarding monitoring, leak detection, repair and reporting of methane emissions from both existing and new oil and gas production facilities. Similar regulations applicable to oil and gas facilities have been promulgated in Colorado. Colorado has begun to increasingly regulate oil and gas operations with consideration towards GHG emissions and cumulative impacts. In October 2024, the Colorado Energy and Carbon Management Commission (formerly the Colorado Oil and Gas Conversation Commission) finalized rules that require regulators to consider cumulative impacts of oil and gas operations in permitting decisions and increase scrutiny on the project’s proximity to other industrial sites, residential and school areas, “disproportionately impacted communities,” and “cumulatively impacted communities.” The rules would set GHG emissions intensity targets for oil and gas operators and require regulators to consider such targets in their cumulative impacts analysis, as well as the potential to restrict operations during the summer in Ozone Nonattainment Areas.

Litigation risks regarding the threat of climate change are also increasing, as a number of parties have sought to bring suit against oil and natural gas companies in state or federal court, alleging, among other things, that such companies created public nuisances by producing fuels that contributed to climate change or alleging that companies have been aware of the adverse effects of climate change for some time but defrauded their investors or customers by failing to adequately disclose those impacts.

There have also been certain financial risks for fossil fuel producers as certain shareholders currently invested in fossil-fuel energy companies concerned about potential effects of climate change may elect in the future to shift some or all of their investments into non-fossil fuel related sectors. Institutional lenders may elect not to provide funding for fossil fuel energy companies, although this trend has waned recently and several high-profile banks and institutional investors have withdrawn from various associations that aim to limit financing of industries that emit significant GHG emissions. Limitation of investments in and financings for fossil fuel energy companies could result in the restriction, delay or cancellation of drilling programs or development or production activities. Additionally, in October 2023, the Governor of California signed the Climate Corporate Data Accountability Act (“CCDAA”) and Climate-Related Financial Risk Act (“CRFRA”) into law which require, respectively, for entities “doing business" in California and that exceed applicable annual revenue thresholds, disclosure of Scope 1, 2 and 3 GHG emissions and a climate-related financial risk report. Both laws are subject to litigation, with the U.S. Court of Appeals for the Ninth Circuit recently enjoining the CRFRA. California also passed the Voluntary Carbon Market Disclosures Act, which places disclosure obligations on companies that purchase or use voluntary carbon offsets and make “net zero”, “carbon neutral”, or similar claims. This law took effect at the beginning of 2024. Although the ultimate impact of these laws on our business is uncertain, they may result in additional costs to comply with these disclosure requirements as well as increased costs of and restrictions on access to capital. Separately, enhanced climate related disclosure requirements could lead to reputational or other harm with customers, regulators, investors or other stakeholders and could also increase our litigation risks relating to alleged climate-related damages resulting from our operations, statements alleged to have been made by us or others in our industry regarding climate change risks, or in connection with any future disclosures we may make regarding reported emissions, particularly given the inherent uncertainties and estimations with respect to calculating and reporting GHG emissions.

Climate change may also result in various physical risks, such as the increased frequency or intensity of extreme weather events (including storms, wildfires, and other natural disasters) or changes in meteorological and hydrological patterns, that could adversely impact our operations, as well as those of our operators and their supply chains. Such physical risks may result in damage to our facilities or otherwise adversely impact our operations, such as if we become subject to water use curtailments in response to drought, or demand for our products, such as to the extent warmer winters reduce the demand for energy for heating purposes. Such physical risks may also impact our supply chain or infrastructure on which we rely to produce or transport our
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products. One or more of these developments could have a material adverse effect on our business, financial condition and results of operation.

Hydraulic fracturing

Hydraulic fracturing is a common practice that is used to stimulate production of oil and/or natural gas from low permeability subsurface rock formations and is important to our business. The hydraulic fracturing process involves the injection of water, proppants and chemicals under pressure into targeted subsurface formations to fracture the hydrocarbon-bearing rock formation and stimulate production of hydrocarbons. We regularly use hydraulic fracturing as part of our operations. Presently, hydraulic fracturing is primarily regulated at the state level, typically by state oil and natural gas commissions, but the practice has become increasingly controversial in certain parts of the country, resulting in increased scrutiny and regulation. In addition, there have been heightened concerns by the public about hydraulic fracturing causing damage to aquifers and there is potential for future regulation to address those concerns.

Separately, the federal government has also pursued further restriction of hydraulic fracturing and other oil and gas development on federal lands, although this has lessened following the change of presidential administrations. In March 2024, the BLM finalized a rule that requires operators to limit flaring from well sites on federal lands, as well as allow the delay or denial of permits if BLM finds that an operator's methane waste minimization plan is insufficient. The rule was challenged by various states, although the litigation is currently being held in abeyance while the Trump Administration considers revisions to the rule. In December 2025, the BLM announced it would delay enforcement of the impending regulatory compliance deadlines under that rule. Separately, in April 2024, the BLM finalized a rule to update the fiscal terms of federal oil and gas leases, which increases fees, rents, royalties, and bonding requirements. The rule also adds new criteria for BLM to consider when determining whether to lease nominated land, including the presence of important habitats or wetlands, the presence of historical properties or sacred sites, and recreational use of the land. To the extent we are unable to obtain the leases, permits, or other authorizations required for our operations or business strategy, our business performance and results of operations may be adversely affected.

At the state level, several states, including Texas, have adopted or are considering legal requirements that require oil and natural gas operators to disclose chemical ingredients and water volumes used to hydraulically fracture wells, in addition to more stringent well construction and monitoring requirements. For example, Colorado has adopted more stringent setbacks for oil and gas development and, in October 2024, adopted final rules that would apply increased scrutiny to the cumulative impacts of GHG emissions of oil and gas development and set GHG emissions targets for oil and gas operators. In California, Senate Bill No. 1137 was signed into law in September 2022, establishing 3,200 feet as the minimum distance between new oil and gas production wells and certain sensitive receptors such as homes, schools or parks effective January 1, 2023, although certain compliance deadlines have been delayed due to the signing of Assembly Bill 218 in September 2024. Local governments may also adopt ordinances within their jurisdictions regulating the time, place and manner of drilling activities in general or hydraulic fracturing activities in particular. For example, in January 2023, the Board of Supervisors of Los Angeles County in California adopted an ordinance prohibiting new oil wells and production facilities in all zones, designating existing oil wells and production facilities as nonconforming uses in all zones and establishing regulations for existing oil wells and production facilities, to include the phasing out of existing operations. Moreover, existing oil and gas facilities within the setback zone in Los Angeles County are impacted by Senate Bill No. 1137. If new or more stringent federal, state, or local legal restrictions relating to the hydraulic fracturing process are adopted in areas where we operate, we could incur potentially significant added costs to comply with such requirements, experience delays or curtailment in the pursuit of exploration, development, or production activities, and perhaps even be precluded from drilling wells.

If new or more stringent federal, state or local legal restrictions relating to the hydraulic fracturing process are adopted in areas where we operate, our fracturing activities could become subject to additional permitting and financial assurance requirements, more stringent construction specifications, increased monitoring, reporting and recordkeeping obligations, plugging and abandonment requirements and attendant permitting delays and potential increases in costs. Such changes could cause us to incur substantial compliance costs, and compliance or the consequences of any failure to comply by us could have a material adverse effect on our financial condition and results of operations. At this time, it is not possible to estimate the impact on our business of newly enacted or potential legislation or regulation governing hydraulic fracturing, and any of the above risks could impair our ability to manage our business and have a material adverse effect on our operations, cash flows and financial position.

Oil Pollution Act

The OPA establishes strict liability for owners and operators of facilities that are the source of a release of oil into waters of the U.S. The OPA and its associated regulations impose a variety of requirements on responsible parties, including owners and
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operators of certain facilities from which oil is released, related to the prevention of oil spills and liability for damages resulting from such spills. While liability limits apply in some circumstances, a party cannot take advantage of liability limits if the spill was caused by gross negligence or willful misconduct, resulted from violation of a federal safety, construction or operating regulation, or if the party fails to report a spill or to cooperate fully in the cleanup. Few defenses exist to the liability imposed by the OPA. The OPA imposes ongoing requirements on a responsible party, including the preparation of oil spill response plans and proof of financial responsibility to cover environmental cleanup and restoration costs that could be incurred in connection with an oil spill.

National Environmental Policy Act

Oil and natural gas exploration and production activities on federal lands are subject to the NEPA. NEPA requires federal agencies to evaluate major agency actions having the potential to significantly impact the environment. The process involves the preparation of an environmental assessment and, if necessary, an environmental impact statement depending on whether the specific circumstances surrounding the proposed federal action have the potential to significantly impact the environment. The NEPA process involves public input through comments which can alter the nature of a proposed project either by limiting the scope of the project or requiring resource-specific mitigation. NEPA decisions can be appealed through the court system by process participants. This process may result in delaying the permitting and development of projects, may increase the costs of permitting and developing some facilities and could result in certain instances in the cancellation of existing leases. There have been several recent developments regarding the NEPA regulatory regime. Most recently, following a Trump Administration Executive Order, in February 2025, the White House’s Council on Environmental Quality (“CEQ”) released an interim final rule rescinding its regulations implementing NEPA. Federal agencies have begun the process of preparing their own new or updated NEPA-implementing rules or guidelines, with the first batch of updates released in July 2025. In May 2025, the Supreme Court issued an opinion in Seven County Infrastructure Coalition v Eagle County emphasizing the “substantial judicial deference” that courts must grant agencies when considering NEPA challenges. And, in September 2025, CEQ issued new guidance to federal agencies implementing NEPA encouraging them to limit their NEPA reviews, rely more heavily on sponsor-prepared documents, and streamline the NEPA process. The impact of these developments remains unclear at this time.

Endangered Species Act and Migratory Bird Treaty Act

The ESA restricts activities that may affect endangered or threatened species or their habitat. Similar protections are offered to migratory birds under the MBTA. We may conduct operations on natural gas leases in areas where certain species that are or could be listed as threatened or endangered are known to exist. For example, in May 2024, the FWS issued a final rule listing the Dunes Sagebrush Lizard as endangered under the ESA (although that decision has been challenged) and, in November 2022, the FWS formally listed two distinct population segments of the lesser prairie-chicken under the ESA. However, the U.S. District Court for the Western District of Texas vacated the rule for the northern distinct population segment in March 2025. In August 2020, the FWS and the National Marine Fisheries Service issued three rules amending the implementation of the ESA regulations, among other things revising the process for listing species and designating critical habitat. A coalition of states challenged the three rules and, after the final rules were remanded, the FWS and NMFS revised the three rules. The revised regulations for classifying species and designating critical habitat, interagency cooperation, and protecting endangered and threatened species were finalized on April 5, 2024.

Under the MBTA, the taking, killing or possessing of migratory birds is unlawful without a permit. In April 2025, the DOI issued a memorandum that reinstated the interpretation that the MBTA’s prohibition only applied to “affirmative actions that have as their purpose the taking or killing of migratory birds, their nests, or their eggs.”

The identification or designation of previously unprotected species, such as the dunes sagebrush lizard, lesser prairie chicken, and greater sage grouse, as threatened or endangered, or the redesignation of a species from threatened to endangered, in areas where underlying property operations are conducted could cause us to incur increased costs arising from species protection measures or could result in limitations on our development activities that could have an adverse impact on our ability to develop and produce reserves. If we were to have a portion of our leases designated as critical or suitable habitat, it could adversely impact the value of our leases.

Related permits, authorizations and considerations

Many environmental laws require us to obtain permits or other authorizations from state and/or federal agencies before initiating certain drilling, construction, production, operation or other oil and natural gas activities, and to maintain these permits and compliance with their requirements for on-going operations. These permits are generally subject to protest, appeal or litigation, which can in certain cases delay or halt projects and cease production or operation of wells, pipelines and other
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operations. In particular, certain areas within California have been subject to significant permitting uncertainty in the past several years, resulting in the delay of receipt of drilling permits.

Worker health and safety

We are subject to a number of federal and state laws and regulations, including the federal OSHA, and comparable state statutes, whose purpose is to protect the health and safety of workers. For example, the OSHA hazard communication standard, the Emergency Planning and Community Right-to-Know Act and comparable state statutes and any implementing regulations require that we maintain, organize and/or disclose information about hazardous materials used or produced in our operations and that this information be provided to employees, state and local governmental authorities and citizens. Other OSHA standards regulate specific worker safety aspects of our operations. Failure to comply with OSHA requirements can lead to the imposition of penalties.

Related insurance

We maintain insurance against some contamination risks associated with our development activities. However, this insurance is limited to activities at the well site and there can be no assurance that this insurance will continue to be commercially available or that this insurance will be available at premium levels that justify its purchase by us. The occurrence of a significant event that is not fully insured or indemnified against could have a material and adverse effect on our financial condition and operations. Further, we have no coverage for gradual, long-term pollution events.

Item 1A. Risk Factors

Described below are certain risks that we believe are applicable to our business and the oil and gas industry in which we operate. Investors should read carefully the following factors as well as the cautionary statements referred to in "Cautionary Statement Regarding Forward-Looking Statements" herein. If any of the risks and uncertainties described below or elsewhere in this Annual Report actually occur, the Company's business, financial condition or results of operations could be materially adversely affected.

Risks related to the oil and natural gas industry and our operations

Oil, natural gas and NGL prices are volatile. A sustained decline in prices could adversely affect our business, financial condition and results of operations, liquidity and our ability to meet our financial commitments or cause us to delay our planned capital expenditures.

Our revenues, operating results, profitability, liquidity and ability to grow depend primarily upon the prices we receive for the oil, natural gas and NGL we sell. We require substantial expenditures to replace our oil, natural gas and NGL reserves, sustain production and fund our business plans, including our development plan. Low oil, natural gas and NGL prices resulting from reduced demand, which may be caused by the conflicts in Ukraine and Israel, substitution of renewable forms of energy for oil and gas, actions of OPEC and other factors materially affected our revenues, particularly before the effects of commodity derivatives, operating results and cash flows. Global oil, natural gas and NGL demand may negatively affect the amount of cash available for capital expenditures and debt repayment, our ability to borrow money or raise additional capital and, as a result, could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows. In addition, low prices may reduce the quantities of oil, natural gas and NGL reserves that may be economically produced and result in an impairment of our oil and natural gas properties.

Historically, the markets for oil, natural gas and NGL have been volatile, and they are likely to continue to be volatile. For
example, the respective conflicts between Russia and Ukraine and Israel and Hamas have contributed to significant increases and volatility in the price for oil and natural gas. Wide fluctuations in oil, natural gas and NGL prices may result from relatively minor changes in the supply of or demand for oil, natural gas and NGL market uncertainty and other factors that are beyond our control, including:

•worldwide and regional economic conditions, including the potential for a global recession, elevated interest rates and associated policies of the Federal Reserve, impacting the supply and demand for oil, natural gas and NGLs;

•changes in seasonal temperatures, including the number of heating degree days during winter months and cooling degree days during summer months;

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•U.S. federal, state and local governmental regulation, including any proposed actions and/or tariffs by the new Trump Administration, and taxes;

•the level of oil, natural gas and NGL exploration, development and production;

•the level of oil, natural gas and NGL inventories;

•the level of U.S. LNG exports;

•prevailing prices, and expectations regarding future prices, on local price indexes in the areas in which we operate;

•the proximity, capacity, cost and availability of gathering and transportation facilities;

•localized and global supply and demand fundamentals and transportation availability;

•the cost of exploring for, developing, producing and transporting reserves;

•the spot price of LNG on world markets;

•weather conditions and natural disasters;

•technological advances affecting energy consumption, including those related to new and emerging technologies;

•the price and availability of alternative fuels, including the potential acceleration of the development of alternative fuels;

•speculative trading in oil and natural gas derivative contracts;

•increased end-user conservation;

•political and economic conditions, such as the conflicts in Ukraine, Venezuela and the Middle East, in or affecting other producing regions or countries, including the Middle East, Africa, South America and Russia;

•political and economic conditions in or affecting major LNG consumption regions or countries, particularly Asia and Europe;

•actions of OPEC, including the ability and willingness of the members of OPEC and other exporting nations to agree to and maintain oil price and production controls, including the anticipated increases in supply from Russia and OPEC, particularly Saudi Arabia and Venezuela;

•U.S. trade policies, including potential tariffs and their effect on U.S. oil and natural gas exports;

•expectations about future commodity prices; and

•the possibility of terrorist or cyberattacks and the consequences of any such attacks.

We have been negatively affected and may in the future be negatively affected by a drop in commodity prices.

Lower commodity prices may reduce our operating margins, cash flow and borrowing ability. If we are unable to obtain needed capital or financing on satisfactory terms, our ability to develop future reserves or make acquisitions could be adversely affected. Also, using lower prices in estimating proved reserves may result in a reduction in proved reserve volumes due to economic limits. Any drop in commodity prices may adversely affect our drilling economics, cash flow and our ability to raise capital, which may require us to re-evaluate and postpone or substantially restrict our development program, and result in the reduction of some of our PUD reserves and related PV-0 and PV-10. As a result, a substantial or extended decline in commodity prices may materially and adversely affect our future business, financial condition, results of operations, liquidity and ability to meet our financial commitments or cause us to delay our planned capital expenditures.

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We have consolidated our business over time through acquisitions, including the Ridgemar Acquisition and the Vital Energy Merger, and there are risks associated with integration of all of these assets, operations and our ability to manage those risks. In addition, we may be unable to make attractive acquisitions or successfully integrate acquired businesses, assets or properties, and any inability to do so may disrupt our business and hinder our ability to grow.

We intend to pursue a strategy focused on both reinvestment and future acquisitions, which is designed to obtain the optimal risk adjusted returns through commodity cycles. Accordingly, in the future we may make acquisitions of businesses, assets or properties that we expect to complement or expand our current assets. For example, in 2025, we acquired certain exploration and production assets in the state of Texas pursuant to the Ridgemar Acquisition and the Vital Energy Merger. However, we may not be able to identify attractive acquisition opportunities in the future. Even if we do identify attractive acquisition opportunities, we may not be able to complete the acquisition or do so on commercially acceptable terms. No assurance can be given that we will be able to identify additional suitable acquisition opportunities, negotiate acceptable terms, obtain financing for acquisitions on acceptable terms or successfully acquire identified targets.

The success of any completed acquisition, including the Ridgemar Acquisition and the Vital Energy Merger, will depend on our ability to integrate effectively the acquired business, asset or property into our existing operations. The process of integrating acquired businesses, assets and properties may involve unforeseen difficulties and may require a disproportionate amount of our managerial and financial resources. For example, as with other operators in the area, certain potential midstream constraints may create operational challenges for us in the Permian and Uinta Basin. The integration of acquisitions is a complex, costly and time-consuming process, and our management may face significant challenges in such process. Some of the factors affecting integration will be outside of our control, and any one of them could result in increased costs and diversion of management’s time and energy, as well as decreases in the amount of expected revenue.

Our failure to achieve consolidation savings, to incorporate the acquired businesses, assets and properties into our existing operations successfully or to minimize any unforeseen operational difficulties could have a material and adverse effect on our financial condition and results of operations.

Reserve estimates depend on many assumptions that may turn out to be inaccurate. Any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.

Numerous uncertainties are inherent in estimating quantities of oil and natural gas reserves. Our estimates of our SEC reserves are based upon average commodity prices over the prior 12 months, which may not reflect actual prices received for our production. For example, our reserve volumes and PV-10 as disclosed in this Annual Report are based on assumed commodity prices of $65.34 per Bbl of oil and $3.39 per MMBtu of natural gas as of December 31, 2025, which, in the case of oil, are higher than the five-year NYMEX forward curve range of $56.91 to $61.14 per Bbl and, in the case of natural gas, below the five-year NYMEX forward curve range of $3.08 to $4.74 per Mcf. Accordingly, you are cautioned not to place undue weight on our reserve volumes or PV-10 based on such pricing when evaluating our financial condition or an investment in our securities. The process of estimating oil and natural gas reserves is complex and requires significant decisions and assumptions in the evaluation of available geological, engineering and economic data for each reservoir. The reports rely upon various assumptions, including assumptions regarding future oil and natural gas prices, our drilling program, production levels, and operating and development costs. Our ability to develop any identified drilling location is subject to various limitations and any drilling activities we are able to conduct may not be successful. As a result, our actual drilling activities may materially differ from those presently identified and could result in downward revisions of estimated proved reserves. In addition, loss of production and leasehold rights due to mechanical failure or depletion of wells and our inability to re-establish their production may occur in certain cases. Production from wellbores may be affected by nearby fracturing activities by offset operators or us, resulting in reserve revisions.

As a result, estimated quantities of proved reserves and projections of future production rates and the timing of development expenditures may prove to be inaccurate. Over time, we may make material changes to reserve estimates taking into account the results of actual drilling and production. Any significant variance in our assumptions and actual results could greatly affect our estimates of reserves, the economically recoverable quantities of oil and natural gas attributable to any particular group of properties, the classifications of reserves based on risk of recovery, and estimates of the future net cash flows. Specifically, future prices received for production and costs may vary, perhaps significantly, from the prices and costs assumed for purposes of these estimates. Sustained lower prices will cause the 12-month weighted average price to decrease over time as the lower prices are reflected in the average price, which may result in the estimated quantities and present values of our reserves being reduced.

Any material inaccuracies in our reserves estimates could also materially affect our borrowing base and liquidity under the Revolving Credit Facility. If the borrowing base under the Revolving Credit Facility decreases as a result of any reductions in
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our reserve estimates, we may have limited ability to obtain the capital necessary to sustain our operations at current and anticipated future levels. If additional capital is needed, we may not be able to obtain debt or equity financing on terms acceptable to us, if at all.

The present value of future net revenues from our proved reserves, as reflected in our Standardized Measure, PV-0 value and PV-10 value, will not necessarily be the same as the current market value of our estimated proved oil and natural gas reserves.

You should not assume that the present value of future net revenues from our proved reserves, as reflected in our Standardized Measure, PV-0 value and PV-10 value, is the current market value of our estimated oil and natural gas reserves. We currently base the estimated discounted future net revenues from our proved reserves on the 12-month unweighted arithmetic average of the first-day-of-the-month price for the preceding 12 months. For example, our reserve volumes, PV-0 and PV-10 as disclosed in this Annual Report are based on assumed commodity prices of $65.34 per Bbl of oil and $3.39 per MMBtu of natural gas as of December 31, 2025, which, in the case of oil, is higher than the five-year NYMEX forward curve range of $56.91 to $61.14 per Bbl and, in the case of natural gas, below the five-year NYMEX forward curve range of $3.08 to $4.74 per Mcf. Accordingly, you are cautioned not to place undue weight on our reserve volumes, PV-0 or PV-10 based on such pricing when evaluating our financial condition or an investment in our securities. Actual future net revenues from our oil and natural gas properties will be affected by factors such as:

•actual prices we receive for crude oil, natural gas and NGLs;

•actual cost of development and production expenditures;

•the amount and timing of actual production;

•transportation and processing; and

•changes in governmental regulations or taxation.

The timing of both our production and expenses in connection with the development and production of, and investment in, our oil and natural gas properties will affect the timing and amount of actual future net revenues from proved reserves, and thus their actual present value. In addition, the 10% discount factor we use when calculating discounted future net revenues at PV-10 may not be the most appropriate discount factor based on interest rates in effect from time to time and risks associated with us or the oil and natural gas industry in general. Actual future prices and costs may differ materially from those used in the present value estimates.

Unless we replace our reserves with new reserves and develop those reserves, our reserves and production will decline, which may adversely affect our future cash flows and results of operations.

In general, the volume of production from oil and natural gas properties declines as reserves are depleted, with the rate of decline depending on each reservoir’s characteristics. Except to the extent that we conduct successful exploration, exploitation, development or reinvestment activities or acquire properties containing proved reserves, our proved reserves will decline as reserves are produced. Our future oil and natural gas production is, therefore, highly dependent on our level of success in finding or acquiring additional reserves as well as the pace of D&C of new wells. Additionally, the business of exploring for, exploiting, developing or acquiring reserves is capital intensive. Recovery of our reserves, particularly undeveloped reserves, will require significant additional capital expenditures and successful drilling operations. To the extent cash flow from operations is reduced and external sources of capital become limited, unavailable or on terms deemed unacceptable by us, our ability to make the necessary capital investment to maintain or expand our asset base of oil and natural gas reserves or to return capital to our investors would be impaired.

As part of our exploration and development operations, we have expanded, and expect to further expand, the application of horizontal drilling and multi-stage hydraulic fracture stimulation techniques as well as enhanced recovery operations. The utilization of these techniques requires substantially greater capital expenditures as compared to the completion cost of a vertical well or a horizontal well utilizing less advanced techniques and therefore may result in fewer wells being completed or recompleted in any given year. The incremental capital expenditures are generally the result of greater measured depths, additional hydraulic fracture stages in horizontal wellbores and increased volumes of water, CO2 and proppant.

The unavailability or high cost of equipment, supplies, personnel and oilfield services, due to, among other things, potential tariffs, commodity price volatility or supply constraints as a result of the conflicts in Ukraine, Venezuela and the Middle
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East, elevated interest rates and associated policies of the Federal Reserve or otherwise could adversely affect our ability to execute development and exploitation plans on a timely basis and within budget, and consequently could materially and adversely affect our anticipated cash flow.

We utilize third-party services to maximize the efficiency of our operation. The cost of oilfield services typically fluctuates based on demand for those services, and the increase in commodity prices and supply constraints due to tariffs, the conflicts in Ukraine, Venezuela and the Middle East, elevated interest rates and associated policies of the Federal Reserve or otherwise has increased the cost of oilfield services. While we currently have excellent relationships with oilfield service companies, there is no assurance that we will be able to contract for such services on a timely basis or that the cost of such services will remain at a satisfactory or affordable level. Shortages or the high cost of equipment, supplies or personnel could delay or adversely affect our development and exploitation operations, which could have a material and adverse effect on our business, financial condition or results of operations.

Our development projects require substantial capital expenditures. We may be unable to obtain required capital or financing on satisfactory terms or at all, which could lead to a decline in our reserves and cash flows.

The oil and natural gas industry is capital intensive. We have made and expect to continue to make substantial capital expenditures in our business for the development of, and reinvestment in, oil and natural gas reserves. We have historically funded development and operating activities primarily through the sale of our oil, natural gas and NGL production. If necessary, we may also access capital through proceeds from asset dispositions, borrowings under the Revolving Credit Facility and capital markets offerings from time to time. Our cash flow from operations and access to capital are subject to a number of variables, including:

•the amount of oil and natural gas we produce from existing wells;

•the prices at which we sell our production;

•take-away capacity;

•the estimated quantities of our oil and natural gas reserves; and

•our ability to acquire, locate and produce new reserves.

If our revenues or the borrowing base under the Revolving Credit Facility decrease as a result of lower commodity prices, operating difficulties, production cost increases, declines in reserves or for any other reason, we may have limited ability to obtain the capital necessary to conduct our operations at expected levels. The Revolving Credit Facility and the documents governing our other indebtedness may restrict our ability to obtain new debt financing. If additional capital is required, we may not be able to obtain debt and/or equity financing on terms favorable to us, or at all which could result in a curtailment of our operations relating to development of our prospects, which in turn could lead to a decline in our reserves, production and cash flows, and could adversely affect our business, results of operation, financial conditions and ability to make payments on our outstanding indebtedness.

The development of our estimated PUD reserves may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our estimated PUD reserves may not be ultimately developed or produced.

Recovery of PUDs requires significant capital expenditures and successful drilling operations. At December 31, 2025, approximately 199.2 MMBoe of our total estimated proved reserves were undeveloped. The reserve data included in our reserve reports assumes that substantial capital expenditures will be made to develop non-producing reserves. The calculation of our estimated net proved reserves as of December 31, 2025 assumes that we will spend $2.4 billion to develop our estimated PUDs. Although cost and reserve estimates attributable to our oil and natural gas reserves have been prepared in accordance with industry standards, we cannot be sure that the estimated costs are accurate. We may need to raise additional capital in order to develop our estimated PUDs, and we cannot be certain that additional financing will be available to us on acceptable terms, if at all. Additionally, extended declines in commodity prices will reduce the future net revenues of our estimated PUDs and may result in some projects becoming uneconomical. Further, our drilling efforts may be delayed or unsuccessful and actual reserves may prove to be less than current reserve estimates, which could have a material and adverse effect on our financial condition, results of operations and future cash flows.

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Our development opportunities are scheduled to be developed over many years, making them susceptible to uncertainties that could materially alter the occurrence or timing of such development. In addition, we may not be able to raise the substantial amount of capital that would be necessary to drill such locations.

As of December 31, 2025, we have undrilled locations, including both PUD drilling locations and unproved drilling locations. These drilling locations represent a meaningful part of our future development strategy. Our ability to drill and develop these drilling locations depends on a number of uncertainties, including oil and natural gas prices, the availability and cost of capital, drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations, gathering system, marketing and transportation constraints, regulatory approvals, labor, takeaway capacity and other factors. Because of these uncertain factors, we do not know if the drilling locations will ever be developed or if we will be able to produce oil or natural gas from these drilling locations at anticipated levels or at all. In addition, unless production is established within the spacing units covering the undeveloped acreage on which some of the locations are located, the leases for such acreage will expire. Therefore, our actual development activities may materially differ from those presently contemplated.

Certain of our undeveloped leasehold acreage is subject to leases that will expire over the next several years unless production is established on units containing the acreage, the primary term is extended through continuous drilling provisions or the leases are renewed.

As of December 31, 2025, approximately 96% of our total net acreage was held by production. The leases for our net acreage not held by production will expire at the end of their primary term unless production is established in paying quantities under the units containing these leases, the leases are held beyond their primary terms under continuous drilling provisions or the leases are renewed. Some of our leases also expire as to certain depths if continuous drilling obligations are not met. If our leases expire in whole or in part and we are unable to renew the leases, we will lose the right to develop the related properties. Our ability to drill and develop these locations depends on a number of uncertainties, including commodity prices, the availability and cost of capital, drilling and production costs, availability of drilling services and equipment, drilling results, lease expirations, gathering system and pipeline transportation constraints, access to and availability of water sourcing and distribution systems, regulatory approvals and other factors.

In the future, we may shut-in some or all of our production depending on market conditions, storage or transportation constraints and contractual obligations, and any prolonged shut-in of our wells could result in the expiration, in whole or in part, of the related leases, which could adversely affect our reserves, business, financial condition and results of operations.

Drilling for and producing oil and natural gas are high-risk activities with many uncertainties that could adversely affect our business, financial condition or results of operations.

Drilling oil and natural gas wells, including development wells, involves numerous risks, including the risk that we may not encounter commercially productive oil and natural gas reserves (including “dry holes”). We must incur significant expenditures to drill and complete wells, the costs of which are often uncertain. It is possible that we will make substantial expenditures on drilling and not discover reserves in commercially viable quantities.

Specifically, we often are uncertain as to the future cost or timing of drilling, completing and operating wells, and our drilling operations and those of our third-party operators may be curtailed, delayed or canceled. The cost of our drilling, completion and well operations may increase and/or our results of operations and cash flows from such operations may be impacted, as a result of a variety of factors, including:

•unexpected drilling conditions;

•title problems;

•pressure or irregularities in formations;

•equipment failures or accidents;

•adverse weather conditions, such as winter storms, fires, flooding and hurricanes, and changes in weather patterns;

•compliance with, or changes in, environmental laws and regulations, including the IRA 2022 or as a result of the new Trump Administration, relating to air emissions, hydraulic fracturing and disposal of produced water, drilling fluids
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and other wastes, laws and regulations imposing conditions and restrictions on D&C operations and other laws and regulations, such as tax laws and regulations;

•the availability and timely issuance of required governmental permits and licenses; and

•the availability of, costs associated with and terms of contractual arrangements for properties, including mineral licenses and leases, pipelines, rail cars, crude oil hauling trucks and qualified drivers and related facilities and equipment to gather, process, compress, transport and market oil, natural gas, NGLs and related commodities.

Our failure to recover our investment in wells, increases in the costs of our drilling operations or those of our third-party operators, and/or curtailments, delays or cancellations of our drilling operations or those of our third-party operators in each case due to any of the above factors or other factors, may materially and adversely affect our business, financial condition and results of operations.

We may experience difficulty in achieving and managing future growth.

Future growth may place strains on our resources and cause us to rely more on project partners and independent contractors, possibly negatively affecting our financial condition and results of operations. Our ability to grow will depend on a number of factors, including:

•the results of our drilling program;

•hydrocarbon prices;

•our ability to develop existing prospects;

•our ability to continue to retain and attract skilled personnel;

•our ability to maintain or enter into new relationships with project partners and independent contracts; and

•our access to capital.

We may also be unable to make attractive acquisitions or asset exchanges, which could inhibit our ability to grow, or could experience difficulty integrating any acquired assets and operations. It may be difficult to identify attractive acquisition opportunities and, even if such opportunities are identified, our debt agreements (including the indentures that govern the Senior Notes (as defined below)) contain limitations on our ability to enter into certain transactions, which could limit our future growth.

Our operations are dependent on third-party service providers.

We contract with third-party service providers to support our operations. These contracted services are generally provided pursuant to master services agreements entered into between the third-party service providers and our operating subsidiaries. Although we have our own employees, our ability to conduct operations and generate revenues is dependent on the availability and performance of those third-party service providers and their compliance with the terms of their respective master service agreements (as further described under "Part III., Item 13. Certain Relationships and Related Transactions, and Director Independence—KKR Funds"). We cannot guarantee that we will be successful in either retaining the services of our current third-party service providers or contracting with alternative service providers in the event that our current contractors discontinue providing services to us or fail to meet their obligations under their respective master services agreements. Any failure to retain the services of our current service providers or locate alternatives will negatively affect our ability to generate revenues and continue and expand our operations. Please see "Part I., Items 1 and 2. Business and Properties—Employees" for more information.

Inflationary issues and associated changes in monetary policy previously have resulted in and such issues, as well as certain proposed tariffs, may in the future result in additional increases to the cost of our goods, services and personnel, which in turn cause our capital expenditures and operating costs to rise.

The U.S. inflation rate remained relatively stable through 2024 and 2025, after an extended period of rising rates, which began in 2022. These inflationary pressures resulted in additional increases to the costs of our oilfield goods, services and personnel, which in turn caused our capital expenditures and operating costs to rise. Sustained levels of high inflation during such period
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likewise caused the U.S. Federal Reserve and other central banks to increase interest rates multiple times during such period. Although the U.S. Federal Reserve reduced benchmark interest rates in 2024 and 2025, and may continue to reduce rates in 2026, to the extent such rates remain elevated above historic levels, we may continue to experience higher costs and may encounter further cost increases for our operations, including oilfield services, labor costs and equipment if our drilling activity increases.

Higher oil and natural gas prices may cause the costs of materials and services to continue to rise. We cannot predict any future trends in the rate of inflation and a significant increase in inflation, to the extent we are unable to recover higher costs through higher oil and natural gas prices and revenues, would negatively impact our business, financial condition and results of operations.

Through the Management Agreement, we depend on the Manager and its personnel to manage and operate our business, the loss of any of whom would materially and adversely affect future operations. Additionally, operational risks affecting the Manager, and our ability to work collaboratively with the Manager, including with respect to the allocation of corporate opportunities and other conflicts of interest, may impact our business and have a material effect on our business, financial results and prospects.

Pursuant to our Management Agreement, the Manager provides us with our senior management team and provides certain other management services. However, in each case such resources are not fully dedicated to our assets and operations, and the allocation of such resources is generally within the Manager’s discretion. See "Part III., Item 13. Certain Relationships and Related Transactions, and Director Independence—Management Agreement.” Accordingly, our success depends on the efforts, experience, diligence, skill and network of business contacts of the Manager’s personnel. We can offer no assurance that the Manager will continue to provide services to us or that we will continue to have access to the Manager’s personnel. The Management Agreement had an initial three-year term, was automatically renewed on December 7, 2024 for an additional three-year term ending December 7, 2027, and will have automatic three-year renewals thereafter. Upon the written notice to the Manager at least 180 days prior to the expiration of the initial term or any automatic renewal term, we may, without cause, decline to renew the Management Agreement upon the affirmative determination of at least two-thirds of its independent directors reasonably and in good faith, that (1) there has been unsatisfactory long-term performance by the Manager that is materially detrimental to us and our subsidiaries taken as a whole or (2) the fees payable to the Manager, in the aggregate, are materially unfair and excessive compared to those that would be charged by a comparable asset manager managing assets comparable to our assets, subject to Manager’s right to renegotiate the fees. If the Management Agreement is terminated and no suitable replacement is found to provide management and operating services for our oil and natural gas assets, we may not be able to execute our business plan, and our financial condition and results of operation may be materially and adversely affected.

Further, our relationship with the Manager presents certain challenges relating to our ability to work collaboratively with the Manager’s broader business. For example, the Manager will source investment opportunities both for our benefit and for the benefit of other KKR investment vehicles. Pursuant to the Management Agreement, the manager shall ensure that at least 70% of any investment amounts related to upstream oil and gas opportunities are allocated to us. Follow-on investment amounts will be generally allocated between us and EIGF II in proportion to the relative amount such vehicle initially invested in the applicable investment. In addition, from time to time, investment opportunities outside of upstream oil and gas assets may arise that are suitable for investment by us, on the one hand, and by EIGF II (and any successor fund) or other KKR Group funds, on the other, that are (A) engaged in an investment strategy that is materially different from our investment strategy (such as distressed debt or special situations investment vehicles) and (B) have pre-existing defined allocation rights pursuant to the KKR Group’s allocation policies or contractual undertakings agreed with the investors in such other KKR Group funds. In such cases, we may elect to co-invest alongside EIGF II and/or such other KKR Group funds in such investments, in which case the Manager will allocate such investment opportunities among us, on the one hand, and EIGF II and/or such other KKR Group funds, on the other hand, in a manner consistent with the priority investment rights of such KKR Group funds, taking into account such factors as the Manager deems appropriate. We shall have no obligation to make any such co-investment.

In addition, other conflicts of interest may arise from time to time in connection with the investment and other activities of us and other members of the KKR Group. With respect to conflicts involving investment opportunities, the Manager will endeavor to resolve any such conflicts of interest in a fair and equitable manner in accordance with the investment allocation policy described above and its prevailing policies and procedures with respect to conflicts resolution among other members of the KKR Group. However, the Manager may have a fiduciary duty to make decisions in the best interests of the Manager's affiliates, including KKR Funds, which may be contrary to our interests. In addition, other conflicts of interest may arise between us, on the one hand, and the Manager or any other member of the KKR Group and their affiliates, including KKR Funds, on the other hand, which may not be resolved in our favor. Further, the Management Agreement provides that nothing shall prevent the Manager from taking certain actions for the sole benefit of the Manager and/or its affiliates. To the fullest extent permitted by law, the Manager and its affiliates, including but not limited to their respective directors, officers,
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employees, agents, managers, trustees, control persons, partners, stockholders, and equityholders, will not be liable to us or any subsidiary or any of their respective directors, officers, employees, agents, managers, trustees, control persons, partners, stockholders, and equityholders, for any acts or omissions by the Manager or its affiliates, including by their respective directors, officers, employees, agents, managers, trustees, control persons, partners, stockholders, and equityholders, performed in accordance with and pursuant to the Management Agreement, except in cases of bad faith, fraud, willful misconduct or gross negligence. The Management Agreement requires us to reimburse, indemnify and hold harmless the Manager, its affiliates, and their respective directors, officers, employees, managers, trustees, control persons, partners, stockholders, and equityholders, and directors, officers, employees, agents, managers, trustees, control persons, partners, stockholders and equityholders of the foregoing from any and all Losses (as defined in the Management Agreement) arising from any proceeding related to us or acts or omissions of the Manager or its affiliates in connection with the Management Agreement, subject to certain exceptions. However, with the exception of the Manager, no other member of the KKR Group assumes any responsibility to render services to us or to consider our interests and our stakeholders in making any investment or other decisions.

Our Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) contains a provision that, to the maximum extent permitted under the law of the State of Delaware, we renounce any interest or expectancy in, or in being offered an opportunity to participate in, business opportunities that are from time to time presented to our officers, directors, the Preferred Stockholder or any partner, manager, member, director, officer, stockholder, employee or agent or affiliate of any such holder. We believe that this provision, which is intended to provide that certain business opportunities are not subject to the “corporate opportunity” doctrine, is appropriate, as the Preferred Stockholder and its affiliates invest in a wide array of companies, including companies with businesses similar to us. As a result of this provision, we may not be offered certain corporate opportunities which could be beneficial to us and our stockholders.

Properties we have recently acquired or may acquire in the future may not produce as projected, and we may be unable to determine reserve potential, identify liabilities associated with such properties or obtain protection from sellers against such liabilities.

Acquiring oil and natural gas properties requires us to assess reservoir and infrastructure characteristics, including recoverable reserves, future oil and gas prices and their applicable differentials, development and operating costs, and potential liabilities, including environmental liabilities. In connection with these assessments, we perform a review of the subject properties that we believe to be generally consistent with industry practices. Such assessments are inexact and inherently uncertain. In connection with the assessments, we perform a review of the subject properties, but such a review may not reveal all existing or potential problems. In the course of due diligence, we may not review every well, pipeline or associated facility. We cannot necessarily observe structural and environmental problems, such as pipe corrosion or groundwater contamination, when a review is performed. We may be unable to obtain contractual indemnities from the seller for liabilities created prior to our purchase of the property or the contractual indemnities we obtain may be insufficient. We may be required to assume the risk of the physical condition of the properties in addition to the risk that the properties may not perform in accordance with its expectations. For these reasons, the properties we will acquire in connection with any future acquisitions may not produce as expected, which could have a material and adverse effect on our financial condition and results of operations.

Future commodity price declines may result in write-downs of our asset carrying values.

We follow the successful efforts method of accounting for our oil and gas operations. Under this method, all property acquisition cost and cost of exploratory and development wells are capitalized when incurred, pending determination of whether proved reserves have been discovered. If proved reserves are not discovered with an exploratory well, the costs of drilling the well are expensed. The capitalized costs of our oil and natural gas properties, on a depletion pool basis, cannot exceed the estimated undiscounted future net cash flows of that depletion pool. If net capitalized costs exceed undiscounted future net revenues, we generally must write down the costs of each depletion pool to the estimated fair value (discounted future net cash flows of that depletion pool). Any such charge will not affect our cash flow from operating activities or liquidity, but will reduce our earnings and investors’ equity.

We may also at times record reporting unit goodwill in connection with a business combination. Goodwill has an indefinite useful life but is tested by us for impairment annually, or more frequently if there are changes in future commodity prices, amongst other factors, that may indicate that the fair value of the reporting unit may have been reduced below its carrying value. If the carrying value of the reporting unit exceeds the fair value, we generally must write down goodwill to the estimated fair value of that reporting unit. Any such charge will not affect our cash flow from operating activities or liquidity but will reduce our earnings and investors’ equity.

A decline in future oil or natural gas prices, or other factors, could cause an impairment write-down of capitalized costs and a non-cash charge against future earnings. For example, during the year ended December 31, 2025, we recorded impairment
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charges of $254.6 million, including an impairment of $233.7 million to write down the carrying value of associated oil and natural gas properties to the estimated transaction price less cost to sell. During the year ended December 31, 2024, we recorded an impairment expense of $161.5 million related to oil and natural gas properties that were determined not to be recoverable.

Our business is subject to operational risks that will not be fully insured. If any of the operational risks materialize our financial condition or results of operations could be materially and adversely affected.

Our business activities are subject to operational risks, including, but not limited to:

•damages to equipment caused by natural disasters such as earthquakes, and adverse weather conditions, including tornadoes, wildfires, hurricanes, extreme weather events and flooding;

•facility or equipment malfunctions;

•pipeline ruptures or spills;

•surface fluid spills, produced water contamination and salt water, surface or groundwater contamination resulting from petroleum constituents or hydraulic fracturing chemical additions;

•fires, blowouts, craterings and explosions; and

•uncontrollable flows of oil, natural gas or well fluids.

Any of these events could adversely affect our ability to conduct operations or cause substantial losses, including personal injury or loss of life, damage to or destruction of property, natural resources and equipment, pollution or other environmental contamination, loss of wells, regulatory penalties, suspension or termination of operations, and attorney’s fees and other expenses incurred in the prosecution or defense of litigation.

As is customary in the industry, we maintain insurance against some but not all of these risks. Additionally, we may elect not to obtain insurance if we believe that the cost of available insurance is excessive relative to the perceived risks presented. Losses could therefore occur for uninsurable or uninsured risks or in amounts in excess of existing insurance coverage. The occurrence of an event that is not fully covered by insurance could have a material and adverse effect on our business, financial condition and results of operations.

We may be unable to compete effectively with larger companies, which may adversely affect our ability to generate sufficient revenues.

The oil and natural gas industry is intensely competitive, and we compete with other companies that have greater resources than us, particularly following recent consolidation within the industry. Our ability to acquire additional properties and to discover reserves in the future will be dependent upon our ability to evaluate and select suitable properties to consummate transactions in a highly competitive market. Many of our larger competitors not only drill for and produce oil and natural gas, but they also engage in refining operations and market petroleum and other products on a regional, national or worldwide basis. Our competitors may be able to pay more for oil and natural gas properties, and evaluate, bid for and purchase a greater number of properties than our financial or human resources permit. In addition, these companies may have a greater ability to continue drilling activities during periods of low oil and natural gas prices, to contract for drilling equipment, to secure trained personnel, and to absorb the burden of present and future federal, state, local and other laws and regulations. The oil and natural gas industry has periodically experienced shortages of drilling rigs, equipment, pipelines and personnel, which has delayed development drilling and other exploitation activities and has caused significant price increases. Competition has been strong in hiring experienced personnel, particularly in the engineering and technical, accounting and financial reporting, tax and land departments. In addition, competition is strong for attractive oil and natural gas properties, oil and natural gas companies, and drilling rights. Our inability to compete effectively with our competitors could have a material and adverse impact on our business activities, financial condition and results of operations.

Deficiencies of title to our leased interests could materially and adversely affect our financial condition.

If an examination of the title history of a property reveals that an oil or natural gas lease or other developed rights has been purchased in error from a person who is not the owner of the mineral interest desired, our interest would substantially decline in value. In such cases, the amount paid for such oil or natural gas lease or leases or other developed rights would be lost. It is management’s practice, in acquiring oil and natural gas leases or undivided interests in oil and natural gas leases or other
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developed rights, not to incur the expense of retaining lawyers to examine the title to the mineral interest to be acquired. Rather, we rely upon the judgment of oil and natural gas lease brokers or landmen who perform the fieldwork in examining records in the appropriate governmental or county clerk’s office before attempting to acquire a lease or other developed rights in a specific mineral interest.

Prior to drilling an oil or natural gas well, however, it is the normal practice in the oil and natural gas industry for the person or company acting as the operator of the well to obtain a preliminary title review of the spacing unit within which the proposed oil or natural gas well is to be drilled to ensure there are no obvious deficiencies in title to the leasehold. Frequently, as a result of such examinations, certain curative work must be done to correct deficiencies in the marketability of the title, such as obtaining affidavits of heirship or causing an estate to be administered. Such curative work entails expense, and it may happen, from time to time, that the operator may elect to proceed with a well despite defects to the title identified in the preliminary title opinion. Our failure to obtain perfect title to our leaseholds may adversely impact our ability in the future to increase production and reserves.

Certain of our properties are subject to land use restrictions, which could limit the manner in which we conduct our business.

Certain of our properties are subject to land use restrictions, including city ordinances, which could limit the manner in which we conduct our business. Such restrictions could affect, among other things, our access to and the permissible uses of our properties as well as the manner in which we produce oil and natural gas and may restrict or prohibit drilling in general. We are also subject to certain ordinances and restrictions promulgated by the Ute Indian Tribe as it relates to our operations in Uinta Basin. The costs we incur to comply with such restrictions may be significant and our development and production activities may be delayed, curtailed or precluded by such restrictions.

Part of our business strategy will involve using some of the latest available horizontal D&C techniques, which involve risks and uncertainties in their application.

Our operations will involve utilizing some of the latest D&C techniques as developed by us and our service providers. The difficulties we may face drilling horizontal wells include:

•landing our wellbore in the desired drilling zone;

•staying in the desired drilling zone while drilling horizontally through the formation;

•running our casing through the entire length of the wellbore; and

•being able to run tools and other equipment consistently through the horizontal wellbore.

The difficulties that we will likely face while completing wells include the following:

•the ability to fracture stimulate the planned number of stages;

•the ability to run tools the entire length of the wellbore during completion operations; and

•the ability to successfully clean out the wellbore after completion of the final fracture stimulation stage.

Use of new technologies may not prove successful and could result in significant cost overruns or delays or reductions in production, and, in extreme cases, the abandonment of a well. In addition, certain of the new techniques we adopt may cause irregularities or interruptions in production due to offset wells being shut in and the time required to drill and complete multiple wells before any such wells begin producing. Furthermore, the results of drilling in new or emerging formations are more uncertain initially than drilling results in areas that are more developed and have a longer history of established production. Newer and emerging formations and areas have limited or no production history and, consequently, we will be more limited in assessing future drilling results in these areas. If its drilling results are less than anticipated, the return on investment for a particular project may not be as attractive as anticipated, and we could incur material write-downs of unevaluated properties and the value of undeveloped acreage could decline in the future.

We may encounter obstacles to marketing our oil and natural gas, which could materially and adversely affect our revenues.

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The marketability of our production depends in part upon the availability and capacity of oil and natural gas gathering systems, pipelines and other transportation facilities owned by third parties. Transportation space on the gathering systems and pipelines we utilize is occasionally limited or unavailable due to repairs or improvements to facilities, weather-related operational issues, or due to space being utilized by other companies that have priority transportation agreements. Additionally, new fields may require the construction of gathering systems and other transportation facilities. These facilities may require us to spend significant capital that would otherwise be spent on drilling. The availability of markets is beyond our control. If market factors dramatically change, the impact on our revenues could be substantial and could adversely affect our ability to produce and market oil and natural gas. Our access to transportation options can also be affected by U.S. federal and state regulation of oil and natural gas production and transportation, general economic conditions and changes in supply and demand.

In addition, the amount of oil and natural gas that can be produced and sold may be subject to curtailment in certain other circumstances outside of our or our operators’ control, such as pipeline interruptions due to maintenance, excessive pressure, inability of downstream processing facilities to accept unprocessed gas, physical damage to the gathering system or transportation system or lack of contracted capacity on such systems. The curtailments arising from these and similar circumstances may last from a few days to several months. In many cases, we and our operators are provided with limited notice, if any, as to when these curtailments will arise and the duration of such curtailments. Any such shut in or curtailment, or an inability to obtain favorable terms for delivery of the oil and natural gas produced from our acreage, could materially and adversely affect our financial condition, results of operations and cash available for distribution.

We are not the operator on all of our acreage or drilling locations, and, therefore, we will not be able to control the timing of exploration or development efforts, associated costs, or the rate of production of any non-operated assets and could be liable for certain financial obligations of the operators or any of our contractors to the extent such operator or contractor is unable to satisfy such obligations.

Some of the properties in which we have an interest are operated by other companies and involve third-party working interest owners. We do not operate 100% of the total net undrilled locations, and there is no assurance that we will operate all of our other future drilling locations. As a result, we have limited ability to influence or control the operation or future development of certain of these properties, including compliance with environmental, safety and other regulations, or the amount of capital expenditures that we will be required to fund with respect to such properties, subject to certain of our election rights. Moreover, we are dependent on the other working interest owners of such projects to fund their contractual share of the capital expenditures of such projects. In addition, a third-party operator could also decide to shut-in or curtail production from wells, or plug and abandon marginal wells, on properties in which we own an interest during periods of lower crude oil or natural gas prices. Furthermore, the success and timing of development activities operated by our partners will depend on a number of factors that will be largely outside of our control, including:

•the timing and amount of capital expenditures;

•the operator’s expertise and financial resources;

•the approval of other participants in drilling wells;

•the selection of technology; and

•the rate of production of reserves, if any.

This limited ability to exercise control over the operations and associated costs of some of our drilling locations could prevent the realization of targeted returns on capital in development or acquisition activities. Further, we may be liable for certain financial obligations of the operator of a well in which we own a working interest to the extent such operator becomes insolvent and cannot satisfy such obligations. Similarly, we may be liable for certain obligations of contractors to the extent such contractor becomes insolvent and cannot satisfy their obligations. The satisfaction of such obligations could have a material and adverse effect on our financial condition. For more information, see "Items 1 and 2. Business and Properties" and "Part II., Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations."

Risks related to regulatory matters

Our drilling and production programs may not be able to obtain access on commercially reasonable terms or otherwise to truck transportation, pipelines, transmission, storage and processing facilities to market our production, and our initiatives to expand our access to midstream and operational infrastructure may be unsuccessful.

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The marketing of oil and natural gas production depends in large part on the availability, proximity and capacity of pipelines and storage facilities, gathering systems and other transportation, processing, fractionation, refining and export facilities, as well as the existence of adequate markets. Transportation space on the gathering systems and pipelines we utilize is occasionally limited or unavailable due to repairs or improvements to facilities or due to space being utilized by other companies that have priority transportation agreements. Additionally, new fields may require the construction of gathering systems and other transportation facilities. These facilities may require us to spend significant capital that would otherwise be spent on drilling. We rely, and expect to rely in the future, on facilities developed and owned by third parties in order to store, process, transmit and sell our production. Our plans to develop and sell our reserves could be materially and adversely affected by the inability or unwillingness of third parties to provide sufficient facilities and services to us on commercially reasonable terms or otherwise. If these facilities are unavailable to us on commercially reasonable terms or otherwise, we could be forced to shut in some production or delay or discontinue drilling plans and commercial production following a discovery of hydrocarbons. The availability of markets is beyond our control. If market factors dramatically change, the impact on our revenues could be substantial and could materially and adversely affect our ability to produce and market oil and natural gas.

Our access to transportation options can also be affected by U.S. federal and state regulation of oil and natural gas production and transportation, general economic conditions and changes in supply and demand. The interstate transportation and sale for resale of natural gas are subject to federal regulation, including regulation of the terms, conditions and rates for interstate transportation, storage and various other matters, primarily by FERC. Federal and state regulations govern the price and terms for access to natural gas pipeline transportation. FERC’s regulations for interstate natural gas transmission in some circumstances may also affect the intrastate transportation of natural gas. FERC regulates the rates, terms and conditions applicable to the interstate transportation of natural gas by pipelines under the NGA as well as under Section 311 of the NGPA. Since 1985, FERC has implemented regulations intended to increase competition within the natural gas industry by making natural gas transportation more accessible to natural gas buyers and sellers on an open-access, nondiscriminatory basis.

Our sales of oil and NGLs are also affected by the availability, terms and costs of transportation. The rates, terms, and conditions applicable to the interstate transportation of oil and NGLs by pipelines are regulated by FERC under the Interstate Commerce Act. FERC has implemented a simplified and generally applicable ratemaking methodology for interstate oil and NGL pipelines to fulfill the requirements of Title XVIII of the Energy Policy Act of 1992 comprised of an indexing system to establish ceilings on interstate oil and NGL pipeline rates. Intrastate oil pipeline transportation rates are subject to regulation by state regulatory commissions. The basis for intrastate oil pipeline regulation, and the degree of regulatory oversight and scrutiny given to intrastate oil pipeline rates, varies from state to state. Insofar as effective interstate and intrastate rates are equally applicable to all comparable shippers, we believe that the regulation of oil transportation rates will not affect our operations in any materially different way than such regulation will affect the operations of our competitors.

Further, interstate and intrastate common carrier oil pipelines must provide service on a non-discriminatory basis. Under this open access standard, common carriers must offer service to all shippers requesting service on the same terms and under the same rates. When oil pipelines operate at full capacity, access is governed by prorationing provisions set forth in the pipelines’ published tariffs. Accordingly, we believe that access to oil pipeline transportation services generally will be available to us to the same extent as to our competitors.

As an alternative to pipeline transportation, any transportation of our crude oil and NGLs by rail will also be subject to regulation by the PHMSA and the FRA of the DOT under the Hazardous Materials Regulations at 49 CFR Parts 171-180, including Emergency Orders by the FRA and new regulations being proposed by the PHMSA, arising due to the consequences of train accidents and the increase in the rail transportation of flammable liquids.

Our operations are substantially dependent on the availability of water. Restrictions on our ability to obtain water may have a material and adverse effect on our financial condition, results of operations and cash flows.

Water is an essential component of both the drilling and hydraulic fracturing processes. Historically, we have been able to purchase water from local land owners and other sources for use in our operations. Some areas in which we have operations have experienced drought conditions that could result in restrictions on water use. If we are unable to obtain water to use in our operations from local sources, we may be unable to economically produce oil and natural gas in the affected areas, which could have a material and adverse effect on our financial condition, results of operations and cash flows.

We may face unanticipated water and other waste disposal costs.

We may be subject to regulation that restricts our ability to discharge water produced as part of our production operations. Productive zones frequently contain water that must be removed in order for the oil and natural gas to produce, and our ability to remove and dispose of sufficient quantities of water from the various zones will determine whether we can produce oil and
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natural gas in commercial quantities. The produced water must be transported from the leasehold and/or injected into disposal wells. The availability of disposal wells with sufficient capacity to receive all of the water produced from our wells may affect our ability to produce our wells. Also, the cost to transport and dispose of that water, including the cost of complying with regulations concerning water disposal, may reduce our profitability. Where water produced from our projects fails to meet the quality requirements of applicable regulatory agencies, our wells produce water in excess of the applicable volumetric permit limits, the disposal wells fail to meet the requirements of all applicable regulatory agencies, or we are unable to secure access to disposal wells with sufficient capacity to accept all of the produced water, we may have to shut in wells, reduce drilling activities, or upgrade facilities for water handling or treatment. The costs to dispose of this produced water may increase if any of the following occur:

•we cannot obtain future permits from applicable regulatory agencies;

•water of lesser quality or requiring additional treatment is produced;

•our wells produce excess water;

•new laws and regulations require water to be disposed in a different manner; or

•costs to transport the produced water to the disposal wells increase.

The disposal of fluids gathered from oil and natural gas producing operations in underground disposal wells has been pointed to by some groups and regulators as a potential cause of increased induced seismic events in certain areas of the country, particularly in Oklahoma, Texas, Colorado, Kansas, New Mexico and Arkansas. Several states have adopted or are considering adopting laws and regulations that may restrict or otherwise prohibit oilfield fluid disposal in certain areas or underground disposal wells, and state agencies implementing those requirements may issue orders directing certain wells in areas where seismic incidents have occurred to restrict or suspend disposal well operations or impose standards related to disposal well construction and monitoring. For example, the TRC has suspended produced water handling permits and introduced injection volume curtailments within the boundaries of certain Seismic Response Areas. Similarly, in Oklahoma, the Oklahoma Corporation Commission has at times limited drilling or ordered wells to be shut down in response to seismic activity. In November 2021, New Mexico implemented protocols requiring operators to take various actions within a specified proximity of certain seismic activity, including a requirement to limit injection rates if a seismic event is of a certain magnitude. Further, in July 2024, the New Mexico Office Conservation District announced the administrative cancellation of 75 pending permit applications for UIC Class II wells within the 10-mile County Line Seismic Response Area, due to the potential for increased seismicity within the area. While we cannot predict the ultimate outcome of these actions, any action that temporarily or permanently restricts the availability of disposal capacity for produced water or other oilfield fluids may increase our costs or have other adverse impacts on our operations.

A change in the jurisdictional characterization of some of our assets by federal, state or local regulatory agencies or a change in policy by those agencies may result in increased regulation of our assets, which may cause our revenues to decline and operating expenses to increase.

Section 1(b) of the NGA exempts natural gas gathering facilities from regulation by FERC as a natural gas company as defined under that statute. We believe that the Springfield Gathering System, in which we own interests, meet the traditional tests FERC has used to establish a pipeline’s status as a gathering pipeline not subject to regulation by FERC. However, the distinction between FERC-regulated transmission services and federally unregulated gathering services is fact intensive and the subject of ongoing litigation, so the classification and regulation of our gathering facilities may be subject to change based on future determinations by FERC, the courts or the U.S. Congress. If FERC were to consider the status of the gathering system and determine that it is subject to FERC regulation, the rates for, and terms and conditions of, services provided by that gathering system would be subject to modification by FERC under the NGA or the NGPA. Such regulation could decrease revenue, increase operating costs, and adversely affect our business, financial condition, and results of operations.

Our natural gas gathering operations may be subject to certain FERC reporting and posting requirements in a given year. Gathering service, which occurs on pipeline facilities located upstream of FERC-jurisdictional interstate transmission services, is regulated by the states onshore and in state waters. Depending on changes in the function performed by particular pipeline facilities, FERC has in the past reclassified certain FERC-jurisdictional transportation facilities as non-jurisdictional gathering facilities, and FERC has reclassified certain non-jurisdictional gathering facilities as FERC-jurisdictional transportation facilities. Any such changes could result in an increase to our costs. Other FERC regulations may indirectly affect our businesses and the markets for products derived from these businesses. FERC’s policies and practices across the range of its natural gas and liquids regulatory activities, including, for example, its policies on open access transportation, natural gas
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quality, ratemaking, capacity release and market center promotion, may indirectly affect the intrastate natural gas and liquids markets. In recent years, FERC has pursued pro-competitive policies in its regulation of interstate natural gas and liquids pipelines. However, we cannot assure you that FERC will continue this approach as it considers matters such as pipeline rates and rules and policies that may affect rights of access to transportation capacity.

We have an interstate liquids pipeline that is considered a common carrier pipeline subject to regulation by FERC under the ICA. Unless we obtain a waiver of the applicable provisions, the ICA requires that we maintain tariffs on file with FERC for interstate movements of liquids on our pipelines. Those tariffs set forth the rates we charge for providing transportation services as well as the rules and regulations governing these services. The ICA requires, among other things, that rates on interstate common carrier pipelines be “just and reasonable” and non-discriminatory. Further, FERC’s scrutiny of transportation service agreements between an ICA jurisdictional pipeline and affiliated shippers or marketers under the just and reasonable and non-discriminatory standard is evolving. The ICA permits interested persons to challenge proposed new or changed rates or rules, and authorizes FERC to investigate such changes and to suspend their effectiveness for a period of up to seven months. Upon completion of such an investigation, FERC may require refunds of amounts collected above what it finds to be a just and reasonable level, together with interest. FERC may also investigate, upon complaint or on its own motion, rates and related rules that are already in effect, and may order a carrier to change them prospectively. Upon an appropriate showing, a shipper may obtain reparations (including interest) for damages sustained for a period of up to two years prior to the filing of its complaint. Changes in FERC’s methodologies for approving rates and the treatment of agreements with affiliated shippers could adversely affect us. Further, challenges to our regulated rates could be filed with FERC and future decisions by FERC regarding our regulated rates and agreements with affiliated shippers could adversely affect our cash flows. We cannot predict the rates we will be allowed to charge in the future for transportation services by such pipelines. For more information, see “Items 1 and 2. Business and Properties—Legislative and regulatory environment.”

The classification of some of our gathering facilities, transportation pipelines, and purchase and sale transactions as FERC-jurisdictional or non-jurisdictional may be subject to change based on future determinations by FERC, the courts or Congress, in which case, our operating costs could increase and we could be subject to enforcement actions under the EP Act of 2005.

In addition, the pipelines used to gather and transport natural gas being produced by us are also subject to regulation by the DOT through PHMSA. PHMSA has established a risk-based approach to determine which gathering pipelines are subject to regulation and what safety standards regulated gathering pipelines must meet. These standards may be revised by PHMSA over time. For example, in October 2019, PHMSA published three final rules that create or expand reporting, inspection, maintenance, and other pipeline safety obligations. As part of the Consolidated Appropriations Act of 2021, the U.S. Congress reauthorized PHMSA through 2023 and directed the agency to move forward with several regulatory actions, including but not limited to the issuance of final regulations to require operators of non-rural gas gathering lines and new and existing transmission and distribution pipeline facilities to conduct certain leak detection and repair programs and to require facility inspection and maintenance plans to align with those regulations. PHMSA has issued various rules to address certain of these requirements. For example, in January 2025, PHMSA finalized a rule to address the management of methane emissions through more stringent leak detection and repair requirements, among other matters. However, PHMSA subsequently withdrew this rule before publication pursuant to the Trump Administration's January 20, 2025, regulatory freeze, and PHMSA has yet to publish a revised version of the rule. Notwithstanding this, PHMSA may be continuing to work on developing additional regulations related to safety oversight of gas gathering pipelines, and additional future regulatory action expanding PHMSA’s jurisdiction and imposing stricter integrity management requirements is possible. The adoption of laws or regulations that apply more comprehensive or stringent safety standards could require us to install new or modified safety controls, pursue new capital projects, or conduct maintenance programs on an accelerated basis, all of which could require us to incur increased operating costs that could be significant. In addition, should we fail to comply with PHMSA or comparable state regulations, we could be subject to substantial fines and penalties. As of December 30, 2024, the maximum civil penalties PHMSA can impose are $272,926 per violation per day, with a maximum of $2,729,245 for a related series of violations.

Should we fail to comply with all applicable FERC administered statutes, rules, regulations and orders, we could be subject to substantial penalties and fines.

Under the Domenici-Barton Energy Policy Act of 2005 ("EPAct 2005"), FERC has civil penalty authority under the NGA and the NGPA to impose penalties for current violations of up to $1,584,648 per day (adjusted annually for inflation) for each violation and disgorgement of profits associated with any violation. While our operations have not been regulated by FERC as a natural gas company under the NGA, FERC has adopted regulations that may subject certain of our otherwise non-FERC jurisdictional operations to FERC annual reporting and posting requirements. We also must comply with the anti-market manipulation rules enforced by FERC. The EPAct 2005 also authorized FERC to impose civil penalties for violations of the ICA and FERC regulations thereunder, up to a maximum amount that is adjusted annual for inflation, which for 2025 equals $16,590 per day, per violation. Additional rules and legislation pertaining to those and other matters may be considered or
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adopted by FERC from time to time. Failure to comply with those regulations in the future could subject us to civil penalty liability, as described in “Items 1 and 2. Business and Properties – Legislative and regulatory environment.”

Our sales of oil and natural gas, and any hedging activities related to such energy commodities, expose us to potential regulatory risks.

Sales of oil natural gas and NGLs are not currently regulated and are made at negotiated prices. However, the federal government historically has been active in the area of oil and natural gas sales regulation. We cannot predict whether new legislation to regulate oil and natural gas sales might be proposed, what proposals, if any, might actually be enacted by the U.S. Congress or the various state legislatures, and what effect, if any, the proposals might have on our operations.

Additionally, FERC, the FTC and the CFTC hold statutory authority to monitor certain segments of the physical and futures energy commodities markets relevant to our business. These agencies have imposed broad regulations prohibiting fraud and manipulation of such markets. With regard to our physical sales of oil and natural gas, and any hedging activities related to these energy commodities, we are required to observe the market-related regulations enforced by these agencies, which hold substantial enforcement authority. These agencies have substantial enforcement authority, including the ability to impose penalties for current violations of $1,584,648 per day (adjusted annually for inflation) by FERC, $1,487,712 (adjusted annually for inflation) by the CFTC, and $1,510,803 (adjusted annually for inflation) by the FTC, for each violation. The FERC has also imposed requirements related to reporting of natural gas sales volumes that may impact the formation of prices indices. Additional rules and legislation pertaining to these and other matters may be considered or adopted from time to time. Our failure to comply with these or other laws and regulations administered by these agencies could subject us to criminal and civil penalties, as described in "Items 1 and 2. Business and Properties—Legislative and regulatory environment." Failure to comply with such regulations, as interpreted and enforced, could materially and adversely affect our financial condition or results of operations.

The adoption of derivatives legislation and regulations by the U.S. Congress related to derivative contracts could have a material and adverse effect on our ability to hedge risks associated with our business.

Title VII of Dodd-Frank establishes federal oversight and regulation of over-the-counter (“OTC”) derivatives and requires the CFTC and the SEC to enact further regulations affecting derivative contracts, including the derivative contracts we use to hedge our exposure to price volatility through the OTC market. Although the CFTC and the SEC have issued final regulations in certain areas, final rules in other areas and the scope of relevant definitions and/or exemptions still remain to be finalized.
In one of its rulemaking proceedings still pending under Dodd-Frank, the CFTC issued on January 30, 2020, a re-proposed rule imposing position limits for certain futures and option contracts in various commodities (including oil and natural gas) and for swaps that are their economic equivalents. Under the proposed rules on position limits, certain types of hedging transactions are exempt from these limits on the size of positions that may be held, provided that such hedging transactions satisfy the CFTC’s requirements for certain enumerated “bona fide hedging” transactions or positions. A final rule has not yet been issued.

The CFTC has also adopted final rules regarding aggregation of positions, under which a party that controls the trading of, or owns 10% or more of the equity interests in, another party will have to aggregate the positions of the controlled or owned party with its own positions for purposes of determining compliance with position limits unless an exemption applies. The CFTC’s aggregation rules are now in effect, though CFTC staff have granted relief—until August 12, 2025—from various conditions and requirements in the final aggregation rules. With the implementation of the final aggregation rules and upon the adoption and effectiveness of final CFTC position limits rules, our ability to execute our hedging strategies described above could be limited. It is uncertain at this time whether, when and in what form the CFTC’s proposed new position limits rules may become final and effective.

The CFTC issued a final rule on the amount of capital certain swap dealers and major swap participants are required to set aside with respect to their swap business on July 22, 2020. This rule may require our swap dealer counterparties to post additional capital as a result of entering into uncleared financial derivatives with us, which could increase the costs to us of future financial derivatives transactions.

The CFTC issued a final rule on margin requirements for uncleared swap transactions on January 6, 2016, which includes an exemption from any requirement to post margin to secure uncleared swap transactions entered into by commercial end-users to hedge commercial risks affecting their business. In addition, the CFTC has issued a final rule authorizing an exemption from the otherwise applicable mandatory obligation to clear certain types of swap transactions through a derivatives clearing organization and to trade such swaps on a regulated exchange, which exemption applies to swap transactions entered into by commercial end-users to hedge commercial risks affecting their business. The mandatory clearing requirement currently applies only to certain interest rate swaps and credit default swaps, but the CFTC could act to impose mandatory clearing requirements
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for other types of swap transactions. Dodd-Frank also imposes recordkeeping and reporting obligations on counterparties to swap transactions and other regulatory compliance obligations.

All of the above regulations could increase the costs to us of entering into financial derivative transactions to hedge or mitigate our exposure to commodity price volatility and other commercial risks affecting our business. The Volcker Rule provisions of Dodd-Frank may also require our current bank counterparties that engage in financial derivative transactions to spin off some of their derivatives activities to separate entities, which separate entities may not be as creditworthy as the current bank counterparties. Under such rules, other bank counterparties may cease their current business as hedge providers. These changes could reduce the liquidity of the financial derivatives markets thereby reducing the ability of entities like us, as commercial end-users, to have access to financial derivatives to hedge or mitigate our exposure to commodity price volatility.

As a result, Dodd-Frank and any new regulations issued thereunder could significantly increase the cost of derivative contracts (including through requirements to post cash collateral), which could adversely affect our capital available for other commercial operations purposes, materially alter the terms of future swaps relative to the terms of our existing bilaterally negotiated financial derivative contracts and reduce the availability of derivatives to protect against commercial risks we encounter.

If we reduce our use of derivative contracts as a result of the new requirements, our results of operations may become more volatile and cash flows less predictable, which could adversely affect our ability to plan for and fund capital expenditures. Finally, the legislation was intended, in part, to reduce the volatility of oil, natural gas and NGL prices, which some legislators attributed to speculative trading in derivatives and commodity instruments related to oil, natural gas and NGL. Our revenues could therefore be adversely affected if a consequence of the legislation and regulations is to lower commodity prices. Any of these consequences could have a material and adverse effect on our consolidated financial condition, results of operations or cash flows.

Our ability to pursue our business strategies may be adversely affected if we incur costs and liabilities due to a failure to comply with environmental laws or regulations or a release of hazardous substances or other wastes into the environment.

We may incur significant costs and liabilities as a result of environmental requirements applicable to the operation of our wells, gathering systems and other facilities. These costs and liabilities could arise under a wide range of federal, state and local environmental laws and regulations, including, for example, the following federal laws and their state counterparts, as amended from time to time:

•the CAA, which restricts the emission of air pollutants from many sources, imposes various pre-construction, monitoring and reporting requirements and is relied upon by the EPA as authority for adopting climate change regulatory initiatives relating to GHG emissions;

•the CWA, which regulates discharges of pollutants from facilities to state and federal waters and establish the extent to which waterways are subject to federal jurisdiction and rulemaking as protected waters of the United States;

•the OPA, which imposes liabilities for removal costs and damages arising from an oil spill into waters of the United States;

•the SDWA, which protects the quality of the nations’ public drinking water through adoption of drinking water standards and control over the subsurface injection of fluids into belowground formations;

•the RCRA, which imposes requirements for the generation, treatment, storage, transport disposal and cleanup of non-hazardous and hazardous wastes;

•the CERCLA, which imposes liability without regard for fault on generators, transporters and arrangers of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur, as well as on present and certain past owners and operators of sites were hazardous substance releases have occurred or are threatening to occur;

•the Emergency Planning and Community Right-to-Know Act, which requires facilities to implement a safety hazard communication program and disseminate information to employees, local emergency planning committees and response departments about toxic chemical uses and inventories; and

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•the ESA, which restricts activities that may affect federally identified endangered and threatened species or their habitats through the implementation of operating limitations or restrictions or a temporary, seasonal or permanent ban on operations in affected areas. Similar protections are afforded to migratory birds under the MBTA.

These U.S. laws and their implementing regulations, as well as state counterparts, generally restrict the level of pollutants emitted to ambient air, discharges to surface water, and disposals or other releases to surface and below-ground soils and ground water. Failure to comply with these laws and regulations may result in the assessment of sanctions, including administrative, civil and criminal penalties, the imposition of investigatory, remedial and corrective actions obligations, the incurrence of capital expenditures, the occurrence of delays in the permitting, development or expansion of projects and the issuance of orders enjoining some or all of our future operations in a particular area. Compliance with more stringent standards and other environmental regulations could restrict our ability to obtain permits for operations or require us to install additional pollution control equipment, the costs of which could be significant. Certain environmental laws and analogous state laws and regulations impose strict joint and several liability, without regard to fault or legality of conduct, for costs required to clean up and restore sites where hazardous substances or other wastes have been disposed of or otherwise released. Moreover, it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the release of hazardous substances, wastes or other materials into the environment. In addition, these laws and regulations may restrict the rate of oil or natural gas production. Historically, our environmental compliance costs have not had a material and adverse effect on our results of operations; however, there can be no assurance that such costs will not be material in the future or that such future compliance will not have a material and adverse effect on our business and operating results.

We are subject to complex federal, state, local and other laws and regulations that could materially and adversely affect the cost, manner or feasibility of conducting our operations.

Our oil and natural gas operations are subject to complex and stringent laws and regulations. In order to conduct our operations in compliance with these laws and regulations, we must obtain and maintain numerous permits, approvals and certificates from various federal, state and local governmental authorities. Failure or delay in obtaining regulatory approvals or drilling permits could have a material and adverse effect on our ability to develop our properties, and receipt of drilling permits with onerous conditions could increase our compliance costs. In addition, regulations regarding conservation practices and the protection of correlative rights affect our operations by limiting the quantity of oil and natural gas we may produce and sell.

We are subject to federal, state and local laws and regulations as interpreted and enforced by governmental authorities possessing jurisdiction over various aspects of the exploration, production and transportation of oil and natural gas. The possibility exists that new laws, regulations or enforcement policies could be more stringent and significantly increase our compliance costs. If we are not able to recover the resulting costs through insurance or increased revenues, our financial condition could be materially and adversely affected.

For example, the TRC has adopted rules and regulations implementing legislation mandating certain clean-up activities for inactive wells and additional requirements related to the approval of plugging extensions. Failure to comply can result in administrative penalties and the loss of an operator’s ability to conduct operations in Texas. A major component of the law is Rule 15, which requires a well operator to comply with certain inactive well clean-up activities, including the disconnection of electricity, purging of all production fluids from inactive lines and tanks and removal of surface equipment for wells that have not produced oil or gas during the preceding year. Noncompliance with Rule 15 could result in administrative penalties of up to $10,000 per violation per day and the loss of an operator’s ability to conduct operations in Texas.

Our access to transportation options can also be affected by U.S. federal and state regulation of oil and natural gas production and transportation, general economic conditions and changes in supply and demand. Various proposals and proceedings that might affect the petroleum industry are pending before the U.S. Congress, FERC, various state legislatures and the courts. The industry historically has been heavily regulated and we cannot provide assurance that the less stringent regulatory approach recently pursued by FERC and the U.S. Congress will continue nor can we predict what effect such proposals or proceedings may have on our operations.

Fuel conservation measures, alternative fuel requirements, elevated consumer demand for alternatives to oil and natural gas, technological advances in fuel economy and energy generation devices, and incentives or funding for renewable energy projects included in governmental regulations, could reduce demand for oil and natural gas. The impact of any changing demand for oil and natural gas may have a material and adverse effect on our business, financial condition, results of operations and cash flows.

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Our operations are subject to a series of risks arising from climate change.

Climate change continues to attract considerable public and scientific attention. As a result, our operations as well as the operations of our non-operated assets are subject to a series of regulatory, political, litigation, and financial risks associated with the production and processing of fossil fuels and emission of GHG. At the federal level, no comprehensive climate change law or regulation has been implemented to date.

However, various states and groups of states have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of GHG emissions. For example, California, through CARB, has implemented a cap and trade program for GHG emissions that sets a statewide maximum limit on covered GHG emissions, and this cap declines annually to reach 40% below 1990 levels by 2030. Covered entities must either reduce their GHG emissions or purchase allowances to account for such emissions. Separately, California has implemented LCFS and associated tradable credits that require a progressively lower carbon intensity of the state’s fuel supply than baseline gasoline and diesel fuels. Such programs work
alongside increased regulation by California seeking to reduce both the supply and demand for fossil fuels in the state, to
include, for example, the phasing out of the sale of vehicles with internal combustion engines. CARB has also promulgated regulations regarding monitoring, leak detection, repair and reporting of methane emissions from both existing and new oil and gas production facilities. Similar regulations applicable to oil and gas facilities have been promulgated in Colorado. Colorado has begun to increasingly regulate oil and gas operations with consideration towards GHG emissions and cumulative impacts. In October 2024, the Colorado Energy and Carbon Management Commission finalized rules that require regulators to consider cumulative impacts of oil and gas operations in permitting decisions and increase scrutiny on the project’s proximity to other industrial sites, residential and school areas, “disproportionately impacted communities,” and “cumulatively impacted communities.” The rules also set GHG emissions intensity targets for oil and gas operators and require regulators to consider such targets in their cumulative impacts analysis, as well as the potential to restrict operations during the summer in Ozone Nonattainment Areas.

Furthermore, we have been and could be impacted in the future by the effects of winter weather and the weatherization of our facility equipment and the equipment of counterparties in anticipation of future climactic events. For example, in the winter of 2022, certain of our surface facilities in South Texas were impacted by abnormal winter conditions that temporarily adversely affected our production. In addition, in response to Winter Storm Uri, the TRC was directed to adopt rules requiring certain natural gas processing, storage, and pipeline facility operators experiencing major or repeated weather-related forced interruptions of service to, among other things, engage an independent party to assess the operator’s weatherization plans, procedures and operations, and submit the assessment to the TRC. In August 2022, the TRC adopted the Weather Emergency Preparedness Standards Rule, which requires critical gas facilities on the state’s Electricity Supply Chain, including natural gas processing, storage, and pipeline facilities, to (i) weatherize to help ensure sustained operations during a weather emergency; (ii) correct known issues that caused weather-related forced stoppages; and (iii) contact the TRC if a facility sustains a weather-related forced stoppage during a weather emergency. In addition, weather-related forced stoppages at processing, storage and pipeline facilities operated by counterparties with which we contract for services may also adversely affect our operations and financial results.

Litigation risks regarding the threat of climate change are also increasing, as a number of parties have sought to bring suit against oil and natural gas companies in state or federal court, alleging, among other things, that such companies created public nuisances by producing fuels that contributed to climate change or alleging that companies have been aware of the adverse effects of climate change for some time but defrauded their investors or customers by failing to adequately disclose those impacts. There have also recently been certain increasing financial risks for fossil fuel producers as certain shareholders currently invested in fossil-fuel energy companies concerned about potential effects of climate change may elect in the future to shift some or all of their investments into non-fossil fuel related sectors. Institutional lenders may elect not to provide funding for fossil fuel energy companies, although this trend has waned recently and several high-profile banks and institutional investors have withdrawn from various associations that aim to limit financing of industries that emit significant GHG emissions. Limitation of investments in and financings for fossil fuel energy companies could result in the restriction, delay or cancellation of drilling programs or development or production activities.

Climate change may also result in various physical risks, such as the increased frequency or intensity of extreme weather events (including storms, wildfires, and other natural disasters) or changes in meteorological and hydrological patterns, that could adversely impact our operations, as well as those of our operators and their supply chains. Such physical risks may result in damage to our facilities or otherwise adversely impact our operations, such as if we become subject to water use curtailments in response to drought, or demand for our products, such as to the extent warmer winters reduce the demand for energy for heating purposes. Such physical risks may also impact our supply chain or infrastructure on which we rely to produce or transport our
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products. One or more of these developments could have a material adverse effect on our business, financial condition and results of operation.

Federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing as well as governmental reviews of such activities could result in increased costs and additional operating restrictions or delays in the completion of oil and natural gas wells and adversely affect our production.

Hydraulic fracturing is an important and common practice that is used to stimulate production of oil, natural gas and NGLs from dense subsurface rock formations. We and the operators of our properties regularly use hydraulic fracturing as part of our operations. Hydraulic fracturing involves the injection of water, sand or alternative proppant and chemicals under pressure into targeted geological formations to fracture the surrounding rock and stimulate production. The U.S. Congress from time to time has considered legislation to amend the SDWA to remove the exemption currently available to hydraulic fracturing, which would place additional regulatory burdens upon hydraulic fracturing operations including requirements to obtain a permit prior to commencing operations adhering to certain construction requirements, to establish financial assurance, and to require reporting and disclosure of the chemicals used in those operations. This legislation has not passed.

Hydraulic fracturing (other than that using diesel) is currently generally exempt from regulation under the SDWA’s UIC program and is typically regulated by state oil and natural gas commissions or similar agencies. However, several federal agencies have asserted regulatory authority or pursued investigations over certain aspects of the process.

In March 2024, the BLM finalized a rule that requires operators to limit flaring from well sites on federal lands, as well as allow the delay or denial of permits if BLM finds that an operator's methane waste minimization plan is insufficient. Litigation challenging the rule is currently being held in abeyance while the Trump Administration considers revisions to the rule and, in December 2025, the BLM announced it would delay enforcement of the impending regulatory compliance deadlines under that rule. In addition, the BLM finalized a rule in April 2024 updating the fiscal terms of oil and gas leases on federal lands and the criteria BLM considers when determining whether to lease nominated land. For more information, see our regulatory disclosure in "Items 1 and 2. Business and Properties—Legislative and regulatory environment—Hydraulic fracturing."

In addition, some states, including Texas, have adopted, and other states are considering adopting, regulations that restrict or could restrict hydraulic fracturing in certain circumstances and that require the disclosure of the chemicals used in hydraulic fracturing operations. Further, state and local governmental entities have exercised the regulatory powers to regulate, curtail or in some cases prohibit hydraulic fracturing. For example, Colorado has adopted more stringent setbacks for oil and gas development and, in October 2024, adopted final rules that would apply increased scrutiny to the cumulative impacts of GHG emissions of oil and gas development and set GHG emissions targets for oil and gas operators. In California, Senate Bill No. 1137 was signed into law in September 2022, establishing 3,200 feet as the minimum distance between new oil and gas production wells and certain sensitive receptors such as home, schools or parks effective January 1, 2023, although certain compliance deadlines have been delayed due to the signing of Assembly Bill 218 in September 2024. New laws or regulations that impose new obligations on, or significantly restrict hydraulic fracturing, could make it more difficult or costly for us to perform hydraulic fracturing activities and thereby affect our determination of whether a well is commercially viable and increase our cost of doing business. Such increased costs and any delays or curtailments in our production activities could have a material and adverse effect on our business, prospects, financial condition, results of operations and liquidity.

Restrictions on drilling activities intended to protect certain species of wildlife may adversely affect our ability to conduct drilling activities in some of the areas where we operate.

Oil and natural gas operations in our operating areas can be adversely affected by seasonal or permanent restrictions on drilling activities designed to protect various wildlife, such as those restrictions imposed under the federal ESA and MBTA. Seasonal restrictions may limit our ability to operate in protected areas and can intensify competition for drilling rigs, oilfield equipment, services, supplies and qualified personnel, which may lead to periodic shortages when drilling is allowed. These constraints and the resulting shortages or high costs could delay our operations and materially increase our operating and capital costs. Permanent restrictions imposed to protect endangered species could prohibit drilling in certain areas or require the implementation of expensive mitigation measures. We may conduct operations on oil and natural gas leases in areas where certain species that are listed as threatened or endangered are known to exist, such as the dunes sagebrush lizard, lesser prairie chicken, and greater sage grouse, and where other species that potentially could be listed as threatened or endangered under the ESA may exist. In May 2024, the FWS issued a final rule listing the dunes sagebrush lizard as endangered under the ESA, although this decision has been challenged. For more information, see our regulatory disclosure in "Items 1 and 2. Business and Properties—Legislative and regulatory environment—Endangered Species Act and Migratory Bird Treaty Act."

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Additionally, the Biden Administration took action to broaden enforcement under the ESA, including expanding the definition of “critical habitat.” However, in November 2025, the FWS announced a proposal to once again revise the regulations governing listing decisions and critical habitat designations. The designation of previously unprotected species in areas where we operate as threatened or endangered, a recategorization of a species from threatened to endangered, or an expansion of areas designated as “critical habitat” could cause us to incur increased costs arising from species protection measures or could result in limitations on our exploration, development and production activities that could have an adverse impact on our ability to develop and produce our reserves. To the extent species are listed or critical habitats are designated under the ESA or similar laws, or previously unprotected species are designated as threatened or endangered in areas where our properties are located, operations on those properties could incur increased costs arising from species protection measures and face delays or limitations with respect to production activities thereon.

Increased attention to sustainability-related matters and conservation measures may adversely impact our business.

Increased attention to climate change, societal expectations on companies to address climate change, investor and societal expectations regarding sustainability disclosures, and consumer demand for alternative forms of energy may result in increased costs, reduced demand for our products, reduced profits, increased investigations and litigation, and negative impacts on our stock price and access to capital markets. Increased attention to climate change and environmental conservation, for example, may result in demand shifts for oil and natural gas products and additional governmental investigations and private litigation against us or our operators. To the extent that societal pressures or political or other factors are involved, it is possible that such liability could be imposed without regard to our causation of or contribution to the asserted damage, or to other mitigating factors.

Moreover, while we may create and publish voluntary or mandatory disclosures regarding sustainability-related matters from time to time, many of the statements in such disclosures are based on expectations and assumptions or hypothetical scenarios that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith. Such expectations and assumptions or hypothetical scenarios are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established approach to identifying, measuring and reporting on many sustainability-related matters. We may also announce participation in, or certification under, various third-party sustainability or climate-related frameworks in an attempt to improve our sustainability profile, but such participation or certification may be costly, may be reliant on unsettled methodologies, and may not achieve the desired results. Additionally, while we may announce various voluntary climate or sustainability-related targets, such targets are aspirational. We may not be able to meet or make progress against such targets in the manner or on such a timeline as initially contemplated, including but not limited to as a result of unforeseen costs, inaccurate forecast or technical difficulties. To the extent we meet or make progress against such targets, it may be achieved through various contractual arrangements, including the purchase of various credits or offsets that may be deemed to mitigate our environmental impact instead of actual changes in our environmental performance. However, we cannot guarantee that there will be sufficient offsets available from third parties, or that any offsets we do purchase will successfully achieve the emissions reductions they represent. Also, despite these aspirational goals and any other actions taken, we may receive pressure from investors, lenders, or other groups to adopt more aggressive climate or other sustainability-related goals, but we cannot guarantee that we will be able to pursue or implement such goals because of potential costs or technical or operational obstacles.

In addition, some organizations that provide information to investors, ratings or proxy advisory services on corporate governance and related matters have developed processes for evaluating companies on their approach to sustainability concerns. Such ratings or recommendations are used by some investors to inform their investment and voting decisions. While such ratings or recommendations do not impact all investors’ investment or voting decisions, unfavorable ratings or recommendations and any recent activism directed at shifting funding away from companies with energy-related assets could lead to increased negative investor sentiment toward us and our industry and to the diversion of investment to other industries, which could have a negative impact on our access to and costs of capital. Also, certain financial institutions may decide not to provide funding or insurance for fossil fuel energy companies based on climate change related concerns, which could affect our access to capital for potential growth projects. Additionally, to the extent sustainability-related matters negatively impact our reputation, we may not be able to compete as effectively to recruit or retain employees, which may adversely affect our operations. Sustainability-related matters may also impact our suppliers and customers, which may ultimately have adverse impacts on our operations.

Furthermore, certain public statements with respect to sustainability matters, such as emissions reduction goals, other environmental targets, or other commitments addressing certain social issues, are becoming increasingly subject to heightened scrutiny from public and governmental authorities, as well as other parties, related to the risk of potential “greenwashing,” i.e., misleading information or false claims overstating potential benefits. For example, federal and state regulators have taken enforcement action against companies for such misconduct. Such regulators, as well as non-governmental organizations and
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other private actors have also filed lawsuits under various securities and consumer protection laws alleging that certain sustainability-related statements, goals or standards were misleading, false or otherwise deceptive. Certain employment practices and social initiatives are the subject of scrutiny by both those advocating for the continued advancement of such policies, as well as those who believe they should be curbed, including government actors, and the complex regulatory and legal frameworks applicable to such initiatives continue to evolve.

We cannot be certain of the impact of such regulatory, legal and other developments on our business. More recent political developments could mean that the Company faces increasing criticism or litigation risks from certain “anti-ESG” parties, including various governmental agencies. Such sentiment may focus on the Company’s environmental or social commitments (such as reducing GHG emissions) or its pursuit of certain employment or business practices or social initiatives that are alleged to be political or polarizing in nature or are alleged to violate laws based, in part, on changing priorities of, or interpretations by, federal agencies or state governments. Consideration of sustainability-related factors in the Company’s decision-making could be subject to increasing scrutiny and objection from such anti-ESG parties. As a result, we may face increased litigation risk from private parties and governmental authorities related to our sustainability-related efforts. In addition, any alleged claims of greenwashing against us or others in our industry may lead to further negative sentiment and diversion of investments. We could face increasing costs as we attempt to comply with and navigate further regulatory sustainability-related focus and scrutiny.

Risks related to our indebtedness

We are partially dependent on our Revolving Credit Facility, our Crescent Minerals and Royalties Credit Facility and continued access to capital markets to successfully execute our operating strategies.

If we are unable to make capital expenditures or acquisitions because we are unable to obtain capital or financing on satisfactory terms, we may experience a decline in our oil and gas production rates and reserves. We are partially dependent on external capital sources to provide financing for certain projects. The availability and cost of these capital sources is cyclical, and these capital sources may not remain available, or we may not be able to obtain financing at a reasonable cost in the future. Elevated interest rates may increase the cost of capital and prevent us from being able to obtain debt financing at favorable rates, or at all, which would materially impact our operations. In addition, conditions in the global capital markets have been volatile due to among other things, the conflicts in Ukraine, Venezuela and Israel, making terms for certain types of financing difficult to predict, and in certain cases, resulting in certain types of financing being unavailable. If our revenues decline as a result of lower oil, gas or NGL prices, operating difficulties, declines in production or for any other reason, we may have limited ability to obtain the capital necessary to sustain our operations at current levels. Our failure to obtain additional financing could result in a curtailment of our operations or not make acquisitions, which in turn could lead to a possible reduction in our oil or gas production, reserves and revenues, not having sufficient liquidity to meet future financial obligations and could negatively impact our results of operations.

We have incurred significant additional indebtedness during recent periods, which may impair our ability to raise further capital or impact our ability to service our debt.

We have incurred significant additional indebtedness during recent periods, including our issuance of senior unsecured notes and our assumption of Vital’s senior unsecured notes in connection with the Vital Energy Merger. Our additional indebtedness may impair our ability to raise further capital, including to expand our business, pursue strategic investments, and take advantage of financing or other opportunities that we believe to be in the best interests of the Company and our shareholders.

Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, curtailing spending, restructuring debt, or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at such time. Our additional indebtedness may also impact our ability to service our debt and to comply with financial covenants and the other terms of our relevant credit arrangements, in which case our lenders might pursue available remedies up to and including terminating our credit arrangements and foreclosing on available collateral.

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A reduction in the borrowing base under our Revolving Credit Facility and our Crescent Minerals and Royalties Credit Facility as a result of periodic borrowing base redeterminations or otherwise may negatively impact our ability to fund our operations.

Our primary sources of liquidity are borrowings under our Revolving Credit Facility, our Crescent Minerals and Royalties Credit Facility, cash from operations and proceeds from equity and debt offerings. The borrowing base under our Revolving Credit Facility and our Crescent Minerals and Royalties Credit Facility is subject to semi-annual redeterminations which occur on or about April 1 and Oct 1 of each year. During a borrowing base redetermination, the lenders can unilaterally adjust the borrowing base and the borrowings permitted to be outstanding under our Revolving Credit Facility and our Crescent Minerals and Royalties Credit Facility. The borrowing base depends on, among other things, projected revenues from, and asset values of, the oil and natural gas properties securing our loan, many of which factors are beyond our control.

If we experience liquidity concerns, we could face a downgrade in our debt ratings which could restrict our access to, and negatively impact the terms of, current or future financings or trade credit.

Our ability to obtain financings and trade credit and the terms of any financings or trade credit is, in part, dependent on the credit ratings assigned to our debt by independent credit rating agencies. We cannot provide assurance that any of our current ratings will remain in effect for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if, in its judgment, circumstances so warrant. Factors that may impact our credit ratings include debt levels, planned asset purchases or sales and near-term and long-term production growth opportunities, liquidity, asset quality, cost structure, product mix and commodity pricing levels. A ratings downgrade could adversely impact our ability to access financings or trade credit and increase our borrowing costs.

The borrowings under our Revolving Credit Facility and our Crescent Minerals and Royalties Credit Facility expose us to interest rate risk.

We are exposed to interest rate risk associated with borrowings under our Revolving Credit Facility and our Crescent Minerals and Royalties Credit Facility. Borrowings under the Revolving Credit Facility and our Crescent Minerals and Royalties Credit Facility bear interest at either a U.S. dollar alternative base rate based on the prime rate, the federal funds effective rate or an adjusted SOFR(as defined below), plus an applicable margin or SOFR, plus an applicable margin, at the election of the borrowers. As a result of our variable interest debt, our results of operations could be adversely affected by increases in interest rates.

Risks related to our common stock

If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of our Class A Common Stock.

Effective internal controls are necessary for us to provide reliable financial reports, prevent fraud and operate successfully as a public company. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results would be harmed. We cannot be certain that our efforts to maintain internal controls will be successful, that we will be able to maintain adequate controls over our financial processes and reporting in the future or that we will be able to comply with our obligations under Section 404 of the Sarbanes-Oxley Act of 2002. Any failure to maintain effective internal controls, or difficulties encountered in implementing or improving internal controls, could harm our operating results or cause us to fail to meet our reporting obligations. Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which would likely have a negative effect on the trading price of our Class A Common Stock.

An active, liquid and orderly trading market for our Class A Common Stock may not be maintained.

Our Class A Common Stock trades on the NYSE under the ticker "CRGY." However, an active, liquid and orderly trading market for our Class A Common Stock may not be maintained. Active, liquid and orderly trading markets usually result in less price volatility and more efficiency in carrying out investors’ purchase and sale orders. Consequently, you may not be able to sell shares of our Class A Common Stock at prices equal to or greater than the assumed price attributable to such shares. The stock markets in general have experienced extreme volatility that has often been unrelated or disproportionate to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our Class A Common Stock. Securities class action litigation has often been instituted against companies following periods of volatility in
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the overall market and in the market price of a company’s securities. Such litigation, if instituted against us could result in very substantial costs, divert management’s attention and resources and harm our business, operating results and financial condition.

Future sales of our Class A Common Stock in the public market, or the perception that such sales may occur, could reduce the price of our Class A Common Stock, and any additional capital raised by us through the sale of equity or convertible securities may dilute your ownership in us.

We may sell additional shares of our Class A Common Stock in subsequent offerings. At December 31, 2025, we had 327,900,272 outstanding shares of Class A Common Stock.

Pursuant to the 2021 Registration Rights Agreement (as defined below) and the registration rights agreement entered into in connection with the Ridgemar Acquisition, we have registered for resale all of the shares of our Class A Common Stock held by the former owners of Independence and Ridgemar. The 2021 Registration Rights Agreement provides for additional demand and "piggyback" rights that would facilitate future sales of our Class A Common Stock in the public market. In addition to sales pursuant to such registration by selling stockholders, certain of our significant stockholders, including certain of Independence's former owners, have distributed shares of our securities that they hold to their investors who themselves may then sell into the public market. Any sales of such securities may depress the price of our shares. Furthermore, we filed registration statements with the SEC on Form S-8 providing for the registration of 6,520,410 shares of our Class A Common Stock issued or reserved for issuance under the Equity Incentive Plan. Subject to the satisfaction of vesting conditions, the expiration of lock-up agreements and the requirements of Rule 144 under the Securities Act of 1933, as amended, shares registered under the registration statement on Form S-8 have been made available for resale immediately in the public market without restriction.

We cannot predict the size of future issuances of our Class A Common Stock or securities convertible into Class A Common Stock or the effect, if any, that future issuances and sales of shares of our Class A Common Stock will have on the market price of our Class A Common Stock. Sales of substantial amounts of our Class A Common Stock (including shares issued in connection with an acquisition and/or sales by our existing stockholders in the public or private markets), or the perception that such sales could occur, may adversely affect prevailing market prices of our Class A Common Stock and may impair our ability to raise capital through future offerings.

If securities or industry analysts do not continue to publish research or reports about our business, if they adversely change their recommendations regarding our Class A Common Stock or if our operating results do not meet their expectations, the trading price of our Class A Common Stock could decline.

The trading market for our Class A Common Stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if one or more of the analysts who cover us downgrades our Class A Common Stock or if our operating results do not meet their expectations, the trading price of our Class A Common Stock could decline.

Risks related to our financial condition

Our hedging activities could result in financial losses or could reduce our net income.

We enter into derivative instrument contracts for a significant portion of our existing production. We plan to continue the practice of entering into hedging arrangements to reduce near-term exposure to commodity prices, protect cash flow and returns and maintain our liquidity.

Our hedging contracts may result in substantial gains or losses. For example, we had realized commodity derivative gains of $81.6 million in 2025, and we may realize additional substantial future losses due to our hedging activities. In addition, if we enter into any hedging contracts and experience a sustained material interruption in our production, we might be forced to satisfy all or a portion of our hedging obligations without the benefit of the cash flows from our sale of the underlying physical commodity, resulting in a substantial diminution of our liquidity.

Our ability to use hedging transactions to protect us from future oil and natural gas price declines will be dependent upon oil and natural gas prices at the time we enter into future hedging transactions and our future levels of hedging and, as a result, our future net cash flows may be more sensitive to commodity price changes. In the future, we may be unable to hedge anticipated production volumes on attractive terms or at all, which would subject us to further potential commodity price uncertainty and could adversely affect our net cash provided by operating activities, financial condition and results of operations.

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Our price hedging strategy and future hedging transactions will be determined at our discretion. The prices at which we hedge our production in the future will be dependent upon commodities prices at the time we enter into these transactions, which may be substantially higher or lower than current prices. Accordingly, our price hedging strategy may not protect us from significant declines in prices received for our future production. Conversely, our hedging strategy may limit our ability to realize cash flows from commodity price increases. It is also possible that a substantially larger percentage of our future production will not be hedged as compared with the next few years, which would result in our oil and natural gas revenues becoming more sensitive to commodity price fluctuations.

Our hedging transactions could expose us to counterparty credit risk.

Our hedging transactions expose us to risk of financial loss if a counterparty fails to perform under a derivative contract. This risk of counterparty non-performance is of particular concern given the historical disruptions that have occurred in the financial markets and the significant decline in oil and natural gas prices which could lead to sudden changes in a counterparty’s liquidity, and impair their ability to perform under the terms of the derivative contract. We are unable to predict sudden changes in a counterparty’s creditworthiness or ability to perform. Even if we do accurately predict sudden changes, our ability to negate the risk may be limited depending upon market conditions. Furthermore, the bankruptcy of one or more of our hedge providers or some other similar proceeding or liquidity constraint, might make it unlikely that we would be able to collect all or a significant portion of amounts owed to us by the distressed entity or entities.

During periods of falling commodity prices, our hedge receivable positions increase, which increases our exposure. If the creditworthiness of our counterparties deteriorates and results in their nonperformance, we could incur a significant loss.

Certain employees of our operating subsidiaries have profits interests that may require substantial payouts and result in substantial accounting charges.

Certain employees of our operating subsidiaries have profits interests that may require substantial payouts, particularly upon liquidation of any such operating subsidiary or a disposition of assets, and may result in substantial accounting charges. Such payouts are linked to the achievement of certain return thresholds and would be paid in the event of such liquidation or disposition in a proportionate amount to the amount of cash received in respect of such liquidation or disposition. For additional information, please read "Part II., Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—General and Administrative Expense" and NOTE 13 – Equity-Based Compensation Awards in the notes to our audited financial statements for the year ended December 31, 2025 included herein.

Our only principal asset is our interest in OpCo, which in turn holds interests in our operating subsidiaries; accordingly, we depend on distributions and other payments from OpCo and our operating subsidiaries.

We are a holding company and have no material assets other than our ownership interest in OpCo, which in turn holds interests in our operating subsidiaries. Because we have no independent means of generating revenue or cash flow and we anticipate that the only source of our earnings will be cash distributions from our operating subsidiaries, our ability to make tax payments, payments under the Management Agreement and pay our other obligations, including corporate overhead expenses, is dependent on the ability of our operating subsidiaries to make distributions to OpCo and the ability of OpCo to make distributions to us in an amount sufficient to cover such obligations.

The ability of OpCo, our operating subsidiaries and other entities in which OpCo directly or indirectly holds an equity interest to make such distributions will be subject to, among other things, (i) the applicable provisions of Delaware law (or other applicable jurisdiction) that may limit the amount of funds available for distribution and (ii) restrictions in relevant debt instruments of OpCo or its subsidiaries and other entities in which OpCo directly or indirectly holds an equity interest, including any restrictions on the payment of distributions required under the Revolving Credit Facility. To the extent that we need funds and OpCo or our operating subsidiaries are restricted from making such distributions or payments under applicable law or regulation or under the terms of any current or future indebtedness agreements, or are otherwise unable to provide such funds, our liquidity and financial condition could be materially adversely affected.

Changes to applicable tax laws or regulations or the interpretation thereof or the imposition of new or increased taxes or fees could increase our future tax liabilities and adversely affect our business, results of operations, financial condition and cash flows.

We are subject to various complex evolving U.S. federal, state and local tax laws, policies, statutes, rules, regulations and ordinances, each of which could be changed, modified, interpreted or applied adversely to us, in each case, possibly with
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retroactive effect. From time to time, U.S. federal and state level legislation has been proposed that would, if enacted into law, make significant changes to tax laws, including to certain key U.S. federal and state income tax provisions currently applicable to natural gas and oil exploration and development companies. It is unclear whether any such changes will be enacted and, if enacted, how soon any such changes could take effect. Additionally, states in which we operate or own assets may impose new or increased taxes or fees on natural gas and oil extraction. The passage of any such legislation or other changes or modifications of current tax laws, any significant variance in our interpretation of current tax laws or a successful challenge of one or more of our tax positions by the U.S. Internal Revenue Service or other tax authorities could increase our future tax liabilities and adversely affect our business, results of operations, financial condition and cash flows.

Risks related to our governance structure

We are a “controlled company” within the meaning of NYSE rules and, as a result, qualify for and rely on exemptions from certain corporate governance requirements.

Because the Preferred Stockholder is the sole owner of our Non-Economic Series I Preferred Stock and accordingly has the exclusive right to appoint our Board, we are a controlled company under the Sarbanes-Oxley Act and NYSE rules. A controlled company does not need its board of directors to have a majority of independent directors or to form an independent compensation or nominating and corporate governance committee. As a controlled company, we will remain subject to rules of the Sarbanes-Oxley Act and the NYSE that require us to have an audit committee composed entirely of independent directors.

If at any time we cease to be a controlled company, we will take all action necessary to comply with the Sarbanes-Oxley Act and NYSE rules, including ensuring that our Board has a majority of independent directors and ensuring that our Compensation Committee and Nominating & Governance Committee are each composed entirely of independent directors, subject to a permitted “phase-in” period.

Our Certificate of Incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or agents.

Our Certificate of Incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our Certificate of Incorporation or our Bylaws, or (iv) any action asserting a claim against us that is governed by the internal affairs doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock will be deemed to have notice of, and consented to, the provisions of our restated Certificate of Incorporation described in the preceding sentence. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or agents, which may discourage such lawsuits against us and such persons. Alternatively, if a court were to find these provisions of our Certificate of Incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business, financial condition or results of operations.

Our Preferred Stockholder’s significant voting power limits the ability of holders of our common stock to influence our business.

Our Preferred Stockholder is the sole holder of our Non-Economic Series I Preferred Stock and is expected to retain its ownership of our Non-Economic Series I Preferred Stock until such time as it ceases to own more than 14,369,367 shares of Common Stock, subject to certain exceptions. Our Non-Economic Series I Preferred Stock entitles the holder thereof to appoint our entire Board and to certain other to approval rights with respect to certain fundamental corporate actions, including debt incurrence in excess of 10% of the outstanding indebtedness, significant equity raises, preferred equity issuances, adoption of a shareholder rights plan, amendments of our Certificate of Incorporation and certain sections of its bylaws, a sale of all or substantially all of our assets, mergers involving us, removals of our Chief Executive Officer and the liquidation or dissolution of us. Unlike common equity in traditional corporate structures, holders of our common stock will not vote for the election of directors. As a result, holders of our common stock will have less ability to influence our business than would the holders of common equity in a traditional corporate structure.

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The Preferred Stockholder’s controlling ownership position may have the effect of delaying or preventing changes in control or changes in management and may adversely affect the trading price of our Class A Common Stock to the extent investors perceive a disadvantage in owning stock of a company with a controlling shareholder.

Given its ownership of our Non-Economic Series I Preferred Stock, the Preferred Stockholder would have to approve any potential acquisition of us. The existence of a controlling shareholder may have the effect of deterring hostile takeovers, delaying or preventing changes in control or changes in management, or limiting the ability of our other shareholders to approve transactions that they may deem to be in our best interests. Moreover, the Preferred Stockholder’s controlling ownership position may adversely affect the trading price of our Class A Common Stock to the extent investors perceive a disadvantage in owning stock of a company with a controlling shareholder, whether due to a decreased likelihood of a sale of us at a premium to the then-existing trading price of our Class A Common Stock or otherwise.

Our Certificate of Incorporation provides that the Preferred Stockholder is, to the fullest extent permitted by law, under no obligation to consider the separate interests of the other stockholders and will contain provisions limiting the liability of the Preferred Stockholder.

To the fullest extent permitted by applicable law, our Certificate of Incorporation contains provisions limiting the duties owed by the Preferred Stockholder and contain provisions allowing the Preferred Stockholder to favor its own interests and the interests of its controlling persons over us and the holders of our common stock. Our Certificate of Incorporation contains provisions stating that the Preferred Stockholder is under no obligation to consider the separate interests of the other stockholders (including the tax consequences to such stockholders) in deciding whether or not to authorize us to take (or decline to authorize us to take) any action as well as provisions stating that the Preferred Stockholder shall not be liable to the other stockholders for damages or equitable relief for any losses, liabilities or benefits not derived by such stockholders in connection with such decisions.

Our Certificate of Incorporation contains a provision renouncing our interest and expectancy in certain corporate opportunities that may prevent us from receiving the benefit of certain corporate opportunities.

The “corporate opportunity” doctrine provides that corporate fiduciaries, as part of their duty of loyalty to the corporation and its stockholders, may not take for themselves an opportunity that in fairness should belong to the corporation. As such, a corporate fiduciary may generally not pursue a business opportunity which the corporation is financially able to undertake and which, by its nature, falls into the line of the corporation’s business and is of practical advantage to it, or in which the corporation has an actual or expectant interest, unless the opportunity is disclosed to the corporation and the corporation determines that it is not going to pursue such opportunity. Section 122(17) of the DGCL, however, expressly permits a Delaware corporation to renounce in its certificate of incorporation any interest or expectancy of the corporation in, or in being offered an opportunity to participate in, specified business opportunities or specified classes or categories of business opportunities that are presented to the corporation or its officers, directors or stockholders.

Our Certificate of Incorporation contains a provision that, to the maximum extent permitted under the law of the State of Delaware, we renounce any interest or expectancy in, or in being offered an opportunity to participate in, business opportunities that are from time to time presented to its officers, directors, the Preferred Stockholder or any partner, manager, member, director, officer, stockholder, employee or agent or affiliate of any such holder. We believe that this provision, which is intended to provide that certain business opportunities are not subject to the “corporate opportunity” doctrine, is appropriate, as the Preferred Stockholder and its affiliates invest in a wide array of companies, including companies with businesses similar to us. As a result of this provision, we may be not be offered certain corporate opportunities which could be beneficial to us and our stockholders.

General risks

Loss, failure or disruption of our and our operators’ information and computer systems could adversely affect our business.

We are heavily dependent on our information systems and computer based programs, including with respect to our well operations information, seismic data, electronic data processing and accounting data, and the availability and integrity of these programs and systems are essential for us to conduct our business and operations. If any of such programs or systems were to be subject to a cyberattack, to fail or to create erroneous information in our hardware or software network infrastructure, whether due to telecommunications failures, human error, natural disaster, fire, sabotage, hardware or software malfunction or defects, computer viruses, intentional acts of vandalism or terrorism or similar acts or occurrences, possible consequences include our loss of communication links, inability to find, produce, process and sell oil and natural gas and inability to
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automatically process commercial transactions or engage in similar automated or computerized business activities. Any such consequence could have a material and adverse effect on our business.

A terrorist attack or armed conflict or associated economic sanctions resulting therefrom could harm our business.

Terrorist activities, anti-terrorist efforts and other armed conflicts involving the United States or other countries may adversely affect the United States and global economies and could prevent us from meeting our financial and other obligations. If any of these events occur, the resulting political instability and societal disruption could reduce overall demand for oil and natural gas, potentially putting downward pressure on demand for our services and causing a reduction in our revenues. Under the new Trump Administration, additional sanctions to certain other countries have been proposed. These sanctions, including the threat of potential sanctions, and actions by countries in response thereto may cause disruptions in international supply chains, financial activities and operations, the full costs, burdens, and limitations of which are currently unknown and may become significant. Costs for insurance and other security may increase as a result of these threats, and some insurance coverage may become more difficult to obtain, if available at all.

Our business could be negatively affected by security threats, including cybersecurity threats, and other disruptions and is subject to complex and evolving laws and regulations regarding privacy and data protection.

We face various security threats, including cybersecurity threats to gain unauthorized access to sensitive information or to render data or systems unusable; threats to the security of our facilities and infrastructure or third-party facilities and infrastructure, such as processing plants and pipelines, and threats from terrorist or criminal actors. The potential for such security threats has subjected our operations to increased risks that could have a material and adverse effect on our business. In particular, our implementation of various procedures and controls to monitor and mitigate security threats and to increase security for our information, facilities and infrastructure may result in increased capital and operating costs. Moreover, there can be no assurance that such procedures and controls will be sufficient to prevent security breaches from occurring, particularly given the unpredictability of the timing, nature, and scope of breaches, attacks, disruptions and other incidents. If any of these incidents were to occur, they could lead to losses of sensitive information, critical infrastructure or capabilities essential to our operations and could have a material adverse effect on our reputation, financial position, results of operations or cash flows. Cybersecurity attacks in particular are becoming more sophisticated and include, but are not limited to, installation of malicious software, attempts to gain unauthorized access to data and systems, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information and corruption of data. The U.S. government also has issued public warnings that indicate that energy assets might be specific targets of cybersecurity threats. These events could damage our reputation and lead to financial losses from remedial actions, loss of business or potential liability. While we maintain insurance, we may not carry appropriate or sufficient coverage to compensate for all potential liability, and such insurance may not continue to be available to us on reasonable terms, if at all.

The regulatory environment surrounding data privacy and protection is constantly evolving and can be subject to significant change. New laws and regulations governing data privacy and the unauthorized disclosure of personal or confidential information pose increasingly complex compliance challenges and could potentially elevate our costs. Any failure to comply with these laws and regulations could result in significant penalties and legal liability. We continue to monitor and assess the impact of these laws, which in addition to penalties and legal liability, could impose significant costs for investigations and compliance, require us to change our business practices and carry significant potential liability for our business should we fail to comply with any such applicable laws.

From time to time, we may be involved in legal proceedings that could result in substantial liabilities.

Similar to many oil and natural gas companies, we are from time to time involved in various legal and other proceedings, such as title, royalty or contractual disputes, regulatory compliance matters and personal injury or property damage matters, in the ordinary course of our business. Such legal proceedings are inherently uncertain and their results cannot be predicted. Regardless of the outcome, such proceedings could have a material and adverse impact on us because of legal costs, diversion of management and other personnel and other factors. In addition, resolution of one or more such proceedings could result in liability, loss of contractual or other rights, penalties or sanctions, as well as judgments, consent decrees or orders requiring a change in our business practices. Accruals for such liability, penalties or sanctions may be insufficient, and judgments and estimates to determine accruals or range of losses related to legal and other proceedings could change from one period to the next, and such changes could be material.

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We may be unable to dispose of non-strategic assets on attractive terms and may be required to retain liabilities for certain matters.

We regularly review our asset base to assess the market value versus holding value of existing assets with a view to optimizing returns on deployed capital. For example, in 2025, we executed divestitures of over $900.0 million of non-core assets, subject to customary purchase price adjustments and transaction costs. Our ability to dispose of assets could be affected by various factors, including the availability of buyers willing to purchase assets at prices acceptable to us. Sellers typically retain certain liabilities or agree to indemnify buyers for certain matters. The magnitude of any such retained liability or indemnification obligation may be difficult to quantify at the time of the transaction and ultimately may be material. Also, as is typical in divestiture transactions, third parties may be unwilling to release us from guarantees or other credit support provided prior to the sale of the divested assets. As a result, after a sale, we may remain secondarily liable for the obligations guaranteed or supported to the extent that the buyer of the assets fails to perform these obligations.

Our operations are subject to catastrophic losses, operational hazards and unforeseen interruptions and other disruptive risks for which we may not be adequately insured.

Our operations are subject to catastrophic losses, operational hazards, unforeseen interruptions and other disruptive risks such as natural disasters, adverse weather, accidents, maritime disasters (including those involving marine vessels/terminals), fires, explosions, hazardous materials releases, terror or cyberattacks, domestic vandalism, power failures, mechanical failures and other events beyond our control. These events could result in an injury, loss of life, property damage or destruction, as well as a curtailment or an interruption in our operations and may affect our ability to meet marketing commitments.

Item 1B. Unresolved Staff Comments

None.

Item 1C. Cybersecurity

Risk management and strategy

Our business is dependent upon our computer systems, devices and networks (including both operational and information technology) to collect, process and store the data necessary to conduct almost all aspects of our business, including the operation of our oil and natural gas assets and the recording and reporting of commercial and financial information. We recognize the importance of developing, implementing, and maintaining effective cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data. We maintain a cybersecurity risk management program to identify, assess, manage, mitigate, and respond to cybersecurity threats.

Managing material risks and integrated overall risk management

Our cybersecurity risk management program incorporates various mechanisms designed to detect and monitor unusual network activity, as well as containment and incident response tools. We monitor issues that are internally discovered or externally reported that may affect our business and have processes to assess those issues for potential cybersecurity impact or risk. We also leverage information from industry groups, including ONE-ISAC, for benchmarking and awareness of cybersecurity best practices.

We have integrated our cybersecurity risk management program into our broader enterprise risk management framework. This integration is designed to make cybersecurity considerations an integral part of our decision-making processes at every level, and we believe that this integration allows cybersecurity risks to be evaluated and addressed in alignment with our business objectives and operational needs.

We maintain an information security policy based upon the National Institute of Standards and Technology ("NIST") Cybersecurity Framework ("CSF") as well as a formal Acceptable Use Policy with supplemental AI Use Guidelines that applies to all employees and is intended to define best practices and safe behaviors for cybersecurity protection. We also use enterprise-wide tools and services to promote secure practices, including, endpoint detection and response, data backups, training and testing. We aim to provide training to our employees at least quarterly on cybersecurity practices through our security awareness training platform and endeavor to conduct simulated phishing exercises on a monthly cadence.

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In the event of an incident, we intend to follow our incident response plan, which outlines the steps to be followed from incident detection to mitigation, recovery and notification, including notifying functional areas (e.g., legal), as well as senior leadership and the Board, as appropriate.

The underlying practices and controls of the cyber risk management program are based on the NIST CSF. We have several deployed teams with distinct roles and responsibilities across our IT, OT, and Cybersecurity divisions. Our Cybersecurity team comprises in-house personnel with specialized expertise, supported by external managed security services providers, consultants, and retainer services. The Cybersecurity team leads our technology risk management committee in coordination with senior and management-level representatives from key departments, including Finance, Legal, IT, and OT. We aim to perform an annual assessment of our cybersecurity risk management program against the NIST CSF. We assess third-party cybersecurity controls through a variety of methods including review of available Trust and Assurance reports and aim to include security and privacy addendums to our contracts where applicable. As part of our existing cybersecurity risk management program, we seek to identify and, as necessary, remediate, risks related to our critical IT vendors.

Risks from cybersecurity threats

We face risks from cybersecurity threats that could have a material and adverse effect on our business. As of the date of this report, though we and our service providers may have experienced certain cybersecurity incidents, we are not aware of any cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including our business, financial condition, results of operations or cash flows. However, we recognize that cybersecurity threats are continually evolving, and there remains a risk that a cybersecurity incident could negatively impact the Company. Despite the implementation of our cybersecurity processes, we cannot guarantee that a significant cybersecurity attack will not occur. While we devote resources to our security measures to protect our systems and information, these measures cannot provide absolute security. See "Part I., Item 1A. Risk Factors" for additional information about the risks to our business associated with a breach or compromise to our IT systems.

Board of Directors' oversight and management's role

The Audit Committee of the Board of Directors oversees our cybersecurity risk exposures and the steps taken by management to monitor and mitigate cybersecurity risks. Assessments of cybersecurity risks are communicated, not less than quarterly, to management by our cybersecurity team's technology risk management committee, which holds responsibility for prioritizing the remediation of cybersecurity risk, evaluating the effectiveness of compensating controls, and consulting with Internal Audit on their evaluations of the effectiveness of our control environment. The technology risk management committee engages representatives from key departments, including our IT, Operations, and Finance, combining expertise across domains. The Head of Cybersecurity & GRC leads the cybersecurity team and technology risk management committee and is responsible for assessing and managing our material risks from cybersecurity threats. The Head of Cybersecurity & GRC has over 20.0 years of experience working in the oil and gas industry in various technology and security management roles and maintains professional certifications, including the CISSP. The technology risk management committee reports to Management, who in turn briefs the Audit Committee on the effectiveness of our cybersecurity risk management program on a quarterly basis. In addition, cybersecurity risks are reviewed by our Board of Directors, at least annually, as part of our corporate risk mapping exercise.

Item 3. Legal Proceedings

We may, from time to time, be involved in litigation and claims arising out of its operations in the normal course of business. We are currently unaware of any proceedings that, in the opinion of management, will individually or in the aggregate have a material adverse effect on our financial position, results of operations or cash flows.

As an owner and operator of oil and gas properties, we are subject to various federal, state and local laws and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on the lessee under an oil and gas lease for the cost of pollution cleanup resulting from operations and subject the lessee to liability for pollution damages. In some instances, we may be directed to suspend or cease operations in the affected area. We maintain insurance coverage that is customary in the industry, although we are not fully insured against all environmental risks.

Item 4. Mine Safety Disclosures

Not applicable
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Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our Class A Common Stock is listed and traded on the NYSE under the ticker symbol "CRGY." As of January 30, 2026, we had 291 Class A common stock shareholders of record. Our future dividends depend on our level of earnings, financial requirements and other factors and will be subject to approval by our Board, applicable law and the terms of our existing debt documents, including the Revolving Credit Facility and the indentures governing the Senior Notes.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Our Board authorized a stock repurchase program in March 2024 with an approved limit of $150.0 million and a two-year term of which $86.0 million of authorization remained as of December 31, 2025. In February 2026 our Board extended the stock repurchase program indefinitely and increased the approved limit to $400.0 million. We have $336.0 million of repurchase authorization remaining under such program as of February 25, 2026. Repurchases pursuant to such program may be made from time to time in the open market, in a privately negotiated transaction, through purchases made in accordance with the Rule 10b5-1 of the Exchange Act or by such other means as will comply with applicable state and federal securities laws. The timing of any repurchases under the share repurchase program will depend on market conditions, contractual limitations and other considerations. The program may be modified, suspended or discontinued at any time, and does not obligate us to repurchase any dollar amount or number of securities.

The IRA 2022 provides for, among other things, the imposition of a 1% non-deductible U.S. federal excise tax on the fair market value of any stock repurchased by a publicly traded domestic corporation during any taxable year, with the fair market value of such repurchased stock reduced by the fair market value of certain stock issued by such corporation during such taxable year (such exercise tax, the "Stock Buyback Tax"). In the past, there have been proposals to increase the amount of the Stock Buyback Tax from 1% to 4%; however, it is unclear whether such a change in the amount of the excise tax will be enacted and, if enacted, how soon any such change could take effect. The Stock Buyback Tax first applied to our stock repurchase program in the year ended December 31, 2023, and will continue to apply in subsequent taxable years.

The following table sets forth information with respect to our repurchases of shares of Class A common stock during the quarter ended December 31, 2025.

Period
Total number of shares purchased
Average price paid per shareTotal number of shares purchased as part of publicly announced plans or programs
Approximate dollar value of shares that may yet be purchased under the plans or programs.
(in thousands)
10/1/2025 - 10/31/2025
—$——$85,984
11/1/2025 - 11/30/2025
———$85,984
12/1/2025 - 12/31/2025
———$85,984
Recent Sales of Unregistered Equity Securities

We had no sales of unregistered equity securities during the period covered by this Annual Report that were not previously reported in a Current Report on Form 8-K or Quarterly Report on Form 10-Q.

Item 6. Reserved

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations is intended to provide the reader of the financial statements with a narrative from the perspective of management on the financial condition, results of operations, liquidity and certain other factors that may affect the Company's operating results. The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and related Notes included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report and also with "Part I., Item 1A. Risk Factors" of this Annual Report. The following information updates the discussion of our financial condition provided in our previous filings, and analyzes the changes in the results of operations between the years ended December 31, 2025 and 2024. Refer to our 2024 Annual Report filed February 26, 2025 for discussion and analysis of the changes in results of operations between the years
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ended December 31, 2024 and 2023. The following discussion contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control. Our actual results could differ materially from those discussed in these forward- looking statements. Factors that could cause or contribute to such differences include, but are not limited to, commodity price volatility, capital requirements and uncertainty of obtaining additional funding on terms acceptable to the Company, realized oil, natural gas and NGL prices, the timing and amount of future production of oil, natural gas and NGLs, shortages of equipment, supplies, services and qualified personnel, as well as those factors discussed below and elsewhere in this Annual Report , particularly under “Risk Factors” and “Cautionary Statement Regarding Forward Looking statements,” all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.

Business overview

Crescent is a differentiated energy company committed to delivering value through a disciplined, returns-driven growth through acquisition strategy and consistent return of capital. Our long-life, balanced portfolio combines significant cash flow from stable production with a deep, high-quality development inventory. Our activities are focused in the Eagle Ford, Permian and Uinta Basins, and we own minerals and royalty interests across premier U.S. oil and natural gas basins, primarily operated by large, well-capitalized companies, with a core focus in the Eagle Ford. Our Class A Common Stock trades on the NYSE under the symbol “CRGY.”

Geopolitical developments and economic environment

During the last several years, prices of crude oil, natural gas and NGLs have experienced periodic downturns and sustained volatility, impacted by geopolitical events, such as Russia’s invasion of Ukraine and the related sanctions imposed on Russia, Hamas' attack against Israel and the ensuing conflict and escalation of tensions in the Middle East, including the conflict with Iran, recent developments in Venezuela, supply chain constraints, elevated interest rates, U.S. international trade and tariff policy developments and responses thereto and costs of capital and political and regulatory uncertainties. Furthermore, the United States has experienced, and may continue to experience, a significant inflationary environment, which began in 2022 that, along with international geopolitical risks and market responses to the announcement of certain tariff policies by the Trump Administration, has contributed to concerns of a potential recession in the United States in 2026 that has created further volatility. For example, OPEC announced that it is phasing out oil output cuts by increasing 411,000 barrels per day, each month from May to July 2025 and then increasing to 548,000 barrels per day in August 2025. While actual production significantly diverged from these announced targets, as several OPEC members were unable to meet the planned increases when others continued to overproduce, the actions of OPEC with respect to oil production levels and announcements of potential changes in such levels may result in further volatility in commodity prices and the oil and natural gas industry generally. Such volatility may lead to a more difficult investing and planning environment for us and our customers. While we use derivative instruments to partially mitigate the impact of commodity price volatility, our revenues and operating results depend significantly upon the prevailing prices for oil and natural gas.

Due to the cyclical nature of the oil and gas industry, fluctuating demand for oilfield goods and services can put pressure on the pricing structure within our industry. As commodity prices rise, the cost of oilfield goods and services generally also increase, while during periods of commodity price declines, oilfield costs typically lag and do not adjust downward as fast as oil prices do. The U.S. inflation rate remained relatively stable through 2024 and 2025, after an extended period of elevation. Inflationary pressures have resulted in and may result in additional increases to the costs of our oilfield goods, services and personnel, which in turn cause our capital expenditures and operating costs to rise. Tariffs announced in 2025 and any further tariffs may also increase our operating costs. Sustained levels of inflation and certain other market pressures have caused the U.S. Federal Reserve and other central banks to increase interest rates in 2022 and 2023. Although the U.S. Federal Reserve made cuts to benchmark interest rates in 2024 and in 2025, there is no guarantee that additional cuts will occur. Although the financial health of the oil and gas industry has shown improvement as compared to prior periods, to the extent elevated interest rates and inflation remain, we may experience further cost increases for our operations, including oilfield services, labor costs and equipment. Higher oil and natural gas prices may cause the costs of materials and services to continue to rise. We cannot predict any future trends in the rate of inflation, any subsequent monetary policy changes, and a significant increase in inflation, to the extent we are unable to recover higher costs through higher oil and natural gas prices and revenues, would negatively impact our business, financial condition and results of operations. See Part I, Item 1A. Risk Factors—"Risks related to the oil and natural gas industry—Inflationary issues and associated changes in monetary policy previously have resulted in and such issues,
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as well as certain proposed tariffs, may in the future result in additional increases to the cost of our goods, services and personnel, which in turn cause our capital expenditures and operating costs to rise."

Capital market transactions

Vital Exchange Offer

On January 2, 2026, in connection with the Vital Energy Merger, Crescent Energy Finance LLC completed its previously announced offers to eligible holders to exchange (the “Exchange Offers”) (i) any and all of the 7.750% senior notes due 2029 (the “Vital 2029 Notes”) of Crescent Energy Finance LLC, as successor in interest to Vital, for up to approximately $298.2 million aggregate principal amount of new 7.750% senior notes due 2029 of Crescent Energy Finance LLC (the “Crescent 2029 Notes”); and (ii) any and all of the 9.750% senior notes due 2030 (the “Vital 2030 Notes”) of Crescent Energy Finance LLC, as successor in interest to Vital, for up to approximately $302.4 million aggregate principal amount of new 9.750% senior notes due 2030 issued by Crescent Energy Finance LLC (the “Crescent 2030 Notes”). Following the settlement of the Exchange Offers, $2.9 million aggregate principal amount of the Vital 2029 Notes, $294.8 million aggregate principal amount of the Crescent 2029 Notes, $65.0 million aggregate principal amount of the Vital 2030 Notes and $237.2 million aggregate principal amount of the Crescent 2030 Notes remain outstanding, respectively.

2025 Senior Notes Offerings

In June 2025, we commenced a cash tender offer (the "Tender Offer") to purchase a portion of our outstanding 9.250% Senior Notes due 2028 (the "2028 Notes"), pursuant to which approximately $306.1 million aggregate principal amount of 2028 Notes were validly tendered and not validly withdrawn at or prior to July 22, 2025, the final tender date. In addition to the Tender Offer, we elected to redeem (the "2028 Notes Redemption") an aggregate principal amount of the 2028 Notes equal to $193.9 million, at a price of 104.625% of the unpaid principal amount of the 2028 Notes, plus accrued and unpaid interest, if any, to, but excluding, July 25, 2025, the redemption date. After giving effect to the 2028 Notes Redemption and the Tender Offer, the aggregate principal amount of the 2028 Notes outstanding is $500.0 million. Combined, we purchased the 2028 Notes at a blended price of 104.472% of par and incurred a loss on the extinguishment of debt of approximately $29.2 million, including the write-off of associated deferred financing costs, during the year ended December 31, 2025.

In July 2025, we issued $600.0 million aggregate principal amount of 8.375% senior notes due 2034 (the "2034 Notes") at par (the "2034 Notes Offering"). The 2034 Notes bear interest at an annual rate of 8.375%, which is payable on January 15 and July 15 of each year, and mature on January 15, 2034. The proceeds from the 2034 Notes Offering were approximately $588.1 million after deducting the initial purchasers' discount and offering expenses. We used the net proceeds to finance the consideration of the Tender Offer and the 2028 Notes Redemption and to repay a portion of our outstanding balance under our Revolving Credit Facility.

Corporate Simplification

In April 2025, we announced that our corporate structure had been simplified through the elimination of the Company’s Up-C structure through the exercise by the holders of all remaining shares of Class B Common Stock of their redemption rights with respect to all of their OpCo Units (the “Corporate Simplification”). Prior to the Corporate Simplification, the Up-C structure provided for holders of Crescent’s then-outstanding Class B Common Stock, which had voting (but no economic) rights with respect to Crescent, to hold a corresponding amount of economic, non-voting units of OpCo (“OpCo Units”), which were generally redeemable or exchangeable for Class A Common Stock on the terms and conditions set forth in the OpCo LLC Agreement. Pursuant to the aforementioned exercise of such right in the Corporate Simplification, all OpCo Units (other than those held by Crescent) were exchanged for an equivalent number of shares of Class A Common Stock and all outstanding shares of Class B Common Stock were cancelled. As a result of the Corporate Simplification, all of the Company’s common stockholders now hold Class A Common Stock. See NOTE 14 – Related Party Transactions for more information.

2025 Equity Transactions

In March 2025, Independence Energy Aggregator L.P., the entity through which certain private investors in affiliated KKR entities held their interests in us, exercised its redemption right with respect to 2.9 million OpCo Units, and such OpCo Units were exchanged for an equivalent number of shares of Class A Common Stock and a corresponding number of shares of Class B Common Stock were cancelled (the "2025 Class A Redemption"). The shares of Class A Common Stock were sold by Independence Energy Aggregator L.P. at a price per share of $9.91, pursuant to Rule 144, through a broker-dealer. We did not receive any proceeds or incur any material expenses related to the 2025 Class A Redemption.

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2024 Senior Notes Offerings

In June 2024, we issued $750.0 million aggregate principal amount of 7.375% senior notes due 2033 (the "2033 Notes") at par (the "June 2024 Offering"). In September 2024, we issued an additional $250.0 million aggregate principal amount of 2033 Notes at 101.000% of par (the "September 2024 Offering," and together with the June 2024 Offering, the "2033 Notes Offerings"). The aggregate proceeds from the 2033 Notes Offerings were approximately $982.1 million, after adjusting for premiums, the initial purchasers' discount and offering expenses. We used the aggregate net proceeds from the 2033 Notes Offerings to finance the majority of the SilverBow Merger, including (i) fund the cash paid to the SilverBow stockholders and holders of SilverBow restricted stock units in connection with the SilverBow Merger, and (ii) repay and extinguish SilverBow's existing indebtedness that was outstanding at the completion of the SilverBow Merger for $1.2 billion, including extinguishment costs. In connection with the repayment of SilverBow's debt we incurred a Loss on the extinguishment of debt of $36.5 million, inclusive of make whole fees.

All issuances of the 2033 Notes are treated as a single series of securities under the indenture governing the 2033 Notes, will vote together as a single class, and have substantially identical terms, other than the issue date and the issue price.

In March 2024, we issued $700.0 million aggregate principal amount of 7.625% senior notes due 2032 (the "2032 Notes") at par (the "March 2024 Offering"). In December 2024, we issued an additional $400.0 million, aggregate principal amount of 2032 Notes at 100.250% of par (the "December 2024 Offering", and together with the March 2024 Offering, the "2032 Notes Offerings"). The aggregate proceeds from the 2032 Notes Offering were approximately $1,080.7 million, after deducting the initial purchasers' discount and offering expenses. We used the net proceeds from the March 2024 Offering to finance the majority of the consideration of a cash tender offer of our 7.25% senior notes due 2026 (the "2026 Notes") and the redemption of any remaining 2026 Notes (collectively, the "Tender Offer and Redemption") following such cash tender offer of all of the aggregate principal amount of the 2026 Notes outstanding for $714.8 million after including extinguishment costs. We used the proceeds from the December 2024 Offering to repay the amounts outstanding under our Revolving Credit Facility.

All issuances of the 2032 Notes are treated as a single series of securities under the indenture governing the 2032 Notes, will vote together as a single class, and have substantially identical terms, other than the issue date and the issue price.

2024 Equity Transactions

In December 2024, we conducted an underwritten public offering of 24.7 million shares of Class A Common Stock at a price to the public of $14.00 per share (not including underwriter discounts and commissions) (the "December 2024 Equity Issuance"). This included 3.2 million shares of Class A Common Stock that were issued upon the underwriters exercise of their 30-day option to purchase additional shares to cover over-allotments pursuant to the related underwriting agreement. We received net proceeds of approximately $329.3 million from the 2024 Equity Issuance, after deducting underwriting fees and expenses.

On April 1, 2024, Independence Energy Aggregator L.P., the entity through which certain private investors in affiliated KKR entities held their interests in us, exercised its redemption right with respect to 6.0 million OpCo Units, and such OpCo Units were exchanged for an equivalent number of shares of Class A Common Stock and a corresponding number of shares of Class B Common Stock were cancelled (the "April 2024 Class A Redemption"). The shares of Class A Common Stock were subsequently sold by Independence Energy Aggregator L.P. at a price per share of $10.74, pursuant to Rule 144, through a broker-dealer. We did not receive any proceeds or incur any material expenses related to the April 2024 Class A Redemption.

In March 2024, 16.1 million OpCo Units were acquired from Independence Energy Aggregator L.P. and we cancelled a corresponding number of shares of Class B Common Stock (the "March 2024 Redemption"). Of the total OpCo Units acquired, 13.8 million were exchanged for shares of Class A Common Stock, which were subsequently sold in an underwritten public offering at a price to the public of $10.50 per share, or a net price of $9.87 per share after deducting the underwriters' discounts and commissions, from which we did not receive any proceeds, nor incur any material expenses with respect to such acquisition. In connection with the underwritten public offering, we repurchased 2.3 million OpCo Units from Independence Energy Aggregator L.P. for $22.7 million in cash and we cancelled a corresponding number of shares of Class B Common Stock (the "March 2024 Repurchase," together with the March 2024 Redemption, the "March 2024 Equity Transactions").

Acquisitions, divestitures and related reorganization

Acquisitions and related reorganization
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Vital Energy Merger

In December 2025, we consummated the Vital Energy Merger. Immediately following the Vital Energy Merger, the Company completed a series of internal transactions following which the assets of Vital and its subsidiary became held by subsidiaries of Crescent Energy Finance LLC. In connection with the Vital Energy Merger, Crescent issued 73.3 million shares of Class A Common Stock and paid $3.7 million in cash to settle outstanding Vital equity awards. In connection with the closing of the Vital Energy Merger, we repaid outstanding borrowings of $890.0 million and terminated the Vital revolving credit facility. See NOTE 3 – Acquisitions and Divestitures for additional information.

Ridgemar Acquisition

On December 3, 2024, we entered into the Ridgemar Acquisition Agreement, pursuant to which we acquired all of the outstanding equity interests in Ridgemar. On January 31, 2025, we acquired all of the outstanding equity interests in Ridgemar for $807.2 million in cash and 5.5 million shares of our Class A Common Stock. In addition, up to $170.0 million in contingent earn-out consideration may be paid in fiscal years 2026 and 2027 if quarterly NYMEX WTI prices of crude oil are above certain thresholds in 2026 and 2027. We accounted for the Ridgemar Acquisition as an asset acquisition. See NOTE 3 – Acquisitions and Divestitures for additional information.

SilverBow Merger

On July 30, 2024, we consummated the SilverBow Merger. Immediately following the SilverBow Merger, Crescent Energy Company completed a series of internal transactions following which the assets of SilverBow and its subsidiary became held by subsidiaries of Crescent Energy Finance LLC. In connection with the SilverBow Merger, Crescent issued 51.6 million shares of Class A Common Stock and paid $382.4 million in cash to former SilverBow shareholders, including amounts payable in respect of outstanding SilverBow equity awards. In connection with the closing of the SilverBow Merger, we repaid all of SilverBow’s outstanding indebtedness. See NOTE 3 – Acquisitions and Divestitures for additional information.

Other Acquisitions

In the first quarter of 2026, in a series of transactions, we acquired a portfolio of mineral and royalty interests located in the Eagle Ford from unrelated third-parties for an aggregate consideration of approximately $355.3 million, subject to customary purchase price adjustments.

In January 2025, we acquired additional interests in Crescent operated oil and gas properties located in Webb County, Texas from unaffiliated third parties for aggregate consideration of approximately $21.2 million, subject to customary post closing adjustments (the “Webb Gas Acquisition”).

In July 2025, we acquired a portfolio of oil and natural gas mineral interests located in various U.S. oil and gas basins from an unrelated third-party for total cash consideration of approximately $67.9 million, subject to customary purchase price adjustments (the "Minerals Acquisition").

In October 2024, we acquired from unaffiliated third parties certain interests in oil and gas properties, rights and related assets located in Atascosa, Frio, La Salle and McMullen Counties, Texas for aggregate consideration of approximately $156.0 million, including certain customary purchase price adjustments in the Central Eagle Ford Acquisition.

In February 2024, we acquired a portfolio of oil and natural gas mineral interests located in the Karnes Trough of the Eagle Ford Basin from an unrelated third-party (the "Eagle Ford Minerals Acquisition") for total cash consideration of approximately $25.0 million, including customary purchase price adjustments. The purchase price was funded using borrowings under our Revolving Credit Facility.

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Divestitures

During 2025, we entered into agreements with certain unrelated third-party buyers to sell non-core assets as part of our previously announced non-core asset divestiture program for total consideration in excess of $900.0 million, subject to customary purchase price adjustments and transaction costs, and we received $847.1 million in aggregate cash proceeds after preliminary customary purchase price adjustments. In connection with these transactions, we performed an assessment of the fair value of the associated net assets and liabilities and determined certain of those assets were impaired, and as such, we recorded impairment expense of $233.7 million to write down those assets to the estimated transaction price less cost to sell. In addition, we recorded a gain of $147.5 million on the sale of certain other assets.

Income Taxes

Crescent is a holding company and its sole material asset is OpCo Units. OpCo is a partnership and is generally not subject to U.S. federal and certain state taxes. Crescent is subject to U.S. federal and certain state taxes on our allocable share of any taxable income of OpCo. Taxable income or loss generated by OpCo is generally allocated and passed through to the holders of OpCo Units, including Crescent, based on their proportionate share of OpCo Unit ownership. Following the 2025 Class A Redemption and the Corporate Simplification, the Company is the sole holder of all outstanding OpCo Units. For additional information regarding income taxes, see "Notes to Consolidated Financial Statements—NOTE 11 – Income Taxes" in “Part II., Item 8. Financial Statements and Supplementary Data” of this Annual Report for more information. Following the 2025 Class A Redemption and the Corporate Simplification, The Company is the sole holder of all outstanding OpCo Units.

On July 4, 2025, the OBBBA was enacted into law. The OBBBA is a significant piece of tax legislation that includes provisions that permanently restore an EBITDA-based section 163(j) calculation for tax years beginning after December 31, 2024 and 100% bonus depreciation under section 168(k) for property acquired and placed in service after January 19, 2025, deferring the recognition of a significant portion of current federal tax for multiple years.

Stewardship

We seek to strategically improve assets we own and acquire to deliver enhanced financial returns, operations and stewardship. We believe that being a responsible operator will produce better outcomes, creating a net benefit for society and the environment, while delivering attractive returns for our investors. We view exceptional sustainability performance as an opportunity to differentiate Crescent from its peers, mitigate risks and strengthen operational performance as well as benefit our stakeholders and the communities in which we operate.

We are members of the Oil & Gas Methane Partnership 2.0 Initiative, or OGMP 2.0, and in 2025, following consecutive years on OGMP 2.0 Gold Standard pathway, we achieved the OGMP 2.0 Gold Standard Reporting designation for our credible plan to more accurately measure our methane emissions. OGMP 2.0 is the United Nations Environment Programme's flagship oil and gas reporting and mitigation program and the leading industry standard for methane emissions reporting. We previously established a Sustainability Advisory Council, an outside council comprising leading experts across key sustainability topics, to advise management and our Board on sustainability-related issues. See additional materials on our website at www.crescentenergyco.com/sustainability. However, please note that the contents and other materials on our website in general, are not intended or deemed to be incorporated into this Annual Report by reference.

How we evaluate our operations

We use a variety of financial and operational metrics to assess the performance of our oil, natural gas and NGL operations, including:

•Production volumes sold;

•Commodity prices and differentials;

•Operating expenses;

•Adjusted EBITDAX (non-GAAP); and

•Levered Free Cash Flow (non-GAAP)

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Development program and capital budget

Our development program, which consists of expenditures for drilling and completion activities, is designed to prioritize the generation of attractive risk-adjusted returns and meaningful free cash flow and is inherently flexible, with the ability to modify our capital program as necessary to react to the current market environment.

We expect to fund our 2026 capital program through cash flow from operations. Due to the flexible nature of our capital program and the fact that the majority of our acreage is held by production, we could choose to defer a portion or all of these planned capital expenditures depending on a variety of factors, including, but not limited to, the success of our drilling activities, prevailing and anticipated prices for oil, gas and NGLs and resulting well economics, the availability of necessary equipment, infrastructure and capital, the receipt and timing of required regulatory permits and approvals, seasonal conditions, drilling and acquisition costs and the level of participation by other interest owners.

Sources of revenues

Our revenues are primarily derived from the sale of our oil, natural gas and NGL production and are influenced by production volumes and realized prices, excluding the effect of our commodity derivative contracts. Pricing of commodities are subject to supply and demand as well as seasonal, political and other conditions that we generally cannot control. Our revenues may vary significantly from period to period as a result of changes in volumes of production sold or changes in commodity prices. The following table illustrates our production revenue mix for each of the periods presented:

Year Ended December 31,
202520242023
Oil69%76%76%
Natural gas20%13%16%
NGLs11%11%8%

In addition, revenue from our midstream assets is supported by commercial agreements that have established minimum volume commitments. These midstream revenues comprise the majority of our midstream and other revenue. Midstream and other revenue accounts for 5% or less of our total revenues for each of the years ended December 31, 2025, 2024 and 2023.

Production volumes sold

The following table presents historical sales volumes for our properties:

Year Ended December 31,
202520242023
Oil (MBbls)38,139 29,945 24,287 
Natural gas (MMcf)236,978 183,227 130,629 
NGLs (MBbls)17,382 13,154 8,475 
Total (MBoe)95,017 73,637 54,533 
Daily average (MBoe/d)260 201 149 

Total sales volume increased 21,380 MBoe during the year ended December 31, 2025 compared to the year ended December 31, 2024. The increase is primarily due to the SilverBow Merger and the Ridgemar Acquisition.

Commodity prices and differentials

Our results of operations depend upon many factors, particularly the price of commodities and our ability to market our production effectively.

The oil and natural gas industry is cyclical and commodity prices can be highly volatile. In recent years, commodity prices have been subject to significant fluctuations, either as a result of the geopolitical events, such as the recent events in Venezuela and expected increase in Venezuelan crude being brought to market, Russia’s invasion of Ukraine and the associated sanctions imposed on Russia, the Israel-Hamas conflict and the broader conflict in the Middle East, actions taken by OPEC, sustained levels of inflation and increased U.S. drilling activity or otherwise. Uncertainty persists regarding OPEC’s actions, increased
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U.S. drilling, proposed tariffs, inflation and the armed conflicts in Ukraine and the Middle East and ongoing hostilities in Venezuela. Additionally, market concern regarding the health of the global banking sector and any resultant recessionary effects contributed, among other factors, to increased volatility in the price for oil and natural gas.

In order to reduce the impact of fluctuations in oil and natural gas prices on revenues, we regularly enter into derivative contracts with respect to a portion of the estimated oil, natural gas and NGL production through various transactions that fix the future prices received. We plan to continue the practice of entering into economic hedging arrangements to reduce near-term exposure to commodity prices, protect cash flow and corporate returns and maintain our liquidity.

The following table presents the percentages of our production that was economically hedged through the use of derivative contracts:

Year Ended December 31,
202520242023
Oil63%67%65%
Natural gas60%51%57%
NGLs12%6%16%

The following table sets forth the average NYMEX oil and natural gas prices and our average realized prices for the periods presented:

Year Ended December 31,
202520242023
Oil (Bbl):
Average NYMEX$64.81 $75.72 $77.62 
Realized price (excluding derivative settlements)62.21 71.14 72.09 
Realized price (including derivative settlements) (1)
64.45 67.38 65.04 
Natural Gas (Mcf):
Average NYMEX$3.43 $2.27 $2.74 
Realized price (excluding derivative settlements)2.84 1.91 2.84 
Realized price (including derivative settlements) (1)
2.83 2.33 2.83 
NGLs (Bbl):
Realized price (excluding derivative settlements)$22.47 $24.10 $22.76 
Realized price (including derivative settlements) (1)
22.42 24.05 24.95 
(1)The realized price presented above does not include $83.1 million and $60.8 million received from the settlement of acquired oil, gas and NGL derivative contracts for the years ended December 31, 2025 and 2024, respectively. For the year ended December 31, 2023, the realized price presented above does not include $61.5 million paid for the settlement of acquired oil derivative contracts.

Results of operations:

Year ended December 31, 2025 compared to year ended December 31, 2024

Revenues

The following table provides the components of our revenues, respective average realized prices and net sales volumes for the periods indicated:
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Year Ended December 31,
20252024$ Change% Change
Revenues (in thousands):
Oil$2,372,726 $2,130,418 $242,308 11%
Natural gas673,540 349,858 323,682 93%
Natural gas liquids390,629 316,981 73,648 23%
Midstream and other142,887 133,662 9,225 7%
Total revenues$3,579,782 $2,930,919 $648,863 22%
Average realized prices, before effects of derivative settlements:
Oil ($/Bbl)$62.21 $71.14 $(8.93)(13%)
Natural gas ($/Mcf)$2.84 $1.91 $0.93 49%
NGLs ($/Bbl)$22.47 $24.10 $(1.63)(7%)
Total ($/Boe)$36.17 $37.99 $(1.82)(5%)
Net sales volumes:
Oil (MBbls)38,139 29,945 8,194 27%
Natural gas (MMcf)236,978 183,227 53,751 29%
NGLs (MBbls)17,382 13,154 4,228 32%
Total (MBoe)95,017 73,637 21,380 29%
Average daily net sales volumes:
Oil (MBbls/d)104 82 22 27%
Natural gas (MMcf/d)649 501 148 30%
NGLs (MBbls/d)48 36 12 33%
Total (MBoe/d)260 201 59 29%

Oil revenue. Oil revenue increased $242.3 million, or 11%, in 2025 compared to 2024. This increase was driven by a $583.0 million increase from higher sales volumes (22 MBbl/d, or 27%), partially offset by lower realized oil prices that resulted in a decrease of $340.7 million (a decline of 13% per Bbl). The increase in sales volumes was primarily driven by the SilverBow Merger and the Ridgemar Acquisition. The decrease in realized oil prices was due to lower index prices partially offset by more favorable price differentials.

Natural gas revenue. Natural gas revenue increased $323.7 million, or 93%, in 2025 compared to 2024. This increase was driven by higher realized natural gas prices that resulted in an increase of $221.0 million (an increase of 49% per Mcf) and a $102.7 million increase from higher sales volumes (148 MMcf/d, or 30%). The increase in sales volumes was primarily due to the SilverBow Merger and the Ridgemar Acquisition. The increase in realized natural gas prices was due to higher benchmark prices.

NGL revenue. NGL revenue increased $73.6 million, or 23%, in 2025 compared to 2024. This increase was driven by a $101.8 million increase from higher sales volumes (12 MBbl/d, or 33%), partially offset by lower realized NGL prices that resulted in a decrease of $28.2 million (a decline of 7% per Bbl). The increase in sales volumes was primarily driven by the SilverBow Merger and the Ridgemar Acquisition.

Midstream and other revenue. Midstream and other revenue increased $9.2 million, or 7%, in 2025 compared to 2024, driven primarily by higher sulfur revenues, higher oil blending and marketing revenues in 2025.

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Expenses

The following table summarizes our expenses for the periods indicated and includes a presentation on a per Boe basis, as we use this information to evaluate our performance relative to our peers and to identify and measure trends we believe may require additional analysis:

Year Ended December 31,
20252024$ Change% Change
Expenses (in thousands):
Operating expense$1,587,632 $1,278,055 $309,577 24%
Depreciation, depletion and amortization1,166,902 949,480 217,422 23%
Impairment expense254,551 161,542 93,009 NM*
General and administrative expense472,160 336,219 135,941 40%
Other operating costs(130,742)(12,839)(117,903)918%
Total expenses$3,350,503 $2,712,457 $638,046 24%
Selected expenses per Boe:
Operating expense$16.71 $17.36 $(0.65)(4)%
Depreciation, depletion and amortization12.28 12.89 (0.61)(5%)
*NM = Not meaningful.

Operating expense. Total operating expense increased $309.6 million, or 24%, in 2025 compared to 2024, driven primarily by the following factors:
(i)Lease and asset operating expenses increased $135.8 million, or 21%, in 2025 compared to 2024. Additionally, lease and asset operating expense per Boe decreased $0.50 per Boe from $8.58 per Boe to $8.08 per Boe. This $135.8 million increase was driven primarily by higher production from the SilverBow Merger and the Ridgemar Acquisition, which was more than offset on a per Boe basis with the additional acquired volumes and cost reduction measures on our legacy assets.
(ii)Gathering, processing and transportation expense increased $96.0 million, or 31%, and increased $0.05 per Boe from $4.25 per Boe to $4.30 per Boe in 2025 compared to 2024. The increase was driven primarily by the SilverBow Merger and the Ridgemar Acquisition.
(iii)Production and other taxes increased $56.8 million, or 35%, in 2025 compared to 2024 and increased $0.10 per Boe, or 5%, to $2.31 per Boe. This increase was driven primarily by higher oil and gas revenues, which increased the tax base upon which our production and other taxes are calculated.
(iv)Workover expense increased $14.2 million in 2025 compared to 2024, and decreased $0.04 per Boe from $0.82 per Boe to $0.78 per Boe. This absolute dollar increase was primarily driven by the SilverBow Merger and the Ridgemar Acquisition.
(v)Midstream and other operating expense increased $6.8 million, or 6%, in 2025 compared to 2024, primarily due to increased crude oil blending and marketing expenses, which was more than offset by additional oil blending and marketing revenue included as part of our Midstream and other revenue.

Depreciation, depletion and amortization. Depreciation, depletion and amortization increased $217.4 million, or 23%, in 2025 compared to 2024, driven primarily by increased production from the SilverBow Merger and the Ridgemar Acquisition.

Impairment expense. During the years ended December 31, 2025 and 2024, we evaluated our oil and natural gas properties and determined that certain amounts were impaired. As a result of our evaluations, during the year ended December 31, 2025, we recorded impairment charges of $254.6 million, including an impairment of $233.7 million to write down the carrying value of associated oil and natural gas properties to the estimated transaction price less cost to sell, and $20.8 million related to office lease impairments as part of our restructuring costs. During the year ended December 31, 2024, we recorded an impairment expense of $161.5 million related to oil and natural gas properties that were determined not to be recoverable.

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General and administrative expense. General and administrative expense ("G&A") increased $135.9 million, or 40%, in 2025 compared to 2024, driven primarily by (i) higher recurring G&A due to the SilverBow Merger and the Ridgemar Acquisition; (ii) an increase in equity-based compensation expense of $55.6 million (2025 and 2024 include additional catch up expense of $146.5 million and $121.8 million, respectively, due to change in estimate) and (iii) $30.4 million higher transaction and nonrecurring related expenses.

Year Ended December 31,
20252024$ Change% Change
General and administrative expense (in thousands)
Recurring general and administrative expense$122,759 $72,857 $49,902 68%
Transaction and nonrecurring expenses100,325 69,881 30,444 44%
Equity-based compensation249,076 193,481 55,595 29%
Total general and administrative expense$472,160 $336,219 $135,941 40%
General and administrative expense per Boe:
Recurring general and administrative expense$1.29 $0.99 $0.30 30%
Transaction and nonrecurring expenses1.06 0.95 0.11 12%
Equity-based compensation2.62 2.63 (0.01)—%

Other operating costs. Other operating costs include exploration expense and gain on sale of assets. Other operating costs decreased by $117.9 million compared to 2024, primary driven by a $118.1 million higher gain on sale of assets recognized in 2025.

Interest expense. In 2025, we incurred interest expense of $298.4 million, as compared to $216.3 million in 2024, a 38% increase. The increase was primarily driven by higher average debt balances driven by the SilverBow Merger and the Ridgemar Acquisition.

Loss on extinguishment of debt. In 2025, we incurred a loss on the extinguishment of debt of our 2028 Notes of $29.2 million related to $22.3 million premium for the Tender Offer and the 2028 Notes Redemption and $6.9 million related to the write-off of outstanding deferred finance costs related to the 2028 Notes. In 2024, we incurred a loss on the extinguishment of debt of $59.1 million composed of (i) $22.6 million related our 2026 Notes, of which $14.8 million is associated with the premium and interest paid for the Tender Offer and Redemption and $7.8 million is related to the write-off of related outstanding deferred finance costs and (ii) $36.5 million related to the make whole provision and premium associated with the repayment of SilverBow’s Second Lien Notes.

Gain (loss) on derivatives. We have entered into derivative contracts to manage our exposure to commodity price risks that impact our revenue and have derivative gains and losses related to our contingent earn-out consideration. Our gain on derivatives during 2025, changed by $417.2 million, from a comparable loss during 2024 primarily due to changes in commodity prices relative to our strike prices.

Income tax benefit (expense). For the years ended December 31, 2025 and 2024 we recognized income tax expense of $34.5 million and income tax benefit of $31.1 million, respectively, for an effective tax rate of 17.1% and 18.4%, respectively. Historically, our effective tax rate has typically been lower than the U.S. federal statutory income tax rate of 21% primarily due to effects of removing income and losses related to our noncontrolling interests and redeemable noncontrolling interests. However, as part of our Corporate Simplification, we expect our effective tax rate to be more in line with the U.S. federal statutory income tax rate plus our blended state income tax rate. Our effective tax rate decreased in 2025 primarily driven by our divestitures combined with timing of income allocated to our noncontrolling interests and redeemable noncontrolling interests.

Adjusted EBITDAX (non-GAAP) and Levered Free Cash Flow (non-GAAP)

Adjusted EBITDAX and Levered Free Cash Flow are supplemental non-GAAP financial measures used by our management to assess our operating results and liquidity. See “—Non-GAAP financial measures” section below for their definitions and application.

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The following tables present reconciliations of Adjusted EBITDAX (non-GAAP) and Levered Free Cash Flow (non-GAAP) to net income (loss), and Levered Free Cash Flow (non-GAAP) to Net cash provided by operating activities, the most directly comparable financial measures, respectively, calculated in accordance with GAAP:

Year Ended December 31,
20252024$ Change% Change
(in thousands, except percentages)
Net income (loss)$167,166 $(137,683)$304,849 (221)%
Adjustments to reconcile to Adjusted EBITDAX:
Interest expense298,432 216,263 
Loss from extinguishment of debt29,248 59,095 
Income tax expense (benefit)34,504 (31,072)
Depreciation, depletion and amortization1,166,902 949,480 
Exploration expense16,795 16,591 
Non-cash (gain) loss on derivatives(221,294)78,494 
Impairment expense254,551 161,542 
Non-cash equity-based compensation expense245,468 193,481 
Gain on sale of assets(147,537)(29,430)
Other (income) expense5,018 (1,760)
Certain redeemable noncontrolling interest distributions made by OpCo (1)
(4,242)(19,963)
Transaction and nonrecurring expenses (2)
137,433 82,484 
Settlement of acquired derivative contracts83,142 60,787 
Adjusted EBITDAX (non-GAAP)$2,065,586 $1,598,309 $467,277 29 %
Adjustments to reconcile to Levered Free Cash Flow:
Interest expense, excluding non-cash amortization of deferred financing costs, discounts, and premiums(283,915)(202,886)
Loss from extinguishment of debt, excluding non-cash write-off of deferred financing costs, discounts, and premiums(22,360)(14,817)
Current income tax benefit (expense)1,152 (4,782)
Tax-related redeemable noncontrolling interest distributions made by OpCo
(1,108)(458)
Development of oil and natural gas properties(903,232)(745,198)
Levered Free Cash Flow (non-GAAP)$856,123 $630,168 $225,955 36%
(1)In our calculation of Adjusted EBITDAX and Levered Free Cash Flow, we reflect Manager Compensation as if 100% of OpCo were owned and managed by the Company, to reflect consistent earnings and liquidity measures not impacted by the amount of OpCo's ownership under management. After giving effect to the Corporate Simplification, the Company owns 100% of outstanding OpCo Units and no longer makes distributions to holders of redeemable noncontrolling interests in OpCo.
(2)Transaction and nonrecurring expenses of $137.4 million during the year ended December 31, 2025 were primarily related to the Vital Energy Merger and the Ridgemar Acquisition transition costs, divestiture and restructuring costs, and legal settlement costs. Transaction and nonrecurring expenses of $82.5 million for the year ended December 31, 2024 were primarily related to the SilverBow Merger, capital markets transactions and integration expenses.

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Year Ended December 31,
20252024$ Change% Change
(in thousands, except percentages)
Net cash provided by operating activities$1,680,156 $1,223,086 $457,070 37 %
Changes in operating assets and liabilities(81,565)49,695 
Certain redeemable noncontrolling interest distributions made by OpCo (1)
(4,242)(19,963)
Tax-related redeemable noncontrolling interest contributions (distributions) made by OpCo(1,108)(458)
Transaction and nonrecurring expenses (2)
137,433 82,484 
Loss from extinguishment of debt, excluding non-cash write-off of deferred financing costs, discounts, and premiums
(22,360)(14,817)
Exploration expense16,795 16,591 
Other adjustments and operating activities34,246 38,748 
Development of oil and natural gas properties(903,232)(745,198)
Levered Free Cash Flow (non-GAAP)$856,123 $630,168 $225,955 36 %

(1)In our calculation of Adjusted EBITDAX and Levered Free Cash Flow, we reflect Manager Compensation as if 100% of OpCo were owned and managed by the Company, to reflect consistent earnings and liquidity measures not impacted by the amount of OpCo's ownership under management. After giving effect to the Corporate Simplification, the Company owns 100% of outstanding OpCo Units and no longer makes distributions to holders of redeemable noncontrolling interests in OpCo.
(2)Transaction and nonrecurring expenses of $137.4 million during the year ended December 31, 2025 were primarily related to the Vital Energy Merger and the Ridgemar Acquisition transition costs, divestiture and restructuring costs, and legal settlement costs. Transaction and nonrecurring expenses of $82.5 million for the year ended December 31, 2024 were primarily related to the SilverBow Merger, capital markets transactions and integration expenses.

Adjusted EBITDAX (non-GAAP) increased by $467.3 million or 29% in 2025, compared to 2024, driven primarily by additional production generated by the SilverBow Merger and the Ridgemar Acquisition, partially offset by lower oil pricing.

Levered Free Cash Flow (non-GAAP) increased by $226.0 million or 36% in 2025 compared to 2024, driven primarily by increased Adjusted EBITDAX of $467.3 million, partially offset by $158.0 million of increased development of oil and natural gas properties expenditures and additional interest expense, excluding non-cash amortization.

Liquidity and capital resources

Our primary sources of liquidity are cash flow from operations, proceeds from equity and debt offerings and borrowings under a senior secured reserve-based revolving credit agreement. Our primary expected uses of capital are for dividends to shareholders, our share repurchase program, debt repayment, including open market repurchases of our senior notes, development of our existing assets and acquisitions.

Our development program is designed to prioritize the generation of meaningful free cash flow and attractive risk-adjusted returns, and is inherently flexible, with the ability to scale our capital program as necessary to react to the existing market environment and ongoing asset performance. See “—Development program and capital budget” above for additional discussion of our capital program.

We plan to continue our practice of entering into economic hedging arrangements to reduce the impact of the near-term volatility of commodity prices and the resulting impact on our cash flow from operations. A key tenet of our focused risk management effort is an active economic hedge strategy to mitigate near-term price volatility while maintaining long-term exposure to underlying commodity prices. Our commodity derivative program focuses on entering into forward commodity contracts when investment decisions regarding reinvestment in existing assets or new acquisitions are finalized, targeting economic hedges for a portion of expected production generated by the capital investment as well as adding incremental derivatives to our production base over time. Our active derivative program allows us to protect margins and corporate returns through commodity cycles. For information regarding risks related to our derivative program, see "Part I., Item 1A. Risk Factors".
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The following table presents our cash balances and outstanding borrowings at the end of each period presented:

At December 31,
(in thousands)20252024
Cash and cash equivalents$10,157 $132,818 
Restricted cash – current725,702 5,490 
Restricted cash – noncurrent17,451 102,600 
Long-term debt5,524,128 3,049,255 

Based on our planned capital spending, our forecasted cash flows and projected levels of indebtedness, we expect to maintain compliance with the covenants under our debt agreements. Further, based on current market indications, we expect to meet in the ordinary course of business other contractual cash commitments to third parties pursuant to the various agreements subsequently described under the heading “Contractual obligations,” recognizing we may be required to meet such commitments even if our business plan assumptions were to change.

Cash flows

The following table summarizes our cash flows for the periods indicated:

Year Ended December 31,
(in thousands)20252024
Net cash provided by operating activities$1,680,156 $1,223,086 
Net cash used in investing activities(922,688)(1,198,299)
Net cash (used in) provided by financing activities(245,066)207,392 

Net cash provided by operating activities. Net cash provided by operating activities for the year ended December 31, 2025 increased by $457.1 million, or 37%, compared to 2024, primarily due to higher net income after adjusting for non-cash items and working capital changes.

Net cash used in investing activities. Net cash used in investing activities for the year ended December 31, 2025 decreased by $275.6 million, or 23%, compared to 2024. Our Acquisitions of oil and gas properties on the consolidated statements of cash flows of $818.9 million in 2025 was driven primarily by the Ridgemar Acquisition and the Minerals Acquisition, while the 2024 acquisitions of $558.6 million was driven by SilverBow Merger, the Central Eagle Ford Acquisition and the Eagle Ford Minerals Acquisition. Our cash expenditures related to the Development of oil and natural gas properties on the consolidated statements of cash flows increased by $265.4 million, and we had $792.4 million higher proceeds from the sale of oil and natural gas properties.

Net cash (provided by) used in financing activities. Net cash used in financing activities for the year ended December 31, 2025 was $245.1 million, a decrease of $452.5 million, primarily due to our debt repayments in 2025 compared to our debt borrowings in 2024.

Debt agreements

Senior Notes

2034 Notes

In July 2025, we issued $600.0 million aggregate principal amount of the 2034 Notes at par. The 2034 Notes bear interest at an annual rate of 8.375%, which is payable on January 15 and July 15 of each year, and mature on January 15, 2034. The proceeds from the 2034 Notes Offering were approximately $588.1 million after deducting the initial purchasers' discount and offering expenses. We used the net proceeds to finance the consideration of the Tender Offer and the 2028 Notes Redemption and to repay a portion of our outstanding balance under our Revolving Credit Facility.

We may, at our option, redeem all or a portion of the 2034 Notes at any time on or after July 15, 2028 at certain redemption prices. We may also redeem up to 40% of the aggregate principal amount of the 2034 Notes before July 15, 2028 with an
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amount of cash not greater than the net proceeds that we raise in certain equity offerings at a redemption price equal to 108.375% of the principal amount of the 2034 Notes being redeemed, plus accrued and unpaid interest, if any, to, but excluding the redemption date. In addition, prior to July 15, 2028, we may redeem some or all of the 2034 Notes at a price equal to 100% of the principal amount thereof, plus a “make-whole” premium, plus accrued and unpaid interest, if any, to, but excluding the redemption date.

2033 Notes

In June 2024, we issued $750.0 million aggregate principal amount of 2033 Notes at par. In September 2024, we issued an additional $250.0 million aggregate principal amount of 2033 Notes at 101.000% of par. The aggregate proceeds from the 2033 Notes Offerings were approximately $982.1 million, after adjusting for premiums, the initial purchasers' discount and offering expenses. We used the aggregate net proceeds from the 2033 Notes Offerings to finance the majority of the SilverBow Merger, including (i) fund the cash paid to the SilverBow stockholders and holders of SilverBow restricted stock units in connection with the SilverBow Merger, and (ii) repay and extinguish SilverBow's existing indebtedness that was outstanding at the completion of the SilverBow Merger for $1.2 billion, including extinguishment costs. In connection with the repayment of SilverBow's debt we incurred a Loss on the extinguishment of debt of $36.5 million, inclusive of make whole fees.

All issuances of the 2033 Notes are treated as a single series of securities under the indenture governing the 2033 Notes, will vote together as a single class, and have substantially identical terms, other than the issue date and the issue price.

The 2033 Notes bear interest at an annual rate of 7.375%, which is payable on January 15 and July 15 of each year, and mature on January 15, 2033. We may, at our option, redeem all or a portion of the 2033 Notes at any time on or after July 15, 2027 at certain redemption prices. We may also redeem up to 40% of the aggregate principal amount of the 2033 Notes before July 15, 2027 with an amount of cash not greater than the net proceeds that we raise in certain equity offerings at a redemption price equal to 107.375% of the principal amount of the 2033 Notes being redeemed, plus accrued and unpaid interest, in any, to, but excluding the redemption date, if at least 50% of the aggregate principal amount of the Notes remains outstanding immediately after such redemption and the redemption occurs within 180 days of the closing date of such equity offering. In addition, prior to July 15, 2027, we may redeem some or all of the 2033 Notes at a price equal to 100% of the principal amount thereof, plus a "make-whole" premium and accrued and unpaid interest, if any, to but excluding the redemption date.

2032 Notes

In March 2024, we issued $700.0 million aggregate principal amount of 2032 Notes at par. In December 2024, we issued an additional $400.0 million, aggregate principal amount of 2032 Notes at 100.250% of par. The aggregate proceeds from the 2032 Notes Offering were approximately $1,080.7 million, after deducting the initial purchasers' discount and offering expenses. We used the net proceeds from the March 2024 Offering to finance the majority of the consideration of the Tender Offer and Redemption of all of the aggregate principal amount of the 2026 Notes outstanding for $714.8 million after including extinguishment costs. We used the proceeds from the December 2024 Offering to repay the amounts outstanding under our Revolving Credit Facility.

All issuances of the 2032 Notes are treated as a single series of securities under the indenture governing the 2032 Notes, will vote together as a single class, and have substantially identical terms, other than the issue date and the issue price.

The 2032 Notes bear interest at an annual rate of 7.625%, which is payable on April 1 and October 1 of each year, and mature on April 1, 2032. We may, at our option, redeem all or a portion of the 2032 Notes at any time on or after April 1, 2027 at certain redemption prices. We may also redeem up to 40% of the aggregate principal amount of the 2032 Notes before April 1, 2027 with an amount of cash not greater than the net proceeds that we raise in certain equity offerings at a redemption price equal to 107.625% of the principal amount of the 2032 Notes being redeemed, plus accrued and unpaid interest, if any, to, but excluding the redemption date. In addition, prior to April 1, 2027, we may redeem some or all of the 2032 Notes at a price equal to 100% of the principal amount thereof, plus a “make-whole” premium, plus accrued and unpaid interest, if any, to, but excluding the redemption date.
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In conjunction with the Vital Energy Merger we assumed $1.0 billion aggregate principal amount of 7.875% senior notes due 2032 of Crescent Energy Finance LLC, as successor in interest to Vital (the "Vital 2032 Notes"). The Vital 2032 Notes will mature on April 15, 2032, with interest accruing at a rate of 7.875% per annum and payable semi-annually, on April 15 and October 15 of each year. We may redeem up to 35% of the aggregate principal amount of the Vital 2032 Notes before April 15, 2027 using funds in an amount not exceeding the net proceeds from one or more private or public equity offerings at a redemption price of 107.875% of the aggregate principal amount of the Vital 2032 Notes redeemed, plus accrued and unpaid interest to the date of redemption. In addition, prior to April 15, 2027, we may redeem all or a part of the Vital 2032 Notes at a redemption price equal to 100% of the principal amount, plus a “make-whole” premium as of, and accrued and unpaid interest, if any, to, the redemption date.

2030 Notes

In conjunction with the Vital Energy Merger we assumed $302.4 million aggregate principal amount of the Vital 2030 Notes. On January 2, 2026, Crescent Energy Finance LLC settled the Exchange Offers, wherein approximately $237.4 million aggregate principal amount of the Vital 2030 Notes were exchanged for approximately $237.2 million aggregate principal amount of the Crescent 2030 Notes, which tendered and accepted Vital 2030 Notes were subsequently canceled. Following the Exchange Offers, approximately $65.0 million aggregate principal amount of the Vital 2030 Notes and approximately $237.2 million of the Crescent 2030 Notes remain outstanding, which are collectively referred to as the "2030 Notes" herein. The 2030 Notes will mature on October 15, 2030, with interest accruing at a rate of 9.750% per annum and payable semi-annually, on April 15 and October 15 of each year. We may, at our option, redeem all or a portion of the 2030 Notes at any time on or after October 15, 2026 at a price equal to 104.875% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding the redemption date. If, on or after October 15, 2027, we may redeem some or all of the Crescent 2030 Notes at a price equal to 102.4375% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding the redemption date. In addition, on or after October 15, 2028 and thereafter, we may redeem some or all of the Crescent 2030 Notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding the redemption date.

2029 Notes

In conjunction with the Vital Energy Merger we assumed $298.2 million aggregate principal amount of the Vital 2029 Notes. On January 2, 2026, Crescent Energy Finance LLC settled the Exchange Offers wherein approximately $295.3 million aggregate principal amount of the Vital 2029 Notes were exchanged for approximately $294.8 million aggregate principal amount of the Crescent 2029 Notes, which tendered and accepted Vital 2029 Notes were subsequently canceled. Following the Exchange Offers, approximately $2.9 million aggregate principal amount of the Vital 2029 Notes and approximately $294.8 million of the Crescent 2029 Notes remain outstanding, which are collectively referred to as the "2029 Notes" herein (collectively with the 2028 Notes, the 2030 Notes, the Vital 2032 Notes, the 2032 Notes, the 2033 Notes and the 2034 Notes, the "Senior Notes"). The 2029 Notes will mature on July 31, 2029, with interest accruing at a rate of 7.750% per annum and payable semi-annually, on January 31 and July 31 of each year. We may, at our option, redeem all or a portion of the 2029 Notes at any time before July 31, 2026 at a price equal to 101.9375% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding the redemption date. In addition, on or after July 31, 2026, we may redeem some or all of the 2029 Notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding the redemption date.

2028 Notes

As of December 31, 2024 we had $1.0 billion of the 2028 Notes outstanding. The 2028 Notes bear interest at an annual rate of 9.250%, which is payable on February 15 and August 15 of each year and mature on February 15, 2028. We may, at our option, redeem all or a portion of the 2028 Notes at any time before February 15, 2027 at a price equal to 102.3125% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding the redemption date. In addition, on or after February 15, 2027, we may redeem some or all of the 2028 Notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding the redemption date.

In June 2025, we commenced the Tender Offer to purchase a portion of our outstanding 2028 Notes, pursuant to which approximately $306.1 million aggregate principal amount of 2028 Notes were validly tendered and not validly withdrawn at or prior to July 22, 2025, the final tender date. In addition to the Tender Offer, we elected to redeem an aggregate principal amount of the 2028 Notes equal to $193.9 million, at a price of 104.625% of the unpaid principal amount of the 2028 Notes, plus accrued and unpaid interest, if any, to, but excluding, July 25, 2025, the redemption date. After giving effect to the 2028 Notes Redemption and the Tender Offer, the aggregate principal amount of the 2028 Notes outstanding is $500.0 million. Combined,
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we purchased the 2028 Notes at a blended price of 104.472% of par and incurred a loss on the extinguishment of debt of approximately $29.2 million, including the write-off of associated deferred financing costs, during the year ended December 31, 2025.

The Senior Notes are our senior unsecured obligations and the Senior Notes and the related guarantees rank equally in right of payment with the borrowings under our Revolving Credit Facility and any of our other future senior indebtedness and senior to any of our future subordinated indebtedness. The Senior Notes are guaranteed on a senior unsecured basis by each of our existing and future subsidiaries that will guarantee our Revolving Credit Facility. The Senior Notes and the guarantees are effectively subordinated to all of our secured indebtedness (including all borrowings and other obligations under our Revolving Credit Facility) to the extent of the value of the collateral securing such indebtedness and structurally subordinated in right of payment to all existing and future indebtedness and other liabilities (including trade payables) of any future subsidiaries that do not guarantee the Senior Notes.

The indentures governing the Senior Notes contains covenants that, among other things, limit the ability of the our restricted subsidiaries to: (i) incur or guarantee additional indebtedness or issue certain types of preferred stock; (ii) pay dividends or distributions in respect of its equity or redeem, repurchase or retire its equity or subordinated indebtedness; (iii) transfer or sell assets; (iv) make investments; (v) create certain liens; (vi) enter into agreements that restrict dividends or other payments from any non-Guarantor restricted subsidiary to it; (vii) consolidate, merge or transfer all or substantially all of its assets; (viii) engage in transactions with affiliates; and (ix) create unrestricted subsidiaries.

If we experience certain kinds of changes of control accompanied by a ratings decline, holders of the Senior Notes may require us to repurchase all or a portion of their notes at certain redemption prices. The Senior Notes are not listed, and we do not intend to list the notes in the future, on any securities exchange, and currently there is no public market for the notes.

Revolving Credit Facility

We are party to a senior secured reserve-based revolving credit agreement (as amended, restated, amended and restated or otherwise modified to date, the "Revolving Credit Facility") with Wells Fargo Bank, N.A., as administrative agent for the lenders and letter of credit issuer, and the lenders from time to time party thereto. The Revolving Credit Facility matures on October 22, 2030. At December 31, 2025, we had $772.0 amount of outstanding borrowings under the Revolving Credit Facility and $16.6 million in outstanding letters of credit, our elected commitment amount was $2.0 billion, and we had $1.2 billion of available borrowings.

Borrowings under the Revolving Credit Facility bear interest at either a (i) U.S. dollar alternative base rate based on the prime rate, the federal funds effective rate or an adjusted secured overnight financing rate ("SOFR"), plus an applicable margin or (ii) SOFR, plus an applicable margin, at the election of the borrowers. The applicable margin varies based upon our borrowing base utilization then in effect. The fee payable for the unused revolving commitments at December 31, 2025 is 0.375% per year. Our weighted average interest rate on loan amounts outstanding as of December 31, 2025 was 5.56% and we had no borrowings outstanding under the Revolving Credit Facility as of December 31, 2024.

The borrowing base under the Revolving Credit Facility was $3.9 billion as of December 31, 2025. The borrowing base is subject to semi-annual scheduled redeterminations on or about April 1 and October 1 of each year, as well as (i) elective borrowing base interim redeterminations at our request not more than twice during any consecutive 12-month period or the required lenders not more than once during any consecutive 12-month period and (ii) elective borrowing base interim redeterminations at our request following any acquisition of oil and natural gas properties with a purchase price in the aggregate of at least 5.0% of the then effective borrowing base. The borrowing base will be automatically reduced upon (a) the issuance of certain permitted junior lien debt and other permitted additional debt, (b) the sale or other disposition of borrowing base properties if the aggregate net present value, discounted at 9% per annum (“PV-9”) of such properties sold or disposed of is in excess of 5.0% of the borrowing base then in effect and (c) early termination or set-off of swap agreements (x) the administrative agent relied on in determining the borrowing base or (y) if the value of such swap agreements so terminated is in excess of 5.0% of the borrowing base then in effect.

The obligations under the Revolving Credit Facility remain secured by first priority liens on substantially all of our and the guarantors’ tangible and intangible assets, including without limitation, oil and natural gas properties and associated assets and equity interests owned by us and such guarantors. In connection with each redetermination of the borrowing base, we must maintain mortgages on at least 85% of the PV-9 of the oil and gas properties that constitute borrowing base properties. Our domestic direct and indirect subsidiaries are required to be guarantors under the Revolving Credit Facility, subject to certain exceptions.
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The Revolving Credit Facility contains certain covenants that restrict the payment of cash dividends, certain borrowings, sales of assets, loans to others, investments, merger activity, commodity swap agreements, liens and other transactions without the adherence to certain financial covenants or the prior consent of our lenders. We are subject to (i) maximum consolidated total debt to consolidated EBITDAX ratio and (ii) minimum current ratio financial covenants calculated as of the last day of each fiscal quarter. The Revolving Credit Facility also contains representations, warranties, indemnifications and affirmative and negative covenants, including events of default relating to nonpayment of principal, interest or fees, inaccuracy of representations or warranties in any material respect when made or when deemed made, violation of covenants, bankruptcy and insolvency events, certain unsatisfied judgments and a change of control. If an event of default occurs and we are unable to cure such event of default, the lenders will be able to accelerate maturity and exercise other rights and remedies. At December 31, 2025, we were in compliance with each of the covenants under the Revolving Credit Facility and expect to remain in compliance with these covenants for the foreseeable future.

In October 2025, in connection with the borrowing base redetermination of our Revolving Credit Facility, we entered into the Thirteenth Amendment (the “Thirteenth Amendment”) to the credit agreement governing our Revolving Credit Facility. Among other things, the Thirteenth Amendment provides for (i) an automatic $1.3 billion increase in the borrowing base from $2.6 billion to $3.9 billion, effective upon the consummation Vital Energy Merger, subject to the satisfaction of certain conditions, (ii) an extension of the maturity date for any revolving loans to October 22, 2030 from April 10, 2029, (iii) a reduction in the applicable margin, so that loans under the Credit Agreement will be priced based on the SOFR plus 1.75% to 2.75% per annum, a reduction of 0.25% per annum, and (iv) an increase in the aggregate maximum credit amount under our Revolving Credit Facility from $3.0 billion to $6.0 billion. The Thirteenth Amendment maintains the aggregate elected commitments at $2.0 billion.

Minerals and Royalties Credit Facility

On February 23, 2026, pursuant to the terms of the Revolving Credit Facility, each of CMP Crescent Minerals I (Gray) LLC, CMP Legacy Co. LLC, DMA Royalty Investments LP, EIGF Minerals GP LLC, EIGF Minerals LP, Falcon Holding LP, IE Buffalo Holdings LLC, IE Buffalo Minerals LLC, Independence Minerals GP LLC, Independence Minerals Holdings LLC, Independence Minerals L.P., Mineral Acquisition Company I, L.P., Vine Royalty GP LLC, and Vine Royalty L.P. (collectively, the “Crescent Minerals Guarantors”) were released from their respective guarantees under the Revolving Credit Facility and, as a result of such release under the Revolving Credit Facility, under the applicable indentures governing Crescent Energy Finance’s Senior Notes (collectively, the “Release”).

In connection with the Release, on February 23, 2026, the Crescent Minerals Guarantors became guarantors under that certain Credit Agreement, by and among the Crescent Royalty Finance LLC, a Delaware limited liability company, as borrower (the “Crescent Minerals Borrower”), Wells Fargo Bank N.A, as administrative agent, collateral agent and a letter of credit issuer (“Wells Fargo”), and the lenders from time to time party thereto (the “Crescent Minerals and Royalties Credit Facility”). The Crescent Minerals and Royalties Credit Facility provides for a $1.0 billion aggregate maximum credit amount senior secured reserve-based revolving credit facility, with an initial aggregate elected commitment amount of $230.0 million, and an initial term loan facility with an aggregate commitment amount of $135.0 million. Revolving loans under the Crescent Minerals and Royalties Credit Facility mature on February 23, 2031 and initial term loans under the Crescent Minerals and Royalties Credit Facility mature on February 23, 2029. Each of the Crescent Minerals Guarantors are guarantors of the debt. As of February 23, 2026, we had $365.0 million of outstanding borrowings under the Crescent Minerals and Royalties Credit Facility.

Borrowings under the Crescent Minerals and Royalties Credit Facility bear interest at either a (i) U.S. dollar alternative base rate (based on the prime rate, the federal funds effective rate or an adjusted secured overnight financing rate (“SOFR”), plus an applicable margin or (ii) SOFR, plus an applicable margin, at the election of the Crescent Minerals Borrower. The applicable margin and fee payable for the unused revolving commitments varies based upon the Crescent Minerals Borrower’s borrowing base utilization then in effect. The weighted average interest rate on loan amounts outstanding as of February 23, 2026 was 6.612%.

The borrowing base under the Crescent Minerals and Royalties Credit Facility is $365.0 million. The borrowing base is subject to semi-annual scheduled redeterminations on or about April 1st and October 1st of each year (commencing April 1, 2027, with the first redetermination occurring on or about September 1, 2026), as well as (i) elective borrowing base interim redeterminations at the Crescent Minerals Borrower's request not more than twice during any period between consecutive scheduled redeterminations or the required lenders’ request not more than once during any period between consecutive scheduled redeterminations and (ii) elective borrowing base interim redeterminations at the Crescent Minerals Borrower’s request following any acquisition of oil and natural gas properties with proved reserves having a PV-9 (calculated at the time of acquisition) in excess of 5.0% of the then effective borrowing base. Upon the issuance of permitted junior lien debt or permitted
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additional debt, the borrowing base will be automatically reduced by 0.25 multiplied by the stated principal amount thereof. In addition, after repayment in full of the initial term loans, the required lenders have the right to adjust the borrowing base (a) upon the sale or other disposition of borrowing base properties if the aggregate PV-9 of such properties sold or disposed of (since the later of the closing date or the last redetermination date or last adjustment under this provision) is in excess of 5.0% of the borrowing base then in effect or (b) upon early termination or creation of off-setting positions in respect of swap agreements (x) upon which the lenders relied in determining the borrowing base and (y) if the Hedge PV of such terminated or off-setting positions is in excess of 5.0% of the borrowing base then in effect.

The obligations under the Crescent Minerals Credit Facility are guaranteed by the Crescent Minerals Guarantors and are secured by first priority liens on substantially all of the Crescent Minerals Borrower’s and Crescent Minerals Guarantors’ tangible and intangible assets, including without limitation, oil and natural gas properties and associated assets and equity interests owned by the Crescent Minerals Borrower and the Crescent Minerals Guarantors. In connection with each redetermination of the borrowing base, the Crescent Minerals Borrower must maintain mortgages on at least 85% of the PV-9 of the oil and gas properties that constitute borrowing base properties.

The Crescent Minerals Credit Facility contains certain covenants that restrict the payment of cash dividends, certain borrowings, sales of assets, loans to others, investments, merger activity, commodity swap agreements, liens and other transactions without the adherence to certain financial covenants or the prior consent of Wells Fargo. The Crescent Minerals Borrower and Crescent Minerals Guarantors are subject to (i) maximum leverage ratio and (ii) current ratio financial covenants calculated as of the last day of each fiscal quarter. The Crescent Minerals Credit Facility also contains representations, warranties, indemnifications and affirmative and negative covenants, including events of default relating to nonpayment of principal, interest or fees, inaccuracy of representations or warranties in any material respect when made or when deemed made, violation of covenants, bankruptcy and insolvency events, certain unsatisfied judgments and a change of control. If an event of default occurs and the Crescent Minerals Borrower and Crescent Minerals Guarantors are unable to cure such event of default, Wells Fargo will be able to accelerate maturity and exercise other rights and remedies. As of February 23, 2026, the Crescent Minerals Borrower and Crescent Minerals Guarantors were in compliance with each of the covenants under the Crescent Minerals Credit Facility and expect to remain in compliance with these covenants for the foreseeable future.

Capital expenditures

Our acquisition and development expenditures consist of acquisitions of proved and unproved property, expenditures associated with the development of our oil and natural gas properties and other asset additions. Cash expenditures for drilling, completion and recompletion activities are presented as "Development of oil and natural gas properties" in investing activities on our consolidated statements of cash flows.

We expect to fund our 2026 capital program, excluding acquisitions, through cash flow from operations. The amount and timing of capital expenditures on development of oil and natural gas properties is substantially within our control due to the held-by-production nature of our assets. We regularly review our capital expenditures throughout the year and could choose to adjust our investments based on a variety of factors, including but not limited to the success of our drilling activities, prevailing and anticipated prices for oil, natural gas and NGLs, the availability of necessary equipment, infrastructure and capital, the receipt and timing of required regulatory permits and approvals, seasonal conditions, drilling and acquisition costs and the level of participation by other interest owners. Any postponement or elimination of our development drilling program could result in a reduction of proved reserve volumes and related Standardized Measure. These risks could materially affect our business, financial condition and results of operations.

The table below presents our capital expenditures and related metrics that we use to evaluate our business for the periods presented:

Year Ended December 31,
(in thousands)20252024
Total development of oil and natural gas properties$903,232 $745,198 
Change in accruals and other non-cash adjustments47,803 (59,514)
Cash used in development of oil and natural gas properties951,035 685,684 
Cash used in acquisition of oil and natural gas properties, net of cash acquired818,873 558,600 
Non-cash acquisition of oil and natural gas properties730,684 611,423 
Total expenditure on acquisition and development of oil and natural gas properties$2,500,592 $1,855,707 

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The increase in our development of oil and natural gas properties costs in 2025 is primarily related to an increase in our operations and related to the timing of invoices. We used cash of $818.9 million in 2025 for the acquisitions of oil and natural gas properties, primarily related to the Ridgemar Acquisition and the Minerals Acquisition, as compared to $558.6 million in 2024, which primarily related to the SilverBow Merger, the Central Eagle Ford Acquisition and the Eagle Ford Minerals Acquisition. See “Notes to Consolidated Financial Statements—NOTE 3 – Acquisitions and Divestitures" in "Part II., Item 8. Financial Statements and Supplementary Data" of this Annual Report.

Contractual obligations

The following table presents our material contractual obligations at December 31, 2025:


(in thousands)
Due within
one year		Due after
one year
Total
Long-term debt – principal (1)
$— $5,572,578 $5,572,578 
Fixed rate long-term debt – interest (2)
385,467 2,007,319 2,392,786 
Derivative liabilities (3)
— 13,421 13,421 
Contingent earn-out liabilities (3)
16,153 10,717 26,870 
Asset retirement obligations (4)
19,544 383,057 402,601 
Oil and natural gas transportation and gathering agreements (5)
181,680 626,988 808,668 
Drilling commitments (6)
17,548 8,623 26,171 
Manager Compensation
78,485 73,109 151,594 
Electricity purchase commitments
48,630 156,073 204,703 
Sand purchase commitments
17,798 2,613 20,411 
Total$765,305 $8,854,498 $9,619,803 
(1)Long-term debt represents our outstanding borrowings as of December 31, 2025 consisting of our Senior Notes; (maturing on February 15, 2028, July 31, 2029, October 15, 2030, April 1, 2032, April 15, 2032, January 15, 2033 and January 15, 2034) and, if any, borrowings under our Revolving Credit Facility (maturing on October 22, 2030).
(2)Excludes variable rate debt interest payments and commitment fees related to the Revolving Credit Facility.
(3)Amounts include liabilities at December 31, 2025 that are subject to change based on future market prices for underlying commodities.
(4)Amounts represent estimated discounted costs for future dismantlement and abandonment of our oil and natural gas properties. See "Notes to Consolidated Financial Statements—NOTE 9 – Asset Retirement Obligations" in "Part II., Item 8. Financial Statements and Supplementary Data" of this Annual Report for additional discussion of our asset retirement obligations.
(5)Amounts include payments which will become due under long-term agreements to purchase goods and services used in the normal course of business to secure transportation of our oil and natural gas production to market, as well as, pipeline, processing and storage capacity.
(6)Amounts shown represent contractual liquidated damages at December 31, 2025 for failure to drill and complete wells on certain leases.

General and Administrative Expense

Our general and administrative expense includes corporate overhead costs, professional service fees, insurance, software applications, fees for transaction expenses, expenses payable under the Management Agreement with the Manager, incentive compensation award agreements granting profits interests, restricted stock units, performance stock units and other incentive awards granted to our employees and non-employee directors.

The incentive compensation portion relates to certain equity-classified and liability-classified profits interests awards issued by our subsidiaries (collectively, “Profits Awards”). These Profits Awards contain different vesting conditions ranging from performance-based conditions that vest upon the achievement of certain return thresholds to time-based service requirements ranging from one year to four years. Compensation cost for these awards is presented within General and administrative expense on our consolidated statements of operations. As of December 31, 2025, (i) unrecognized compensation cost related to unvested equity-classified profits interest awards was $1.5 million, and (ii) we carried $2.4 million in Other long term liabilities on the consolidated balance sheet and had no unrecognized compensation related to unvested liability-classified profits interest awards. Actual amounts paid towards equity-classified profits interests awards in the future will be shown as distributions to
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non-controlling interests in our consolidated financial statements, and may differ from the amounts shown for unrecognized compensation cost related to unvested equity-classified profits interest awards.

For additional information, see "Notes to Consolidated Financial Statements—NOTE 13 – Equity-Based Compensation Awards" in "Part II., Item 8. Financial Statements and Supplementary Data" of this Annual Report.

Dividends

Our future dividends depend on our level of earnings, financial requirements and other factors and will be subject to approval by our Board, applicable law and the terms of our existing debt documents, including the indentures governing the Senior Notes.

We paid cash dividends totaling $0.48 per share of our Class A Common Stock to shareholders during the year ended December 31, 2025.

On February 25, 2026, the Board approved a quarterly cash dividend of $0.12 per share, or $0.48 per share on an annualized basis, to be paid to shareholders of our Class A Common Stock with respect to the fourth quarter of 2025. The quarterly dividend is payable on March 25, 2026 to shareholders of record as of the close of business on March 11, 2026.

The payment of quarterly cash dividends is subject to management’s evaluation of our financial condition, results of operations and cash flows in connection with such payments and approval by our Board. In light of current economic conditions, management will evaluate any future increases in cash dividend on a quarterly basis.

Stock Repurchase Program

Our Board authorized a stock repurchase program in March 2024 with an approved limit of $150.0 million and a two-year term of which $86.0 million of authorization remained as of December 31, 2025. In February 2026 our Board extended the stock repurchase program indefinitely and increased the approved limit to $400.0 million. We have $336.0 million of repurchase authorization remaining under such program as of February 25, 2026. Repurchases pursuant to such program may be made from time to time in the open market, in a privately negotiated transaction, through purchases made in accordance with the Rule 10b5-1 of the Exchange Act or by such other means as will comply with applicable state and federal securities laws. The timing of any repurchases under the share repurchase program will depend on market conditions, contractual limitations and other considerations. The program may be modified, suspended or discontinued at any time, and does not obligate us to repurchase any dollar amount or number of securities.

The IRA 2022 provides for, among other things, the imposition of a 1% non-deductible U.S. federal excise tax on the fair market value of any stock repurchased by a publicly traded domestic corporation during any taxable year, with the fair market value of such repurchased stock reduced by the fair market value of certain stock issued by such corporation during such taxable year (such exercise tax, the "Stock Buyback Tax"). In the past, there have been proposals to increase the amount of the Stock Buyback Tax from 1% to 4%; however, it is unclear whether such a change in the amount of the excise tax will be enacted and, if enacted, how soon any such change could take effect. The Stock Buyback Tax first applied to our stock repurchase program in the year ended December 31, 2023, and will continue to apply in subsequent taxable years.

Critical accounting estimates

Our significant accounting policies are described in "Notes to Consolidated Financial Statements—NOTE 2 – Summary of Significant Accounting Policies" in "Part II., Item 8. Financial Statements and Supplementary Data" of this Annual Report. The Company's consolidated financial statements are prepared in accordance with GAAP. The preparation of consolidated financial statements requires management to make assumptions and estimates that affect the reported results of operations and financial position. The following is a discussion of the accounting policies, estimates and judgments that management believes are most significant in the application of GAAP used in the preparation of our consolidated financial statements. These accounting policies, among others, may involve a high degree of complexity and judgment on the part of management. Further, these estimates and other factors, including those outside of our control could have significant adverse impact to our financial condition, results of operations and cash flows.

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Crude oil, natural gas and NGL reserves

One of our most significant estimates is of proved crude oil, natural gas and NGL reserves. Reserve engineering is a subjective process of estimating volumes of economically recoverable oil and natural gas that cannot be measured in an exact manner. Our crude oil and natural gas reserves are based on a combination of proved reserves and risk-weighted probable reserves and require significant judgment. Technologies used in our reserves estimation include decline curve analysis, statistical analysis of production performance, pressure and rate transient analysis, pressure gradient analysis, reservoir simulation and volumetric analysis. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation. In addition, periodic revisions of our estimated reserves and future cash flows may be necessary as a result of a number of factors, including reservoir performance, crude oil and natural gas prices, changes in costs, capital funding and drilling plans (including our five-year development plan), technological advances, new geological or geophysical data, or other economic factors. Accordingly, reserve estimates often differ from the quantities of crude oil and natural gas that are ultimately recovered. We cannot predict the amounts or timing of future reserve revisions.

When determining the December 31, 2025 proved reserves for each property, the benchmark prices issued by the SEC were adjusted using price differentials that account for property-specific quality and location differences. If the future average crude oil prices are below the average prices used to determine proved reserves at December 31, 2025, it could have an adverse effect on our estimates of proved reserve volumes and the value of our business. It is difficult to estimate the magnitude of any potential price change and the effect on proved reserves, due to numerous factors (including future crude oil price and performance revisions). For further discussion of risks associated with our estimation of proved reserves, see "Part I., Item 1A. Risk Factors."

Estimates of proved reserves are key components of our most significant financial estimates including the computation of depreciation, depletion and amortization ("DD&A") and impairment of proved oil and natural gas properties.

Oil and natural gas properties

Oil and natural gas producing activities are accounted for under the successful efforts method of accounting. See "Notes to Consolidated Financial Statements—NOTE 2 – Summary of Significant Accounting Policies" in "Part II., Item 8. Financial Statements and Supplementary Data" of this Annual Report for further discussion of the accounting policies applicable to the successful efforts method of accounting.

The successful efforts method inherently relies on the estimation of proved crude oil, natural gas and NGL reserves. The amount of estimated proved reserve volumes affect, among other things, whether certain costs are capitalized or expensed, the amount and timing of costs depreciated, depleted or amortized into net income and the presentation of supplemental information on oil and gas producing activities. In addition, the expected future cash flows to be generated by producing properties used for testing impairment, also in part, rely on estimates of quantities of net reserves.

Depreciation, depletion and amortization

DD&A of oil and natural gas producing properties is determined on a field-by-field basis using the units-of-production method. During the years ended December 31, 2025, 2024, and 2023, we recognized DD&A expense of $1,166.9 million, $949.5 million, and $675.8 million, respectively.

While revisions of previous reserve estimates have not historically been significant to the depreciation and depletion rates, any reduction in proved reserves, could result in an acceleration of future DD&A expense. Holding all other factors constant, if proved reserves are revised downward, the rate at which we record DD&A expense would increase, reducing net income. Conversely, if proved reserves are revised upward, the rate at which we record DD&A expense would decrease. However, a sensitivity analysis is not practicable, given the numerous assumptions required to calculate proved reserves. In addition, any unfavorable adjustments to some of the above listed assumptions (e.g. commodity prices) would likely be offset by favorable adjustments in other assumptions (e.g. lower costs) as we have historically seen in our industry.

Impairment of oil and natural gas properties

Proved and unproved oil and natural gas properties that are classified as held and used are reviewed for impairment when events and circumstances indicate a possible decline in the recoverability of the carrying amount of such property. When a triggering event is identified, we compare the carrying amount of our oil and natural gas properties to the estimated undiscounted cash flows our oil and natural gas properties will generate to determine if the carrying amount is recoverable. If
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the carrying amount exceeds the estimated undiscounted cash flows, we will write-down the carrying amount of the oil and natural gas properties to fair value. The factors used to determine fair value include:
•Estimates of oil and natural gas reserves and expected timing of production. Our oil and natural gas reserves are based on a combination of proved reserves and risk-weighted probable reserves and require significant judgment. Reserve engineering is a subjective process, which requires assumptions associated with the underground accumulations of oil and natural gas, development costs, future commodity prices and the future regulatory and political environment. Any significant variance in these assumptions could materially affect the estimated quantity and value of the reserves, which would affect the fair value of our oil and natural gas properties. The estimates of our reserves help to inform our expectation of future oil and natural gas production, which will likely vary from our actual production.
•Future commodity prices, which are based on publicly available forward commodity prices for a period of time and then escalated thereafter. A decrease in estimated future commodity prices will decrease the fair value of our oil and natural gas properties.
•Future capital requirements, which are based on our internal forecasts and supported by the underlying cash flows generated from our oil and natural gas assets.
•Discount rate commensurate with the risk associated with realizing projected cash flows, which is based on a variety of factors, including market and economic conditions, as well as operational and regulatory risk.

During the years ended December 31, 2024, and 2023, we determined that there were triggering events requiring an evaluation of whether the carrying value of our oil and natural gas properties was recoverable. Following an assessment of our oil and natural gas properties, during the years ended December 31, 2024, and 2023, we recorded impairment expense of $161.5 million and $149.6 million, respectively.

Proved and unproved oil and natural gas properties are also evaluated for impairment when they become classified as held for sale. We write down the carrying value of such oil and natural gas properties to the estimated transaction price less cost to sell. During the year ended December 31, 2025, we performed an assessment of the fair value of the oil and natural gas properties classified as held for sale, and subsequently determined the transaction price less cost of sell exceeded the carrying value of certain oil and natural gas properties, which resulted in impairment expense of $233.7 million.

Properties acquired in business combinations

When sufficient market data is not available, we determine the fair values of proved and unproved oil and natural gas properties acquired in transactions accounted for as business combinations by preparing estimates of cash flows from the production of crude oil, natural gas and NGL reserves. We estimate future prices to apply to the estimated reserves quantities acquired, and estimates future operating and development costs, to arrive at estimates of future net cash flows. For the fair value assigned to proved reserves, future net cash flows are discounted using a market-based weighted average cost of capital rate determined appropriate at the time of the business combination. When estimating and valuing unproved reserves, discounted future net cash flows of probable and possible reserves are reduced by additional risk-weighting factors. For other assets and liabilities acquired in business combinations, we use a combination of available cost and market data and/or estimated cash flows to determine the fair values.

Significant reductions in the proved reserves used to determine the fair value of the acquired properties could result in future impairments of the properties. See the discussion above under "Depreciation, depletion and amortization" on the practicability of a sensitivity analysis due to changes in our fair value calculations.

Income taxes

Crescent is a holding company and its sole material assets is OpCo Units. OpCo is a partnership and is generally not subject to U.S. federal and certain state taxes. Crescent is subject to U.S. federal income and certain state tax on its allocable share of any taxable income of OpCo. Following the 2025 Class A Redemption and the Corporate Simplification, the Company is the sole holder of all outstanding OpCo Units.

Historically, our effective tax rate has been lower than the U.S. federal statutory income tax rate of 21% primarily due to effects of removing income and losses related to our noncontrolling interests and redeemable noncontrolling interests. However, as part of our Corporate Simplification, we expect our effective tax rate to be more in line with the U.S. federal statutory income tax rate plus our blended state income tax rate. Our effective tax rate for the year ended December 31, 2025 increased primarily due to our increased ownership of OpCo in 2025.
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The amount of income taxes recorded by the Company requires interpretations of complex rules and regulations of various tax jurisdictions throughout the United States. We have recognized deferred tax assets and liabilities for temporary differences, operating losses and tax credit carryforwards. We routinely assess the realizability of our deferred tax assets and reduce such assets by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. We routinely assess potential uncertain tax positions and, if required, establish accruals for such amounts. The accruals for deferred tax assets and liabilities, including deferred state income tax assets and liabilities, are subject to significant judgment and are reviewed and adjusted routinely based on changes in facts and circumstances. Although we consider our tax accruals adequate, material changes in these accruals may occur in the future, based on the impact of tax audits, changes in legislation and resolution of pending or future tax matters. Refer to "Notes to Consolidated Financial Statements—NOTE 11 – Income Taxes" in "Part II., Item 8. Financial Statements and Supplementary Data" of this Annual Report for more information.

New and revised accounting standards

See “Notes to Consolidated Financial Statements—NOTE 2 – Summary of Significant Accounting Policies” in "Part II., Item 8. Financial Statements and Supplementary Data" of this Annual Report.

Non-GAAP financial measures

Our “Management’s Discussion and Analysis of Financial Condition and Results of Operations” includes financial and liquidity measures that have not been calculated in accordance with U.S. GAAP. These non-GAAP measures include the following:
•Adjusted EBITDAX; and
•Levered Free Cash Flow.

These are supplemental non-GAAP financial and liquidity measures used by our management to assess our operating results and assist us make our investment decisions. We believe that the presentation of these non-GAAP measures provides investors with greater transparency with respect to our results of operations, as well as liquidity and capital resources, and that these measures are useful for period-to-period comparison of results.

We define Adjusted EBITDAX as net income (loss) before interest expense, loss from extinguishment of debt, income tax expense (benefit), depreciation, depletion and amortization, exploration expense, non-cash gain (loss) on derivatives, impairment expense, equity-based compensation, (gain) loss on sale of assets, other (income) expense and transaction and nonrecurring expenses. Additionally, we further subtract certain redeemable noncontrolling interest distributions made by OpCo and settlement of acquired derivative contracts. We include “Certain-redeemable noncontrolling interest distributions made by OpCo" to reflect Manager Compensation as if 100% of OpCo were owned and managed by the Company, to reflect consistent earnings and liquidity measures not impacted by the amount of OpCo's ownership under management.

Adjusted EBITDAX is not a measure of performance as determined by GAAP. We believe Adjusted EBITDAX is a useful performance measure because it allows for an effective evaluation of our operating performance when compared against our peers, without regard to our financing methods, corporate form or capital structure. We exclude the items listed above from net income (loss) in arriving at Adjusted EBITDAX because these amounts can vary substantially within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired. Adjusted EBITDAX should not be considered as an alternative to, or more meaningful than, net income (loss) as determined in accordance with GAAP, of which such measure is the most comparable GAAP measure. Certain items excluded from Adjusted EBITDAX are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax burden, as well as the historic costs of depreciable assets, none of which are reflected in Adjusted EBITDAX. Our presentation of Adjusted EBITDAX should not be construed as an inference that our results will be unaffected by unusual or nonrecurring items. Our computations of Adjusted EBITDAX may not be identical to other similarly titled measures of other companies. In addition, the Revolving Credit Facility and Senior Notes include a calculation of Adjusted EBITDAX for purposes of covenant compliance.

We define Levered Free Cash Flow as Adjusted EBITDAX less interest expense, excluding non-cash amortization of deferred financing costs, discounts, and premiums, loss from extinguishment of debt, excluding non-cash write-off of deferred financing costs, discounts, and premiums, current income tax benefit (expense), tax-related redeemable noncontrolling interest distributions made by OpCo and development of oil and natural gas properties. Levered Free Cash Flow does not take into account amounts incurred on acquisitions.
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Levered Free Cash Flow is not a measure of liquidity as determined by GAAP. Levered Free Cash Flow is a supplemental non-GAAP liquidity measure that is used by our management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. We believe Levered Free Cash Flow is a useful liquidity measure because it allows for an effective evaluation of our operating and financial performance and the ability of our operations to generate cash flow that is available to reduce leverage or distribute to our equity holders. Levered Free Cash Flow should not be considered as an alternative to, or more meaningful than, Net cash flow provided by operating activities as determined in accordance with GAAP, of which such measure is the most comparable GAAP measure, or as an indicator of actual liquidity, operating performance or investing activities. Our computations of Levered Free Cash Flow may not be comparable to other similarly titled measures of other companies.

Adjusted EBITDAX and Levered Free Cash Flow should be read in conjunction with the information contained in our consolidated financial statements prepared in accordance with GAAP. For a reconciliation of these non-GAAP measures to the nearest comparable GAAP measures, see “—Results of Operations—Adjusted EBITDAX (non-GAAP) and Levered Free Cash Flow (non-GAAP)” above.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risk, including the effects of adverse changes in commodity prices and interest rates as described below. The primary objective of the following information is to provide quantitative and qualitative information about our potential exposure to market risks. The term “market risk” refers to the risk of loss arising from adverse changes in commodity prices and interest rates. The disclosures are not meant to be precise indicators of expected future losses but rather indicators of reasonably possible losses.

Commodity price risk

Our major market risk exposure is in the pricing that we receive for our oil, natural gas and NGLs production.

Pricing for oil, natural gas and NGLs has been volatile and unpredictable for several years, and we expect this volatility to continue in the future. The prices we receive for our production depend on many factors outside of our control, such as the strength of the global economy and global supply and demand for the commodities we produce.

To reduce the impact of fluctuations in oil, natural gas and NGLs prices on our cash flows, we regularly enter into commodity derivative contracts with respect to certain of our oil, natural gas and NGL production through various transactions that limit the risks of fluctuations of future prices. A key tenet of our focused risk management effort is an active economic hedge strategy to mitigate near-term price volatility while maintaining long-term exposure to underlying commodity prices. Our hedging program allows us to protect the balance sheet and corporate returns through commodity cycles and consistently return capital to investors. Future transactions may include price swaps whereby we will receive a fixed price for our production and pay a variable market price to the contract counterparty. Additionally, we may enter into collars, whereby we receive the excess, if any, of the fixed
floor over the floating rate or pay the excess, if any, of the floating rate over the fixed ceiling. These economic hedging activities are intended to limit our near-term exposure to product price volatility and to maintain stable cash flows, a strong balance sheet and attractive corporate returns.

As of December 31, 2025, our derivative portfolio had an aggregate notional value of approximately $3.3 billion, and the fair market value of our commodity derivative contracts was a net asset of $312.2 million. We determine the fair value of our oil and natural gas commodity derivatives using valuation techniques that utilize market quotes and pricing analysis. Inputs include publicly available prices and forward price curves generated from a compilation of data gathered from third parties.

Based upon our open commodity derivative positions at December 31, 2025, a hypothetical 10% increase or decrease in the NYMEX WTI, Brent price, Henry Hub Index price, NGL prices and basis prices would change our net commodity derivative position by approximately $221.6 million and $221.9 million, respectively. The hypothetical change in fair value could be a gain or a loss depending on whether commodity prices decrease or increase.

Derivative assets and liabilities are classified on the consolidated balance sheets as risk management assets and liabilities. We use derivative instruments and enter into swap contracts which are governed by International Swaps and Derivatives Association (“ISDA”) master agreements. Amounts not offset on the consolidated balance sheets represent positions that do not meet all of the conditions to be netted on such balance sheet, such as the legally enforceable right of offset or the execution of a
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master netting arrangement. See "Notes to Consolidated Financial Statements—NOTE 5 – Derivatives" in "Part II., Item 8. Financial Statements and Supplementary Data" of this Annual Report for additional discussion.

Counterparty and customer credit risk

Our cash and cash equivalents are exposed to concentrations of credit risk. We manage and control this risk by investing these funds with major financial institutions. We often have balances in excess of the federally insured limits.

We sell oil, natural gas and NGLs to various types of customers. Credit is extended based on an evaluation of our customer’s financial conditions and historical payment record. The future availability of a ready market for oil, natural gas and NGLs depends on numerous factors outside of our control, none of which can be predicted with certainty.

For the years ended December 31, 2025, 2024 and 2023, we had certain major customers that exceeded 10% of total revenues. See "Part I., Items 1 and 2. Business and Properties—Marketing and customers.” We do not believe the loss of any single customer would materially impact our operating results because oil, natural gas and NGLs are fungible products with well-established markets and numerous purchasers.

To minimize the credit risk in derivative instruments, it is our policy to enter into derivative contracts only with counterparties that are creditworthy financial institutions deemed by our management as competent and competitive market makers. Additionally, our ISDAs allow us to net positions with the same counterparty to minimize credit risk exposure. The creditworthiness of our counterparties is subject to periodic review.

Interest rate risk

We are subject to the risk of changes in interest rates under our Revolving Credit Facility. Borrowings under the Revolving Credit Facility bear interest at either a U.S. dollar alternative base rate (based on the prime rate, the federal funds effective rate or an adjusted SOFR), plus an applicable margin or SOFR, plus an applicable margin, at the election of the borrowers. We manage our interest rate exposure by maintaining a combination of fixed and variable rate debt and monitoring the effect of market changes in interest rates. Assuming no change in the amount outstanding, the impact on interest expense of each 1% (or 100 basis point) increase or decrease in the average interest rate would result in an approximately $7.7 million increase or decrease in interest expense per year on our variable rate debt outstanding at December 31, 2025.
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Item 8. Financial Statements and Supplementary Data

INDEX TO FINANCIAL STATEMENTS
CRESCENT ENERGY COMPANY

Page
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)
Consolidated Financial Statements:
Consolidated Balance Sheets as of December 31, 2025 and 2024
Consolidated Statements of Operations for the Years Ended December 31, 2025, 2024 and 2023
Consolidated Statements of Changes in Equity for the Years Ended December 31, 2025, 2024 and 2023
Consolidated Statements of Cash Flows for the Years Ended December 31, 2025, 2024 and 2023
Notes to Consolidated Financial Statements
Financial Statement Schedules:
Schedule I - Condensed Financial Information of Registrant



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Crescent Energy Company

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Crescent Energy Company and subsidiaries (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations, changes in equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes and schedule listed in the Index at Item 8 (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, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 25, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting.

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 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. 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 Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate 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 matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Proved Oil and Natural Gas Properties – Oil and Natural Gas Reserves – Refer to Notes 2 and 4 to the Financial Statements

Critical Audit Matter Description

The Company’s proved oil and natural gas properties are depleted on a field-by-field basis using the units-of-production method based on estimated proved oil and natural gas reserves. The development of the Company’s estimated proved oil and natural gas reserves volumes requires management to make significant estimates and assumptions, including calculating the best estimate of future production and the Company’s ability to convert proved undeveloped reserves to producing oil and natural gas properties within five years of their initial proved reserves bookings.

The Company engaged an independent reserve engineer to independently engineer their proved oil and natural gas reserves in accordance with Securities and Exchange Commission Regulation S-X and the rules established by the Financial Accounting Standards Board. Changes in these estimates, assumptions or engineering data could materially affect the Company’s estimated reserves quantities and depletion expense.

Given the significant judgments made by management, performing audit procedures to evaluate the Company’s proved oil and natural gas reserve quantities, including management’s estimates and assumptions related to the best estimate of future production and
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converting proved undeveloped reserves to producing oil and natural gas properties within five years, required a high degree of auditor judgment and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s significant judgments and assumptions related to oil and natural gas reserves quantities, included the following, among others:

•We tested the operating effectiveness of controls related to the Company’s estimation of proved oil and natural gas reserves quantities and the estimates and assumptions related to converting proved undeveloped reserves to producing oil and natural gas properties within five years.

•We evaluated the Company’s best estimate of future production by:

•Comparing the Company’s best estimate of future production to historical production volumes.

•Assessing the reasonableness of the production volume decline curves by comparing to historical decline curve estimates.

•We evaluated the reasonableness of management’s estimates and assumptions related to converting proved undeveloped reserves to producing oil and natural gas properties within five years, by performing the following:

•Comparing historical conversions of proved undeveloped reserves into proved developed reserves to management’s forecasts of conversions.

•Comparing management’s forecasts to the Company’s drilling plan and the availability of capital relative to the drilling plan.

•Evaluating whether the forecasted date of development for the proved undeveloped locations are within five years of their original booking date.

•Reviewing internal communications to management and the Board of Directors.

•We evaluated the experience, qualifications and objectivity of management’s expert, an independent reserve engineering firm.

Acquisitions and Divestitures – Vital Energy Merger – Valuation of Oil and Natural Gas Properties – Refer to Notes 2 and 3 to the Financial Statements

Critical Audit Matter Description

As described in Note 3 to the financial statements, the Company consummated a stock merger with Vital Energy, Inc. (“Vital”). The acquisition was accounted for as a business combination, which required assets acquired and liabilities assumed to be recorded based on their estimated fair values at the date of acquisition, including the fair values of acquired oil and natural gas properties. The Company’s determination of the fair value of their acquired oil and natural gas properties requires management to make significant estimates and apply a high level of judgement. As such, the Company employed an independent third-party firm to value the acquired oil and natural gas properties which represent a substantial majority of the gross assets acquired. The third-party firm was predominantly used to assist management in their assessment of business and market assumptions applied in the valuation model with a high degree of subjectivity and judgement, including the application of a discount rate commensurate with the risk and current market conditions associated with realizing the projected cash flows, determining appropriate risk adjustment factors for each reserve category, determining an appropriate escalation factor for pricing and costs, and future oil and natural gas prices of the acquired oil and natural gas properties.

Given the significant judgments made by management, including the development of oil and natural gas reserves estimates using management’s experts as defined in the previous Critical Audit Matter and in developing estimates of an appropriate discount rate, reserves risk adjustment factors, escalation factor for pricing and costs, and future oil and natural gas prices, performing audit procedures over these management estimates required a higher degree of auditor judgment and an increased extent of effort, including the use of professionals with specialized skill and knowledge.

How the Critical Audit Matter Was Addressed in the Audit

In addition to the procedures specified in the previous Critical Audit Matter, our audit procedures related to management’s selection of business and market assumptions applied to the determination of fair value of oil and natural gas properties acquired from Vital, included the following, among others:
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•We tested the operating effectiveness of controls related to the Company’s estimation of business and market assumptions related to an appropriate discount rate, reserves risk adjustment factors, escalation factor for pricing and costs, and future oil and natural gas prices for the acquired oil and natural gas properties from Vital.

•We evaluated the appropriateness of the business assumptions and accounting assumptions in line with the applicable financial reporting framework, as well as assessed the acceptability of the underlying data.

•With the assistance of our fair value specialist, we evaluated the appropriateness of the market assumptions by:

◦Evaluating the appropriateness of the selected valuation technique and the mathematical models used to develop the discount rate.

◦Evaluating the guideline public companies selected by management and used in the selection of the discount rate considering the comparability of operations to the Company.

◦Comparing the selected market assumptions, specifically, the reserves risk adjustment factors, the escalation factor for pricing and costs, and the future oil and natural gas prices, to published estimates for the industry.

◦Developing a range of independent estimates for each market assumption and comparing the assumptions selected by management with the range of independent estimates.


/s/ DELOITTE & TOUCHE LLP

Houston, Texas
February 25, 2026

We have served as the Company’s auditor since 2021.
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CRESCENT ENERGY COMPANY
CONSOLIDATED BALANCE SHEETS
December 31,
2025		December 31,
2024
(in thousands, except share and unit data)
ASSETS
Current assets:
Cash and cash equivalents$10,157 $132,818 
Restricted cash725,702 5,490 
Accounts receivable, net738,333 535,416 
Accounts receivable – affiliates4,501 6,856 
Derivative assets – current322,784 53,273 
Prepaid expenses
46,309 42,595 
Other current assets
13,271 11,640 
Total current assets1,861,057 788,088 
Property, plant and equipment:
Oil and natural gas properties at cost, successful efforts method
Proved13,264,097 11,471,299 
Unproved413,444 374,306 
Oil and natural gas properties at cost, successful efforts method13,677,541 11,845,605 
Field and other property and equipment, at cost157,031 226,871 
Total property, plant and equipment13,834,572 12,072,476 
Less: accumulated depreciation, depletion, amortization and impairment(3,558,601)(3,927,422)
Property, plant and equipment, net10,275,971 8,145,054 
Derivative assets – noncurrent2,829 6,684 
Investments in equity affiliates
8,146 13,810 
Deferred tax asset
143,706 — 
Other assets151,498 207,013 
TOTAL ASSETS$12,443,207 $9,160,649 
The accompanying notes to financial statements are an integral part of these consolidated financial statements
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CRESCENT ENERGY COMPANY
CONSOLIDATED BALANCE SHEETS
December 31,
2025		December 31,
2024
(in thousands, except share and unit data)
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities$1,121,678 $740,452 
Accounts payable – affiliates46,279 18,334 
Derivative liabilities – current— 2,698 
Financing lease obligations – current4,860 3,625 
Other current liabilities86,603 62,254 
Total current liabilities1,259,420 827,363 
Long-term debt5,524,128 3,049,255 
Derivative liabilities – noncurrent13,421 37,732 
Asset retirement obligations383,057 448,945 
Deferred tax liability11,671 370,329 
Financing lease obligations – noncurrent3,228 3,526 
Other liabilities82,847 55,539 
Total liabilities7,277,772 4,792,689 
Commitments and contingencies (Note 12)
Redeemable noncontrolling interests— 1,228,329 
Equity:
Class A common stock, $0.0001 par value; 1,000,000,000 shares authorized, 334,979,293 and 189,505,209 shares issued, and 327,900,272 and 187,070,725 shares outstanding as of December 31, 2025 and 2024, respectively
33 19 
Class B common stock, $0.0001 par value; 500,000,000 shares authorized and 0 and 65,948,124 shares issued and outstanding as of December 31, 2025 and 2024, respectively
— 7 
Preferred stock, $0.0001 par value; 500,000,000 shares authorized and 1,000 Series I preferred shares issued and outstanding as of December 31, 2025 and 2024
— — 
Treasury stock, at cost; 7,079,021 and 2,434,484 shares of Class A common stock as of December 31, 2025 and 2024, respectively
(71,054)(32,430)
Additional paid-in capital5,228,928 3,227,450 
Retained earnings (accumulated deficit)
— (64,751)
Noncontrolling interests7,528 9,336 
Total equity5,165,435 3,139,631 
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY$12,443,207 $9,160,649 








The accompanying notes to financial statements are an integral part of these consolidated financial statements
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CRESCENT ENERGY COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
202520242023
(in thousands, except per share amounts)
Revenues:
Oil$2,372,726 $2,130,418 $1,750,961 
Natural gas673,540 349,858 371,066 
Natural gas liquids390,629 316,981 192,870 
Midstream and other142,887 133,662 67,705 
Total revenues3,579,782 2,930,919 2,382,602 
Expenses:
Lease and asset operating expense
767,814 632,042 581,973 
Workover expense74,537 60,312 58,441 
Gathering, processing and transportation
408,920 312,931 235,153 
Production and other taxes219,416 162,634 162,963 
Depreciation, depletion and amortization1,166,902 949,480 675,782 
Impairment expense254,551 161,542 153,495 
Exploration expense16,795 16,591 9,328 
Midstream and other operating expense
116,945 110,136 39,809 
General and administrative expense472,160 336,219 140,918 
(Gain) loss on sale of assets
(147,537)(29,430)— 
Total expenses3,350,503 2,712,457 2,057,862 
Income (loss) from operations229,279 218,462 324,740 
Other income (expense):
Gain (loss) on derivatives302,901 (114,348)166,980 
Interest expense(298,432)(216,263)(145,807)
Loss from extinguishment of debt(29,248)(59,095)— 
Other income (expense)(5,018)1,760 (282)
Income (loss) from equity affiliates
2,188 729 (413)
Total other income (expense)(27,609)(387,217)20,478 
Income (loss) before taxes201,670 (168,755)345,218 
Income tax benefit (expense)(34,504)31,072 (23,227)
Net income (loss)167,166 (137,683)321,991 
Less: net (income) loss attributable to noncontrolling interests(20,210)1,215 (472)
Less: net (income) loss attributable to redeemable noncontrolling interests(14,050)21,863 (253,909)
Net income (loss) attributable to Crescent Energy$132,906 $(114,605)$67,610 
Net income (loss) per share:
Class A common stock – basic$0.55 $(0.88)$1.02 
Class A common stock – diluted$0.54 $(0.88)$1.02 
Class B common stock – basic and diluted$— $— $— 
Weighted average shares outstanding:
Class A common stock – basic242,060 130,715 66,598 
Class A common stock – diluted245,058 130,715 67,402 
Class B common stock – basic and diluted16,609 70,519 104,271 


The accompanying notes to financial statements are an integral part of these consolidated financial statements
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CRESCENT ENERGY COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands)

Crescent Energy Company
Class A Common StockClass B Common StockSeries I Preferred StockTreasury StockAdditional Paid-in CapitalRetained Earnings (Accumulated Deficit)
Noncontrolling
Interest
Total
SharesAmountSharesAmountSharesAmountSharesAmount
Balance at December 31, 202248,282 $5 118,645 $12 1 $— 1,151 $(18,448)$804,587 $61,957 $14,178 $862,291 
Net income (loss)— — — — — — — — — 67,610 472 68,082 
Contributions— — — — — — — — — — 4,738 4,738 
Distributions— — — — — — — — — — (2,500)(2,500)
Dividend to Class A common stock— — — — — — — — — (34,120)— (34,120)
Equity based compensation80 — — — — — (80)1,305 25,681 — 12,799 39,785 
Change in deferred taxes related to basis differences associated with the Class A Conversions— — — — — — — — (79,378)— — (79,378)
Change in equity associated with the Class A Conversions30,597 3 (30,597)(3)— — — — 679,567 — — 679,567 
Change in deferred taxes related to basis differences associated with the 2023 Equity Issuance— — — — — — — — (13,122)— — (13,122)
Change in equity associated with the 2023 Equity Issuance12,650 1 — — — — — — 209,166 — — 209,167 
Balance at December 31, 202391,609 $9 88,048 $9 1 $— 1,071 $(17,143)$1,626,501 $95,447 $29,687 $1,734,510 
Net income (loss)— — — — — — — — — (114,605)(1,215)(115,820)
Contributions— — — — — — — — — — 4,280 4,280 
Distributions— — — — — — — — — — (10,111)(10,111)
Dividend to Class A common stock— — — — — — — — (19,482)(45,593)— (65,075)
Equity-based compensation108 — — — — — — — 131,850 — (13,375)118,475 
Change in deferred taxes related to basis differences associated with the SilverBow Merger — — — — — — — — (31,454)— — (31,454)
Change in deferred taxes related to basis differences associated with the 2024 Equity Transactions and 2024 Class A Repurchases— — — — — — — — (53,272)— — (53,272)
Repurchase of redeemable noncontrolling interest— — — — — — — — 653 — 70 723 
Change in equity associated with the 2024 Equity Transactions44,525 5 (22,100)(2)— — — — 821,530 — — 821,533 
Changes in equity associated with the SilverBow Merger51,562 5 — — — — 630 (7,442)754,956 — — 747,519 
Repurchases of Class A common stock(733)— — — — — 733 (7,845)(3,832)— — (11,677)
Balance at December 31, 2024187,071 $19 65,948 $7 1 $— 2,434 $(32,430)$3,227,450 $(64,751)$9,336 $3,139,631 





The accompanying notes to financial statements are an integral part of these consolidated financial statements

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CRESCENT ENERGY COMPANY
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in thousands)
Crescent Energy Company
Class A Common StockClass B Common StockSeries I Preferred StockTreasury StockAdditional Paid-in CapitalRetained Earnings (Accumulated Deficit)
Noncontrolling
Interest
Total
SharesAmountSharesAmountSharesAmountSharesAmount
Balance at December 31, 2024187,071 $19 65,948 $7 1 $— 2,434 $(32,430)$3,227,450 $(64,751)$9,336 $3,139,631 
Net income (loss)— — — — — — — — — 132,906 20,210 153,116 
Distributions— — — — — — — — — — (8,432)(8,432)
Accrued repurchase of noncontrolling interest— — — — — — — — (18,966)— (14,367)(33,333)
Dividend to Class A common stock— — — — — — — — (46,966)(68,155)— (115,121)
Equity-based compensation244 — — — — — 38 (416)238,052 — 781 238,417 
Change in deferred taxes related to basis in OpCo— — — — — — — — (136,871)— — (136,871)
Change in equity associated with the 2025 Class A Redemption2,949 — (2,949)— — — — — 34,096 — — 34,096 
Changes in equity associated with the Ridgemar Acquisition5,455 1 — — — — — — 108,048 — — 108,049 
Changes in equity associated with the Corporate Simplification62,999 6 (62,999)(7)— — — — 1,176,669 — — 1,176,668 
Changes in equity associated with the Vital Energy Merger
73,258 7 — — — — 531 (4,738)648,539 — — 643,808 
Cash distributions on behalf of former redeemable noncontrolling interest holders related to income taxes— — — — — — — — (1,013)— — (1,013)
Repurchases of Class A common stock(4,076)— — — — — 4,076 (33,470)— — — (33,470)
Other— — — — — — — — (110)— — (110)
Balance at December 31, 2025327,900 $33 — $— 1 $— 7,079 $(71,054)$5,228,928 $— $7,528 $5,165,435 





The accompanying notes to financial statements are an integral part of these consolidated financial statements
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CRESCENT ENERGY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
202520242023
Cash flows from operating activities:(in thousands)
Net income (loss)
$167,166 $(137,683)$321,991 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, depletion and amortization1,166,902 949,480 675,782 
Impairment expense254,551 161,542 153,495 
Deferred income tax expense (benefit)35,656 (35,854)22,733 
(Gain) loss on sale of assets
(147,537)(29,430)— 
(Gain) loss on derivatives(302,901)114,348 (166,980)
Net cash (paid) received on settlement of derivatives81,607 (35,854)(153,734)
Non-cash equity-based compensation expense245,468 185,613 82,936 
Amortization of debt issuance costs, premium and discount14,517 13,377 12,826 
Loss from debt extinguishment29,248 59,095 — 
Settlement of acquired derivative contracts83,142 60,787 (61,455)
Other(29,228)(32,640)(24,205)
Changes in operating assets and liabilities:
Accounts receivable69,340 111,405 (42,091)
Accounts receivable – affiliates2,355 (4,748)573 
Prepaid and other current assets12,536 3,223 (6,523)
Accounts payable and accrued liabilities(31,962)(128,016)91,822 
Accounts payable – affiliates32,470 (25,144)20,773 
Other(3,174)(6,415)7,826 
Net cash provided by operating activities1,680,156 1,223,086 935,769 
Cash flows from investing activities:
Development of oil and natural gas properties(951,035)(685,684)(581,350)
Acquisitions of oil and natural gas properties, net of cash acquired(818,873)(558,600)(849,254)
Proceeds from the sale of oil and natural gas properties847,143 54,771 28,946 
Purchases of restricted investment securities – HTM(23,355)(7,114)(12,428)
Maturities of restricted investment securities – HTM23,432 7,200 12,522 
Other— (8,872)2,764 
Net cash used in investing activities$(922,688)$(1,198,299)$(1,398,800)
The accompanying notes to financial statements are an integral part of these consolidated financial statements
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CRESCENT ENERGY COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
202520242023
Cash flows from financing activities:
Proceeds from the issuance of Senior Notes, after premium, discount and underwriting fees
$591,750 $2,074,625 $984,625 
Repurchase of Senior Notes, including extinguishment costs(522,360)(714,817)— 
Revolving Credit Facility borrowings4,579,500 3,168,300 2,283,800 
Revolving Credit Facility repayments(3,810,660)(3,191,800)(2,819,748)
Payment of debt issuance costs(9,712)(28,019)(7,241)
Settlement of acquired deferred acquisition consideration— (75,000)— 
Proceeds from the Equity Issuances after underwriting fees— 330,573 145,665 
Payment of costs related to the Equity Issuances— (1,296)(2,340)
Redeemable noncontrolling interest contributions— — 1,238 
Redeemable noncontrolling interest distributions— (293)(417)
Repayments of debt acquired in SilverBow Merger, including extinguishment costs— (1,177,138)— 
Repayments of debt acquired in Vital Energy Merger
(890,000)— — 
Dividend to Class A common stock(115,121)(65,075)(34,120)
Cash distributions to redeemable noncontrolling interests initiated by Class A common stock dividend(7,560)(32,013)(56,259)
Cash distributions to redeemable noncontrolling interests initiated by Manager Compensation(8,767)(22,237)(33,236)
Cash distributions to redeemable noncontrolling interests initiated by income taxes(1,108)(458)(798)
Repurchase of redeemable noncontrolling interests related to 2024 Equity Transactions— (22,701)— 
Repurchase of redeemable noncontrolling interests— (9,916)— 
Noncontrolling interest distributions(8,432)(10,111)(2,500)
Noncontrolling interest contributions— 4,280 1,771 
Cash paid for treasury stock acquired for equity-based compensation tax withholding(5,153)(7,536)(72)
Repurchases of Class A common stock(33,470)(7,845)— 
Other
(3,973)(4,131)(3,912)
Net cash provided by (used in) financing activities(245,066)207,392 456,456 
Net change in cash, cash equivalents and restricted cash512,402 232,179 (6,575)
Cash, cash equivalents and restricted cash, beginning of period240,908 8,729 15,304 
Cash, cash equivalents, and restricted cash, end of period$753,310 $240,908 $8,729 








The accompanying notes to financial statements are an integral part of these consolidated financial statements
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CRESCENT ENERGY COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Except as noted within the context of each footnote disclosure, the dollar amounts presented in the tabular data within these footnote disclosures are stated in thousands of dollars.)

NOTE 1 – Organization and Basis of Presentation

Organization

Crescent is a differentiated U.S. energy company committed to delivering value through a disciplined, returns-driven growth through acquisition strategy and consistent return of capital. Our long-life, balanced portfolio combines significant cash flow from stable production with deep, high-quality development inventory. Our activities are focused in the Eagle Ford, Permian Basin and Uinta Basin, and we own minerals and royalty interests across premier U.S. oil and natural gas basins, primarily operated by large, well-capitalized companies, with a core focus in the Eagle Ford.

Corporate Structure

Our Class A Common Stock is listed on the New York Stock Exchange under the symbol “CRGY.” Crescent is a holding company, the sole material assets of which are units ("OpCo Units") representing limited liability company interest in Crescent Energy OpCo LLC ("OpCo"). The assets and liabilities of OpCo represent substantially all of our consolidated assets and liabilities, with the exception of certain current and deferred taxes and certain liabilities under the Management Agreement, as defined within NOTE 14 – Related Party Transactions. Certain restrictions and covenants related to the transfer of assets from OpCo are discussed further in NOTE 8 – Debt. Shares of Crescent Class A common stock, par value $0.0001 per share ("Class A Common Stock"), have both voting and economic rights with respect to Crescent. . Additionally, an affiliate of KKR & Co. Inc. (together with its subsidiaries, the "KKR Group") is the sole holder of Crescent's non-economic Series I preferred stock, $0.0001 par value per share, which entitles the holder thereof to appoint the Board of Directors of Crescent and to certain other approval rights.

Corporate Simplification

In April 2025, we announced that our corporate structure had been simplified through the elimination of the Company’s Up-C structure through the exercise by the holders of all remaining shares of Class B Common Stock, par value $0.0001 per share (“Class B Common Stock”), of their redemption rights with respect to all of their OpCo Units (the “Corporate Simplification”). Prior to the Corporate Simplification, the Up-C structure provided for holders of Crescent’s then-outstanding Class B Common Stock, which had voting (but no economic) rights with respect to Crescent, to hold a corresponding amount of economic, non-voting units of OpCo (“OpCo Units, which were generally redeemable or exchangeable for Class A Common Stock on the terms and conditions set forth in OpCo’s Amended and Restated Limited Liability Company Agreement (the “OpCo LLC Agreement”). Pursuant to the aforementioned exercise of such right in the Corporate Simplification, all OpCo Units (other than those held by Crescent) were exchanged for an equivalent number of shares of Class A Common Stock and all outstanding shares of Class B Common Stock were cancelled. As a result of the Corporate Simplification, all of the Company’s common stockholders now hold Class A Common Stock. See NOTE 14 – Related Party Transactions for more information.

Basis of Presentation

Our consolidated financial statements (the “financial statements”) include the accounts of the Company and its subsidiaries after the elimination of intercompany transactions and balances and are presented in accordance with U.S. generally accepted accounting principles (“GAAP”). We have no elements of other comprehensive income for the periods presented.

Crescent is a holding company that conducts substantially all of its business through its consolidated subsidiaries, including (i) OpCo, which, as of December 31, 2025, is wholly-owned by Crescent, and as of December 31, 2024, was 74% owned by Crescent and 26% owned by holders of our redeemable noncontrolling interests representing former owners of Independence, and (ii) Crescent Energy Finance LLC, OpCo's wholly owned subsidiary. Crescent and OpCo have no operations, or material cash flows, assets or liabilities other than their investment in Crescent Energy Finance LLC. As the sole managing member of OpCo, Crescent is responsible for all operational, management and administrative decisions related to OpCo’s business. Because the unit holders of OpCo lacked the characteristics of a controlling financial interest, OpCo was determined to be a variable interest entity. Crescent is considered the primary beneficiary of OpCo as it has both the power to direct OpCo and the right to receive benefits from OpCo. As a result, Crescent consolidates the financial results of OpCo and its subsidiaries,
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including Crescent Energy Finance LLC. See “— Corporate Structure” above for more information regarding our corporate structure.

The financial statements include undivided interests in oil and natural gas properties. We account for our share of oil and natural gas properties by reporting our proportionate share of assets, liabilities, revenues, costs, and cash flows within the accompanying consolidated balance sheets, statements of operations, and statements of cash flows.

NOTE 2 – Summary of Significant Accounting Policies

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make use of estimates and assumptions that affect the reported amount 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 period. We use historical experience and various other assumptions and information that are believed to be reasonable under the circumstances in developing our estimates and judgments. Estimates and assumptions about future events and their effects cannot be predicted with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as our operating environment changes. While we believe that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results may differ from these estimates. Our significant estimates include the fair value of acquired assets and liabilities, oil and natural gas reserves, impairment of proved and unproved oil and natural gas properties, valuation of derivative instruments and income taxes.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash deposited in commercial bank accounts and highly liquid investments purchased with an original maturity of three months or less at the date of purchase. Cash and cash equivalents are maintained with major financial institutions in the U.S. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits; however, the financial stability of the financial institutions is regularly monitored, and we believe that we do not have exposure to any significant default risk.

Restricted Cash

Restricted cash consists of funds earmarked for a special purpose and therefore not available for immediate and general use. Our restricted cash is comprised of cash that is contractually required to be restricted for a variety of purposes including to fund acquisitions and to pay for the future abandonment of certain wells. As of the date these financial statements are issued, restrictions associated with $713.7 million were released. Restricted cash is presented separately in current assets while the noncurrent portion is included in Other assets on our consolidated balance sheets.

The following table provides a reconciliation of cash and restricted cash presented on our balance sheets to amounts shown in our consolidated statements of cash flows:

As of December 31,
202520242023
(in thousands)
Cash and cash equivalents
$10,157 $132,818 $2,974 
Restricted cash – current725,702 5,490 261 
Restricted cash – noncurrent17,451 102,600 5,494 
Total cash, cash equivalents and restricted cash$753,310 $240,908 $8,729 

Accounts Receivable

We routinely assess the recoverability of our accounts receivable, which primarily comprise amounts due from (i) purchasers of our oil, natural gas and NGL production and (ii) joint interest owners on properties that we operate. We monitor our exposure to credit risk primarily by reviewing credit ratings, financial statements and payment history. We extend credit terms based on our evaluation of each counterparty’s creditworthiness. Generally, our oil and natural gas receivables are collected within 45 to 60 days of production. Our joint interest billings are collected within the month after they are billed, and we have the ability to withhold future revenue distributions to recover any nonpayment of our joint interest billings.
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We establish allowances for credit losses equal to the estimable portions of accounts receivable for which failure to collect is expected to occur primarily based on a historical loss rate analysis. We estimate uncollectible amounts based on the length of time that the accounts receivables have been outstanding, historical collection experience and current and future economic and market conditions. We consider forecasts of future economic conditions in the estimate of our expected credit losses, in particular whether there is an increase in the probability that our counterparties will be unable to pay their obligations when due, and adjust our allowance for expected credit losses, when necessary. We established an allowance for expected credit losses of $7.4 million as of December 31, 2025 related to certain joint interest billings receivables for which we are no longer able to withhold future revenue distributions due to the sale of the attributable oil and gas properties. Our allowance for expected credit losses was nominal as of December 31, 2024. We incurred credit loss expense or bad debt expense related to our accounts receivable of $7.4 million during the year ended December 31, 2025, and we did not incur credit loss expense or bad debt expense related to our accounts receivable as of December 31, 2024, and 2023. We do not have any off-balance sheet credit exposure related to our customers.

Restricted Investment Securities

We hold U.S. Treasury securities, which are contractually required to be set aside to pay for the future abandonment of certain wells in California. Due to this restriction, we report these investment securities as noncurrent and include them within Other assets on our consolidated balance sheets.

We classify our investment in these debt securities at the acquisition date and re-evaluate the classification at each balance sheet date. We classify debt securities purchased with the positive intent and ability to hold until their maturity date as held-to-maturity investments (“HTM”) and carry these investments at amortized cost. Premiums and discounts on purchases are amortized over the remaining time to maturity of the security and the amortization is recorded as an adjustment to interest income. At each of December 31, 2025 and 2024, we had restricted investment securities – HTM with a carrying value of $7.2 million and $7.1 million, respectively.

Oil and Natural Gas Properties

Oil and natural gas producing activities are accounted for under the successful efforts method of accounting. Under this method, exploration costs, other than the costs of drilling exploratory wells, are charged to expense as incurred. Costs that are associated with the drilling of successful exploration wells are capitalized if proved reserves are found. Capitalized costs attributed to the properties are charged as an operating expense through depreciation, depletion and amortization (“DD&A”). Dry hole costs associated with developing proved fields are capitalized. Costs associated with the drilling of exploratory wells that do not find proved reserves, geological and geophysical costs and costs of certain non-producing leasehold costs are expensed once evaluated and determined to be a dry hole. We incurred exploration expense of $16.8 million, $16.6 million, and $9.3 million for the years ended December 31, 2025, 2024 and 2023, respectively, primarily related to seismic transfer fees associated with our acquisitions.

Delay and surface rentals are charged to expense as incurred. The costs to acquire mineral interests in oil and natural gas properties and lease acquisition costs are capitalized when incurred. If proved reserves are found on an undeveloped property, leasehold costs are transferred to proved properties.

The capitalized costs of producing oil and natural gas properties are depleted on a field-by-field basis using the units-of-production method based on the ratio of current production to estimated total net proved oil, natural gas and NGL reserves. Proved developed reserves are used in computing depletion rates for drilling and development costs and total proved reserves are used for depletion rates of leasehold costs.

Upon the sale of a complete or partial unit of a proved property or pipeline and related facilities, the cost and related accumulated DD&A are removed from the property accounts and any gain or loss is recognized.

Estimated dismantlement and abandonment costs for oil and natural gas properties are capitalized at their estimated net present value and amortized on a unit-of-production basis over the remaining life of the related proved developed reserves. Refer to Asset Retirement Obligations below for additional discussion.

During the years ended December 31, 2025, 2024 and 2023, we recognized depletion expense of $1.1 billion, $892.4 million and $626.6 million, respectively.

Other Property, Plant and Equipment
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We have other property, plant, and equipment that consists principally of gathering and processing facilities, land, vehicles, computer hardware and software, office furniture and equipment, buildings and leasehold improvements. Other property, plant, and equipment, except land, is recorded at cost and depreciated on a straight-line basis over the estimated useful lives of the respective assets which range from three to thirty years. Leasehold improvements are amortized over the shorter of their economic lives or the lease term. The cost of maintenance and repairs are expensed in the period incurred. Expenditures that extend the life or improve existing property and equipment are capitalized.

Impairment of Oil and Natural Gas Properties

Proved and unproved oil and natural gas properties are reviewed for impairment when events and circumstances indicate a possible decline in the recoverability of the carrying amount of such property. When a triggering event is identified, we compare the carrying amount of our oil and natural gas properties to the estimated undiscounted cash flows our oil and natural gas properties will generate to determine if the carrying amount is recoverable. We perform this analysis on an asset pool basis. If the carrying amount exceeds the estimated undiscounted cash flows, we will write-down the carrying amount of the oil and natural gas properties to fair value. The factors used to determine fair value include, but are not limited to, estimates of reserves, future commodity prices, future production estimates, and discount rates commensurate with the risk associated with realizing the projected cash flows.

During the year ended December 31, 2025, in conjunction with our asset divestitures, we determined certain of those assets were impaired and we recorded impairment expense of $233.7 million to write down those assets to the estimated transaction price less cost to sell. During the years ended December 31, 2024 and 2023, we determined that there were triggering events requiring the evaluation of the recoverability of certain of our oil and natural gas properties and recorded an impairment expense of $161.5 million and $149.6 million.

Investments in Equity Affiliates

If an entity is organized as a limited partnership or limited liability company and maintains separate ownership accounts, we generally account for our investment using the equity method if our ownership interest is between 3% and 50%, unless our interest is so minor that we have virtually no influence over the investee’s operating and financial policies. For all other types of investments, we generally apply the equity method of accounting if our ownership interest is between 20% and 50% and we exercise significant influence over the investee’s operating and financial policies. We eliminate our proportionate share of profits and losses from transactions with equity affiliates to the extent such amounts remain on our consolidated balance sheets (or those of our equity affiliates).

Under the equity method, our proportionate share of each investees' net income increases the balance of our investment, while a net loss or receipt of dividends decreases the balance of our investment. Our proportionate share of net income from our equity affiliates are reported as a single line item within income (loss) from equity affiliates in our consolidated statements of operations.

During the year ended December 31, 2023, we identified an indicator that the carrying value of our equity method investment was not recoverable and thus recorded an other-than-temporary impairment charge of $3.9 million.

Debt Issuance Costs

We capitalize costs incurred in connection with obtaining financing associated with our Revolving Credit Facility and the 2028 Notes, 2029 Notes, 2030 Notes, Vital 2032 Notes, 2032 Notes, 2033 Notes and 2034 Notes (each as defined below and collectively, the "Senior Notes") and amortize such costs as additional interest expense over the life of the underlying indebtedness. These costs include fees paid to financial institutions and professional fees. Debt issuance costs associated with our Revolving Credit Facility are included in Other assets in our consolidated balance sheets. Debt issuance costs associated with our Senior Notes are included as a contra-liability in Long-term debt in our consolidated balance sheets.

Revenue Recognition

Oil, Gas and NGL Revenues
We hold operated and non-operated working interests and mineral and royalty interests in producing assets that function as follows:

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Operated working interests: We are responsible for the day-to-day management and operation of the field as well as negotiations required for post-production transportation, gathering, processing and marketing. We remit proceeds from sales of resulting hydrocarbons to third parties back to non-operators less costs as agreed in the applicable joint operating agreement. We sell oil production at the contractually specified delivery point, and collect an agreed-upon index price, net of pricing differentials. Under our natural gas contracts, we deliver natural gas to a midstream processor at a contractually specified delivery point. The midstream processor gathers and processes the natural gas and then markets and remits proceeds to us for the resulting sale of the residue gas and NGLs.

Non-operated working interests: An operator of these assets is responsible for the day-to-day management and operation of the field as well as negotiations required for post-production transportation, gathering, processing, and marketing. The operator then remits proceeds from sales of resulting hydrocarbons to third parties back to non-operators less costs as agreed in the applicable joint operating agreement. Proceeds reflect post-production expenses such as gathering, processing and other expenses incurred in marketing of that production.

Mineral and royalty interests: The owner of this share of production does not bear any of the cost of exploration, drilling, producing, operating or any other expense associated with drilling and producing an oil and gas well. Mineral and royalty interests may be burdened by some or all of the post-production costs related to gathering, processing and marketing.

Performance Obligations
Under product sales contracts, each unit of product generally represents a separate performance obligation. We record revenue for our product sales contracts at the point-in-time control of a commodity is transferred to the customer. However, settlement statements from non-operated working interests may not be received for 30 to 60 days after the date production is delivered, and as a result, we are required to estimate the amount of production delivered to the customer and the net commodity price that will be received for the sale of these commodity products.

At the end of the reporting period, we did not have any unsatisfied performance obligations. Our contracts with customers typically include variable consideration based on monthly pricing tied to local indices and volumes delivered in the current month. The nature of our contracts with customers does not require us to constrain variable consideration for accounting purposes.

Revenue is recognized to the extent it is determined that it is probable that a significant reversal will not occur. We record the differences between our revenue estimates and the actual amounts received in the month that payment is received from the operator.

Equity-Based Compensation Awards

Equity-based compensation awards include share-based payments that are issued to employees, directors and non-employees in exchange for services provided to us. Equity-classified share-based payment awards are recognized at fair value on the grant date, and amortized over the life of the award. Liability-classified share-based payment awards are remeasured at fair value until settlement. For awards with service-based vesting conditions only, we recognize compensation cost using straight-line attribution. For awards that contain market or performance conditions we use accelerated attribution. Our policy is to recognize forfeitures as they occur.

Equity-based compensation cost is presented as "General and administrative expense" on our consolidated statements of operations. See NOTE 13 – Equity-Based Compensation Awards for additional discussion.

Defined Contribution Plan

We offer our employees a defined contribution 401(k) Plan (the “401(k) Plan”) which allows eligible employees to make tax-deferred contributions, not to exceed annual limits established by the Internal Revenue Service. We match 100% of employee contributions up to a certain threshold of compensation with immediate vesting for existing employees. During the years ended December 31, 2025, 2024, and 2023, we made contributions of $6.4 million, $4.5 million and $4.2 million, respectively, to the plan.

Business Combinations

We recognize the identifiable assets acquired and liabilities assumed at the estimated acquisition date fair values. Fair value is the price that would be received to sell an asset or would be paid to transfer a liability in an orderly transaction between market
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participants at the measurement date. The fair value measurement is based on the assumptions of market participants and not those of the reporting entity. Therefore, entity-specific intentions do not impact the measurement of fair value. These fair values are accounted for at the date of acquisition and included in our consolidated balance sheets as of December 31, 2025 and 2024. The results of operations of an acquired business are included in our consolidated statements of operations from the date of the acquisition.

Assets Held for Sale

We may market certain non-core natural gas and oil assets or other properties for sale. At the end of each reporting period, we evaluate if these assets should be classified as held for sale. The held for sale criteria includes the following: management commits to a plan to sell, the asset is available for immediate sale, an active program to locate a buyer exists, the sale of the asset is probable and expected to be completed within a year, the asset is actively being marketed for sale and that it is unlikely that significant changes to the plan will be made. If each of the criteria are met, then the assets and associated liabilities are classified as held for sale. Additionally, once assets are classified as held for sale, we cease depreciation on those related assets.

Credit and Concentration Risk

We sell a significant amount of our oil, natural gas and NGL production to a limited number of purchasers. This concentration has the potential to impact our overall exposure to credit risk, either positively or negatively, in that our purchasers may be similarly affected by changes in economic, industry or other conditions. If these counterparties were to fail to pay amounts due to us, our financial position and results of operations could be materially affected.

The below purchasers represented greater than 10% of our revenues during the years ended December 31, 2025, 2024 and 2023:

2025
20242023
Shell Trading US Company21.4%23.7%18.3%
ConocoPhillips13.5%16.5%*
Enterprise Products Partners L.P.11.7%**
*Purchaser did not account for greater than 10% of revenue for the year

We believe that the loss of any of our purchasers would not result in a material adverse effect on our ability to market future oil and natural gas production.

Risks and Uncertainties

Our future financial condition, results of operations and cash flows are dependent on the demand and prices received for oil, natural gas and NGL production. These prices historically have been volatile, and we expect such volatility to continue in the future, as they are subject to wide fluctuation in response to relatively minor changes in the supply of and demand for oil, natural gas and NGL, market uncertainty and a variety of additional factors beyond our control. These factors include weather conditions, government regulations and taxes, the price and availability of alternative fuels and overall economic conditions. A decline in oil, natural gas or NGL prices may adversely affect our financial position, cash flows and results of operations. Lower oil, natural gas or NGL prices also may reduce the amount of oil, natural gas and NGL that can be produced economically.

Our revenues are derived principally from uncollateralized sales to numerous companies in the oil and natural gas industry; therefore, our customers may be similarly affected by changes in economic and other conditions within the industry.

Risk Management

We periodically enter into derivative contracts to manage our exposure to commodity price and interest rate changes. These derivative contracts may take the form of forward contracts, futures contracts, swaps, swaptions, collars or other options. We do not use derivative contracts for speculative purposes and have not designated any derivative instruments as hedging instruments for accounting purposes. As such, unrealized gains and losses from changes in the valuation of our unsettled derivative contracts, as well as realized gains and losses on the settlement of derivative contracts, are reported in Gain (loss) on derivatives in our consolidated statements of operations.

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Such derivative instruments are initially recorded at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value at each reporting date. Derivatives are carried as assets when the fair value is positive or as liabilities when the fair value is negative and are classified as current and long term based on the delivery periods of the financial instruments. If the right of offset exists and certain other criteria are met, derivative assets and liabilities with the same counterparty are netted on our consolidated balance sheets.

See NOTE 6 – Fair Value Measurements for additional discussion.

Contingencies

Certain conditions may exist as of the date our financial statements are issued, which may result in a loss to us but which will only be resolved when one or more future events occur or fail to occur. In the preparation of our financial statements, management assesses the need for accounting recognition or disclosure of these contingencies, if any, and such assessment inherently involves an exercise in judgment. In assessing loss contingencies related to legal proceedings that are pending against us or unasserted claims that may result in such proceedings, our management and legal counsel evaluate the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.

When applicable, we will accrue an undiscounted liability for contingencies where the incurrence of a loss is probable and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum amount within the range is accrued. We do not record a contingent liability when the likelihood of loss is probable but the amount cannot be reasonably estimated or when it is believed to be only reasonably possible or remote.

For contingencies where an unfavorable outcome is reasonably possible and the impact would be material, we disclose the nature of the contingency and, if feasible, an estimate of the possible loss or range of loss. Loss contingencies considered remote are generally not disclosed. See NOTE 12 – Commitments and Contingencies.

Income Taxes

Crescent is a holding company and its sole material asset is OpCo Units. OpCo is a partnership and is generally not subject to U.S. federal and certain state taxes. Crescent is subject to U.S. federal and certain state taxes on our allocable share of any taxable income of OpCo. Taxable income or loss generated by OpCo is generally allocated and passed through to the holders of OpCo Units, including Crescent, based on their proportionate share of OpCo Unit ownership. Following the 2025 Class A Redemption (as defined below) and the Corporate Simplification, the Company is the sole holder of all outstanding OpCo Units.

On July 4, 2025, the OBBBA was enacted into law. The OBBBA is a significant piece of tax legislation that includes provisions that permanently restore an EBITDA-based section 163(j) calculation for tax years beginning after December 31, 2024 and 100% bonus depreciation under section 168(k) for property acquired and placed in service after January 19, 2025, deferring the recognition of a significant portion of current federal tax for multiple years.

The amount of income taxes we record requires interpretations of complex rules and regulations of various tax jurisdictions throughout the United States. We recognize deferred tax assets and liabilities for temporary differences, operating losses and tax credit carryforwards. Temporary differences arise when there are differences between the financial statement carrying amount and the tax basis of existing assets and liabilities as these differences create taxable or tax-deductible amounts for future periods. Deferred income tax assets and liabilities are based on enacted tax rates applicable to the future period when those temporary differences are expected to be recovered or settled. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period the rate change is enacted. A valuation allowance is provided for deferred tax assets when it is more likely than not the deferred tax assets will not be realized. For additional information regarding income taxes, see NOTE 11 – Income Taxes.

Accounting Standards Codification (“ASC") Topic 740, Income Taxes, specifies the accounting for uncertainty in income taxes by prescribing a minimum recognition threshold for a tax position to be reflected in the financial statements. If recognized, the tax benefit is measured as the largest amount of tax benefit that is more likely than not to be realized upon ultimate settlement. Management has considered the amounts and the probabilities of the outcomes that could be realized upon ultimate settlement and believes that it is more likely than not that the Company's recorded income tax benefits will be fully realized, or recognizes a valuation allowance against deferred tax assets in cases where we do not forecast sufficient future income to recognize the deferred tax asset.
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Leases

We record a net operating lease right-of-use ("ROU") asset and operating lease liability on the consolidated balance sheets for all operating leases with a lease term in excess of 12 months.

We enter into contractual lease arrangements to rent buildings, compressors, drilling rigs, office and rental equipment and vehicles from third-party lessors. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make future lease payments arising from the lease. Operating lease ROU assets and liabilities are recorded at commencement date based on the present value of lease payments over the lease term. Leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets. We recognize lease expense for these short-term leases on a straight-line basis over the lease term. We use our incremental borrowing rate based on the information available at commencement date of the contract in determining the present value of future lease payments. The incremental borrowing rate is calculated using our collateralized incremental borrowing rate based on our debt structure. The operating lease ROU asset also includes any lease incentives received in the recognition of the present value of future lease payments. Certain of our leases may also include escalation clauses or options to extend or terminate the lease. These options are included in the present value recorded for the leases when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

If an arrangement is determined to be a lease, we record the resulting ROU asset on the consolidated balance sheets with offsetting liabilities at the commencement date. We recognize a lease in the financial statements when the arrangement either explicitly or implicitly involves property, plant or equipment ("PP&E"), the contract terms are dependent on the use of the PP&E, and we have the ability or right to control the PP&E or to direct others to control the PP&E and receive the majority of the economic benefits of the assets. As of December 31, 2025 and 2024, we had financing right-of-use asset of $23.3 million and $18.4 million in field and other property and equipment, at cost, and operating right-of-use asset of $81.3 million and $66.6 million in Other assets, respectively. During the year ended December 31, 2025 we recorded an impairment on our ROU assets of $20.8 million as part of our restructuring costs.

Asset Retirement Obligations

An ARO represents the legal obligation associated with the future abandonment of tangible assets, such as wells, service assets, pipelines, and other facilities. We record an ARO liability and capitalize the asset retirement cost in oil and natural gas properties in the period in which the ARO liability is incurred based upon the estimated fair value of the obligation to perform site reclamation, dismantle facilities or plug and abandon wells. After recording these amounts, the ARO liability is accreted to its future estimated value using an estimated credited-adjusted risk-free rate and the capitalized asset retirement cost is depleted on a unit-of-production basis. Both the accretion expense and the depletion expense are included in Depreciation, depletion and amortization expense on our consolidated statements of operations.

Measuring the future ARO liability requires management to make estimates, assumptions and judgments inherent in the present value calculation including the ultimate costs, inflation factors, credit adjusted discount rates, timing of settlement and changes in the legal, regulatory, environmental and political environments. To the extent future revisions to these assumptions impact the present value of the existing ARO liability, a corresponding adjustment is made to the related asset. If the ARO liability is settled for an amount other than the recorded amount, a gain or loss is recognized at settlement and included in Depreciation, depletion and amortization expense on our consolidated statements of operations.

See NOTE 9 – Asset Retirement Obligations.

Environmental Expenditures

In addition to our ARO liability, management also reviews our estimates of the cleanup costs of various sites on an annual basis. When it is probable that obligations have been incurred, and where a reasonable estimate of the cost of compliance or remediation can be determined, the applicable amount is accrued. For other potential liabilities, the timing of accruals coincides with the related ongoing site assessments. We do not discount any of these liabilities. Recoveries for environmental remediation costs from third parties, which are probable of realization, are separately recorded and are not offset against the related environmental liability. As of December 31, 2025 and 2024, we did not have any significant probable environmental remediation costs.

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Supplemental Cash Flow Disclosures

The following are our supplemental cash flow disclosures for the years ended December 31, 2025, 2024 and 2023:

Year Ended December 31,
202520242023
(in thousands)
Supplemental cash flow disclosures:
Interest paid, net of amounts capitalized$272,765 $141,760 $113,796 
Income tax payments (refunds)
9,968 1,851 (1,391)
Non-cash investing and financing activities:
Capital expenditures included in accounts payable and accrued liabilities181,631 180,172 83,841 
Equity consideration for acquisitions
730,684 611,423 — 
Right-of-use assets obtained in exchange for leases67,046 62,468 29,624 

Recent Accounting Standards

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company adopted ASU 2023-09 prospectively during 2025, see NOTE 11 – Income Taxes.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03.

In May 2025, the FASB issued ASU 2025-03, Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity, which requires an entity involved in an acquisition
transaction effected primarily by exchanging equity interests when the legal acquiree is a VIE that meets the definition of a business to consider the factors in paragraphs 805-10-55-12 through 55-15 to determine which entity is the
accounting acquirer. ASU 2025-03 is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2025-03.

NOTE 3 – Acquisitions and Divestitures

During the three years ended December 31, 2025, we completed the following acquisitions and divestitures:

Acquisitions

Vital Energy Merger

In December 2025, we consummated the transactions contemplated by the Agreement and Plan of Merger, dated August 24, 2025 (the "Vital Energy Merger Agreement") (the transactions contemplated within the Vital Energy Merger Agreement, the "Vital Energy Merger"), between Crescent, Venus Merger Sub I Inc. ("Venus MS Inc."), Venus Merger Sub II LLC ("Venus MS LLC") and Vital Energy, Inc. ("Vital"). The Vital Energy Merger has been accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations ("ASC 805"), with Crescent being identified as the accounting acquirer.

Venus MS Inc., a wholly owned subsidiary of Crescent, merged with and into Vital, with Vital continuing as the surviving corporation (the "First Company Merger"). Immediately following the First Company Merger, Vital merged with and into Venus MS LLC, a direct, wholly owned subsidiary of Crescent, with Venus MS LLC continuing as the surviving company (the "Second Company Merger"). Promptly following the completion of the Second Company Merger, Crescent effected an internal
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reorganization for financing purposes pursuant to which the surviving company was contributed to OpCo and subsequently to Crescent Energy Finance LLC, the operating subsidiaries of Crescent Energy Finance LLC were contributed to the surviving company, and the surviving company was merged with and into Crescent Energy Finance LLC, with Crescent Energy Finance LLC surviving the merger.

In accordance with the terms of the Vital Energy Merger Agreement, each share of Vital common stock issued and outstanding immediately prior to the Effective Time, was converted into the right to receive from Crescent 1.9062 shares of Crescent Class A common stock, with cash paid in lieu of any fractional shares of Crescent Class A common stock. Each Vital restricted stock award that was outstanding immediately prior to the Vital Energy Merger vested in full and was cancelled and converted into the right to receive, without interest, the merger consideration in respect of each share of Vital common stock subject thereto, with cash paid in lieu of any fractional shares of Crescent Class A common stock. Each Vital cash-settled performance unit that was outstanding immediately prior to the Effective Time vested in full, with performance conditions deemed to have been satisfied at the target performance level, and was cancelled and converted into the right to receive a lump-sum cash payment equal to the product of (i) the total number of shares of Vital common stock subject to such Vital cash-settled performance unit and (ii) the closing trading price per share of Vital common stock reported on the NYSE on the trading day immediately preceding the closing of the Vital Energy Merger, less applicable tax withholdings.

The initial accounting for the Vital Energy Merger is preliminary, and adjustments to provisional amounts (such as certain accrued liabilities and deferred tax assets) or recognition of additional assets acquired or liabilities assumed, may occur as additional information is obtained about facts and circumstances that existed as of the acquisition date during the measurement period, which will not exceed 12 months from the date of the Vital Energy Merger.

Crescent issued 73.3 million shares of Class A Common Stock in the Vital Energy Merger and paid $3.7 million in cash to settle outstanding Vital equity awards. See NOTE 13 – Equity-Based Compensation Awards.

From the date of the Vital Energy Merger through December 31, 2025, revenues and net income associated with operations acquired through the Vital Energy Merger were $76.1 million and $18.1 million, respectively. We recognized transaction related expenses of $78.3 million within General and administrative expense on the consolidated statements of operations for the year ended December 31, 2025.

Ridgemar Acquisition

On December 3, 2024, we entered into the Ridgemar Acquisition Agreement, pursuant to which we acquired all of the outstanding equity interests in Ridgemar (Eagle Ford) LLC (“Ridgemar”). On January 31, 2025, we acquired all of the outstanding equity interests in Ridgemar for $807.2 million in cash and 5.5 million shares of our Class A Common Stock. In addition, up to $170.0 million in contingent earn-out consideration may be paid in fiscal years 2026 and 2027 if quarterly NYMEX WTI prices of crude oil are above certain thresholds in 2026 and 2027. We accounted for the Ridgemar Acquisition as an asset acquisition.

SilverBow Merger

On July 30, 2024, we consummated the transactions contemplated by the Agreement and Plan of Merger, dated May 15, 2024 (the transactions contemplated therein, the "SilverBow Merger"), between Crescent, SilverBow Resources, Inc. ("SilverBow"), Artemis Acquisition Holdings Inc. ("Artemis Holdings"), Artemis Merger Sub Inc. ("Artemis MS Inc.") and Artemis Merger Sub II LLC ("Artemis MS LLC"). The SilverBow Merger has been accounted for as a business combination using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations ASC 805, with Crescent being identified as the accounting acquirer.

Artemis MS Inc., a Delaware corporation and a direct wholly owned subsidiary of Crescent, merged with and into SilverBow (the "Initial Merger"), with SilverBow surviving the merger (the "Initial Surviving Corporation"), and immediately following the Initial Merger, the Initial Surviving Corporation merged with and into Artemis MS LLC, a Delaware limited liability company and a direct, wholly owned subsidiary of Artemis Holdings, a Delaware corporation and a direct wholly owned subsidiary of Crescent (the "Subsequent Merger" and together with the Initial Merger, the "Mergers"), with Artemis MS LLC continuing as the surviving company of the Subsequent Merger (the "Subsequent Surviving Company") as a direct wholly owned subsidiary of Artemis Holdings. Promptly following the completion of the Mergers, Artemis Holdings contributed the Subsequent Surviving Company to OpCo, a Delaware limited liability company, of which Crescent is the managing member, which in turn contributed the Subsequent Surviving Company to its wholly owned subsidiary, Crescent Energy Finance, a Delaware limited liability company.
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Subject to the terms and conditions of the Merger Agreement, each share of SilverBow's common stock, par value $0.01 per share ("SilverBow Common Stock") issued and outstanding immediately prior to the merger close date, was converted into the right to receive, pursuant to an election made and not revoked, one of the following forms of consideration: (A) 3.125 shares of Crescent Class A Common Stock, (B) a combination of 1.866 shares of Crescent Class A Common Stock and $15.31 in cash or (C) $38.00 in cash, subject to an aggregate cap of $400.0 million on the total cash consideration payable for the SilverBow Common Stock in the SilverBow Merger. The Merger Agreement also provided that each outstanding SilverBow restricted stock unit, performance-based stock unit (assuming maximum performance) and in-the money stock option, whether vested or unvested, held by certain employees and directors of SilverBow (collectively, the "SilverBow Equity Awards") became fully vested and was canceled and converted into a right to receive a cash payment (less the exercise price in the case of stock options) or, in the case of the restricted stock units and performance-based stock units, a partial cash payment and partial settlement in shares of Crescent Class A Common Stock. Each stock option with an exercise price that equaled or exceeded the amount of such cash payment was cancelled for no consideration. See the table below for consideration transferred and final purchase price allocation. Crescent issued 51.6 million shares of Class A Common Stock in the SilverBow Merger and paid $382.4 million in cash to former SilverBow shareholders, including amounts payable in respect of outstanding SilverBow equity awards. See NOTE 13 – Equity-Based Compensation Awards.

From the date of the SilverBow Merger through December 31, 2024, revenues and net income associated with operations acquired through the SilverBow Merger were $430.2 million and $156.9 million, respectively. We recognized transaction related expenses of $42.8 million within General and administrative expense on the consolidated statements of operations for the year ended December 31, 2024.

As part of the SilverBow Merger we acquired a deferred acquisition liability from historical SilverBow acquisitions. Per the terms of the acquired contract we were required to make a $75.0 million payment in the fourth quarter of 2024 related to deferred purchase consideration of $50.0 million and a WTI-based contingent earn-out payment of $25.0 million since the average settlement price of WTI was between $75 per barrel and $80 per barrel during the 12-month period that began in December 2023.

During 2024 and 2025 we reorganized our business, primarily as a result of the Vital Energy Merger, SilverBow Merger and divestitures, which included one-time termination costs and exit costs for the closure of legacy corporate offices. As of December 31, 2025 and December 31, 2024, we expected the total amount of one-time employee termination benefits incurred to be $51.3 million and $11.4 million, and lease termination and other costs of $10.9 million and $5.5 million, respectively. During the years ended December 31, 2025 and 2024, we recognized $46.3 million and $14.3 million in General and administrative expense, and $15.9 million and $2.7 million in Lease and asset operating expense, respectively, on the consolidated statements of operations. The following is a reconciliation of our restructuring liability, which is included within Accounts payable and accrued liabilities on the consolidated balance sheets.

One-time employee termination benefits
Lease termination and other costs
Total
(in thousands)
December 31, 2023$— $— $— 
Costs incurred and charged to expense11,433 5,516 16,949 
Costs paid(6,531)(5,516)(12,047)
December 31, 2024$4,902 $— $4,902 
Costs incurred and charged to expense51,267 10,920 62,187 
Costs paid(4,003)(1,767)(5,770)
December 31, 2025$52,166 $9,153 $61,319 

Other Acquisitions

Webb Gas Acquisition

In January 2025, we acquired additional interests in Crescent operated oil and gas properties located in Webb County, Texas from unaffiliated third parties for aggregate consideration of approximately $21.2 million, subject to customary post closing adjustments (the “Webb Gas Acquisition”).

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Minerals Acquisition

In July 2025, we acquired a portfolio of oil and natural gas mineral interests located in various U.S. oil and gas basins from an unrelated third-party for total cash consideration of approximately $67.9 million, subject to customary purchase price adjustments (the "Minerals Acquisition"). The purchase price was funded using borrowings under our Revolving Credit Facility.

Central Eagle Ford Acquisition

In October 2024, we acquired from unaffiliated third parties certain interests in oil and gas properties, rights and related assets located in Atascosa, Frio, La Salle and McMullen Counties, Texas for aggregate consideration of approximately $156.0 million, including certain customary purchase price adjustments in the Central Eagle Ford Acquisition.

The Central Eagle Ford Acquisition has been accounted for as a business combination using the acquisition method of accounting in accordance with ASC 805, with Crescent being identified as the accounting acquirer. From the date of the Central Eagle Ford Acquisition through December 31, 2024, revenues and net income associated with operations acquired through the Central Eagle Ford Acquisition were $10.4 million and $3.1 million, respectively. We recognized transaction related expenses of $5.6 million within General and administrative expense on the consolidated statements of operations for the year ended December 31, 2024.

Eagle Ford Minerals Acquisition

In February 2024, we acquired a portfolio of oil and natural gas mineral interests located in the Karnes Trough of the Eagle Ford Basin from an unrelated third-party (the "Eagle Ford Minerals Acquisition") for total cash consideration of approximately $25.0 million, including customary purchase price adjustments. The purchase price was funded using borrowings under our Revolving Credit Facility.

Western Eagle Ford Acquisitions

In July 2023, we consummated the acquisition contemplated by the Purchase and Sale Agreement, dated as of May 2, 2023, between our subsidiary and Comanche Holdings, LLC ("Comanche Holdings") and SN EF Maverick, LLC ("SN EF Maverick," and together with Comanche Holdings, the "Seller"), pursuant to which we agreed to acquire operatorship and incremental working interests (the "July Western Eagle Ford Acquisition") in certain of our existing Western Eagle Ford assets from the Seller for aggregate cash consideration of approximately $592.7 million, including capitalized transaction costs and certain final purchase price adjustments.

In October 2023, we consummated the unrelated acquisition contemplated by the Purchase and Sale Agreement, dated as of August 22, 2023, between our subsidiary and an unaffiliated third party, pursuant to which we agreed to acquire certain incremental working interests in oil and natural gas properties (the "October Western Eagle Ford Acquisition," and together with the July Western Eagle Ford Acquisition, the "Western Eagle Ford Acquisitions") in certain of our existing Western Eagle Ford assets from the seller for aggregate cash consideration of approximately $235.1 million, including certain customary purchase price adjustments.
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Consideration Transferred

The following table summarizes the consideration transferred and the net assets acquired for our significant asset acquisitions and business combinations during the three years ended December 31, 2025 that impact the periods presented:

Asset AcquisitionsBusiness Combinations
Minerals Acquisition
Ridgemar Acquisition
Webb Gas AcquisitionEagle Ford Minerals AcquisitionJuly Western Eagle Ford AcquisitionOctober Western Eagle Ford AcquisitionVital Energy MergerSilverBow MergerCentral Eagle Ford Acquisition
Acquisition period
2025
2024
2023
2025
2024
(in thousands)
Consideration transferred:
Cash consideration:
Cash
$67,369 $807,247 $21,204 $25,000 $592,735 $235,069 $— $358,092 $156,031 
Settlement of Equity Awards in cash
— — — — — — 3,693 18,858 — 
Equity consideration:
Fair value of Class A Common Stock issued
— 82,145 — — — — 640,982 595,294 — 
Settlement of Equity Awards in Class A Common Stock
— — — — — — 7,557 16,129 — 
Fair value of contingent earn-out consideration
— 51,746 — — — — — — — 
Transaction costs capitalized
490 18,484 — — — — — — — 
Total$67,859 $959,622 $21,204 $25,000 $592,735 $235,069 $652,232 $988,373 $156,031 
Assets acquired and liabilities assumed:
Cash and cash equivalents$— $— $— $— $— $— $122,923 $5,200 $— 
Accounts receivable, net— 1,150 — — — — 279,731 135,210 — 
Derivative assets – current— — — — — — 184,247 100,601 — 
Prepaid expenses— — — — 355 — 25,857 6,154 — 
Other current assets— — — — — — — 945 — 
Oil and natural gas properties - proved57,200 988,758 21,204 12,865 595,025 239,573 2,207,966 1,985,363 144,085 
Oil and natural gas properties - unproved11,044 — — 12,135 22,310 9,819 137,055 229,459 — 
Field and other property and equipment— 3,240 — — — — 50,156 4,586 17,848 
Derivative assets – noncurrent— — — — — — 2,471 37,870 — 
Deferred tax asset— — — — — — 695,291 — — 
Other assets— — — — — — 62,847 25,199 — 
Accounts payable and accrued liabilities(385)(9,565)— — (12,668)(5,790)(421,231)(198,831)(1,212)
Acquired deferred acquisition consideration
— — — — — — — (76,550)— 
Other current liabilities— (573)— — — — (30,465)(10,029)— 
Short-term debt— — — — — — — (37,500)— 
Long-term debt— — — — — — (2,490,578)(1,103,125)— 
Deferred tax liability— — — — — — — (79,070)— 
Derivative liabilities – noncurrent— — — — — — (7,329)— 
Asset retirement obligations— (22,855)— — (10,541)(7,908)(127,821)(25,683)(4,690)
Other liabilities— (533)— — (1,746)(625)(38,888)(11,426)— 
Net assets acquired$67,859 $959,622 $21,204 $25,000 $592,735 $235,069 $652,232 $988,373 $156,031 
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Supplemental Pro Forma Information (Unaudited)

The following table summarizes our unaudited pro forma financial information for the three years ended December 31, 2025, as if the Vital Energy Merger occurred on January 1, 2024 and the SilverBow Merger and Central Eagle Ford Acquisition occurred on January 1, 2023:

Year Ended December 31,
2025
2024
2023
(in thousands)
Revenues$5,278,646 $5,785,570 $3,610,300 
Net income (418,510)282,494 782,563 

Divestitures

During 2025, we entered into agreements with certain unrelated third-party buyers to sell non-core assets as part of our previously announced non-core asset divestiture program for total consideration in excess of $900.0 million, subject to customary purchase price adjustments and transaction costs, and we received $847.1 million in aggregate cash proceeds after preliminary customary purchase price adjustments. In connection with these transactions, we performed an assessment of the fair value of the associated net assets and liabilities and determined certain of those assets were impaired, and as such, we recorded impairment expense of $233.7 million to write down those assets to the estimated transaction price less cost to sell. In addition, we recorded a gain of $147.5 million on the sale of certain other assets.

During the year ended December 31, 2024, we sold non-core assets to unrelated third-party buyers for $54.8 million in aggregate cash proceeds and recorded a gain of approximately $29.4 million on the sale of these assets.


NOTE 4 – Property, Plant and Equipment

The following table summarizes our oil and natural gas properties as of December 31, 2025 and 2024:

As of December 31,
20252024
(in thousands)
Proved oil and natural gas properties (successful efforts method)$13,264,097 $11,471,299 
Unproved oil and natural gas properties413,444 374,306 
Oil and natural gas properties, at cost13,677,541 11,845,605 
Less: accumulated depreciation, depletion, amortization and impairment(3,529,964)(3,840,344)
Oil and natural gas properties, net$10,147,577 $8,005,261 

Other Property

The following table summarizes other property, plant and equipment as of December 31, 2025 and 2024:

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Estimated useful life
As of December 31,
20252024
(years)
(in thousands)
Gathering and pipeline system30$— $109,324 
Vehicles
3-5
10,925 19,309 
Computers, furniture, and equipment
3-10
22,656 12,491 
Buildings and improvements
5-30
19,520 14,177 
Land37,391 20,694 
Financing right-of-use asset
1-5
23,339 18,435 
Field inventory43,200 32,441 
Field and other property and equipment, at cost157,031 226,871 
Less: accumulated depreciation, amortization and impairment(28,637)(87,078)
Field and other property and equipment, net$128,394 $139,793 

Capitalized Exploratory Well Costs

Capitalized exploratory well costs are included in unproved oil and natural gas properties. As of December 31, 2025 and 2024, we did not have any capitalized exploratory well costs.

NOTE 5 – Derivatives

In the normal course of business, we are exposed to certain risks including changes in the prices of oil, natural gas and NGLs which may impact the cash flows associated with the sale of our future oil and natural gas production. We enter into derivative contracts with lenders under our Revolving Credit Facility that consist of either a single derivative instrument or a combination of instruments to manage our exposure to these risks.

As of December 31, 2025, our commodity derivative instruments consisted of fixed price and basis swaps and collars which are described below:

Fixed Price and Basis Swaps: Fixed price swaps receive a fixed price and pay a floating market price to counterparty on the notional amount. Our basis swaps fix the basis differentials between the index price at which we sell our production as compared to the index price used in the basis swap. Under a swap contract, we will receive payment if the settlement price is less than the fixed price and would be required to make a payment to the counterparty if the settlement price is greater than the fixed price.

Two-Way and Three-Way Collars: Two-way collars provide a minimum (“fixed floor price”) and maximum (“fixed ceiling price”) price on a notional amount of sales volume. Under a two-way collar, we will receive payment if the settlement price is less than the fixed floor price and make a payment to the counterparty if the settlement price is greater than the fixed ceiling price. We would not be required to make a payment or receive payment if the settlement price falls between the fixed floor price and fixed ceiling price. A three-way collar adds a secondary lower price below the fixed floor price (“fixed subfloor price”). In this structure, if the settlement price falls between the fixed floor price and the fixed subfloor price, we receive payment equal to the difference between the fixed floor price and the settlement price. If the settlement price falls below the fixed subfloor price, we receive payment equal to the difference between the fixed floor price and the fixed subfloor price. We still make a payment to the counterparty if the settlement price is greater than the fixed ceiling price, and we would still not be required to make or receive payment if the settlement price falls between the fixed ceiling price and the fixed floor price.
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The following table details our net volume positions by commodity as of December 31, 2025:

Production Period
Volumes
Weighted
Average Fixed
Price
(in thousands)
Crude oil swaps – WTI (Bbls):
202621,836 $65.07
2026 (1)
368 $67.03
2027 (2)
3,650 $75.00
20273,285 $61.07
Crude oil two-way collars – WTI (Bbls):
20264,361 $60.25—$70.37
Crude oil three-way collars – WTI (Bbls):
20261,643 $48.00—$60.00—$72.00
Crude oil two-way collars – Brent (Bbls):
2026183 $60.00—$82.00
Natural gas swaps (MMBtu):
202691,020 $4.03
20277,300 $4.21
2027 (3)
18,250 $4.19
Natural gas two-way collars (MMBtu):
202646,180 $3.08—$4.79
Crude oil basis swaps (Bbls):
202611,309 $1.55
Natural gas basis swaps (MMBtu):
2026103,960 $(0.43)
202791,250 $(0.42)
Calendar Month Average roll swaps (Bbls):
20261,825 $0.20
Natural Gas Fixed Index Swaps – Waha (MMBtu):
202655,480 $2.41
202743,800 $2.69
(1)     Represents outstanding crude oil swap options exercisable by the counterparty until June 2026.
(2)     Represents outstanding crude oil swap options exercisable by the counterparty until December 2026.
(3)     Represents outstanding crude oil collar options exercisable by the counterparty until December 2026.

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Ridgemar Contingent Consideration: The former owners of Ridgemar are entitled to receive contingent consideration payments from us if the daily average price of NYMEX WTI crude oil exceeds certain thresholds during specified quarterly periods. For each quarterly period in 2026, we will be required to pay $15.0 million if the average WTI price for the quarter is equal to or greater than $70 per barrel, and an additional $15.0 million if the average price equals or exceeds $75 per barrel. For each quarterly period in 2027, we will be required to pay $12.5 million if the average price NYMEX WTI crude oil for the quarter equals or exceeds $70 per barrel. The fair value of the Ridgemar Contingent Consideration is determined by a third-party valuation specialist using a Monte Carlo simulation. The significant inputs used in the valuation are the NYMEX WTI forward price curve, mean reversion rate, and volatility. We determined these were Level 2 fair value inputs that are substantially observable in active markets or can be derived from observable data. Contingent earn-out consideration is included in Other current liabilities and Other liabilities on the consolidated balance sheets.

Vital Contingent Consideration: As part of the Vital Energy Merger, Crescent acquired a contingent consideration arrangement in which Crescent is entitled to receive contingent consideration payments from a third party if certain performance conditions are met as it relates to certain assets previously sold by Vital. Crescent is entitled to up to $9.0 million in 2026, and $58.6 million in 2027 if certain performance conditions are met within those periods. The fair value of the Vital Contingent Consideration is determined by a third-party valuation specialist using a Monte Carlo simulation. The significant inputs used in the valuation include Crescent’s internally developed cash flow projections for the underlying assets and a risk-adjusted discount rate, which is developed by the third-party valuation specialist based on market participant assumptions and prevailing market conditions. We determined that these Level 3 fair value inputs are primarily based on unobservable inputs. Contingent earn-out consideration is included in Other assets on the consolidated balance sheets.

We use derivative commodity instruments and enter into swap contracts which are governed by International Swaps and Derivatives Association (ISDA) master agreements. The following table shows the effects of master netting arrangements on the fair value of our derivative contracts at December 31, 2025 and 2024:

Gross Fair
Value
Effect of
Counterparty
Netting
Net Carrying
Value
(in thousands)
December 31, 2025
Assets:
Derivative assets – current$346,849 $(24,065)$322,784 
Derivative assets – noncurrent22,875 (20,046)2,829 
Other assets
17,590 — 17,590 
Total assets$387,314 $(44,111)$343,203 
Liabilities:
Derivative liabilities – current$(24,065)$24,065 $— 
Other current liabilities (16,153)— (16,153)
Derivative liabilities – noncurrent
(33,467)20,046 (13,421)
Other liabilities (10,717)— (10,717)
Total liabilities$(84,402)$44,111 $(40,291)
December 31, 2024
Assets:
Derivative assets – current$95,484 $(42,211)$53,273 
Derivative assets – noncurrent25,287 (18,603)6,684 
Total assets$120,771 $(60,814)$59,957 
Liabilities:
Derivative liabilities – current$(44,909)$42,211 $(2,698)
Derivative liabilities – noncurrent
(56,335)18,603 (37,732)
Total liabilities$(101,244)$60,814 $(40,430)

See NOTE 6 – Fair Value Measurements for more information.

The amount of realized and unrealized gain (loss) recognized in Gain (loss) on derivatives in our consolidated statements of operations was as follows for the years ended December 31, 2025, 2024 and 2023:
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Years ended December 31,
202520242023
(in thousands)
Derivatives not designated as hedging instruments:
Realized gain (loss) on oil positions$85,224 $(112,777)$(171,274)
Realized gain (loss) on natural gas positions(2,701)77,546 (1,022)
Realized gain (loss) on NGL positions(916)(623)18,562 
Total realized gain (loss) on derivatives
81,607 (35,854)(153,734)
Unrealized gain (loss) on commodity derivatives
196,418 (78,494)320,714 
Unrealized gain (loss) on contingent earn-out consideration24,876 — — 
Total unrealized gain (loss)221,294 (78,494)320,714 
Gain (loss) on derivatives
$302,901 $(114,348)$166,980 

NOTE 6 – Fair Value Measurements

GAAP defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Generally, the determination of fair value requires the use of significant judgment and different approaches and models under varying circumstances. Under a market-based approach, we consider prices of similar assets, consult with brokers and experts, or employ other valuation techniques. Under an income-based approach, we generally estimate future cash flows and then discount them at a risk-adjusted rate. We classify the inputs used to measure the fair value of our financial assets and liabilities into the following hierarchy:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2: Quoted market prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active or other than quoted prices that are observable, either directly or indirectly, and can be corroborated by observable market data.

Level 3: Unobservable inputs that reflect management’s best estimates and assumptions of what market participants would use in measuring the fair value of an asset or liability.

Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of significance for a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and liabilities within the fair value hierarchy levels.

Recurring Fair Value Measurements

The following table presents the location and fair value of our derivative assets and liabilities that were accounted for at fair value on a recurring basis as of December 31, 2025 and 2024, by level within the fair value hierarchy:

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Fair Value Measurement Using
Level 1Level 2Level 3Total
(in thousands)
December 31, 2025
Financial assets:
Derivative assets$— $369,724 $— $369,724 
Contingent earn-out consideration— — 17,590 17,590 
Financial Liabilities:
Derivative liabilities$— $(57,532)$— $(57,532)
Contingent earn-out consideration— (26,870)— (26,870)
December 31, 2024
Financial assets:
Derivative assets$— $120,771 $— $120,771 
Financial Liabilities:
Derivative liabilities$— $(101,244)$— $(101,244)

Non-Recurring Fair Value Measurements

Certain nonfinancial assets and liabilities are measured at fair value on a non-recurring basis. We utilize fair value measurement on a non-recurring basis to value our oil and natural gas properties when events and circumstances indicate a possible decline in the recoverability of the carrying amount of such property. When a triggering event is identified, we compare the carrying amount of our oil and natural gas properties to the estimated undiscounted cash flows our oil and natural gas properties will generate to determine if the carrying amount is recoverable. We perform this analysis on an asset pool basis. If the carrying amount exceeds the estimated undiscounted cash flows, we will write-down the carrying amount of the oil and natural gas properties to fair value. The Level 3 inputs used to determine such fair value are primarily based upon internally developed cash flow models and estimated net proceeds upon the potential sale of an asset pool as discussed in Note 2 and are classified within Level 3. Significant Level 3 assumptions associated with discounted cash flows include, but are not limited to, estimates of reserves, future commodity prices, future production estimates, and discount rates commensurate with the risk associated with realizing the projected cash flows.

As stated in NOTE 2 – Summary of Significant Accounting Policies, our oil and natural gas properties were written down to their fair value resulting in an impairment expense. We also perform a separate impairment analysis when certain assets are classified as held for sale. The analysis is based on the agreed-upon proceeds less costs to sell, a Level 2 fair value measurement. For assets classified as held for sale during the year ended December 31, 2025, we recorded impairment charges of $233.7 million. During the year ended December 31, 2024, we recorded an impairment expense of $161.5 million related to oil and natural gas properties and reduced assets with a carrying value of $345.9 million to a fair value of $184.4 million. The fair value was determined using a discounted cash flow model based on the expected present value of the future net cash flows from our oil and natural gas reserves. Significant Level 3 assumptions associated with the calculation of discounted cash flows used in the impairment analysis include estimates of (i) future prices based on the forward commodity price curve as of December 31, 2024, (ii) production costs, development expenditures and anticipated production, based on our 2024 net proved reserves, and (iii) a risk-adjusted discount rate of 10%.

Our other non-recurring fair value measurements include the estimates of the fair value of assets and liabilities acquired through business combinations. Our business combinations are accounted for using the acquisition method under GAAP, which requires all assets acquired and liabilities assumed in the acquisitions to be recorded at fair values at the acquisition date of each transaction. Oil and natural gas properties were valued based on an income approach using a discounted cash flow model utilizing Level 3 inputs, including internally generated development and production profiles and price and cost assumptions. Net derivative liabilities assumed in the acquisitions were valued based on Level 2 inputs similar to the Company's other commodity price derivatives. See NOTE 3 – Acquisitions and Divestitures.

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Other Fair Value Measurements

The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their fair values due to the short-term maturities of these instruments. Our long-term debt obligations under our Revolving Credit Facility also have approximate fair value because the associated variable rates of interest are market based. The fair value of the Senior Notes as of December 31, 2025 and 2024 was $4.7 billion and $3.1 billion based on quoted market prices or Level 1 inputs.

NOTE 7 – Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consisted of the following as of December 31, 2025 and 2024:

As of December 31,
20252024
(in thousands)
Accounts payable and accrued liabilities:
Accounts payable$144,794 $56,323 
Accrued lease and asset operating expense177,348 76,990 
Accrued capital expenditures164,739 171,365 
Accrued general and administrative86,964 15,044 
Accrued gathering, processing and transportation expense72,303 76,477 
Accrued revenue and royalties payable304,468 192,884 
Accrued interest expense130,816 98,343 
Accrued severance taxes22,449 36,135 
Other17,797 16,891 
Total accounts payable and accrued liabilities$1,121,678 $740,452 

NOTE 8 – Debt

Senior Notes

2034 Notes

In July 2025, we issued $600.0 million aggregate principal amount of 8.375% the 2034 Notes at par. The 2034 Notes bear interest at an annual rate of 8.375%, which is payable on January 15 and July 15 of each year, and mature on January 15, 2034. The proceeds from the 2034 Notes Offering were approximately $588.1 million after deducting the initial purchasers' discount and offering expenses. We used the net proceeds to finance the consideration of the Tender Offer and the 2028 Notes Redemption (each as defined below) and to repay a portion of our outstanding balance under our Revolving Credit Facility.

We may, at our option, redeem all or a portion of the 2034 Notes at any time on or after July 15, 2028 at certain redemption prices. We may also redeem up to 40% of the aggregate principal amount of the 2034 Notes before July 15, 2028 with an amount of cash not greater than the net proceeds that we raise in certain equity offerings at a redemption price equal to 108.375% of the principal amount of the 2034 Notes being redeemed, plus accrued and unpaid interest, if any, to, but excluding the redemption date. In addition, prior to July 15, 2028, we may redeem some or all of the 2034 Notes at a price equal to 100% of the principal amount thereof, plus a “make-whole” premium, plus accrued and unpaid interest, if any, to, but excluding the redemption date.

2033 Notes

In June 2024, we issued $750.0 million aggregate principal amount of 2033 Notes at par. In September 2024, we issued an additional $250.0 million aggregate principal amount of 2033 Notes at 101.000% of par. The aggregate proceeds from the 2033 Notes Offerings were approximately $982.1 million, after adjusting for premiums, the initial purchasers' discount and offering expenses. We used the aggregate net proceeds from the 2033 Notes Offerings to finance the majority of the SilverBow Merger, including (i) fund the cash paid to the SilverBow stockholders and holders of SilverBow restricted stock units in connection with the SilverBow Merger, and (ii) repay and extinguish SilverBow's existing indebtedness that was outstanding at the
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completion of the SilverBow Merger for $1.2 billion, including extinguishment costs. In connection with the repayment of SilverBow's debt we incurred a Loss on the extinguishment of debt of $36.5 million, inclusive of make whole fees.

All issuances of the 2033 Notes are treated as a single series of securities under the indenture governing the 2033 Notes, will vote together as a single class, and have substantially identical terms, other than the issue date and the issue price.

The 2033 Notes bear interest at an annual rate of 7.375%, which is payable on January 15 and July 15 of each year, and mature on January 15, 2033. We may, at our option, redeem all or a portion of the 2033 Notes at any time on or after July 15, 2027 at certain redemption prices. We may also redeem up to 40% of the aggregate principal amount of the 2033 Notes before July 15, 2027 with an amount of cash not greater than the net proceeds that we raise in certain equity offerings at a redemption price equal to 107.375% of the principal amount of the 2033 Notes being redeemed, plus accrued and unpaid interest, in any, to, but excluding the redemption date, if at least 50% of the aggregate principal amount of the Notes remains outstanding immediately after such redemption and the redemption occurs within 180 days of the closing date of such equity offering. In addition, prior to July 15, 2027, we may redeem some or all of the 2033 Notes at a price equal to 100% of the principal amount thereof, plus a "make-whole" premium and accrued and unpaid interest, if any, to but excluding the redemption date.

2032 Notes

In March 2024, we issued $700.0 million aggregate principal amount of 2032 Notes at par. In December 2024, we issued an additional $400.0 million, aggregate principal amount of 2032 Notes at 100.250% of par. The aggregate proceeds from the 2032 Notes Offering were approximately $1,080.7 million, after deducting the initial purchasers' discount and offering expenses. We used the net proceeds to finance the majority of the consideration of a cash tender offer of our 7.25% senior notes due 2026 (the "2026 Notes") and the redemption of any remaining 2026 Notes following such cash tender offer of all of the aggregate principal amount of the 2026 Notes outstanding for $714.8 million after including extinguishment costs. We used the proceeds from the December 2024 Offering to repay the amounts outstanding under our Revolving Credit Facility.

All issuances of the 2032 Notes are treated as a single series of securities under the indenture governing the 2032 Notes, will vote together as a single class, and have substantially identical terms, other than the issue date and the issue price.

The 2032 Notes bear interest at an annual rate of 7.625%, which is payable on April 1 and October 1 of each year, and mature on April 1, 2032. We may, at our option, redeem all or a portion of the 2032 Notes at any time on or after April 1, 2027 at certain redemption prices. We may also redeem up to 40% of the aggregate principal amount of the 2032 Notes before April 1, 2027 with an amount of cash not greater than the net proceeds that we raise in certain equity offerings at a redemption price equal to 107.625% of the principal amount of the 2032 Notes being redeemed, plus accrued and unpaid interest, if any, to, but excluding the redemption date. In addition, prior to April 1, 2027, we may redeem some or all of the 2032 Notes at a price equal to 100% of the principal amount thereof, plus a “make-whole” premium, plus accrued and unpaid interest, if any, to, but excluding the redemption date.

In conjunction with the Vital Energy Merger we assumed $1.0 billion aggregate principal amount of 7.875% senior notes due 2032 of Crescent Energy Finance LLC, as successor in interest to Vital (the "Vital 2032 Notes"). The Vital 2032 Notes will mature on April 15, 2032, with interest accruing at a rate of 7.875% per annum and payable semi-annually, on April 15 and October 15 of each year. We may redeem up to 35% of the aggregate principal amount of the Vital 2032 Notes before April 15, 2027 using funds in an amount not exceeding the net proceeds from one or more private or public equity offerings at a redemption price of 107.875% of the aggregate principal amount of the Vital 2032 Notes redeemed, plus accrued and unpaid interest to the date of redemption. In addition, prior to April 15, 2027, we may redeem all or a part of the Vital 2032 Notes at a redemption price equal to 100% of the principal amount, plus a “make-whole” premium as of, and accrued and unpaid interest, if any, to, the redemption date.

2030 Notes

In conjunction with the Vital Energy Merger we assumed $302.4 million aggregate principal amount of the 9.750% senior notes due 2030 (the Vital 2030 Notes") of Crescent Energy Finance LLC, as successor in interest to Vital. On January 2, 2026, Crescent Energy Finance LLC settled offers to eligible holders to exchange any and all of the Vital 2030 Notes then outstanding, wherein approximately $237.4 million aggregate principal amount of the Vital 2030 Notes were exchanged for approximately $237.2 million aggregate principal amount of the 9.750% senior notes due 2030 newly issued by Crescent Energy Finance LLC (the "Crescent 2030 Notes"), which tendered and accepted Vital 2030 Notes were subsequently canceled. Following such exchange offer, approximately $65.0 million aggregate principal amount of the Vital 2030 Notes and approximately $237.2 million of the Crescent 2030 Notes remain outstanding, which are collectively referred to as the "2030
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Notes" herein. The 2030 Notes will mature on October 15, 2030, with interest accruing at a rate of 9.750% per annum and payable semi-annually, on April 15 and October 15 of each year. We may, at our option, redeem all or a portion of the 2030 Notes at any time on or after October 15, 2026 at a price equal to 104.875% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding the redemption date. If, on or after October 15, 2027, we may redeem some or all of the Crescent 2030 Notes at a price equal to 102.4375% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding the redemption date. In addition, on or after October 15, 2028 and thereafter, we may redeem some or all of the Crescent 2030 Notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding the redemption date.

2029 Notes

In conjunction with the Vital Energy Merger we assumed $298.2 million aggregate principal amount of the 7.750% senior notes due 2029 (the "Vital 2029 Notes") of Crescent Energy Finance LLC, as successor in interest to Vital. On January 2, 2026, Crescent Energy Finance LLC settled offers to eligible holders to exchange any and all of the Vital 2029 Notes then outstanding, wherein approximately $295.3 million aggregate principal amount of the Vital 2029 Notes were exchanged for approximately $294.8 million aggregate principal amount of the 7.750% senior notes due 2029 newly issued by Crescent Energy Finance LLC (the "Crescent 2029 Notes"), which tendered and accepted Vital 2029 Notes were subsequently canceled. Following such exchange offer, approximately $2.9 million aggregate principal amount of the Vital 2029 Notes and approximately $294.8 million of the Crescent 2029 Notes remain outstanding, which are collectively referred to as the "2029 Notes" herein (collectively with the 2028 Notes, the 2030 Notes, the Vital 2032 Notes, the 2032 Notes, the 2033 Notes and the 2034 Notes, the "Senior Notes").The 2029 Notes will mature on July 31, 2029, with interest accruing at a rate of 7.750% per annum and payable semi-annually, on January 31 and July 31 of each year. We may, at our option, redeem all or a portion of the 2029 Notes at any time before July 31, 2026 at a price equal to 101.9375% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding the redemption date. In addition, on or after July 31, 2026, we may redeem some or all of the 2029 Notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding the redemption date.

2028 Notes

As of December 31, 2024 we had $1.0 billion of the 2028 Notes outstanding. The 2028 Notes bear interest at an annual rate of 9.250%, which is payable on February 15 and August 15 of each year and mature on February 15, 2028. We may, at our option, redeem all or a portion of the 2028 Notes at any time before February 15, 2027 at a price equal to 102.3125% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding the redemption date. In addition, on or after February 15, 2027, we may redeem some or all of the 2028 Notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding the redemption date.

In June 2025, we commenced the Tender Offer to purchase a portion of our outstanding 2028 Notes, pursuant to which approximately $306.1 million aggregate principal amount of 2028 Notes were validly tendered and not validly withdrawn at or prior to July 22, 2025, the final tender date. In addition to the Tender Offer, we elected to redeem an aggregate principal amount of the 2028 Notes equal to $193.9 million, at a price of 104.625% of the unpaid principal amount of the 2028 Notes, plus accrued and unpaid interest, if any, to, but excluding, July 25, 2025, the redemption date. After giving effect to the 2028 Notes Redemption and the Tender Offer, the aggregate principal amount of the 2028 Notes outstanding is $500.0 million. Combined, we purchased the 2028 Notes at a blended price of 104.472% of par and incurred a loss on the extinguishment of debt of approximately $29.2 million, including the write-off of associated deferred financing costs, during the year ended December 31, 2025.

The Senior Notes are our senior unsecured obligations and the Senior Notes and the related guarantees rank equally in right of payment with the borrowings under our Revolving Credit Facility and any of our other future senior indebtedness and senior to any of our future subordinated indebtedness. The Senior Notes are guaranteed on a senior unsecured basis by each of our existing and future subsidiaries that will guarantee our Revolving Credit Facility. The Senior Notes and the guarantees are effectively subordinated to all of our secured indebtedness (including all borrowings and other obligations under our Revolving Credit Facility) to the extent of the value of the collateral securing such indebtedness and structurally subordinated in right of payment to all existing and future indebtedness and other liabilities (including trade payables) of any future subsidiaries that do not guarantee the Senior Notes.

The indentures governing the Senior Notes contains covenants that, among other things, limit the ability of the our restricted subsidiaries to: (i) incur or guarantee additional indebtedness or issue certain types of preferred stock; (ii) pay dividends or distributions in respect of its equity or redeem, repurchase or retire its equity or subordinated indebtedness; (iii) transfer or sell assets; (iv) make investments; (v) create certain liens; (vi) enter into agreements that restrict dividends or other payments from
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any non-Guarantor restricted subsidiary to it; (vii) consolidate, merge or transfer all or substantially all of its assets; (viii) engage in transactions with affiliates; and (ix) create unrestricted subsidiaries.

If we experience certain kinds of changes of control accompanied by a ratings decline, holders of the Senior Notes may require us to repurchase all or a portion of their notes at certain redemption prices. The Senior Notes are not listed, and we do not intend to list the notes in the future, on any securities exchange, and currently there is no public market for the notes.

Revolving Credit Facility

Overview

We are party to a senior secured reserve-based revolving credit agreement (as amended, restated, amended and restated or otherwise modified to date, the "Revolving Credit Facility") with Wells Fargo Bank, N.A., as administrative agent for the lenders and letter of credit issuer, and the lenders from time to time party thereto. Our Revolving Credit Facility matures on October 22, 2030, but contains terms that if certain conditions regarding our outstanding 2028 Notes, 2029 Notes, or 2030 Notes exist 91 days prior to their stated maturity, it will mature on such date. At December 31, 2025, we had $772.0 million outstanding borrowings and $16.6 million in letters of credit outstanding under the Revolving Credit Facility.

The obligations under the Revolving Credit Facility remain secured by first priority liens on substantially all of the Company’s and the guarantors’ tangible and intangible assets, including without limitation, oil and natural gas properties and associated assets and equity interests owned by the Company and such guarantors. In connection with each redetermination of the borrowing base, the Company must maintain mortgages on at least 85% of the net present value, discounted at 9% per annum (“PV-9”) of the oil and natural gas properties that constitute borrowing base properties. The Company’s domestic direct and indirect subsidiaries are required to be guarantors under the Revolving Credit Facility, subject to certain exceptions.

The borrowing base is subject to semi-annual scheduled redeterminations on or about April 1 and October 1 of each year, as well as (i) elective borrowing base interim redeterminations at our request not more than twice during any consecutive 12-month period or the required lenders not more than once during any consecutive 12-month period and (ii) elective borrowing base interim redeterminations at our request following any acquisition of oil and natural gas properties with a purchase price in the aggregate of at least 5.0% of the then effective borrowing base. The borrowing base will be automatically reduced upon (i) the issuance of certain permitted junior lien debt and other permitted additional debt, (ii) the sale or other disposition of borrowing base properties if the aggregate PV-9 of such properties sold or disposed of is in excess of 5.0% of the borrowing base then in effect and (iii) early termination or set-off of swap agreements (a) the administrative agent relied on in determining the borrowing base or (b) if the value of such swap agreements so terminated is in excess of 5.0% of the borrowing base then in effect.

In October 2025, in connection with the borrowing base redetermination of our Revolving Credit Facility, we entered into the Thirteenth Amendment (the “Thirteenth Amendment”) to the credit agreement governing our Revolving Credit Facility. Among other things, the Thirteenth Amendment provides for (i) an automatic $1.3 billion increase in the borrowing base from $2.6 billion to $3.9 billion, effective upon the consummation Vital Energy Merger, subject to the satisfaction of certain conditions, (ii) an extension of the maturity date for any revolving loans to October 22, 2030 from April 10, 2029, (iii) a reduction in the applicable margin, so that loans under the Credit Agreement will be priced based on the SOFR plus 1.75% to 2.75% per annum, a reduction of 0.25% per annum, and (iv) an increase in the aggregate maximum credit amount under our Revolving Credit Facility from $3.0 billion to $6.0 billion. The Thirteenth Amendment maintains the aggregate elected commitments at $2.0 billion.

Interest

Borrowings under the Revolving Credit Facility bear interest at either (i) a U.S. dollar alternative base rate based on the prime rate, the federal funds effective rate or an adjusted SOFR, plus an applicable margin or (ii) SOFR, plus an applicable margin, at the election of the borrowers. The applicable margin varies based upon our borrowing base utilization then in effect. The fee payable for the unused revolving commitments at December 31, 2025 is 0.375% per year and fees incurred are included within Interest expense on our consolidated statements of operations. Our weighted average interest rate on loan amounts outstanding as of December 31, 2025 was 5.560%. We had $772.0 million borrowing outstanding under the Revolving Credit Facility at December 31, 2025. We had no borrowing outstanding under the Revolving Credit Facility at December 31, 2024.

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Covenants

The Revolving Credit Facility contains certain covenants that restrict the payment of cash dividends, certain borrowings, sales of assets, loans to others, investments, merger activity, commodity swap agreements, liens and other transactions without the adherence to certain financial covenants or the prior consent of our lenders. We are subject to (i) maximum consolidated total debt to consolidated EBITDAX ratio and (ii) minimum current ratio financial covenants calculated as of the last day of each fiscal quarter. The Revolving Credit Facility also contains representations, warranties, indemnifications and affirmative and negative covenants, including events of default relating to nonpayment of principal, interest or fees, inaccuracy of representations or warranties in any material respect when made or when deemed made, violation of covenants, bankruptcy and insolvency events, certain unsatisfied judgments and change of control. If an event of default occurs and we are unable to cure such event of default, the lenders will be able to accelerate maturity and exercise other rights and remedies.

Letters of Credit

From time to time, we may request the issuance of letters of credit for our own account. Letters of credit accrue interest at a rate equal to the margin associated with SOFR borrowings. At December 31, 2025 and 2024, we had letters of credit outstanding of $16.6 million and $21.2 million, respectively, which reduces the amount available to borrow under our Revolving Credit Facility.

The following table summarizes our debt balances as of December 31, 2025 and 2024:

Debt
Outstanding
Letters of Credit
Issued
Borrowing
Base

Maturity
(in thousands)
December 31, 2025
Revolving Credit Facility
$772,000 $16,625 $3,900,000 10/22/2030
9.250% Senior Notes due 2028
500,000 — — 2/15/2028
7.750% Senior Notes due 2029
298,214 — — 7/31/2029
9.750% Senior Notes due 2030
302,364 — — 10/15/2030
7.875% Senior Notes due 2032
1,000,000 — — 4/15/2032
7.625% Senior Notes due 2032
1,100,000 — — 4/1/2032
7.375% Senior Notes due 2033
1,000,000 — — 1/15/2033
8.375% Senior Notes due 2034
600,000 — — 1/15/2034
Less: Unamortized discount, premium and issuance costs(48,450)
Total long-term debt$5,524,128 
December 31, 2024
Revolving Credit Facility$— $21,186 $2,600,000 4/10/2029
9.250% Senior Notes due 2028
1,000,000 — — 2/15/2028
7.625% Senior Notes due 2032
1,100,000 — — 4/1/2032
7.375% Senior Notes due 2033
1,000,000 — — 1/15/2033
Less: Unamortized discount, premium and issuance costs(50,745)
Total long-term debt$3,049,255 

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NOTE 9 – Asset Retirement Obligations

Our ARO liabilities are based on our net ownership in wells and facilities and management’s estimate of the costs to abandon and remediate those wells and facilities together with management’s estimate of the future timing of the costs to be incurred. The following table summarizes activity related to our ARO liabilities for the years ended December 31, 2025 and 2024:

Year Ended December 31,
20252024
(in thousands)
Balance at beginning of period
$486,168 $445,060 
Additions(1)
162,974 43,784 
Retirements(12,771)(13,399)
Accretion expense31,789 31,527 
Revisions(795)35,230 
Divestitures (2)
(264,764)(56,034)
Balance at end of period402,601 486,168 
Less: current portion(19,544)(37,223)
Balance at end of period, noncurrent portion$383,057 $448,945 
(1)During the year ended December 31, 2025, our ARO additions primarily related to oil and natural gas properties acquired in the Vital Energy Merger and the Ridgemar Acquisition. During the year ended December 31, 2024, our ARO additions primarily related to properties acquired in the SilverBow Merger and the Central Eagle Ford Acquisition. See NOTE 3 – Acquisitions and Divestitures for additional information.
(2)See NOTE 3 – Acquisitions and Divestitures for additional information.

NOTE 10 – Equity and Redeemable Noncontrolling Interests

Equity

Class A and Class B Common Stock

In April 2025, we announced that our corporate structure had been simplified through the elimination of the Company’s Up-C structure through the exercise by the holders of all remaining shares of Class B Common Stock of their redemption rights with respect to all of their OpCo Units. Prior to the Corporate Simplification, the Up-C structure provided for holders of Crescent’s then-outstanding Class B Common Stock which had voting (but no economic) rights with respect to Crescent, to hold a corresponding amount of OpCo Units, which were generally redeemable or exchangeable for Class A Common Stock on the terms and conditions set forth in the OpCo LLC Agreement. Pursuant to the aforementioned exercise of such right in the Corporate Simplification, all OpCo Units (other than those held by Crescent) were exchanged for an equivalent number of shares of Class A Common Stock and all outstanding shares of Class B Common Stock were cancelled. As a result of the Corporate Simplification, all of the Company’s common stockholders now hold Class A Common Stock. See NOTE 14 – Related Party Transactions for more information.

As of December 31, 2025 and 2024, we had 327,900,272 and 187,070,725 shares of Class A Common Stock and 0 and 65,948,124 shares of Class B Common Stock outstanding, respectively. Our Class A Common Stock is publicly traded, while our Class B Common Stock was 100% owned by the former owners of Independence. We paid dividends of $0.12 per share quarterly, or $0.48 per share, annually, of Class A Common Stock during the years ended December 31, 2025 and 2024.

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Equity Transactions

2025 Equity Transactions

In March 2025, Independence Energy Aggregator L.P., the entity through which certain private investors in affiliated KKR entities held their interests in us, exercised its redemption right with respect to 2.9 million OpCo Units, and such OpCo Units were exchanged for an equivalent number of shares of Class A Common Stock and a corresponding number of shares of Class B Common Stock were cancelled (the "2025 Class A Redemption"). The shares of Class A Common Stock were sold by Independence Energy Aggregator L.P. at a price per share of $9.91, pursuant to Rule 144, through a broker-dealer. We did not receive any proceeds or incur any material expenses related to the 2025 Class A Redemption.

As a result of the 2025 Class A Redemption and the Corporate Simplification, the total number of shares of our Class A Common Stock increased by 65.9 million shares with a corresponding decrease in the number of shares of our Class B Common Stock, and redeemable noncontrolling interests decreased by $1,210.8 million, while Additional paid-in capital
(“APIC”) increased by $1,210.8 million.

2024 Equity Transactions

In December 2024, we conducted an underwritten public offering of 24.7 million shares of Class A Common Stock at a price to the public of $14.00 per share (not including underwriter discounts and commissions) (the "December 2024 Equity Issuance"). This included 3.2 million shares of Class A Common Stock that were issued upon the underwriters exercise of their 30-day option to purchase additional shares to cover over-allotments pursuant to the related underwriting agreement. We received net proceeds of approximately $329.3 million from the 2024 Equity Issuance, after deducting underwriting fees and expenses.

On April 1, 2024, Independence Energy Aggregator L.P., the entity through which certain private investors in affiliated KKR entities held their interests in us, exercised its redemption right with respect to 6.0 million OpCo Units, and such OpCo Units were exchanged for an equivalent number of shares of Class A Common Stock and a corresponding number of shares of Class B Common Stock were cancelled (the "April 2024 Class A Redemption"). The shares of Class A Common Stock were subsequently sold by Independence Energy Aggregator L.P. at a price per share of $10.74, pursuant to Rule 144, through a broker-dealer. We did not receive any proceeds or incur any material expenses related to the April 2024 Class A Redemption.

In March 2024, 16.1 million OpCo Units were acquired from Independence Energy Aggregator L.P. and we cancelled a corresponding number of shares of Class B Common Stock (the "March 2024 Redemption"). Of the total OpCo Units acquired, 13.8 million were exchanged for shares of Class A Common Stock, which were subsequently sold in an underwritten public offering at a price to the public of $10.50 per share, or a net price of $9.87 per share after deducting the underwriters' discounts and commissions, from which we did not receive any proceeds, nor incur any material expenses with respect to such acquisition. In connection with the underwritten public offering, we repurchased 2.3 million OpCo Units from Independence Energy Aggregator L.P. for $22.7 million in cash and we cancelled a corresponding number of shares of Class B Common Stock (the "March 2024 Repurchase," together with the March 2024 Redemption, the "March 2024 Equity Transactions").

As a result of the December 2024 Equity Issuance, April 2024 Class A Redemption and the March 2024 Equity Transactions (the "2024 Equity Transactions"), the total number of shares of our Class A Common Stock increased by 44.5 million shares and the total number of shares of our Class B Common Stock decreased by 22.1 million shares. Redeemable noncontrolling interests decreased by $515.0 million while APIC increased by $821.5 million as a result of the 2024 Equity Transactions.

2023 Equity Transactions

In September 2023, we conducted an underwritten public offering of 12.7 million shares of Class A Common Stock at a price to the public of $12.25 per share (not including underwriter discounts and commissions). This includes 1.7 million shares of Class A Common Stock that were issued upon the underwriters exercise of their 30-day option to purchase additional shares to cover over-allotments pursuant to the related underwriting agreement. We received net proceeds of $145.7 million from the such issuance (the "2023 Equity Issuance," and together with the 2024 Equity Issuance, the "Equity Issuances"), after deducting underwriting fees and expenses.

During 2023, an affiliate of KKR exercised its redemption right with respect to approximately 30.6 million OpCo Units , and such OpCo Units were exchanged for an equivalent number of shares of Class A Common Stock and a corresponding number of shares of Class B Common Stock were cancelled (the "2023 Class A Redemption"); 27.6 million of such shares of Class A Common Stock were subsequently distributed to certain of its legacy investors in privately-managed funds and accounts;
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3.0 million of such shares of Class A Common Stock were subsequently sold by such affiliate of KKR at a price per share of $10.90, pursuant to Rule 144, through a broker-dealer. We did not receive any proceeds or incur any material expenses associated with the 2023 Class A Redemption.

Treasury stock

Our Board authorized a stock repurchase program in March 2024 with an approved limit of $150.0 million and a two-year term. In February 2026, our Board of Directors extended the stock repurchase program indefinitely and increased the approved limit to $400.0 million. Such repurchases may be made by Crescent or by OpCo, as applicable, and may be made from time to time in the open market, in privately negotiated transactions, through purchases made in accordance with the Rule 10b5-1 of the Exchange Act or by such other means as will comply with applicable state and federal securities laws. The timing of any repurchases under the stock repurchase program will depend on market conditions, contractual limitations and other considerations. The program may be extended, modified, suspended or discontinued at any time, and does not obligate us to repurchase any dollar amount or number of securities. The 1% U.S. federal excise tax on certain repurchases of stock by publicly traded U.S. corporations enacted as part of the IRA 2022 applies to repurchases of our Class A Common Stock pursuant to our stock repurchase program.

We record treasury stock purchases at cost, which includes incremental direct transaction costs. Amounts are recorded as a reduction to equity on our consolidated balance sheets. For the year ended December 31, 2025, we repurchased 4.1 million shares of our Class A Common Stock for $33.5 million, at an average price of $8.21 per share ("2025 Class A Repurchases"). During 2024, we repurchased 0.7 million shares of our Class A Common Stock for $7.8 million, at an average price of $10.70 per share (the "2024 Class A Repurchases" and together with the 2025 Class A Repurchases, the "Class A Repurchases"), and in connection therewith, we cancelled a corresponding number of OpCo Units held by us. When combining the Class A Repurchases with the 2024 Equity Transactions, the remaining amount under the authorized plan is approximately $86.0 million as of December 31, 2025.

In addition a portion of our treasury stock shares represent shares we withheld associated with the payroll tax withholding obligations due from employees upon the vesting of stock awards. We include the shares withheld as Treasury stock on our consolidated balance sheets and separately pay the payroll tax obligation. These retained shares are not part of a publicly announced program to repurchase shares of our Class A Common Stock and are accounted for at cost.

Noncontrolling interests

We record noncontrolling interest associated with third party ownership interests in our subsidiaries. Income or loss associated with these interests is classified as net income (loss) attributable to noncontrolling interest on our consolidated statements of operations.

Redeemable Noncontrolling Interests

In 2021, 127.5 million OpCo Units were issued to the former owners of Independence. Prior to the Corporate Simplification, the former owners of Independence owned all outstanding shares of our Class B Common Stock. Pursuant to the OpCo LLC Agreement, holders of OpCo Units, other than the Company, if any, may redeem all or a portion of their OpCo Units for either (a) shares of Class A Common Stock or (b) at the election of the Company, an approximately equivalent amount of cash as determined pursuant to the terms of the OpCo LLC Agreement. In connection with such redemption, a corresponding number of shares of Class B Common Stock will be cancelled. The cash redemption election was not considered to be within the control of the Company because the holders of Class B Common Stock and their affiliates controlled the Company through direct representation on the Board of Directors. As a result, we present the noncontrolling interests in OpCo as redeemable noncontrolling interests outside of permanent equity. Redeemable noncontrolling interests are recorded at the greater of the carrying value or redemption amount with a corresponding adjustment to additional paid-in capital. The cash redemption amount is based on the 10-day volume-weighted average closing price (“VWAP”) of Class A Common Stock at the end of the reporting period. Changes in the redemption value are recognized immediately as they occur, as if the end of the reporting period was also the redemption date for the instrument, with an offsetting entry to additional paid-in capital. Following the 2025 Class A Redemption and the Corporate Simplification, the Company is the sole holder of all outstanding OpCo Units and there are no shares of our Class B Common Stock outstanding.

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The 2025 Equity Transactions reduced the number of shares of Class B Common Stock by 65.9 million shares, and we reclassified $1,210.8 million from Redeemable noncontrolling interests to Additional paid-in capital as a result of the transfer of additional OpCo Units to Crescent.

The 2024 Equity Transactions reduced the number of shares of our Class B Common Stock by 22.1 million shares. In addition, the 2024 Equity Transactions resulted in the transfer of 19.8 million OpCo Units to Crescent and the repurchase, by OpCo, of 2.3 million OpCo Units for $22.7 million in cash. As a result of the transfer of additional OpCo Units to Crescent, we reclassified $448.0 million from Redeemable noncontrolling interests to Additional paid-in capital.

In September 2023, the proceeds from the 2023 Equity Issuance, including the exercise of the underwriters' over-allotment, were contributed by Crescent to OpCo in exchange for 12.7 million OpCo Units. As a result of the additional OpCo Units owned by Crescent, we reclassified $65.8 million from Redeemable noncontrolling interests to Additional paid-in capital.

During 2023, the Class A Conversion reduced the number of shares of our Class B Common Stock outstanding by 30.6 million shares. A corresponding number of OpCo Units were transferred to Crescent, which reduced the value of our Redeemable noncontrolling interests by $679.6 million.

From December 31, 2022 through December 31, 2025, we recorded adjustments to the value of our redeemable noncontrolling interests as shown below:

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Redeemable Noncontrolling Interest
(in thousands)
Balance as of December 31, 2022$2,436,703 
Net income attributable to redeemable noncontrolling interests253,909 
Contributions1,238 
Distributions(417)
Cash distributions from OpCo initiated by Class A common stock dividend, Manager Compensation and income taxes, net(80,805)
Accrued OpCo cash distribution initiated by Manager Compensation(6,794)
Equity-based compensation42,782 
Change in redeemable noncontrolling interests associated with the Class A Conversions(679,567)
Change in redeemable noncontrolling interests associated with the 2023 Equity Issuance(65,841)
Balance as of December 31, 2023$1,901,208 
Net (loss) attributable to redeemable noncontrolling interests(21,863)
Distributions(293)
Cash distributions from OpCo initiated by Class A common stock dividend, Manager Compensation and income taxes, net(48,008)
Accrued OpCo cash distribution initiated by Manager Compensation(4,525)
Equity-based compensation67,042 
Repurchase of redeemable noncontrolling interest(10,569)
Change in redeemable noncontrolling interests associated with the 2024 Equity Transactions(514,955)
Change in redeemable noncontrolling interests associated with the SilverBow Merger(143,540)
Cancellation of OpCo Units associated with 2024 Class A Repurchases3,832 
Balance as of December 31, 2024$1,228,329 
Net income attributable to redeemable noncontrolling interests14,050 
Cash distributions from OpCo initiated by Class A common stock dividend, Manager Compensation and income taxes, net
(7,648)
Accrued OpCo cash distribution initiated by Manager Compensation
(4,242)
Equity-based compensation6,635 
Change in redeemable noncontrolling interests associated with the Ridgemar Acquisition
(26,359)
Change in redeemable noncontrolling interests associated with the 2025 Class A Redemption
(34,096)
Change in redeemable noncontrolling interests associated with the Corporate Simplification(1,176,669)
Balance as of December 31, 2025
$— 

NOTE 11 – Income Taxes

We are subject to U.S. federal income and state tax on our allocable share of any taxable income of OpCo.

During the year ended December 31, 2025, we decreased APIC by $136.9 million related to a change in the deferred tax liability related to our estimated basis in our ownership interests in OpCo as a result of the Corporate Simplification and the 2025 Class A Redemption. During the year ended December 31, 2024, we decreased APIC by $84.7 million related to a change in the deferred tax liability related to our estimated basis in our ownership interests in OpCo as a result of the 2024 Equity Issuances, the SilverBow Merger and Class A Redemptions. As of December 31, 2025 and 2024, we did not have any uncertain tax positions.

On July 4, 2025, the OBBBA was enacted into law. The OBBBA is a significant piece of tax legislation that includes provisions that permanently restore an EBITDA-based section 163(j) calculation for tax years beginning after December 31, 2024 and 100% bonus depreciation under section 168(k) for property acquired and placed in service after January 19, 2025, deferring the recognition of a significant portion of current federal tax for multiple years.

Details of current and deferred income taxes are provided in the following tables:

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Year Ended December 31,
202520242023
Federal income tax expense (benefit)(in thousands)
Current
$(1,288)$1,422 $(17)
Deferred41,146 (39,379)19,520 
State income tax expense (benefit)
Current
136 3,360 511 
Deferred(5,490)3,525 3,213 
Total income tax expense (benefit)$34,504 $(31,072)$23,227 
The difference between the statutory federal income tax rate and the Company's effective income tax rate after the adoption of ASU 2023-09 is as follows:
Year Ended December 31,
2025
Amount
%
(in thousands)
Federal income taxes statutory rate$42,351 21.0 %
Change in rate as a result of:
State income tax provision, net of federal benefit (1)
(5,512)(2.7)%
Merger transaction costs7,430 3.7 %
Change in valuation allowance
(242)(0.1)%
Permanent adjustments— — %
Income attributable to noncontrolling interests and redeemable noncontrolling interests(7,195)(3.6)%
Return to provision
(2,328)(1.2)%
Effective income tax rate$34,504 17.1 %
(1)During the year ended December 31, 2025, the majority (greater than 50%) of our state income tax provision reduction related to the removal of Oklahoma deferred tax liabilities associated with our divestitures.

The difference between the statutory federal income tax rate and the Company's effective income tax rate prior to the adoption of ASU 2023-09 is as follows:

Year Ended December 31,
20242023
Federal income taxes statutory rate21.0 %21.0 %
Change in rate as a result of:
State income tax provision, net of federal benefit(3.1)%1.0 %
SilverBow Merger transaction costs
3.1 %— %
Change in valuation allowance (1)
(0.6)%— %
Permanent adjustments
(0.1)%— %
Income attributable to noncontrolling interests and redeemable noncontrolling interests(2.6)%(15.3)%
Other0.7 %— %
Effective income tax rate18.4 %6.7 %
(1)During the year ended December 31, 2024, we recognized changes in the valuation allowance related to our recognized built-in loss ("RBIL") deferred tax asset as it was not more likely than not to be fully utilized.

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Significant components of the Company's deferred income taxes were as follows:

Year Ended December 31,
20252024
Deferred tax liabilities(in thousands)
Outside basis in OpCo$541,831 $529,071 
OpCo state deferred tax11,671 13,832 
Other
137 — 
Total deferred tax liabilities553,639 542,903 
Deferred tax assets
U.S. federal and state net operating loss ("NOL") carryforwards
269,329 132,811 
Recognized built-in loss carryforward25,513 21,637 
NOL and RBIL valuation allowance(44,894)(45,136)
Equity-based compensation114,620 47,402 
Capitalized intangible drilling costs300,487 — 
Other20,619 15,860 
Total deferred tax assets, net of valuation allowance685,674 172,574 
Net deferred income tax (asset) liability$(132,035)$370,329 
Cash paid for income taxes (net of refunds received) were as follows:

Year Ended December 31,
202520242023
(in thousands)
U.S. Federal
$4,166 $— $(5,000)
U.S. State:
Colorado
692 — 85 
Oklahoma
437 15 1,633 
Texas
2,861 1,166 563 
Utah
460 83 671 
Other
1,352 587 657 
Total U.S. State
5,802 1,851 3,609 
Total U.S. Federal and State taxes
$9,968 $1,851 $(1,391)
In December 2025, we completed the Vital Energy Merger, see NOTE 3 – Acquisitions and Divestitures for more information. As part of the preliminary purchase price allocation, we recognized a net deferred tax asset of $695.3 million to reflect differences between tax basis and the fair value of Vital’s assets acquired and liabilities assumed. Tax attributes related to U.S. federal NOLs are included in the net deferred tax asset. Due to the change of ownership of Vital in connection with the Vital Energy Merger, the availability of these attributes will have utilization limitations under Section 382.

In July 2024, we completed the SilverBow Merger, see NOTE 3 – Acquisitions and Divestitures for more information. As part of the purchase price allocation, we recognized a net deferred tax liability of $79.1 million to reflect differences between tax basis and the fair value of SilverBow’s assets acquired and liabilities assumed. Tax attributes related to U.S. federal NOLs and interest expense are included in the net deferred tax liability. Due to the change of ownership of SilverBow in connection with the SilverBow Merger, the availability of these attributes will have utilization limitations under Section 382.

We continually assess the available positive and negative evidence to determine if sufficient future taxable income will be generated to use the existing deferred tax assets. On the basis of this evaluation, as of December 31, 2025 and 2024, a valuation allowance has been recorded to recognize only the portion of the deferred tax assets that are more likely than not to be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted in the future.

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As of December 31, 2025 and 2024, we had U.S. federal and state NOLs of $269.3 million and $132.8 million, respectively. A portion of these NOLs are subject to a valuation allowance of $23.5 million as of December 31, 2025 and 2024, because we do not believe they will be recoverable as a result of limitations on their use under Section 382. During the year ended December 31, 2025 we reduced our valuation allowance by $0.2 million and increased the valuation allowance by $1.0 million during the year ended December 31, 2024, respectively, related to RBIL property that was also subject to the Section 382 limitation. At December 31, 2025 and 2024, the valuation allowance related to our RBIL carryforward was $21.4 million and $21.6 million, respectively. As of December 31, 2025 our federal and state NOL expiration dates were as follows:

Expiration dates
Amounts
(in thousands)
2029-2037$70,600 
Indefinite198,729 
Total federal and state NOLs$269,329 

As we noted above, we have U.S. federal NOL carryforwards and RBIL property that are subject to limitation under Section 382. Pursuant to Section 382 and 383 of the U.S. Internal Revenue Code of 1986, as amended, utilization of our NOL and RBIL carryforwards is subject to an annual limitation. These annual limitations may result in the expiration of NOL and RBIL carryforwards prior to utilization; accordingly we have maintained a valuation allowance related to U.S. federal NOL and RBIL carryforwards that we do not believe are recoverable due to these Section 382 limitations.

NOTE 12 – Commitments and Contingencies

From time to time, we may be a plaintiff or defendant in a pending or threatened legal proceeding arising in the normal course of business. We are currently unaware of any proceedings that, in the opinion of management, will individually or in the aggregate have a material adverse effect on our financial position, results of operations or cash flows.

We are subject to extensive federal, state and local environmental laws and regulations. These laws regulate the discharge of materials into the environment and may require us to remove or mitigate the environmental effects of the disposal or release of petroleum or chemical substances at various sites. We believe we are currently in compliance with all applicable federal, state and local regulations. Accordingly, no significant liability or loss associated with environmental remediation was recognized as of December 31, 2025 and 2024.

Oil and Natural Gas Transportation and Gathering Agreements

We have entered into certain oil and natural gas transportation and gathering agreements with various pipeline carriers. Under these agreements, we are obligated to ship minimum daily quantities or pay for any deficiencies at a specified rate. We are also obligated under certain of these arrangements to pay a demand charge for firm capacity rights on pipeline systems regardless of the amount of pipeline capacity that we utilize. If we do not utilize the capacity, we can release it to others, thus reducing our potential liability. We recognized $2.0 million, $6.6 million and $15.6 million of transportation expense in our consolidated statements of operations related to minimum volume deficiencies for the years ended December 31, 2025, 2024 and 2023, respectively.

The following table summarizes our future commitments related to these oil and natural gas transportation and gathering agreements as of December 31, 2025:

As of December 31, 2025
(in thousands)
2026$181,680 
2027158,193 
2028135,779 
2029111,615 
203087,508 
Thereafter133,893 
Total minimum future commitments$808,668 

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Additional Purchase Commitments

We have committed to purchase a fixed supply of electricity at specified prices through 2029. As of December 31, 2025, future minimum payments under the terms of this agreement are estimated to be $204.7 million.

We have committed to take delivery of processed sand, which is utilized in our completions activities, at specified prices through 2026. As of December 31, 2025, future minimum purchase commitments under the terms of these agreements are estimated to be $20.4 million.

NOTE 13 – Equity-Based Compensation Awards

Overview

We and certain of our subsidiaries have entered into incentive compensation award agreements to grant profits interest awards, restricted stock units ("RSUs"), performance stock units ("PSUs") and other incentive awards to our employees, our Manager, and non-employee directors. The following table summarizes compensation cost we recognized in connection with our equity-based compensation awards for the years indicated:

Year Ended December 31,
202520242023
(in thousands)
Equity-based compensation expense:
Liability-classified profits interest awards
$83 $3,446 $298 
Equity-classified profits interest awards
781 (11,649)12,799 
Equity-classified LTIP RSU awards
4,520 2,999 1,685 
Equity-classified LTIP PSU awards
683 639 118 
Equity-classified Manager PSUs
229,828 188,138 68,036 
SilverBow Merger awards
— 9,908 — 
Vital Energy Merger awards13,181 — — 
Total equity-based compensation expense

$249,076 $193,481 $82,936 
Tax benefit related to equity-based compensation awards$675 $851 $277 

Our incentive compensation awards may contain certain service-based, performance-based, and market-based vesting conditions, which are further discussed below.

Equity-based compensation awards

Liability-classified profits interest awards

We issue profits interests that are liability-classified stock-based compensation awards. These awards contain different vesting conditions ranging from performance-based conditions that vest upon the achievement of certain return thresholds to time-based service requirements ranging from one year to four years. Each of these profits interests is liability-classified because of certain features within these awards that predominantly contain characteristics of liability instruments. Compensation cost for these awards is presented within General and administrative expense on the consolidated statements of operations with a corresponding credit to other long-term liabilities on the consolidated balance sheets.

We did not have any unrecognized compensation cost related to time-based unvested liability-classified profits interest awards at December 31, 2025 and 2024. We had no unrecognized compensation cost related to performance-based unvested liability classified profits interest awards as of December 31, 2025, and $2.9 million as of December 31, 2024. As of December 31, 2025 and 2024, we carried $2.4 million and $4.5 million in Other liabilities on the consolidated balance sheets, respectively. Transactions involving all of our unvested liability-classified stock-based compensation profits interests awards is summarized below:

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Year Ended December 31,
202520242023
(units in thousands)
Beginning balance1 1 1 
Granted— 371 — 
Vested(1)(371)— 
Forfeited— — — 
Ending balance— 1 1 
(in millions)
Fair value of vested awards$1.5 $7.3 $— 
Cash settlements of liability-classified profits interest awards1.5 7.3 — 

Equity-classified profits interest awards

We issue equity-classified profits interests awards that contain different vesting conditions ranging from performance-based conditions that vest upon the achievement of certain return thresholds to time-based service requirements ranging from one year to four years. Each of these profits interests is equity-classified because of certain features within these awards that predominantly contain characteristics of equity instruments. Compensation cost for these awards is presented within General and administrative expense on the consolidated statements of operations with a corresponding credit to Additional paid-in capital on the consolidated balance sheets.

We had no unrecognized compensation cost related to time-based unvested equity-classified profits interest awards as of December 31, 2025. Unrecognized compensation cost related to time-based unvested equity-classified profits interest awards was $0.8 million as of December 31, 2024. Unrecognized compensation cost related to our performance based equity-classified profits interest awards was $1.5 million for the years ended December 31, 2025 and 2024, respectively. Transactions involving all of our unvested equity-classified profits interest awards, including weighted average grant date fair values, are summarized below:

UnitsWeighted average grant date fair value
(in thousands)
Unvested at December 31, 2023106,589 $0.86 
Vested(43,905)0.14 
Forfeited(2,784)29.23 
Unvested at December 31, 2024
59,900 $0.07 
Vested(30,035)0.08 
Unvested at December 31, 2025
29,865 $0.05 

Year Ended December 31,
202520242023
(in thousands)
Fair value of awards vested during the period$2,306 $6,361 $— 

Equity-classified LTIP RSU Awards

During the years ended December 31, 2025 and 2024, we granted equity-classified LTIP RSUs under the Crescent Energy Company 2021 Equity Incentive Plan (“LTIP”) to certain directors, officers and employees. Each LTIP RSU represents the contingent right to receive one share of Class A Common Stock. LTIP RSUs will vest over a period of one to three years, with equity based compensation expense recognized ratably over the applicable vesting period. Compensation cost for these awards is presented within General and administrative expense on the consolidated statements of operations with a corresponding credit to Additional paid-in capital and Redeemable noncontrolling interest on the consolidated balance sheets.

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At December 31, 2025 and 2024, we had $8.3 million and $2.4 million of unrecognized compensation cost related to unvested equity-classified LTIP RSU awards, which are expected to be recognized over a remaining weighted average period of 2.0 years and 2.1 years, respectively. The fair value of vested LTIP RSUs during the years ended December 31, 2025 and 2024 was $3.4 million and $1.4 million respectively. Transactions involving all of our unvested equity-classified LTIP RSU awards, including weighted average grant date fair values, are summarized below:

Restricted Stock Units
Weighted average grant date fair value
(in thousands)
Unvested at December 31, 2023287 $12.77 
Granted301 11.45 
Vested(116)11.99 
Forfeited(26)17.42 
Unvested at December 31, 2024
446 $11.82 
Granted1,110 11.06 
Vested(283)11.89 
Forfeited(146)11.20 
Unvested at December 31, 2025
1,127 $11.14 

Equity-classified LTIP PSU Awards

During the years ended December 31, 2025 and 2024, we granted equity-classified LTIP PSUs under the Crescent Energy Company 2021 Equity Incentive Plan to certain employees. Each LTIP PSU represents the right to receive one share of Class A Common Stock, on such LTIP PSU's performance period end date, modified by an amount ranging from 0% to 240% based on certain absolute and relative shareholder return components. Compensation cost for these awards is presented within General and administrative expense on the consolidated statements of operations with a corresponding credit to Additional paid-in capital and Redeemable noncontrolling interest on the consolidated balance sheets.

At December 31, 2025 and 2024, we had $3.5 million and $1.6 million of unrecognized compensation cost related to unvested equity-classified LTIP PSU Awards, which are expected to be recognized over a remaining weighted average period of 2.3 years and 2.4 years. The fair value of vested LTIP PSUs during the year ended December 31, 2025 is $0.2 million. We did not have any LTIP PSUs vest during the year ended December 31, 2024. Transactions involving all of our unvested equity-classified LTIP PSU awards, including weighted average grant date fair value, are summarized below:

Target Class A SharesWeighted average grant date fair value
(in thousands)
Unvested at December 31, 2023102 $22.75 
Unvested at December 31, 2024102 $22.75 
Granted191 22.75 
Vested(9)22.75 
Forfeited(63)22.75 
Unvested at December 31, 2025221 $22.75 

Equity-classified Manager PSU Awards

We have equity-classified Manager PSUs that were granted in accordance with the Manager Incentive Plan. The Manager PSU performance periods are generally three years with the performance period end dates ranging from December 2024 through December 2028. Each Manager PSU represents the right to receive a target 2% of our issued and outstanding Class A Common Stock on such Manager PSU's performance period end date, modified by an amount ranging from 0% to 240% based on certain absolute and relative shareholder return components. Compensation cost for these awards is presented within General and administrative expense on the consolidated statements of operations with a corresponding credit to Additional paid-in capital on the consolidated balance sheets.

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During the year ended December 31, 2025, in conjunction with the 2025 Equity Transactions, the Vital Energy Merger, the Ridgemar Acquisition, repurchases of Class A common stock and LTIP RSU award vesting, we increased our Class A Common Stock share count by 140.8 million shares. As a result, the number of equity-classified Manager PSU target shares of Class A Common Stock related to the Crescent Energy Company 2021 Manager Incentive Plan increased by approximately 9.8 million shares. We accounted for this increase as a change in estimate and recognized additional expense of $146.5 million during the year ended December 31, 2025. See NOTE 3 – Acquisitions and Divestitures for more information.

During the year ended December 31, 2024, in conjunction with the 2024 Equity Transactions, the closing of the SilverBow Merger, 2024 Class A Repurchases and LTIP RSU award vesting, we increased our Class A Common Stock share count by 95.5 million shares. As a result, the number of equity-classified Manager PSU target shares of Class A Common Stock related to the Crescent Energy Company 2021 Manager Incentive Plan increased by approximately 9.5 million shares. We accounted for this increase as a change in estimate and recognized additional expense of $121.8 million during the year ended December 31, 2024. See NOTE 3 – Acquisitions and Divestitures for more information. The certification of the Company's level of achievement with respect to the first and second Target PSU for the three-year-performance periods under the Incentive Compensation is in process and is expected to be completed in 2026.

Unrecognized compensation cost related to unvested awards was $140.1 million and $144.0 million, at a weighted average grant date fair value of $22.75 per share as of December 31, 2025 and 2024, and is expected to be recognized over a remaining weighted-average period of 1.9 years and 2.4 years, respectively. Transactions involving all of our unvested Manager PSUs are summarized below:
Target Class A Shares
(in thousands)
Unvested at December 31, 20239,160 
Granted9,546 
Vested(3,741)
Unvested at December 31, 2024
14,965 
Granted9,801 
Vested(5,092)
Unvested at December 31, 2025
19,674 

Vital Energy Merger Awards

On December 15, 2025, in accordance with the Vital Energy Merger Agreement, certain of the outstanding Vital equity awards were modified to vest immediately and certain of the outstanding Vital equity awards were modified to vest at the maximum level of performance. Accordingly, we recognized a portion of this settlement as consideration transferred in the Vital Energy Merger and the remaining settlement was recognized as a one-time charge to equity based compensation expense within General and administrative expense on the consolidated statements of operations during the year ended December 31, 2025. See NOTE 3 – Acquisitions and Divestitures for more information.

SilverBow Merger Awards

On July 30, 2024, in accordance with the Agreement and Plan of Merger, certain of the outstanding SilverBow Equity Awards were modified to be accelerated to vest immediately and certain of the outstanding SilverBow Equity Awards were modified to vest at the maximum level of performance. Accordingly, we recognized a portion of this settlement as consideration transferred in the SilverBow Merger and the remaining settlement was recognized as a one-time charge to equity based compensation expense within General and administrative expense on the consolidated statements of operations during the year ended December 31, 2024. See NOTE 3 – Acquisitions and Divestitures for more information.

NOTE 14 – Related Party Transactions

KKR Group

Management Agreement

Crescent Energy Company has a management agreement (the "Management Agreement") with KKR Energy Assets Manager LLC (the "Manager"). Pursuant to the Management Agreement, the Manager provides the Company with members of its senior
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executive management team and certain management services. The Management Agreement has a term of three years that began in 2021 and was automatically renewed in December 2024 for an additional three-year term ending December 7, 2027 and will have automatic three-year renewals thereafter, unless the Company or the Manager elects not to renew the Management Agreement.

As consideration for the services rendered pursuant to the Management Agreement and the Manager’s overhead, including compensation of members of its executive management team, the Manager is entitled to receive compensation from the Company equal to $78.5 million per annum ("Manager Compensation"), as of December 31, 2025, which is included in General administrative expenses on our consolidated statements of operations. As the Company's business and assets expand, the Manager Compensation will increase by an amount equal to 1.5% per annum of the net proceeds from all future issuances of our primary equity securities by the Company (including in connection with acquisitions). See NOTE 3 – Acquisitions and Divestitures for more information.

Prior to the Corporate Simplification, the Manager Compensation was reduced proportionally by the percentage of OpCo Units held as redeemable noncontrolling interests, with such amount distributed concurrently to the holders of redeemable noncontrolling interests. This cash distribution to the holders of redeemable noncontrolling interests did not represent additional Manager Compensation; rather, it represented an ordinary cash distribution to the holders of redeemable noncontrolling interests. In certain instances in our financial statements and other disclosures, we clarify the underlying event that requires us to make such distributions.

During the years ended December 31, 2025, 2024 and 2023, we recorded General and administrative expense of $67.5 million, $41.3 million and $23.8 million, respectively, related to the Manager Compensation and concurrently made cash distributions of $8.8 million, $22.2 million and $33.2 million in 2025, 2024 and 2023 to our redeemable noncontrolling interests. After the Corporate Simplification, there are no longer any outstanding redeemable noncontrolling interests in OpCo, and as such, we will no longer make cash distributions to holders of redeemable noncontrolling interests. At December 31, 2024, we reduced redeemable noncontrolling interests by $4.5 million for the OpCo distribution declaration to redeemable noncontrolling interests that was paid during the first quarter of 2025. At December 31, 2025 and 2024, we had $19.6 million and $17.4 million, included within Accounts payable - affiliates on the consolidated balance sheets for Crescent Energy Company's fee associated with the Manager Compensation.

Additionally, the Manager is entitled to receive incentive compensation ("Incentive Compensation") under which the Manager is targeted to receive 10% of our outstanding Class A Common Stock based on the achievement of certain performance-based measures. The Incentive Compensation consists of five tranches that settle over a five-year period beginning in 2024, and each tranche relates to a target number of shares of Class A Common Stock equal to 2% of the outstanding Class A Common Stock as of the time such tranche is settled. So long as the Manager continuously provides services to us until the end of the performance period applicable to a tranche, the Manager is entitled to settlement of such tranche with respect to a number of shares of Class A Common Stock ranging from 0% to 4.8% of the outstanding Class A Common Stock at the time each tranche is settled. During the years ended December 31, 2025, 2024 and 2023, we recorded non-cash general and administrative expense of $229.8 million, $188.1 million and $68.0 million, respectively, related to the Incentive Compensation. See NOTE 13 – Equity-Based Compensation Awards for more information.

KKR Funds

From time to time, we may invest in upstream oil and gas assets alongside EIGF II and/or other KKR funds ("KKR Funds") pursuant to the terms of the Management Agreement. In these instances, certain of our consolidated subsidiaries enter into Master Service Agreements ("MSA") with entities owned by KKR Funds, pursuant to which our subsidiaries provide certain services to such KKR Funds, including the allocation of the production and sale of oil, natural gas and NGLs, collection and disbursement of revenues, operating expenses and general and administrative expenses in the respective oil and natural gas properties, and the payment of all capital costs associated with the ongoing operations of the oil and natural gas assets. Our subsidiaries settle balances due to or due from KKR Funds on a quarterly basis. The administrative costs associated with these MSAs are allocated by us to KKR Funds based on (i) an actual basis for direct expenses we may incur on their behalf or (ii) an allocation of such charges between the various KKR Funds based on the estimated use of such services by each party. As of December 31, 2025 and 2024, we had a related party receivable of $1.2 million and $4.3 million, respectively, included within Accounts receivable – affiliates and a related party payable of $25.1 million and $1.2 million, respectively, included within Accounts payable – affiliates on our consolidated balance sheets associated with KKR Funds transactions.

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KKR Capital Markets LLC

We may engage KCM, an affiliate of KKR Group, for capital market transactions including notes offerings, credit facility structuring and equity offerings. The following table summarizes fees, discounts and commissions paid to KCM by Crescent in connection with our debt and equity transactions:

Year Ended December 31,
202520242023
(in millions)
Amounts paid to KCM$1.5 $8.7 $5.2 

We recorded these fees to debt issuance costs within Long-term debt (note offerings) and Other assets (credit facility structuring) or APIC (equity offerings).

Other Transactions

In March 2024, OpCo repurchased 2.3 million OpCo Units from Independence Energy Aggregator L.P., the entity through which certain private investors in affiliated KKR entities held their interests in us, for $22.7 million. See NOTE 10 – Equity and Redeemable Noncontrolling Interests for more information. During the years ended December 31, 2025, 2024 and 2023, we made cash distributions of $8.7 million, $32.5 million and $57.1 million to our redeemable noncontrolling interests related to their pro rata share of cash distributions made to Crescent Energy Company to pay dividends and income taxes. As a result of the Corporate Simplification, such pro rata distributions to holders of redeemable noncontrolling interests were eliminated.

In addition, during the years ended December 31, 2025, 2024 and 2023, we reimbursed KKR $3.1 million, $2.4 million and $1.5 million for costs incurred on our behalf. At December 31, 2025 and 2024, we had $0.7 million accrued within Accounts payable - affiliates for reimbursable costs.

Other

We may be required to fund certain workover costs, and we will be required to fund plugging and abandonment costs related to producing assets held by Chama, an Investment in equity affiliates on our consolidated balance sheets. John Goff, the Chairman of our Board of Directors, holds an approximate interest of 17.5% in Chama, and the remaining interests are held by other investors. During the years ended. December 31, 2025 and 2024, we funded $11.9 million and $4.7 million, respectively, to Chama associated with the plugging and abandonment costs.

NOTE 15 – Earnings Per Share

We have two classes of common stock in the form of Class A Common Stock and Class B Common Stock. Our shares of Class A Common Stock are entitled to dividends, and shares of Class B Common Stock do not have rights to participate in dividends or undistributed earnings. However, shareholders of Class B Common Stock receive pro rata distributions from OpCo through their ownership of OpCo Units. We apply the two-class method for purposes of calculating earnings per share. The two-class method determines earnings per share of common stock and participating securities according to dividends or dividend equivalents declared during the period and each security's respective participation rights in undistributed earnings and losses. Net income (loss) per share - diluted excludes the effect of 3.3 million PSUs and 0.2 million of RSUs for the year ended December 31, 2024 that were not included in the computation of earnings per share because to do so would have been antidilutive to our net loss.

Net income (loss) attributable to Crescent Energy is allocated to Class A Common Stock and Class B Common Stock based on the participation rights of each class to share in undistributed earnings and losses after giving effect to dividends declared during the period, if any.

The following table sets forth the computation of basic and diluted net income (loss) per share:

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Year Ended December 31,
202520242023
(in thousands, except share and per share amounts)
Numerator:
Net income (loss)$167,166 $(137,683)$321,991 
Less: net (income) loss attributable to noncontrolling interests
(20,210)1,215 (472)
Less: net (income) loss attributable to redeemable noncontrolling interests
(14,050)21,863 (253,909)
Net income (loss) attributable to Crescent Energy - basic$132,906 $(114,605)$67,610 
Add: Reallocation of net income attributable to redeemable noncontrolling interest for the dilutive effect of RSUs(5)— 46 
Add: Reallocation of net income attributable to redeemable noncontrolling interest for the dilutive effect of PSUs(302)— 869 
Net income (loss) attributable to Crescent Energy - diluted$132,599 $(114,605)$68,525 
Denominator:
Weighted-average Class A Common Stock outstanding - basic242,060,311 130,715,482 66,597,580 
Add: dilutive effect of RSUs159,281 — 39,999 
Add: dilutive effect of PSUs2,838,629 — 764,643 
Weighted-average Class A common stock outstanding – diluted245,058,221 130,715,482 67,402,222 
Weighted-average Class B Stock outstanding - basic and diluted16,609,332 70,519,162 104,271,400 
Net income (loss) per share:
Class A Common Stock - basic
$0.55 $(0.88)$1.02 
Class A Common Stock - diluted
$0.54 $(0.88)$1.02 
Class B Common Stock - basic and diluted$— $— $— 


NOTE 16 - Segment Information

We have evaluated how we are organized and managed and have identified one reportable segment, which is the exploration and production of crude oil, natural gas and NGLs. We consider our gathering, processing and transportation functions as ancillary to our oil and gas producing activities. Substantially all of our operations and assets are located onshore in the United States, and substantially all of our revenues are attributable to United States customers.

The Company’s Chief Operating Decision Maker ("CODM") is the Chief Executive Officer. The CODM uses measures of profitability including Net income (loss) on the Consolidated statement of operations to assess performance and determine resource allocation. The CODM uses these metrics to make key operating decisions, including the determination of allocation of capital between development of existing oil and gas properties and the acquisition of additional oil and gas properties, and the identification and divestiture of non-core assets. The measure of segment assets is reported on the Consolidated balance sheets as Total assets. We do not have intra-entity sales or transfers.

The table below provides information about the Company’s single reportable segment:

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Year Ended December 31,
202520242023
(in thousands)
Total revenues$3,579,782 $2,930,919 $2,382,602 
Less:
Lease and asset operating expense
767,814 632,042 581,973 
Workover expense74,537 60,312 58,441 
Gathering, processing and transportation408,920 312,931 235,153 
Production and other taxes219,416 162,634 162,963 
Depreciation, depletion and amortization1,166,902 949,480 675,782 
Impairment expense
254,551 161,542 153,495 
Midstream and other operating expense116,945 110,136 39,809 
General and administrative expense excluding equity-based compensation223,084 142,738 57,982 
Equity-based compensation expense249,076 193,481 82,936 
Interest expense298,432 216,263 145,807 
Other segment items
(367,061)127,043 (133,730)
Net income (loss)$167,166 $(137,683)$321,991 
Total development of oil and natural gas properties903,232 745,198 578,316 

Other segment items include Exploration expense, Gain (loss) on derivatives, (Gain) loss on sale of assets and Loss from extinguishment of debt from our consolidated statements of operations.

NOTE 17 – Subsequent Events

Subsequent events have been evaluated through the date of issuance of these financial statements, and there have been no events subsequent to December 31, 2025, other than those items disclosed below, that would require additional adjustments to our disclosure in our financial statements.

Dividend

On February 25, 2026, the Board of Directors approved a quarterly cash dividend of $0.12 per share, or $0.48 per share on an annualized basis, to be paid to our shareholders of our Class A Common Stock with respect to the fourth quarter of 2025. The quarterly dividend is payable on March 25, 2026 to shareholders of record as of the close of business on March 11, 2026. OpCo unitholders will also receive a distribution based on their pro rata ownership of OpCo Units.

The payment of quarterly cash dividends is subject to management’s evaluation of our financial condition, results of operations and cash flows in connection with such payments and approval by our Board of Directors. Management and the Board of Directors will evaluate any future changes in cash dividends on a quarterly basis.

2026 Minerals and Royalties Acquisitions

In the first quarter of 2026, in a series of transactions, we acquired a portfolio of mineral and royalty interests located in the Eagle Ford from unrelated third-parties for an aggregate consideration of approximately $355.3 million, subject to customary purchase price adjustments.

Minerals and Royalties Credit Facility

On February 23, 2026, we entered into a separate credit facility ("Crescent Minerals Credit Facility") that is guaranteed by certain of our mineral and royalty assets. As of February 23, 2026, the Crescent Minerals Credit Facility had $365.0 million of outstanding borrowings, with a weighted average interest rate of 6.612% on loan amounts outstanding.

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NOTE 18 – Supplemental Oil and Natural Gas Disclosures (Unaudited)

Geographic Area of Operation

All of the oil and natural gas properties in which we have working interests and mineral and royalty interests are located within the continental U.S., with the majority concentrated in Texas and the Rockies. Therefore, the following disclosures about our costs incurred and proved reserves are presented on a consolidated basis.

Oil and Natural Gas Reserve Information

The following table presents our net proved reserves for the years ended December 31, 2025, 2024 and 2023 and the changes in net proved oil, natural gas and NGL reserves during such years.


Developed and UndevelopedOil
(MBbls)		Natural Gas
(MMcf)		Natural Gas Liquids
(MBbls)		Total
(MBoe)
Net proved reserves at December 31, 2022243,0821,506,53578,621572,793
Revisions of previous estimates (1)
(15,501)(472,337)(11,676)(105,901)
Extensions, discoveries, and other additions (2)
2,80816,2401,6357,150
Sales of reserves in place(1,655)(15,075)(1,774)(5,942)
Purchases of reserves in place (3)
46,018271,68243,301134,599
Production(24,287)(130,629)(8,475)(54,533)
Net proved reserves at December 31, 2023
250,4651,176,416101,632548,166
Revisions of previous estimates (4)
(17,316)(210,432)(11,263)(63,648)
Extensions, discoveries, and other additions (5)
16,62670,63210,60439,002
Sales of reserves in place(3,344)(5,318)(767)(4,998)
Purchases of reserves in place (6)
81,204746,98858,664264,366
Production(29,945)(183,227)(13,154)(73,637)
Net proved reserves at December 31, 2024297,6901,595,059145,716709,251
Revisions of previous estimates (7)
(59,053)40,084(10,331)(62,706)
Extensions, discoveries, and other additions (8)
20,232436,5139,438102,423
Sales of reserves in place(43,427)(291,673)(21,288)(113,327)
Purchases of reserves in place (9)
182,392735,054129,993434,894
Production(38,139)(236,978)(17,382)(95,017)
Net proved reserves at December 31, 2025359,6952,278,059236,146975,518
(1)Revisions of previous estimates primarily relate to a 133 MMBoe downward revision from lower oil and natural gas prices, partially offset by 27 MMBoe in upward revisions from a variety of factors primarily driven by new contracts, operating expense revisions and upward forecast revisions in certain basins.
(2)Extensions, discoveries and other additions of 7.2 MMBoe primarily relate to PUD extensions all of which related to our Eagle Ford and Uinta assets.
(3)Purchases of reserves in place of 134.6 MMBoe primarily relate to our Western Eagle Ford Acquisitions.
(4)Revisions of previous estimates relate to 79.6 MMBoe downward revisions, driven primarily by a 44.0 MMBoe downward revision from lower oil and natural gas prices, partially offset by 16.0 MMBoe in upward revisions from a variety of factors primarily driven by new contracts and operating expense revisions in certain basins.
(5)Extensions, discoveries and other additions of 39.0 MMBoe primarily relate to PUD extensions all of which related to our Eagle Ford and Uinta assets.
(6)Purchases of reserves in place of 264.4 MMBoe primarily relate to our SilverBow Merger and Central Eagle Ford Acquisition.
(7)Revisions of previous estimates relate to 62.7 MMBoe downward revisions, driven primarily by 47.4 MMBoe downward revision from the removal of PUD inventory combined with a 14.2 MMBoe downward revision to PDP mostly related to price changes.
(8)Extensions, discoveries and other additions of 102.4 MMBoe primarily relate to gas volume extensions in the Eagle Ford.
(9)Purchases of reserves in place of 434.9 MMBoe primarily relate to the Vital Energy Merger, the Ridgemar Acquisition and the Minerals Acquisition.
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The following table sets forth our net proved oil, natural gas and NGL reserves for our consolidated operations as of the years ended December 31, 2025, 2024 and 2023:

Proved Developed Reserves

Oil
(MBbls)
Natural Gas
(MMcf)
Natural Gas Liquids
(MBbls)
Total
(MBoe)
December 31, 2025275,734 1,819,476 197,366 776,346 
December 31, 2024193,611 1,342,718 109,223 526,622 
December 31, 2023176,546 1,032,578 87,316 435,958 
Proved Undeveloped Reserves

Oil
(MBbls)
Natural Gas
(MMcf)
Natural Gas Liquids
(MBbls)
Total
(MBoe)
December 31, 202583,961 458,583 38,780 199,172 
December 31, 2024104,079 252,341 36,493 182,629 
December 31, 202373,919 143,838 14,316 112,208 

Capitalized Costs Relating to Oil and Gas Producing Activities

The following table summarizes the capitalized costs relating to our oil and natural gas producing activities for our consolidated operations as of December 31, 2025 and 2024:

As of December 31,
20252024
(in thousands)
Proved oil and natural gas properties (successful efforts method)$13,264,097 $11,471,299 
Unproved oil and natural gas properties413,444 374,306 
Oil and natural gas properties, at cost13,677,541 11,845,605 
Less: accumulated depreciation, depletion, amortization and impairment(3,529,964)(3,840,344)
Net capitalized costs$10,147,577 $8,005,261 

Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development Activities

Acquisition costs include costs incurred to purchase, lease or otherwise acquire property. For a description and allocation of costs incurred for our significant acquisitions included in the table below, see NOTE 3 – Acquisitions and Divestitures. Exploration costs include additions to exploratory wells, including those in progress, and exploration expenses. Development costs include additions to production facilities and equipment and additions to development wells, including those in progress.

The following table summarizes costs incurred related to our oil and natural gas activities for our consolidated operations for the years ended December 31, 2025, 2024 and 2023:

Year Ended December 31,
202520242023
(in thousands)
Acquisition costs:
Proved$3,297,772 $2,163,000 $836,159 
Unproved169,166 219,326 35,474 
Field and other property and equipment53,396 25,734 — 
Exploration costs16,795 16,591 9,328 
Development903,232 745,198 578,316 
Total costs incurred$4,440,361 $3,169,849 $1,459,277 

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Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves

The following information has been developed utilizing procedures prescribed by ASC Topic 932, Extractive Industries – Oil and Gas, and based on crude oil, NGL and natural gas reserves and production volumes estimated by our engineering staff. The estimates were based on a 12-month average for first-day-of-the month commodity prices. The following information may be useful for certain comparative purposes, but should not be solely relied upon in evaluating our performance. Further, information contained in the following table should not be considered as representative of realistic assessments of future cash flows, nor should the standardized measure of discounted future net cash flows be viewed as representative of our current value.

The future cash flows presented below are based on sales prices and cost rates in existence as of the date of the projections. It is expected that material revisions to some estimates of crude oil, NGL and natural gas reserves may occur in the future, development and production of the reserves may occur in periods other than those assumed, and actual prices realized and costs incurred may vary significantly from those used.

Management does not rely upon the following information in making investment and operating decisions. Such decisions are based upon a wide range of factors, including estimates of probable and possible reserves as well as proved reserves, and varying price and cost assumptions considered more representative of a range of possible economic conditions that may be anticipated.

Future net cash flows were calculated at December 31, 2025, 2024 and 2023 by applying prices, which were the simple average of the first-of-the-month commodity prices, adjusted for location and quality differentials, with consideration of known contractual price changes. The following table provides the average benchmark prices per unit, before location and quality differential adjustments, used to calculate the related reserve category:

Year Ended December 31,
202520242023
Average benchmark price per unit:
Crude oil (Bbl)$65.34 $75.48 $78.22 
Natural gas (MMBtu)$3.39 $2.13 $2.64 

The following table sets forth the standardized measure of discounted future net cash flows for our consolidated operations from projected production of oil and natural gas reserves and excludes the midstream revenue impact on a portion of our operations that could reduce future production costs, for the years ended December 31, 2025, 2024 and 2023:

Year Ended December 31,
202520242023
(in thousands)
Future cash inflows$32,852,573 $27,890,094 $24,267,134 
Future production costs(15,003,036)(12,981,064)(11,897,791)
Future development costs (1)
(3,387,941)(3,801,466)(2,713,247)
Future income taxes (2)
(1,308,188)(1,055,147)(410,721)
Future net cash flows13,153,408 10,052,417 9,245,375 
Annual discount of 10% for estimated timing
(5,397,858)(4,348,722)(3,956,193)
Standardized measure of discounted future net cash flows$7,755,550 $5,703,695 $5,289,182 
(1)    Future development costs include future abandonment and salvage costs.
(2)    Our future income taxes are based upon our allocable share of any taxable income of OpCo. Estimated future taxable income or loss generated by OpCo is generally allocated and passed through to Crescent at our proportionate share of OpCo unit ownership which at December 31, 2025, 2024 and 2023 was 100%, 74% and 51%, respectively.

Changes in standardized measure of discounted future net cash flows

The following table sets forth the changes in the standardized measure of discounted future net cash flows for our consolidated operations for the years ended December 31, 2025, 2024 and 2023:

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Year Ended December 31,
202520242023
(in thousands)
Balance at beginning of period$5,703,695 $5,289,182 $9,134,666 
Net change in prices and production costs(2,011,577)(47,265)(2,859,297)
Net change in future development costs872,553 (92,580)(141,382)
Sales and transfers of oil and natural gas produced, net of production expenses
(2,075,124)(1,715,764)(1,354,856)
Extensions, discoveries, additions and improved recovery, net of related costs606,461 318,421 119,025 
Purchases of reserves in place4,652,989 2,493,077 1,338,224 
Sales of reserves in place(553,700)(70,549)(90,157)
Revisions of previous quantity estimates(208,348)(817,132)(2,244,012)
Previously estimated development costs incurred399,891 369,595 301,839 
Net change in taxes(92,507)(478,046)190,444 
Accretion of discount615,853 556,612 960,208 
Changes in timing and other(154,636)(101,856)(65,520)
Balance at end of period$7,755,550 $5,703,695 $5,289,182 

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SCHEDULE I

CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CRESCENT ENERGY COMPANY
PARENT COMPANY BALANCE SHEETS
December 31, 2025December 31, 2024
(in thousands, except share and unit data)
ASSETS
Current assets:
Cash and cash equivalents
$290 $3,001 
Income tax receivable3,612 523 
Accounts receivable - affiliates19,657 12,872 
Total current assets23,559 16,396 
Investment in subsidiary5,018,345 4,722,280 
Deferred tax asset
143,706 — 
TOTAL ASSETS$5,185,610 $4,738,676 
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Current liabilities:
Accounts payable – affiliates$19,731 $12,947 
Income tax payable
444 1,272 
Total current liabilities20,175 14,219 
Deferred tax liability— 356,497 
Total liabilities20,175 370,716 
Contingencies (Note 3)
Redeemable noncontrolling interests— 1,228,329 
Equity:
Class A common stock, $0.0001 par value; 1,000,000,000 shares authorized and 334,979,293 and 189,505,209 shares issued and 327,900,272 and 187,070,725 shares outstanding as of December 31, 2025 and 2024, respectively
33 19 
Class B common stock, $0.0001 par value; 500,000,000 shares authorized and 0 and 65,948,124 shares issued and outstanding as of December 31, 2025 and 2024, respectively
— 7 
Preferred stock, $0.0001 par value; 500,000,000 shares authorized and 1,000 Series I preferred shares issued and outstanding as of December 31, 2025 and 2024
— — 
Treasury stock, at cost; 7,079,021 and 2,434,484 shares of Class A common stock as of December 31, 2025 and 2024, respectively
(71,054)(32,430)
Additional paid-in capital5,228,928 3,227,450 
Retained earnings (accumulated deficit)
— (64,751)
Noncontrolling interests7,528 9,336 
Total equity5,165,435 3,139,631 
TOTAL LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY$5,185,610 $4,738,676 

The accompanying notes to financial statements are an integral part of these condensed financial statements.

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SCHEDULE I - CONTINUED
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CRESCENT ENERGY COMPANY
PARENT COMPANY STATEMENTS OF OPERATIONS

Year Ended December 31,
202520242023
(in thousands, except per share amounts)
Revenues$— $— $— 
Expenses:
General and administrative expense67,493 41,262 23,829 
Total expenses67,493 41,262 23,829 
Income (loss) before taxes and equity in income (losses) of subsidiary(67,493)(41,262)(23,829)
Income tax benefit (expense)(35,704)39,166 (21,553)
Income (loss) before equity in income (losses) of subsidiary(103,197)(2,096)(45,382)
Equity in income (losses) of subsidiary, net of tax270,363 (135,587)367,373 
Net income (loss)167,166 (137,683)321,991 
Less: net (income) loss attributable to noncontrolling interests(20,210)1,215 (472)
Less: net (income) loss attributable to redeemable noncontrolling interests
(14,050)21,863 (253,909)
Net income (loss) attributable to Crescent Energy$132,906 $(114,605)$67,610 
Net income (loss) per share:
Class A common stock - basic$0.55 $(0.88)$1.02 
Class A common stock - diluted$0.54 $(0.88)$1.02 
Class B common stock - basic and diluted$— $— $— 
Weighted average shares outstanding:
Class A common stock - basic242,060 130,715 66,598 
Class A common stock - diluted245,058 130,715 67,402 
Class B common stock - basic and diluted16,609 70,519 104,271 

The accompanying notes to financial statements are an integral part of these condensed financial statements.

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SCHEDULE I - CONTINUED
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
CRESCENT ENERGY COMPANY
PARENT COMPANY STATEMENTS OF CASH FLOWS

Year Ended December 31,
202520242023
(in thousands)
Cash flows from operating activities:
Net income (loss)
$167,166 $(137,683)$321,991 
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Equity in (income) losses of subsidiary(270,363)135,587 (367,373)
Deferred income taxes (benefit)36,576 (42,549)21,068 
Changes in operating assets and liabilities:
Income tax receivable(3,089)1,415 3,366 
Accounts receivable - affiliates(1,133)449 (487)
Accounts payable – affiliates6,895 5,763 3,329 
Income tax payable
531 1,272 (1,051)
Net cash used in operating activities(63,417)(35,746)(19,157)
Cash flows from investing activities:
Acquisition of oil and gas properties, net of cash acquired(3,693)(376,950)— 
Net cash provided by investing activities(3,693)(376,950)— 
Cash flows from financing activities:
Distributions from OpCo175,828 101,517 59,582 
Cash received from sale of OpCo Units
42,317 392,236 — 
Dividend to Class A common stock
(115,122)(65,075)(34,120)
Proceeds from Equity Issuance after underwriting fees— 330,573 145,665 
Cash contribution to OpCo
— (330,573)(149,665)
Cash paid for treasury stock acquired for equity-based compensation tax withholding(5,154)(7,441)— 
Repurchases of Class A common stock(33,470)(7,845)— 
Net cash provided by financing activities64,399 413,392 21,462 
Net change in cash, cash equivalents and restricted cash(2,711)696 2,305 
Cash, cash equivalents and restricted cash, beginning of period3,001 2,305 — 
Cash, cash equivalents, and restricted cash, end of period$290 $3,001 $2,305 

The accompanying notes to financial statements are an integral part of these condensed financial statements.

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SCHEDULE I - CONTINUED
CRESCENT ENERGY COMPANY
NOTES TO PARENT COMPANY FINANCIAL STATEMENTS

NOTE 1 – Corporate Structure and Basis of Presentation

Corporate Structure

Our Class A Common Stock is listed on the New York Stock Exchange under the symbol “CRGY.” Crescent is a holding company, the sole material assets of which are units ("OpCo Units") representing limited liability company interests in Crescent Energy OpCo LLC ("OpCo"). The assets and liabilities of OpCo represent substantially all of our consolidated assets and liabilities with the exception of certain current and deferred taxes and certain liabilities under the Management Agreement, as defined within “Notes to Consolidated Financial Statements—NOTE 14 – Related Party Transactions" included elsewhere in of this Annual Report. Certain restrictions and covenants related to the transfer of assets from OpCo are discussed further in "Notes to Consolidated Financial Statements—NOTE 8 – Debt" included elsewhere in this Annual Report. Shares of Crescent Class A common stock, par value $0.0001 per share ("Class A Common Stock") have both voting and economic rights with respect to Crescent. Holders of Crescent Class B common stock, par value $0.0001 per share ("Class B Common Stock"), which shares of Class B Common Stock have voting (but no economic) rights with respect to Crescent, hold a corresponding amount of economic, non-voting OpCo Units. Additionally, an affiliate of the KKR Group, as defined in "Notes to Consolidated Financial Statements—NOTE 1 – Organization and Basis of Presentation" included elsewhere in this Annual Report, is the sole holder of Crescent's non-economic Series I preferred stock, $0.0001 par value per share, which entitles the holder thereof to appoint the Board of Directors of Crescent and to certain other approval rights.

Corporate Simplification

In April 2025, we announced that our corporate structure had been simplified through the elimination of the Company’s Up-C structure through the exercise by the holders of all remaining shares of Class B Common Stock of their redemption rights with respect to all of their OpCo Units (the “Corporate Simplification”). Prior to the Corporate Simplification, the Up-C structure provided for holders of Crescent’s then-outstanding Class B Common Stock, which had voting (but no economic) rights with respect to Crescent, to hold a corresponding amount of economic, non-voting OpCo Units, which were generally redeemable or exchangeable for Class A Common Stock on the terms and conditions set forth in OpCo’s Amended and Restated Limited Liability Company Agreement (the “OpCo LLC Agreement”). Pursuant to the aforementioned exercise of such right in the Corporate Simplification, all OpCo Units (other than those held by Crescent) were exchanged for an equivalent number of shares of Class A Common Stock and all outstanding shares of Class B Common Stock were cancelled. As a result of the Corporate Simplification, all of the Company’s common stockholders now hold Class A Common Stock. See NOTE 14 – Related Party Transactions for more information.

Basis of Presentation

As the sole managing member of OpCo, we are responsible for all operational, management and administrative decisions related to OpCo’s business. Because the unit holders of OpCo lack the characteristics of a controlling financial interest, OpCo was determined to be a variable interest entity. Crescent is considered the primary beneficiary of OpCo as it has both the power to direct OpCo and the right to receive benefits from OpCo. As a result, we consolidate the financial results of OpCo and its subsidiaries, including Crescent Energy Finance LLC. During the year ended December 31, 2025 and 2024, our ownership of OpCo increased due to the Corporate Simplification and the 2025 Class A Redemption as described in "Notes to Consolidated Financial Statements—NOTE 1 – Organization and Basis of Presentation" included elsewhere in this Annual Report. At December 31, 2025 and 2024, our ownership of OpCo was 100% and 74%, respectively, and 0% and 26%, respectively, of OpCo was owned by holders of our redeemable noncontrolling interests.

These condensed parent company financial statements reflect the activity of Crescent as the parent company to OpCo and have been prepared in accordance with Rules 5-04 and 12-04 of Regulation S-X, as the restricted net assets of OpCo and its consolidated subsidiaries exceed 25% of the consolidated net assets of Crescent. This information should be read in conjunction with the consolidated financial statements of Crescent included elsewhere in this Annual Report.

NOTE 2 – Acquisitions

For details regarding acquisitions, see "Notes to Consolidated Financial Statements—NOTE 3 – Acquisitions and Divestitures" included elsewhere in this Annual Report.

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NOTE 3 – Income Taxes

For details regarding income taxes, see "Notes to Consolidated Financial Statements—NOTE 11 – Income Taxes" included elsewhere in this Annual Report.

NOTE 4 – Contingencies

For details regarding contingencies related to litigation, see "Notes to Consolidated Financial Statements—NOTE 12 – Commitments and Contingencies" included elsewhere in this Annual Report.
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Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures

None.

Item 9A. Controls and Procedures

Limitations on Effectiveness of Controls and Procedures

We maintain disclosure controls and procedures ("Disclosure Controls") within the meaning of Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Our Disclosure Controls are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act, such as this Annual Report, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Our Disclosure Controls are also designed to ensure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our Disclosure Controls, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

Evaluation of Disclosure Controls and Procedures

The Company's Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of the Company's Disclosure Controls, as of December 31, 2025. Based on such evaluation, such officers have concluded that, as of December 31, 2025, the Company's disclosure controls and procedures are designed and effective to ensure that information required to be included in the Company's reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms and that information required to be disclosed in the Company's reports filed or submitted under the Exchange Act is accumulated and communicated to the Company's management including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.

In designing and evaluating the Company's disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the control system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events and the application of judgment in evaluating the cost-benefit relationship of possible controls and procedures. Because of these and other inherent limitations of control systems, there is only reasonable assurance that the Company's controls will succeed in achieving their goals under all potential future conditions.

Changes in Internal Control over Financial Reporting

There were no changes in the Company's internal control over financial reporting (as defined by Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2025, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

Management's Assessment of Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining effective internal control over financial reporting as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. As of December 31, 2025, management assessed the effectiveness of our internal control over financial reporting. In making this assessment, management, including our Chief Executive Officer and Chief Financial Officer, used the criteria set forth by the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on this assessment, our Chief Executive Officer and Chief Financial Officer have concluded that our internal control over financial reporting was effective as of December 31, 2025.

In conjunction with the Vital Energy Merger, we are in the process of integrating the acquired operations, systems and processes into the Company’s overall internal control framework. SEC guidance permits registrants to exclude a recently acquired business from the scope of management's evaluation for the first year after the acquisition is completed. Accordingly, the acquired business from the Vital Energy Merger has been excluded from management’s assessment of internal control over financial reporting. The total assets and revenues from this acquisition represented approximately 30.1% and 2.1% of our
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consolidated total assets and revenues, respectively, as of and for the year ended December 31, 2025. See "Notes to Consolidated Financial Statements—NOTE 3 – Acquisitions and Divestitures" included elsewhere in this Annual Report for additional information on this merger.

Deloitte & Touche LLP, the independent registered public accounting firm that audited our consolidated financial statements included in this Annual Report, has also audited the effectiveness of our internal control over financial reporting as of December 31, 2025 and has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2025. Please see their "Report of Independent Registered Public Accounting Firm" included below.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Crescent Energy Company
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Crescent Energy Company and subsidiaries (the “Company”) as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2025 of the Company and our report dated February 25, 2026 expressed an unqualified opinion on those financial statements.

As described in Management’s Assessment of Internal Control over Financial Reporting appearing within Item 9A, management excluded from its assessment the internal control over financial reporting at Vital Energy, Inc., which was acquired on December 15, 2025, and whose financial statements constitute approximately 30.1% of consolidated total assets and 2.1% of revenues, respectively, as of and for the year ended December 31, 2025. Accordingly, our audit did not include the internal control over financial reporting at Vital Energy, Inc.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Assessment on Internal Control over Financial Reporting, appearing under Part II, Item 9A. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ DELOITTE & TOUCHE LLP

Houston, Texas
February 25, 2026

Item 9B. Other Information

Trading Arrangements

During the three months ended December 31, 2025, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, terminated or modified a “Rule 10b5-1 trading arrangement” or non-Rule 10b5-1 trading arrangement (as each term is defined in Item 408 of Regulation S-K).

The discussion under “Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Debt Agreements – Crescent Minerals Credit Facility” is incorporated herein by reference. A copy of the Crescent Minerals Credit Agreement is filed herein as Exhibit 10.48.

Item 9C. Disclosure Regarding Foreign Jurisdiction that Prevent Inspections.

Not applicable
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Part III
Item 10. Directors, Executive Officers and Corporate Governance

Board of Directors and Executive Officers

The following table sets forth information regarding the members (each, a “Director”) of our Board of Directors and officers (each, an “Executive Officer”).

NameAgePosition
David C. Rockecharlie53Chief Executive Officer and Director
Brandi Kendall41Chief Financial Officer and Director
J.D. Hall
60
Chief Operating Officer
Todd N. Falk45Chief Accounting Officer
John Clayton “Clay” Rynd36
Executive Vice President, Investments
Bo Shi37General Counsel and Corporate Secretary
John C. Goff70Chairman and Director
William Albrecht
74Director
Bevin Brown49Director
Claire S. Farley67Director
Robert G. Gwin62Director
Jarvis Hollingsworth
63Director
Conrad V. Langenhagen59Director
Ellis L. “Lon” McCain78Director
Marcus C. Rowland73
Director
Karen J. Simon66Director

The following are biographical summaries of the business experience of each Director and Executive Officer.

David C. Rockecharlie has served as Crescent Energy Company’s Chief Executive Officer and a Director on our Board since December 2021. Mr. Rockecharlie previously served as the Chief Executive Officer of Independence's managing member since March 2021, prior to which he served as Manager and President of Independence's managing member beginning in June 2020. Mr. Rockecharlie also served on Independence's Board since June 2020. Mr. Rockecharlie joined KKR in 2011 and is currently a Partner and Head of KKR’s Energy Real Assets business and Chairman of KKR’s Energy Investment Committee. Prior to joining KKR, Mr. Rockecharlie was co-founder and co-CEO of RPM Energy, LLC, a privately-owned oil and gas company. Previously, Mr. Rockecharlie served as co-head of Jefferies & Company’s Energy Investment Banking Group and before that was an executive with El Paso Corp., where he led a variety of corporate activities. Mr. Rockecharlie began his career as an energy investment banker with S.G. Warburg and Donaldson, Lufkin & Jenrette. Mr. Rockecharlie received an A.B., magna cum laude, from Princeton University. We believe Mr. Rockecharlie’s extensive industry experience and longstanding relationship with KKR make him well-suited to serve as a Director.

Brandi Kendall has served as Crescent Energy Company’s Chief Financial Officer and a director on Crescent's Board since December 2021, prior to which she served as Chief Financial Officer and a member of the Board of Crescent's predecessor entity. Ms. Kendall joined KKR in 2013 with a focus on the strategy of Crescent and its predecessors and is currently a Managing Director. Prior to joining KKR, Ms. Kendall served as Director, Finance and Planning at Marlin Midstream and Finance Associate at NFR Energy. Ms. Kendall began her career in the energy investment banking industry, where she held positions at JP Morgan and Tudor, Pickering, Holt & Co. Ms. Kendall earned a B.A. in Economics, Managerial Studies and Kinesiology from Rice University.

J.D. Hall has served as Crescent Energy Company’s Chief Operating Officer since June 2025, prior to which he served as Executive Vice President of Operations at Pioneer Natural Resources Company, where he was also a member of the Executive Committee. During his multi-decade career at Pioneer, Mr. Hall held leadership roles overseeing development and operational strategy in multiple regions, including the Eagle Ford and Permian Basin. Mr. Hall is currently a director of Nine Energy
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Service Inc., where he serves on both the Audit Committee and Nominating, Governance and Compensation Committee. Mr. Hall received a B.S. in Mechanical Engineering from Texas Tech University and is a Registered Professional Engineer in the State of Texas. In addition to his professional accomplishments, Mr. Hall and his family support a number of non-profit organizations and co-founded the nonprofit “Will to Cure ALD.”

Todd N. Falk has served as Crescent Energy Company’s Chief Accounting Officer since December 2021. Mr. Falk previously served as Chief Accounting Officer of Independence's managing member since March 2021, prior to which he served as Vice President, Finance of Independence's managing member beginning in June 2020. Mr. Falk joined KKR in 2018 and is currently a Managing Director and member of KKR’s Energy Real Assets business. Prior to joining KKR, Mr. Falk served as Director of Finance and Controller of Vitruvian Exploration from October 2013 to September 2018. Mr. Falk began his career at Deloitte, where as a senior manager he assisted clients with complex financial reporting issues, specializing in initial public offerings and other interactions with the SEC. Mr. Falk has over 20 years of finance and accounting experience in the energy industry, is a Certified Public Accountant and holds a B.S., magna cum laude, in Accounting and an M.S. in Finance from Texas A&M University.

John Clayton “Clay” Rynd has served as Crescent Energy Company’s Executive Vice President, Investments since March 2021. Mr. Rynd joined KKR in 2015 and is a member of the Energy Real Assets team. He has been involved in numerous oil and gas investments across KKR’s Energy Real Assets strategy, including the creation of Crescent Energy. Prior to joining KKR, Mr. Rynd was with Tudor, Pickering, Holt & Co. in the investment banking division, where he focused primarily on strategic advisory and M&A transactions for companies across the energy sector. Prior to that, he worked within the equity research division at Tudor, Pickering, Holt & Co. Mr. Rynd holds a B.A. in both Economics and History from Texas A&M University.

Bo Shi has served as Crescent Energy Company’s General Counsel and Corporate Secretary since December 2021. Mr. Shi previously served as General Counsel for Independence since October 2021. Prior to joining Independence, Mr. Shi worked as an attorney at Vinson & Elkins L.L.P. where his practice focused on capital markets transactions, corporate governance and mergers and acquisitions, primarily within the oil and gas industry. He received a J.D. from Harvard Law School and a B.A. in Political Science and Policy Studies from Rice University.

John C. Goff, a private investor based in Fort Worth, Texas, has served as Chairman of the Crescent Energy Company Board of Directors since December 2021. He was elected to the board of directors of Contango in August 2018 and as Non-Executive Chairman of the board in October 2019. Mr. Goff founded his family office, Goff Capital, in 2009. Goff Capital invests in a variety of public and private industries and is presently focused on investments in real estate, aerospace, oil & gas, entertainment, and wellness. Mr. Goff co-founded Crescent Real Estate with Richard Rainwater in the early 1990’s, designing the strategy and orchestrating the acquisitions leading to its initial public offering (NYSE) in May 1994. Under his leadership as CEO, Crescent Real Estate grew from approximately $500 million at its IPO to $6.5 billion upon its sale to Morgan Stanley in August 2007. Crescent Real Estate provided its shareholders with a 15.4 percent compounded annual return and more than $2.5 billion in cash dividends during its 13 years as a public company. In November 2009, Mr. Goff reacquired Crescent Real Estate in a partnership with Barclays Capital, and in December 2017 he purchased Barclays Capital’s interest to become the principal owner of Crescent Real Estate and its subsidiaries. Crescent Real Estate currently has assets under management, development and investment capacity of more than $10 billion. Mr. Goff graduated from The University of Texas at Austin and is a member of McCombs Business School Hall of Fame. He was named EY Entrepreneur of the Year for the Southwest Region in 2014 and more recently, was inducted to the North Texas Real Estate, the Dallas Business and the Fort Worth Business Halls of Fame. Mr. Goff brings investment and financial acumen, including expertise in analyzing opportunities, risks and strategy in investments in various industries, including energy investments, and providing guidance regarding corporate governance matters, which makes him well-suited to serve as a Director.

William Albrecht has served as a Director on our Board since December 2025. Mr. Albrecht has more than 45 years of experience in the oil and gas industry, including multiple executive leadership roles. He is currently the President and CEO of Moncrief Energy, LLC. He has most recently served as non-Executive Chairman of the board of directors of publicly traded companies California Resources Corporation and Rowan Companies. Previously, Mr. Albrecht held multiple positions at Occidental Petroleum where he had broad supervision of the exploration and production business as Vice President of Occidental Petroleum, President of Oxy Oil & Gas, Americas and President of Oxy Oil & Gas, USA. Earlier in his career, Mr. Albrecht was an executive at EOG Resources and a petroleum engineer for Tenneco Oil Company. He currently serves as a member of the board of directors of Halliburton. Additionally, he is a National Association of Corporate Directors certified Board Leadership Fellow. Mr. Albrecht received a B.S. from the United States Military Academy and a M.S. from the University of Southern California. We believe that Mr. Albrecht’s executive leadership experience and industry knowledge make him well-suited to serve as Director.

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Bevin Brown has served as a Director since December 2021. Ms. Brown previously served as a director of Independence from August 2020 through December 2021. Ms. Brown is the Managing Director of Portfolio Strategy & Management for Global Partnerships and Innovation at LMI, a position she has held since February 2020, prior to which she served as a Director at LMI beginning in 2013. Prior to joining LMI, Ms. Brown was a Director at a private equity firm and a Manager at PwC. Ms. Brown holds a B.S. from Stonehill College. We believe that Ms. Brown’s investment experience and relationship with LMI make her well-suited to serve as a Director.

Claire S. Farley has served as a Director since December 2021 and previously served as a Director of Independence from August 2020 through December 2021. Ms. Farley served as a Senior Advisor to KKR’s Energy Real Assets team from 2011 through 2021, after having joined KKR in 2011 as a Partner. Prior to joining KKR, she was co-founder and co-CEO of RPM Energy LLC. Ms. Farley previously was an advisory director of Jefferies Randall & Dewey, also serving as co-president. She was CEO of Randall & Dewey before it combined with Jefferies & Company. Prior to that, she served in various roles at Texaco, Inc., including CEO of HydroTexaco, president of the North American production division and president of worldwide exploration and new ventures. She has also served as CEO of two start-up ventures: Intelligent Diagnostics Corporation, and Trade-Ranger Inc. Ms. Farley serves on the board of directors of Technip FMC and LyondellBasell Industries, N.V. Ms. Farley holds a B.S. from Emory University. We believe that Ms. Farley’s leadership, investing and energy experience make her well-suited to serve as a Director.

Robert G. Gwin has served as a Director since December 2021. Mr. Gwin was previously President of Anadarko Petroleum Corporation (“Anadarko”), one of the world’s largest independent oil and natural gas exploration and production companies, until August of 2019, when the company was purchased by Occidental Petroleum Corporation. He previously was Executive Vice President, Finance and Chief Financial Officer of Anadarko from 2009 to 2018. Mr. Gwin is also currently a director of TechnipFMC plc. He has previously served as a director of Pembina Pipeline Corporation, Enable Midstream Partners, LP, where he served as Chairman of its board of directors, LyondellBasell Industries, N.V, where he served as Chairman of its board of directors, and Western Gas Partners LP and its general partner Western Gas Equity Partners LP, where he served as Chairman of their boards of directors. He has served on numerous community and charitable organization boards throughout his career, currently including the MD Anderson Cancer Center and Communities in Schools – Houston. He holds a Bachelor of Science degree from the University of Southern California and a Master of Business Administration degree from the Fuqua School of Business at Duke University, and is a Chartered Financial Analyst (CFA). We believe Mr. Gwin’s business and industry experience make him well-suited to serve as a Director.

Jarvis Hollingsworth has served as a Director on our Board since December 2025. Mr. Hollingsworth is the President and CEO of JVH Capital Partners, Inc., a business consulting, advisory and principal investment firm. Previously, Mr. Hollingsworth served as a Vice Chairman and Chief Operating Officer of Irradiant Partners LP, an alternatives investment advisor that managed over $12B in assets before being acquired in May 2025. He is a former board member and Lead Independent Director of Core Scientific, Inc. and formerly served as the Secretary/General Counsel of Kayne Anderson Capital Advisors, L.P. Mr. Hollingsworth is a former Partner of the law firm Bracewell LLP in Houston where he had a fiduciary practice counseling boards of directors and trustees on corporate governance and strategic matters. He served on the law firm’s Management Committee and was a member of its Finance Committee. Mr. Hollingsworth formerly served two terms as Chairman of the Board of Trustees of the Teacher Retirement System of Texas and is also currently a Director on the Memorial Hermann Health System’s Board where he is a member of the Finance and Compensation committees. Mr. Hollingsworth is a former member of the Federal Reserve Bank of Dallas Financial Sector Advisory Council and is a former director of several other companies, including Frost Bank and its holding company, Cullen/Frost Bankers, Inc., and Emergent Technologies, Inc. Mr. Hollingsworth received a B.S. from the United States Military Academy at West Point, where he was a four-year letterman on the Army football team, and upon graduation served for several years on active and reserve duty in the U.S. Army. He retired as a Captain. He received a J.D. from the University of Houston Law Center. Mr. Hollingsworth is a member of the Board of the Tri-Cities chapter of the National Association of Corporate Directors, and is a former Director of the United Way’s Alexis de Tocqueville Society. We believe that Mr. Hollingsworth’s extensive business, financial and leadership experience make him well-suited to serve as a Director.

Conrad V. Langenhagen has served as a Director on our Board since May 2025. Previously, Mr. Langenhagen served as Executive Vice President, Executive Managing Director and Co-Head, Global Alternative Markets at Liberty Mutual Investments (“LMI”), the investment arm of Liberty Mutual Insurance Co., from January 2020 to December 2024. In this position, Mr. Langenhagen oversaw LMI’s alternative investments portfolio, which includes real estate, private equity, oil & gas, energy transition and infrastructure, timber & agriculture, direct lending, distressed and other strategic investments. Mr. Langenhagen joined Liberty Mutual Insurance in 2004, transitioned to LMI in 2007 and has held a series of progressively senior roles at the company. Mr. Langenhagen currently serves on the Board of The Spotlight Foundation, a charitable organization. Mr. Langenhagen obtained a B.S. in Biomedical/Electrical Engineering from Duke University and an MBA from
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Stanford University. We believe that Mr. Langenhagen’s leadership and investment experience make him well-suited to serve as a Director.

Ellis L. “Lon” McCain has served as a Director since December 2021. Mr. McCain was previously a director of Contango from February 2006 through December 2021, at which time he was serving as Chairman of Contango’s Audit Committee. Mr. McCain also served as Contango’s Lead Director from the 2014 Annual Meeting through the 2016 Annual Meeting. Mr. McCain served as Executive Vice President and Chief Financial Officer of Ellora Energy, Inc. (“Ellora”) from July 2009 through August 2010, when Ellora was merged into a subsidiary of Exxon Mobil Corporation. Prior to Ellora, Mr. McCain was Vice President, Treasurer, and Chief Financial Officer of Westport Resources Corporation (“Westport”), a publicly traded exploration and production company, from 2001 until the sale of Westport to Kerr McGee Corporation and his retirement from Westport in 2004. From 1992 until joining Westport in 2001, Mr. McCain was Senior Vice President and Principal of Petrie Parkman & Co., an investment banking firm specializing in the oil and gas industry. From 1978 until joining Petrie Parkman & Co., Mr. McCain held senior financial management positions with Presidio Oil Company, Petro-Lewis Corporation, and Ceres Capital. He was an Adjunct Professor of Finance at the University of Denver from 1982 through 2005. In addition to the board of Crescent Energy Company, Mr. McCain currently serves on the board of Cheniere Energy Partners, GP, LLC, the general partner of Cheniere Energy Partners, L.P., a publicly traded partnership. Previously, he served on the board of Continental Resources, Inc. from 2006 to November 2022. Mr. McCain received a B.A. in business administration and an M.B.A. with a major in finance from the University of Denver. Mr. McCain brings extensive business, financial and management expertise to the Company from his background as Chief Financial Officer of Ellora and Westport and from his tenure as an investment banker specializing in the oil and gas industry. Mr. McCain also brings considerable experience from his position as a director with several other energy companies. We believe Mr. McCain’s extensive business, financial, management and director expertise qualify him to serve on our Board and as Chairman of our Audit Committee.

Marcus Rowland has served as a Director on our Board since July 2024. Mr. Rowland is a seasoned oil and gas corporate executive, director and investment manager with more than 40 years of experience in all aspects of upstream and midstream business segments. Previously, Mr. Rowland has served as the Founder and Director of IOG Capital, an energy investment firm. Prior to this, Mr. Rowland held various roles at FTS International, including President and Chief Financial Officer and Chief Executive Officer. Before that, he served as Executive Vice President and Chief Financial Officer of Chesapeake Energy when the company became publicly traded. Mr. Rowland also served as the Chief Operating Officer of Anglo-Suisse Capital Limited and owned his own operating company earlier in his career. Mr. Rowland has served as a director on the boards of a number of public and private companies. He was previously Chairman of the Board at SilverBow Resources from September 2016 to July 2024, Chairman of the Board at Chaparral Energy, Inc. from 2019 to 2020 and also served as a director at SAExploration Holdings from 2020 to 2022, Warrior Technologies Acquisition Company from 2021 to 2022, Key Energy Services from 2020 to 2022, MIND Technology from 2015 to 2022, Warren Resources from 2012 to 2014 and Chesapeake Midstream Partners from 2010 to 2011. Mr. Rowland holds a B.A. from Wichita State University. We believe that Mr. Rowland’s executive leadership experience and industry knowledge make him well-suited to serve as a Director.

Karen J. Simon has served as a Director since December 2021. Ms. Simon was previously a director of Contango, elected in April 2021. Ms. Simon previously served as Vice Chairman, Investment Banking, at JPMorgan before retiring in December 2019. Over her 36-year banking career, she held a number of leadership positions, including Global Co-Head of Financial Sponsor Coverage, providing M&A and capital raising investment banking services to private equity funds; Co-Head of EMEA Debt Capital Markets and Head of EMEA Oil & Gas coverage, both in London, and most recently she founded JPMorgan’s Director Advisory new client group focused on providing advice to public company Directors. In 2025, Ms. Simon joined the board of Bullish (NYSE: BLSH), a global digital asset platform, where she serves as the Chairman of the Compensation Committee and as a member of the Audit Committee. Ms. Simon also serves as director of two European public companies; one of which she chairs, Energean plc in London (LON: ENOG) since March 2018 and Aker ASA in Oslo (OSL: AKER) since April 2013. At Energean, Ms. Simon is a member of the Remuneration committee and Chairs the Nomination & Governance committee. Additionally, since 2022, Ms. Simon has served as a Senior Advisor Consultant with Independence Point Advisors, the first female-owned investment bank based in the United States. Ms. Simon received dual graduate business degrees in 1983: an M.B.A. from Southern Methodist University in Dallas and a Master of International Management from the American Graduate School of International Management (Thunderbird) in Arizona. Earlier, she graduated from the University of Colorado, earning a Bachelor of Arts cum laude in Economics. We believe Ms. Simon’s business and investment experience make her well-suited to serve as a Director.

Composition of our Board of Directors

Members of our Board of Directors are designated by the Preferred Stockholder, and, as applicable, any successor thereto. Our current Board of Directors consists of twelve Directors. Mr. Goff as Chairman and eight other Directors were designated by the Preferred Stockholder, including Messrs. Rockecharlie, Langenhagen, McCain and Gwin and Mses. Kendall, Brown, Simon
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and Farley, subject to the Specified Rights Agreement and Voting Agreement, as described below. In connection with the closing of the SilverBow Merger in July 2024, Mr. Rowland joined the Board.

On December 15, 2025 we consummated the Vital Energy Merger as contemplated by the Merger Agreement. In connection with the closing of the Vital Energy Merger, we increased the size of our Board of Directors to twelve members and appointed two directors designated by Vital.

The Board has determined that each of Mses. Brown, Farley and Simon and Messrs. Albrecht, Goff, Gwin, Hollingsworth, Langenhagen, McCain and Rowland is “independent” under the relevant standards of the NYSE. Because the Preferred Stockholder is the sole owner of our Non-Economic Series I Preferred Stock and accordingly has the exclusive right to appoint our Board of Directors, we are a “controlled company” under the Sarbanes-Oxley Act and NYSE rules; therefore, our Compensation Committee and Nominating & Governance Committee are not required to consist entirely of independent directors. See Item 1A. Risk Factors—“Risks related to our governance structure—We are a “controlled company” within the meaning of NYSE rules and, as a result, qualify for and rely on exemptions from certain corporate governance requirements.”

For information regarding procedure by which a presiding director is selected for each executive session and the process by which any interested party may communicate with the non-management directors or independent directors as a group, please see the Company’s Corporate Governance Guidelines at www.crescentenergyco.com.

Specified Rights Agreement & Voting Agreement

The Specified Rights Agreement, dated as of June 7, 2021, by and among PT Independence and Independence Energy Aggregator GP LLC ("Aggregator GP"), a Delaware limited liability company (the “Specified Rights Agreement”) grants PT Independence the right to designate two Directors to our Board of Directors (one of whom must be an Independent Director), so long as Liberty Mutual Insurance Co. beneficially owns a number of shares of Common Stock equal to at least 33.33% of its initial ownership of shares of Class B Common Stock. For so long as PT Independence owns at least one share of Common Stock, PT Independence shall have the right to designate one Director to our Board of Directors. On May 5, 2025, Mr. Erich Bobinsky provided the Board of Directors of the Company with notice of his decision to not seek reelection to the Board, effective May 5, 2025. Mr. Bobinsky’s departure was not the result of any disagreement with the Company or any matter relating to the Company’s operations, policies, or practices. Presently, the PT Independence designees to our Board of Directors are Ms. Brown and Mr. Langenhagen.

Pursuant to the Voting Agreement, dated as of June 7, 2021, by and between John C. Goff, Independence and the other signatories thereto (the “Voting Agreement”), Mr. Goff was granted the right to be appointed to our Board of Directors. Mr. Goff may only be removed for cause by a majority vote of Independent Directors.

There are no arrangements or understandings between any Director and any other person pursuant to which the Director was selected as a Director, other than as described above, relating to the appointment of directors. Except as otherwise disclosed herein and other than Mr. Rockecharlie’s and Ms. Kendall’s indirect interest in the Management Agreement as employees of KKR, none of the directors is a participant in any related party transaction required to be reported pursuant to Item 404(a) of Regulation S-K.

Audit Committee

We have a separately-designated Audit Committee of the Board of Directors (the “Audit Committee”) in accordance with Section 3(a) (58)(A) of the Exchange Act. Our Audit Committee has three members: Messrs. McCain, and Langenhagen and Ms. Simon. Mr. McCain currently serves as the chairperson of the Audit Committee. Our Board of Directors has determined that each of Messrs. McCain and Langenhagen and Ms. Simon constitute “Audit Committee Financial Experts” as defined in Section 11 of the Securities Act. Likewise, each of the members serving on our Audit Committee are “independent” under the relevant standards of the NYSE and the SEC.

Compensation Committee Interlocks and Insider Participation

The members of the Compensation Committee of the Board during the year ending December 31, 2025 were Mses. Brown, Farley and Kendall until May 5, 2025, at which time, Ms. Kendall left the Compensation Committee and Mr. Rowland joined. Ms. Kendall was an officer of the Company during fiscal year 2025. None of the members who served on the Compensation Committee at any time during fiscal year 2025 had any relationship requiring disclosure in “Part III., Item 13. Certain Relationships and Related Transactions, and Director Independence,” except for Ms. Kendall’s indirect interest in the
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Management Agreement as an employee of KKR. See “Part III., Item 13. Certain Relationships and Related Transactions, and Director Independence—Registration Rights Agreement—Management Agreement.” No executive officer of the Company served as a member of the compensation committee of another entity that had an executive officer serving as a member of our Board of Directors or our Compensation Committee. No executive officer of the Company served as a member of the board of another entity that had an executive officer serving as a member of our Compensation Committee.

Code of Business Conduct and Ethics

Our Board of Directors has adopted a Code of Business Conduct and Ethics ("Code of Ethics") that applies to all of our directors, officers and employees, including our principal executive, principal financial and principal accounting officers, or persons performing similar functions. Our Code of Ethics is available free of charge on our website, www.crescentenergyco.com. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of our Code of Ethics by posting such information at the website address location specified above within four business days following the date of the amendment or waiver.

Item 11. Executive Compensation

Compensation Discussion and Analysis

This Compensation Discussion and Analysis reviews the compensation policies and programs for individuals who were deemed our “named executive officers” or “NEOs,” as determined under applicable SEC rules.

The narrative discussion set forth in this Compensation Discussion and Analysis is intended to provide additional information related to the data presented in the compensation-related tables included throughout the “Executive Compensation” section of this Annual Report and largely describes the compensation program that was in place from January 1, 2025 to December 31, 2025.

Executive Summary

Named Executive Officers

The following individuals were deemed our named executive officers for the year ended December 31, 2025:

•David C. Rockecharlie, Chief Executive Officer and Director;
•Brandi Kendall, Chief Financial Officer and Director;
•J.D. "Joey" Hall, Chief Operating Officer;
•Todd N. Falk, Chief Accounting Officer;
•John Clayton "Clay" Rynd, Executive Vice President, Investments; and
•Bo Shi, General Counsel and Corporate Secretary.

We have been externally managed by our Manager since December 2021 pursuant to the terms of the Management Agreement. During fiscal year 2025, all of our executive officers other than Messrs. Hall and Shi, which consists of four of the six individuals deemed to be our named executive officers above, were employed by the Manager (such named executive officers who are employed by the Manager, the “Manager Executives”). Because our Management Agreement provides that our Manager is responsible for managing our day-to-day affairs, the Manager Executives did not currently receive any cash or equity-based compensation from us or any of our subsidiaries for serving as our executive officers. Additionally, the Management Agreement does not require the Manager Executives to dedicate a specific amount of time to fulfilling our Manager’s obligations to us under the Management Agreement and does not require a specified amount or percentage of the fees paid to the Manager to be allocated to the Manager Executives. Our Manager does not compensate its employees specifically for such services because these individuals also provide investment management and other services to other investment vehicles that are sponsored, managed or advised by affiliates of our Manager. As a result, our Manager has informed us that it cannot identify the portion of the compensation awarded to the Manager Executives by our Manager that relates solely to their services to us. Accordingly, we are unable to provide complete compensation information for any of the Manager Executives, including our Chief Executive Officer, as the total compensation of the Manager Executives reflects the performance of all the investment vehicles for which these individuals provide services, including, but not limited to, us.

Messrs. Hall and Shi are the only named executive officers who were employed by us during fiscal year 2025 and the only named executive officers for whom we made compensation determinations during fiscal year 2025. Accordingly, unless
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specified otherwise, the following disclosures regarding the compensation paid to our named executive officers relates only to the compensation paid to Messrs. Hall and Shi. Mr. Hall was appointed by the Board of Directors to serve as the Company’s Chief Operating Officer, effective June 2, 2025. Mr. Hall’s compensation described below reflects his partial year of service. As described below under the heading “Item 13. Certain Relationships and Related Transactions, and Director Independence—KKR Funds,” certain of our consolidated subsidiaries have entered into MSAs with entities owned by KKR Funds. Pursuant to the MSAs, certain of our employees, including Messrs. Hall and Shi, provide services to such entities and the Company is reimbursed for compensation paid by the Company to our employee in respect of services provided to such entities. However, the disclosures related to Messrs. Hall and Shi’s compensation set forth herein reflect 100% of the compensation paid to Messrs. Hall and Shi by the Company and have not been reduced by amounts, if any, for which the Company was reimbursed by entities owned by KKR Funds.

Compensation Objectives

Our compensation program is intended to attract, motivate and retain talented individuals, such as Messrs. Hall and Shi, who are committed to high performance and achieving successful company results. Our compensation program is not only designed to align the incentives of executives with our stockholders’ interests, but also to promote the achievement of key corporate performance measures.

Summary of Compensation Practices

We strive to maintain judicious governance standards and compensation practices by regularly reviewing best practices. We incorporated many best practices when forming our 2025 compensation program, including the following:

What We Do
R
Align our executive compensation with Company performance
R
Align executives’ interests with those of stockholders through awards of stock-based compensation
R
Engage an independent compensation consultant, Meridian Compensation Partners (“Meridian”), to assess our practices with its independence reviewed on an annual basis by us
RRequire that all annual equity awards have a minimum of one year before any initial vesting
R
Maintain policies that:
•Prohibit all employees from short selling our securities, entering into any derivative transactions with respect to our securities, or otherwise hedging the risk and rewards of our securities
•Prohibit Section 16 officers and directors from pledging our securities
•Claw back incentive-based compensation under certain circumstances
RProvide for limited perquisites

What We Don’t Do
QAutomatically increase salaries each year or make lock-step changes in compensation based on peer group compensation levels or metrics
QPay guaranteed or multi-year cash bonuses
QProvide significant perquisites
QProvide tax gross-ups

To help retain and motivate executives, our compensation committee aims to offer competitive compensation packages through a mix of cash and long-term, equity-based incentives. The compensation committee does not have any formal policies for allocating total compensation among the various components. Instead, the compensation committee uses its judgment, in consultation with Meridian, to establish an appropriate balance of short-term and long-term compensation for such named executive officers. The balance may change from year to year based on corporate strategy, financial performance and non-financial objectives, among other considerations.

Process for Determining 2025 Compensation

We do not determine the cash or other compensation payable by our Manager to the Manager Executives. Our Manager and its affiliates determine the salaries, bonuses and other wages earned by the Manager Executives from our Manager and its affiliates. Our Manager and its affiliates also determine whether and to what extent the Manager Executives will be provided
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with the opportunity to participate in employee benefit plans. The process for determining the compensation paid to Messrs. Hall and Shi and our non-employee directors during 2025 is described below.

Role of Compensation Committee

The compensation committee oversees our executive compensation and employee benefit programs, and, as a result, reviews and approves all compensation decisions relating to Messrs. Hall and Shi. The compensation committee also approves its report for inclusion in this Annual Report and has reviewed and discussed this Compensation Discussion and Analysis with management.

The compensation committee reviews and approves, or recommends that our Board of Directors approve, the compensation of Messrs. Hall and Shi and our non-employee directors, administers our incentive compensation and benefit plans, selects and retains independent compensation consultants and assesses whether any of our compensation policies and programs have the potential to encourage excessive risk-taking. The compensation committee may delegate, to any subcommittee it may form, responsibility and authority for any particular matter as it deems appropriate under the circumstances. The compensation committee may also delegate approval of award grants and other responsibilities regarding the administration of compensatory programs to a subcommittee consisting solely of members of the compensation committee or to members of the Board who are “non-employee directors” for purposes of Rule 16b-3 of the Exchange Act.

Role of Independent Compensation Consultant

During fiscal year 2025, the compensation committee continued to engage Meridian as its independent compensation consultant to assist the committee with its responsibilities related to our executive officer and director compensation programs. A representative of Meridian attends compensation committee meetings as requested. Meridian provides no services to management or the compensation committee that are unrelated to the duties and responsibilities of the compensation committee, and the compensation committee makes all decisions regarding the compensation of Messrs. Hall and Shi and our non-employee directors. Meridian reports directly to the compensation committee, and all work conducted by Meridian for us is on behalf of the compensation committee.

Role of Chief Executive Officer and Senior Management

Our named executive officers regularly interact with the compensation committee and its chair to suggest and discuss our compensation structure and programs. Our chief executive officer makes recommendations for the annual cash and equity incentive awards for Messrs. Hall and Shi and other employees of the Company.

Use of Market Data and Peer Group Analysis

From time to time, Meridian provides the compensation committee with market and peer group data for comparison purposes, such as to compare equity and pay mix practices. Meridian provides the compensation committee with a general survey of total compensation benchmarks that are reviewed by the compensation committee in its compensation determinations.

Risk Assessment of Compensation Plans

Each year, the Committee assesses the Company’s risk profile relative to the executive compensation program and confirms that its compensation programs and policies do not create or encourage excessive risks that are reasonably likely to have a material adverse impact on the Company. As a result, we believe that our compensation program does not encourage excessive or unnecessary risk taking. This is primarily due to the fact that our compensation programs and the compensation arrangements with the Manager are designed to encourage our named executive officers and employees to focus on both short-term and long-term strategic goals, thereby creating an ownership culture and helping to align the interests of our employees and our stockholders. Accordingly, our compensation program is balanced between short-term and long-term incentive compensation. Short-term incentive compensation is paid to Messrs. Hall and Shi annually in cash, but is dependent on satisfying quantitative and qualitative factors determined in the discretion of the Compensation Committee each year.

2025 Compensation Decisions

Base Salary

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Base salaries serve to provide fixed cash compensation to our employees, including Messrs. Hall and Shi, for performing their ongoing responsibilities to the Company. During 2025, Mr. Hall's base salary was $625,000 and Mr. Shi’s base salary was $465,000. Effective March 1, 2026, based on an analysis of the competitive marketplace provided by Meridian and Messrs. Hall and Shi's contributions, performance and experience, the Compensation Committee approved the increase of Mr. Hall's base salary to $646,875 and the increase of Mr. Shi’s base salary to $500,000.

While we do not pay the Manager Executives any cash compensation, we pay the Management Compensation to our Manager. The Management Compensation compensates our Manager for the services that it provides to the Company, including making the Manager Executives available to serve as our executive officers. The Manager Compensation is described in more detail under the heading “Items 1 and 2. Business and Properties—Management Agreement.”

Annual Cash Incentive Awards

Annual cash incentive awards are used to motivate and reward our employees, including Messrs. Hall and Shi. We do not maintain a formal annual cash incentive award program, as such awards are instead determined on a discretionary basis and are generally based on certain Company and individual performance metrics, including quantitative financial and operational metrics related to the Company’s unlevered free cash flow, cost structure, capital efficiency and HSE (health, safety and environment) as well as individual qualitative metrics related to strategic and corporate objectives. The target amount of Messrs. Hall and Shi’s annual cash incentive compensation for 2025 was set at 100% of Mr. Hall's base salary and 90% of Mr. Shi’s base salary, respectively (“Target Bonus”). Due to strong company and individual performance, the Compensation Committee awarded Messrs. Hall and Shi annual cash incentive compensation for 2025 at 108% of the applicable Target Bonus based on achievement with respect to the metrics described above. The Compensation Committee reviewed input from Meridian and the considerations outlined above and Messrs. Hall and Shi’s target annual cash incentive compensation target percentage remains unchanged at 100% and 90%, respectively, for the 2026 plan year.

Equity-Based Compensation

We have adopted two equity incentive plans pursuant to which we may grant equity-based compensation to our service providers. Our Compensation Committee believes that awards under these plans promote alignment of the interests of management with those of our stockholders and promote creation of value for our stockholders. The Manager Incentive Plan governs the Incentive Compensation granted to our Manager, and the Equity Incentive Plan governs awards granted to our service providers, including the Manager Executives and Messrs. Hall and Shi. However, during fiscal years of 2023, 2024 and 2025, none of the Manager Executives were granted an award under the Equity Incentive Plan.

During 2025, we issued restricted stock unit awards subject to time-based vesting to certain of our employees, including Messrs. Hall and Shi, and our non-employee directors pursuant to the Equity Incentive Plan. On April 1, 2025, Mr. Shi was granted an annual award of 10,352 RSUs. Mr. Shi’s 2025 award of RSUs will vest in substantially equal installments on each of the first three anniversaries of April 1, 2025, subject to his continuous employment with the Company through each such vesting date. On September 26, 2025, Mr. Hall was granted a one-time sign-on award of 116,144 RSUs, which will vest on June 2, 2026, subject to his continuous employment with the Company through such vesting date. On September 26, 2025, Mr. Hall was also granted an annual award of 67,751 RSUs, which will vest in substantially equal installments on each of the first three anniversaries of June 2, 2025, subject to his continuous employment with the Company through each such vesting date.

On April 1, 2025 and September 26, 2025, Messrs. Shi and Hall were granted awards of 41,408 and 80,515 target performance share units (“PSUs”), respectively. The PSUs will become earned based on performance with respect to absolute and relative total shareholder return over the period beginning December 7, 2024 and ending December 6, 2027, with the ability to earn 0% to 240% of the target PSUs granted. The PSUs are subject to continued employment through the last day of the applicable performance period; provided, that, if Mr. Hall voluntarily resigns from the Company and provides six months’ notice, a pro rata portion of the target PSUs granted will remain outstanding based on the number of days that Mr. Hall was employed during the performance period and such pro rata RSUs shall be eligible to become earned PSUs based on the extent to which the applicable performance goals have been achieved at the end of the applicable performance period.

The actual value realized by Messrs. Hall and Shi with respect to their RSU and PSU awards will be dependent on the value of the Class A Common Stock on the relevant settlement date.

While we did not grant the Manager Executives any awards under the Equity Incentive Plan during fiscal years of 2023, 2024 and 2025, we pay our Manager the Incentive Compensation. The Incentive Compensation serves to further align the interests of our Manager and the Manager Executives with those of the Company and its stockholders and mitigates the possibility of excessive risk taking. The Incentive Compensation is described in more detail under the headings “Items 1 and 2. Business and
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Properties—Management Agreement” and “Item 12. Security Ownership of Certain Beneficial Owner and Management and Related Stockholder Matters—Equity Compensation Plan Information.”

Employment Agreements and Severance and Change in Control Benefits

We have not entered into employment agreements with any of our named executive officers. Further, we do not have any arrangements that would obligate us to make payments to the Manager Executives upon the termination of their services to us or in the event of a change in control of us. However, the award agreements governing the RSU awards granted to Messrs. Hall and Shi in 2025 provide for “double trigger” acceleration of vesting in the event that Messrs. Hall or Shi experiences a qualifying termination in the 12-month period following a change in control. In addition, the award agreement governing the RSU award granted to Mr. Shi in 2024 provides for the same “double trigger” acceleration of vesting protection. Further, the award agreements governing the PSU awards granted to Messrs. Hall and Shi in 2025 provide for “single trigger” acceleration of vesting in the event of a “change in control” as well as acceleration of vesting if Messrs. Hall or Shi experiences a qualifying termination. These arrangements with Messrs. Hall and Shi are described in more detail under the heading “—Potential Payments Upon Termination or Change in Control.” As further discussed below under the heading “—Potential Payments Upon Termination or Change in Control” Messrs. Hall and Shi are each party to a Change in Control Agreement (each, a “CIC Agreement”) pursuant to which they may be entitled to receive severance benefits should they experience a qualifying termination. The foregoing arrangements are described in more detail under the heading “—Potential Payments Upon Termination or Change in Control.”

Other Benefits

Employee Benefits

We offer a comprehensive array of benefits to our employees, including Messrs. Hall and Shi. These benefits are offered in order to attract and retain qualified employees. Subject to the terms of any applicable plans, policies or programs, Messrs. Hall and Shi are entitled to receive employee benefits, including any and all vacation, deferred compensation, retirement, health and welfare insurance as we may provide from time to time to salaried employees generally, and such other benefits as the Compensation Committee may from time to time establish for our management-level employees.

Retirement Benefits

We currently maintain a retirement plan intended to provide benefits under section 401(k) of the Code whereby employees, including Messrs. Hall and Shi, are allowed to contribute a portion of their base salaries to a tax qualified retirement account. For fiscal year 2025, matching contributions were made to participating employees equal to 100% of the employee’s deferral contributions up to 6% of the employee’s compensation, subject to applicable nondiscrimination limitations imposed by the Code. The contributions made on behalf of Messrs. Hall and Shi for fiscal year 2025 are disclosed in the footnotes to the Summary Compensation Table.

Other Compensation Policies and Practices

Anti-Hedging and Pledging Policies

All directors, officers and other employees of the Company are prohibited from making any short sales of any securities of the Company and from engaging in transactions involving Company-based derivative securities. This prohibition includes, but is not limited to, trading in Company-based option contracts, transacting in straddles or collars, hedging (generally purchasing any financial instrument or engaging in any transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Company’s securities), transacting in convertible debt and writing puts or calls. In addition, pursuant to the Company’s Insider Trading Policy, directors, officers and employees are prohibited from holding the Company’s securities in a margin account or pledging securities of the Company as collateral for a loan. Pledging of the company securities in conjunction with hedging transactions is prohibited.

Stock Ownership Guidelines

To further align the interests of our directors with the interests of the Company’s other stockholders, our Nominating Committee established stock ownership and retention guidelines for our non-employee directors during 2024 that continued to apply during 2025. These guidelines are described in detail under the heading “—Director Compensation” below.

Clawback Policy
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On October 31, 2023, our Board of Directors adopted a clawback policy (the “Clawback Policy”) that complies with the final rule adopted by the SEC in November 2022 and the applicable listing standards adopted by the New York Stock Exchange. The Clawback Policy requires us to recoup certain incentive-based compensation erroneously awarded to our current and former executive officers in the event of an accounting restatement.

Say on Pay Vote

In accordance with Dodd-Frank and as required by Rule 14a-21 of the Exchange Act, because we have not yet solicited proxies from our stockholders related to the election of directors, we have not yet held a non-binding, advisory note on the compensation of our named executive officers. We will hold such a vote at the first meeting for which we are required to do so. We value the opinions of our stockholders and are committed to excellence in corporate governance, and as part of this commitment, our Compensation Committee and Board of Directors intend to consider the results of future shareholder advisory votes when determining the compensation we pay to our named executive officers.

2025 Compensation Committee Report

Our compensation committee has furnished the following report. The information contained in this “Compensation Committee Report is not to be deemed “soliciting material” or “filed” with the SEC, nor is such information to be incorporated by reference into any future filings under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that we specifically incorporate it by reference into such filings.

The compensation committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K under the Exchange Act with management. Based on such review and discussions, the compensation committee recommended to our board of directors that the Compensation Discussion and Analysis be included in this Annual Report.

Compensation Committee of the Board of Directors
Claire Farley
Bevin Brown
Marcus C. Rowland

2025 Executive Compensation Tables

Summary Compensation Table

The following table sets forth the compensation paid to our named executive officers by us for their services for the fiscal years presented.

Name and Principal PositionYearSalary
($)		Bonus
($)
Stock Awards
($) (1)
Non-Equity Incentive Plan Compensation
($) (2)
All Other Compensation
($) (3)
Total
($)
Bo Shi2025465,000—515,530451,98021,8101,454,320 
General Counsel and Corporate Secretary2024400,000483,000261,176—19,3011,163,477 
2023400,000460,000105,013—18,920983,933 
J.D. Hall(4)
2025364,583—2,344,961394,20023,9703,127,714 
Chief Operating Officer
2024——————
2023——————
David C. Rockecharlie2025——————
Chief Executive Officer2024——————
2023——————
Brandi Kendall2025——————
Chief Financial Officer2024——————
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2023——————
Todd N. Falk2025——————
Chief Accounting Officer2024——————
2023——————
John Clayton "Clay" Rynd2025——————
Executive Vice President, Investments
2024——————
2023——————
_______________
(1) Amounts reported in this column for fiscal year 2025 represent the aggregate grant date fair value, determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, of RSUs and PSUs awarded in 2025 under our Equity Incentive Plan to Messrs. Hall and Shi. The assumptions used in calculating the aggregate grant date fair value of such award are described in "Notes to Consolidated Financial Statements—NOTE 13 – Equity-Based Compensation Awards" in "Part II., Item 8. Financial Statements and Supplementary Data" of this Annual Report. The grant date fair value of PSUs is based on the probable outcome of the performance conditions as of the date of grant, which was target. The grant date fair value of the PSU awards reflected in this column is as follows: Mr. Hall, $548,307 and Mr. Shi, $400,829. If the maximum amount, rather than the probable amount, were reported in the table with respect to the PSUs, the values associated with the PSUs would be as follows: Mr. Hall, $1,315,937 and Mr. Shi, $961,991. As described in the Compensation Discussion and Analysis, the amount reported in this column does not reflect the actual value that will be realized by Messrs. Hall and Shi in respect of their 2025 RSU and PSU awards. We have not granted equity or equity-based awards to any of the Manager Executives.
(2) Amounts reported in this column reflect the 2025 annual cash incentive awards that were earned by Messrs. Hall and Shi based upon achievement with respect to the company and individual performance metrics described above. For more information, see “—Compensation Discussion & Analysis—2025 Compensation Decisions—Annual Cash Incentive Awards.”
(3) Amounts reported in this column for Messrs. Hall and Shi reflect (i) Company-paid life insurance premiums in the amounts of $2,970 for Mr. Hall and $810 for Mr. Shi and (ii) 401(k) matching contributions in the amounts of 21,000 for Mr. Hall and $21,000 for Mr. Shi, in each case, for the fiscal year ended December 31, 2025.
(4) Mr. Hall began serving as our Chief Operating Officer, effective June 2, 2025. Amounts shown for Mr. Hall reflect his partial year of service during the fiscal year ended 2025.


Grants of Plan-Based Awards for Fiscal Year 2025

The table below includes information regarding RSUs and PSUs granted under our Equity Incentive Plan to our named executive officers during the fiscal year ended December 31, 2025.

Estimated Future Payouts Under Equity Incentive Plan Awards (2)
All Other Stock Awards: Number of Shares of Stock or Units
(#) (1)
Grant Date Fair Value of Stock and Option Awards
($) (3)
NameGrant DateApproval Date
Threshold (#)
Target (#)
Maximum (#)
Bo Shi
RSUs
04/01/202502/18/2025———10,352 114,700 
PSUs
04/01/202502/18/2025—41,408 99,379 —400,829 
J.D. Hall
RSUs
09/26/202505/19/2025———183,895 1,796,654 
PSUs
09/26/202505/19/2025—80,515 193,236 —548,307 
David C. Rockecharlie
RSUs
———————
PSUs
———————
Brandi Kendall
RSUs
———————
PSUs
———————
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Estimated Future Payouts Under Equity Incentive Plan Awards (2)
All Other Stock Awards: Number of Shares of Stock or Units
(#) (1)
Grant Date Fair Value of Stock and Option Awards
($) (3)
NameGrant DateApproval Date
Threshold (#)
Target (#)
Maximum (#)
All Other Stock Awards: Number of Shares of Stock or Units
(#) (1)
Grant Date Fair Value of Stock and Option Awards
($) (3)
Todd N. Falk
RSUs
———————
PSUs
———————
John Clayton "Clay" Rynd
RSUs
———————
PSUs
———————
_______________
(1) The amount included in this column represents the number of RSUs granted to Messrs. Hall and Shi pursuant to the Equity Incentive Plan during fiscal year 2025. For Mr. Shi, these RSUs will vest in substantially equal installments on each of the first three anniversaries of April 1, 2025. For Mr. Hall, 67,751 RSUs will vest in substantially equal installments on the first three anniversaries of June 2, 2025 and 116,144 RSUs will vest in their entirety on June 2, 2026. For more information, see the section titled “Compensation Discussion and Analysis—Equity-Based Compensation” above.
(2) These columns reflect the threshold, target, and maximum number of shares that may be earned with respect to PSUs granted to Messrs. Hall and Shi granted pursuant to the Equity Incentive Plan during fiscal year 2025.
(3) The amount reported in this column represents the aggregate grant date fair value, determined in accordance with FASB ASC 718, of the RSUs and PSUs granted to Messrs. Hall and Shi in 2025. The assumptions used in calculating the aggregate grant date fair value of such award are described in "Notes to Consolidated Financial Statements—NOTE 13 – Equity-Based Compensation Awards" in "Part II., Item 8. Financial Statements and Supplementary Data" of this Annual Report.

Narrative to Summary Compensation Table and Grants of Plan Based Awards Table

Employment Agreements

We have not entered into employment agreements with any of our named executive officers. More information on the agreements we have entered into with our named executive officers is provided in the Compensation Discussion and Analysis above under the heading “—Compensation Discussion and Analysis—Employment Agreements and Severance and Change in Control Benefits.”

Salary and Annual Cash Incentive Award in Proportion to Total Compensation

The table below reflects the aggregate amount of Messrs. Hall and Shi’s 2025 salary and annual cash incentive award compensation in proportion to the total compensation paid to Messrs. Hall and Shi during 2025. The amounts reported in this table for Messrs. Hall and Shi were calculated using the amounts reported in the “Salary” and “Non-Equity Incentive Plan Compensation” columns of the Summary Compensation Table above. More information regarding Messrs. Hall and Shi’s salary and annual cash incentive award arrangements is provided in the Compensation Discussion and Analysis above under the headings “—Compensation Discussion and Analysis—2025 Compensation Decisions—Base Salary” and “—Compensation Discussion and Analysis—2025 Compensation Decisions—Annual Cash Incentive Awards.”

NameYear
Salary and Annual Cash Incentive Award
($)
Salary and Annual Cash Incentive Award as a Percentage of Total Compensation
Bo Shi2025916,98063%
J.D. Hall
2025758,78324%

We do not pay any cash or other compensation to the Manager outside of the Manager Incentive Plan as described in more detail in the Compensation Discussion and Analysis above.

Equity Incentive Plan Awards

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We granted awards of time-based RSUs and performance-based PSUs to Messrs. Hall and Shi in 2025. Messrs. Hall and Shi will have no right to receive any dividends or other distribution with respect to a RSU or PSU unless and until shares of Class A Common Stock have been delivered in respect of the RSUs that become vested, if any, in accordance with the terms and conditions of the corresponding RSU award. The terms and conditions, including vesting, applicable to Messrs. Hall and Shi’s 2025 RSU and PSU awards are further described in the Compensation Discussion and Analysis above under the heading “—Compensation Discussion and Analysis—Equity-Based Compensation.” The potential acceleration and forfeiture events relating to Messrs. Hall and Shi’s 2025 RSU and PSU awards are described, as of December 31, 2025, in greater detail under the heading “—Potential Payments Upon Termination or Change in Control” below.

Outstanding Equity Awards at 2025 Fiscal Year End

The following table reflects information regarding outstanding equity-based awards held by our named executive officers as of December 31, 2025, which consist of RSUs and PSUs granted under the Equity Incentive Plan to Messrs. Hall and Shi.

Name
Stock Awards
Number of Shares or Units of Stock That Have Not Vested
(#) (1)
Market Value of Shares or Units of Stock That Have Not Vested
($) (2)
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
(3) (#)
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
(2) ($)
Bo Shi
RSUs
28,417238,419——
PSUs
——41,408347,413
J.D. Hall
RSUs
183,8951,542,879——
PSUs——80,515675,521
David C. Rockecharlie
RSUs
—$——$—
PSUs————
Brandi Kendall
RSUs
—$——$—
PSUs————
Todd Falk
RSUs
—$——$—
PSUs————
John Clayton "Clay" Rynd
RSUs
—$——$—
PSUs————
_______________
(1) Each RSU award granted to Messrs. Hall and Shi represents the contingent right to receive one share of our Class A Common Stock upon vesting. Mr. Shi’s 2022 RSU award vested as to one-third granted on April 1, 2025, which were the final RSUs outstanding that were subject to such 2022 RSU award. Mr. Shi’s 2023 RSU award vested as to one-third of the RSUs granted on April 1, 2025 and will vest as to an additional one-third of the RSUs granted on April 1, 2026. Mr. Shi’s 2024 RSU award vested as to one-third of the RSUs granted on April 1, 2025 and will vest as to an additional one-third of the RSUs granted on April 1 of 2026 and 2027. Mr. Shi’s 2025 RSU award will vest in substantially equal one-third installments on April 1 of 2026, 2027, and 2028. For Mr. Hall, 67,751 RSUs will vest in substantially equal installments on the first three anniversaries of June 2, 2025 and the 116,144 RSUs will vest in their entirety on June 2, 2026.

(2) The amount included in the applicable column represents the market value of our Class A Common Stock underlying the RSU or PSU awards granted to Messrs. Hall and Shi, computed based on the closing price of our Class A Common Stock on December 31, 2025, the last trading day of 2025, which was $8.39 per share.

(3) Each PSU award granted to Messrs. Hall and Shi represents the contingent right to receive one share of our Class A Common Stock based on performance with respect to absolute and relative total shareholder return over the performance
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period beginning December 7, 2024 and ending December 6, 2027, with the ability to earn 0% to 240% of the target PSUs granted. With respect to PSU awards, the amounts shown are based on target performance.


Option Exercises and Stock Vested in Fiscal Year 2025

Name
Stock Awards
Number of Shares Acquired on Vesting
(#) (1)
Value Realized on Vesting
($) (1)
Bo Shi13,000$144,040
J.D. Hall
——
David C. Rockecharlie——
Brandi Kendall——
Todd Falk——
John Clayton "Clay" Rynd——
_______________
(1) Reflects shares received pursuant to the vesting, on April 1, 2025, of RSUs subject to Mr. Shi's 2022, 2023 and 2024 RSU awards. The value realized on vesting reflects the closing price of our Class A Common Stock on April 1, 2025, the vesting date, which was $11.08, multiplied by the number of shares of our Class A Common Stock received by Mr. Shi.

Pension Benefits and Nonqualified Deferred Compensation

We have not maintained, and do not currently maintain, a defined benefit pension plan or a nonqualified deferred compensation plan providing for retirement benefits to our employees, including the named executive officers.

Potential Payments Upon Termination or Change in Control

Termination and Change in Control Arrangements

Since the Manager Executives are employees of our Manager or its affiliates, we do not have any obligations to make any payments to the Manager Executives upon a termination of employment or upon a change of control. However, we are obligated to make certain payments to the Manager in connection with certain terminations of the Management Agreement. Such payments are described above under the heading “Items 1 and 2. Business and Properties—Management Agreement.”

Change in Control Agreements

In 2025, each of Messrs. Hall and Shi entered into a CIC Agreement with the Company that provides for certain severance benefits on a termination of employment in connection with a “change in control.” Under the CIC Agreements, if, within two years after a “change in control” (or, in certain circumstances, within six months before a “change in control” if the termination is in anticipation thereof), (i) the Company terminates Messrs. Hall or Shi for any reason other than their death or “disability” or a “termination for cause” or (ii) Messrs. Hall or Shi resigns for “good reason,” Messrs. Hall or Shi will be entitled to (1) a lump-sum cash payment equal to 2.5 times the sum of (A) Messrs. Hall or Shi’s protected base salary and (B) the greater of Messrs. Hall or Shi’s target annual bonus or the average of the annual bonuses paid for the three years immediately preceding the termination; (2) a pro-rated annual bonus for the year of termination based on the higher of target or actual performance; (3) accelerated vesting of all outstanding equity awards (with performance-based awards vesting as the higher of actual or target performance); (4) up to 24 months of Company-paid COBRA coverage for Messrs. Hall or Shi and their eligible dependents; (5) a lump-sum cash payment of $30,000 in lieu of financial and tax planning assistance for two years; and (6) outplacement services for up to 12 months following termination, at a cost to the Company not to exceed $50,000.

The terms set forth below are generally defined as follows for purposes of Messrs. Hall and Shi’s CIC Agreements:

•“termination for cause” means a termination of employment by the Company due to the occurrence of any of the following:
1.continued failure (i) to substantially perform duties and responsibilities (other than any such failure resulting from physical or mental impairment or incapacity) or (ii) to comply with any material written policy of the Company generally applicable to all officers of the Company and, if applicable, the successor in interest to the Company or, if such successor is a subsidiary of any other entity, the direct or indirect ultimate parent of
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such successor (such successor or such ultimate parent entity, the “Company Successor”), which specifically provides for dismissal (or employment termination) as a consequence of any such failure to comply, in either case more than 10 business days after written demand for substantial performance or compliance with the policy is delivered by the Company specifically identifying the manner in which the Company believes there has not been substantial performance of duties and responsibilities or not complied with the written policy;
2.engaging in an act or acts of gross misconduct which result in, or are intended to result in, material damage to the Company’s business or reputation;
3.failure, following a written request from the Company, reasonably to cooperate (including, without limitation, the refusal to be interviewed or deposed, or to give testimony) in connection with any investigation or proceeding, whether internal or external (including, without limitation, by any governmental or quasi-governmental agency), into the business practices or operations of the Company; or
4.conviction of (or plea of guilty or nolo contendere to a charge of) any felony or any crime or misdemeanor, in either case, involving moral turpitude or financial misconduct which results in significant monetary damage to the Company.
•“termination for good reason” means a termination of employment due to the occurrence of any of the following, without the express written consent, after the occurrence of a “change in control:”
1.(i) the assignment of any duties inconsistent in any material adverse respect with to position, authority or responsibilities as in effect immediately prior to a “change in control”, or (ii) any other material adverse change in such position, including (A) titles, authority, responsibilities, or functions, (B) the position to which the employee reports or the principal departmental functions that report to the employee, or (C) the budget over which the employee retains authority, which, in the case of any officer of the Company, shall be deemed to have occurred unless, following the change in control date, the employee holds such position or positions with the Company Successor that are substantially comparable to the position or positions held at the Company immediately prior to the change in control date; provided that there shall be excluded for the purpose of this subparagraph (1) any isolated, insubstantial and inadvertent action remedied promptly after receipt of notice thereof given by employee;
2.any failure by the Company or the Company Successor, other than an insubstantial or inadvertent failure remedied promptly after receipt of notice thereof, to provide an annual base salary which is at least equal to the base salary payable immediately prior to the change in control date or, if more favorable to the employee, at the rate made available any time thereafter;
3.any failure by the Company or the Company Successor, other than an insubstantial or inadvertent failure remedied promptly after receipt of notice thereof, to provide the employee with an annual target bonus opportunity that is at least equal to the employee’s target bonus opportunity under any Company annual bonus program (which, if not stated as the target for a full year of service, shall be annualized) for the year in which the change in control date occurs;
4.the Company or the Company Successor requires (or notifies in writing that it will require) the employee to be based at any office or location more than 50 miles from that location at which the employee principally performed services for the Company immediately prior to the change in control date, except for travel reasonably required in the performance of the employee’s responsibilities to an extent substantially consistent with business travel obligations immediately prior to the “change in control”; or
5.if, not later than the change in control date, any Company Successor shall have failed to agree in writing to assume and perform the CIC Agreement.
•“change in control” means an event that constitutes a “change in control” as defined in the Equity Incentive Plan, except that an event shall only constitute a “change in control” if it both qualifies as such under the Equity Incentive Plan and is a change in the ownership or effective control or in the ownership of a substantial portion of the assets of the Company for purposes of Section 409A of the Internal Revenue Code of 1986, as amended. Any modification to the definition of “change in control” in the Equity Incentive Plan (including by virtue of the adoption by the Company of a successor plan thereto setting forth a modified definition of “change in control”) adopted after the effective date of the CIC Agreement shall apply for purposes of the CIC Agreement, except that any modification to such definition adopted on or after, or within 180 days prior to, a “change in control” shall not apply in determining the definition of such term under the CIC Agreement unless such amendment is favorable to the employee.
•“disability” means physical or mental impairment or incapacity of sufficient severity such that: (1) in the opinion of a qualified physician selected by the Company with the consent of the employee or the employee’s legal representative (which consent shall not be unreasonably withheld), after taking into account all reasonable accommodations that the Company has made or could make, the employee is unable to continue to perform employee’s duties and responsibilities as an employee of the Company; or (2) the employee’s condition entitles employee to long-term disability benefits under any employee benefit plan maintained by the Company or any of its affiliates that are at least comparable to those made available to the employee by the Company prior to the “change in control.”

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Award Agreements

The award agreements governing Mr. Shi’s 2024 RSU award and Messrs. Hall and Shi’s 2025 RSU awards provide that, upon a termination of Messrs. Hall and Shi’s employment by the Company without “cause” or a resignation by Messrs. Hall and Shi for “good reason” that, in each case, occurs within the 12 month period following a “change in control” of the Company, any RSUs that remain unvested as of the date of such termination will immediately vest in full, provided Messrs. Hall and Shi has remained continuously employed by us from the grant date of such award through the date of termination. Upon a termination of Messrs. Hall and Shi’s employment for any other reason, any unvested RSUs held by him as of the applicable termination date will be forfeited without consideration.

The terms set forth below are generally defined as follows for purposes of Messrs. Hall and Shi’s RSU award agreements:

•“cause” means one or more of the following: (i) gross negligence or willful misconduct in the performance of duties to the Company or its affiliates, (ii) material breach of any material provision of any written agreement with the Company or an affiliate, or the material breach of an applicable corporate policy or code of conduct, (iii) willful conduct that is materially injurious to the Company or an affiliate, or (iv) conviction of, plea of no contest to, or the receipt of deferred adjudication or adjudicated probation in connection with a felony involving fraud, dishonesty or moral turpitude (or a crime of similar import in a foreign jurisdiction);
•“good reason” means a material diminution in base salary, provided that good reason exists only if such diminution occurs without consent, written notice is provided to the Company of such diminution within 45 days of its occurrence, such diminution remains uncorrected for 30 days following receipt of such notice and the date of termination occurs within 90 days of the date such notice is received by the Company; and
•“change in control” means one of the following: (i) the acquisition of more than 50% of the then outstanding Class A Common Stock or total voting power of the Company, (ii) a majority of the members of the Board are replaced with individuals who are not incumbent directors over any two year period, (iii) a sale, merger or similar transaction or series of related transactions involving the Company, as a result of which the owners of the Company’s securities prior to such transaction cease to hold more than 50% of the voting securities of the surviving entity, any single person owns more than 50% of the securities entitled to vote for the election of directors or the incumbent directors prior to such transaction cease to represent at least a majority of the board of the surviving entity or its parent, or (iv) the sale of all or substantially all of the assets of the Company in a transaction or series of related transactions.

The award agreements governing Messrs. Hall and Shi’s 2025 PSU awards provide that, upon a “change in control” of the Company, any PSUs that remain unvested as of the date of such “change in control” will immediately vest in full based on target, provided Messrs. Hall or Shi has remained continuously employed by us from the grant date of such award through the change in control date. Mr. Hall’s PSU award provides that, upon a termination of Mr. Hall’s employment due to a “qualifying resignation” a pro rata portion of the target PSUs granted will remain outstanding based on the number of days that Mr. Hall was employed during the performance period and such pro rata RSUs shall be eligible to become earned PSUs based on the extent to which the applicable performance goals have been achieved at the end of the applicable performance period. Upon a termination of Messrs. Hall or Shi’s employment for any other reason, any unvested PSUs held by them as of the applicable termination date will be forfeited without consideration.

The terms set forth below are generally defined as follows for purposes of Messrs. Hall and Shi’s PSU award agreements; provided, that Mr. Shi’s PSU award does not contain the definition of “qualifying resignation”:

•“change in control” means hall mean an event that constitutes a “change in control” as defined in the Equity Incentive Plan;
•“qualifying resignation” means a voluntarily termination of employment or service with the Company and its affiliates other than for “cause” and each of the following is satisfied: (i) the participant delivers to the Company a written notice of resignation at least six (6) months prior to the separation date; (ii) the participant remains continuously employed by, or continuously provides services to, the Company or an affiliate from the date of grant through the separation date; and (iii) no event constituting “cause” shall have occurred prior to or on the separation date and the participant shall not have engaged in any act or omission that would constitute grounds for termination for “cause”; and
•“cause” means “cause” (or a term of like import) as defined in any employment or severance agreement between the participant and the Company or an affiliate or, in the absence of such an agreement that defines “cause” (or a term of like import), then “cause” shall mean (i) material breach of any written agreement between the participant and the Company or an affiliate; (ii) material breach of any law applicable to the workplace or employment relationship, or the material breach of any material policy or code of conduct established by the Company, an affiliate, or a successor to the Company applicable to the participant, including policies on discrimination, harassment and sexual harassment;
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(iii) gross negligence, willful misconduct, breach of fiduciary duty, fraud, theft or embezzlement; (iv) the commission of, or conviction or indictment for, or plea of nolo contendere to, any felony (or state law equivalent) or any crime involving moral turpitude; or (v) willful failure or refusal, other than due to disability to perform obligations or to follow any lawful directive from the Company, as determined by the Company; provided, however, that if the action or omissions as set forth in clause (v) are of such a nature that the Company or a successor of the Company determines that they are curable, such actions or omissions must remain uncured for 30 days after the Company or a successor of the Company provides the participant written notice of the obligation to cure such actions or omissions.

Quantification of Benefits

The following table provides information concerning the estimated payments and benefits that would be provided in the circumstances described above to each of our named executive officers. Except where otherwise noted, payments and benefits are estimated assuming both qualifying termination of employment and a change in control occurred on December 31, 2025. There can be no assurance that a triggering event would produce the same or similar results as those estimated below if such event occurs on any other date or at any other price, or if other circumstances affect the assumptions used to estimate these potential payments and benefits. Due to the number of factors that affect the nature and amount of any potential payments or benefits, any actual payments and benefits paid in such circumstances may be different than those set forth in the table below.

Benefits and Payments(1)
Termination Without Cause or for Good Reason During Two Year Period Following Change in Control
($)(2)
Change in Control
($) (3)
Qualifying Resignation
($) (6)
All Other Terminations
($) (7)
Bo Shi
Cash Severance$2,627,250 $— $— $— 
Accelerated Equity Awards
585,832(3)
347,413 — — 
COBRA and Other Benefits
141,334(4)
— — — 
Total$3,354,416 $347,413 $— $— 
J.D. Hall
Cash Severance$3,750,000 $— $— $— 
Accelerated Equity Awards
2,218,400(3)
675,521 131,396 — 
COBRA and Other Benefits
119,369(4)
— — — 
Total$6,087,769 $675,521 $131,396 $— 
David C. Rockecharlie
Cash Severance$— $— $— $— 
Accelerated Equity Awards— — — — 
COBRA and Other Benefits
— — — — 
Total$— $— $— $— 
Brandi Kendall
Cash Severance$— $— $— $— 
Accelerated Equity Awards— — — — 
COBRA and Other Benefits
— — — — 
Total$— $— $— $— 
Todd N. Falk
Cash Severance$— $— $— $— 
Accelerated Equity Awards— — — — 
COBRA and Other Benefits
— — — — 
Total$— $— $— $— 
John Clayton "Clay" Rynd
Cash Severance$— $— $— $— 
Accelerated Equity Awards— — — — 
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COBRA and Other Benefits
— — — — 
Total$— $— $— $— 
_______________
(1) None of the Manager Executives are eligible to receive any payments or benefits in the event of a change in control of us or a termination of employment.
(2) Under the CIC Agreements entered into by each of Messrs. Hall and Shi, if, within two years after a change in control (or, in certain circumstances, within six months before a change in control if the termination is in anticipation thereof), (i) the Company terminates Messrs. Hall or Shi for any reason other than their death or disability or a termination for cause or (ii) Messrs. Hall or Shi resigns for good reason” Messrs. Hall or Shi will be entitled to (1) a lump-sum cash payment equal to 2.5 times the sum of (A) Messrs. Hall or Shi’s protected base salary and (B) the greater of Messrs. Hall or Shi’s target annual bonus or the average of the annual bonuses paid for the three years immediately preceding the termination; (2) a pro-rated annual bonus for the year of termination based on the higher of target or actual performance; (3) accelerated vesting of all outstanding equity awards (with performance-based awards vesting as the higher of actual or target performance); (4) up to 24 months of Company-paid COBRA coverage for Messrs. Hall or Shi and their eligible dependents; (5) a lump-sum cash payment of $30,000 in lieu of financial and tax planning assistance for two years; and (6) outplacement services for up to 12 months following termination, at a cost to the Company not to exceed $50,000.
(3) The amounts shown assume target performance with respect to PSU awards and were calculated by multiplying (a) the number of shares of our Class A Common Stock underlying Messrs. Hall and Shi’s RSU and PSU awards that would accelerate in such circumstance (as described in more detail in footnote (2) above) by (b) $8.39, the closing price of our Class A Common Stock on December 31, 2025, the last trading day of 2025.
(4) Consists of amounts described in footnote (2) above that relate to (a) Company-paid COBRA coverage for up to 24 months, (b) a lump-sum cash payment in lieu of financial and tax planning assistance for two years and (c) outplacement services for up to 12 months. For purposes of (a) in the preceding sentence, amounts reflect 24 months of Company-paid COBRA coverage and, for purposes of (c) in the preceding sentence, amounts reflect the maximum of $50,000 for outplacement services.
(5) In the event of a change in control, any PSUs held by Messrs. Hall or Shi that remain unvested as of the date of such change in control will immediately vest in full based on target. The amounts shown were calculated by multiplying the PSUs held by Messrs. Hall or Shi that remained unvested as of December 31, 2025, by $8.39, the closing price of our Class A Common Stock on December 31, 2025, the last trading day of 2025.
(6) In the event of a qualifying resignation, a pro rata portion of the target PSUs held by Mr. Hall will remain outstanding based on the number of days that such individual was employed during the performance period and such pro rata RSUs shall be eligible to become earned PSUs based on the extent to which the applicable performance goals have been achieved at the end of the applicable performance period. The amounts shown assume target performance and were calculated by multiplying the pro rata portion of PSUs held by Mr. Hall that would have remained outstanding as of December 31, 2025 if a qualifying resignation occurred on such date, by $8.39, the closing price of our Class A Common Stock on December 31, 2025, the last trading day of 2025.
(7) Messrs. Hall and Shi are not eligible to receive any payments or benefits in the event of any other termination of employment that is not described in the table.

CEO Pay Ratio

Section 953(b) of Dodd-Frank, and Item 402(u) of Regulation S-K, requires that we provide information about the relationship of the annual total compensation of David C. Rockecharlie, our chief executive officer, to the median annual total compensation of other employees providing services to us. However, as disclosed in the “Compensation Discussion and Analysis” section above, Mr. Rockecharlie did not receive any direct cash or other compensation from us nor did our Manager allocate any cash or other compensation solely for Mr. Rockecharlie’s services as our chief executive officer, and we did not reimburse our Manager or any of its affiliates for any compensation paid to Mr. Rockecharlie. As a result, we are unable to provide a ratio of the median employee’s annual total compensation to the total annual compensation of Mr. Rockecharlie.

Director Compensation

2025 Compensation

The following table sets forth information concerning the compensation paid by us to our directors for the fiscal year ended December 31, 2025.

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NameFees Earned or Paid in Cash
($)
Stock Awards
($)(5)(6)
All Other Compensation
($)		Total
($)
John C. Goff80,000217,933—297,933
William Albrecht (1)
3,334——3,334
Erich Bobinsky (2)
27,671122,356—150,027
Bevin Brown (2)
80,000122,356—202,356
Michael Duginski (3)
80,000122,356—202,356
Claire S. Farley99,500122,356—221,856
Robert G. Gwin80,000122,356—202,356
Jarvis Hollingsworth (1)
3,334——3,334
Conrad V. Langenhagen (4)
52,49366,332—118,825
Ellis L. “Lon” McCain100,000122,356—222,356
Marcus C Rowland
80,000122,356—202,356
Karen J. Simon80,000122,356
25,000 (7)
227,356
_______________
(1) On December 15, 2025, in connection with the consummation of the Merger with Vital, Messrs. Albrecht and Hollingsworth were appointed as directors. Amounts shown reflect the partial year of service for each director.

(2) Erich Bobinsky and Bevin Brown are officers and employees of Liberty Holdco and serve on our Board of Directors as nominees of PT Independence. Mr. Bobinsky and Ms. Brown have agreed that they will not receive any separate compensation for serving as directors of the Company and have agreed to transfer to Liberty Holdco any director compensation that they receive from us, including any shares received in respect of equity or equity-based awards. As such, all amounts reported for Mr. Bobinsky and Ms. Brown in this table will not be retained by them, but instead will be transferred to Liberty Holdco. As such, Mr. Bobinsky and Ms. Brown will not retain any compensation with respect to their service on our Board of Directors in 2025. Effective May 5, 2025, Mr. Bobinsky's service as a director of the Company ended.

(3) On December 14, 2025, in connection with the consummation of the Merger with Vital, Mr. Duginski resigned as a director. Mr. Duginski was compensated as if he had served as a director for the entire year.

(4) Effective May 5, 2025, Mr. Langenhagen began serving as a director.

(5) The amounts reported in this column represent the aggregate grant date fair value, determined in accordance with FASB ASC 718, of 19,669 RSUs that were granted to Mr. Goff on April 1, 2025, 7,362 RSUs that were granted to Mr. Langenhagen on October 1, 2025 (reflecting a pro-rata grant for his service as a director during 2025), and 11,043 RSUs that were granted to each other non-management director on April 1, 2025, in each case, pursuant to the Equity Incentive Plan. The assumptions used in calculating the aggregate grant date fair value of such awards are described in "Notes to Consolidated Financial Statements—NOTE 13 – Equity-Based Compensation Awards" in "Part II., Item 8. Financial Statements and Supplementary Data" of this Annual Report. The RSU awards will vest in full on April 1, 2026, subject to the director continuously providing services on our Board of Directors through such date.

(6) As described below, the target value of the annual equity-based compensation granted to our non-management directors is $160,000 plus an additional award with a target value of $125,000 to the non-executive Chairman of the Board. The number of RSUs issued pursuant to the 2025 awards was determined by dividing such target value by $14.49, which was the volume-weighted average closing price per share of our Class A Common Stock for the 20 trading days preceding December 7, 2024 (matching the 20 trading day measurement period under the Incentive Compensation). The aggregate number of outstanding RSUs held, as of December 31, 2025, by Mr. Goff was 19,669, by Mr. Langenhagen was 7,362 and by each other non-management director was 11,043.

(7) The amount reported represents Ms. Simon’s retainer in connection with her service on the Company's Sustainability Council.

Director Compensation Policy

We established a comprehensive non-management director compensation policy. The policy is designed to provide competitive compensation necessary to attract and retain high quality non-management directors and to encourage ownership of our Class A
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Common Stock to further align their interests with those of the Company’s stockholders. No compensation is paid to management directors. The non-management director compensation policy in effect for the fiscal year ended December 31, 2025, provided for the following compensation to our non-management directors:

•An annual cash retainer of $80,000;
•An annual equity-based award with a value of $160,000 (adjusted for partial periods of service) granted in the form restricted stock units, subject to a one-year vesting period;
•An additional equity-based award to the non-executive Chairman of the Board with a value of $125,000 granted in the form of restricted stock units, subject to a one-year vesting period;
•An additional annual cash retainer for the following committee chairs:
•$20,000 for the chairperson of the Audit Committee,
•$10,000 for the chairperson of the Compensation Committee, and
•$9,500 for the chairperson of the Nominating Committee.

We also provide for the reimbursement of out-of-pocket expenses incurred by directors in the performance of their duties, including reasonable travel expenses incurred attending meetings. Each director is indemnified for his or her actions associated with being a director to the fullest extent permitted under Delaware law.

Stock Ownership Requirements

To further align the interests of our non-employee directors with those of our stockholders, in November 2022, our Nominating Committee adopted stock ownership and retention requirements for all non-management directors, other than Mr. Bobinsky (who was later replaced by Mr. Langenhagen in May 2025) or Ms. Brown who were appointed to serve on our Board pursuant to the director nominee rights held by their employer, Liberty, and are prohibited by Liberty from owning securities of the Company in their individual capacities.

Pursuant to the stock ownership guidelines, the applicable non-management directors are required to own common stock of the Company equal in value to at least five times their total annual cash retainer, which includes any additional annual retainer paid for service on a committee. Share equivalents (including restricted stock units) are counted for purposes of satisfying the stock ownership requirement. Non-management directors must attain such ownership within five years of the date the guidelines were adopted, or five years of joining the Board, whichever is later.

Manager Incentive Plan

In 2021, we adopted and our stockholders approved, the Manager Incentive Plan. The purpose of the Manager Incentive Plan is to provide a means through which we may provide equity-based compensation to the Manager, as required by the Management Agreement. The description of the Manager Incentive Plan set forth below is a summary of the material features of the Manager Incentive Plan. This summary does not purport to be a complete description of all of the provisions of the Manager Incentive Plan and is qualified in its entirety by reference to the Manager Incentive Plan, which is attached hereto as Exhibit 10.6.

Manager Incentive Plan Share Limit. Subject to adjustment in the event of certain transactions or changes of capitalization in accordance with the Manager Incentive Plan, 4,306,745 were initially reserved for issuance pursuant to awards under the Manager Incentive Plan. The aggregate number of shares of Class A Common Stock reserved for delivery shall be increased on January 1 of each calendar year that occurs before the tenth anniversary of the Effective Date (as defined in the Manager Incentive Plan) by 10% of the additional Class A Common Stock issued, if any, during the immediately preceding calendar year. If an award under the Manager Incentive Plan is forfeited, settled for cash or expires without the actual delivery of shares, any shares subject to such award will again be available for new awards under the Manager Incentive Plan.

Administration. The Manager Incentive Plan is administered by the board or a committee later appointed by the board.

Awards. The Manager Incentive Plan provides for the grant of (i) stock options; (ii) stock appreciation rights; (iii) restricted or unrestricted Class A Common Stock; (iv) restricted stock units; (v) other equity-based awards; (vi) incentive awards; (vii) cash awards; (viii) performance awards; and (ix) substitute awards.

Certain Transactions. If any change is made to our capitalization, such as a stock split, stock combination, stock dividend, exchange of shares or other recapitalization, merger or otherwise, which results in an increase or decrease in the number of outstanding shares of Class A Common Stock, appropriate adjustments will be made by the committee in the shares subject to awards under the Manager Incentive Plan. The committee will also have the discretion to make certain adjustments to awards in the event of a Change in Control (as defined in the Manager Incentive Plan), such as accelerating the vesting or exercisability of
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awards, requiring the assumption of awards or substitution of awards for new awards or cancelling awards in exchange for payments of consideration in forms determined by the committee.

Clawback Policy. All awards under the Manager Incentive Plan will be subject to our clawback or recapture policy, as in effect from time to time.

Amendment and Termination. The board may amend or terminate the Manager Incentive Plan at any time; however, no amendment may adversely impair the rights of participants with respect to outstanding awards and shareholder approval will be required for any amendment to the extent necessary to comply with applicable law or exchange listing standards. The committee will not have the authority, without the approval of shareholders, to amend any outstanding stock option or stock appreciation right to reduce its exercise price per share. The Manager Incentive Plan will remain in effect for a period of ten years following the effective date of the Manager Incentive Plan (unless earlier terminated by the Board).

Other. As described under "The Transaction Agreement and Related Agreements—OpCo LLC Agreement", the OpCo LLC Agreement provides that, subject to certain exceptions, at any time we issue a share of Class A Common Stock or any other equity security (including awards granted under the Manager Incentive Plan) following December 7, 2021, the net proceeds received by us with respect to such issuance, if any, will be concurrently contributed to OpCo, which, in turn, will issue one Unit (if we issue a share of Class A Common Stock) or such other equity security (if we issue equity securities other than Class A Common Stock) corresponding to the equity securities issued by us to the Company Group.

The Incentive Compensation

In 2021, the Manager was granted the Incentive Compensation, which is an award of PSUs under the Manager Incentive Plan, as required by the Management Agreement. This summary does not purport to be a complete description of all of the provisions of the Incentive Compensation and is qualified in its entirety by reference to the award agreement governing the Incentive Compensation (the “Award Agreement”), the form of which is included as Exhibit 10.5 hereto.

General Description. The Incentive Compensation is a grant of five “Target PSUs,” each of which corresponds to a number of shares of Class A Common Stock equal to 2% of the total number of shares of Class A Common Stock outstanding on each Performance Period End Date (as defined in the Award Agreement). The Incentive Compensation represents the right to receive shares of Class A Common Stock in an amount ranging from 0% to 240% of each Target PSU, subject to the Company’s achievement of certain performance-based vesting conditions.

Vesting. Each Target PSU will become earned, if at all, following the determination of the Company’s level of achievement of certain performance goals during a three-year performance period. For each performance period, the performance goals for (i) 60% of the Target PSU shall be based on the Company’s absolute total stockholder return (the “Absolute TSR Portion”) during the applicable performance period and (ii) 40% of the Target PSU shall be based on the relative total stockholder return (the “Relative TSR Portion”) ranking of the Company as compared to our peer group during the applicable performance period.

For each performance period, the Absolute TSR Portion of the Target PSU will become earned based on the committee’s determination of the Company’s Absolute TSR Portion in accordance with the table below.
Absolute TSR (%)Earned Amount (% of Absolute TSR Portion)*
<25%
0%
25%
100%
55%
150%
85%
200%
115%
250%
145%
300%

For each performance period, the Relative TSR Portion of the Target PSU will become earned based on the committee’s determination of the Company’s Relative TSR in accordance with the table below.

Relative TSR Percentile RankingEarned Amount (% of Relative TSR Portion)*
<20th Percentile
0%
20th Percentile
50%
40th Percentile
75%
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Relative TSR Percentile RankingEarned Amount (% of Relative TSR Portion)*
60th Percentile
100%
70th Percentile
125%
≥80th Percentile
150%

Acceleration of Vesting. The Award Agreement provides that unearned Target PSUs will immediately be deemed earned with respect to 100% of such Target PSUs upon the occurrence of a Change in Control or a complete liquidation or dissolution of the Company, provided that the Management Agreement has not been terminated prior to such date.

Equity Incentive Plan

In 2021, we adopted, and our stockholders approved, the Equity Incentive Plan. On May 10, 2023, the Board adopted, and stockholders holding a majority of the shares of voting power of our Class A Common Stock and Class B Common Stock approved the adoption of, the First Amendment to the Equity Incentive Plan (the “First Amendment”). The First Amendment increases the number of shares of our Class A Common Stock authorized to be delivered under the Equity Incentive Plan by 2,477,201 shares.

On October 29, 2024, our Board of Directors adopted the Second Amendment (the “Second Amendment”) to the Crescent Energy Company 2021 Equity Incentive Plan (as amended from time to time, the “Plan”). Pursuant to the Second Amendment, an additional 2,848,006 shares of our Class A Common Stock may be issued pursuant to the Plan as a result of the assumption of the authorized but unused shares that remained available under the SilverBow Resources, Inc. 2016 Equity Incentive Plan (the SilverBow Plan”) following the completion of the SilverBow Merger. For the avoidance of doubt, in accordance with Section 303A.08 of the New York Stock Exchange Listed Company Manual, the authorized but unused shares that remained available under the SilverBow Plan were adjusted to reflect the SilverBow Merger in order to determine the 2,848,006 shares of Class A Common Stock added to the Plan pursuant to the Second Amendment. The additional shares of our Class A Common Stock authorized to be issued under the Plan pursuant to the Second Amendment were registered pursuant to a registration statement on Form S-8, which is included as Exhibit 10.6 hereto.

The purpose of the Equity Incentive Plan is to incentivize individuals providing services to the Company or its affiliates as its employees, officers or non-employee directors through grants of equity-based incentive awards. Any individual employed by the Manager or any of its parent companies is not be eligible to participate in the Equity Incentive Plan. As such, none of our executive officers, including the named executive officers, except Messrs. Hall and Shi are eligible to participate in the Equity Incentive Plan. The description of the Equity Incentive Plan set forth below is a summary of the material features of the Equity Incentive Plan. This summary does not purport to be a complete description of all of the provisions of the Equity Incentive Plan and is qualified in its entirety by reference to the Equity Incentive Plan.

Equity Incentive Plan Share Limits. Subject to adjustment in the event of certain transactions or changes of capitalization in accordance with the Equity Incentive Plan, 3,338,550 shares of Class A Common Stock are reserved for issuance pursuant to awards under the Equity Incentive Plan (after giving effect to the First Amendment). The total number of shares reserved for issuance under the Equity Incentive Plan may be issued pursuant to incentive stock options (which generally are stock options that meet the requirements of Section 422 of the Code). If an award under the Equity Incentive Plan is forfeited, settled for cash or expires without the actual delivery of shares, any shares subject to such award will again be available for new awards under the Equity Incentive Plan.

Administration. The Equity Incentive Plan is administered by the board or a committee later appointed by the board.

Awards. The Equity Incentive Plan provides for the grant of (i) stock options; (ii) stock appreciation rights; (iii) restricted or unrestricted Class A Common Stock; (iv) restricted stock units; (v) other equity-based awards; (vi) incentive awards; (vii) cash awards; (viii) performance awards; and (ix) substitute awards.

Maximum Calendar Year Award. No non-employee director may receive, in any one calendar year, more than $1,000,000 in the aggregate in awards granted under the Equity Incentive Plan and cash compensation (including retainers and cash-based awards). Notwithstanding the foregoing, awards and cash compensation may be granted or paid to non-employee directors in excess of such limits for any calendar year in which the director first commences service on the Board of Directors, serves on a special committee of the Board of Directors, or serves as lead director or chairman of the Board of Directors.

Certain Transactions. If any change is made to the Company’s capitalization, such as a stock split, stock combination, stock dividend, exchange of shares or other recapitalization, merger or otherwise, which results in an increase or decrease in the
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number of outstanding shares of Class A Common Stock, appropriate adjustments will be made by the committee in the shares subject to awards under the Equity Incentive Plan. The committee will also have the discretion to make certain adjustments to awards in the event of a Change in Control (as defined in the Equity Incentive Plan), such as accelerating the vesting or exercisability of awards, requiring the assumption of awards or substitution of awards for new awards or cancelling awards in exchange for payments of consideration in forms determined by the committee.

Clawback Policy. All awards under the Equity Incentive Plan will be subject to our clawback or recapture policy, as in effect from time to time.

Amendment and Termination. The board may amend or terminate the Equity Incentive Plan at any time; however, no amendment may adversely impair the rights of participants with respect to outstanding awards and shareholder approval will be required for any amendment to the extent necessary to comply with applicable law or exchange listing standards. The committee will not have the authority, without the approval of shareholders, to amend any outstanding stock option or stock appreciation right to reduce its exercise price per share. The Equity Incentive Plan will remain in effect for a period of ten years following the effective date (unless earlier terminated by the board).

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information known to us, based on filings made under Section 13(d) and 13(g) of the Exchange Act, regarding the beneficial ownership of our common stock as of January 30, 2026 by:

•each person, or group of affiliated persons, known to us to beneficially own more than 5% of our common stock;
•each member of the Board of Directors;
•each of our Named Executive Officers; and
•all of our directors and executive officers as a group.

Beneficial ownership is determined in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to such securities. Except as otherwise indicated, all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable community property laws. Unless otherwise indicated, the address of each person or entity named in the table below is c/o Crescent Energy Company, 600 Travis Street, Suite 7200, Houston, Texas 77002.

As of January 30, 2026, there were 327,900,272 shares of our Class A Common Stock outstanding.

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Shares Beneficially Owned by Certain Beneficial Owners and Management
Class A Common Stock
Number% of class
5% Stockholders
Independence Energy Aggregator LP and its affiliates (1)
26,185,773 8.0 %
KKR Upstream Associates LLC (2)
26,758,127 8.2 %
Liberty Mutual Foundation Inc. (3)(4)
36,894,411 11.3 %
The Vanguard Group (5)
20,731,434 6.3 %
BlackRock, Inc. (6)
26,061,287 7.9 %
Directors and Named Executive Officers
John C. Goff (7)
9,805,786 3.0 %
David C. Rockecharlie110,000 *
Brandi Kendall23,347 *
J.D. Hall— *
John Clayton "Clay" Rynd7,000 *
Todd N. Falk7,000 *
Bo Shi (9)
38,437 *
Karen J. Simon (8)
86,337 *
Ellis L. McCain (8)
78,978 *
Bevin Brown (8)(10)
25,354 *
Claire S. Farley (8)
45,913 *
Robert G. Gwin (8)
45,913 *
Marcus C. Rowland (8)
80,035 *
Conrad Langenhagen (11)
7,362 *
William Albrecht
64,664 *
Jarvis Hollingsworth
38,245 *
Directors and Executive Officers as a group (16 persons)
10,464,371 3.2 %
(1)Aggregator L.P. is the direct beneficial owner of the securities reported and is the entity through which certain unaffiliated limited partners and affiliated entities hold their interests in the Company and OpCo. Aggregator GP is the general partner of Aggregator. KKR Upstream Associates LLC is the sole member of Aggregator GP. KKR Group Assets Holdings III L.P. and KKR Financial Holdings LLC are the controlling members of KKR Upstream Associates LLC. KKR Group Assets III GP LLC is the general partner of KKR Group Assets Holdings III L.P. KKR Group Partnership L.P. is the sole member of each of KKR Group Assets III GP LLC and KKR Financial Holdings LLC. KKR Group Holdings Corp. is the general partner of KKR Group Partnership L.P. KKR & Co. Inc. is the sole shareholder of KKR Group Holdings Corp. KKR Management LLP is the Series I preferred stockholder of KKR & Co. Inc. Henry R. Kravis and George R. Roberts are the founding partners of KKR Management LLP. Each of such beneficial owners disclaims beneficial ownership of such securities in excess of their pecuniary interest therein.
(2)KKR Upstream Associates LLC is the direct beneficial owner of the 572,354 shares of Class A Common Stock reported and may be deemed to beneficially own the shares of Class A Common Stock held of record by Aggregator. KKR Group Assets Holdings III L.P. and KKR Financial Holdings LLC are the controlling members of KKR Upstream Associates LLC. KKR Group Assets III GP LLC is the general partner of KKR Group Assets Holdings III L.P. KKR Group Partnership L.P. is the sole member of each of KKR Group Assets III GP LLC and KKR Financial Holdings LLC. KKR Group Holdings Corp. is the general partner of KKR Group Partnership L.P. KKR & Co. Inc. is the sole stockholder of KKR Group Holdings Corp. KKR Management LLP is the Series I preferred stockholder of KKR & Co. Inc. Henry R. Kravis and George R. Roberts are the founding partners of KKR Management LLP. Each of such beneficial owners disclaims beneficial ownership of such securities in excess of their pecuniary interest therein.
(3)Liberty Mutual Foundation Inc. is the direct beneficial owner of 36,813,628 shares of Class A Common Stock previously held directly by PT Independence. Liberty Energy Holdings, LLC, Liberty Mutual Insurance Company, Liberty Mutual Group Inc., LMHC Massachusetts Holdings Inc. and Liberty Mutual Holding Company Inc. may be deemed to beneficially own the shares of Class A Common Stock owned by Liberty Foundation due to their common control but have no pecuniary interest in such shares. Liberty Energy Holdings, LLC directly holds 80,783 shares of Class A
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Common Stock, including 39,665 shares held by certain director designees. Liberty Mutual Foundation Inc. may be deemed to beneficially own such shares due its common control with Liberty Energy Holdings, LLC but has no pecuniary interest in such shares.
(4)Includes 11,043 shares of Class A Common Stock underlying RSU awards held by Bevin Brown granted in respect of service on our Board of Directors that will vest, subject to continued service on our Board, within 60 days of the date hereof. As described in the footnotes to the Director Compensation Table, Brown have agreed to remit any shares of Class A Common Stock received as compensation for service on our Board of Directors to Liberty Holdco.
(5)The address of The Vanguard Group is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.
(6)The address of BlackRock, Inc. is 50 Hudson Yards, New York, New York 10001.
(7)Includes 19,669 shares of Class A Common Stock underlying RSU awards granted as compensation in respect of service on our Board of Directors that will vest, subject to Mr. Goff's continued service on our Board, within 60 days of the date hereof. John C. Goff is the record holder of 714,357 shares of Class A Common Stock, and as the sole board member of The Goff Family Foundation, and the sole trustee of the Goff Family Trust, which is the managing member of GFT Strategies, LLC and the sole shareholder of Goff Capital, Inc. and JCG 2016 Management, LLC, he may be deemed to beneficially own the shares of Class A Common Stock held of record by those entities.
(8)Includes 11,043 shares of Class A Common Stock underlying RSU awards granted as compensation in respect of service on our Board of Directors that will vest, subject to continued service on our Board, within 60 days of the date hereof.
(9)Includes 13,999 shares of Class A Common Stock underlying RSU awards that will vest, subject to continued employment, within 60 days of the date hereof.
(10)Ms. Brown is a director designee of Liberty Mutual Foundation pursuant to the Specified Rights Agreement and Liberty Mutual Foundation may be deemed to have beneficial ownership of the shares held directly by Ms. Brown.
(11)Includes 7,362 shares of Class A Common Stock underlying RSU awards granted as compensation in respect of service on our Board of Directors that will vest, subject to continued service on our Board, within 60 days of the date hereof.
*     less than 1%

Equity Compensation Plan Information

The following table provides information with respect to the shares of our Class A Common Stock that may be issued under our existing equity compensation plans as of December 31, 2025.

Plan Category
Number of shares of Class A Common Stock to be issued upon exercise of outstanding options, warrants and rights
Weighted-average exercise price of outstanding options, warrants and rights (3)
Number of shares of Class A Common Stock remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(a)(b)(c)
Equity compensation plans approved by security holders
Crescent Energy Company 2021 Equity Incentive Plan
1,062,422$—5,674,805
Equity compensation plans not approved by shareholders
Crescent Energy Company 2021 Manager Incentive Plan (1)
18,954,130⁽²⁾$——
Total20,016,552$—5,674,805
(1)The Manager Incentive Plan contains a formula for calculating the number of securities available for issuance under the Manager Incentive Plan. Pursuant to such formula, the total number of shares of our Class A Common Stock reserved for issuance under the Manager Incentive Plan is equal to the sum of (i) 4,306,745, plus (ii) on January 1 of each calendar year that occurs before the tenth anniversary of the effective date of the Manager Incentive Plan, 10% of the additional Class A Common Stock issued, if any, during the immediately preceding calendar year.
(2)The amount reported in this row represents the maximum number of shares issuable in respect of the Incentive Compensation. The exact number of shares of Class A Common Stock covered by the Incentive Compensation will not be determinable until the Incentive Compensation vests and is settled. However, the number of shares issuable in respect of the Incentive Compensation is limited by the number of shares available for issuance under the Manager Incentive Plan, which was equal to 18,954,130 as of December 31, 2025. If the performance goals applicable to the Incentive Compensation became earned at target performance as of December 31, 2025, 28,508,063 shares of Class A Common Stock would have become earned. If the Incentive Compensation became earned at a level in excess of the Class A Common Stock reserved for issuance under the Manager Incentive Plan, such excess would be settled in cash. For more information on the Incentive Compensation see the narrative disclosure following this table and the disclosure included elsewhere under the headings “Items 1 and 2. Business and Properties—Management Agreement.”
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(3)All outstanding awards under the Manager Incentive Plan and the Equity Incentive Plan represent restricted stock units subject to time- or performance-based vesting, which do not have an exercise price.

Descriptions of the material terms of the Equity Incentive Plan and the Manager Incentive Plan are included herein under the heading “Item 11. Executive Compensation— Equity-Based Compensation,” which descriptions are incorporated to this Equity Compensation Plan Information disclosure by reference.

Item 13. Certain Relationships and Related Transactions, and Director Independence

Policies and Procedures for Review of Related Party Transactions

A “Related Party Transaction” is a transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we or any of our subsidiaries was, is or will be a participant, the amount of which involved will or may be expected to exceed $120,000, and in which any Related Person had, has or will have a direct or indirect material interest. A “Related Person” means:

•a person who is or was (since the beginning of the Company’s last completed fiscal year, even if they do not presently serve in that role) a director or director nominee of the Company;
•a person who is or was (since the beginning of the Company’s last completed fiscal year, even if they do not presently serve in that role) a senior officer of the Company, which, among others, includes each vice president and officer of the Company that is subject to reporting under Section 16 of the Exchange Act;
•any holder of the Company’s Series I Preferred Stock (a “Preferred Holder”);
•a greater than 5% beneficial owner of any class of the Company’s voting stock (a “5% Stockholder”);
•a person who is an immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law of a director, director nominee, senior officer or 5% Stockholder of Preferred Holder, and any person (other than a tenant or employee) sharing the household of the director, director nominee, senior officer or 5% Stockholder or Preferred Holder; or
•an entity that is owned or controlled by someone listed above, an entity in which someone listed above has a substantial ownership interest or control of the entity, or an entity which someone listed above is an executive officer or general partner, or holds a similar position.

Our Related Party Transactions Policy (the “RPT Policy”) was adopted by our Board of Directors in December 2021. The RPT Policy requires that, prior to entering into a Related Party Transaction, the Audit Committee shall review the material facts of the proposed transaction in advance. If advance Audit Committee review and approval of a Related Party Transaction is not feasible, then such Related Party Transaction will be reviewed and considered and, if the Audit Committee determines it to be appropriate and not inconsistent with the interests of the Company and its stockholders, ratified at the Audit Committee’s next regularly scheduled meeting. In determining whether to approve or ratify such a Related Party Transaction, the Audit Committee will take into account, among other factors it deems appropriate, (1) whether the Related Party Transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances, (2) the extent of the Related Person’s interest in the transaction and (3) whether the Related Party Transaction is material to the Company.

Unless otherwise stated, each of the Related Party Transactions discussed below were authorized or consummated prior to our adoption of the RPT Policy.

Registration Rights Agreement

On December 7, 2021, the Company entered into a Registration Rights Agreement (the “2021 Registration Rights Agreement”) with holders associated with Independence’s former owners and John C. Goff (collectively, the “Holders”), relating to the registered resale of Class A Common Stock owned by such parties as of that date (the “Registrable Securities”). Under the 2021 Registration Rights Agreement, the Company has agreed to use its reasonable best efforts to obtain the effectiveness of a registration statement following its receipt of written request by a Holder of Registrable Securities. In January 2023, the Company registered the resale of 128,927,826 shares of our Class A Common Stock (including shares of Class A Common Stock to be issued upon redemption of a corresponding number of Class B Common Stock) by certain selling stockholders pursuant to the 2021 Registration Rights Agreement, which registration statement was amended in February 2025.

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The Holders will also have “piggyback” registration rights exercisable at any time that allow them to include the shares of the Class A Common Stock that they own in certain registrations initiated by the Company or other holders of Class A Common Stock. Independence’s former owners also have customary rights to effect certain shelf take-downs, underwritten offering and block trades. The 2021 Registration Rights Agreement will terminate at such time as there are no Registrable Securities outstanding.

Management Agreement

Crescent Energy Company has a management agreement with the Manager. Pursuant to the Management Agreement, the Manager provides the Company with members of its senior executive management team and certain management services. The Management Agreement has a term of three years that began in 2021 and was automatically renewed in December 2024 for an additional three-year term ending December 7, 2027 and will have automatic three-year renewals thereafter, unless the Company or the Manager elects not to renew the Management Agreement.

As consideration for the services rendered pursuant to the Management Agreement and the Manager’s overhead, including compensation of members of its executive management team, the Manager is entitled to receive compensation from the Company equal to $78.5 million per annum ("Manager Compensation"), as of December 31, 2025, which is included in General administrative expenses on our consolidated statements of operations. As the Company's business and assets expand, the Manager Compensation will increase by an amount equal to 1.5% per annum of the net proceeds from all future issuances of our primary equity securities by the Company (including in connection with acquisitions). See NOTE 3 – Acquisitions and Divestitures for more information. During the year ended December 31, 2025, we recorded General and administrative expense of $67.5 million and concurrently made cash distributions of $8.8 million to our redeemable noncontrolling interests. After the Corporate Simplification, there are no longer any outstanding redeemable noncontrolling interests in OpCo, and as such, we will no longer make cash distributions to holders of redeemable noncontrolling interests. At December 31, 2024, we reduced redeemable noncontrolling interests by $4.5 million for the OpCo distribution declaration to redeemable noncontrolling interests that was paid during the first quarter of 2025. At December 31, 2025, we had $19.6 million, included within Accounts payable - affiliates on the consolidated balance sheets for Crescent Energy Company's fee associated with the Manager Compensation.

Additionally, the Manager is entitled to receive incentive compensation ("Incentive Compensation") under which the Manager is targeted to receive 10% of our outstanding Class A Common Stock based on the achievement of certain performance-based measures. The Incentive Compensation consists of five tranches that settle over a five-year period beginning in 2024, and each tranche relates to a target number of shares of Class A Common Stock equal to 2% of the outstanding Class A Common Stock as of the time such tranche is settled. So long as the Manager continuously provides services to us until the end of the performance period applicable to a tranche, the Manager is entitled to settlement of such tranche with respect to a number of shares of Class A Common Stock ranging from 0% to 4.8% of the outstanding Class A Common Stock at the time each tranche is settled. During the year ended December 31, 2025, we recorded non-cash general and administrative expense of $229.8 million related to the Incentive Compensation. See "Notes to Consolidated Financial Statements—NOTE 13 – Equity-Based Compensation Awards" in "Part II., Item 8. Financial Statements and Supplementary Data" of this Annual Report for more information.

KKR Funds

From time to time, we may invest in upstream oil and gas assets alongside EIGF II and/or other KKR funds ("KKR Funds") pursuant to the terms of the Management Agreement. In these instances, certain of our consolidated subsidiaries enter into Master Service Agreements ("MSA") with entities owned by KKR Funds, pursuant to which our subsidiaries provide certain services to such KKR Funds, including the allocation of the production and sale of oil, natural gas and NGLs, collection and disbursement of revenues, operating expenses and general and administrative expenses in the respective oil and natural gas properties, and the payment of all capital costs associated with the ongoing operations of the oil and natural gas assets. Our subsidiaries settle balances due to or due from KKR Funds on a quarterly basis. The administrative costs associated with these MSAs are allocated by us to KKR Funds based on (i) an actual basis for direct expenses we may incur on their behalf or (ii) an allocation of such charges between the various KKR Funds based on the estimated use of such services by each party. As of December 31, 2025, we had a related party receivable of $1.2 million included within Accounts receivable – affiliates and a related party payable of $25.1 million included within Accounts payable – affiliates on our consolidated balance sheets associated with KKR Funds transactions.

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KKR Capital Markets LLC

We may engage KCM, an affiliate of KKR Group, for capital market transactions including notes offerings, credit facility structuring and equity offerings. We paid $1.5 million in fees, discounts and commissions to KCM in connection with our debt and equity transactions during the year ended December 31, 2025.

Other Transactions

During the years ended December 31, 2025, 2024 and 2023, we made cash distributions of $8.7 million, $32.5 million and $57.1 million to our redeemable noncontrolling interests related to their pro rata share of cash distributions made to Crescent Energy Company to pay dividends and income taxes. As a result of the Corporate Simplification, such pro rata distributions to holders of redeemable noncontrolling interests were eliminated. In addition, during the years ended December 31, 2025, 2024 and 2023, we reimbursed KKR $3.1 million, $2.4 million and $1.5 million for costs incurred on our behalf. At December 31, 2025 we had $0.7 million accrued within Accounts payable - affiliates for reimbursable costs.

We may be required to fund certain workover costs, and we will be required to fund plugging and abandonment costs related to producing assets held by Chama, an Investment in equity affiliates on our consolidated balance sheets. John Goff, the Chairman of our Board of Directors, holds an approximate interest of 17.5% in Chama, and the remaining interests are held by other investors. December 31, 2025 and 2024, we funded $11.9 million and $4.7 million, respectively, to Chama associated with the plugging and abandonment costs.

Item 14. Principal Accounting Fees and Services

Our independent registered public accounting firm is Deloitte & Touche LLP, Houston, Texas, Auditor Firm ID: 34.

Aggregate fees for professional services rendered for the Company by Deloitte & Touche LLP for the years ended December 31, 2025 and 2024 are presented in the following table.

20252024
(in thousands)
Audit fees$4,066 $3,330 
Audit-related fees752 1,382 
Tax fees3,881 2,629 
Total$8,699 $7,341 

As presented in the preceding table, “Audit fees” represent amounts billed for each year in connection with (i) the annual audit of our consolidated financial statements filed on Form 10-K and related internal controls over financial reporting and (ii) the quarterly review of our consolidated financial statements filed on Form 10-Q. "Audit-related fees" represent amounts for services provided in connection with our statutory and regulatory filings or engagements, including comfort letters, consents and other services related to SEC matters. We are prohibited from using Deloitte & Touche to perform general bookkeeping, human resources or management functions for us, and any other service not permitted by the PCAOB. "Tax fees" represent amounts for services rendered for tax compliance. All fees presented were approved by the Audit Committee in accordance with its pre-approval policy. We did not engage Deloitte & Touche to perform any other services for us during the last two years.

The Audit Committee has determined that Deloitte & Touche LLP is independent for purposes of providing external audit services to the Company.

Audit Committee Policy for Pre-Approval of Audit, Audit-Related, Tax and Permissible Non-Audit Services

The Audit Committee has adopted procedures for pre-approving all audit and non-audit services provided by its independent accounting firm. These procedures include reviewing fee estimates for audit services and permitted recurring non-audit services, and authorizing the Company to execute letter agreements setting forth such fees. Audit Committee approval is required for any services to be performed by the independent accounting firm that are not specified in the letter agreements. The Audit Committee has delegated approval authority to the chairman of the Audit Committee, but any exercises of such authority are reported to the Audit Committee at the next meeting.

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Table of Contents

Part IV
Item 15. Exhibits, and Financial Statement Schedules

(a) Financial statements and financial statement schedules filed as part of this report are listed in the index included in "Part II., Item 8. Financial Statements and Supplementary Data" of this Annual Report. All valuation and qualifying accounts schedules have been omitted because they are either not material, not required, not applicable or the information required to be presented is included in our consolidated financial statements and related notes.

(b) Exhibits. The following is a list of exhibits required to be filed as a part of this Annual Report in Item 15(b).

Exhibit No.Description
2.1#
2.2#
2.3#
2.4#
2.5#
2.6#
2.7#
2.8#
2.9#
2.10#
3.1
3.2
4.1
4.2
180
Table of Contents

Exhibit No.Description
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13

4.14
4.15
4.16
4.17
181
Table of Contents

Exhibit No.Description
4.18*
4.19
4.20
4.21
4.22
4.23
4.24
4.25*
4.26
4.27
4.28
4.29
4.30
4.31
4.32*
4.33
4.34*
182
Table of Contents

Exhibit No.Description
4.35
4.36
4.37
4.38
4.39
4.40
4.41
4.42
4.43
4.44
4.45
4.46
10.1
10.2
10.3
10.4
183
Table of Contents

Exhibit No.Description
10.5
10.6
10.7
10.8†
10.9†
10.10†
10.11†
10.12†
10.13†
10.14†
10.15†
10.16†
10.17†
10.18†
10.19†
10.20†
10.21†
10.22†
10.23†
10.24†
10.25†
10.26†
10.27†
10.28†
184
Table of Contents

Exhibit No.Description
10.29†


10.30†
10.31†
10.32†
10.33
10.34
10.35
10.36
10.37
10.38
10.39
10.40
10.41
10.42
10.43
185
Table of Contents

Exhibit No.Description
10.44
10.45
10.46
10.47*
10.48*
10.49†
10.50
10.51
10.52
10.53
10.54
10.55*†
19.1*
21.1*
23.1*
23.2*
23.3*
23.4*
31.1*
31.2*
32.1**
97.1
99.1*
186
Table of Contents

Exhibit No.Description
99.2*
99.3*
101*
Interactive data files (formatted as Inline XBRL).
104*
Cover Page Interactive Data File (contained in Exhibit 101).
*    Filed herewith
**    These files are furnished and deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Act of 1934, as amended, and otherwise are not subject to liability under those sections.
† Management contract or compensatory plan or agreement
# Certain annexes, schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to furnish supplemental copies of any of the omitted annexes, schedules and exhibits upon request by the U.S. Securities and Exchange Commission.

Item 16. Form 10-K Summary

None.
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Table of Contents

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on February 25, 2026.

CRESCENT ENERGY COMPANY
(Registrant)
/s/ David Rockecharlie
David Rockecharlie
Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on February 25, 2026.

188
Table of Contents

/s/ David RockecharlieChief Executive Officer and Director
David Rockecharlie(Principal Executive Officer)
/s/ Brandi KendallChief Financial Officer and Director
Brandi Kendall(Principal Financial Officer)
/s/ Todd FalkChief Accounting Officer
Todd Falk(Principal Accounting Officer)
/s/ John C. GoffChairman of the Board and Director
John C. Goff
/s/ Robert G. GwinDirector
Robert G. Gwin
/s/ Claire S. FarleyDirector
Claire S. Farley
/s/ Conrad V. Langenhagen
Director
Conrad V. Langenhagen
/s/ Ellis L. "Lon" McCainDirector
Ellis "Lon" McCain
/s/ Bevin BrownDirector
Bevin Brown
/s/ Karen SimonDirector
Karen Simon
/s/ Marcus C. Rowland
Director
Marcus C. Rowland
/s/ William Albrecht
Director
William Albrecht
/s/ Jarvis Hollingsworth
Director
Jarvis Hollingsworth

189
Exhibit 4.18
EIGHTH SUPPLEMENTAL INDENTURE
Eighth Supplemental Indenture (this “Supplemental Indenture”), dated as of December 15, 2025, among Vital Midstream Services, LLC, a Delaware limited liability company (the “Guaranteeing Subsidiary”), a subsidiary of Crescent Energy Finance LLC, a Delaware limited liability company (the “Company”), and U.S. Bank Trust Company, National Association, a national banking association, as trustee (the “Trustee”).
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the Trustee an Indenture, dated as of February 1, 2023 (the “Original Indenture”), as supplemented by the first supplemental indenture, dated as of July 20, 2023 (the “First Supplemental Indenture”), the second supplemental indenture, dated as of September 12, 2023 (the “Second Supplemental Indenture”), the third supplemental indenture, dated as of December 8, 2023 (the “Third Supplemental Indenture”), the fourth supplemental indenture, dated as of September 3, 2024 (the “Fourth Supplemental Indenture”), the fifth supplemental indenture, dated as of November 7, 2024 (the “Fifth Supplemental Indenture”), the sixth supplemental indenture, dated as of March 24, 2025 (the “Sixth Supplemental Indenture”) and the seventh supplemental indenture, dated as of July 7, 2025 (the “Seventh Supplemental Indenture”) and the Original Indenture as supplemented by the First Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture, the Fourth Supplemental Indenture, the Fifth Supplemental Indenture, the Sixth Supplemental Indenture and the Seventh Supplemental Indenture, the “Indenture”) providing for the issuance of an unlimited aggregate principal amount of 9.250% Senior Notes due 2028 (the “Notes”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “Guarantee”); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders as follows:
(1)Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

(2)Agreement to Guarantee. The Guaranteeing Subsidiary acknowledges that it has received and reviewed a copy of the Indenture and all other documents it deems necessary to review in order to enter into this Supplemental Indenture and (i) hereby joins and becomes a party to the Indenture as indicated by its signature below as a Guarantor and


(ii) acknowledges and agrees to (x) be bound by the Indenture as a Guarantor and (y) perform all obligations and duties required of a Guarantor pursuant to the Indenture.

(3)No Recourse Against Others. No past, present or future director, officer, employee, incorporator, member, partner or equity holder of the Company or any Guarantor or any Parent Company will have any liability for any obligations of the Company or the Guarantors under the Notes, the Guarantee, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder by accepting Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

(4)Governing Law. THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

(5)Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. This Supplemental Indenture may be executed in multiple counterparts, which, when taken together, shall constitute one instrument. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or electronic (by ‘.pdf’ or other format) transmissions shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or electronically (by ‘.pdf’ or other format) shall be deemed to be their original signatures for all purposes.

(6)Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof.

(7)The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary.

(8)Benefits Acknowledged. Upon execution and delivery of this Supplemental Indenture the Guaranteeing Subsidiary will be subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and this Supplemental Indenture and that its obligations as a result of this Supplemental Indenture are knowingly made in contemplation of such benefits.

(9)Successors. All agreements of the Guaranteeing Subsidiary in this Supplemental Indenture shall bind its successors, except as otherwise provided in this Supplemental Indenture. All agreements of the Trustee in this Supplemental Indenture shall bind its successors.
(Signature Pages Follow)


IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.
 
CRESCENT ENERGY FINANCE LLC, as Company

By: Crescent Energy OpCo LLC, its sole member
By: Crescent Energy Company, its managing member


By: /s/Brandi Kendall__________________
Name: Brandi Kendall
Title: Chief Financial Officer


VITAL MIDSTREAM SERVICES, LLC, as Guarantor


By: /s/Brandi Kendall__________________
Name: Brandi Kendall
Title: Chief Financial Officer





[Signature Page to Eighth Supplemental Indenture (2028)]

U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION
As Trustee

By: /s/Michael K. Herberger ____________
Name: Michael K. Herberger
Title: Vice President


[Signature Page to Eighth Supplemental Indenture (2028)]
Exhibit 4.25
SIXTH SUPPLEMENTAL INDENTURE
Sixth Supplemental Indenture (this “Supplemental Indenture”), dated as of December 15, 2025, among Vital Midstream Services, LLC, a Delaware limited liability company (the “Guaranteeing Subsidiary”), a subsidiary of Crescent Energy Finance LLC, a Delaware limited liability company (the “Company”), and U.S. Bank Trust Company, National Association, a national banking association, as trustee (the “Trustee”).
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the Trustee an Indenture, dated as of March 26, 2024 (the “Original Indenture”), as supplemented by the first supplemental indenture, dated September 3, 2024 (the “First Supplemental Indenture”), the second supplemental indenture, dated September 7, 2024 (the “Second Supplemental Indenture”), the third supplemental indenture, dated as of December 11, 2024 (the “Third Supplemental Indenture”), the fourth supplemental indenture, dated as of March 24, 2025 (the “Fourth Supplemental Indenture”) and the fifth supplemental indenture, dated as of July 7, 2026 (the “Fifth Supplemental Indenture”) and the Original Indenture, as supplemented by the First Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture, the Fourth Supplemental Indenture and the Fifth Supplemental Indenture, the “Indenture”), providing for the issuance of an unlimited aggregate principal amount of 7.625% Senior Notes due 2032 (the “Notes”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “Guarantee”); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders as follows:
(1)Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

(2)Agreement to Guarantee. The Guaranteeing Subsidiary acknowledges that it has received and reviewed a copy of the Indenture and all other documents it deems necessary to review in order to enter into this Supplemental Indenture and (i) hereby joins and becomes a party to the Indenture as indicated by its signature below as a Guarantor and (ii) acknowledges and agrees to (x) be bound by the Indenture as a Guarantor and (y) perform all obligations and duties required of a Guarantor pursuant to the Indenture.



(3)No Recourse Against Others. No past, present or future director, officer, employee, incorporator, member, partner or equity holder of the Company or any Guarantor or any Parent Company will have any liability for any obligations of the Company or the Guarantors under the Notes, the Guarantee, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder by accepting Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

(4)Governing Law. THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

(5)Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. This Supplemental Indenture may be executed in multiple counterparts, which, when taken together, shall constitute one instrument. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or electronic (by ‘.pdf’ or other format) transmissions shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or electronically (by ‘.pdf’ or other format) shall be deemed to be their original signatures for all purposes.

(6)Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof.

(7)The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary.

(8)Benefits Acknowledged. Upon execution and delivery of this Supplemental Indenture the Guaranteeing Subsidiary will be subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and this Supplemental Indenture and that its obligations as a result of this Supplemental Indenture are knowingly made in contemplation of such benefits.

(9)Successors. All agreements of the Guaranteeing Subsidiary in this Supplemental Indenture shall bind its successors, except as otherwise provided in this Supplemental Indenture. All agreements of the Trustee in this Supplemental Indenture shall bind its successors.
(Signature Pages Follow)


IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.
 
CRESCENT ENERGY FINANCE LLC, as Company

By: Crescent Energy OpCo LLC, its sole member
By: Crescent Energy Company, its managing member


By: /s/Brandi Kendall__________________
Name: Brandi Kendall
Title: Chief Financial Officer


VITAL MIDSTREAM SERVICES, LLC, as Guarantor


By: /s/Brandi Kendall__________________
Name: Brandi Kendall
Title: Chief Financial Officer





[Signature Page to Sixth Supplemental Indenture (2032)]

U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION
As Trustee

By: /s/Michael K. Herberger ____________
Name: Michael K. Herberger
Title: Vice President


[Signature Page to Sixth Supplemental Indenture (2032)]
Exhibit 4.32
SIXTH SUPPLEMENTAL INDENTURE
Sixth Supplemental Indenture (this “Supplemental Indenture”), dated as of December 15, 2025, among Vital Midstream Services, LLC, a Delaware limited liability company (the “Guaranteeing Subsidiary”), a subsidiary of Crescent Energy Finance LLC, a Delaware limited liability company (the “Company”), and U.S. Bank Trust Company, National Association, a national banking association, as trustee (the “Trustee”).
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the Trustee an Indenture, dated as of June 14, 2024 (the “Original Indenture”), as supplemented by the first supplemental indenture, dated September 3, 2024 (the “First Supplemental Indenture”), the second supplemental indenture, dated September 9, 2024 (the “Second Supplemental Indenture”), the third supplemental indenture, dated as of November 7, 2024 (the “Third Supplemental Indenture”), the fourth supplemental indenture, dated as of March 24, 2025 (the “Fourth Supplemental Indenture”) and the fifth supplemental indenture, dated as of July 7, 2026 (the “Fifth Supplemental Indenture”) and the Original Indenture, as supplemented by the First Supplemental Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture, the Fourth Supplemental Indenture and the Fifth Supplemental Indenture, the “Indenture”), providing for the issuance of an unlimited aggregate principal amount of 7.375% Senior Notes due 2033 (the “Notes”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “Guarantee”); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders as follows:
(1)Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

(2)Agreement to Guarantee. The Guaranteeing Subsidiary acknowledges that it has received and reviewed a copy of the Indenture and all other documents it deems necessary to review in order to enter into this Supplemental Indenture and (i) hereby joins and becomes a party to the Indenture as indicated by its signature below as a Guarantor and (ii) acknowledges and agrees to (x) be bound by the Indenture as a Guarantor and (y) perform all obligations and duties required of a Guarantor pursuant to the Indenture.

(3)No Recourse Against Others. No past, present or future director, officer, employee, incorporator, member, partner or equity holder of the Company or any Guarantor or any Parent Company will have any liability for any obligations of the Company or the


Guarantors under the Notes, the Guarantee, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder by accepting Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.

(4)Governing Law. THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

(5)Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. This Supplemental Indenture may be executed in multiple counterparts, which, when taken together, shall constitute one instrument. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or electronic (by ‘.pdf’ or other format) transmissions shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or electronically (by ‘.pdf’ or other format) shall be deemed to be their original signatures for all purposes.

(6)Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof.

(7)The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary.

(8)Benefits Acknowledged. Upon execution and delivery of this Supplemental Indenture the Guaranteeing Subsidiary will be subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and this Supplemental Indenture and that its obligations as a result of this Supplemental Indenture are knowingly made in contemplation of such benefits.

(9)Successors. All agreements of the Guaranteeing Subsidiary in this Supplemental Indenture shall bind its successors, except as otherwise provided in this Supplemental Indenture. All agreements of the Trustee in this Supplemental Indenture shall bind its successors.
(Signature Pages Follow)


IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.
 
CRESCENT ENERGY FINANCE LLC, as Company

By: Crescent Energy OpCo LLC, its sole member
By: Crescent Energy Company, its managing member


By: /s/Brandi Kendall__________________
Name: Brandi Kendall
Title: Chief Financial Officer


VITAL MIDSTREAM SERVICES, LLC, as Guarantor


By: /s/Brandi Kendall__________________
Name: Brandi Kendall
Title: Chief Financial Officer





[Signature Page to Sixth Supplemental Indenture (2033)]

U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION
As Trustee

By: /s/Michael K. Herberger ____________
Name: Michael K. Herberger
Title: Vice President


[Signature Page to Sixth Supplemental Indenture (2033)]
Exhibit 4.34
FIRST SUPPLEMENTAL INDENTURE
First Supplemental Indenture (this “Supplemental Indenture”), dated as of December 15, 2025, among Vital Midstream Services, LLC, a Delaware limited liability company (the “Guaranteeing Subsidiary”), a subsidiary of Crescent Energy Finance LLC, a Delaware limited liability company (the “Company”), and U.S. Bank Trust Company, National Association, a national banking association, as trustee (the “Trustee”).
W I T N E S S E T H
WHEREAS, the Company has heretofore executed and delivered to the Trustee an Indenture (as amended, supplemented or modified from time to time, the “Indenture”), dated as of July 8, 2025, providing for the issuance of an unlimited aggregate principal amount of 8.375% Senior Notes due 2034 (the “Notes”);
WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein and under the Indenture (the “Guarantee”); and
WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.
NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the parties mutually covenant and agree for the equal and ratable benefit of the Holders as follows:
(1)Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

(2)Agreement to Guarantee. The Guaranteeing Subsidiary acknowledges that it has received and reviewed a copy of the Indenture and all other documents it deems necessary to review in order to enter into this Supplemental Indenture and (i) hereby joins and becomes a party to the Indenture as indicated by its signature below as a Guarantor and (ii) acknowledges and agrees to (x) be bound by the Indenture as a Guarantor and (y) perform all obligations and duties required of a Guarantor pursuant to the Indenture.

(3)No Recourse Against Others. No past, present or future director, officer, employee, incorporator, member, partner or equity holder of the Company or any Guarantor or any Parent Company will have any liability for any obligations of the Company or the Guarantors under the Notes, the Guarantee, the Indenture or this Supplemental Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each Holder by accepting Notes waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes.



(4)Governing Law. THIS SUPPLEMENTAL INDENTURE WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

(5)Counterparts. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. This Supplemental Indenture may be executed in multiple counterparts, which, when taken together, shall constitute one instrument. The exchange of copies of this Supplemental Indenture and of signature pages by facsimile or electronic (by ‘.pdf’ or other format) transmissions shall constitute effective execution and delivery of this Supplemental Indenture as to the parties hereto and may be used in lieu of the original Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile or electronically (by ‘.pdf’ or other format) shall be deemed to be their original signatures for all purposes.

(6)Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof.

(7)The Trustee. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary.

(8)Benefits Acknowledged. Upon execution and delivery of this Supplemental Indenture the Guaranteeing Subsidiary will be subject to the terms and conditions set forth in the Indenture. The Guaranteeing Subsidiary acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by the Indenture and this Supplemental Indenture and that its obligations as a result of this Supplemental Indenture are knowingly made in contemplation of such benefits.

(9)Successors. All agreements of the Guaranteeing Subsidiary in this Supplemental Indenture shall bind its successors, except as otherwise provided in this Supplemental Indenture. All agreements of the Trustee in this Supplemental Indenture shall bind its successors.
(Signature Pages Follow)


IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed, all as of the date first above written.
 
CRESCENT ENERGY FINANCE LLC, as Company

By: Crescent Energy OpCo LLC, its sole member
By: Crescent Energy Company, its managing member


By: /s/Brandi Kendall__________________
Name: Brandi Kendall
Title: Chief Financial Officer


VITAL MIDSTREAM SERVICES, LLC, as Guarantor


By: /s/Brandi Kendall__________________
Name: Brandi Kendall
Title: Chief Financial Officer





[Signature Page to First Supplemental Indenture (2034)]

U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION
As Trustee

By: /s/Michael K. Herberger ____________
Name: Michael K. Herberger
Title: Vice President


[Signature Page to First Supplemental Indenture (2034)]
Execution Version

    Fourteenth Amendment to Credit Agreement

This Fourteenth Amendment to Credit Agreement (this “Fourteenth Amendment”) dated as of February 23, 2026, is among Crescent Energy Finance LLC, a Delaware limited liability company (the “Borrower”); each of the undersigned Guarantors (collectively with the Borrower, the “Obligors”); Wells Fargo Bank, National Association, as administrative agent for the Lenders (in such capacity, together with its successors, the “Administrative Agent”), Collateral Agent and a Letter of Credit Issuer; and the Lenders signatory hereto.

    Recitals

A.    The Borrower, the Administrative Agent, the Collateral Agent, the Letter of Credit Issuers and the Lenders are parties to that certain Credit Agreement dated as of May 6, 2021 (as amended by the First Amendment to Credit Agreement, dated as of September 24, 2021, the Second Amendment to Credit Agreement, dated as of March 30, 2022, the Third Amendment to Credit Agreement, dated as of March 30, 2022, the Fourth Amendment to Credit Agreement, dated as of September 23, 2022, the Fifth Amendment to Credit Agreement, dated as of July 3, 2023, the Sixth Amendment to Credit Agreement, dated as of December 13, 2023, the Seventh Amendment to Credit Agreement, dated as of April 10, 2024, the Eighth Amendment to Credit Agreement, dated as of May 24, 2024, the Ninth Amendment to Credit Agreement, dated as of June 14, 2024, the Tenth Amendment to Credit Agreement, dated as of July 30, 2024, the Eleventh Amendment to Credit Agreement, dated as of December 17, 2024, the Twelfth Amendment to Credit Agreement, dated as of May 2, 2025, and the Thirteenth Amendment to Credit Agreement, dated as of October 22, 2025, and as further amended, modified, supplemented or restated from time to time prior to the date hereof, the “Credit Agreement”), pursuant to which the Lenders have made certain credit available to and on behalf of the Borrower.

B.    The Borrower, the Administrative Agent and the Lenders party hereto (which constitute all of the Lenders) have agreed to amend certain provisions of the Credit Agreement as more fully set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Section 1.Defined Terms. Each capitalized term which is defined in the Credit Agreement, but which is not defined in this Fourteenth Amendment, shall have the meaning ascribed such term in the Credit Agreement. Unless otherwise indicated, all section, exhibit and schedule references in this Fourteenth Amendment refer to sections, exhibits and schedules of the Credit Agreement.
Section 2.Amendments to the Credit Agreement on the Fourteenth Amendment Effective Date. Subject to the conditions precedent contained in Section 3 hereof, the Credit Agreement shall be amended effective as of the Fourteenth Amendment Effective Date in the manner provided in this Section 2.
2.1Amendments to Section 1.1.
4898-6674-8811v.6


(a)Each of the following definitions is hereby amended and restated in its entirety to read as follows:
“Agreement” shall mean this Credit Agreement, as amended by the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the Sixth Amendment, the Seventh Amendment, the Eighth Amendment, the Ninth Amendment, the Tenth Amendment, the Eleventh Amendment, the Twelfth Amendment, the Thirteenth Amendment and the Fourteenth Amendment, as the same may from time to time be amended, restated, amended and restated, supplemented or otherwise modified.

“Consolidated Total Debt” shall mean, as of any date of determination, (a) all Indebtedness of the types described in clauses (a) and (b) (other than intercompany Indebtedness owing to the Borrower or any Restricted Subsidiary), clause (d) (but, in the case of clause (d), only to the extent of any unreimbursed drawings under any letter of credit) and clause (f) of the definition thereof, in each case actually owing by the Borrower and the Restricted Subsidiaries on such date and to the extent appearing on the balance sheet of the Borrower determined on a consolidated basis in accordance with GAAP (provided that the amount of any Capitalized Lease Obligations or any such Indebtedness issued at a discount to its face value shall be determined in accordance with GAAP) minus (b) the aggregate amount of Unrestricted Cash listed on the consolidated balance sheet of the Borrower and the Restricted Subsidiaries at such date (provided that, at any time the Total Revolving Credit Exposures, exceeds 5% of the Loan Limit, the amount deducted from Consolidated Total Debt pursuant to this (b) shall not exceed 10% of the Loan Limit as of such date of determination) minus (c) solely for purposes of determining the Borrower’s compliance with Section 10.11(a) as of the last day of the Test Period ending December 31, 2025, an amount of cash or cash equivalents held by the Borrower and the Restricted Subsidiaries as of December 31, 2025 equal to $725,702,000.

“Liquidity” shall mean, as of any date of determination, the sum of (a) the Available Commitment on such date and (b) the aggregate amount of Unrestricted Cash of the Borrower and its Restricted Subsidiaries at such date, less the amount, if any, of the Borrowing Base Deficiency existing on such date of determination.

(b)The definitions of “SilverBow Acquisition Debt Proceeds” and “SilverBow Acquisition Debt Outside Date” are hereby deleted in their entirety.
(c)The following definition is hereby added where alphabetically appropriate to read as follows:
“Fourteenth Amendment” shall mean that certain Fourteenth Amendment to Credit Agreement, dated as of February 23, 2026, among the Borrower, the Guarantors party thereto, the Administrative Agent and the Lenders party thereto.

Page 2
4898-6674-8811v.6

Section 3.Conditions Precedent to Fourteenth Amendment Effective Date. This Fourteenth Amendment shall become effective on the date (such date, the “Fourteenth Amendment Effective Date”) when each of the following conditions is satisfied (or waived in accordance with Section 13.1):
3.1Amendment. The Administrative Agent shall have received from the Majority Lenders and each Obligor counterparts (in such number as may be reasonably requested by the Administrative Agent) of this Fourteenth Amendment signed on behalf of such Persons.
3.2Fees and Expenses. The Administrative Agent and the Lenders shall have received all fees and other amounts due and payable on or prior to the Fourteenth Amendment Effective Date, including (to the extent invoiced at least three (3) Business Days prior), reimbursement or payment of all reasonable and documented out-of-pocket expenses required to be reimbursed or paid by the Borrower under the Credit Agreement.
3.3No Event of Default. After giving effect to the terms of this Fourteenth Amendment, no Event of Default shall have occurred and be continuing as of the Fourteenth Amendment Effective Date.
The Administrative Agent is hereby authorized and directed to declare the Fourteenth Amendment Effective Date to have occurred when it has received documents confirming or certifying, to the satisfaction of the Administrative Agent, compliance with the conditions set forth in this Section 3 or the waiver of such conditions as permitted in Section 13.1 of the Credit Agreement. Such declaration shall be final, conclusive and binding upon all parties to the Credit Agreement for all purposes. For purposes of determining compliance with the conditions specified in this Section 3, each Lender that has signed this Fourteenth Amendment shall be deemed to have consented to, approved or accepted, or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to such Lender.
Section 4.Miscellaneous.
4.1Confirmation.  The provisions of the Credit Agreement, as amended by this Fourteenth Amendment, shall remain in full force and effect following the Fourteenth Amendment Effective Date.
4.2Ratification and Affirmation; Representations and Warranties.  Each of the Borrower and the Guarantors hereby: (a) acknowledges the terms of this Fourteenth Amendment; (b) ratifies and affirms its obligations under, and acknowledges its continued liability under, each Credit Document to which it is a party and agrees that each such Credit Document remains in full force and effect as expressly amended hereby; (c) agrees that from and after the date hereof, each reference to the Credit Agreement in the other Credit Documents shall be deemed to be a reference to the Credit Agreement, as amended by this Fourteenth Amendment; and (d) represents and warrants to the Lenders that as of the date hereof, after giving effect to the terms of this Fourteenth Amendment: (i) the representations and warranties set forth in each Credit Document to which it is a party are true and correct in all material respects (except where such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects as of such earlier date), provided that such representations shall be true and correct in all respects to the
Page 3
4898-6674-8811v.6

extent already qualified by materiality, and (ii) no Event of Default has occurred and is continuing.
4.3Counterparts.  This Fourteenth Amendment may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Each party hereto agrees that any Electronic Signature or execution in the form of an Electronic Record shall be valid and binding on itself and each of the other parties hereto to the same extent as a manual, original signature.
4.4No Oral Agreement.  This Fourteenth Amendment and the other Credit Documents represent the agreement of the Borrower, the Guarantors, the Collateral Agent, the Administrative Agent and the Lenders party hereto with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Borrower, the Guarantors, any Agent nor any Lender party hereto relative to the subject matter hereof not expressly set forth or referred to herein or in the other Credit Documents.
4.5GOVERNING LAW.  THIS FOURTEENTH AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
4.6Severability.  Any provision of this Fourteenth Amendment that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
4.7Successors and Assigns.  This Fourteenth Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
4.8Credit Document. This Fourteenth Amendment is a “Credit Document” as defined and described in the Credit Agreement, and all of the terms and provisions of the Credit Agreement relating to Credit Documents shall apply hereto.
[Signature Pages Follow]
Page 4
4898-6674-8811v.6

IN WITNESS WHEREOF, the parties hereto have caused this Fourteenth Amendment to be duly executed.

BORROWER:

CRESCENT ENERGY FINANCE LLC



By: /s/ Brandi Kendall    
Name: Brandi Kendall
Title: Vice President
GUARANTORS:


INDEPENDENCE MINERALS HOLDINGS LLC
INDEPENDENCE MINERALS GP LLC
IE BUFFALO MINERALS LLC
CMP LEGACY CO. LLC
CRESCENT UINTA, LLC
IE BUFFALO HOLDINGS LLC
VINE ROYALTY GP LLC
INDEPENDENCE UPSTREAM HOLDINGS GP LLC
COLT ADMIRAL A HOLDING GP LLC
CRESCENT CONVENTIONAL LLC
CMP VENTURE CO. LLC
CRESCENT GLADIATOR LLC
CRESCENT ENERGY MIDLAND SERVICES LLC
CRESCENT (EAGLE FORD) LLC


By: /s/ Brandi Kendall    
Name: Brandi Kendall
Title: Vice President

[Signature Page to Crescent Energy Finance, LLC – Fourteenth Amendment to Credit Agreement]

INDEPENDENCE UPSTREAM HOLDINGS L.P.

By: Independence Upstream Holdings GP LLC, its general partner
By:/s/ Brandi Kendall
Name: Brandi Kendall
Title: Vice President


TITAN ENERGY HOLDINGS L.P.

By: Colt Admiral A Holding GP LLC, its general partner
By:/s/ Brandi Kendall
Name: Brandi Kendall
Title: Vice President


COLT ADMIRAL A HOLDING L.P.

By: Colt Admiral A Holding GP LLC, its general partner
By:/s/ Brandi Kendall
Name: Brandi Kendall
Title: Vice President





[Signature Page to Crescent Energy Finance, LLC – Fourteenth Amendment to Credit Agreement]


BRIDGE ENERGY LLC
BRIDGE ENERGY HOLDINGS LLC
JAVELIN OIL & GAS, LLC
SPRINGFIELD GS HOLDINGS LLC
CRESCENT EFA GP LLC
CRESCENT PALO VERDE GP LLC
NEWARK ACQUISITION GP I LLC
NEWARK HOLDING AGENT CORP.
CRESCENT ENERGY MARKETING, LLC
JAVELIN EF GP LLC
EIGF MINERALS GP LLC
JAVELIN VENTURECO, LLC
CONTANGO CRESCENT RENEE LLC
By:/s/ Brandi Kendall
Name: Brandi Kendall
Title: Authorized Person

CRESCENT EFA HOLDINGS LLC

By: JAVELIN OIL & GAS, LLC, its sole member
By:/s/ Brandi Kendall
Name: Brandi Kendall
Title: Authorized Person



[Signature Page to Crescent Energy Finance, LLC – Fourteenth Amendment to Credit Agreement]

JAVELIN EF L.P.

By: Javelin EF GP LLC, its general partner
By:/s/ Brandi Kendall
Name: Brandi Kendall
Title: Authorized Person


CRESCENT PALO VERDE LP

By: Crescent Palo Verde GP LLC, its general partner
By:/s/ Brandi Kendall
Name: Brandi Kendall
Title: Authorized Person


[Signature Page to Crescent Energy Finance, LLC – Fourteenth Amendment to Credit Agreement]

CRESCENT EF AGGREGATOR L.P.
NEWARK C-I HOLDING L.P.
CRESCENT PALO VERDE AGGREGATOR L.P.

By: Crescent EFA GP LLC, its general partner
By:/s/ Brandi Kendall
Name: Brandi Kendall
Title: Authorized Person


INDEPENDENCE UPSTREAM L.P.

By: Independence Upstream GP LLC, its general partner
By: Independence Upstream Holdings L.P., its sole member
By: Independence Upstream Holdings GP LLC, its general partner
By:/s/ Brandi Kendall
Name: Brandi Kendall
Title: Vice President



INDEPENDENCE UPSTREAM GP LLC

By: Independence Upstream Holdings L.P., its sole member
By: Independence Upstream Holdings GP LLC, its general partner
By:/s/ Brandi Kendall
Name: Brandi Kendall
Title: Vice President
                        
[Signature Page to Crescent Energy Finance, LLC – Fourteenth Amendment to Credit Agreement]

CONTANGO CRESCENT VENTURECO I LLC
IE L MERGER SUB LLC
ARTEMIS MERGER SUB II LLC
SILVERBOW AGENTCO INC.
CRESCENT ENERGY OPERATING, LLC
CMP CRESCENT MINERALS I (GRAY) LLC


By:/s/ Brandi Kendall
Name: Brandi Kendall
Title: Senior Vice President


EIGF MINERALS L.P.

By: EIGF Minerals GP LLC, its general partner
By:/s/ Brandi Kendall
Name: Brandi Kendall
Title: Authorized Person





[Signature Page to Crescent Energy Finance, LLC – Fourteenth Amendment to Credit Agreement]

INDEPENDENCE MINERALS L.P.
DMA ROYALTY INVESTMENTS L.P.
FALCON HOLDING L.P.
MINERAL ACQUISITION COMPANY I, L.P.
By: Independence Minerals GP LLC, its general partner

By:/s/ Brandi Kendall
Name: Brandi Kendall
Title: Vice President

VINE ROYALTY L.P.
By: Vine Royalty GP LLC, its general partner
By:
/s/ Brandi Kendall
Name: Brandi Kendall
Title: Vice President

NEWARK ACQUISITION I L.P.

By: Newark Acquisition GP I LLC, its general partner
By:/s/ Brandi Kendall
Name: Brandi Kendall
Title: Authorized Person

[Signature Page to Crescent Energy Finance, LLC – Fourteenth Amendment to Credit Agreement]


VITAL MIDSTREAM SERVICES, LLC
By:/s/ Brandi Kendall
Name: Brandi Kendall
Title: Chief Financial Officer

ADMINISTRATIVE AGENT, COLLATERAL AGENT
AND LENDER:

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent, Collateral Agent and Lender

By:     /s/ Shiloh Davila                    
Name:    Shiloh Davila
Title: Executive Director
                    
LENDER:

JPMORGAN CHASE BANK, N.A., as a Lender

By:     /s/ Dalton Harris                
Name:    Dalton Harris
Title: Authorized Officer
LENDER:

BANK OF AMERICA, N.A., as a Lender

By:     /s/ Ajay Prakash                
Name:    Ajay Prakash
Title: Director
[Signature Page to Crescent Energy Finance, LLC – Fourteenth Amendment to Credit Agreement]


LENDER:

ROYAL BANK OF CANADA, as a Lender

By:     /s/ Kristan Spivey            
Name:    Kristan Spivey
Title: Authorized Signatory
LENDER:

FIFTH THIRD BANK, NATIONAL ASSOCIATION, as a Lender

By:     /s/ Thomas Kleiderer            
Name:    Thomas Kleiderer
Title: Managing Director
LENDER:

KEYBANK NATIONAL ASSOCIATION, as a Lender

By:     /s/ David M. Bornstein            
Name:    David M. Bornstein
Title: Senior Vice President
LENDER:

MIZUHO BANK, LTD., as a Lender

By:     /s/ Edward Sacks            
Name:    Edward Sacks
Title: Managing Director
[Signature Page to Crescent Energy Finance, LLC – Fourteenth Amendment to Credit Agreement]

LENDER:

TRUIST BANK, as a Lender

By:     /s/ Greg Krablin            
Name:    Greg Krablin
Title: Director
[Signature Page to Crescent Energy Finance, LLC – Fourteenth Amendment to Credit Agreement]

LENDER:

MORGAN STANLEY SENIOR FUNDING, INC., as a Lender

By:     /s/ Karina Rodriguez            
Name:    Karina Rodriguez
Title: Vice President

[Signature Page to Crescent Energy Finance, LLC – Fourteenth Amendment to Credit Agreement]

LENDER:

CAPITAL ONE, NATIONAL ASSOCIATION, as a Lender

By:     /s/ Jason Groll                
Name:    Jason Groll
Title: Director



    

[Signature Page to Crescent Energy Finance, LLC – Fourteenth Amendment to Credit Agreement]



LENDER:

CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK BRANCH, as a Lender

By:     /s/ Scott W. Danvers            
Name:    Scott W. Danvers
Title: Authorized Signatory


By:     /s/ Donovan C. Broussard        
Name:    Donovan C. Broussard
Title: Authorized Signatory
    

[Signature Page to Crescent Energy Finance, LLC – Fourteenth Amendment to Credit Agreement]



LENDER:

REGIONS BANK, as a Lender

By:     /s/ Katie Hammons            
Name:    Katie Hammons
Title: Director


[Signature Page to Crescent Energy Finance, LLC – Fourteenth Amendment to Credit Agreement]
Execution Version
CREDIT AGREEMENT
Dated as of February 23, 2026

among
CRESCENT ROYALTY FINANCE LLC
as the Borrower,
The Several Lenders
from Time to Time Parties Hereto,

and
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent, Collateral Agent
and a Letter of Credit Issuer,

WELLS FARGO SECURITIES, LLC,
BOFA SECURITIES, INC.,
CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK BRANCH,
CAPITAL ONE, NATIONAL ASSOCIATION,
FIFTH THIRD BANK, NATIONAL ASSOCIATION,
JPMORGAN CHASE BANK, N.A.,
KEYBANC CAPITAL MARKETS INC.,
MIZUHO BANK, LTD.,
RBC CAPITAL MARKETS, AND
TRUIST SECURITIES, INC.
as Joint Lead Arrangers and Joint Bookrunners



TABLE OF CONTENTS
Page
i

ii

iii

iv

v

Schedules and Exhibits

Schedule 1.1(a)(i)
Schedule 1.1(a)(ii)
Schedule 1.1(b)
Schedule 1.1(c)
Schedule 1.1(e)
Schedule 8.4
Schedule 8.11
Schedule 8.12
Schedule 8.17
Schedule 8.18
Schedule 8.19
Schedule 9.9
Schedule 10.1
Schedule 10.2
Schedule 10.4
Schedule 10.5
Schedule 10.8
Schedule 13.2
Elected Commitment Amounts and Maximum Credit Amount
Initial Term Loan Commitment Amounts
Excluded Stock
Excluded Subsidiaries
Closing Date Subsidiary Guarantors
Litigation
Compliance With ERISA
Subsidiaries
Closing Date Gas Imbalances
Closing Date Marketing Agreements
Closing Date Hedge Agreements
Closing Date Affiliate Transactions
Closing Date Indebtedness
Closing Date Liens
Scheduled Dispositions
Closing Date Investments
Closing Date Negative Pledge Agreements
Notice Addresses
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Exhibit E
Exhibit F
Exhibit G
Exhibit H
Exhibit I
Exhibit J
Exhibit K
Exhibit L
Exhibit M
Exhibit N-1
Exhibit N-2
Exhibit N-3
Exhibit N-4
Exhibit O
Exhibit P
Exhibit Q
Exhibit R
Exhibit S
Exhibit T
Exhibit U
Exhibit V
Form of Assignment and Acceptance
Form of Compliance Certificate
Form of Customary Intercreditor Agreement
Form of Guarantee
Form of Intercompany Note
Form of Mortgage/Deed of Trust
Form of Notice of Borrowing
Form of Pledge Agreement
Form of Reserve Report Certificate
Form of Security Agreement
Form of Letter of Credit Requests
Form of Credit Party Closing Certificate
Form of Solvency Certificate
Form of Non-Bank Tax Certificate
Form of Non-Bank Tax Certificate
Form of Non-Bank Tax Certificate
Form of Non-Bank Tax Certificate
Form of Revolving Promissory Note
Form of Term Loan Promissory Note
Form of Notice of Term Loan Conversion
Form of Notice of Revolving Loan Conversion
Form of Excess Cash/Net Cash Proceeds Certificate
Form of Notice of Excess Cash Prepayment
Form of Notice of Net Cash Proceeds Prepayment
Form of Notice of Excess Initial Term Loan Prepayment
vi

CREDIT AGREEMENT, dated as of February 23, 2026, among CRESCENT ROYALTY FINANCE LLC, a Delaware limited liability company (the “Borrower”), (such terms and each other capitalized term used but not defined in this preamble having the meaning provided in Section 1), the banks, financial institutions and other lending institutions from time to time parties as lenders hereto (each a “Lender” and, collectively, the “Lenders”), WELLS FARGO BANK NATIONAL ASSOCIATION, as Administrative Agent, Collateral Agent, and a Letter of Credit Issuer, and each other Letter of Credit Issuer from time to time party hereto.
RECITALS
WHEREAS, (a) the Borrower has requested that the Lenders extend credit in the form of Loans made available to the Borrower on the Closing Date and at any time and from time to time after the Closing Date subject to the Available Commitment and (b) the Borrower has requested that the Letter of Credit Issuers issue Letters of Credit (subject to the Available Commitment) at any time and from time to time prior to the L/C Maturity Date, in an aggregate Stated Amount at any time outstanding not in excess of the Letter of Credit Commitment;
WHEREAS, in furtherance of the Transactions (as defined below), on the Closing Date, the Borrower desires to repay the loan previously made by Crescent Energy Finance LLC to the Borrower the proceeds of which were used to fund the Acquisition (the “Closing Date Refinancing”);
WHEREAS, in connection with the foregoing, (i) the Borrower has requested that on the Closing Date the Lenders provide Loans to the Borrower in order to fund a portion of the Closing Date Refinancing, (ii) at any time and from time to time upon the Closing Date and prior to the Maturity Date, the proceeds of the Loans will be used by the Borrower for the Transactions, for the acquisition, development and exploration of Oil and Gas Properties and for working capital and other general corporate purposes of the Borrower and its Subsidiaries (including Permitted Acquisitions) and (iii) the Letters of Credit will be used by the Borrower and its Subsidiaries for general corporate purposes and to provide or support deposits required under purchase agreements pursuant to which the Borrower or its Subsidiaries may acquire Oil and Gas Properties and other assets;
WHEREAS, the Lenders and Letter of Credit Issuers are willing to make available to the Borrower such revolving credit and letter of credit facilities upon the terms and subject to the conditions set forth herein; and
NOW, THEREFORE, in consideration of the premises and the covenants and agreements contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1Defined Terms. As used herein, the following terms shall have the meanings specified in this Section 1.1 unless the context otherwise requires (it being understood that defined terms in this Agreement shall include in the singular number the plural and in the plural the singular):
1

“ABR” shall mean, for any day, a rate per annum equal to the greatest of (a) the Prime Rate in effect on such day, (b) the NYFRB Rate in effect on such day plus ½ of 1% and (c) Term SOFR for a one month Interest Period as published two U.S. Government Securities Business Days prior to such day (or if such day is not a Business Day, the immediately preceding Business Day) plus 1.00%; provided that for the purpose of this definition, Term SOFR for any day shall be based on the Term SOFR Reference Rate at approximately 5:00 a.m. Chicago time on such day (or any amended publication time for the Term SOFR Reference Rate, as specified by the Term SOFR Administrator in the Term SOFR Reference Rate methodology). Any change in the ABR due to a change in the Prime Rate, NYFRB Rate or in the one-month Term SOFR shall be effective from and including the effective date of such change in the Prime Rate, the NYFRB Rate or Term SOFR, respectively. If the ABR is being used as an alternate rate of interest pursuant to Section 2.18(b) hereof (for the avoidance of doubt, only until the Benchmark Replacement has been determined pursuant to Section 2.18(b)), then the ABR shall be the greater of clause (a) and (b) above and shall be determined without reference to clause (c) above. For the avoidance of doubt, if the ABR shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
“ABR Loan” shall mean each Loan bearing interest based on the ABR.
“Account Control Agreement” shall mean a control agreement, in form and substance reasonably satisfactory to the Administrative Agent, which grants the Administrative Agent “control” as defined in the UCC over any deposit account or securities account maintained by any Credit Party (in each case, other than an Excluded Account), in each case, among the Administrative Agent, the applicable Credit Party and the applicable financial institution at which such deposit account or securities account is maintained.
“Acquired Assets” shall mean each of the Riverbend Conveyed Assets and the Cobra Conveyed Assets.
“Acquired EBITDAX” shall mean, with respect to any Acquired Entity or Business or any Converted Restricted Subsidiary (any of the foregoing, a “Pro Forma Entity”) for any period, the amount (or, at the election of the Borrower, if the annualized portion of Acquired EBITDAX for the most recent portion of such period is a more appropriate indicator of future performance than Acquired EBITDAX for such period (as determined by the Borrower in good faith), the annualized portion) for such period of Consolidated EBITDAX of such Pro Forma Entity (determined using such definitions as if references to the Borrower and its Restricted Subsidiaries therein were to such Pro Forma Entity and its Restricted Subsidiaries), all as determined on a consolidated basis for such Pro Forma Entity in a manner not inconsistent with GAAP.
“Acquired Entity or Business” shall have the meaning provided in the definition of the term “Consolidated EBITDAX.”
“Acquisition” shall mean each of the Riverbend Acquisition and the Cobra Acquisition.
“Acquisition Agreement” shall mean each of the Riverbend Acquisition Agreement and the Cobra Acquisition Agreement.
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“Acquisition Reserve Report” shall mean the internal engineering data prepared by the Borrower and delivered to the Administrative Agent prior to the Closing Date, and setting forth, as of December 31, 2025, the Proved Reserves attributable to the Acquired Assets.
“Acquisition Hedges” shall have the meaning assigned to such term in Section 10.10(b).
“Additional Lender” shall have the meaning provided in Section 2.16(a).
“Adjusted Revolving Commitment” shall mean, at any time, the Total Revolving Commitment less the aggregate amount of Revolving Commitments of all Defaulting Lenders.
“Administrative Agent” shall mean Wells Fargo Bank, National Association, as the administrative agent for the Lenders under this Agreement and the other Credit Documents, or any successor administrative agent appointed in accordance with the provisions of Section 12.9.
“Administrative Agent’s Office” shall mean the Administrative Agent’s address and, as appropriate, account as set forth on Schedule 13.2, or such other address or account as the Administrative Agent may from time to time notify in writing to the Borrower and the Lenders.
“Administrative Questionnaire” shall mean, for each Lender, an administrative questionnaire in a form approved by the Administrative Agent.
“Affected Financial Institution” shall mean (a) any EEA Financial Institution or (b) any UK Financial Institution.
“Affiliate” shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with such Person. A Person shall be deemed to control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise; provided that in no event will any portfolio company of KKR or its Affiliates be considered as an Affiliate of the Borrower or any Restricted Subsidiaries (except with respect to Section 9.9).
“Affiliated Institutional Lender” shall mean (i) any Affiliate of KKR or its Affiliate that is either a bona fide debt fund or such Affiliate extends credit or buys loans in the ordinary course of business and (ii) KKR Corporate Lending LLC and KKR Capital Markets LLC.
“Affiliated Lender” shall mean a Lender that is the Sponsor or any Affiliate thereof (other than the Borrower, any Subsidiary of the Borrower, or any Affiliated Institutional Lender).
“Agents” shall mean the Administrative Agent and the Collateral Agent.
“Aggregate Elected Commitment Amount” means the sum of the Elected Commitment Amounts of all of the Lenders. The Aggregate Elected Commitment Amount as of the Closing Date is $230,000,000.
“Aggregate Maximum Credit Amount” at any time shall equal the sum of the Maximum Credit Amounts, as the same may be increased, reduced or terminated from time to time in
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connection with an optional increase of the Aggregate Maximum Credit Amount pursuant to Section 2.16(a) or a termination or reduction of the Aggregate Maximum Credit Amount pursuant to Section 4.2. The Aggregate Maximum Credit Amount as of the Closing Date is $1,000,000,000.
“Agreement” shall mean this Credit Agreement, as the same may from time to time be amended, restated, amended and restated, supplemented or otherwise modified.
“All-In Yield” shall mean, as to any Indebtedness, the yield thereof, whether in the form of interest rate, margin, original issue discount, upfront fees, or any SOFR or ABR floor, in each case, incurred or payable by the Credit Parties generally to all the lenders of such Indebtedness; provided that (a) original issue discount and upfront fees shall be equated to interest rate assuming a 4-year life to maturity (or, if less, the stated life to maturity at the time of its incurrence of the applicable Indebtedness), and (b) “All-In Yield” shall not include amendment fees, arrangement fees, structuring fees, commitment fees, underwriting fees and similar fees (regardless of whether shared with, or paid to, in whole or in part, any or all lenders), success fees, consent fees paid to consenting lenders, ticking fees on undrawn commitments or any other fees not paid ratably to all lenders in the primary syndication of such Indebtedness.
“Anti-Corruption Laws” shall mean all laws, rules, and regulations of any jurisdiction applicable to the Borrower or any of its Subsidiaries from time to time concerning or relating to bribery or corruption.
“Applicable Equity Amount” shall mean, at any time (the “Applicable Equity Amount Reference Time”), an amount equal to, without duplication,
(a)    the amount of any capital contributions made in cash to, or any proceeds of an equity issuance received by, the Borrower during the period from and including the Business Day immediately following the Closing Date, through and including the Applicable Equity Amount Reference Time, including proceeds from the issuance of Stock or Stock Equivalents of any direct or indirect parent of the Borrower, but excluding all proceeds from the issuance of Disqualified Stock; minus
(b)    the sum, without duplication, of:
(i)    the aggregate amount of any Investments made by the Borrower or any Restricted Subsidiary pursuant to Section 10.5(g)(iv)(B), Section 10.5(h)(ii) and Section 10.5(i)(B) after the Closing Date, and prior to the Applicable Equity Amount Reference Time;
(ii)    the aggregate amount of any Dividends made by the Borrower pursuant to Section 10.6(k) after the Closing Date, and prior to the Applicable Equity Amount Reference Time; and
(iii)    the aggregate amount of prepayments, repurchases, redemptions and defeasances made by the Borrower or any Restricted Subsidiary pursuant to
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Section 10.7(c)(iii) after the Closing Date and prior to the Applicable Equity Amount Reference Time.
“Applicable Margin” shall mean, for any day, with respect to:
(a)    any ABR Revolving Loan, Term SOFR Revolving Loan or Daily Simple SOFR Revolving Loan, or with respect to the Commitment Fee Rate, as the case may be, the rate per annum set forth in the grid below based upon the Borrowing Base Utilization Percentage in effect on such day:
Borrowing Base Utilization Grid
Borrowing Base Utilization Percentage< 25%≥ 25% but <50%≥ 50% but <75%≥ 75% but <90%≥ 90%
Term SOFR Revolving Loans or Daily Simple SOFR Revolving Loans1.75%2.00%2.25%2.50%2.75%
ABR Revolving Loans0.75%1.00%1.25%1.50%1.75%
Commitment Fee Rate0.375%0.375%0.50%0.50%0.50%

Notwithstanding the foregoing, until the Initial Term Loans Repayment Date, the “Applicable Margin” with respect to any ABR Revolving Loan, Term SOFR Revolving Loan or Daily Simple SOFR Revolving Loan, or with respect to the Commitment Fee Rate, as the case may be, shall be the rate per annum set forth in the Borrowing Base Utilization Grid above for a Borrowing Base Utilization Percentage of ≥ 90%. Each change in the Commitment Fee Rate or Applicable Margin shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change;
(b)    any Initial Term Loan that is (i) a Term SOFR Loan, a rate per annum equal to 3.25% and (ii) an ABR Loan, a rate per annum equal to 2.25%;
(c)    any Term Loan (other than the Initial Term Loans), the rate per annum as set forth in the Term Loan Amendment for such Term Loan.
“Approved Fund” means an Approved Revolving Fund or an Approved Term Fund, or both, as the context may require.
“Approved Petroleum Engineers” shall mean (a) Netherland, Sewell & Associates, Inc., (b) Ryder Scott Company, L.P., (c) W. D. Van Gonten & Co. Petroleum Engineering, (d) DeGolyer and MacNaughton, (e) LaRoche Petroleum Consultants, Ltd., (f) Cawley, Gillespie & Associates, (g) Haas Engineering, (h) William M. Cobb & Associates and (i) at the Borrower’s option, any other independent petroleum engineers selected by the Borrower and reasonably acceptable to the Administrative Agent.
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“Approved Revolving Fund” shall mean any Fund that is administered or managed by (a) a Revolving Lender, (b) an Affiliate of a Revolving Lender or (c) an entity or an Affiliate of an entity that administers or manages a Revolving Lender; provided, that with respect to any Affiliate or entity referred to in clause (b) or (c) above, such Affiliate or entity shall be a financial institution that is engaged in oil and gas reserve-based lending governed by a borrowing base in the ordinary course of its business.
“Approved Term Fund” shall mean any Fund that is administered or managed by (a) a Term Lender, (b) an Affiliate of a Term Lender or (c) an entity or an Affiliate of an entity that administers or manages a Term Lender; provided, that with respect to any Affiliate or entity referred to in clause (b) or (c) above, such Affiliate or entity shall be a financial institution that is engaged in oil and gas reserve-based lending governed by a borrowing base in the ordinary course of business.
“Assignment and Acceptance” shall mean an assignment and acceptance substantially in the form of Exhibit A or such other form as may be approved by the Administrative Agent.
“Auction Agent” shall mean (i) the Administrative Agent or (ii) any other financial institution or advisor employed by the Borrower or any Restricted Subsidiary (whether or not an Affiliate of the Administrative Agent) to act as an arranger in connection with any Permitted Debt Exchange pursuant to Section 2.20; provided that the Borrower shall not designate the Administrative Agent as the Auction Agent without the written consent of the Administrative Agent (it being understood that the Administrative Agent shall be under no obligation to agree to act as the Auction Agent); provided, further, that neither the Borrower nor any of its Subsidiaries may act as the Auction Agent.
“Authorized Officer” shall mean as to any Person, (a) the President, any Vice President, the Chief Executive Officer, the Chief Financial Officer, the Chief Operating Officer, the Chief Accounting Officer, the Executive Vice President, the Treasurer, the Assistant or Vice Treasurer, the Vice President-Finance, the Vice President-Acquisition Activities, the Vice President-Investments, the General Counsel and any manager, managing member or general partner, in each case, of such Person, and (b) any other individual designated as such in writing to the Administrative Agent by a Person described in clause (a). Any document delivered hereunder that is signed by an Authorized Officer shall be conclusively presumed to have been authorized by all necessary corporate, limited liability company, partnership and/or other action on the part of the Borrower or any other Credit Party and such Authorized Officer shall be conclusively presumed to have acted on behalf of such Person.
“Auto-Extension Letter of Credit” shall have the meaning provided in Section 3.2(b).
“Available Borrowing Base” shall mean, at any time, (a) prior to the Initial Term Loans Repayment Date, the amount of the Conforming Borrowing Base then in effect, and (b) after the Initial Term Loans Repayment Date, the amount of the Borrowing Base then in effect minus the Total Term Loan Exposures.
“Available Commitment” shall mean, at any time, (a) the Loan Limit at such time minus (b) the Total Revolving Credit Exposures at such time.
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    “Available Tenor” means, as of any date of determination and with respect to the then-current Benchmark, as applicable, (a) if such Benchmark is a term rate, any tenor for such Benchmark (or component thereof) that is or may be used for determining the length of an interest period pursuant to this Agreement or (b) otherwise, any payment period for interest calculated with reference to such Benchmark (or component thereof) that is or may be used for determining any frequency of making payments of interest calculated with reference to such Benchmark, in each case, as of such date and not including, for the avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition of “Interest Period” pursuant to Section 2.18(d).
“Bail-In Action” shall mean the exercise of any Write-Down and Conversion Powers by the applicable Resolution Authority in respect of any liability of an Affected Financial Institution.
“Bail-In Legislation” shall mean (a) with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law, regulation, rule or requirement for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009 (as amended from time to time) and any other law, regulation or rule applicable in the United Kingdom relating to the resolution of unsound or failing banks, investment firms or other financial institutions or their affiliates (other than through liquidation, administration or other insolvency proceedings).
“Bank Price Deck” shall mean the Administrative Agent’s most recent internal price deck on a forward curve basis for each of oil, natural gas and other Hydrocarbons, as applicable, furnished to the Borrower by the Administrative Agent from time to time in accordance with the terms of this Agreement.
“Bankruptcy Code” shall have the meaning provided in Section 11.5.
“Benchmark” shall mean, initially, Term SOFR; provided that if a Benchmark Transition Event has occurred with respect to Term SOFR or the then-current Benchmark, then “Benchmark” means the applicable Benchmark Replacement to the extent that such Benchmark Replacement has replaced such prior benchmark rate pursuant to Section 2.18(a).
“Benchmark Replacement” means with respect to any Benchmark Transition Event, the first alternative set forth in the order below that can be determined by the Administrative Agent for the applicable Benchmark Replacement Date:
(a) Daily Simple SOFR; or
(b) the sum of: (i) the alternate benchmark rate that has been selected by the Administrative Agent and the Borrower as the replacement for the then-current Benchmark for the applicable Corresponding Tenor giving due consideration to (A) any selection or recommendation of a replacement benchmark rate or the mechanism for determining such a rate by the Relevant Governmental Body or (B) any evolving or then-prevailing market convention for determining a benchmark rate as a replacement for the then-current Benchmark for Dollar-denominated syndicated credit facilities at such time and (ii) the related Benchmark Replacement
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Adjustment; provided that, in the case of clause (ii) above, such adjustment shall not be in the form of an increase of the Applicable Margin.
If the Benchmark Replacement as determined pursuant to clause (a) or (b) above would be less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the purposes of this Agreement and the other Credit Documents.
“Benchmark Replacement Adjustment” means, with respect to any replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement for any applicable Interest Period and Available Tenor for any setting of such Unadjusted Benchmark Replacement, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Borrower for the applicable Corresponding Tenor giving due consideration to (a) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement by the Relevant Governmental Body on the applicable Benchmark Replacement Date or (b) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted Benchmark Replacement for U.S. syndicated credit facilities denominated in Dollars at such time.
“Benchmark Replacement Conforming Changes” means, with respect to the use, administration, adoption or implementation of any Benchmark Replacement, any technical, administrative or operational changes (including changes to the definition of “ABR,” the definition of “Business Day,” the definition of “U.S. Government Securities Business Day,” the definition of “Interest Period” or any similar or analogous definition (or the addition of a concept of “interest period”), timing and frequency of determining rates and making payments of interest, timing of borrowing requests or prepayment, conversion or continuation notices, the applicability and length of lookback periods, the applicability of breakage provisions, and the applicability of other technical, administrative or operational matters) that the Administrative Agent decides (in consultation with the Borrower) may be appropriate to reflect the adoption and implementation of any such rate or to permit the use and administration thereof by the Administrative Agent in a manner substantially consistent with market practice (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of any such rate exists, in such other manner of administration as the Administrative Agent decides (in consultation with the Borrower) is reasonably necessary in connection with the administration of this Agreement and the other Credit Documents).
“Benchmark Replacement Date” means the earlier to occur of the following events with respect to the then-current Benchmark:
(a)    in the case of clause (a) or (b) of the definition of “Benchmark Transition Event”, the later of (i) the date of the public statement or publication of information referenced therein and (ii) the date on which the administrator of such Benchmark (or the published component used in the calculation thereof) permanently or indefinitely
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ceases to provide all Available Tenors of such Benchmark (or such component thereof); or
(b)    in the case of clause (c) of the definition of “Benchmark Transition Event”, the first date on which such Benchmark (or the published component used in the calculation thereof) has been determined and announced by or on behalf of the administrator of such Benchmark (or such component thereof) or the regulatory supervisor for the administrator of such Benchmark (or such component thereof) to be non-representative; provided that such non-representativeness will be determined by reference to the most recent statement or publication referenced in such clause (c) and even if any Available Tenor of such Benchmark (or such component thereof) continues to be provided on such date.
For the avoidance of doubt, (i) if the event giving rise to the Benchmark Replacement Date occurs on the same day as, but earlier than, the Reference Time in respect of any determination, the Benchmark Replacement Date will be deemed to have occurred prior to the Reference Time for such determination and (ii) the “Benchmark Replacement Date” will be deemed to have occurred in the case of clause (a) or (b) with respect to any Benchmark upon the occurrence of the applicable event or events set forth therein solely to the extent such event applies to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Transition Event” means the occurrence of one or more of the following events with respect to the then-current Benchmark:
(a)    a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) announcing that such administrator has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof), permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof);
(b)    a public statement or publication of information by the regulatory supervisor for the administrator of such Benchmark (or the published component used in the calculation thereof), the Board, the Federal Reserve Bank of New York, Term SOFR Administrator, an insolvency official with jurisdiction over the administrator for such Benchmark (or such component), a resolution authority with jurisdiction over the administrator for such Benchmark (or such component) or a court or an entity with similar insolvency or resolution authority over the administrator for such Benchmark (or such component), which states that the administrator of such Benchmark (or such component) has ceased or will cease to provide all Available Tenors of such Benchmark (or such component thereof) permanently or indefinitely; provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide any Available Tenor of such Benchmark (or such component thereof); or
(c)    a public statement or publication of information by or on behalf of the administrator of such Benchmark (or the published component used in the calculation thereof) or the regulatory supervisor for the administrator of such Benchmark (or such
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component thereof) announcing that all Available Tenors of such Benchmark (or such component thereof) are not, or as of a specified future date will not be, representative.
For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have occurred with respect to any Benchmark solely to the extent that a public statement or publication of information set forth above has occurred with respect to all then-current Available Tenors of such Benchmark (or the published component used in the calculation thereof).
“Benchmark Unavailability Period” means, the period (if any) (a) beginning at the time that a Benchmark Replacement Date has occurred if, at such time, no Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Credit Document in accordance with Section 2.18 and (b) ending at the time that a Benchmark Replacement has replaced the then-current Benchmark for all purposes hereunder and under any Credit Document in accordance with Section 2.18.
“Beneficial Ownership Certification” shall mean a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.
“Beneficial Ownership Regulation” means 31 CFR § 1010.230.
“Benefit Plan” shall mean any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”.
“Benefited Lender” shall have the meaning provided in Section 13.8(a).
“BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
“Board” shall mean the Board of Governors of the Federal Reserve System of the United States (or any successor).
“Borrower” shall have the meaning provided in the introductory paragraph hereto.
“Borrowing” shall mean the incurrence of one Type and Class of Loan on a given date (or resulting from conversions on a given date) having, in the case of Term SOFR Loans, the same Interest Period.
“Borrowing Base” shall mean, at any time, an amount equal to the amount determined in accordance with Section 2.14, as the same may be adjusted from time to time pursuant to (a) the Borrowing Base Adjustment Provisions or (b) prior to the Initial Term Loans Repayment Date, Section 2.14(j)(G).
“Borrowing Base Adjustment Provisions” shall mean Section 2.14(e), Section 2.14(f), Section 2.14(g) and Section 2.14(h).
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“Borrowing Base Deficiency” occurs if, at any time, the sum of (a) the Total Revolving Credit Exposures plus (b) the Total Term Loan Exposures, exceeds the Borrowing Base then in effect. The amount of the Borrowing Base Deficiency is the amount by which the sum of (i) the Total Revolving Credit Exposures plus (ii) the Total Term Loan Exposures, exceeds the Borrowing Base then in effect.
“Borrowing Base Properties” shall mean the Oil and Gas Properties of the Credit Parties included in the Initial Reserve Report and thereafter in the most recently delivered Reserve Report delivered pursuant to Section 9.14 and evaluated for purposes of determining the Borrowing Base then in effect.
“Borrowing Base Required Lenders” shall mean, at any date, Non-Defaulting Lenders having or holding at least 100% of the Total Credit Exposures (excluding (a) the Loans and Letter of Credit Exposure of Defaulting Lenders and (b) the Excluded Term Loan Exposures) in the aggregate at such date.
“Borrowing Base Utilization Percentage” shall mean, as of any day, the fraction expressed as a percentage, the numerator of which is the sum of the Total Revolving Credit Exposures plus the Total Term Loan Exposures on such day, and the denominator of which is the Borrowing Base in effect on such day.
“Business Day” shall mean any day excluding Saturday, Sunday and any other day on which banking institutions in New York City are authorized by law or other governmental actions to close; provided that, in relation to Daily Simple SOFR Loans and any interest rate settings, fundings, disbursements, settlements or payments of any such Loan, or any other dealings of such Loan, any such day that is only a U.S. Government Securities Business Day.
“Capital Expenditures” shall mean, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities and including in all events all amounts expended or capitalized under Capital Leases) by the Borrower and the Restricted Subsidiaries during such period that, in conformity with GAAP, are or are required to be included as capital expenditures on a consolidated statement of cash flows of the Borrower and its Restricted Subsidiaries.
“Capital Lease” shall mean, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee that, in conformity with GAAP, is, or is required to be, accounted for as a capital lease on the balance sheet of that Person; provided, any lease that would have been characterized as an operating lease pursuant to GAAP prior to the date of the Borrower’s adoption of ASC 842 (whether or not such operating lease was in effect on such date) shall continue to be accounted for as an operating lease (and not as a Capital Lease) for purposes of this Agreement.
“Capitalized Lease Obligations” shall mean, as applied to any Person, all obligations under Capital Leases of such Person or any of its Subsidiaries, in each case taken at the amount thereof accounted for as liabilities on the balance sheet (excluding the footnotes thereto) in accordance with GAAP; provided that obligations that are recharacterized as Capitalized Lease Obligations due to the Borrower’s adoption of ASC 842 shall not be treated as Capitalized Lease
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Obligations for any purpose under this Agreement but shall instead be treated as they would have been in accordance with GAAP prior to the date of the Borrower’s adoption of ASC 842.
“Capitalized Software Expenditures” shall mean, for any period, the aggregate of all expenditures (whether paid in cash or accrued as liabilities) by a Person and its Restricted Subsidiaries during such period in respect of licensed or purchased software or internally developed software and software enhancements that, in conformity with GAAP, are or are required to be reflected as capitalized costs on the consolidated balance sheet of such Person and its Restricted Subsidiaries.
“Captive Insurance Subsidiary” shall mean any Subsidiary of the Borrower that is subject to regulation as an insurance company (or any Subsidiary thereof).
“Cash Collateralize” shall have the meaning provided in Section 3.8(c). “Cash Collateralization” and “Cash Collateralized” shall have meanings correlative thereto.
“Cash Management Agreement” shall mean any agreement entered into from time to time by the Borrower or any of the Borrower’s Restricted Subsidiaries in connection with cash management services for collections, other Cash Management Services and for operating, payroll and trust accounts of such Person, including automatic clearing house services, controlled disbursement services, electronic funds transfer services, lockbox services, stop payment services and wire transfer services.
“Cash Management Bank” shall mean any Person that either (a) at the time it provides Cash Management Services, (b) on the Closing Date or (c) at any time after it has provided any Cash Management Services, is a Revolving Lender or an Agent or an Affiliate of a Revolving Lender or an Agent.
“Cash Management Obligations” shall mean obligations owed by the Borrower or any Restricted Subsidiary to any Cash Management Bank in connection with, or in respect of, any Cash Management Services.
“Cash Management Services” shall mean (a) commercial credit cards, merchant card services, purchase or debit cards, including non-card e-payables services, (b) treasury management services (including controlled disbursement, overdraft, automated clearing house fund transfer services, return items and interstate depository network services) and (c) any other demand deposit or operating account relationships or other cash management services, including any Cash Management Agreement.
“Casualty Event” shall mean, with respect to any Collateral, (a) any damage to, destruction of, or other casualty or loss involving, any property or asset or (b) any seizure, condemnation, confiscation or taking under the power of eminent domain of, or any requisition of title or use of, or relating to, or any similar event in respect of, any property or asset.
“Change in Law” shall mean the occurrence after the date of this Agreement or, with respect to any Lender, such later date on which such Lender becomes a party to this Agreement, (a) the adoption of any law, treaty, order, policy, rule or regulation after the Closing Date, (b) any change in any law, treaty, order, policy, rule or regulation or in the interpretation,
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implementation or application thereof by any Governmental Authority after the Closing Date or (c) compliance by any Lender or a Letter of Credit Issuer (or, for purposes of Section 2.10(c), by any lending office of such Lender or by such Lender’s or the Letter of Credit Issuer’s holding company, if any) with any guideline, request, directive or order enacted or promulgated after the Closing Date by any central bank or other Governmental Authority or quasi-Governmental Authority (whether or not having the force of law); provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act, and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Regulations and Supervisory Practices (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case, pursuant to Basel III, and all guidelines, requests, directives, orders, rules and regulations adopted, enacted or promulgated in connection therewith shall be deemed to have gone into effect after the Closing Date regardless of the date adopted, enacted or promulgated and shall be included as a Change in Law only to the extent a Lender is imposing applicable increased costs or costs in connection with capital adequacy and liquidity requirements similar to those described in Section 2.10(a)(ii) and Section 2.10(c) generally on other borrowers of loans under United States reserve-based credit facilities.
“Change of Control” shall mean and be deemed to have occurred if:
(a) at any time prior to a Qualified IPO, (i) prior to the Initial Term Loans Repayment Date, the Permitted Holders shall at any time cease, directly or indirectly, to have the power to vote or direct the voting of more than 50% of the Voting Stock of the Borrower or (ii) following the Initial Term Loans Repayment Date, (x) the Permitted Holders shall at any time cease, directly or indirectly, to have the power to vote or direct the voting of at least 35% of the Voting Stock of the Borrower or (y) any Person, entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act, but excluding any employee benefit plan of such Person, entity or “group” and its Subsidiaries and any Person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than the Permitted Holders, shall at any time have acquired direct or indirect beneficial ownership (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act) of a percentage of the voting power of the outstanding Voting Stock of the Borrower that is greater than the percentage of such voting power of such Voting Stock in the aggregate, directly or indirectly, beneficially owned by the Permitted Holders, or
(b) at any time on and after a Qualified IPO, any Person, entity or “group” (within the meaning of Section 13(d) or 14(d) of the Exchange Act, but excluding any employee benefit plan of such Person, entity or “group” and their respective Subsidiaries and any Person or entity acting in its capacity as trustee, agent or other fiduciary or administrator of any such plan), other than the Permitted Holders, shall at any time have acquired direct or indirect beneficial ownership (as defined in Rules 13(d)-3 and 13(d)-5 under the Exchange Act) of voting power of the outstanding Voting Stock of the Borrower having more than the greater of (i) 35% of the ordinary voting power for the election of the board of directors (or other direct or indirect governing body) of the Borrower and (ii) the percentage of the ordinary voting power for the election of the board of directors (or other direct or indirect governing body) of the Borrower owned in the aggregate, directly or indirectly, beneficially, by the Permitted Holders, unless in the case of either clause (i) or
13

(ii) above, the Permitted Holders have, at such time, the right or the ability by voting power, contract or otherwise to elect or designate for election at least a majority of the members of the board of directors (or other direct or indirect governing body) of the Borrower, or
(c) a “change of control” (or similar event) shall occur under any Indebtedness for borrowed money permitted under Section 10.1 with an outstanding principal amount in excess of $50,000,000 or any Permitted Refinancing Indebtedness in respect of any of the foregoing with an outstanding principal amount in excess of $50,000,000.
Notwithstanding the foregoing, for the avoidance of doubt, a Change of Control shall not occur as a result of the IPOCo Transactions, the Qualified IPO and any transactions relating thereto, including, without limitation, (i) the contribution of the Stock and/or Stock Equivalents of the Borrower to IPOCo or (ii) any transaction in which the Borrower remains a subsidiary of IPOCo but one or more intermediate holding companies between the Borrower and IPOCo are added, liquidated, merged or consolidated out of existence (except, after giving effect to a Qualified IPO, as a result of the circumstances described in clause (b) above).
Notwithstanding the preceding or any provision of Section 13d-3 of the Exchange Act, (i) a Person or group shall not be deemed to beneficially own Stock or Stock Equivalents subject to a stock or asset purchase agreement, merger agreement, option agreement, warrant agreement or similar agreement (or voting or option or similar agreement related thereto) until the consummation of the acquisition of the Stock or Stock Equivalents in connection with the transactions contemplated by such agreement, (ii) if any group includes one or more Permitted Holders, the issued and outstanding Stock or Stock Equivalents of the Borrower owned, directly or indirectly, by any Permitted Holders that are part of such group shall not be treated as being beneficially owned by such group or any other member of such group for purposes of determining whether a Change of Control has occurred and (iii) a Person or group will not be deemed to beneficially own the Stock or Stock Equivalents of another Person as a result of its ownership of the Stock or Stock Equivalents or other securities of such other Person’s parent entity (or related contractual rights) unless it owns 50% or more of the total voting power of the Stock or Stock Equivalents entitled to vote for the election of directors of such parent entity having a majority of the aggregate votes on the board of directors (or similar body) of such parent entity. No Change of Control will be deemed to have occurred unless and until such Change of Control has actually been consummated.
“Class” shall mean (i) with respect to Commitments or Loans, those of such Commitments or Loans that have the same terms and conditions (without regard to differences in the Type of Loan, Interest Period, original issue discount, upfront fees or similar fees paid or payable in connection with such Commitments or Loans, or differences in tax treatment (e.g., “fungibility”)); provided that such Commitments or Loans may be designated in writing by the Administrative Agent, the Borrower and Lenders holding such Commitments or Loans as a separate Class from other Commitments or Loans that have the same terms and conditions and (ii) with respect to Lenders, those of such Lenders that have Commitments or Loans of a particular Class. In addition, when used in reference to any Loan, the term “Class” may refer to whether such Loan is a Revolving Loan or a Term Loan.
“Closing Date” shall mean February 23, 2026.
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“Closing Date Refinancing” shall have the meaning provided in the recitals to this Agreement.
“Cobra Acquisition Agreement” shall mean that certain Cooperation and Acquisition Agreement, dated as of January 11, 2026 (together with all exhibits and schedules thereto, and as amended, supplemented or otherwise modified from time to time), between Crescent Minerals Assets LLC, a Delaware limited liability company, as buyer, and WRMF Cobra LLC, a Delaware limited liability company, as seller, pursuant to which the Borrower will acquire (the “Cobra Acquisition”) the Conveyed Assets (as defined in the Cobra Acquisition Agreement and referred to herein as the “Cobra Conveyed Assets”).
“Cobra Acquisition” shall have the meaning provided in the definition of the term “Cobra Acquisition Agreement”.
“Cobra Conveyed Assets” shall have the meaning provided in the definition of the term “Cobra Acquisition Agreement”.
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.
“Collateral” shall have the meaning provided for such term in each of the Security Documents; provided that with respect to any Mortgages, “Collateral”, as defined herein, shall include “Mortgaged Property” as defined therein.
“Collateral Agent” shall mean Wells Fargo Bank, National Association, as collateral agent under the Security Documents, or any successor collateral agent appointed in accordance with the provisions of Section 12.9.
“Collateral Coverage Minimum” shall mean that the Mortgaged Properties represent at least 85% of the PV-9 of the Credit Parties’ total Proved Reserves, included, as of the Closing Date, in the Initial Reserve Report, and, thereafter, in the most recent Reserve Report delivered pursuant to Section 9.14.
“Commitment” shall mean, with respect to any Lender, such Lender’s Term Commitment, Extended Commitment or Revolving Commitment, as applicable.
“Commitment Fee” shall have the meaning provided in Section 4.1(a).
“Commitment Fee Rate” shall mean, for any day, with respect to the Available Commitment on any day, the applicable rate per annum set forth next to the row heading “Commitment Fee Rate” in the definition of “Applicable Margin” and based upon the Borrowing Base Utilization Percentage in effect on such day.
“Commodity Exchange Act” shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.
“Compliance Certificate” shall mean the Compliance Certificate substantially in the form of Exhibit B.
15

“Confidential Information” shall have the meaning provided in Section 13.16.
“Conforming Borrowing Base” shall have the meaning provided in Section 2.14(j). The Conforming Borrowing Base on the Closing Date shall be the amount set forth in Section 2.14(a).
“Consolidated EBITDAX” shall mean, for any period, Consolidated Net Income for such period, plus:
(a)    without duplication and to the extent already deducted (and not added back) in arriving at such Consolidated Net Income, the sum of the following amounts for the Borrower and the Restricted Subsidiaries for such period:
(i)    total interest expense and, to the extent not reflected in such total interest expense, any losses on Hedging Obligations or other derivative instruments entered into for the purpose of hedging interest rate risk (net of interest income and gains on such Hedging Obligations), bank fees, deferred financing fees, costs of surety bonds in connection with financing activities, commissions, discounts, yield and other fees and charges related to financing activities (including letters of credit),
(ii)    provision for taxes based on income, profits (including any margin tax related thereto) or capital, including U.S. federal, state, non-U.S., franchise, excise, property and similar taxes and foreign withholding taxes (including (i) any future taxes or other levies which replace or are intended to be in lieu of such taxes and any penalties and interest related to such taxes or arising from tax examinations and (ii) the amount of distributions actually made in accordance with Section 10.6(f)(ix)) paid or accrued during such period, including any penalties and interest relating to any tax examinations, and the net tax expense associated with any adjustments made pursuant to the definition of Consolidated Net Income,
(iii)    depreciation, depletion and amortization, including the amortization of intangible assets established through purchase accounting and the amortization of deferred financing fees or costs, and commissions, fees and expenses and amortization of Capitalized Software Expenditures and amortization of unrecognized prior service costs and actuarial gains and losses to pensions and other post-employment benefits of such Person and its Restricted Subsidiaries for such period on a consolidated basis and otherwise determined in accordance with GAAP,
(iv)    Non-Cash Charges,
(v)    the amount of any reductions in arriving at Consolidated Net Income resulting from the application of Accounting Standards Codification Topic No. 810, Consolidation,
(vi)    restructuring charges, accruals or reserves or related charges (including restructuring costs related to acquisitions after the Closing Date), equity-based or non-cash compensation charges or expenses including any such charges or expenses arising from grants of stock appreciation or similar rights,
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stock options, restricted stock or other rights, retention charges (including charges or expenses in respect of incentive plans), severance costs, costs relating to initiatives aimed at profitability improvement, costs or reserves associated with improvements to accounting functions and integration and facilities opening costs or any one-time costs incurred in connection with acquisitions and investments,
(vii)    the amount of management, monitoring, consulting, advisory and similar fees and indemnities and related expenses (it being understood that this clause (vii) is not intended to address ordinary course general and administrative expenses) paid or accrued in such period to (or on behalf of) the Sponsor to the extent otherwise permitted by Section 9.9,
(viii)    exploration expenses or costs and accretion of asset retirement obligations,
(ix)    any costs or expenses incurred pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement or any equity subscription or equity holder agreement, to the extent that such costs or expenses are funded with cash proceeds contributed to the capital of the Borrower or net cash proceeds of an issuance of Stock or Stock Equivalents of the Borrower (other than Disqualified Stock),
(x)    to the extent covered by insurance and directly or indirectly reimbursed, or, so long as the Borrower has made a determination that there exists reasonable evidence that such amount will in fact be reimbursed by the insurer and only to the extent that such amount is (A) not denied by the applicable carrier in writing within 180 days and (B) in fact reimbursed within 365 days of the date of such evidence (with a deduction for any amount so added back to the extent not so reimbursed within such 365 days) reimbursable by a third party, expenses with respect to liability or casualty events or business interruption,
(xi)    losses on asset Dispositions, disposals or abandonments (other than asset Dispositions, disposals or abandonments in the ordinary course of business),
(xii)    cash receipts (or any netting arrangements resulting in reduced cash expenditures) not representing Consolidated EBITDAX in any period to the extent non-cash gains relating to such income were deducted in the calculation of Consolidated EBITDAX pursuant to paragraph (b) below for any previous period and not added back,
(xiii)    the amount of “run rate” revenue enhancements, cost savings, operating expense reductions and savings from synergies (x) related to the Transactions projected by the Borrower in good faith to result from actions that have been taken, or with respect to which substantial steps have been taken or are expected to be taken (in the good faith determination of the Borrower), within 36 months after the Closing Date or (y) related to mergers and other business combinations, acquisitions, investments, dispositions, divestitures, restructurings,
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operating improvements, cost savings initiatives and other similar transactions or initiatives (including the modification and renegotiation of contracts and other arrangements) consummated after the Closing Date and projected by the Borrower in good faith to result from actions that have been taken or with respect to which substantial steps have been taken, or are expected to be taken (in the good faith determination of the Borrower) within 36 months after consummation of such merger or other business combination, acquisition, divestiture, restructuring, operating improvement or cost savings initiative or other similar initiative that have been taken or with respect to which substantial steps have been taken or are expected to be taken (in the good faith determination of the Borrower), and projected by the Borrower in good faith to result within 36 months after such actions are taken, in each case, calculated on a Pro Forma Basis as though such revenue enhancements, cost savings, operating expense reductions, and savings from synergies had been realized on the first day of such period, as if such revenue enhancements, cost savings, operating expense reductions and savings from synergies were realized during the entirety of such period, net of the amount of actual benefits realized during such period from such actions; provided that (A) such “run rate” revenue enhancements, cost savings, operating expense reductions and savings from synergies are reasonably identifiable and factually supportable in the good faith judgment of the Borrower and certified by an Authorized Officer of the Borrower and (B) no revenue enhancements, cost savings, operating expense reductions and savings from synergies shall be added pursuant to this clause (xiii) to the extent duplicative of any expenses or charges otherwise added to Consolidated EBITDAX, whether through a Pro Forma Adjustment or otherwise, for such period,
(xiv)    [reserved],
(xv)    the amount of any loss attributable to a new plant or facility, until the date that is 12 months after the date of commencing construction of or acquiring such plant or facility, as the case may be; provided that (A) such losses are reasonably identifiable and factually supportable and certified by an Authorized Officer of the Borrower and (B) losses attributable to such plant or facility after 12 months from the date of commencing such construction of or acquiring such plant or facility, as the case may be, shall not be included in this clause (xv), and
(xvi)    costs associated with preparations for and implementation of Public Company Compliance,
less
(b)    without duplication and to the extent included in arriving at such Consolidated Net Income, the sum of the following amounts for such period:
(i)    non-cash gains (excluding any non-cash gain to the extent it represents the reversal of an accrual or reserve for a potential cash item that reduced Consolidated EBITDAX in any prior period),
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(ii)    gains on asset Dispositions, disposals and abandonments,
(iii)    cash expenditures (or any netting arrangements resulting in increased cash expenditures) not deducted in arriving at Consolidated EBITDAX in any period to the extent non-cash losses relating to such income were added in the calculation of Consolidated EBITDAX pursuant to paragraph (a) above for any previous period and not deducted,
(iv)    in each case, as determined on a consolidated basis for the Borrower and the Restricted Subsidiaries in accordance with GAAP; provided that:
(A)    there shall be included in determining Consolidated EBITDAX for any period, without duplication, (x) the Acquired EBITDAX of any Person or business or attributable to any property or asset, acquired by the Borrower or any Restricted Subsidiary during such period (but not the Acquired EBITDAX of any related Person or business or any Acquired EBITDAX attributable to any assets or property, in each case to the extent not so acquired) to the extent not subsequently sold, transferred or otherwise Disposed of by the Borrower or such Restricted Subsidiary (each such Person, business, property or asset acquired and not subsequently so Disposed of, an “Acquired Entity or Business”) and the Acquired EBITDAX of any Unrestricted Subsidiary that is converted into a Restricted Subsidiary during such period (each, a “Converted Restricted Subsidiary”), based on the actual (or, at the election of the Borrower, if the annualized portion of Acquired EBITDAX for the most recent portion of such period is a more appropriate indicator of future performance than Acquired EBITDAX for such period (as determined by the Borrower in good faith), the annualized portion of) Acquired EBITDAX of such Pro Forma Entity for such period (including the portion thereof occurring prior to such acquisition or conversion) determined on a historical Pro Forma Basis, and (y) for the purposes of the definition of the term “Permitted Acquisition” and the calculation of the Consolidated Total Debt to Consolidated EBITDAX Ratio (including, without limitation, the calculation for purposes of Section 10.11), but without limiting the adjustments included in the definition of Consolidated EBITDAX, an adjustment equal to the amount of the Pro Forma Adjustment with respect to such Acquired Entity or Business shall be added back to Consolidated EBITDAX for such period (including the portion thereof occurring prior to such acquisition or conversion) as specified in a certificate executed by an Authorized Officer and delivered to the Administrative Agent (for further delivery to the Lenders), and
(B)    to the extent included in Consolidated Net Income, there shall be excluded in determining Consolidated EBITDAX for any period, the Disposed EBITDAX of any Person or business or attributable to any property or asset (other than an Unrestricted Subsidiary) sold, transferred, abandoned or otherwise Disposed of or closed or classified as
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discontinued operations (but if such operations are classified as discontinued due to the fact that they are subject to an agreement to dispose of such operations, only when and to the extent such operations are actually disposed of) by the Borrower or any Restricted Subsidiary during such period (each such Person, business, property or asset so sold or Disposed of or closed, a “Sold Entity or Business”), and the Disposed EBITDAX of any Restricted Subsidiary that is converted into an Unrestricted Subsidiary during such period (each, a “Converted Unrestricted Subsidiary”) based on the actual Disposed EBITDAX of such Sold Entity or Business for such period (including the portion thereof occurring prior to such sale, transfer, abandonment or Disposition, closure or conversion).
Notwithstanding the foregoing, the aggregate amount of add-backs made pursuant to subclause (xiii) of clause (a) above in any Test Period shall not exceed 15% of Consolidated EBITDAX (prior to giving effect to such add-backs) for such Test Period, and the Borrower shall deliver reasonable supporting detail regarding such add-backs in the form of an exhibit reasonably acceptable to the Administrative Agent.
Consolidated EBITDAX shall be calculated for each four-fiscal quarter period using the Consolidated EBITDAX for the four most recently ended fiscal quarters. Notwithstanding anything to the contrary contained herein, for purposes of determining Consolidated EBITDAX under this Agreement for any period that includes any of the fiscal quarters ending June 30, 2026, September 30, 2026, December 31, 2026, Consolidated EBITDAX for the relevant period shall be deemed to equal Consolidated EBITDAX for such fiscal quarter (and, in the case of the latter two such determinations, each previous fiscal quarter beginning with the quarter ending June 30, 2026) multiplied by 4, 2 and 4/3, respectively.
For the avoidance of doubt, Consolidated EBITDAX shall be calculated, including Pro Forma Adjustments, in accordance with Section 1.10.
“Consolidated Net Income” shall mean, for any period, the net income (loss) attributable to the Borrower and the Restricted Subsidiaries for such period determined on a consolidated basis in accordance with GAAP, excluding, without duplication,
(a)any extraordinary, unusual or non-recurring charges and gains for such period (less all fees and expenses relating thereto), including any restructuring costs, charges, accruals or reserves (including restructuring and integration costs related to acquisitions and adjustments to existing reserves, and in each case, whether or not classified as such under GAAP) and any unusual or non-recurring operating expenses directly attributable to the implementation of strategic initiatives, cost-savings initiatives or business optimization (including costs associated with the implementation or adoption of business optimization programs, new systems design, retention charges, system establishment costs and implementation costs, project start-up costs, new financial reporting, and accounting or information systems expected to result in business optimization), severance costs, relocation costs, signing costs, one-time compensation costs and expenses, consulting fees, retention or completion bonuses, executive recruiting costs, transition costs, costs related to the integration, opening, pre-opening, closure and/
20

or consolidation of facilities and fixed assets, costs and expenses incurred in connection with non-ordinary course product and intellectual property development and costs from curtailments or modifications to pension and post-retirement employee benefit plans for such period.
(b)    (i) the cumulative effect of a change in accounting principles during such period whether effected through a cumulative effect adjustment or a retroactive application, in accordance with GAAP, (ii) any non-cash gains, losses, income and expenses resulting from fair value accounting required by the applicable standard under GAAP and related interpretations, (iii) non-cash charges for deferred tax asset valuation allowances shall be excluded (except to the extent reversing a previously recognized increase to net income); provided, that the foregoing shall exclude any adjustments resulting from (x) effects of adjustments to accruals and reserves during a prior period relating to any change in methodology calculating reserves, rebates or other chargebacks and (y) the application of Accounting Standards Codification Topic No. 460, Guarantees, or any comparable regulation,
(c)    gains (losses) on asset Dispositions, disposals or abandonments (other than asset Dispositions, disposals or abandonments in the ordinary course of business) provided that the exclusion for the discontinuance of discontinued operations held for sale shall be at the option of the Borrower pending such sale,
(d)    Transaction Expenses incurred prior to or on or about the Closing Date,
(e)    any fees and expenses incurred during such period, or any amortization thereof for such period, in connection with any acquisition, investment, recapitalization, asset Disposition, issuance, incurrence or Refinancing of debt, issuance of equity securities, refinancing transaction or amendment or other modification of any debt instrument (in each case, including any such transaction consummated prior to the Closing Date and any such transaction undertaken but not completed) and any charges or non-recurring acquisition costs incurred during such period as a result of any such transaction,
(f)    any net after tax effect on income (or loss) for such period attributable to the early extinguishment of Indebtedness, Hedging Obligations or other derivative instruments,
(g)    any unrealized income (or loss) for such period attributable to Hedging Obligations or other derivative instruments,
(h)    accruals and reserves established or adjusted, or other charges required as a result of, the adoption or modification of accounting policies during such period,
(i)    any non-cash liabilities recorded in connection with stock-based, partnership interest-based or similar incentive-based compensation awards or arrangements, including without limitation (i) any equity or phantom equity based or non-cash compensation charge or expense, including any charge or expense arising from grants of stock appreciation rights, equity incentive programs or similar rights, stock options, restricted stock or other rights to, and any cash charges associated with equity
21

incentives or other long term incentive compensation plans (including under the Borrower’s deferral compensation arrangements), the rollover, acceleration, or payout of, Stock or Stock Equivalents by management, other employees or business partners of the Borrower or of a Restricted Subsidiary or any parent entity, (ii) noncash compensation expense resulting from the application of Accounting Standards Codification Topic No. 718, Compensation—Stock Compensation or Accounting Standards Codification Topic 505-50, Equity-Based Payments to Non-Employees and (iii) any income (loss) attributable to deferred compensation plans or trusts,
(j)    [reserved],
(k)    any net income (or loss) for such period of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting; provided that Consolidated Net Income of the Borrower shall be increased by the amount of dividends or distributions or other payments that are actually received by the Borrower or a Restricted Subsidiary in cash or Permitted Investments (or to the extent converted into cash or Permitted Investment),
(l)    to the extent covered by insurance and directly or indirectly reimbursed or reimbursable by a third party, and any expenses, charges or losses that are covered by indemnification or other reimbursement provisions in connection with any acquisition, Investment or any sale, conveyance, transfer or other disposition of assets permitted under this Agreement,
(m)    effects of adjustments related to the application of recapitalization accounting or purchase accounting, including applying purchase accounting to inventory, property and equipment, software and other intangible assets and deferred revenue required or permitted by GAAP and related authoritative pronouncements (including the effects of such adjustments pushed down to the Borrower and its Restricted Subsidiaries),
(n)    accruals and reserves that are established or adjusted in connection with an Investment or an acquisition that are required to be established or adjusted as a result of such Investment or such acquisition, in each case, in accordance with GAAP,
(o)    (i) Non-Cash Charges, (ii) any impairment charges or asset write-off or write-down, in each case pursuant to GAAP, and the amortization of intangibles arising pursuant to GAAP; and (iii) any impairment charges, asset writeoff or write-down, including ceiling test write-downs on Oil and Gas Properties under GAAP or SEC guidelines,
(p)    any non-cash gain (loss) attributable to the mark to market movement in the valuation of Hedging Obligations or other derivative instruments pursuant to FASB Accounting Standards Codification Topic 815—Derivatives and Hedging or mark to market movement of other financial instruments pursuant to FASB Accounting Standards Codification Topic 825—Financial Instruments,
(q)    any net unrealized gain or loss (after any offset) resulting in such period from currency transaction or translation gains or losses including those related to
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currency remeasurements of Indebtedness (including any net loss or gain resulting from (a) Hedging Obligations for currency exchange risk and (b) resulting from intercompany indebtedness) and any other foreign currency transaction or translation gains and losses, to the extent such gain or losses are non-cash items,
(r)    any non-cash rent expense, and
(s)    earn-out and contingent consideration obligations (including to the extent accounted for as bonuses or otherwise) and adjustments thereof and purchase price adjustments.
In addition, to the extent not already included in the Consolidated Net Income of the Borrower and its Restricted Subsidiaries, Consolidated Net Income shall include the amount of proceeds received or receivable from business interruption insurance, the amount of any expenses or charges incurred by the Borrower or its Restricted Subsidiaries during such period that are, directly or indirectly, reimbursed or reimbursable by a third party, and amounts that are covered by indemnification or other reimbursement provisions in connection with any acquisition, Investment or any sale, conveyance, transfer or other disposition of assets permitted under this Agreement.
“Consolidated Total Debt” shall mean, as of any date of determination, (a) all Indebtedness of the types described in clauses (a) and (b) (other than intercompany Indebtedness owing to the Borrower or any Restricted Subsidiary), clause (d) (but, in the case of clause (d), only to the extent of any unreimbursed drawings under any letter of credit) and clause (f) of the definition thereof, in each case actually owing by the Borrower and the Restricted Subsidiaries on such date and to the extent appearing on the balance sheet of the Borrower determined on a consolidated basis in accordance with GAAP (provided that the amount of any Capitalized Lease Obligations or any such Indebtedness issued at a discount to its face value shall be determined in accordance with GAAP) minus (b) the aggregate amount of Unrestricted Cash listed on the consolidated balance sheet of the Borrower and the Restricted Subsidiaries at such date; provided that, if at as of any such date of determination the aggregate Total Revolving Credit Exposures exceed 5% of the Loan Limit, the amount deducted from Consolidated Total Debt pursuant to this (b) shall not exceed 10% of the Loan Limit as of such date of determination.
“Consolidated Total Debt to Consolidated EBITDAX Ratio” shall mean, as of any date of determination, the ratio of (a) Consolidated Total Debt as of the last day of the most recent Test Period ended on or prior to such date of determination to (b) Consolidated EBITDAX for such Test Period.
“Contractual Requirement” shall have the meaning provided in Section 8.3.
“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract or otherwise. “Controlling” and “Controlled” shall have meanings correlative thereto.
“Controlled Investment Affiliate” shall mean, as to any Person, any other Person, other than any Sponsor, which directly or indirectly is in Control of, is Controlled by, or is under
23

common Control with such Person and is organized by such Person (or any Person Controlling such Person) primarily for making direct or indirect equity or debt investments in the Borrower and/or other companies.
“Converted Restricted Subsidiary” shall have the meaning provided in the definition of the term “Consolidated EBITDAX.”
“Converted Revolving Loans” shall mean the revolving loans made by the Lenders to the Borrower pursuant to Section 2.1(d).
“Converted Revolving Loan Commitment” shall mean with respect to each Initial Term Lender with respect to each Revolving Loan Conversion on any Revolving Loan Conversion Date, an amount equal to the product of (a) the Excess Conforming Borrowing Base on such Revolving Loan Conversion Date and (b) such Initial Term Lender’s Term Loan Commitment Percentage on such Revolving Loan Conversion Date.
“Converted Term Loans” shall mean the term loans made by the Lenders to the Borrower pursuant to Section 2.1(c).
“Converted Term Loan Commitment” shall mean with respect to each Revolving Lender with respect to each Term Loan Conversion on any Term Loan Conversion Date, an amount equal to the product of (a) the Excess Revolving Loans on such Term Loan Conversion Date and (b) such Revolving Lender’s Revolving Commitment Percentage on such Term Loan Conversion Date.
“Converted Unrestricted Subsidiary” shall have the meaning provided in the definition of the term “Consolidated EBITDAX.”
“Corresponding Tenor” with respect to any Available Tenor means, as applicable, either a tenor (including overnight) or an interest payment period having approximately the same length (disregarding business day adjustment) as such Available Tenor.
“Covered Entity” shall mean any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FS1” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
“Covered Party” shall have the meaning assigned to such term in Section 13.28(b).
“Credit Documents” shall mean this Agreement, the Guarantee, the Security Documents, each Letter of Credit, any promissory notes issued by the Borrower under this Agreement, any Extension Amendment and any Customary Intercreditor Agreement entered into after the Closing Date to which the Collateral Agent is party, and any Incremental Agreement.
“Credit Event” shall mean and include the making (but not the conversion or continuation) of a Loan and the issuance of a Letter of Credit.
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“Credit Exposure” shall mean, as to any Lender at any time, the sum of (a) the unused Revolving Commitments of such Lender, (b) the Revolving Credit Exposures of such Lender and (c) the Term Loan Exposure of such Lender at such time.
“Credit Party” shall mean each of the Borrower and the Guarantors.
“Cure Amount” shall have the meaning provided in Section 11.13(a).
“Cure Deadline” shall have the meaning provided in Section 11.13(a).
“Cure Right” shall have the meaning provided in Section 11.13(a).
“Current Assets” shall mean, at any date, without duplication, the sum of all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current assets” (or any like caption) on a consolidated balance sheet of the Borrower and the Restricted Subsidiaries at such date, plus the Available Commitment, but excluding (a) all non-cash assets under ASC 815 and ASC 842 and (b) the aggregate amount of any deposits (in each case, whether in cash or otherwise) posted by the Borrower or any of its Restricted Subsidiaries to secure Hedging Obligations owing by such Persons or to cover market exposures.
“Current Liabilities” shall mean, at any date, without duplication, the sum of all amounts that would, in conformity with GAAP, be set forth opposite the caption “total current liabilities” (or any like caption) on a consolidated balance sheet of the Borrower and the Restricted Subsidiaries on such date, but excluding, without duplication, (a) the liabilities related to the return of any deposits (in each case, whether cash or otherwise) posted to the Borrower or any of its Restricted Subsidiaries to secure any counterparty’s Hedging Obligations owing to the Borrower or any of its Restricted Subsidiaries or to cover such counterparty’s market exposure, (b) the current portion of any Funded Debt, (c) all Indebtedness (including Letters of Credit Outstanding) under this Agreement, or under any Permitted Refinancing Indebtedness in respect of either thereof, in each case, to the extent otherwise included therein, (d) the current portion of interest, (e) the current portion of current and deferred income taxes or any amounts payable as tax distributions, (f) any non-cash liabilities recorded in connection with stock-based, partnership interest-based or similar incentive-based compensation awards or arrangements, (g) any other liabilities that are not Indebtedness and will not be settled in cash or Permitted Investments during the next succeeding twelve month period after such date, (h) the effects from applying purchase accounting, (i) non-cash obligations under ASC 815 and ASC 842, (j) Indebtedness of a Credit Party incurred for the purpose of funding any deposit paid in the ordinary course of business to a seller of Oil and Gas Properties (or its designee) in advance of the acquisition thereof by any Credit Party while such Credit Party is awaiting the receipt of the proceeds of a capital call, provided that such Indebtedness is repaid in full within 20 Business Days of being incurred, and (k) Indebtedness of a Credit Party for the purpose of funding working capital while such Credit Party is awaiting the receipt of a capital call, provided that such Indebtedness is repaid in full within 45 Business Days of being incurred.
“Current Ratio” shall mean, as of any date of determination, the ratio of (a) Current Assets as of the last day of the most recent Test Period ended on or prior to such date of determination to (b) Current Liabilities as of the last day of such Test Period.
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“Customary Intercreditor Agreement” shall mean an intercreditor agreement substantially in the form of Exhibit C (which agreement in such form or with immaterial changes thereto the Collateral Agent is irrevocably authorized (and each Lender hereby irrevocably directs the Collateral Agent) to enter into) or otherwise reasonably acceptable to the Administrative Agent and the Borrower, the subsidiaries of the Borrower from time to time party thereto, the Collateral Agent and one or more collateral agents or representatives for the holders of Indebtedness that is permitted under Section 10.2(w) to be, and intended to be, secured on a junior basis to the Obligations.
“Daily Simple SOFR” means, for any day (a “SOFR Day”), a rate per annum equal SOFR for the day that is five (5) U.S. Government Securities Business Days prior to (i) if such SOFR Day is a U.S. Government Securities Business Day, such SOFR Day or (ii) if such SOFR Day is not a U.S. Government Securities Business Day, the U.S. Government Securities Business Day immediately preceding such SOFR Day, in each case, as such SOFR is published by the SOFR Administrator on the SOFR Administrator’s Website. Any change in Daily Simple SOFR due to a change in SOFR shall be effective from and including the effective date of such change in SOFR without notice to the Borrower. For the avoidance of doubt, if the Daily Simple SOFR shall be less than the Floor, such rate shall be deemed to be the Floor for purposes of this Agreement.
“Daily Simple SOFR Loan” shall mean any Loan bearing interest at a rate determined by reference to Daily Simple SOFR.
“Debt Fund Affiliate” shall mean any Affiliate of the Sponsor that is a bona fide diversified debt fund and is not either (a) a natural person or (b) the Borrower, a Subsidiary of the Borrower.
“Default” shall mean any event, act or condition that with notice or lapse of time, or both, would constitute an Event of Default.
“Default Rate” shall have the meaning provided in Section 2.8(c).
“Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
“Defaulting Lender” shall mean any Lender whose acts or failure to act, whether directly or indirectly, cause it to meet any part of the definition of “Lender Default”.
“Deferred Net Cash Proceeds” shall have the meaning provided in the definition of “Net Cash Proceeds”.
“Deferred Net Cash Proceeds Payment Date” shall have the meaning provided in the definition of “Net Cash Proceeds”.
“Designated Persons” shall mean any Person:
(i)    named as a “Specially Designated National and Blocked Person” (“SDN”) on the most current list (the “SDN List”) published by OFAC at its official website or any replacement website or other replacement official publication of such list; or is otherwise the subject of any Sanctions Laws and Regulations; or
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(ii)    in which any Person on the SDN List has 50% or greater ownership interest or that is otherwise controlled by an SDN.
“Discharge of Initial Term Loan Obligations” shall mean the payment in full in cash of the principal of and interest on all Initial Term Loans and the termination of the Initial Term Loan Commitments.
    “Disposed EBITDAX” shall mean, with respect to any Sold Entity or Business or any Converted Unrestricted Subsidiary for any period, the amount for such period of Consolidated EBITDAX of such Sold Entity or Business or Converted Unrestricted Subsidiary (determined as if references to the Borrower and the Restricted Subsidiaries in the definition of Consolidated EBITDAX were references to such Sold Entity or Business or Converted Unrestricted Subsidiary and its respective Subsidiaries), all as determined on a consolidated basis for such Sold Entity or Business or Converted Unrestricted Subsidiary, as the case may be.
“Disposition” shall have the meaning provided in Section 10.4. “Dispose” and “Disposed” shall have a correlative meaning.
“Disqualified Institution” shall mean (i) those Persons that have been specified in writing by the Borrower to the Administrative Agent prior to the Closing Date and (ii) any competitor of the Borrower and its Subsidiaries and any Affiliates of such competitor that are operating companies (or Affiliates of operating companies) subsequently identified in writing by the Borrower, other than their respective financial investors that are not operating companies and other than any Debt Fund Affiliate. The list of Disqualified Institutions shall be specified on a schedule that is held with the Administrative Agent, which shall be made available to any Lender upon request to the Administrative Agent, subject to customary confidentiality requirements. Notwithstanding the foregoing, “Disqualified Institution” shall not include any Person that (i) has acquired an assignment or participation interest, (ii) entered into a trade for either of the foregoing or (iii) becomes a competitor of the Borrower, in each case, before such entity is added to the list of Disqualified Institutions.
“Disqualified Stock” shall mean, with respect to any Person, any Stock or Stock Equivalents of such Person which, by its terms, or by the terms of any security into which it is convertible or for which it is putable or exchangeable, or upon the happening of any event, matures or is mandatorily redeemable (other than solely for Stock or Stock Equivalents that is not Disqualified Stock), other than as a result of a change of control or asset sale, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof (other than as a result of a change of control or asset sale to the extent the terms of such Stock or Stock Equivalents provide that such Stock or Stock Equivalents shall not be required to be repurchased or redeemed until the Latest Maturity Date has occurred or such repurchase or redemption is otherwise permitted by this Agreement (including as a result of a waiver hereunder)), in whole or in part, in each case prior to the date that is 91 days after the Latest Maturity Date hereunder; provided that, if such Stock or Stock Equivalents are issued pursuant to any plan for the benefit of future, present or former employees, directors, officers, members of management or consultants (or their respective Controlled Investment Affiliates or immediate family members) of the Borrower or its Subsidiaries (or any direct or indirect parent thereof) or by any such plan to such employees, directors, officers, members of management or consultants (or their
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respective Controlled Investment Affiliates or immediate family members), such Stock or Stock Equivalents shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Borrower or its Subsidiaries (or any direct or indirect parent thereof) in order to satisfy applicable statutory or regulatory obligations; provided, further, that any Stock or Stock Equivalents held by any future, present or former employee, director, officer, manager or consultant of the Borrower, any of its Subsidiaries or any of its direct or indirect parent companies or any other entity in which the Borrower or a Restricted Subsidiary has an Investment and is designated in good faith as an “affiliate” by the board of directors or managers of the Borrower, in each case pursuant to any equity holders’ agreement, management equity plan or stock incentive plan or any other management or employee benefit plan or agreement shall not constitute Disqualified Stock solely because it may be required to be repurchased by the Borrower or its Subsidiaries.
“Dividends” shall have the meaning provided in Section 10.6.
“Dollars” and “$” shall mean dollars in lawful currency of the United States of America.
“Domestic Subsidiary” shall mean each Subsidiary of the Borrower that is organized under the laws of the United States or any state thereof, or the District of Columbia.
“Drawing” shall have the meaning provided in Section 3.4(b).
“EEA Financial Institution” shall mean (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“EEA Member Country” shall mean any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“EEA Resolution Authority” shall mean any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“Elected Commitment Amount” shall mean, (a) with respect to each Revolving Lender as of the Closing Date, the amount set forth opposite such Revolving Lender’s name on Schedule 1.1(a) as such Revolving Lender’s “Elected Commitment Amount” and (b) in the case of any Person that becomes a Revolving Lender after the Closing Date, the amount specified as such Revolving Lender’s “Elected Commitment Amount” in the Assignment and Acceptance or in the Incremental Agreement pursuant to which such Revolving Lender assumed a portion of the Total Revolving Commitment, in each case as the same may be changed from time to time pursuant to the terms of this Agreement.
“Electronic Record” has the meaning assigned to that term in, and shall be interpreted in accordance with, 15 U.S.C. 7006.
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“Electronic Signature” has the meaning assigned to that term in, and shall be interpreted in accordance with, 15 U.S.C. 7006.
“Engineering Reports” shall have the meaning provided in Section 2.14(c).
“Environmental Claims” shall mean any and all actions, suits, orders, decrees, demands, demand letters, claims, liens, notices of noncompliance, violations or potential responsibility or investigation (other than internal reports prepared by or on behalf of the Borrower or any of the Subsidiaries (a) in the ordinary course of such Person’s business or (b) as required in connection with a financing transaction or an acquisition or disposition of real estate) or proceedings arising under or based upon any Environmental Law or any permit required under any such Environmental Law, including, without limitation, (i) any by Governmental Authorities for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law and (ii) any by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief relating to the presence, release or threatened release of Hazardous Materials or arising from alleged injury to any Person (to the extent relating to human exposure to Hazardous Materials), or the environment including, without limitation, ambient air, surface water, groundwater, land surface and subsurface strata and natural resources such as wetlands.
“Environmental Law” shall mean any applicable federal, state, foreign or local statute, law, rule, regulation, ordinance, code and rule of common law now or hereafter in effect and in each case as amended, and any legally binding judicial or administrative interpretation thereof, including any legally binding judicial or administrative order, consent decree or judgment, relating to the protection of the environment, including, without limitation, ambient air, surface water, groundwater, land surface and subsurface strata and natural resources such as wetlands, or human health or safety (to the extent relating to human exposure to Hazardous Materials), or Hazardous Materials.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. Section references to ERISA are to ERISA as in effect on the Closing Date and any subsequent provisions of ERISA amendatory thereof, supplemental thereto or substituted therefor.
“ERISA Affiliate” shall mean each person (as defined in Section 3(9) of ERISA) that together with the Borrower would be deemed to be a “single employer” within the meaning of Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.
“Erroneous Payment” shall have the meaning provided in Section 12.16.
“EU Bail-In Legislation Schedule” shall mean the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time.
“Event of Default” shall have the meaning provided in Section 11.
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“Excess Cash” means, as of any date of determination, the aggregate amount of cash and Permitted Investments of the Borrower and its Restricted Subsidiaries (other than Excluded Cash) in excess of an amount equal to (i) for purposes of Section 5.2(c)(iii), either (x) at any time (other than during an Excess Cash Borrowing Base Deficiency Period), $5,000,000 or (y) at any time during an Excess Cash Borrowing Base Deficiency Period, $1,000,000; or (ii) for purposes of Section 5.2(f) and Section 7.2, $15,000,000.
(i)“Excess Cash Borrowing Base Deficiency Period” shall mean the period from and including the date on which the Borrower elects (or is deemed to have elected) to cure a Borrowing Base Deficiency pursuant to Section 5.2(c)(iv)(A)(5) through and including the date on which such Borrowing Base Deficiency is reduced to zero.
(ii)“Excess Cash Prepayment Date” shall have the meaning provided in Section 5.2(c)(iii).
(iii)“Excess Cash Prepayment Test Date” means, prior to the Initial Term Loans Repayment Date, the date that is the 15th day of each calendar month (or if such day is not a Business Day, the next succeeding Business Day), commencing with April 15, 2026.
(iv)“Excess Cash Prepayment Amount” means, with respect to any Excess Cash Prepayment Test Date, the amount of Excess Cash on such Excess Cash Prepayment Test Date.
“Excess Conforming Borrowing Base” shall mean, on any Redetermination Date to occur prior to the Initial Term Loans Repayment Date, the amount by which the Conforming Borrowing Base as redetermined on such Redetermination Date exceeds the Revolving Loans then outstanding.
“Excess Initial Term Loans” shall mean, with respect to any Borrowing Base Deficiency at any time prior to the Initial Term Loans Repayment Date, an amount of Initial Term Loans then outstanding equal to the amount of such Borrowing Base Deficiency.
“Excess Revolving Loans” shall mean, on any Redetermination Date to occur prior to the Initial Term Loans Repayment Date, the amount of Revolving Loans then outstanding in excess of the Conforming Borrowing Base as redetermined on such Redetermination Date.
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Exchange Rate” shall mean on any day with respect to any currency (other than Dollars), the rate at which such currency may be exchanged into any other currency (including Dollars), as set forth at approximately 11:00 a.m. (London time) on such day on the Reuters World Currency Page for such currency. In the event that such rate does not appear on any Reuters World Currency Page, the Exchange Rate shall be determined by reference to such other publicly available service for displaying exchange rates as may be agreed by the Administrative Agent and the Borrower, or, in the absence of such agreement, such Exchange Rate shall instead be the arithmetic average of the spot rates of exchange of the Administrative Agent in the market where its foreign currency exchange operations in respect of such currency are then being conducted, at or about 11:00 a.m., local time, on such date for the purchase of the relevant currency for delivery two Business Days later.
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“Excluded Accounts” shall mean (a) each account all or substantially all of the deposits in which consist of amounts utilized to fund payroll, employee benefit or tax obligations of the Borrower and its Restricted Subsidiaries, (b) fiduciary accounts, trust accounts and suspense accounts of the Borrower and any Restricted Subsidiary holding royalty obligations, (c) escrow accounts or other similar accounts used solely for escrow funds or other deposits in connection with acquisitions or dispositions that are subject to an executed purchase and sale agreement, (d) “zero balance” accounts, (e) accounts of the Borrower and any Restricted Subsidiary constituting cash collateral accounts permitted under Section 10.2(b) (provided that any such account subject to control agreements in favor of the Collateral Agent, for the benefit of the Secured Parties, or otherwise constituting cash collateral in favor of the Collateral Agent, for the benefit of the Secured Parties shall not be an Excluded Account) and (f) after the Initial Term Loans Repayment Date, other accounts selected by the Borrower and its Restricted Subsidiaries so long as the average daily maximum balance in any such other account over a 30-day period does not at any time exceed $3,000,000; provided that the aggregate daily maximum balance for all such bank accounts excluded pursuant to this clause (f) on any day shall not exceed $10,000,000.
“Excluded Cash” shall mean, as of any date of determination, without duplication, (a) any cash or Permitted Investments to be used (i) to pay obligations of the Borrower or any Restricted Subsidiary then due and owing or to make Dividends, debt prepayments, Investments or other acquisitions not prohibited by this Agreement or (ii) to pay bona fide royalty obligations, working interest obligations, production payments, vendor payments and suspense payments due and owing in each case of clauses (i) and (ii), for which the Borrower or such Restricted Subsidiary (x) has issued checks or has initiated wires or ACH transfers (but which amounts have not, as of such time, been subtracted from the balance in the relevant account of the Borrower or such Restricted Subsidiary) or (y) reasonably anticipates in good faith that it will issue checks or initiate wires or ACH transfers within ten (10) Business Days thereafter, (b) any cash or Permitted Investments held in Excluded Accounts or in other accounts, in each case designated and used solely for one or more of the following purposes: (i) payroll or employee wage and benefit payments, (ii) the payment of taxes, including severance and ad valorem taxes, payroll taxes and other taxes of the Borrower or any Restricted Subsidiary that are due and payable within the existing fiscal quarter, or (iii) to pay trust and fiduciary obligations of the Borrower or any Restricted Subsidiary, (c) any cash or Permitted Investments held for the Cash Collateralization of Letters of Credit, (d) while and to the extent refundable, any cash or Permitted Investments held by the Borrower or any Restricted Subsidiary constituting purchase price deposits pursuant to a binding and enforceable purchase and sale agreement containing customary provisions regarding the payment and refunding of such deposits, (e) any cash or Permitted Investments (including any proceeds of a Borrowing) held by the Borrower or any Restricted Subsidiary in good faith to fund any customary deposit in the nature of earnest money with respect to, or the purchase price of, any future acquisition permitted under this Agreement, provided that the Borrower shall have provided written notice of its intention to make such acquisition to the Administrative Agent at or prior to such time, (f) any proceeds of a Borrowing used to make Dividends, debt prepayments, Investments or other acquisitions not prohibited under this Agreement, in each case to the extent the Borrower has provided notice to the Administrative Agent of such purpose on or prior to the date of such Borrowing, (g) any cash or Permitted Investments used in connection with the unwinding or termination of any Hedge Agreement permitted under Section 10.4(l), (h) any cash set aside to make settlement payments in respect of any Hedging Obligations that are due and payable within ten (10) Business Days of such date, and (i) any proceeds of common capital contributions made in cash to, or any proceeds
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of an equity issuance (other than Disqualified Capital Stock) received by, the Borrower, which the Borrower expects to use to fund the purchase price of or a deposit in connection with any acquisition permitted under this Agreement, provided that (i) the Borrower has provided notice to the Administrative Agent of such purpose on or prior to the date of such capital contribution or equity issuance (or such later date as the Administrative Agent may agree in its reasonable discretion) and (ii) such cash proceeds shall constitute Excluded Cash from the date of such capital contribution or equity issuance through and including the tenth Business Day after such capital contribution or equity issuance; provided that, in the case of clauses (e) and (f), such proceeds of a Borrowing shall only constitute Excluded Cash from the date of such Borrowing through and including the tenth Business Day after such Borrowing; provided, further that, notwithstanding anything to the contrary contained in this definition, prior to the Initial Term Loans Repayment Date, “Excluded Cash” shall be limited to the cash and Permitted Investments described in the foregoing clauses (a)(ii), (b), (c), (d), (e) (in the case of clause (e), other than during any Excess Cash Borrowing Base Deficiency Period), (h) and (i) (in the case of clause (i), other than during any Excess Cash Borrowing Base Deficiency Period).
“Excluded Stock” shall mean (a) any Stock or Stock Equivalents with respect to which, in the reasonable judgment of the Administrative Agent (confirmed in writing by notice to the Borrower and the Collateral Agent), the cost or other consequences of pledging such Stock or Stock Equivalents in favor of the Secured Parties under the Security Documents shall be excessive in view of the benefits to be obtained by the Secured Parties therefrom, (b) solely in the case of any pledge of Stock or Stock Equivalents of any Foreign Corporate Subsidiary or FSHCO to secure the Obligations, any Stock or Stock Equivalents that is Voting Stock of such Foreign Corporate Subsidiary or FSHCO in excess of 65% of the Voting Stock of such Subsidiary, (c) any Stock or Stock Equivalents to the extent the pledge thereof would be prohibited by any Requirement of Law, (d) in the case of (i) any Stock or Stock Equivalents of any Subsidiary to the extent the pledge of such Stock or Stock Equivalents is prohibited by Contractual Requirements or (ii) any Stock or Stock Equivalents of any Subsidiary that is not wholly owned by the Borrower and its Restricted Subsidiaries at the time such Subsidiary becomes a Subsidiary, any Stock or Stock Equivalents of each such Subsidiary described in clause (d)(i) or (d)(ii) to the extent (A) that a pledge thereof to secure the Obligations is prohibited by any applicable Contractual Requirement (other than customary non-assignment provisions which are ineffective under the Uniform Commercial Code or other applicable Requirements of Law), (B) any Contractual Requirement prohibits such a pledge without the consent of any other party; provided that this clause (B) shall not apply if (1) such other party is a Credit Party or a wholly owned Restricted Subsidiary or (2) consent has been obtained to consummate such pledge (it being understood that the foregoing shall not be deemed to obligate the Borrower or any Subsidiary to obtain any such consent) and only for so long as such Contractual Requirement or replacement or renewal thereof is in effect, or (C) a pledge thereof to secure the Obligations would give any other party (other than a Credit Party or a wholly owned Restricted Subsidiary) to any Contractual Requirement governing such Stock or Stock Equivalents the right to terminate its obligations thereunder (other than customary non-assignment provisions that are ineffective under the Uniform Commercial Code or other applicable Requirement of Law), (e) the Stock or Stock Equivalents of any Immaterial Subsidiary (unless a security interest in the Stock or Stock Equivalents of such Subsidiary may be perfected by filing an “all assets” UCC financing statement) and any Unrestricted Subsidiary, (f) the Stock or Stock Equivalents of any Subsidiary of a Foreign Corporate Subsidiary or FSHCO, (g) any Stock or Stock Equivalents of any Subsidiary to the extent that the pledge of
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such Stock or Stock Equivalents would result in material adverse tax consequences to the Borrower or any Subsidiary as reasonably determined by the Borrower in consultation with the Administrative Agent and (h) any Stock or Stock Equivalents set forth on Schedule 1.1(b) which have been identified on or prior to the Closing Date in writing to the Administrative Agent by an Authorized Officer of the Borrower and agreed to by the Administrative Agent; provided, further, that, notwithstanding anything herein to the contrary, (a) the Stock and Stock Equivalents of any Restricted Subsidiary owning Borrowing Base Properties shall not be Excluded Stock and (b) prior to the Initial Term Loans Repayment Date, the Stock and Stock Equivalents of any Material Subsidiary shall not be Excluded Stock.
“Excluded Subsidiary” shall mean (a) each Domestic Subsidiary listed on Schedule 1.1(c) and each future Domestic Subsidiary, in each case, for so long as any such Subsidiary does not constitute a Material Subsidiary, (b) each Domestic Subsidiary that is not a wholly owned Subsidiary on any date such Subsidiary would otherwise be required to become a Guarantor pursuant to the requirements of Section 9.11 (for so long as such Subsidiary remains a non-wholly owned Restricted Subsidiary), (c) [reserved], (d) each Domestic Subsidiary that is prohibited by any applicable Contractual Requirement or Requirement of Law from guaranteeing or granting Liens to secure the Obligations at the time such Subsidiary becomes a Restricted Subsidiary (and for so long as such restriction or any replacement or renewal thereof is in effect) or that would require consent, approval, license or authorization of a Governmental Authority to guarantee or grant Liens to secure the Obligations at the time such Subsidiary becomes a Restricted Subsidiary (unless such consent, approval, license or authorization has been received), (e) each Domestic Subsidiary that is a Subsidiary of a Foreign Corporate Subsidiary, (f) each FSHCO, (g) each other Domestic Subsidiary acquired pursuant to a Permitted Acquisition or other Investment permitted by Section 10.5 financed with secured Indebtedness incurred pursuant to Section 10.1(j) and permitted by the proviso in Section 10.1(j)(iii) and each Restricted Subsidiary thereof that guarantees such Indebtedness to the extent and so long as the financing documentation relating to such Permitted Acquisition or other Investment permitted by Section 10.5 to which such Restricted Subsidiary is a party prohibits such Restricted Subsidiary from guaranteeing or granting a Lien on any of its assets to secure the Obligations, (h) each not-for-profit Subsidiary, (i) each Captive Insurance Subsidiary, (j) [reserved], (k) any other Domestic Subsidiary with respect to which, (x) in the reasonable judgment of the Administrative Agent and the Borrower, the cost or other consequences of providing a Guarantee of the Obligations shall be excessive in view of the benefits to be obtained by the Lenders therefrom or (y) providing such a Guarantee would result in material adverse tax consequences as reasonably determined by the Borrower, and (l) each Unrestricted Subsidiary; provided that, notwithstanding anything herein to the contrary, (i) no Restricted Subsidiary owning Borrowing Base Properties shall be an Excluded Subsidiary and (ii) prior to the Initial Term Loans Repayment Date, no Material Subsidiary shall constitute an Excluded Subsidiary.
“Excluded Swap Obligation” shall mean, with respect to any Credit Party, (a) any Swap Obligation if, and to the extent that, all or a portion of the guarantee of such Credit Party pursuant to the Guarantee of, or the grant by such Guarantor of a security interest to secure, such Swap Obligation (or any guarantee pursuant to the Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation, or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) or (b) any other Swap Obligation designated as an “Excluded Swap Obligation” of such Credit Party as specified
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in any agreement between the relevant Credit Parties and Hedge Bank applicable to such Swap Obligations. If a Swap Obligation arises under a Master Agreement governing more than one Swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to the Swap for which such guarantee or security interest is or becomes excluded in accordance with the first sentence of this definition.
“Excluded Taxes” shall mean, with respect to the Administrative Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of any Credit Party hereunder or under any other Credit Document (each, a “Recipient”), (i) Taxes imposed on or measured by its net income or branch profits (however denominated), and franchise (and similar) Taxes imposed on it, in each case by a jurisdiction (including any political subdivision thereof) as a result of such Recipient being organized in, having its principal office in, or in the case of any Lender, having its applicable lending office in, such jurisdiction, or as a result of any other present or former connection with such jurisdiction (other than any such connection arising solely from this Agreement or any other Credit Documents or any transactions contemplated thereunder), (ii) except in the case of a Lender that is an assignee pursuant to a request by the Borrower under Section 13.7, any U.S. federal withholding Tax imposed on any payment by or on account of any obligation of any Credit Party with respect to an interest in an applicable Loan or Commitment that is required to be imposed on amounts payable to such Lender pursuant to laws in force at the time such Lender acquires such interest in the Loan or Commitment (or designates a new lending office), except to the extent that such Lender (or its assignor, if any) was entitled, immediately prior to the designation of a new lending office (or assignment), to receive additional amounts or indemnification payments from any Credit Party with respect to such withholding Tax pursuant to Section 5.4, (iii) Taxes attributable to such Recipient’s failure to comply with Section 5.4 or (iv) any Tax imposed under FATCA.
“Excluded Term Loan Exposures” shall mean the Term Loan Exposures of Term Lenders holding Term Loans with respect to which the terms of the Term Loan Amendments for such Term Loans specifically state that such Term Loans and the Term Loan Exposure attributable to such Term Loans shall not be included for purposes of determining the “Borrowing Base Required Lenders”, the “Majority Lenders” or the “Required Lenders” for any purpose under this Agreement.
“Existing Class” shall mean an Existing Revolving Class or an Existing Term Class, as applicable.
“Existing Commitment” shall mean an Existing Revolving Commitment or an Existing Term Commitment, as applicable.
“Existing Loans” means Existing Revolving Loans or Existing Term Loans, as applicable.
“Existing Revolving Class” shall have the meaning provided in Section 2.17.
“Existing Revolving Commitment” shall have the meaning provided in Section 2.17.
“Existing Revolving Loans” shall have the meaning provided in Section 2.17.
“Existing Term Class” shall have the meaning provided in Section 2.17.
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“Existing Term Commitment” shall have the meaning provided in Section 2.17.
“Existing Term Loans” shall have the meaning provided in Section 2.17.
“Extended Commitments” shall mean Extended Revolving Commitments or Extended Term Commitments, as applicable.
“Extended Loans” shall mean Extended Revolving Loans or Extended Term Loans, as applicable.
“Extended Revolving Commitments” shall have the meaning provided in Section 2.17.
“Extended Revolving Loans” shall have the meaning provided in Section 2.17.
“Extended Term Commitments” shall have the meaning provided in Section 2.17.
“Extended Term Loan Facility” means any Extended Term Loans of a given Term Loan Extension Series.
“Extended Term Loans” has the meaning set forth in Section 2.17.
“Extending Lender” shall have the meaning provided in Section 2.17.
“Extension Amendment” shall have the meaning provided in Section 2.17.
“Extension Date” shall have the meaning provided in Section 2.17.
“Extension Election” shall have the meaning provided in Section 2.17.
“Extension Request” shall have the meaning provided in Section 2.17.
“Extension Series” shall mean all Extended Commitments that are established pursuant to the same Extension Amendment (or any subsequent Extension Amendment to the extent such Extension Amendment expressly provides that the Extended Commitments provided for therein are intended to be a part of any previously established Extension Series) and that provide for the same interest margins, extension fees, maturity and other terms.
“Facility” means each of (a) any Term Loan Facility, (b) any Extended Term Loan Facility and (c) the Revolving Commitments and the Revolving Loans made thereunder, and “Facilities” shall be a collective reference to each of the foregoing.
“Fair Market Value” shall mean, with respect to any asset or group of assets on any date of determination, the value of the consideration obtainable in a Disposition of such asset at such date of determination assuming a Disposition by a willing seller to a willing purchaser dealing at arm’s length and arranged in an orderly manner over a reasonable period of time having regard to the nature and characteristics of such asset, as reasonably determined by the Borrower.
“Fair Value” shall mean the amount at which the assets (both tangible and intangible), in their entirety, of the Borrower and its Subsidiaries taken as a whole would change hands between
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a willing buyer and a willing seller, within a commercially reasonable period of time, each having reasonable knowledge of the relevant facts, with neither being under any compulsion to act.
“FATCA” shall mean Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future Treasury Regulations promulgated thereunder or official administrative interpretations thereof, any agreement entered into pursuant to Section 1471(b)(1) of the Code, any intergovernmental agreement, treaty or convention implementing any of the foregoing, and any law, regulation, rule, promulgation or official agreement implementing any of the foregoing.
“Federal Funds Effective Rate” means, for any day, the rate calculated by the NYFRB based on such day’s federal funds transactions by depositary institutions, as determined in such manner as shall be set forth on the NYFRB’s Website from time to time, and published on the next succeeding Business Day by the NYFRB as the effective federal funds rate; provided that if the Federal Funds Effective Rate as so determined would be less than zero, such rate shall be deemed to be zero for the purposes of this Agreement.
“Financial Performance Covenants” shall mean the covenants of the Borrower set forth in Section 10.11.
“Fitch” means Fitch Ratings Inc. or any successor by merger or consolidation to its business.
“Flood Insurance Laws” shall mean the National Flood Insurance Act of 1968 and the Flood Disaster Protection Act of 1973, the National Flood Insurance Reform Act of 1994, the Biggert-Waters Flood Insurance Reform Act of 2012 and the regulations issued in connection therewith by the Office of the Comptroller of the Currency, the Board and other Governmental Authorities, each as it may be amended, reformed or otherwise modified from time to time.
“Floor” means the benchmark rate floor, if any, provided in this Agreement initially (as of the execution of this Agreement, the modification, amendment or renewal of this Agreement or otherwise) with respect to Term SOFR or Daily Simple SOFR, as applicable. For the avoidance of doubt, the initial Floor for each of Term SOFR or Daily Simple SOFR shall be 0.00%.
“Foreign Corporate Subsidiary” shall mean a Foreign Subsidiary that is treated as a “controlled foreign corporation” within the meaning of Section 957 of the Code any shares of which are treated as owned directly or indirectly by a United States Shareholder (within the meaning of Section 951(b) of the Code) as measured for purposes of Section 958(a) of the Code.
“Foreign Plan” shall mean any employee benefit plan, program, policy, arrangement or agreement maintained or contributed to by the Borrower or any of its Subsidiaries with respect to employees employed outside the United States.
“Foreign Subsidiary” shall mean each Subsidiary of the Borrower that is not a Domestic Subsidiary.
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“Fronting Fee” shall have the meaning provided in Section 4.1(c).
“FSHCO” shall mean any direct or indirect Subsidiary substantially all of the assets of which consist of Stock, Stock Equivalents or Stock, Stock Equivalents and Indebtedness of one or more direct or indirect Foreign Corporate Subsidiaries.
“Fund” shall mean any Person (other than a natural person) that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course.
“Funded Debt” shall mean all indebtedness of the Borrower and the Restricted Subsidiaries for borrowed money that matures more than one year from the date of its creation or matures within one year from such date that is renewable or extendable, at the option of the Borrower or any Restricted Subsidiary, to a date more than one year from such date or arises under a revolving credit or similar agreement that obligates the lender or lenders to extend credit during a period of more than one year from such date, including all amounts of Funded Debt required to be paid or prepaid within one year from the date of its creation and, in the case of the Borrower, Indebtedness in respect of the Loans.
“GAAP” shall mean generally accepted accounting principles in the United States of America, as in effect from time to time.
“Governmental Authority” shall mean any nation, sovereign or government, any state, province, territory or other political subdivision thereof, and any entity or authority exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including a central bank or stock exchange.
“Guarantee” shall mean the Guarantee made by any Guarantor in favor of the Collateral Agent for the benefit of the Secured Parties, substantially in the form of Exhibit D.
“Guarantee Obligations” shall mean, as to any Person, any obligation of such Person guaranteeing or intended to guarantee any Indebtedness of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of such Person, whether or not contingent, (a) to purchase any such Indebtedness or any property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any such Indebtedness or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such Indebtedness of the ability of the primary obligor to make payment of such Indebtedness or (d) otherwise to assure or hold harmless the owner of such Indebtedness against loss in respect thereof; provided, however, that the term “Guarantee Obligations” shall not include endorsements of instruments for deposit or collection in the ordinary course of business or customary and reasonable indemnity obligations in effect on the Closing Date or entered into in connection with any acquisition or Disposition of assets permitted under this Agreement (other than such obligations with respect to Indebtedness). The amount of any Guarantee Obligation shall be deemed to be an amount equal to the stated or determinable amount of the Indebtedness in respect of which such Guarantee Obligation is made or, if not stated or determinable, the
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maximum reasonably anticipated liability in respect thereof (assuming such Person is required to perform thereunder) as determined by such Person in good faith.
“Guarantors” shall mean each Domestic Subsidiary listed on Schedule 1.1(e) and each other Domestic Subsidiary (other than an Excluded Subsidiary) that becomes a party to the Guarantee after the Closing Date pursuant to Section 9.11 or otherwise; provided that, for the avoidance of doubt, the Borrower in its sole discretion may cause any Restricted Subsidiary that is not required to be a Guarantor hereunder or pursuant to the Security Documents to provide a Guarantee by causing such Restricted Subsidiary to execute a Guarantee and such Restricted Subsidiary shall be a Guarantor and a Credit Party for all purposes hereunder except to the extent released from such Guarantee in accordance with the terms hereof.
“Hazardous Materials” shall mean (a) any petroleum or petroleum products, radioactive materials, friable asbestos, urea formaldehyde foam insulation, transformers or other equipment that contain dielectric fluid containing regulated levels of polychlorinated biphenyls, and radon gas, (b) any chemicals, materials or substances defined as or included in the definition of “hazardous substances”, “hazardous waste”, “hazardous materials”, “extremely hazardous waste”, “restricted hazardous waste”, “toxic substances”, “toxic pollutants”, “contaminants”, or “pollutants”, or words of similar import, under any applicable Environmental Law and (c) any other chemical, material or substance, which is prohibited, limited or regulated by any Environmental Law due to its hazardous or dangerous properties or characteristics.
“Hedge Agreements” shall mean (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts and fixed-price physical delivery contracts, whether or not exchange traded, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement”), including any such obligations or liabilities under any Master Agreement. Notwithstanding the foregoing, (x) agreements or obligations to physically sell any commodity at any index-based price shall not be considered Hedge Agreements, and (y) any right of a Person to ‘put’ an asset to another Person that arises in connection with an acquisition, disposition or similar agreement shall not be considered a Hedge Agreement.
“Hedge Bank” shall mean (a) any Person (other than the Borrower or any of its Subsidiaries) that (i) at the time it enters into a Hedge Agreement with the Borrower or any of its Restricted Subsidiaries is a Revolving Lender or Agent or an Affiliate of a Revolving Lender or Agent, or (ii) at any time after it enters into a Hedge Agreement with the Borrower or any of its Restricted Subsidiaries it becomes a Revolving Lender or Agent or an Affiliate of a Revolving
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Lender or Agent, and (b) with respect to any Hedge Agreement with the Borrower or any of its Restricted Subsidiaries that is in effect on the Closing Date, any Person (other than the Borrower or any of its Subsidiaries) that is a Revolving Lender or Agent or an Affiliate of a Revolving Lender or Agent on the Closing Date.
“Hedge PV” shall mean, with respect to any commodity Hedge Agreement, the present value, discounted at 9% per annum, of the future receipts expected to be paid to the Borrower or the Restricted Subsidiaries under such Hedge Agreement netted against the most recent Bank Price Deck provided to the Borrower by the Administrative Agent pursuant to Section 2.14(j); provided, however, that the “Hedge PV” shall never be less than $0.00.
“Hedging Obligations” shall mean, with respect to any Person, the obligations of such Person under Hedge Agreements.
“Highest Lawful Rate” shall mean, with respect to each Lender, the maximum nonusurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the Loans under laws applicable to such Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws allow as of the date hereof.
“Hydrocarbon Interests” shall mean all rights, titles, interests and estates now or hereafter acquired in and to oil and gas leases, oil, gas and mineral leases, or other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding royalty and royalty interests, net profit interests and production payment interests, including any reserved or residual interests of whatever nature.
“Hydrocarbons” shall mean oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined, processed or separated therefrom.
“Identified Contingent Liabilities” shall mean the maximum estimated amount of liabilities reasonably likely to result from pending litigation, asserted claims and assessments, guaranties, uninsured risks and other contingent liabilities of the Borrower and its Subsidiaries taken as a whole after giving effect to the Transactions (including all fees and expenses related thereto but exclusive of such contingent liabilities to the extent reflected in Stated Liabilities), as identified and explained in terms of their nature and estimated magnitude by an Authorized Officer of the Borrower.
“Immaterial Subsidiary” shall mean any Subsidiary that is not a Material Subsidiary.
“Increasing Lender” shall have the meaning provided in Section 2.16(a).
“Incremental Agreement” shall have the meaning provided in Section 2.16(c).
“Incremental Increase” shall have the meaning provided in Section 2.16(a).
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“Indebtedness” of any Person shall mean, without duplication, (a) all indebtedness of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes, loan agreements or other similar instruments, (c) the deferred purchase price of assets or services that in accordance with GAAP would be included as a liability on the balance sheet of such Person (other than (i) any earn-out obligation until such obligation becomes a liability on the balance sheet of such Person in accordance with GAAP, (ii) accruals for payroll and other liabilities incurred in the ordinary course of business and (iii) obligations resulting under firm transportation contracts or take or pay contracts or other similar agreements entered into in the ordinary course of business), (d) the face amount (after giving effect to any prior drawings or reductions which may have been reimbursed) of all letters of credit (including standby and commercial), bankers’ acceptances, bank guaranties, surety bonds, performance bonds and similar instruments issued or created by the account of such Person and, without duplication, all drafts drawn thereunder, (e) all indebtedness (excluding prepaid interest thereon) of any other Person secured by any Lien on any property owned by such Person, whether or not such Indebtedness has been assumed by such Person or is limited in recourse, (f) the principal component of all Capitalized Lease Obligations of such Person, (g) net Hedging Obligations of such Person, (h) all obligations of such Person in respect of the redemption, repayment or other repurchase of Disqualified Stock (excluding accrued dividends that have not increased the liquidation preference of such Disqualified Stock), (i) obligations to deliver Hydrocarbons, in consideration of one or more material advance payments, other than obligations relating to net oil, natural gas liquids or natural gas balancing arrangements arising in the ordinary course of business, (j) the undischarged balance of any production payment created by such Person or for the creation of which such Person directly or indirectly received payment, and (k) without duplication, all Guarantee Obligations of such Person in respect of the items described in clauses (a) through (k) above; provided that Indebtedness shall (A) include the Indebtedness of any partnership or joint venture (other than a joint venture that is itself a corporation or limited liability company) in which such Person is a general partner or a joint venturer, except to the extent such Person’s liability for such Indebtedness is otherwise expressly limited and only to the extent such Indebtedness would be included in the calculation of Consolidated Total Debt or (B) not include (i) trade and other ordinary course payables and accrued expenses, (ii) deferred or prepaid revenue, (iii) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty or other unperformed obligations of the respective seller, (iv) in the case of the Borrower and its Restricted Subsidiaries, the net amount of (A) all intercompany Indebtedness having a term not exceeding 364 days (inclusive of any roll-over or extensions of terms) and made in the ordinary course of business and (B) intercompany liabilities in connection with the cash management, tax and accounting operations of the Borrower and the Restricted Subsidiaries, (v) any obligation in respect of a farm-in agreement or similar arrangement whereby such Person agrees to pay all or a share of the drilling, completion or other expenses of an exploratory or development well (which agreement may be subject to a maximum payment obligation, after which expenses are shared in accordance with the working or participation interest therein or in accordance with the agreement of the parties) or perform the drilling, completion or other operation on such well in exchange for an ownership interest in an oil or gas property, (vi) operating leases or sale and leaseback transactions (except any resulting obligations under any Capital Lease) and (vii) commitments or obligations of such Person to make capital contributions in another Person or fund construction costs of equipment, gathering, transportation, processing, handling, pipelines and other related systems and facilities which constitute Industry Investments.
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For purposes hereof, the amount of any net Hedging Obligations on any date shall be deemed to be the Swap Termination Value thereof as of such date. The amount of Indebtedness of any Person for purposes of clause (e) above shall be deemed to be equal to the least of (i) the aggregate unpaid amount of such Indebtedness, (ii) the Fair Market Value of the property encumbered thereby as determined by such Person in good faith and (iii) the maximum amount for which such Person may be liable in respect of such Indebtedness.
“Indemnified Liabilities” shall have the meaning provided in Section 13.5.
“Indemnified Taxes” shall mean all Taxes imposed on or with respect to, any payment by or on account of any obligation of any Credit Party hereunder or under any other Credit Document, other than (a) Excluded Taxes and (b) Other Taxes.
“Industry Investment” shall mean Investments and expenditures made in the ordinary course of, and of a nature that is or shall have become customary in, the Oil and Gas Business, including: (a) ownership interests (including equity or other ownership interests) in oil, natural gas, other Hydrocarbons and minerals properties, liquefied natural gas facilities, processing facilities, gathering systems, pipelines, storage facilities or related systems or ancillary real property interests; (b) Investments and expenditures in the form of or pursuant to operating agreements, processing agreements, farm-in agreements, farm-out agreements, development agreements, area of mutual interest agreements, unitization agreements, pooling arrangements, joint bidding agreements, service contracts, joint venture agreements, partnership agreements (whether general or limited), and other similar agreements (including for limited liability companies) with third parties; and (c) Investments in direct or indirect ownership interests in drilling rigs and related equipment, including, without limitation, transportation equipment.
“Initial Maturity Date” shall mean the fifth anniversary of the Closing Date, or, if such anniversary is not a Business Day, the Business Day immediately following such anniversary date.
“Initial Reserve Reports” shall mean (i) the reserve reports (x) prepared by the Borrower and audited by Ryder Scott Company, L.P. on January 20, 2026 and (y) prepared by Ryder Scott Company, L.P. on January 21, 2026, in each case delivered to the Administrative Agent prior to the Closing Date, and setting forth, as of December 31, 2025, the Proved Reserves attributable to the Borrowing Base Properties of the Borrower and the Credit Parties owned prior to the Closing Date (and prior to giving effect to the Acquisition) and (ii) the Acquisition Reserve Report.
“Initial Revolving Loans” shall mean any Revolving Loans made hereunder other than any Extended Revolving Loans.
“Initial Term Lenders” means (a) the Persons listed on Schedule 1.1(a)(ii), (b) any Revolving Lender that advances Converted Term Loans, (c) any Person that shall have become a party hereto pursuant to an Assignment and Assumption with respect to which all or a portion of an Initial Term Loan is assigned to such Person, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.
“Initial Term Loan Commitment” means, with respect to each Initial Term Lender, the commitment of such Initial Term Lender to make Initial Term Loans hereunder on the Closing Date. The amount of each Initial Term Lender’s Initial Term Loan Commitment on the Closing
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Date is set forth on Schedule 1.1(a)(ii). The aggregate amount of the Initial Term Lenders’ Initial Term Loan Commitments on the Closing Date is $135,000,000.
“Initial Term Loan Maturity Date” shall mean the third anniversary of the Closing Date, or, if such anniversary is not a Business Day, the Business Day immediately following such anniversary.
“Initial Term Loan Period” means the period from and including the Closing Date through and including the Initial Term Loans Repayment Date.
“Initial Term Loans” means the term loans made by the Initial Term Lenders to the Borrower pursuant to Section 2.1(b) and all Converted Term Loans.
“Initial Term Loans Repayment Date” the date on which the Discharge of Initial Term Loan Obligations occurs.
“Intercompany Note” shall mean the Intercompany Subordinated Note, dated as of the Closing Date, substantially in the form of Exhibit E executed by the Borrower and each Subsidiary of the Borrower.
“Interest Period” shall mean, with respect to any Loan, the interest period applicable thereto, as determined pursuant to Section 2.9.
“Interim Redetermination” shall have the meaning provided in Section 2.14(b).
“Interim Redetermination Date” shall mean the date on which a Borrowing Base that has been redetermined pursuant to an Interim Redetermination becomes effective as provided in Section 2.14(b).
“Investment” shall mean, for any Person: (a) the acquisition whether for cash, property, services or securities or otherwise of Stock, Stock Equivalents, evidences of Indebtedness or other ownership interests or other securities of any other Person (including any “short sale” or any sale of any securities at a time when such securities are not owned by the Person entering into such sale), (b) the making of any deposit with, or advance, loan or other extension of credit to, any other Person (including the purchase of property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such property to such Person, but excluding any such advance, loan or extension of credit representing the purchase price of inventory or supplies sold by such Person in the ordinary course of business) (including any partnership or joint venture), (c) the entering into of any guarantee of, or other contingent obligation with respect to, Indebtedness of another Person or (d) the purchase or other acquisition (in one transaction or a series of transactions) of (i) all or substantially all of the property and assets or business of another Person or (ii) assets constituting a business unit, line of business or division of such Person; provided that, in the event that any Investment is made by the Borrower or any Restricted Subsidiary in any Person through substantially concurrent interim transfers of any amount through one or more other Restricted Subsidiaries, then such other substantially concurrent interim transfers shall be disregarded for purposes of Section 10.5. Except as otherwise explicitly addressed in any exception to Section 10.5, for purposes of covenant compliance, the amount of any Investment at any time shall be (1) the amount actually invested (measured at the time made), without adjustment for subsequent increases or decreases in the
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value of such Investment minus (2) the amount of dividends or distributions received in connection with such Investment and any return of capital and any payment of principal received in respect of such Investment that in each case is received in cash, cash equivalents or short-term marketable debt securities by the Person holding such Investment.
“IPOCo” means a Person formed to acquire, directly or indirectly, Stock and Stock Equivalents of the Borrower in order to undertake a Qualified IPO.
“IPOCo Transactions” means the transactions in connection with the formation and capitalization of IPOCo prior to and in connection with and reasonably related to the Qualified IPO, including, without limitation: (a) the legal formation of IPOCo and one or more Subsidiaries of the Permitted Holders to own interests therein, (b) the contribution, directly or indirectly, of the Stock and Stock Equivalents of the Borrower and other Subsidiaries of the Borrower to IPOCo, or the other acquisition by IPOCo thereof (so long as, in each case, no Change of Control pursuant to clause (a) of the definition thereof occurs as a result thereof), (c) the conversion of the outstanding Stock and Stock Equivalents in the Borrower into a new class of Stock and Stock Equivalents in the Borrower, (d) the issuance of Stock and Stock Equivalents of IPOCo or the Borrower to the public and the use of proceeds therefrom to pay transaction expenses, distribute funds as a reimbursement for capital expenditures, and other purposes approved by a Permitted Holder, (e) the execution, delivery and performance of customary documentation (and amendments to existing documentation) governing the relations between and among the Borrower, IPOCo, the Permitted Holders and their respective Subsidiaries, including, without limitation, the execution, delivery and performance of a tax receivables agreement among IPOCo, the Borrower and the Permitted Holders on customary terms for similar transactions and (f) any other transactions and documentation related to the foregoing or necessary or appropriate in the view of the Permitted Holders or the board of directors of the Borrower or any direct or indirect parent of the Borrower in connection with the Qualified IPO.
“ISP” shall mean, with respect to any Letter of Credit, the “International Standby Practices 1998” published by the Institute of International Banking Law & Practice (or such later version thereof as may be in effect at the time of issuance).
“Issuer Documents” shall mean, with respect to any Letter of Credit, the Letter of Credit Request, and any other document, agreement and instrument entered into by the Letter of Credit Issuer and the Borrower (or any Restricted Subsidiary) or in favor of the Letter of Credit Issuer and relating to such Letter of Credit.
“KKR” shall mean Kohlberg Kravis Roberts & Co., L.P.
“L/C Borrowing” shall mean an extension of credit resulting from a drawing under any Letter of Credit which has not been reimbursed on the date when made or refinanced as a Borrowing. All L/C Borrowings shall be denominated in Dollars.
“L/C Issuance Limit” means, with respect to each Letter of Credit Issuer, an amount equal to the greater of (i) $5,000,000 and (ii) such higher amount as such Letter of Credit Issuer may agree in its sole discretion.
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“L/C Maturity Date” shall mean the date that is three Business Days prior to the Maturity Date.
“L/C Obligations” shall mean, as at any date of determination, the aggregate amount available to be drawn under all outstanding Letters of Credit plus the aggregate of all Unpaid Drawings, including all L/C Borrowings. For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.
“L/C Participant” shall have the meaning provided in Section 3.3(a).
“L/C Participation” shall have the meaning provided in Section 3.3(a).
“Latest Maturity Date” shall mean at any date of determination, the latest Maturity Date applicable to any Class of Commitments or Loans that is outstanding hereunder on such date of determination, as extended in accordance with this Agreement from time to time.
“LCT Election” shall have the meaning provided in Section 1.10(f).
“LCT Test Date” shall have the meaning provided in Section 1.10(f).
“Lead Arranger” shall mean each of Wells Fargo Securities, LLC, BofA Securities, Inc., Canadian Imperial Bank of Commerce, New York Branch, Capital One, National Association, Fifth Third Bank, National Association, JPMorgan Chase Bank, N.A., KeyBanc Capital Markets, Inc., Mizuho Bank, Ltd., RBC Capital Markets and Truist Securities, Inc., each in its capacity as joint lead arranger and joint bookrunner hereunder.
“Lender” shall have the meaning provided in the preamble to this Agreement, and includes each Revolving Lender and each Term Lender. For avoidance of doubt, each Additional Lender shall be deemed a “Lender” for purposes of this Agreement and each other Credit Document.
“Lender Default” shall mean (i) the refusal or failure of any Lender to make available its portion of any incurrence of Loans or participations in Letters of Credit, which refusal or failure is not cured within one Business Day after the date of such refusal or failure; (ii) the failure of any Lender to pay over to the Administrative Agent, any Letter of Credit Issuer or any other Lender any other amount required to be paid by it hereunder within one Business Day of the date when due; (iii) a Lender has notified the Borrower or the Administrative Agent that it does not intend or expect to comply with any of its funding obligations or has made a public statement to that effect with respect to its funding obligations under the Facilities, (iv) the failure, within three Business Days after request by the Administrative Agent or a Credit Party, acting in good faith, by a Lender to confirm in a manner reasonably satisfactory to the Administrative Agent that it will comply with its obligations under the Facilities; provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (iv) upon receipt of such written confirmation by the Administrative Agent and the Borrower; (v) a Distressed Person has admitted in writing that it is insolvent or such Distressed Person becomes subject to a Lender-Related Distress Event or (vi) any Lender that has, or has a direct or indirect parent company that has, become the subject of a Bail-In Action; provided that a Lender shall not become a Defaulting Lender solely as a result of
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the acquisition or maintenance of an ownership interest in such Lender or Person Controlling such Lender or the exercise of Control over a Lender or Person Controlling such Lender by a Governmental Authority or an instrumentality thereof, so long as such ownership interest does not result in or provide such Lender with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts or agreements made with such Lender.
“Lender-Related Distress Event” shall mean, with respect to any Lender, that such Lender or any Person that directly or indirectly controls such Lender (each, a “Distressed Person”), as the case may be, is or becomes subject to a voluntary or involuntary case with respect to such Distressed Person under any debt relief law, or a custodian, conservator, receiver or similar official is appointed for such Distressed Person or any substantial part of such Distressed Person’s assets, or such Distressed Person or any Person that directly or indirectly controls such Distressed Person is subject to a forced liquidation, or such Distressed Person makes a general assignment for the benefit of creditors or is otherwise adjudicated as, or determined by any Governmental Authority having regulatory authority over such Distressed Person or its assets to be, insolvent or bankrupt; provided that a Lender-Related Distress Event shall not be deemed to have occurred solely by virtue of (i) the ownership or acquisition of any equity interests in any Lender or any Person that directly or indirectly controls such Lender by a Governmental Authority or an instrumentality thereof or (ii) an undisclosed administration pursuant to the laws of the Netherlands.
“Letter of Credit” shall have the meaning provided in Section 3.1.
“Letter of Credit Commitment” shall mean, at the time of incurrence or issuance of a Letter of Credit, $5,000,000, as such commitment may be reduced from time to time pursuant to Section 3.1.
“Letter of Credit Exposure” shall mean, with respect to any Revolving Lender, at any time, the sum of (a) the principal amount of any Unpaid Drawings in respect of which such Revolving Lender has made (or is required to have made) payments to the Letter of Credit Issuer pursuant to Section 3.4(a) at such time and (b) such Revolving Lender’s Revolving Commitment Percentage of the Letters of Credit Outstanding at such time (excluding the portion thereof consisting of Unpaid Drawings in respect of which the Revolving Lenders have made (or are required to have made) payments to the Letter of Credit Issuer pursuant to Section 3.4(a)) minus (c) such Revolving Lender’s Revolving Commitment Percentage of the amount of cash or deposit account balances held by the Administrative Agent to Cash Collateralize outstanding Letters of Credit and Unpaid Drawings under Section 3.8.
“Letter of Credit Fee” shall have the meaning provided in Section 4.1(b).
“Letter of Credit Issuer” shall mean (a) Wells Fargo Bank, National Association, (b) any of its Affiliates or any replacement or successor appointed pursuant to Section 3.6, and (c) if requested by the Borrower (subject to the consent of the Administrative Agent, which consent shall not be unreasonably withheld, delayed or conditioned) any other Person who is at the time of such request a Lender that agrees to act as Letter of Credit Issuer (it being understood that if any such Person ceases to be a Lender hereunder, such Person will remain a Letter of Credit
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Issuer with respect to any Letters of Credit issued by such Person that remained outstanding as of the date such Person ceased to be a Lender). Each Letter of Credit Issuer may, in its discretion, arrange for such Letter of Credit to be issued by any Lender or any Affiliate thereof that agrees to act as Letter of Credit Issuer, and in each such case the term “Letter of Credit Issuer” shall include any such Lender or Affiliate with respect to Letters of Credit issued by such Lender or Affiliate. References herein and in the other Credit Documents to the Letter of Credit Issuer shall be deemed to refer to the Letter of Credit Issuer in respect of the applicable Letter of Credit or to all Letter of Credit Issuers, as the context requires.
“Letter of Credit Request” shall have the meaning provided in Section 3.2.
“Letters of Credit Outstanding” shall mean, at any time, the sum of, without duplication, (a) the aggregate Stated Amount of all outstanding Letters of Credit and (b) the aggregate principal amount of all Unpaid Drawings in respect of all Letters of Credit.
“Lien” shall mean any interest in property securing an obligation owed to, or a claim by, a Person other than the owner of the property, whether such interest is based on the common law, statute or contract, and whether such obligation or claim is fixed or contingent, and including (a) the lien or security interest arising from a mortgage, encumbrance, pledge, security agreement or a financing lease, consignment or bailment for security purposes, (b) Production Payments and the like payable out of Oil and Gas Properties and (c) any easement, right of way or other encumbrance on title to real property; provided that in no event shall an operating lease be deemed to be a Lien.
“Limited Condition Transaction” shall mean any acquisition or Investment by one or more of the Borrower and its Restricted Subsidiaries of or in any assets, business or Person permitted by this Agreement the consummation of which is not conditioned on the availability of, or on obtaining, third party financing.
“Liquidation” and the correlative term “Liquidated” shall have the meaning provided in Section 2.14(f).
“Liquidity” shall mean, as of any date of determination, the sum of (a) the Available Commitment on such date and (b) the aggregate amount of Unrestricted Cash of the Borrower and its Restricted Subsidiaries at such date, less the amount, if any, of the Borrowing Base Deficiency existing on such date of determination.
“Loan” shall mean any Revolving Loan or any Term Loan made by any Lender hereunder (including any Initial Revolving Loan, any Extended Revolving Loan or any Extended Term Loan).
“Loan Limit” shall mean, at any time, the least of (a) the Aggregate Maximum Credit Amount at such time, (b) the Available Borrowing Base at such time and (c) the Aggregate Elected Commitment Amount at such time.
“Majority Lenders” shall mean, at any date, Non-Defaulting Lenders having or holding a majority of the Total Credit Exposures (excluding (a) the Credit Exposure of Defaulting Lenders and (b) the Excluded Term Loan Exposures).
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“Majority Revolving Lenders” shall mean, at any date, (a) Non-Defaulting Lenders having or holding a majority of the Adjusted Revolving Commitment at such date, or (b) if the Revolving Commitments have been terminated or for the purposes of acceleration pursuant to Section 11, Non-Defaulting Lenders having or holding a majority of the outstanding principal amount of the Revolving Loans and Letter of Credit Exposure (excluding the Revolving Loans and Letter of Credit Exposure of Defaulting Lenders) in the aggregate at such date.
“Majority Term Lenders” shall mean, at any date, Non-Defaulting Lenders having or holding a majority of the Total Term Loan Exposures (excluding the Term Loans of Defaulting Lenders) in the aggregate at such date.
“Material Adverse Effect” shall mean a circumstance or condition affecting the business, assets, operations, properties or financial condition of the Borrower and the other Credit Parties, taken as a whole, that would, individually or in the aggregate, materially adversely affect (a) the ability of the Borrower and the other Credit Parties, taken as a whole, to perform their payment obligations under this Agreement or any of the other Credit Documents or (b) the rights and remedies of the Agents and the Lenders under this Agreement or under any of the other Credit Documents.
“Material Subsidiary” shall mean, at any date of determination, each Restricted Subsidiary of the Borrower (a) whose Total Assets (when combined with the assets of such Subsidiary’s Subsidiaries, after eliminating intercompany obligations) at the last day of the most recently ended Test Period were equal to or greater than 5% (or, prior to the Initial Term Loans Repayment Date, 1%) of the Total Assets of the Borrower and the Restricted Subsidiaries at such date or (b) whose revenues (when combined with the revenues of such Subsidiary’s Subsidiaries, after eliminating intercompany obligations) during such Test Period were equal to or greater than 5% (or, prior to the Initial Term Loans Repayment Date, 1%) of the consolidated revenues of the Borrower and the Restricted Subsidiaries for such period, in each case determined in accordance with GAAP; provided that if, at any time and from time to time after the Closing Date, Restricted Subsidiaries that are not Material Subsidiaries have, in the aggregate, (i) Total Assets (when combined with the assets of such Subsidiary’s Subsidiaries, after eliminating intercompany obligations) at the last day of such Test Period equal to or greater than 10% (or, prior to the Initial Term Loans Repayment Date, 2%) of the Total Assets of the Borrower and the Restricted Subsidiaries at such date or (ii) revenues (when combined with the revenues of such Subsidiary’s Subsidiaries, after eliminating intercompany obligations) during such Test Period equal to or greater than 10% (or, prior to the Initial Term Loans Repayment Date, 2%) of the consolidated revenues of the Borrower and the Restricted Subsidiaries for such period, in each case determined in accordance with GAAP, then the Borrower shall, on the date on which financial statements for such quarter are delivered pursuant to this Agreement, designate in writing to the Administrative Agent one or more of such Restricted Subsidiaries as “Material Subsidiaries”; provided, further, that, notwithstanding anything herein to the contrary, each Restricted Subsidiary that owns Borrowing Base Properties shall be a Material Subsidiary.
“Maturity Date” shall mean, (a) as to the applicable Revolving Loan, the Initial Maturity Date or any maturity date related to any Extension Series of Extended Commitments, as applicable, (b) as to the Initial Term Loans, the Initial Term Loan Maturity Date, and (c) as to any Term Loan (other than the Initial Term Loans), the final maturity date as specified in the applicable Term Loan Amendment, or with respect to any Extended Term Loans of a given Term
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Loan Extension Series, the final maturity date as specified in the applicable Extension Amendment.
“Maximum Credit Amount” shall mean, as to each Revolving Lender, the amount set forth opposite such Revolving Lender’s name on Schedule 1.1(a) under the caption “Maximum Credit Amounts,” as such amount may be increased, reduced or terminated under this Agreement.
“Mineral Interests” means interests in Hydrocarbons constituting royalty and leased mineral fee interests, including lessor royalties, overriding royalty interests, non-participating royalty interests, net profit interests, production payments and any other similar non-participatory interests, in each case, which do not bear a share of drilling, operating, or other costs as a participating mineral owner.
“Minimum Borrowing Amount” shall mean, with respect to any Borrowing of Loans, $500,000 (or, if less, the entire remaining Commitments at the time of such Borrowing).
“Minimum Tender Condition” shall have the meaning provided in Section 2.20(b).
“Minority Investment” shall mean any Person (other than a Subsidiary) in which the Borrower or any Restricted Subsidiary owns Stock or Stock Equivalents.
“Moody’s” shall mean Moody’s Investors Service, Inc. or any successor by merger or consolidation to its business.
“Mortgage” shall mean a mortgage or a deed of trust, deed to secure debt, trust deed, assignment of as-extracted collateral, fixture filing or other security document entered into by the owner of a Mortgaged Property and the Collateral Agent for the benefit of the Secured Parties in respect of that Mortgaged Property, substantially in the form of Exhibit F (with such changes thereto as may be necessary to account for local law matters) or otherwise in such form as agreed between the Borrower and the Collateral Agent.
“Mortgaged Property” shall mean real property and improvements thereto with respect to which a Mortgage has been granted on the Closing Date or pursuant to Section 9.11.
“Multiemployer Plan” shall mean a Plan that is a multiemployer plan as defined in Section 4001(a)(3) of ERISA.
“Net Cash Proceeds” means, with respect to any Disposition by the Borrower or any of its Restricted Subsidiaries pursuant to Section 10.4(b), Section 10.4(g), Section 10.4(m) or Section 10.4(s), any Casualty Event, any unwind or termination of any Hedge Agreement pursuant to Section 10.4(l), or the incurrence or issuance of any Indebtedness, the excess, if any, of (i) the sum of gross cash proceeds (including any such cash received by way of insurance payments, condemnation award, deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise) received in connection with such Disposition, Casualty Event, unwind or termination or such incurrence or issuance of Indebtedness, but, in each case, only as and when so received, over (ii) the sum, without duplication, of (A) the costs and expenses incurred by the Borrower or such Restricted Subsidiary in connection with such Disposition, Casualty Event, unwind or termination, (B) all
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title and recording Tax expense, all federal, state, provincial, foreign and local income and similar Taxes, and all Tax distributions paid or estimated to be payable as a consequence of such Disposition, Casualty Event, unwind or termination, (C) any reasonable reserve established in accordance with GAAP against any liabilities (other than Taxes deducted pursuant to clause (A) above) (I) associated with the assets that are the subject of such prepayment and (2) retained by the Borrower or any of the Restricted Subsidiaries, (D) cash payments made to satisfy obligations resulting from the unwind or termination of any Hedging Agreements in connection with or as a result of any such Disposition or Casualty Event, (E) in the case of any Disposition, any portion of the purchase price from such Disposition placed in escrow, whether as a reserve for adjustment of the purchase price, for satisfaction of indemnities in respect of such Disposition or otherwise in connection with such Disposition; provided, however, that upon the termination of that escrow, Net Cash Proceeds will be increased by any portion of funds in the escrow that are released to the Borrower or its Restricted Subsidiaries; (F) the amount of any Indebtedness (other than the Loans) secured by a Lien on the assets that are the subject of such prepayment to the extent that (i) such Lien is permitted under this Agreement and (ii) the instrument creating or evidencing such Indebtedness requires that such Indebtedness be repaid upon the consummation of such prepayment, (G) solely in the case of any Casualty Event, the amount of proceeds of such Casualty Event that the Borrower or any Restricted Subsidiary has reinvested (or intends to reinvest within the Reinvestment Period) or has entered into a binding commitment period to the last day of the Reinvestment Period to reinvest) in the business of the Borrower or any of the Restricted Subsidiaries; provided, that any portion of such proceeds that has not been so reinvested within such Reinvestment Period (with respect to such Casualty Event, the “Deferred Net Cash Proceeds”) shall, unless the Borrower or a Restricted Subsidiary has entered into a binding commitment prior to the last day of the Reinvestment Period to reinvest such proceeds no later than 180 days following the last day of such Reinvestment Period, (1) be deemed to be Net Cash Proceeds of a Casualty Event occurring on the last day of such Reinvestment Period or, if later, 180 days after the date the Borrower or such Restricted Subsidiary has entered into such binding commitment, as applicable (such last day or 180th day, as applicable, the “Deferred Net Cash Proceeds Payment Date”), and (2) be applied to the repayment of Initial Term Loans in accordance with Section 5.2(c)(i) and (ii), (H) any cash allocated for, reserved or otherwise set aside to fund distributions in accordance with Section 10.6(vii) – (ix) in connection with or as a result of any such Disposition or Casualty Event, and (I) all documented fees and out-of-pocket expenses paid by the Borrower or a Restricted Subsidiary in connection with any of the foregoing (for the avoidance of doubt, including, (I) in the case of the issuance of Indebtedness, any fees, underwriting discounts, premiums, commissions, and other costs and expenses associated therewith, and (II) documented legal fees and expenses, investment banking fees, survey costs, title insurance premiums, and related search and recording charges, transfer taxes, deed or mortgage recording taxes, underwriting discounts and commissions, other customary expenses, and brokerage, consultant, accountant and other customary fees).
“New Borrowing Base Notice” shall have the meaning provided in Section 2.14(d).
“Non-Cash Charges” shall mean, without duplication, (a) non-cash losses on non-ordinary course asset Dispositions, disposals or abandonments, (b) any impairment charge or asset write-off or write-down related to intangible assets (including goodwill), long-lived assets (including Oil and Gas Properties)and investments in debt and equity securities pursuant to GAAP, including ceiling test writedowns, (c) all non-cash losses from Investments recorded using the equity method, (d) non-cash stock-based, partnership interest-based or similar
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incentive-based awards or arrangements, compensation expense or costs, including any such charges arising from stock options, restricted stock grants or other equity incentive grants, (e) the non-cash impact of purchase accounting and the non-cash impact of accounting changes or restatements, (f) the accretion of discounted liabilities and (g) other non-cash charges (including reserve impairments) (provided that if any non-cash charges referred to in this clause (g) represent an accrual or reserve for potential cash items in any future period, the cash payment in respect thereof in such future period shall be subtracted from Consolidated EBITDAX to such extent, and excluding amortization of a prepaid cash item that was paid in a prior period).
“Non-Conforming Borrowing Base” shall have the meaning provided in Section 2.14(j). The Non-Conforming Borrowing Base on the Closing Date shall be the amount set forth in Section 2.14(a).
“Non-Consenting Lender” shall have the meaning provided in Section 13.7(b).
“Non-Cost Bearing Interest” shall mean any ownership interest in Oil and Gas Properties where the owner of such interests does not incur any direct liability for its portion of the ongoing costs associated with exploration, drilling and production, including without limitation, a producing mineral royalty, overriding royalty interest, non-participating royalty interest or net profits interest.
“Non-Defaulting Lender” shall mean and include each Lender other than a Defaulting Lender.
“Non-Extension Notice Date” shall have the meaning provided in Section 3.2(b).
“Non-U.S. Lender” shall mean any Lender that is not a “United States person” as defined by Section 7701(a)(30) of the Code.
“Notice of Borrowing” shall mean a request of the Borrower in accordance with the terms of Section 2.3(a) and substantially in the form of Exhibit G or such other form as shall be approved by the Administrative Agent (acting reasonably).
“Notice of Conversion or Continuation” shall have the meaning provided in Section 2.6(a).
“NYFRB Rate” means, for any day, the greater of (a) the Federal Funds Effective Rate in effect on such day and (b) the Overnight Rate in effect on such day (or for any day that is not a Business Day, for the immediately preceding Business Day); provided that if none of such rates are published for any day that is a Business Day, the term “NYFRB Rate” means the rate for a federal funds transaction quoted at 11:00 a.m. on such day received by the Administrative Agent from a federal funds broker of recognized standing selected by it; provided, further, that if any of the aforesaid rates as so determined be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.
“NYFRB’s Website” means the website of the NYFRB at http://www.newyorkfed.org, or any successor source.
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“Obligations” shall mean all advances to, and debts, liabilities, obligations, covenants and duties of, any Credit Party arising under any Credit Document or otherwise with respect to any Loan (including, for the avoidance of doubt, the Revolving Loans, the Extended Revolving Loans, the Term Loans and the Extended Term Loans) or Letter of Credit, or of the Borrower or any of its Restricted Subsidiaries under any Secured Cash Management Agreement or Secured Hedge Agreement, in each case, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising and including interest and fees that accrue after the commencement by or against any Credit Party or any Affiliate thereof in any proceeding under any bankruptcy or insolvency law naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding. Without limiting the generality of the foregoing, the Obligations of the Credit Parties under the Credit Documents (and any of their Restricted Subsidiaries to the extent they have obligations under the Credit Documents or any Secured Cash Management Agreement or Secured Hedge Agreement) include the obligation (including Guarantee Obligations) to pay principal, interest, charges, expenses, fees, attorney costs, indemnities and other amounts payable by any Credit Party under any Credit Document or the Borrower or any of its Restricted Subsidiaries under any Secured Cash Management Agreement or Secured Hedge Agreement, and all renewals, extensions and/or rearrangements of any of the above. Notwithstanding the foregoing, (a) the obligations of the Borrower or any Restricted Subsidiary under any Secured Hedge Agreement and under any Secured Cash Management Agreement shall be secured and guaranteed pursuant to the Security Documents and the Guarantee only to the extent that, and for so long as, the other Obligations are so secured and guaranteed and (b) any release of Collateral or Guarantors effected in the manner permitted by this Agreement and the other Credit Documents shall not require the consent of the holders of Hedging Obligations under Secured Hedge Agreements or of the holders of Cash Management Obligations under Secured Cash Management Agreements. Notwithstanding the foregoing, the definition of “Obligations” shall not include any Excluded Swap Obligations.
“OFAC” shall mean the U.S. Department of the Treasury Office of Foreign Assets Control.
“Oil and Gas Business” means: (a) the business of acquiring, exploring, exploiting, developing, producing, operating and disposing of interests in oil, natural gas, natural gas liquids, liquefied natural gas and other Hydrocarbons and mineral properties or products produced in association with any of the foregoing; (b) the business of gathering, marketing, distributing, treating, processing (but not refining), storing, selling and transporting of any production from such interests or properties; (c) any business relating to exploration for or development, production, treatment, processing (but not refining), storage, transportation or marketing of oil, gas and other minerals and products produced in association therewith; (d) any business relating to oilfield sales and service; and (e) any business or activity relating to, arising from, or necessary, appropriate, incidental or ancillary to the activities described in the foregoing clauses (a) through (d) of this definition.
“Oil and Gas Properties” shall mean (a) Hydrocarbon Interests, (b) the properties now or hereafter pooled or unitized with Hydrocarbon Interests, (c) all presently existing or future unitization agreements, pooling agreements and declarations of pooled units and the units created thereby (including all units created under orders, regulations and rules of any Governmental Authority) which may affect all or any portion of the Hydrocarbon Interests, (d) all operating
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agreements, contracts and other agreements, including production sharing contracts and agreements, which relate to any of the Hydrocarbon Interests or the production, sale, purchase, exchange or processing of Hydrocarbons from or attributable to such Hydrocarbon Interests, (e) all Hydrocarbons in and under and which may be produced and saved or attributable to the Hydrocarbon Interests, including all oil in tanks, and all rents, issues, profits, proceeds, products, revenues and other incomes from or attributable to the Hydrocarbon Interests, (f) all tenements, hereditaments, appurtenances and properties in any manner appertaining, belonging, affixed or incidental to the Hydrocarbon Interests and (g) all properties, rights, titles, interests and estates described or referred to above, including any and all property, real or personal, now owned or hereafter acquired and situated upon, used, held for use or useful in connection with the operating, working or development of any of such Hydrocarbon Interests or property (excluding drilling rigs, automotive equipment, rental equipment or other personal property which may be on such premises for the purpose of drilling a well or for other similar temporary uses) and including any and all oil wells, gas wells, injection wells or other wells, structures, fuel separators, liquid extraction plants, plant compressors, pumps, pumping units, field gathering systems, gas processing plants and pipeline systems and any related infrastructure to any thereof, tanks and tank batteries, fixtures, valves, fittings, machinery and parts, engines, boilers, meters, apparatus, equipment, appliances, tools, implements, cables, wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements and servitudes together with all additions, substitutions, replacements, accessions and attachments to any and all of the foregoing; provided that the Oil and Gas Properties shall not include any “building” or “mobile home” (each as defined in Regulation H as promulgated by the Board under the Flood Insurance Laws).
“Ongoing Hedges” shall have the meaning provided in Section 10.10(a).
“Other Taxes” shall mean any and all present or future stamp, registration, documentary, intangible, recording, filing, or similar taxes arising from any payment made hereunder or made under any other Credit Document or from the execution or delivery of, registration or enforcement of, consummation or administration of, or otherwise with respect to, this Agreement or any other Credit Document; provided that such term shall not include any of the foregoing Taxes (i) that result from an assignment, grant of a participation pursuant to Section 13.6(c) or transfer or assignment to or designation of a new lending office or other office for receiving payments under any Credit Document (“Assignment Taxes”) to the extent such Assignment Taxes are imposed as a result of a connection between the assignor/participating Lender and/or the assignee/Participant and the taxing jurisdiction (other than a connection arising solely from any Credit Documents or any transactions contemplated thereunder), except to the extent that any such action described in this proviso is requested or required by the Borrower, or (ii) Excluded Taxes.
“Overnight Rate” means, for any day, the rate comprised of both overnight federal funds and overnight eurodollar transactions denominated in Dollars by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the Board as set forth on the NYFRB’s Website from time to time, and published on the next succeeding Business Day by the Federal Reserve Bank of New York as an overnight bank funding rate.
“Participant” shall have the meaning provided in Section 13.6(c).
“Participant Register” shall have the meaning provided in Section 13.6(c).
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“Patriot Act” shall have the meaning provided in Section 13.18.
“Payment in Full” shall mean the Term Commitments, the Revolving Commitments and each Letter of Credit have terminated (unless such Letters of Credit have been collateralized or backstopped on terms and conditions reasonably satisfactory to the Letter of Credit Issuer following the termination of the Revolving Commitment) and the Loans and Unpaid Drawings, together with interest, fees and all other Obligations incurred hereunder (other than Hedging Obligations under Secured Hedge Agreements, Cash Management Obligations under Secured Cash Management Agreements or contingent obligations not then due and payable), have been paid in full.
“Payment or Bankruptcy Event of Default” shall mean an Event of Default under Section 11.1 or Section 11.5.
“PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to Section 4002 of ERISA, or any successor thereto.
“Pension Act” shall mean the Pension Protection Act of 2006, as it presently exists or as it may be amended from time to time.
“Permitted Acquisition” shall mean the acquisition, by merger or otherwise, by the Borrower or any of the Restricted Subsidiaries of assets (including any assets constituting a business unit, line of business or division) or Stock or Stock Equivalents, so long as (a) such acquisition and all transactions related thereto shall be consummated in all material respects in accordance with Requirements of Law; (b) if such acquisition involves the acquisition of Stock or Stock Equivalents of a Person that upon such acquisition would become a Subsidiary, such acquisition shall result in the issuer of such Stock becoming a Restricted Subsidiary and, to the extent required by Section 9.11, a Guarantor; (c) such acquisition shall result in the Collateral Agent, for the benefit of the Secured Parties, being granted a security interest in any Stock or any assets so acquired to the extent required by Section 9.11; (d) after giving effect to such acquisition, no Event of Default shall have occurred and be continuing; (e) after giving effect to such acquisition, the Borrower and its Subsidiaries shall be in compliance with Section 9.17 and (f) the Borrower shall be in compliance, on a Pro Forma Basis after giving effect to such acquisition (including any Indebtedness assumed or permitted to exist pursuant to Section 10.1(j), and any related Pro Forma Adjustment), with the Financial Performance Covenants, as such covenants are recomputed as at the last day of the most recently ended Test Period as if such acquisition had occurred on the first day of such Test Period.
“Permitted Acquisition Consideration” shall mean in connection with any Permitted Acquisition, the aggregate amount (as valued at the Fair Market Value of such Permitted Acquisition at the time such Permitted Acquisition is made) of, without duplication: (a) the purchase consideration paid or payable in cash for such Permitted Acquisition, whether payable at or prior to the consummation of such Permitted Acquisition or deferred for payment at any future time, whether or not any such future payment is subject to the occurrence of any contingency, and including any and all payments representing the purchase price and any assumptions of Indebtedness and/or Guarantee Obligations, “earn-outs” and other agreements to make any payment the amount of which is, or the terms of payment of which are, in any respect
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subject to or contingent upon the revenues, income, cash flow or profits (or the like) of any Person or business and (b) the aggregate amount of Indebtedness incurred or assumed in connection with such Permitted Acquisition; provided, in each case, that any such future payment that is subject to a contingency shall be considered Permitted Acquisition Consideration only to the extent of the reserve, if any, required under GAAP (as determined at the time of the consummation of such Permitted Acquisition) to be established in respect thereof for the Borrower or its Restricted Subsidiaries.
“Permitted Additional Debt” shall mean unsecured senior, senior subordinated or subordinated Indebtedness issued by the Borrower or a Guarantor after the Closing Date, (a) the terms of which do not provide for any scheduled repayment, mandatory redemption or sinking fund obligation prior to the 91st day after the Latest Maturity Date as in effect on the date of determination (other than (i) customary offers to purchase upon a change of control, AHYDO payments, asset sale or casualty or condemnation event and customary acceleration rights after an event of default, and (ii) unsecured Indebtedness incurred pursuant to a customary bridge facility if the Indebtedness pursuant to such customary bridge facility converts at maturity to Indebtedness which does not provide for any scheduled repayment, mandatory redemption or sinking fund obligation (except to the extent permitted pursuant to clause (i)) and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of the Facility with the then Latest Maturity Date, if applicable), (b) if such Indebtedness is senior subordinated or subordinated Indebtedness, the terms of such Indebtedness provide for customary subordination of such Indebtedness to the Obligations and (c) no Restricted Subsidiary of the Borrower (other than a Guarantor or a Person who becomes a Guarantor in connection therewith) is an obligor under such Indebtedness.
“Permitted Debt Exchange” shall have the meaning provided in Section 2.20(a).
“Permitted Debt Exchange Notes” shall have the meaning provided in Section 2.20(a).
“Permitted Debt Exchange Offer” shall have the meaning provided in Section 2.20(a).
“Permitted Holders” shall mean the (a) Sponsor and its co-investors as of the Closing Date, (b) officers, directors, employees and other members of management of the Borrower (or its direct or indirect parent) or any of its Restricted Subsidiaries who are or become holders of Stock or Stock Equivalents of the Borrower (or its direct or indirect parent company) (and their Controlled Investment Affiliates and immediate family members), (c) each Person to whom the Sponsor transfers Stock or Stock Equivalents of the Borrower (or any direct or indirect parent thereof) in connection with the primary equity syndication following the Closing Date, (d) any direct or indirect parent entity of the Borrower, for so long as a majority of the aggregate ordinary voting power represented by the issued and outstanding Voting Stock of such direct or indirect parent entity of the Borrower is owned (as defined in Rules 13(d)(3) and 13(d)(5) under the Exchange Act), directly or indirectly, by one or more Permitted Holders described in the foregoing clauses of this definition and (e) any group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) of which any of the Permitted Holders are members; provided that in the case of such group and without giving effect to the existence of such group or any other group, the Sponsor, directly or indirectly, has beneficial ownership of more than 50% of the total voting power of the Voting Stock of the Borrower.
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“Permitted Intercompany Activities” shall mean any transactions between or among the Borrower and its Subsidiaries that are entered into in the ordinary course of business of the Borrower and its Subsidiaries and, in the good faith judgment of the Borrower, are necessary or advisable in connection with the ownership or operation of the business of the Borrower and its Subsidiaries consisting of (i) payroll, cash management, purchasing, insurance and hedging arrangement, (ii) management, technology and licensing arrangements and (iii) other general and administrative expenses.
“Permitted Investments” shall mean:
(a)    Dollars;
(b)    (i) Euros, Yen, Canadian Dollars, Pound Sterling or any national currency of any Participating Member State of the EMU or (ii) in the case of any Foreign Subsidiary or any jurisdiction in which the Borrower or its Restricted Subsidiaries conducts business, such local currencies held by it from time to time in ordinary course of business and not for speculation;
(c)    securities issued or unconditionally guaranteed by the United States government or any agency or instrumentality thereof, in each case having maturities and/or reset dates of not more than 24 months from the date of acquisition thereof;
(d)    securities issued by any state, territory or commonwealth of the United States of America or any political subdivision of any such state, territory or commonwealth or any public instrumentality thereof or any political subdivision of any such state, territory or commonwealth or any public instrumentality thereof having maturities of not more than 24 months from the date of acquisition thereof and, at the time of acquisition, having an investment grade rating generally obtainable from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, then from another nationally recognized rating service);
(e)    commercial paper and variable or fixed rate notes maturing no more than 36 months after the date of creation thereof and, at the time of acquisition, having a rating of at least A-2 or P-2 from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, an equivalent rating from another nationally recognized rating service);
(f)    time deposits, certificates of deposit or eurodollar time deposits maturing no more than two years after the date of acquisition thereof or bankers’ acceptances maturing no more than three years after the date of acquisition thereof, in each case, issued by any Lender or any other bank having combined capital and surplus of not less than $500,000,000 in the case of domestic banks and $100,000,000 (or the Dollar equivalent thereof) in the case of foreign banks;
(g)    repurchase agreements for underlying securities of the type described in clauses (c), (d) and (f) above or clauses (h) and (i) below entered into with any bank meeting the qualifications specified in clause (d) above or securities dealers of recognized national standing;
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(h)    marketable short-term money market and similar funds (i) either having assets in excess of $500,000,000 or (ii) having a rating of at least A-2 or P-2 from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, an equivalent rating from another nationally recognized rating service);
(i)    readily marketable direct obligations issued or fully guaranteed by (i) any state, commonwealth or territory of the United States or any political subdivision or taxing authority thereof or (ii) any foreign government or any political subdivision or public instrumentality thereof; provided, that each such readily marketable direct obligation shall have an investment grade rating generally obtainable from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, then from another nationally recognized rating service) with maturities of 36 months or less from the date of acquisition;
(j)    Investments with average maturities of 36 months or less from the date of acquisition in money market funds rated AAA- (or the equivalent thereof) or better by S&P or Aaa3 (or the equivalent thereof) or better by Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, then from another nationally recognized rating service);
(k)    shares of investment companies that are registered under the Investment Company Act of 1940 and substantially all the investments of which are one or more of the types of securities described in clauses (a) through (j) above; and
(l)    in the case of Investments by any Restricted Foreign Subsidiary or Investments made in a country outside the United States of America, Permitted Investments shall include other customarily utilized high-quality Investments of the type and maturity described in clauses (a) through (h) above of foreign obligors, which Investments or obligors (or the parents of such obligors) have ratings described in such clauses or equivalent ratings from comparable foreign rating agencies and (ii) other shorter term investments utilized by Restricted Foreign Subsidiaries in accordance with normal investment practices for cash management in Investments analogous to the foregoing investments in clauses (a) through (k) above and in this clause (l).
Notwithstanding the foregoing, Permitted Investments shall include amounts denominated in currencies other than those set forth in clauses (a) and (b) above; provided that such amounts are converted into any currency listed in clause (a) or (b) above as promptly as practicable and in any event within ten Business Days following the receipt of such amounts
“Permitted Liens” shall mean:
(a)    Liens for taxes, assessments or governmental charges or claims not yet overdue for a period of more than 30 days or that are being contested in good faith and by appropriate proceedings for which appropriate reserves have been established to the extent required by and in accordance with GAAP (or in the case of any Foreign Subsidiary, the comparable accounting principles in the relevant jurisdiction), or for
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property taxes on property that the Borrower or one of its Subsidiaries has determined to abandon if the sole recourse for such tax, assessment, charge or claim is to such property;
(b)    Liens in respect of property or assets of the Borrower or any of the Restricted Subsidiaries imposed by law, such as landlords’, sublandlords’, vendors’, suppliers’, carriers’, warehousemen’s, repairmens’, construction contractors’, workers’ and mechanics’ Liens and other similar Liens arising in the ordinary course of business or incident to the exploration, development, operation or maintenance of Oil and Gas Properties, in each case so long as such Liens arise in the ordinary course of business and do not individually or in the aggregate have a Material Adverse Effect;
(c)    Liens arising from judgments or decrees in circumstances not constituting an Event of Default under Section 11.9;
(d)    Liens incurred or pledges or deposits made in connection with workers’ compensation, unemployment insurance and other types of social security, old age pension, public liability obligations or similar legislation and deposits securing liabilities to insurance carriers under insurance or self-insurance arrangements in respect of such obligations, or to secure (or secure the Liens securing) liability for reimbursement or indemnification obligations of (including obligations in respect of letters of credit or bank guarantees for the benefit of) insurance carriers providing property, casualty or liability insurance to the Borrower or any Subsidiary;
(e)    deposits and other Liens securing (or securing the bonds or similar instruments securing) the performance of tenders, statutory obligations, plugging and abandonment obligations, surety, stay, customs and appeal bonds, bids, leases, government contracts, trade contracts, performance and return-of-money bonds and other similar obligations (including letters of credit issued in lieu of such bonds or to support the issuance thereof) incurred in the ordinary course of business or in a manner consistent with past practice or industry practice including those incurred to secure health, safety and environmental obligations in the ordinary course of business or otherwise constituting Investments permitted by Section 10.5;
(f)    ground leases, subleases, licenses or sublicenses in respect of real property on which facilities owned or leased by the Borrower or any of its Restricted Subsidiaries are located;
(g)    easements, rights-of-way, restrictive covenants, licenses, restrictions (including zoning restrictions), title defects, exceptions, deficiencies or irregularities in title, encroachments, protrusions, servitudes, permits, conditions and covenants and other similar charges or encumbrances (including in any rights of way or other property of the Borrower or its Restricted Subsidiaries for the purpose of roads, pipelines, transmission lines, transportation lines, distribution lines for the removal of gas, oil or other minerals or timber, and other like purposes, or for joint or common use of real estate, rights of way, facilities and equipment) not interfering in any material respect with the business of the Borrower and its Restricted Subsidiaries, taken as a whole and, to the extent
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reasonably agreed by the Administrative Agent, any exception on the title reports issued in connection with any Borrowing Base Property;
(h)    (i) any interest or title of a lessor, sublessor, licensor or sublicensor under any lease, liens reserved in oil, gas or other Hydrocarbons, minerals, leases for bonus, royalty or rental payments and for compliance with the terms of such lease and (ii) any interest or title of a lessor, sublessor, licensor or sublicensor or secured by a lessor’s, sublessor’s, licensor’s or sublicensor’s interest under any lease, sublease, license or sublicense entered into by the Borrower or any Restricted Subsidiary in the ordinary course of business or otherwise permitted by this Agreement;
(i)    Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods;
(j)    Liens on goods or inventory the purchase, shipment or storage price of which is financed by a documentary letter of credit or bankers’ acceptance issued for the account of the Borrower or any of its Restricted Subsidiaries; provided that such Lien secures only the obligations of the Borrower or such Restricted Subsidiaries in respect of such letter of credit or bankers’ acceptance to the extent permitted under Section 10.1;
(k)    leases, licenses, subleases or sublicenses granted to others not interfering in any material respect with the business of the Borrower and its Restricted Subsidiaries, taken as a whole;
(l)    Liens arising from precautionary Uniform Commercial Code financing statement or similar filings made in respect of operating leases entered into by the Borrower or any of its Restricted Subsidiaries;
(m)    Liens created in the ordinary course of business in favor of banks and other financial institutions over credit balances of any bank accounts, commodity trading accounts or other brokerage accounts of the Borrower and the Restricted Subsidiaries held at such banks or financial institutions, as the case may be, in the ordinary course of business;
(n)    Liens which arise in the ordinary course of business under operating agreements, joint venture agreements, oil and gas partnership agreements, oil and gas leases, farm-out agreements, farm-in agreements, division orders, contracts for the sale, gathering, transportation or exchange of oil and natural gas, unitization and pooling declarations and agreements, area of mutual interest agreements, overriding royalty agreements, marketing agreements, processing agreements, net profits agreements, development agreements, gas balancing or deferred production agreements, injection, repressuring and recycling agreements, salt water or other disposal agreements, seismic or other geophysical permits or agreements, and other agreements that are usual and customary in the Oil and Gas Business and are for claims which are not delinquent or that are being contested in good faith and by appropriate proceedings for which appropriate reserves have been established to the extent required by and in accordance with GAAP; provided that any such Lien referred to in this clause does not materially impair the use of
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the property covered by such Lien for the purposes for which such property is held by the Borrower or any Restricted Subsidiary or materially impair the value of such property subject thereto;
(o)    (i) any zoning, building, entitlement and other land use regulations by Governmental Authorities with which the normal operation of the business complies and (ii) any zoning or similar law or right reserved to or vested in any Governmental Authority to control or regulate the use of any real property that does not materially interfere with the ordinary conduct of the business of the Borrower and its Restricted Subsidiaries, taken as a whole; and
(p)    Liens on pipelines, pipeline facilities and other midstream assets or facilities that arise by operation of law or other like Liens arising by operation of law, in each case in the ordinary course of business and incidental to the exploration, development, operation or maintenance of Oil and Gas Properties.
(q)    Liens on equipment of the Borrower or any Restricted Subsidiary granted in the ordinary course of business to the Borrower’s or such Restricted Subsidiary’s client at which such equipment is located;
(r)    security given to a public utility or any municipality or governmental authority when required by such utility or authority in connection with the operations of that Person in the ordinary course of business;
(s)    Liens on Permitted Investments that are earmarked to be used to satisfy or discharge Indebtedness; provided that (x) such Permitted Investments are deposited into an account from which payment is to be made, directly or indirectly, to the Person or Persons holding the Indebtedness that is to be satisfied or discharged, (y) such Liens extend solely to the account in which such Permitted Investments are deposited and are solely in favor of the Person or Persons holding the Indebtedness (or any agent or trustee for such Person or Persons) that is to be satisfied or discharged and (z) the satisfaction or discharge of such Indebtedness is expressly permitted hereunder; and
(t)    deposits of cash with the owner or lessor of premises leased and operated by the Borrower or any of its Subsidiaries to secure the performance of the Borrower’s or such Subsidiary’s obligations under the terms of the lease for such premises.
Without limiting the ability of the Administrative Agent or Collateral Agent, as applicable, to subordinate any Lien to the extent permitted by the terms of this Agreement (including pursuant to Section 12.11), the parties acknowledge and agree that no intention to subordinate the priority afforded the Liens granted in favor of the Collateral Agent, for the benefit of the Secured Parties, under the Security Documents is to be hereby implied or expressed by the permitted existence of such Permitted Liens.
“Permitted Junior Lien Debt” shall mean secured Indebtedness which may be senior, senior subordinated or subordinated Indebtedness (provided that the holders of the obligations secured thereby (or a representative or trustee on their behalf) shall have entered into a
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Customary Intercreditor Agreement providing that the Liens securing such obligations shall rank junior to the Liens securing the Obligations), in each case, issued or incurred by the Borrower and guaranteed by the Guarantors (a) the terms of which do not provide for any scheduled repayment, mandatory redemption or sinking fund obligation prior to the 91st day after the Latest Maturity Date (other than nominal amortization, customary offers to purchase upon a change of control, asset sale or casualty or condemnation event and customary acceleration rights after an event of default), (b) if such Indebtedness is senior subordinated or subordinated Indebtedness, the terms of such Indebtedness provide for customary subordination of such Indebtedness to the Obligations and (c) no Restricted Subsidiary of the Borrower (other than a Guarantor or a Person who becomes a Guarantor in connection therewith) is an obligor under such Indebtedness.
“Permitted Junior Lien Debt Documents” shall mean any document or instrument (including any guarantee, security agreement or mortgage and which may include any or all of the Credit Documents) issued or executed and delivered with respect to any Permitted Junior Lien Debt by any Credit Party.
“Permitted Refinancing Indebtedness” shall mean, with respect to any Indebtedness (the “Refinanced Indebtedness”), any Indebtedness issued or incurred in exchange for, or the net proceeds of which are used to modify, extend, refinance, renew, replace or refund (collectively to “Refinance” or a “Refinancing” or “Refinanced”), such Refinanced Indebtedness (or previous refinancing thereof constituting Permitted Refinancing Indebtedness); provided that (A) the principal amount (or accreted value, if applicable) of any such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Refinanced Indebtedness outstanding immediately prior to such Refinancing except by an amount equal to the unpaid accrued interest and premium thereon plus other amounts paid and fees and expenses incurred in connection with such Refinancing plus an amount equal to any existing commitment unutilized and letters of credit undrawn thereunder, (B) if the Indebtedness being Refinanced is Indebtedness permitted by Section 10.1(h), (j) or (o), the direct and contingent obligors with respect to such Permitted Refinancing Indebtedness are not changed as a result of such Refinancing (except that a Credit Party may be added as an additional obligor), (C) other than with respect to a Refinancing in respect of Indebtedness permitted pursuant to Section 10.1(g), such Permitted Refinancing Indebtedness shall have a final maturity date equal to or later than the final maturity date of, and has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Refinanced Indebtedness, (D) if the Indebtedness being Refinanced is Indebtedness permitted by Section 10.1(h) or Section 10.1(o), the terms and conditions of any such Permitted Refinancing Indebtedness, taken as a whole, are not materially less favorable to the Lenders than the terms and conditions of the Refinanced Indebtedness being Refinanced (including, if applicable, as to collateral priority and subordination, but excluding as to interest rates, fees, floors, funding discounts and redemption or prepayment premiums) or are customary for similar Indebtedness in light of current market conditions; provided that a certificate of an Authorized Officer of the Borrower delivered to the Administrative Agent at least three Business Days prior to the incurrence or issuance of such Indebtedness, together with a reasonably detailed description of the material terms and conditions of such Indebtedness or drafts of the documentation relating thereto, stating that the Borrower has determined in good faith that such terms and conditions satisfy the foregoing requirement shall be conclusive evidence that such terms and conditions satisfy the foregoing requirement, (E) if such Refinanced Indebtedness is senior subordinated or subordinated Indebtedness, the terms of such Permitted Refinancing Indebtedness shall provide for customary subordination of such Indebtedness to the Obligations on terms no less favorable to the Secured
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Parties than the subordination terms applicable to the Indebtedness being refinanced, (F) if the Indebtedness being Refinanced is Permitted Additional Debt, then, to the extent such Permitted Refinancing Indebtedness constitutes Permitted Additional Debt, such Permitted Refinancing Indebtedness shall comply with the conditions set forth in the definition of Permitted Additional Debt and shall be deemed to be Permitted Additional Debt as such term is used in this Agreement and (G) if the Indebtedness being Refinanced is Permitted Junior Lien Debt, then, to the extent such Permitted Refinancing Indebtedness constitutes Permitted Junior Lien Debt, such Permitted Refinancing Indebtedness shall comply with the conditions set forth in the definition of Permitted Junior Lien Debt and shall be deemed to be Permitted Junior Lien Debt as such term is used in this Agreement.
“Person” shall mean any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise or any Governmental Authority.
“Petroleum Industry Standards” shall mean the Definitions for Oil and Gas Reserves promulgated by the Society of Petroleum Engineers (or any generally recognized successor) as in effect at the time in question.
“Plan” shall mean any multiemployer or single-employer plan, as defined in Section 4001 of ERISA and subject to Title IV of ERISA, that is or was within any of the preceding six plan years maintained or contributed to by (or to which there is or was an obligation to contribute or to make payments to) the Borrower or an ERISA Affiliate.
“Pledge Agreement” shall mean the Pledge Agreement entered into by the Borrower, the other pledgors party thereto and the Collateral Agent, for the benefit of the Secured Parties, substantially in the form of Exhibit H.
“Post Acquisition Period” shall mean, with respect to any Specified Transaction, the period beginning on the date such Specified Transaction is consummated and ending on the last day of the fourth full consecutive fiscal quarter immediately following the date on which such Specified Transaction is consummated.
“Present Fair Salable Value” shall mean the amount that could be obtained by an independent willing seller from an independent willing buyer if the assets (both tangible and intangible) of the Borrower and its Subsidiaries taken as a whole are sold on a going concern basis with reasonable promptness in an arm’s-length transaction under present conditions for the sale of comparable business enterprises insofar as such conditions can be reasonably evaluated.
“Prime Rate” means the rate of interest last quoted by The Wall Street Journal as the “Prime Rate” in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the “bank prime loan” rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by the Administrative Agent) or any similar release by the Board (as determined by the Administrative Agent). Each change in the Prime Rate shall be effective from and including the date such change is publicly announced or quoted as being effective.
“Pro Forma Adjustment” shall mean, for any Test Period that includes all or any part of a fiscal quarter included in any Post Acquisition Period, with respect to the Acquired EBITDAX of
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the applicable Pro Forma Entity or the Consolidated EBITDAX of the Borrower, the pro forma increase or decrease in such Acquired EBITDAX or such Consolidated EBITDAX, as the case may be, projected by the Borrower in good faith as a result of (a) actions taken or expected to be taken prior to or during such Post Acquisition Period for the purposes of realizing reasonably identifiable and factually supportable cost savings, operating expense reductions and cost synergies or (b) any additional costs incurred prior to or during such Post Acquisition Period, in each case in connection with the combination of the operations of such Pro Forma Entity with the operations of the Borrower and the Restricted Subsidiaries; provided that (i) at the election of the Borrower, such Pro Forma Adjustment shall not be required to be determined for any Pro Forma Entity to the extent the aggregate consideration paid in connection with such acquisition was less than the greater of $8,000,000 and 5% of Consolidated EBITDAX as of the then most recently ended Test Period and (ii) so long as such actions are taken prior to or during such Post Acquisition Period or such costs are incurred during such Post Acquisition Period, as applicable, it may be assumed, for purposes of projecting such pro forma increase or decrease to such Acquired EBITDAX or such Consolidated EBITDAX, as the case may be, that the applicable amount of such cost savings, operating expense reductions and cost synergies will be realizable during the entirety of such Test Period, or the applicable amount of such additional costs, as applicable, will be incurred during the entirety of such Test Period; provided, further, that any such pro forma increase or decrease to such Acquired EBITDAX or such Consolidated EBITDAX, as the case may be, shall be without duplication for cost savings, operating expense reductions, cost synergies or additional costs already included in such Acquired EBITDAX or such Consolidated EBITDAX, as the case may be, for such Test Period.
“Pro Forma Basis”, “Pro Forma Compliance” and “Pro Forma Effect” shall mean, with respect to compliance with any test or covenant or calculation of any ratio hereunder, that (A) to the extent applicable, the Pro Forma Adjustment shall have been made and (B) all Specified Transactions and the following transactions in connection therewith shall be deemed to have occurred as of the first day of the applicable period of measurement in such test or covenant: (a) income statement items (whether positive or negative) attributable to the property or Person subject to such Specified Transaction, which (i) in the case of a Disposition of all or substantially all Stock or Stock Equivalents in any Subsidiary of the Borrower or any division, product line, or facility used for operations of the Borrower or any of its Subsidiaries, shall be excluded, and (ii) in the case of a Permitted Acquisition or Investment described in the definition of “Specified Transaction”, shall be included (and may be included on an annualized basis, at the election of the Borrower, if annualizing such income statement items is a more appropriate indicator of future performance than inclusion of the actual income statement items (as reasonably determined by the Borrower)), (b) any retirement, redemption, repayment, discharge, defeasance or extinguishment of Indebtedness, and (c) any Indebtedness incurred or assumed by the Borrower or any of the Restricted Subsidiaries in connection therewith (and if such Indebtedness has a floating or formula rate, such Indebtedness shall have an implied rate of interest for the applicable period for purposes of this definition determined by utilizing the rate which is or would be in effect with respect to such Indebtedness as at the relevant date of determination); provided that, without limiting the application of the Pro Forma Adjustment pursuant to (A) above, the foregoing Pro Forma Adjustments may be applied to any such test solely to the extent that such adjustments are consistent with the definition of Consolidated EBITDAX and give effect to events (including operating expense reductions) that are (as determined by the Borrower in good faith) (i) (x) directly attributable to such transaction, (y) expected to have a continuing impact on the Borrower and the Restricted Subsidiaries and (z) factually supportable or (ii)
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otherwise consistent with the definition of Pro Forma Adjustment; provided, further, that, at the election of the Borrower, such test or covenant shall deemed to have been conducted on a Pro Forma Basis and shall not be required to be determined on a Pro Forma Basis to the extent the consideration paid or received in connection with acquisitions or dispositions, for which the election has been taken, is in aggregate at the time of determination less than the greater of $8,000,000 and 5% of Consolidated EBITDAX as of the then most recently ended Test Period.
“Pro Forma Entity” shall have the meaning provided in the definition of the term “Acquired EBITDAX.”
“Pro Forma Projections” shall have the meaning provided in Section 8.8(a).
“Proceeding” shall have the meaning provided in Section 13.5.
“Production Forecast Update” shall have the meaning provided in Section 10.10(a).
“Production Payment” means a production payment obligation (whether volumetric or dollar denominated) of the Borrower or any of its Restricted Subsidiaries which is payable from a specified share of proceeds received from production from specified Oil and Gas Properties, together with all undertakings and obligations in connection therewith.
“Property” shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible.
“Proposed Acquisition” shall have the meaning provided in Section 10.10(b).
“Proposed Borrowing Base” shall have the meaning provided in Section 2.14(c)(i).
“Proposed Borrowing Base Notice” shall have the meaning provided in Section 2.14(c)(ii).
“Proved Developed Producing Reserves” means Proved Reserves which are categorized as both “Developed” and “Producing” in the Definitions for Oil and Gas Reserves promulgated by the Society of Petroleum Engineers (or any generally recognized successor) as in effect at the time in question; provided, that the Borrower may classify Proved Reserves as Proved Developed Producing Reserves in any Reserve Report if it in good faith determines, prior to the date of delivery thereof, based on publicly available information that such Proved Reserves have been developed and were producing Hydrocarbons prior to the “as of” date of such Reserve Report even if the operator of such Proved Reserves has not yet designated them as “Developed” and “Producing”.
“Proved Reserves” shall mean oil and gas reserves that, in accordance with Petroleum Industry Standards, are classified as both “Proved Reserves” and one of the following: (a) “Developed Producing Reserves”, (b) “Developed Non-Producing Reserves” or (c) “Undeveloped Reserves”.
“PTE” means a prohibited transaction class exemption issued by the U.S. Department of Labor, as such exemption may be amended from time to time.
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“Public Company Compliance” shall mean compliance with the requirements of the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated in connection therewith, the provisions of the Securities Act and the Exchange Act, and the rules of national securities exchange listed companies (in each case, as applicable to companies with equity or debt securities held by the public), including procuring directors and officers’ insurance, legal and other professional fees, and listing fees.
“PV-9” shall mean, with respect to any Borrowing Base Properties or Oil and Gas Properties becoming Borrowing Base Properties, the net present value, discounted at 9% per annum, of the future net revenues expected to accrue to the Borrower’s and the Credit Parties’ collective interests in such reserves during the remaining expected economic lives of such reserves, calculated in accordance with the most recent Bank Price Deck provided to the Borrower by the Administrative Agent pursuant to Section 2.14(j).
“QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).
“QFC Credit Support” shall have the meaning assigned to such term in Section 13.28(a).
“Qualified IPO” means any transaction or series of transactions, including a SPAC IPO, that results in, or following which, any common Stock or Stock Equivalents of the Borrower, IPOCo, other direct or indirect parent of the Borrower or any SPAC IPO Entity (or its successor by merger, amalgamation or other combination) being publicly traded on any United States national securities exchange or over-the-counter market, or any analogous exchange or market in Canada, the United Kingdom or the European Union so long as it results in gross proceeds being provided to the Borrower, IPOCo or any parent entity of at least $100,000,000, before deducting any applicable underwriting discounts, commissions and expenses.
“Qualified Professional Asset Manager” shall have the meaning provided in Section 13.27(a)(iii)(A).
“Recipient” shall have the meaning provided in the definition of the term “Excluded Taxes”.
“Redetermination Date” shall mean, with respect to any Scheduled Redetermination or any Interim Redetermination, the date that the redetermined Borrowing Base related thereto becomes effective pursuant to Section 2.14(d).
“Reference Time” with respect to any setting of the then-current Benchmark means (1) if such Benchmark is Term SOFR, 5:00 a.m. (Chicago time) on the day that is two (2) Business Days preceding the date of such setting, (2) if such Benchmark is Daily Simple SOFR, then four Business Days prior to such setting and (3) if such Benchmark is not Term SOFR or Daily Simple SOFR, the time determined by the Administrative Agent in its reasonable discretion.
“Refinance” shall have the meaning provided in the definition of “Permitted Refinancing Indebtedness.”
“Register” shall have the meaning provided in Section 13.6(b)(iv).
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“Regulation T” shall mean Regulation T of the Board as from time to time in effect and any successor to all or a portion thereof establishing margin requirements.
“Regulation U” shall mean Regulation U of the Board as from time to time in effect and any successor to all or a portion thereof establishing margin requirements.
“Regulation X” shall mean Regulation X of the Board as from time to time in effect and any successor to all or a portion thereof establishing margin requirements.
“Reinvestment Period” shall mean 365 days following the date of receipt of Net Cash Proceeds of a Casualty Event.
“Reimbursement Date” shall have the meaning provided in Section 3.4(a).
“Related Parties” shall mean, with respect to any specified Person, such Person’s Affiliates and the directors, officers, employees, agents and members of such Person or such Person’s Affiliates and any Person that possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of such Person, whether through the ability to exercise voting power, by contract or otherwise.
“Relevant Governmental Body” means the Board or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Board or the Federal Reserve Bank of New York or any successor thereto.
“Replaced Loans” shall have the meaning assigned to such term in Section 13.1(h).
“Replacement Loans” shall have the meaning assigned to such term in Section 13.1(h).
“Reportable Event” shall mean an event described in Section 4043 of ERISA and the regulations thereunder, other than any event as to which the 30-day notice period has been waived.
“Required Lenders” shall mean, at any date, Non-Defaulting Lenders having or holding at least 66-2/3% of the Total Credit Exposures (excluding (a) the Credit Exposure of Defaulting Lenders and (b) the Excluded Term Loan Exposures).
“Requirement of Law” shall mean, as to any Person, any law, treaty, rule, regulation statute, order, ordinance, decree, judgment, consent decree, writ, injunction, settlement agreement or governmental requirement enacted, promulgated or imposed or entered into or agreed by any Governmental Authority, in each case applicable to or binding upon such Person or any of its property or assets or to which such Person or any of its property or assets is subject.
“Reserve Report” shall mean the Initial Reserve Report and any other subsequent report, in form and substance reasonably satisfactory to the Administrative Agent, setting forth, as of each June 30th or December 31st (or such other date in the event of certain Interim Redeterminations or such other date permitted hereunder) the Proved Reserves attributable to the Borrowing Base Properties of the Borrower and the Credit Parties, together with a projection of the rate of production and future net income, taxes, operating expenses and Capital Expenditures with respect thereto as of such date, based upon the most recent Bank Price Deck provided to the
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Borrower by the Administrative Agent pursuant to Section 2.14(j); provided that in connection with any Interim Redeterminations of the Borrowing Base pursuant to the last sentence of Section 2.14(b), (i.e., as a result of the Borrower having acquired Oil and Gas Properties with Proved Reserves which are to be Borrowing Base Properties having a PV-9 (calculated at the time of acquisition) in excess of 5% of the Borrowing Base in effect immediately prior to such acquisition), the Borrower shall be required, for purposes of updating the Reserve Report, to set forth only such additional Proved Reserves and related information as are the subject of such acquisition.
“Reserve Report Certificate” shall mean a certificate of an Authorized Officer in substantially the form of Exhibit I certifying as to the matters set forth in Section 9.14(c).
“Resolution Authority” shall mean an EEA Resolution Authority or, with respect to any UK Financial Institution, a UK Resolution Authority.
“Restricted Foreign Subsidiary” shall mean a Foreign Subsidiary that is a Restricted Subsidiary.
“Restricted Subsidiary” shall mean any Subsidiary of the Borrower other than an Unrestricted Subsidiary.
“Revolving Commitment” shall mean, with respect to each Revolving Lender, the commitment of such Revolving Lender to make Revolving Loans and to acquire participations in Letters of Credit hereunder, as such commitment may be modified from time to time under this Agreement, including pursuant to assignments by or to such Lender pursuant to Section 13.6(b). The amount of each Revolving Lender’s Revolving Commitment shall at any time be the least of (a) such Lender’s Maximum Credit Amount, (b) such Revolving Lender’s Revolving Commitment Percentage of the then effective Available Borrowing Base, and (c) such Revolving Lender’s Elected Commitment Amount.
“Revolving Commitment Percentage” shall mean, at any time, for each Revolving Lender, the percentage obtained by dividing (a) such Revolving Lender’s Revolving Commitment at such time by (b) the amount of the Total Revolving Commitment at such time; provided that at any time when the Total Revolving Commitment shall have been terminated, each Revolving Lender’s Revolving Commitment Percentage shall be the percentage obtained by dividing (i) such Lender’s Revolving Credit Exposures at such time by (ii) the Total Revolving Credit Exposures at such time.
“Revolving Credit Exposures” shall mean, with respect to any Revolving Lender at any time, the sum of (a) the aggregate principal amount of the Revolving Loans of such Revolving Lender then outstanding and (b) such Revolving Lender’s Letter of Credit Exposure at such time.
“Revolving Lenders” shall mean (a) the Persons listed as “Revolving Lenders” on Schedule 1.1(a)(i) as of the Closing Date, (b) any Initial Term Lender that has any Converted Revolving Loans outstanding, and (c) any other Person that shall have become a party hereto with a Revolving Commitment and/or any Revolving Loan pursuant to Section 2.16 or pursuant to an Assignment and Acceptance, other than any such Person that ceases to be a party hereto with a Revolving Commitment and/or any Revolving Loan pursuant to an Assignment and Acceptance.
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“Revolving Loan Conversion” shall mean each automatic conversion of Initial Term Loans to Converted Revolving Loans on each Revolving Loan Conversion Date pursuant to and in accordance with Section 2.1(c).
“Revolving Loan Conversion Amount” shall mean, with respect to any Revolving Loan Conversion Date, the amount of the Excess Conforming Borrowing Base on such date.
“Revolving Loan Conversion Date” shall mean each Redetermination Date to occur prior to the Initial Term Loans Repayment Date on which there is any Excess Conforming Borrowing Base.
“Revolving Loans” shall have the meaning set forth in Section 2.1(a).
“Revolving Termination Date” shall mean the earlier to occur of (a) the Latest Maturity Date applicable to the Revolving Loans and (b) the date on which the Total Revolving Commitment shall have terminated.
“Riverbend Acquisition Agreement” shall mean that certain Purchase and Sale Agreement, dated as of November 25, 2025 (together with all exhibits and schedules thereto, and as amended, supplemented or otherwise modified from time to time), between Riverbend Oil & Gasa IX Investments, L.L.C., a Delaware limited liability company, as seller, and Crescent Minerals Assets LLC, a Delaware limited liability company, as buyer, pursuant to which the Borrower will acquire (the “Riverbend Acquisition”) the Conveyed Assets (as defined in the Riverbend Acquisition Agreement and referred herein to as the “Riverbend Conveyed Assets”).
“Riverbend Acquisition” shall have the meaning provided in the definition of the term “Riverbend Acquisition Agreement”.
“Riverbend Conveyed Assets” shall have the meaning provided in the definition of the term “Riverbend Acquisition Agreement”.
“S&P” shall mean Standard & Poor’s Ratings Services or any successor by merger or consolidation to its business.
“Sanctions Laws and Regulations” shall mean any sanctions, prohibitions or trade embargoes imposed by any executive order of the U.S. government or by any sanctions program administered by OFAC.
“Scheduled Dispositions” shall have the meaning provided in Section 10.4(i).
“Scheduled Redetermination” shall have the meaning provided in Section 2.14(b).
“Scheduled Redetermination Date” shall mean the date on which a Borrowing Base that has been redetermined pursuant to a Scheduled Redetermination becomes effective as provided in Section 2.14(d).
“SDN” shall have the meaning provided in the definition of the term “Designated Persons.”
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“SDN List” shall have the meaning provided in the definition of the term “Designated Persons.”
“SEC” shall mean the Securities and Exchange Commission or any successor thereto.
“Section 2.17 Additional Amendment” shall have the meaning provided in Section 2.17(c).
“Section 9.1 Financials” shall mean the financial statements delivered, or required to be delivered, pursuant to Section 9.1(a) or (b), together with the accompanying Authorized Officer’s certificate delivered, or required to be delivered, pursuant to Section 9.1(c).
“Secured Cash Management Agreement” shall mean any agreement related to Cash Management Services by and between the Borrower or any of its Restricted Subsidiaries and any Cash Management Bank.
“Secured Hedge Agreement” shall mean any Hedge Agreement by and between the Borrower or any of its Restricted Subsidiaries and any Hedge Bank.
“Secured Parties” shall mean, collectively, the Administrative Agent, the Collateral Agent, each Letter of Credit Issuer, each Lender, each Hedge Bank that is party to any Secured Hedge Agreement, each Cash Management Bank that is a party to any Secured Cash Management Agreement and each sub-agent pursuant to Section 12 appointed by the Administrative Agent with respect to matters relating to the Credit Documents or by the Collateral Agent with respect to matters relating to any Security Document.
“Securities Act” shall mean the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Security Agreement” shall mean the Security Agreement entered into by the Borrower, the other grantors party thereto and the Collateral Agent, for the benefit of the Secured Parties, substantially in the form of Exhibit J.
“Security Documents” shall mean, collectively, (a) the Security Agreement, (b) the Pledge Agreement, (c) the Mortgages, (d) the Account Control Agreements and (e) each other security agreement or other instrument or document executed and delivered pursuant to Section 9.11 or Section 9.13 or pursuant to any other such Security Documents or otherwise to secure or perfect the security interest in any or all of the Obligations.
“September 2026 Redetermination” shall have the meaning provided in Section 2.14(b).
“SOFR” means a rate equal to the secured overnight financing rate as administered by the SOFR Administrator.
“SOFR Administrator” means the Federal Reserve Bank of New York (or a successor administrator of the secured overnight financing rate).
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“SOFR Administrator’s Website” means the website of the Federal Reserve Bank of New York, currently at http://www.newyorkfed.org, or any successor source for the secured overnight financing rate identified as such by the SOFR Administrator from time to time.
“Sold Entity or Business” shall have the meaning provided in the definition of the term “Consolidated EBITDAX”.
“Solvent” shall mean, with respect to any Person, that as of the Closing Date, (i) the Fair Value of the assets of such Person exceeds its Stated Liabilities and Identified Contingent Liabilities; (ii) the Present Fair Salable Value of the assets of such Person exceeds its Stated Liabilities and Identified Contingent Liabilities; (iii) for the period from the date hereof through the Initial Maturity Date, such Person after consummation of the Transactions is a going concern and has sufficient capital to ensure that it will continue to be a going concern for such period, in light of the nature of the particular business or businesses conducted or to be conducted, and based on the needs and anticipated needs for capital of the business conducted or anticipated to be conducted by such Person as reflected in projected financial statements and in light of anticipated credit capacity; and (iv) for the period from the date hereof through the Maturity Date, such Person will have sufficient assets and cash flow to pay its Stated Liabilities and Identified Contingent Liabilities as those liabilities mature or (in the case of contingent liabilities) otherwise become payable, in light of the business conducted or anticipated to be conducted by such Person as reflected in projected financial statements and in light of anticipated credit capacity.
“SPAC IPO” means the acquisition, purchase, merger, amalgamation or other combination of the Borrower or any direct or indirect parent of the Borrower, by, or with, a publicly traded special purpose acquisition company or targeted acquisition company or any entity similar to the foregoing (a “SPAC IPO Entity”) that results in any common Stock or Stock Equivalents of the Borrower, any direct or indirect parent of the Borrower or such SPAC IPO Entity (or its successor by merger, amalgamation or other combination) being publicly traded on any United States national securities exchange or over-the-counter market, or any analogous exchange or market in Canada, the United Kingdom or the European Union.
“Specified Conditions” shall mean as of any date of determination, subject to Section 1.10(f), that (a) no Event of Default or Borrowing Base Deficiency has occurred and is continuing or would result therefrom; (b) except with respect to the date on which the Initial Term Loans are made, at least 20% of the Revolving Commitments are unused; and (c) the Consolidated Total Debt to Consolidated EBITDAX Ratio is equal to or less than 2.50 to 1.00, in each case, on a Pro Forma Basis.
“Specified Existing Commitment” shall mean any Existing Commitments belonging to a Specified Existing Commitment Class.
“Specified Existing Commitment Class” shall have the meaning provided in Section 2.17(a).
“Specified Subsidiary” shall mean, at any date of determination (a) prior to the Initial Term Loans Repayment Date, any Material Subsidiary, and (b) after the Initial Term Loans Repayment Date, any Restricted Subsidiary (i) whose Total Assets at the last day of the Test
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Period ending on the last day of the most recently ended Test Period were equal to or greater than 15% of the Total Assets of the Borrower and the Restricted Subsidiaries at such date, or (ii) whose revenues during such Test Period were equal to or greater than 15% of the consolidated revenues of the Borrower and the Restricted Subsidiaries for such period, in each case determined in accordance with GAAP.
“Specified Transaction” shall mean, with respect to any period, any Investment, any Disposition of assets, incurrence, issuance or Refinancing of Indebtedness, Dividend, Subsidiary designation, Incremental Increase or other event that by the terms of this Agreement requires “Pro Forma Compliance” with a test or covenant hereunder or requires such test or covenant to be calculated on a “Pro Forma Basis.”
“Sponsor” shall mean KKR and its Affiliates, but excluding (i) the Borrower and Subsidiaries of the Borrower and (ii) portfolio companies of KKR or its Affiliates.
“Stated Amount” of any Letter of Credit shall mean the maximum amount from time to time available to be drawn thereunder, determined without regard to whether any conditions to drawing could then be met.
“Stated Liabilities” shall mean the recorded liabilities (including contingent liabilities that would be recorded in accordance with GAAP) of the Borrower and its Subsidiaries taken as a whole, as of the date hereof after giving effect to the consummation of the Transactions, determined in accordance with GAAP consistently applied.
“Stock” shall mean any and all shares of capital stock or shares in the capital, as the case may be (whether denominated as common stock or preferred stock or ordinary shares or preferred shares, as the case may be), beneficial, partnership or membership interests, participations or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company or equivalent entity, whether voting or non-voting.
“Stock Equivalents” shall mean all securities convertible into or exchangeable for Stock and all warrants, options or other rights to purchase or subscribe for any Stock, whether or not presently convertible, exchangeable or exercisable.
“Subsidiary” of any Person shall mean and include (a) any corporation more than 50% of whose Stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time Stock of any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person directly or indirectly through Subsidiaries; and (b) any limited liability company, partnership, association, joint venture or other entity of which such Person directly or indirectly through Subsidiaries has more than a 50% equity interest at the time. Unless otherwise expressly provided, all references herein to a “Subsidiary” shall mean a Subsidiary of the Borrower.
“Subsidiary Guarantor” shall mean each Subsidiary that is a Guarantor.
“Successor Borrower” shall have the meaning provided in Section 10.3(a).
“Supported QFC” shall have the meaning assigned to such term in Section 13.28(a).
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“Swap” shall mean any agreement, contract, or transaction that constitutes a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.
“Swap Obligation” shall mean any obligation to pay or perform under any Swap.
“Swap Termination Value” shall mean, in respect of any one or more Hedge Agreements, after taking into account the effect of any legally enforceable netting agreement relating to such Hedge Agreements, (a) for any date on or after the date such Hedge Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Hedge Agreements, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Hedge Agreements (which may include a Lender or any Affiliate of a Lender).
“Taxes” shall mean any and all present or future taxes, duties, levies, imposts, assessments, deductions, withholdings or other similar charges imposed by any Governmental Authority whether computed on a separate, consolidated, unitary, combined or other basis and any interest, fines, penalties or additions to tax with respect to the foregoing.
“Term Commitment” has the meaning set forth in Section 2.19(a), as the same may be modified from time to time pursuant to any assignment permitted by Section 13.6.
“Term Lenders” means (a) the Initial Term Lenders, (b) any Person that shall become a party hereto with a Term Loan Commitment pursuant to Section 2.19, and (c) any Person that shall become a party hereto pursuant to an Assignment and Acceptance with respect to which all or any portion of a Term Loan was assigned to such Person. For the avoidance of doubt, any Term Lender that ceases to have any Term Loan Exposure shall not constitute a Term Lender hereunder.
“Term Loan Commitment Percentage” shall mean, at any time, for each Term Lender, the percentage obtained by dividing (a) such Term Lender’s Term Loan Commitment at such time by (b) the amount of the total Term Loan Commitment of all Term Lenders at such time; provided that at any time when the total Term Loan Commitments of all Term Lenders shall have been terminated, each Term Lender’s Term Loan Commitment Percentage shall be the percentage obtained by dividing (i) such Term Lender’s Term Loan Exposure at such time by (ii) the aggregate Total Term Loan Exposures at such time.
“Term Loan Conversion” shall mean each automatic conversion of Revolving Loans to Converted Term Loans on each Term Loan Conversion Date pursuant to and in accordance with Section 2.1(c).
“Term Loan Conversion Amount” shall mean, with respect to any Term Loan Conversion Date, the amount of the Excess Revolving Loans on such date.
“Term Loan Conversion Date” shall mean each Redetermination Date to occur prior to the Initial Term Loans Repayment Date on which there is any Excess Revolving Loans.
“Term Loan Exposure” means, with respect to any Term Lender at any time, the outstanding principal amount of such Term Lender’s Term Loans at such time.
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“Term Loan Extension” has the meaning set forth in Section 2.17(f).
“Term Loan Extension Request” has the meaning set forth in Section 2.17(f).
“Term Loan Extension Series” means the meaning set forth in Section 2.17(f).
“Term Loan Facility” means (a) the Initial Term Loan Facility and (b) any term loan facility established pursuant to Section 2.19 and, unless the context shall otherwise require, shall include any Extended Term Loan Facility.
“Term Loan Facility Closing Date” has the meaning set forth in Section 2.19(d).
“Term Loans” means (a) prior to the Initial Term Loans Repayment Date, the Initial Term Loans; and (b) after the Initial Term Loans Repayment Date, the term loans made to the Borrower by the Term Lenders pursuant to Article II (other than pursuant to Section 2.1(b) or (c)), or any portion thereof, as the context requires, and, unless the context otherwise requires, any Extended Term Loan.
“Term SOFR” means, with respect to any Borrowing of Term SOFR Loans and for any tenor comparable to the applicable Interest Period, the Term SOFR Reference Rate at approximately 5:00 a.m., Chicago time, two U.S. Government Securities Business Days prior to the commencement of such tenor comparable to the applicable Interest Period, as such rate is published by the Term SOFR Administrator. For the avoidance of doubt, if the Term SOFR shall be less than the Floor, such rate shall be deemed to be the Floor for purposes of this Agreement.
“Term SOFR Administrator” means CME Group Benchmark Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference Rate selected by the Administrative Agent in its reasonable discretion).
“Term SOFR Determination Day” shall have the meaning provided in the definition of the term “Term SOFR Reference Rate.”
“Term SOFR Loan” shall mean any Loan bearing interest at a rate determined by reference to Term SOFR (other than an ABR Loan bearing interest by reference to Term SOFR by virtue of clause (c) of the definition of ABR).
“Term SOFR Reference Rate” means, for any day and time (such day, the “Term SOFR Determination Day”), with respect to any Borrowing of Term SOFR Loans denominated in Dollars and for any tenor comparable to the applicable Interest Period, the rate per annum determined by the Administrative Agent as the forward-looking term rate based on SOFR. If by 5:00 pm (New York City time) on such Term SOFR Determination Day, the “Term SOFR Reference Rate” for the applicable tenor has not been published by the Term SOFR Administrator and a Benchmark Replacement Date with respect to Term SOFR has not occurred, then the Term SOFR Reference Rate for such Term SOFR Determination Day will be the Term SOFR Reference Rate as published in respect of the first preceding U.S. Government Securities Business Day for which such Term SOFR Reference Rate was published by the Term SOFR Administrator, so long as such first preceding Business Day is not more than five (5) Business Days prior to such Term SOFR Determination Day.
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“Test Period” shall mean, for any determination under this Agreement, the four consecutive fiscal quarters of the Borrower then last ended and for which Section 9.1 Financials have been or were required to be delivered to the Administrative Agent; provided that, for any determination(s) occurring:
(a)    on the date when Section 9.1 Financials are required to be delivered for the fiscal quarter of the Borrower ending June 30, 2026 to the date when Section 9.1 Financials are required to be delivered for the fiscal quarter of the Borrower ending September 30, 2026, “Test Period” means the most recent fiscal quarter of the Borrower for which Section 9.1 Financials are required to be delivered,
(b)    on the date when Section 9.1 Financials are required to be delivered or the fiscal quarter of the Borrower ending September 30, 2026 to the date when Section 9.1 Financials are required to be delivered for the fiscal year of the Borrower ending December 31, 2026, “Test Period” means the two most recent consecutive fiscal quarters of the Borrower ending with the most recently ended fiscal quarter for which Section 9.1 Financials are required to be delivered, and
(c)    on the date when Section 9.1 Financials are required to be delivered for the fiscal year of the Borrower ending December 31, 2026 to the date when Section 9.1 Financials are required to be delivered for the fiscal quarter of the Borrower ending March 31, 2027, “Test Period” means the three most recent consecutive fiscal quarters of the Borrower ending with the most recently ended fiscal quarter for which Section 9.1 Financials are required to be delivered.
“Total Assets” shall mean, as of any date of determination, the amount that would, in conformity with GAAP, be set forth opposite the caption “total assets” (or any like caption) on a consolidated balance sheet of the Borrower and the Restricted Subsidiaries at such date (and, in the case of any determination relating to any incurrence of Indebtedness or any Investment or other acquisition, on a Pro Forma Basis including any property or assets being acquired in connection therewith).
“Total Credit Exposures” shall mean, at any time, the sum of (a) the unused Revolving Commitments of all Lenders, (b) the Total Revolving Credit Exposures and (c) the Total Term Loan Exposures.
“Total Revolving Commitment” shall mean the sum of the Revolving Commitments of the Revolving Lenders.
“Total Revolving Credit Exposures” shall mean, at any time, the amount of the Revolving Credit Exposures of all of the Revolving Lenders.
“Total Term Loan Exposures” shall mean, at any time, the amount of the Term Loan Exposures of all of the Term Lenders.
“Transaction Expenses” shall mean any fees or expenses incurred or paid by the Borrower or any of its Subsidiaries or any of their Affiliates in connection with the Transactions, this Agreement and the other Credit Documents and the transactions contemplated hereby and thereby.
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“Transactions” shall mean, collectively, the Closing Date Refinancing, the Acquisition, and the consummation of the other transactions related to each of the foregoing, the entering into the Credit Documents and this Agreement, the payment of Transaction Expenses on the Closing Date and the other transactions contemplated by this Agreement and the Credit Documents.
“Transferee” shall have the meaning provided in Section 13.6(e).
“Treasury Regulations” shall mean the U.S. Department of Treasury regulations promulgated under the Code.
“Type” shall mean, as to any Loan, its nature as an ABR Loan, a Term SOFR Loan or, to the extent applicable pursuant to Section 2.10(a) or Section 2.18, a Daily Simple SOFR Loan.
“U.S. Government Securities Business Day” means any day except for (i) a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed for the entire day for purposes of trading in United States government securities.
“U.S. Lender” shall have the meaning provided in Section 5.4(h).
“U.S. Special Resolution Regimes” shall have the meaning provided in Section 13.28(a).
“UCC” shall mean the Uniform Commercial Code of the State of New York or of any other state the laws of which are required to be applied in connection with the perfection of security interests in any Collateral.
“UK Financial Institution” shall mean any BRRD Undertaking (as such term is defined under the PRA Rulebook (as amended form time to time) promulgated by the United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6 of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom Financial Conduct Authority, which includes certain credit institutions and investment firms, and certain affiliates of such credit institutions or investment firms.
“UK Resolution Authority” shall mean the Bank of England or any other public administrative authority having responsibility for the resolution of any UK Financial Institution.
“Unadjusted Benchmark Replacement” means the applicable Benchmark Replacement excluding the related Benchmark Replacement Adjustment.
“Unfunded Current Liability” of any Plan shall mean the amount, if any, by which the Accumulated Benefit Obligation (as defined under Statement of Financial Accounting Standards No. 87 (“SFAS 87”)) under the Plan as of the close of its most recent plan year, determined in accordance with SFAS 87 as in effect on the date hereof, exceeds the Fair Market Value of the assets allocable thereto.
“Unpaid Drawing” shall have the meaning provided in Section 3.4(a).
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“Unrestricted Cash” shall mean cash or cash equivalents (including Permitted Investments) of the Borrower or any of its Restricted Subsidiaries that would not appear as “restricted” on a consolidated balance sheet of the Borrower or any of its Restricted Subsidiaries; provided that cash or cash equivalents (including Permitted Investments) that would appear as “restricted” on a consolidated balance sheet of Borrower or any of its Restricted Subsidiaries solely because such cash or cash equivalents (including Permitted Investments) are subject to an Account Control Agreement in favor of the Collateral Agent shall constitute Unrestricted Cash hereunder.
“Unrestricted Subsidiary” shall mean (a) any Subsidiary of the Borrower that is formed or acquired after the Closing Date; provided that at such time (or promptly thereafter) the Borrower designates such Subsidiary an Unrestricted Subsidiary in a written notice to the Administrative Agent, (b) any Restricted Subsidiary subsequently designated as an Unrestricted Subsidiary by the Borrower in a written notice to the Administrative Agent; provided that in the case of clauses (a) and (b), (i) such designation shall be deemed to be an Investment (or reduction in an outstanding Investment, in the case of a designation of an Unrestricted Subsidiary as a Restricted Subsidiary) on the date of such designation in an amount equal to the Fair Market Value of the Borrower’s investment therein and such designation shall be permitted only to the extent permitted under Section 10.5 on the date of such designation, (ii) in the case of clause (b), such designation shall be deemed to be a Disposition of the assets owned by such Restricted Subsidiary on the date of such designation for the purposes of Section 2.14(f) and (g), as applicable, and (iii) no Event of Default or Borrowing Base Deficiency would result from such designation after giving Pro Forma Effect thereto and (c) each Subsidiary of an Unrestricted Subsidiary. No Subsidiary may be designated as an Unrestricted Subsidiary if, after such designation, it would be a “Restricted Subsidiary” for the purpose of any Permitted Additional Debt, Permitted Junior Lien Debt or any Permitted Refinancing Indebtedness in respect of any of the foregoing. The Borrower may, by written notice to the Administrative Agent, re-designate any Unrestricted Subsidiary as a Restricted Subsidiary, and thereafter, such Subsidiary shall no longer constitute an Unrestricted Subsidiary, but only if (A) to the extent such Subsidiary has outstanding Indebtedness on the date of such designation, immediately after giving effect to such designation, the Borrower shall be in compliance, on a Pro Forma Basis after giving effect to the incurrence of such Indebtedness, with the Financial Performance Covenants and (B) no Event of Default would result from such re-designation.
“Voting Stock” shall mean, with respect to any Person, such Person’s Stock or Stock Equivalents having the right to vote for the election of directors of such Person under ordinary circumstances.
“Weighted Average Life to Maturity” shall mean, when applied to any Indebtedness at any date, the number of years obtained by dividing: (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect thereof, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then outstanding principal amount of such Indebtedness.
“Write-Down and Conversion Powers” shall mean, (a) with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority
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from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule, and (b) with respect to the United Kingdom, any powers of the applicable Resolution Authority under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of any UK Financial Institution or any contract or instrument under which that liability arises, to convert all or part of that liability into shares, securities or obligations of that person or any other person, to provide that any such contract or instrument is to have effect as if a right had been exercised under it or to suspend any obligation in respect of that liability or any of the powers under that Bail-In Legislation that are related to or ancillary to any of those powers.
Section 1.2Other Interpretive Provisions. With reference to this Agreement and each other Credit Document, unless otherwise specified herein or in such other Credit Document:
(a)The meanings of defined terms are equally applicable to the singular and plural forms of the defined terms.
(b)The words “herein”, “hereto”, “hereof” and “hereunder” and words of similar import when used in any Credit Document shall refer to such Credit Document as a whole and not to any particular provision thereof.
(c)Article, Section, Exhibit and Schedule references are to the Credit Document in which such reference appears.
(d)The term “including” is by way of example and not limitation.
(e)The term “documents” includes any and all instruments, documents, agreements, certificates, notices, reports, financial statements and other writings, however evidenced, whether in physical or electronic form.
(f)In the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”; the words “to” and “until” each mean “to but excluding”; and the word “through” means “to and including”.
(g)Section headings herein and in the other Credit Documents are included for convenience of reference only and shall not affect the interpretation of this Agreement or any other Credit Document.
(h)Any reference to any Person shall be constructed to include such Person’s successors or assigns (subject to any restrictions on assignment set forth herein) and, in the case of any Governmental Authority, any other Governmental Authority that shall have succeeded to any or all of the functions thereof.
(i)Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.
(j)The word “will” shall be construed to have the same meaning as the word “shall”.
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(k)The words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.
(l)No provision of any Credit Document shall be interpreted or construed against any Person solely because such Person or its legal counsel drafted such provision.
(m)The principal amount of any non-interest bearing Indebtedness or other discount security constituting Indebtedness at any date shall be the principal amount thereof that would be shown on a balance sheet of the Borrower dated such date prepared in accordance with GAAP.
Section 1.3Accounting Terms.
(a)All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP, applied in a manner consistent with that used in preparing the first audited financial statements delivered under Section 9.1(a) (and prior to such time in a manner consistent with the past practices of the Sponsor for its portfolio companies in the oil and gas sector as reasonably determined by the Borrower), except as otherwise specifically prescribed herein; provided, however, that if the Borrower notifies the Administrative Agent that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the Closing Date in GAAP or in the application thereof on the operation of such provision (or if the Administrative Agent notifies the Borrower that the Required Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith.
(b)Notwithstanding anything to the contrary herein, for purposes of determining compliance with any test or covenant contained in this Agreement with respect to any period during which any Specified Transaction occurs, the Consolidated Total Debt to Consolidated EBITDAX Ratio and the Current Ratio, as applicable, shall be calculated with respect to such period and such Specified Transaction on a Pro Forma Basis.
Section 1.4Rounding. Any financial ratios required to be maintained or complied with by the Borrower pursuant to this Agreement (or required to be satisfied in order for a specific action to be permitted under this Agreement) shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).
Section 1.5References to Agreements, Laws, Etc. Unless otherwise expressly provided herein, (a) references to organizational documents, agreements (including the Credit Documents) and other Contractual Requirements shall be deemed to include all subsequent
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amendments, restatements, amendment and restatements, extensions, supplements and other modifications thereto, but only to the extent that such amendments, restatements, amendment and restatements, extensions, supplements and other modifications are permitted by any Credit Document and (b) references to any Requirement of Law shall include all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting such Requirement of Law.
Section 1.6Times of Day. Unless otherwise specified, all references herein to times of day shall be references to New York City (daylight or standard, as applicable).
Section 1.7Timing of Payment or Performance. When the payment of any obligation or the performance of any covenant, duty or obligation is stated to be due or performance required on a day which is not a Business Day, the date of such payment (other than as described in Section 2.9) or performance shall extend to the immediately succeeding Business Day.
Section 1.8Currency Equivalents Generally.
(a)For purposes of any determination under Section 9, Section 10 (other than Section 10.11) or Section 11 or any determination under any other provision of this Agreement requiring the use of a current exchange rate, all amounts incurred, outstanding or proposed to be incurred or outstanding in currencies other than Dollars shall be translated into Dollars at the Exchange Rate then in effect on the date of such determination; provided, however, that (x) for purposes of determining compliance with Section 10 with respect to the amount of any Indebtedness, Investment, Disposition, Dividend or payment under Section 10.7 in a currency other than Dollars, no Default or Event of Default shall be deemed to have occurred solely as a result of changes in rates of exchange occurring after the time such Indebtedness or Investment is incurred or Disposition, Dividend or payment under Section 10.7 is made, (y) for purposes of determining compliance with any Dollar-denominated restriction on the incurrence of Indebtedness, if such Indebtedness is incurred to Refinance other Indebtedness denominated in a foreign currency, and such Refinancing would cause the applicable Dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such Refinancing, such Dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such Refinanced Indebtedness does not exceed the principal amount of such Indebtedness being Refinanced and (z) for the avoidance of doubt, the foregoing provisions of this Section 1.8 shall otherwise apply to such Sections, including with respect to determining whether any Indebtedness or Investment may be incurred or Disposition, Dividend or payment under Section 10.7 may be made at any time under such Sections. For purposes of Section 10.11, amounts in currencies other than Dollars shall be translated into Dollars at the applicable exchange rates used in preparing the most recently delivered financial statements pursuant to Section 9.1(a) or Section 9.1(b).
(b)Each provision of this Agreement shall be subject to such reasonable changes of construction as the Administrative Agent may from time to time specify with the Borrower’s consent (such consent not to be unreasonably withheld) to appropriately reflect a change in currency of any country and any relevant market conventions or practices relating to such change in currency.
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Section 1.9Classification of Loans and Borrowings. For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., an “Extended Loan”) or by Type (e.g., a “Term SOFR Loan”, an “ABR Loan”), by Class and whether such Loan is a Revolving Loan or a Term Loan (e.g., an “Extended Revolving Loan”, an “Extended Term SOFR Loan”), or by Type and whether such Loan is a Revolving Loan or a Term Loan (e.g., a “Term SOFR Revolving Loan”, a “Term SOFR Term Loan”, an “ABR Revolving Loan” or an “ABR Term Loan”).

Section 1.10Pro Forma Calculations.
(a)Notwithstanding anything to the contrary herein, financial ratios and tests, including the Financial Performance Covenants, shall be calculated in the manner prescribed by this Section 1.10; provided that notwithstanding anything to the contrary in Section 1.10(b), (c) or (d), when calculating the Financial Performance Covenants for purposes of determining actual compliance (and not Pro Forma Compliance or compliance on a Pro Forma Basis) with the Financial Performance Covenants, the events described in this Section 1.10 that occurred subsequent to the end of the applicable Test Period shall not be given Pro Forma Effect. In addition, whenever a covenant, test or ratio is to be calculated on a Pro Forma Basis, the reference to the “Test Period” for purposes of calculating such financial ratio or test shall be deemed to be a reference to, and shall be based on, the most recently ended Test Period for which financial statements of the Borrower are available; provided that, the provisions of this sentence shall not apply for purposes of determining actual compliance with the Financial Performance Covenants for purposes of Section 10.11 (other than, for the avoidance of doubt, for the purpose of determining Pro Forma Compliance with the Financial Performance Covenants), each of which shall be based on the financial statements delivered pursuant to Section 9.01(a) or (b), as applicable, for the relevant Test Period.
(b)For purposes of calculating any financial ratio or test, or basket that is based on a percentage of Consolidated EBITDAX, Specified Transactions (with any incurrence or repayment of any Indebtedness (other than Indebtedness incurred under any revolving credit facility or line of credit for working capital purposes in connection therewith) to be subject to Section 1.10(d)) that have been made (i) during the applicable Test Period and (ii) if applicable as described in Section 1.10(a), subsequent to such Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made shall be calculated on a Pro Forma Basis assuming that all such Specified Transactions (and any increase or decrease in Consolidated EBITDAX and the component financial definitions used therein attributable to any Specified Transaction) had occurred on the first day of the applicable Test Period. If since the beginning of any applicable Test Period any Person that subsequently became a Restricted Subsidiary or was merged, amalgamated or consolidated with or into the Borrower or any of its Restricted Subsidiaries since the beginning of such Test Period shall have made any Specified Transaction that would have required adjustment pursuant to this Section 1.10, then such financial ratio or test shall be calculated to give Pro Forma Effect thereto in accordance with this Section 1.10.
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(c)Whenever Pro Forma Effect is to be given to the Transactions, a Specified Transaction or the implementation of an operational initiative or operational change, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Borrower and may include, for the avoidance of doubt, the amount of “run-rate” cost savings, operating expense reductions and savings from other operating improvements and synergies projected by the Borrower in good faith to be realized as a result of specified actions taken, committed to be taken or expected to be taken (calculated on a Pro Forma Basis as though such cost savings, operating expense reductions and savings from other operating improvements and synergies had been realized on the first day of such period and as if such cost savings, operating expense reductions, operating initiatives, savings from operating changes and synergies were realized during the entirety of such period) and “run-rate” means the full recurring benefit for a period that is associated with any action taken, committed to be taken or expected to be taken (including any savings expected to result from the elimination of a public target’s costs of Public Company Compliance) net of the amount of actual benefits realized during such period from such actions; provided that (A) such amounts are reasonably identifiable and factually supportable in the good faith judgment of the Borrower, (B) such cost savings, operating expense reductions, and savings from other operating improvements and synergies are reasonably identifiable and factually supportable and determined, in the good faith judgment of the Borrower, to result from actions either taken or expected to be taken within 36 months after the date of the Transactions, such Specified Transaction or determination to implement such initiative or operational change, and (C) no amounts shall be added pursuant to this Section 1.10(c) to the extent duplicative of any amounts that are otherwise added back in computing Consolidated EBITDAX, whether through a Pro Forma Adjustment or otherwise, with respect to such period.
(d)In the event that the Borrower or any Restricted Subsidiary incurs (including by assumption or guarantees) or repays (including by redemption, repayment, retirement or extinguishment) any Indebtedness included in the calculations of any financial ratio or test (in each case, other than Indebtedness incurred under any revolving credit facility or line of credit for working capital purposes), (i) during the applicable Test Period or (ii) subject to Section 1.10(a) subsequent to the end of the applicable Test Period and prior to or simultaneously with the event for which the calculation of any such ratio is made, then such financial ratio or test shall be calculated giving Pro Forma Effect to such incurrence or repayment of Indebtedness, to the extent required, as if the same had occurred on the last day of the applicable Test Period.
(e)At any time prior to the first applicable test date under Section 10.11, any provision requiring the Pro Forma Compliance with Section 10.11 shall be made assuming that compliance with the Financial Performance Covenants is required for the most recent Test Period prior to such time.
(f)Notwithstanding anything in this Agreement or any Credit Document to the contrary, when calculating the Financial Performance Covenants testing any basket determined by reference to Consolidated EBITDAX or Total Assets or determining other compliance with this Agreement (including the determination of compliance with any provision of this Agreement which requires that no Default or Event of Default has
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occurred, is continuing or would result therefrom or requiring the accuracy of representations and warranties) in connection with a Specified Transaction undertaken in connection with the consummation of a Limited Condition Transaction, the date of determination of such ratio and determination for calculation of any such covenant or ratio or whether any Default or Event of Default has occurred, is continuing or would result therefrom, at the option of the Borrower (the Borrower’s election to exercise such option in connection with any Limited Condition Transaction, an “LCT Election”), be deemed to be the date the definitive agreements for such Limited Condition Transaction are entered into (the “LCT Test Date”) and if, after such ratios and other provisions are measured or determined on a Pro Forma Basis after giving effect to such Limited Condition Transaction and the other Specified Transactions to be entered into in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) as if they occurred at the beginning of the most recent date of determination ending prior to the LCT Test Date, the Borrower could have taken such action on the relevant LCT Test Date in compliance with such ratios and provisions, such ratios and provisions shall be deemed to have been complied with on such date; provided that, if financial statements for one or more subsequent fiscal periods shall have become available, the Borrower may elect, in its sole discretion, to redetermine all such ratios, tests or baskets on the basis of such financial statements, in which case such date of redetermination shall thereafter be deemed to be the applicable LCT Test Date. For the avoidance of doubt, (x) if any of such ratios or baskets are exceeded as a result of fluctuations in such ratio or basket (including due to fluctuations in Consolidated EBITDAX or Total Assets of the Borrower or the target of any Limited Condition Transaction or any incurrence, disposition or Dividend or currency exchange rates at or prior to the consummation of the relevant Limited Condition Transaction), or any Default or Event of Default has occurred and is continuing or any such representation or warranty in any Credit Document is not correct at such time, such ratios, baskets and other provisions will not be deemed to have been exceeded or failed to have been complied with as a result of such circumstances solely for purposes of determining whether the Limited Condition Transaction and the other transactions to be entered into in connection therewith are permitted hereunder and (y) such ratios, baskets and other provisions shall not be tested at the time of consummation of such Limited Condition Transaction or related Specified Transactions. If the Borrower has made an LCT Election for any Limited Condition Transaction, then in connection with any subsequent calculation of any ratio (excluding, for the avoidance of doubt, the Financial Performance Covenants (other than Pro Forma Compliance)) or basket availability with respect to any other Specified Transaction on or following the relevant LCT Test Date and prior to the earlier of the date on which such Limited Condition Transaction is consummated or the date that the definitive agreement for such Limited Condition Transaction is terminated or expires without consummation of such Limited Condition Transaction or is otherwise revoked or withdrawn by the Borrower, any such ratio or basket shall be calculated (and tested) on a Pro Forma Basis assuming such Limited Condition Transaction and other transactions in connection therewith (including any incurrence of Indebtedness and the use of proceeds thereof) have been consummated.
Section 1.11Rates. The interest rate on a Loan denominated in dollars may be derived from an interest rate benchmark that may be discontinued or is, or may in the future become, the subject of regulatory reform. Upon the occurrence of a Benchmark Transition Event, Section
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2.18 provides a mechanism for determining an alternative rate of interest. The Administrative Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission, and performance of any interest rate used in this Agreement, or with respect to any alternative or successor rate thereto, or replacement rate thereof, including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rate will be similar to, or produce the same value or economic equivalence of, the existing interest rate being replaced or have the same volume or liquidity as did any existing interest rate prior to its discontinuance or unavailability. The Administrative Agent and its affiliates and/or other related entities may engage in transactions that affect the calculation of any interest rate used in this Agreement or any alternative, successor or alternative rate (including any Benchmark Replacement) and/or any relevant adjustments thereto, in each case, in a manner adverse to the Borrower. The Administrative Agent may select information sources or services in its reasonable discretion to ascertain any interest rate used in this Agreement, any component thereof, or rates referenced in the definition thereof, in each case pursuant to the terms of this Agreement, and shall have no liability to the Borrower, any Lender or any other person or entity for damages of any kind, including direct or indirect, special, punitive, incidental or consequential damages, costs, losses or expenses (whether in tort, contract or otherwise and whether at law or in equity), for any error or calculation of any such rate (or component thereof) provided by any such information source or service.
Section 1.12Certifications. All certifications to be made hereunder by an officer or representative of a Credit Party shall be made by such person in his or her capacity solely as an officer or a representative of such Credit Party, on such Credit Party’s behalf and not in such Person’s individual capacity.
Section 1.13Divisions. For all purposes under the Credit Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction’s laws): (a) if any asset, right, obligation or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its Stock at such time.
ARTICLE II
AMOUNT AND TERMS OF CREDIT
Section 2.1Commitments.
(a)Subject to and upon the terms and conditions herein set forth, each Revolving Lender severally, but not jointly, agrees to make a loan or loans (such loans, together with all Converted Revolving Loans, the “Revolving Loans”) denominated in Dollars to the Borrower, which Revolving Loans (i) shall be made at any time and from time to time on and after the Closing Date and prior to the Revolving Termination Date, (ii) may, at the option of the Borrower, be incurred and maintained as, and/or converted into, ABR Revolving Loans or Term SOFR Revolving Loans, subject to Section 2.18; provided that all Revolving Loans made by each of the Revolving Lenders pursuant to the same Revolving Borrowing shall, unless otherwise specifically provided herein, consist entirely of Revolving Loans of the same Type, (iii) may be repaid and reborrowed in accordance with the provisions hereof, (iv) shall not, for any Revolving Lender at any time, after giving effect thereto and to the application of the proceeds thereof, result in
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such Revolving Lender’s Revolving Credit Exposures at such time exceeding such Revolving Lender’s Revolving Commitment, and (v) shall not, after giving effect thereto and to the application of the proceeds thereof, result in the aggregate amount of the Total Revolving Credit Exposures at such time exceeding the Loan Limit then in effect.
(b)Subject to the terms and conditions herein set forth herein, each Initial Term Lender severally agrees to make an Initial Term Loan denominated in Dollars to the Borrower in a single advance on the Closing Date in an aggregate principal amount equal to such Initial Term Lender’s Initial Term Loan Commitment. Once borrowed, the Borrower may not reborrow any portion of the Initial Term Loans that has been repaid or prepaid, whether in whole or in part. Upon the funding of any Initial Term Loan hereunder by any Initial Term Lender, such Initial Term Lender’s Initial Term Loan Commitment shall terminate immediately and without further action. If the total Initial Term Loan Commitments as of the Closing Date are not drawn on the Closing Date, any Initial Term Loan Commitments in respect of the undrawn amount shall automatically be terminated.
(c)Subject to the terms and conditions herein set forth herein, during the Initial Term Loan Period, each Revolving Lender severally agrees to make Converted Term Loans denominated in Dollars to the Borrower on each Term Loan Conversion Date in an aggregate principal amount equal to its Converted Term Loan Commitment. On each Term Loan Conversion Date: (i) each Revolving Lender shall make its Converted Term Loan to the Borrower by converting the principal of such Revolving Lender’s outstanding Revolving Loans in an amount equal to such Revolving Lender’s Converted Term Loan Commitment to a Converted Term Loan in a principal amount equal to such Revolving Lender’s Converted Term Loan Commitment (it being understood that such conversion shall occur automatically without any further action on such Term Loan Conversion Date and, for the avoidance doubt, not by an actual funding of such Converted Term Loan, and for this purpose the phrase “shall make its Converted Term Loan” or similar phrase contained in this Agreement shall refer to such conversion); and (ii) such Revolving Lender’s Revolving Loans shall be deemed to be prepaid in amount equal to the principal of such Converted Term Loan (each a “Deemed Term Loan Prepayment”). In furtherance of the foregoing, on each Term Loan Conversion Date, the Borrower shall be deemed to have delivered a Notice of Borrowing requesting Converted Term Loans in an amount equal to the Excess Revolving Loans on such date and for this purpose, the terms of Section 2.3(a) (other than Section 2.3(a)(D)) shall apply mutatis mutandis to the deemed Notice of Borrowing delivered with respect to the Converted Term Loans, and with respect to such deemed Notice of Borrowing (a) any reference to “Revolving Loans” contained in Section 2.3(a) shall be deemed to be a reference to “Converted Term Loans”, (b) the Borrower shall be deemed to have requested Converted Term Loans of the same Type as the Revolving Loans deemed to have been repaid, and (c) if such Converted Term Loans are Term SOFR Loans, the Interest Period shall be initially one month. For the avoidance of doubt, (I) the making (or deemed making) of Converted Term Loans on each Term Loan Conversion Date shall not be subject to the conditions precedent to the making of Loans set forth in Article VII of this Agreement, and (II) to the extent the Deemed Term Loan Prepayment is equal to
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the outstanding Initial Term Loans of all Initial Term Lenders as of the Term Loan Conversion Date, such prepayment shall constitute a Discharge of Initial Term Loan Obligations. Each Revolving Lender hereby waives any notice requirements with respect to any Deemed Term Loan Prepayment. On each Term Loan Conversion Date and after giving effect to the Term Loan Conversion on such date, the Administrative Agent shall promptly notify the Lenders of the occurrence of such Term Loan Conversion by delivering a Notice of Term Loan Conversion substantially in the form of Exhibit Q. For the avoidance of any doubt, and notwithstanding anything to the contrary contained in this Agreement, each Term Loan Conversion shall occur whether or not a Borrowing Base Deficiency exists on such Term Loan Conversion Date.
(d)Subject to the terms and conditions herein set forth herein, during the Initial Term Loan Period, each Initial Term Lender severally agrees to make Revolving Loans denominated in Dollars to the Borrower on each Revolving Loan Conversion Date in an aggregate principal amount equal to its Converted Revolving Loan Commitment. On each Revolving Loan Conversion Date: (i) each Initial Term Lender shall make its Converted Revolving Loan to the Borrower by converting the principal of such Initial Term Lender’s outstanding Initial Term Loans in an amount equal to such Initial Term Lender’s Converted Revolving Loan Commitment to a Converted Revolving Loan in a principal amount equal to such Initial Term Lender’s Converted Revolving Loan Commitment (it being understood that such conversion shall occur automatically without any further action on such Revolving Loan Conversion Date and, for the avoidance doubt, not by an actual funding of such Converted Revolving Loan, and for this purpose the phrase “shall make its Converted Revolving Loan” or similar phrase contained in this Agreement shall refer to such conversion); and (ii) such Initial Term Lender’s Initial Term Loans shall be deemed to be prepaid in amount equal to the principal of such Converted Revolving Loan (each a “Deemed Revolving Loan Prepayment”). In furtherance of the foregoing, on each Revolving Loan Conversion Date, the Borrower shall be deemed to have delivered a Notice of Borrowing requesting Converted Revolving Loans in an amount equal to the Excess Conforming Borrowing Base on such date and for this purpose, the terms of Section 2.3(a)) shall apply mutatis mutandis to the deemed Notice of Borrowing delivered with respect to the Converted Revolving Loans, and with respect to such deemed Notice of Borrowing (a) any reference to “Revolving Loans” contained in Section 2.3(a) shall be deemed to be a reference to “Converted Revolving Loans”, (b) the Borrower shall be deemed to have requested Converted Revolving Loans of the same Type as the Initial Term Loans deemed to have been repaid, and (c) if such Converted Revolving Loans are Term SOFR Loans, the Interest Period shall be initially one month. For the avoidance of doubt, the making (or deemed making) of Converted Revolving Loans on each Revolving Loan Conversion Date shall not be subject to the conditions precedent to the making of Loans set forth in Article VII of this Agreement. Each Initial Term Lender hereby waives any notice requirements with respect to any Deemed Revolving Loan Prepayment. On each Revolving Loan Conversion Date and after giving effect to the Revolving Loan Conversion on such date, the Administrative Agent shall promptly notify the Lenders of the occurrence of such Revolving Loan Conversion by delivering a Notice of Term Loan Conversion substantially in the form of Exhibit R.
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(e)After the Initial Term Loans Repayment Date, subject to the terms and conditions herein set forth and in the applicable Term Loan Amendment, each Term Lender with a Term Commitment as set forth in such applicable Term Loan Amendment severally agrees to make a Term Loan denominated in Dollars to the Borrower, which Term Loans (i) may, at the option of the Borrower, be incurred and maintained as, and/or converted into, ABR Term Loans or Term SOFR Term Loans, subject to Section 2.18 and (ii) shall be in an aggregate principal amount that will not result in (A) the amount of the Term Loan made by such Term Lender hereunder exceeding such Term Lender’s Term Commitment or (B) the aggregate amount of the Term Loans made by all such Term Lenders hereunder exceeding the total Term Commitments of such Term Lenders. Once borrowed, the Borrower may not reborrow any portion of the Term Loans that has been repaid or prepaid, whether in whole or in part. Upon any funding of any Term Loan hereunder by any Term Lender, such Term Lender’s Term Commitment shall terminate immediately and without further action. Notwithstanding anything to the contrary herein, the Term Commitments that are funded on any Term Loan Facility Closing Date shall be terminated upon such funding and, if the total Term Commitments as of such Term Loan Facility Closing Date are not drawn on such Term Loan Facility Closing Date, any Term Commitments in respect of the undrawn amount shall automatically be terminated.
(f)Each Lender may at its option make any Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan, provided that (i) any exercise of such option shall not affect the obligation of the Borrower to repay such Loan and (ii) in exercising such option, such Lender shall use its reasonable efforts to minimize any increased costs to the Borrower resulting therefrom (which obligation of the Lender shall not require it to take, or refrain from taking, actions that it determines would result in increased costs for which it will not be compensated hereunder or that it determines would be otherwise disadvantageous to it and in the event of such request for costs for which compensation is provided under this Agreement, the provisions of Section 2.10 shall apply).
Section 2.2Minimum Amount of Each Borrowing; Maximum Number of Borrowings. The aggregate principal amount of each Borrowing shall be in a minimum amount of at least the Minimum Borrowing Amount for such Type of Loans and in a multiple of $100,000 in excess thereof (except Loans to reimburse the Letter of Credit Issuer with respect to any Unpaid Drawing shall be made in the amounts required by Section 3.3 or Section 3.4, as applicable). More than one Borrowing may be incurred on any date; provided, that at no time shall there be outstanding more than ten Borrowings of Term SOFR Loans or Daily Simple SOFR Loans under this Agreement.
Section 2.3Notice of Revolving Borrowing.
(a)Whenever the Borrower desires to incur Revolving Loans (other than borrowings to repay Unpaid Drawings), the Borrower shall give the Administrative Agent at the Administrative Agent’s Office, (i) written notice (or telephonic notice promptly confirmed in writing) prior to 1:00 p.m. (New York City time) at least three Business Days’ prior to each Borrowing of Revolving Loans if such Revolving Loans are to be initially Term SOFR Revolving Loans (or written notice (or telephonic notice
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promptly confirmed in writing) prior to 9:00 a.m. (New York City time) one Business Day prior to a Borrowing of Revolving Loans to be made on the Closing Date if such Revolving Loans are to be initially Term SOFR Revolving Loans) and (ii) written notice (or telephonic notice promptly confirmed in writing) prior to 12:00 noon (New York City time) on the date of each Borrowing of Revolving Loans that are to be ABR Revolving Loans. Each Notice of Borrowing shall specify (A) the aggregate principal amount of the Revolving Loans to be made pursuant to such Borrowing, (B) the date of the Borrowing (which shall be a Business Day), (C) whether the respective Borrowing shall consist of ABR Revolving Loans and/or Term SOFR Revolving Loans and, if Term SOFR Revolving Loans, the Interest Period to be initially applicable thereto (if no Interest Period is selected, the Borrower shall be deemed to have selected an Interest Period of one month’s duration) and (D) the Loan Limit, the Available Borrowing Base, the current Total Revolving Credit Exposures (without regard to the requested Borrowing) of all Revolving Lenders and the pro forma Total Revolving Credit Exposures (giving effect to the requested Borrowing) and the Total Term Loan Exposures. The Administrative Agent shall promptly give each Revolving Lender written notice (or telephonic notice promptly confirmed in writing) of each proposed Borrowing of Revolving Loans, of such Revolving Lender’s Revolving Commitment Percentage thereof and of the other matters covered by the related Notice of Borrowing
Notwithstanding the foregoing, the terms of this Section 2.3(a) (other than Section 2.3(a)(D)) shall apply mutatis mutandis to the Notice of Borrowing with respect to the Initial Term Loans delivered by the Borrower to the Administrative Agent pursuant to Section 7.3, and for this purpose, (a) any reference to “Revolving Loans” contained in this Section 2.3(a) shall be deemed to be a reference to “Term Loans”, and (b) any reference to “Revolving Lender” contained in this Section 2.3(a) shall be deemed to be a reference to “Initial Term Lender”.

(b)Borrowings to reimburse Unpaid Drawings shall be made upon the notice specified in Section 3.4(a).
(c)Without in any way limiting the obligation of the Borrower to confirm in writing any notice it may give hereunder by telephone, the Administrative Agent may act prior to receipt of written confirmation without liability upon the basis of such telephonic notice believed by the Administrative Agent in good faith to be from an Authorized Officer of the Borrower.
Section 2.4Disbursement of Funds.
(a)No later than 1:00 p.m. (New York City time) on the date specified in each Notice of Borrowing, each Lender will make available its pro rata portion of each Borrowing requested to be made on such date in the manner provided below.
(b)Each Lender shall make available all amounts it is to fund to the Borrower under any Borrowing in immediately available funds to the Administrative Agent at the Administrative Agent’s Office in Dollars, and the Administrative Agent will (except in the case of Borrowings to repay Unpaid Drawings) make available to the Borrower, by depositing or wiring to an account as designated by the Borrower in the Notice of
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Borrowing to the Administrative Agent the aggregate of the amounts so made available in Dollars. Unless the Administrative Agent shall have been notified by any Lender prior to the date of any such Borrowing that such Lender does not intend to make available to the Administrative Agent its portion of the Borrowing or Borrowings to be made on such date, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on such date of Borrowing, and the Administrative Agent, in reliance upon such assumption, may (in its sole discretion and without any obligation to do so) make available to the Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Administrative Agent by such Lender and the Administrative Agent has made available such amount to the Borrower, the Administrative Agent shall be entitled to recover such corresponding amount from such Lender. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand therefor the Administrative Agent shall promptly notify the Borrower and the Borrower shall immediately pay such corresponding amount to the Administrative Agent in Dollars. The Administrative Agent shall also be entitled to recover from such Lender or the Borrower, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Administrative Agent to the Borrower to the date such corresponding amount is recovered by the Administrative Agent, at a rate per annum equal to (i) if paid by such Lender, the Overnight Rate or (ii) if paid by the Borrower, the then-applicable rate of interest or fees, calculated in accordance with Section 2.8, for the respective Loans.
(c)Nothing in this Section 2.4 shall be deemed to relieve any Lender from its obligation to fulfill its commitments hereunder or to prejudice any rights that the Borrower may have against any Lender as a result of any default by such Lender hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to fulfill its commitments hereunder).
Section 2.5Repayment of Loans; Evidence of Debt.
(a)
(i)The Borrower promises and agrees to repay to the Administrative Agent, for the benefit of the applicable Revolving Lenders, (i) on the Initial Maturity Date, the then outstanding Initial Revolving Loans and (ii) on the relevant maturity date for any Extension Series of Extended Revolving Commitments, all then outstanding Extended Revolving Loans in respect of such Extension Series.
(ii)The Borrower promises and agrees to repay to the Administrative Agent, for the benefit of the Initial Term Lenders, the aggregate principal amount of all Initial Term Loans outstanding on the Initial Term Loan Maturity Date.
(iii)The Borrower promises and agrees to repay to the Administrative Agent, for the benefit of the applicable Term Lenders and the Term Lenders with respect to any Extended Term Loans, the aggregate principal amount of all Term Loans or Extended Term Loans of a given Term Loan Extension Series, as
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applicable, outstanding on the date(s) and in the amounts specified in the applicable Term Loan Amendment or Extension Amendment, as applicable.
(b)Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of the Borrower to the appropriate lending office of such Lender resulting from each Loan made by such lending office from time to time, including the amounts of principal and interest payable and paid to such lending office from time to time under this Agreement.
(c)The Administrative Agent, acting solely for this purpose as a non-fiduciary agent of the Borrower, shall maintain the Register pursuant to Section 13.6(b), and a subaccount for each Lender, in which Register and subaccounts (taken together) shall be recorded (i) the amount of each Loan made hereunder (whether such Loan is an Initial Revolving Loan, an Extended Revolving Loan, a Term Loan or an Extended Term Loan, as applicable), the Type and Class of each Loan made and the Interest Period applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from the Borrower and each Lender’s share thereof.
(d)The entries made in the Register and accounts and subaccounts maintained pursuant to Section 2.5(b) and Section 2.5(c) shall, to the extent permitted by applicable Requirements of Law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain such account, such Register or such subaccount, as applicable, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest) the Loans made to the Borrower by such Lender in accordance with the terms of this Agreement.
Section 2.6Conversions and Continuations.
(a)Subject to the penultimate sentence of this Section 2.6(a), (i) the Borrower shall have the option on any Business Day to convert all or a portion equal to at least the Minimum Borrowing Amount (and in multiples of $100,000 in excess thereof) of the outstanding principal amount of Loans of one Type into a Borrowing or Borrowings of another Type and (ii) the Borrower shall have the option on any Business Day to continue the outstanding principal amount of any Term SOFR Loans as Term SOFR Loans for an additional Interest Period; provided that (A) no partial conversion of Term SOFR Loans shall reduce the outstanding principal amount of Term SOFR Loans made pursuant to a single Borrowing to less than the Minimum Borrowing Amount, (B) ABR Loans may not be converted into Term SOFR Loans if an Event of Default is in existence on the date of the conversion and the Administrative Agent has or the Majority Lenders have determined in its or their sole discretion not to permit such conversion, (C) Term SOFR Loans may not be continued as Term SOFR Loans for an additional Interest Period if an Event of Default is in existence on the date of the proposed continuation and the Administrative Agent has or the Majority Lenders have determined in its or their sole discretion not to permit such continuation, and (D) Borrowings resulting from
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conversions pursuant to this Section 2.6 shall be limited in number as provided in Section 2.2. Each such conversion or continuation shall be effected by the Borrower by giving the Administrative Agent at the Administrative Agent’s Office written notice (or telephonic notice promptly confirmed in writing) prior to 1:00 p.m. (New York City time) (1) at least three Business Days’ prior to the date of such conversion or continuation, in the case of a continuation of or conversion to Term SOFR Loans or (2) on the date of conversion, in the case of a conversion into ABR Loans (each, a “Notice of Conversion or Continuation”) specifying the Loans to be so converted or continued, the Type of Loans to be converted into or continued and, if such Loans are to be converted into or continued as Term SOFR Loans, the Interest Period to be initially applicable thereto (if no Interest Period is selected, the Borrower shall be deemed to have selected an Interest Period of one month’s duration). The Administrative Agent shall give each applicable Lender notice as promptly as practicable of any such proposed conversion or continuation affecting any of its Loans.
(b)If any Event of Default is in existence at the time of any proposed continuation of any Term SOFR Loans or Daily Simple SOFR Loans and the Administrative Agent has or the Majority Lenders have determined in its or their sole discretion not to permit such continuation, (i) such Term SOFR Loans shall be automatically converted on the last day of the current Interest Period into ABR Loans and (ii) such Daily Simple SOFR Loans shall be automatically converted into ABR Loans. If upon the expiration of any Interest Period in respect of Term SOFR Loans, the Borrower has failed to elect a new Interest Period to be applicable thereto as provided in Section 2.6(a) above, the Borrower shall be deemed to have elected to continue such Borrowing of Term SOFR Loans into a Borrowing of Term SOFR Loans with an Interest Period of one month, effective as of the expiration date of such current Interest Period.
(c)Notwithstanding anything to the contrary herein, the Borrower may deliver a Notice of Conversion or Continuation pursuant to which the Borrower elects to irrevocably continue the outstanding principal amount of any Loans subject to an interest rate Hedge Agreement as Term SOFR Loans for each Interest Period until the expiration of the term of such applicable Hedge Agreement; provided that any Notice of Conversion or Continuation delivered pursuant to this Section 2.6(c) shall include a schedule attaching the relevant interest rate Hedge Agreement or related trade confirmation.
Section 2.7Pro Rata Borrowings. Each Borrowing of Initial Revolving Loans under this Agreement shall be made by the Revolving Lenders pro rata on the basis of their then applicable Revolving Commitment Percentage with respect to the applicable Class. Each Borrowing of Term Loans under this Agreement shall be made by the Term Lenders pro rata on the basis of their Term Loan Commitments with respect to the applicable Class in accordance with the Term Loan Amendment. Each Borrowing of Extended Loans under this Agreement shall be granted by the Lenders of the relevant Extension Series thereof pro rata on the basis of their then-applicable Extended Commitments for the applicable Extension Series. It is understood that (a) no Lender shall be responsible for any default by any other Lender in its obligation to make Loans hereunder and that each Lender severally but not jointly shall be obligated to make the Loans provided to be made by it hereunder, regardless of the failure of any other Lender to fulfill its commitments hereunder and (b) failure by a Lender to perform any of its obligations under any of the Credit Documents shall not release any Person from performance of its obligation under any Credit Document.
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Section 2.8Interest.
(a)The unpaid principal amount of each ABR Loan shall bear interest from the date of the Borrowing thereof until maturity (whether by acceleration or otherwise) at a rate per annum that shall at all times be the Applicable Margin plus the ABR, in each case, in effect from time to time.
(b)The unpaid principal amount of each Term SOFR Loan shall bear interest from the date of the Borrowing thereof until maturity thereof (whether by acceleration or otherwise) at a rate per annum that shall at all times be the Applicable Margin plus Term SOFR, in each case, in effect from time to time. The unpaid principal amount of each Daily Simple SOFR Loan shall bear interest from the date of the Borrowing thereof until maturity thereof (whether by acceleration or otherwise) at a rate per annum that shall at all times be the Applicable Margin plus Daily Simple SOFR, in each case, in effect from time to time.
(c)If all or a portion of (i) the principal amount of any Loan or (ii) any interest payable thereon shall not be paid when due (whether at stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum that is (the “Default Rate”) (A) in the case of overdue principal, the rate that would otherwise be applicable thereto plus 2% or (B) in the case of any overdue interest, to the extent permitted by applicable Requirements of Law, the rate described in Section 2.8(a) plus 2% from the date of such non-payment to the date on which such amount is paid in full (after as well as before judgment).
(d)Interest on each Loan shall accrue from and including the date of any Borrowing to but excluding the date of any repayment thereof and shall be payable in Dollars; provided that any Loan that is repaid on the same date on which it is made shall bear interest for one day. Except as provided below, interest shall be payable (i) in respect of each ABR Loan, quarterly in arrears on the last Business Day of each March, June, September and December, (ii) in respect of each Term SOFR Loan, (A) on the last day of each Interest Period applicable thereto and, in the case of an Interest Period in excess of three months, on each date occurring at three-month intervals after the first day of such Interest Period and (B) on any conversion of any Term SOFR Loan prior to the end of the current Interest Period therefor, on the effective date of such conversion, (iii) in respect of each Daily Simple SOFR Loan, on each date that is on the numerically corresponding day in each calendar month that is one month after the Borrowing of such Loan (or, if there is no such numerically corresponding day in such month, then the last day of such month) and (iv) in respect of each Loan, (A) on any prepayment (on the amount prepaid), Term Loan Conversion or Revolving Loan Conversion, (B) at maturity (whether by acceleration or otherwise) and (C) after such maturity, on demand.
(e)All computations of interest hereunder shall be made in accordance with Section 5.5.
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(f)The Administrative Agent, upon determining the interest rate for any Borrowing of Term SOFR Loans, shall promptly notify the Borrower and the relevant Lenders thereof. Each such determination shall, absent clearly demonstrable error, be final and conclusive and binding on all parties hereto.
Section 2.9Interest Periods. At the time the Borrower gives a Notice of Borrowing or Notice of Conversion or Continuation in respect of the making of, or conversion into or continuation as, a Borrowing of Term SOFR Loans in accordance with Section 2.6(a), the Borrower shall give the Administrative Agent written notice (or telephonic notice promptly confirmed in writing) of the Interest Period applicable to such Borrowing, which Interest Period shall, at the option of the Borrower be a one, three or six month period.
Notwithstanding anything to the contrary contained above:
(a)the initial Interest Period for any Borrowing of Term SOFR Loans shall commence on the date of such Borrowing (including the date of any conversion from a Borrowing of ABR Loans) and each Interest Period occurring thereafter in respect of such Borrowing shall commence on the day on which the next preceding Interest Period expires;
(b)if any Interest Period relating to a Borrowing of Term SOFR Loans begins on the last Business Day of a calendar month or begins on a day for which there is no numerically corresponding day in the calendar month at the end of such Interest Period, such Interest Period shall end on the last Business Day of the calendar month at the end of such Interest Period;
(c)if any Interest Period would otherwise expire on a day that is not a Business Day, such Interest Period shall expire on the next succeeding Business Day; provided that, if any Interest Period in respect of a Term SOFR Loan would otherwise expire on a day that is not a Business Day, but is a day of the month after which no further Business Day occurs in such month, such Interest Period shall expire on the next preceding Business Day; and
(d)the Borrower shall not be entitled to elect any Interest Period in respect of any Term SOFR Loan if such Interest Period would extend beyond the Maturity Date applicable to such Loan.
Section 2.10Increased Costs, Illegality, Etc.
(a)Subject to Section 2.18, in the event that (x) in the case of Section 2.10(a)(i) below, the Administrative Agent or (y) in the case of Section 2.10(a)(ii) and Section 2.10(a)(iii) below, any Lender, shall have reasonably determined (which determination shall, absent clearly demonstrable error, be final and conclusive and binding upon all parties hereto):
(i)on any date (x) for determining Term SOFR for any Interest Period that adequate and fair means do not exist for ascertaining Term SOFR or Term SOFR (including because the Term SOFR Reference Rate is not available or
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published on a current basis), for such Interest Period or (y) that adequate and reasonable means do not exist for ascertaining the applicable Daily Simple SOFR; or
(ii)that, due to a Change in Law occurring at any time or after the Closing Date, which Change in Law shall (A) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in Term SOFR), (B) subject any Lender to any Tax with respect to any Credit Document or any Term SOFR Loan made by it (other than (i) Taxes indemnifiable under Section 5.4, or (ii) Excluded Taxes), or (C) impose on any Lender or the applicable offshore interbank market any other condition, cost or expense affecting this Agreement or Term SOFR Loans made by such Lender, which results in the cost to such Lender of making, converting into, continuing or maintaining Term SOFR Loans or participating in Letters of Credit (in each case hereunder) increasing by an amount which such Lender reasonably deems material or the amounts received or receivable by such Lender hereunder with respect to the foregoing shall be reduced; or
(iii)at any time, that the making or continuance of any Term SOFR Loan has become unlawful as a result of compliance by such Lender in good faith with any Requirement of Law (or would conflict with any such Requirement of Law not having the force of law even though the failure to comply therewith would not be unlawful);
then, and in any such event, such Lenders (or the Administrative Agent, in the case of Section 2.10(a)(i) above) shall within a reasonable time thereafter give notice (if by telephone, confirmed in writing) to the Borrower and to the Administrative Agent of such determination (which notice the Administrative Agent shall promptly transmit to each of the other Lenders). Thereafter (x) in the case of Section 2.10(a)(i) above, (1) Term SOFR Loans shall no longer be available until such time as the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice by the Administrative Agent no longer exist (which notice the Administrative Agent agrees to give at such time when such circumstances no longer exist), (2) any Notice of Conversion or Continuation that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Term SOFR Loan and any Notice of Borrowing or that requests a Term SOFR Loan shall instead be deemed to be a Notice of Conversion or Continuation or Notice of Borrowing, as applicable, for (I) a Daily Simple SOFR Loan so long as Daily Simple SOFR is not also the subject of Section 2.10(a)(i) above or (II) an ABR Loan if Daily Simple SOFR also is the subject of Section 2.10(a)(i) above and (3) if any Term SOFR Loan is outstanding on the date of the Borrower’s receipt of the notice from the Administrative Agent referred to in this Section 2.10(a), then until (I) the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist with respect to Term SOFR and (II) the Borrower delivers a new Notice of Conversion or Continuation in accordance with the terms of Section 2.6 or a new Notice of Borrowing in accordance with the terms of Section 2.3, any Term SOFR Loan shall on the last day of the
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Interest Period applicable to such Loan (or the next succeeding Business Day if such day is not a Business Day), be converted by the Administrative Agent to, and shall constitute, (aa) a Daily Simple SOFR Loan so long as Daily Simple SOFR is not also the subject of Section 2.10(a)(i) above or (bb) an ABR Loan if Daily Simple SOFR also is the subject of Section 2.10(a)(i) above, on such day, (y) in the case of Section 2.10(a)(ii) above, the Borrower shall pay to such Lender, promptly (but no later than fifteen days) after receipt of written demand therefor such additional amounts as shall be required to compensate such Lender for such increased costs or reductions in amounts receivable hereunder (it being agreed that a written notice as to the additional amounts owed to such Lender, showing in reasonable detail the basis for the calculation thereof, submitted to the Borrower by such Lender shall, absent clearly demonstrable error, be final and conclusive and binding upon all parties hereto) and (z) in the case of Section 2.10(a)(iii) above, the Borrower shall take one of the actions specified in Section 2.10(b) as promptly as possible and, in any event, within the time period required by applicable Requirements of Law.
(b)At any time that any Term SOFR Loan is affected by the circumstances described in Section 2.10(a)(ii) or Section 2.10(a)(iii), the Borrower may (and in the case of a Term SOFR Loan affected pursuant to Section 2.10(a)(iii) shall) either (i) if the affected Term SOFR Loan is then being made pursuant to a Borrowing, cancel such Borrowing by giving the Administrative Agent telephonic notice (confirmed promptly in writing) thereof on the same date that the Borrower was notified by a Lender pursuant to Section 2.10(a)(ii) or Section 2.10(a)(iii) or (ii) if the affected Term SOFR Loan is then outstanding, upon at least three Business Days’ notice to the Administrative Agent, require the affected Lender to convert each such Term SOFR Loan into an ABR Loan; provided that if more than one Lender is affected at any time, then all affected Lenders must be treated in the same manner pursuant to this Section 2.10(b).
(c)If, after the Closing Date, any Change in Law relating to capital adequacy or liquidity of any Lender or compliance by any Lender or its parent with any Change in Law relating to capital adequacy or liquidity occurring after the Closing Date, has or would have the effect of reducing the rate of return on such Lender’s or its parent’s capital or assets as a consequence of such Lender’s commitments or obligations hereunder to a level below that which such Lender or its parent could have achieved but for such Change in Law (taking into consideration such Lender’s or its parent’s policies with respect to capital adequacy or liquidity), then from time to time, promptly (but in any event no later than fifteen days) after written demand by such Lender (with a copy to the Administrative Agent), the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender or its parent for such reduction, it being understood and agreed, however, that a Lender shall not be entitled to such compensation as a result of such Lender’s compliance with, or pursuant to any request or directive to comply with, any applicable Requirement of Law as in effect on the Closing Date (except as otherwise set forth in the definition of Change in Law). Each Lender, upon determining in good faith that any additional amounts will be payable pursuant to this Section 2.10(c), will give prompt written notice thereof to the Borrower, which notice shall set forth in reasonable detail the basis of the calculation of such additional amounts, although the failure to give any such notice shall not, subject to Section 2.13, release or diminish the Borrower’s obligations to pay additional amounts pursuant to this Section 2.10(c) upon receipt of such notice.
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Section 2.11Compensation. If (a) any payment of principal of any Term SOFR Loan is made by the Borrower to or for the account of a Lender other than on the last day of the Interest Period for such Term SOFR Loan as a result of a payment or conversion pursuant to Section 2.5, Section 2.6, Section 2.10, Section 5.1, Section 5.2 or Section 13.7, as a result of acceleration of the maturity of the Loans pursuant to Section 11 or for any other reason, (b) any Borrowing of Term SOFR Loans is not made on the date specified in a Notice of Borrowing, (c) any ABR Loan is not converted into a Term SOFR Loan on the date specified in a Notice of Conversion or Continuation, (d) any Term SOFR Loan is not continued as a Term SOFR Loan on the date specified in a Notice of Conversion or Continuation or (e) any prepayment of principal of any Term SOFR Loan is not made as a result of a withdrawn notice of prepayment pursuant to Section 5.1 or Section 5.2, the Borrower shall after the Borrower’s receipt of a written request by such Lender (which request shall set forth in reasonable detail the basis for requesting such amount), pay to the Administrative Agent (within fifteen days after such request) for the account of such Lender any amounts required to compensate such Lender for any additional losses, costs or expenses that such Lender may reasonably incur as a result of such payment, failure to convert, failure to continue or failure to prepay, including any loss, cost or expense (excluding loss of anticipated profits) actually incurred by reason of the liquidation or reemployment of deposits or other funds acquired by any Lender to fund or maintain such Term SOFR Loan. The parties hereto acknowledge and agree that this Section 2.11 shall not apply to, and each Revolving Lender hereby waives any compensation pursuant to this Section 2.11 on account of, any Term Loan Conversion pursuant to Section 2.1(c) or any Revolving Loan Conversion pursuant to Section 2.1(d).
Section 2.12Change of Lending Office. Each Lender agrees that, upon the occurrence of any event giving rise to the operation of Section 2.10(a)(ii), Section 2.10(a)(iii), Section 2.10(c), Section 3.5 or Section 5.4 with respect to such Lender, it will, if requested by the Borrower use reasonable efforts (subject to overall policy considerations of such Lender) to designate another lending office for any Loans affected by such event; provided that such designation is made on such terms that such Lender and its lending office suffer no economic, legal or regulatory disadvantage, with the object of avoiding the consequence of the event giving rise to the operation of any such Section. Nothing in this Section 2.12 shall affect or postpone any of the obligations of the Borrower or the right of any Lender provided in Section 2.10, Section 3.5 or Section 5.4.
Section 2.13Notice of Certain Costs. Notwithstanding anything in this Agreement to the contrary, to the extent any notice or demand pursuant to Section 2.10, Section 2.11, Section 3.5 or Section 5.4 is given by any Lender more than 180 days after such Lender has knowledge (or should have had knowledge) of the occurrence of the event giving rise to the additional cost, reduction in amounts, loss, tax or other additional amounts described in such Sections, such Lender shall not be entitled to compensation under Section 2.10, Section 2.11, Section 3.5 or Section 5.4, as the case may be, for any such amounts incurred or accruing prior to the 181st day prior to the giving of such notice or demand to the Borrower; provided that if the circumstance giving rise to such claim is retroactive, then such 180-day period referred to above shall be extended to include the period of retroactive effect thereof.
Section 2.14Borrowing Base.
(a)Closing Date Borrowing Base. For the period from and including the Closing Date to but excluding the first Redetermination Date to occur thereafter, the
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amount of the Borrowing Base shall be equal to $365,000,000, comprised of a Conforming Borrowing Base equal to $230,000,000 and a Non-Conforming Borrowing Base equal to $135,000,000. Notwithstanding the foregoing, the Borrowing Base may be subject to adjustments from time to time pursuant to the Borrowing Base Adjustment Provisions. Prior to the Initial Term Loans Repayment Date, Sections 2.14(a) through (d) shall be modified by, and subject to, the terms contained in Section 2.14(j).
(b)Scheduled and Interim Redeterminations. The Borrowing Base shall be redetermined on or about September 1, 2026 (the “September 2026 Redetermination”) and thereafter semi-annually, in each case, in accordance with this Section 2.14 (a “Scheduled Redetermination”), and, subject to Section 2.14(d), such redetermined Borrowing Base shall become effective and applicable to the Borrower, the Administrative Agent, the Letter of Credit Issuers and the Lenders on or about September 1, 2026 (in the case of the September 2026 Redetermination), and thereafter on or about April 1st and October 1st of each year, commencing April 1, 2027, subject to the terms of Section 2.14(c)(iii) and Section 2.14(d). In addition, the Borrower may at any time (including prior to the September 2026 Redetermination), by notifying the Administrative Agent thereof not more than twice during any period between consecutive Scheduled Redeterminations, and the Administrative Agent may at any time (commencing after the September 2026 Redetermination), at the direction of the Required Lenders, by notifying the Borrower thereof, not more than one time during any period between consecutive Scheduled Redeterminations, in each case elect to cause the Borrowing Base to be redetermined between Scheduled Redeterminations (an “Interim Redetermination”) in accordance with this Section 2.14. In addition to, and not including and/or limited by the annual Interim Redetermination allowed above, the Borrower may, by notifying the Administrative Agent thereof, at any time between Scheduled Redeterminations, request additional Interim Redeterminations of the Borrowing Base in the event it acquires Oil and Gas Properties with Proved Reserves which are to be Borrowing Base Properties having a PV-9 (calculated at the time of acquisition) in excess of 5% of the Borrowing Base in effect immediately prior to such acquisition (it being understood that for purposes of the foregoing, the designation of an Unrestricted Subsidiary owning Oil and Gas Properties with Proved Reserves as a Restricted Subsidiary shall be deemed to constitute an acquisition by the Borrower of Oil and Gas Properties with Proved Reserves); provided that, in connection with an Interim Redetermination occurring in connection with such threshold being satisfied, the Borrower, may, as set forth in the definition of Reserve Report, elect only to provide a Reserve Report in respect of the acquired properties (in which case the most recent Reserve Report shall be used for the existing Borrowing Base Properties).
(c)Scheduled and Interim Redetermination Procedure.
(i)Each Scheduled Redetermination and each Interim Redetermination shall be effectuated as follows: Upon receipt by the Administrative Agent of (A) the Reserve Report and the Reserve Report Certificate, and (B) such other reports, data and supplemental information, including the information provided pursuant to Section 9.14(c), as may, from time to time, be reasonably requested by the Required Lenders (the Reserve Report,
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such Reserve Report Certificate and such other reports, data and supplemental information being the “Engineering Reports”), the Administrative Agent shall evaluate the information contained in the Engineering Reports and shall in good faith propose a new Borrowing Base (the “Proposed Borrowing Base”) based upon such information and such other information (including the status of title information with respect to the Borrowing Base Properties as described in the Engineering Reports and the existence of any Hedge Agreements) as the Administrative Agent deems appropriate in good faith in accordance with its usual and customary oil and gas lending criteria as it exists at the particular time.
(ii)The Administrative Agent shall notify the Borrower and the Lenders of the Proposed Borrowing Base (the “Proposed Borrowing Base Notice”):
(A)in the case of a Scheduled Redetermination (1) if the Administrative Agent shall have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 9.14(a) and Section 9.14(c) in a timely manner, then on or before the March 15th and September 15th of such year following the date of delivery (or, in the case of the September 2026 Redetermination, on or before August 15, 2026) or (2) if the Administrative Agent shall not have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 9.14(a) and Section 9.14(c) in a timely manner, then promptly after the Administrative Agent has received complete Engineering Reports from the Borrower and has had a reasonable opportunity to determine the Proposed Borrowing Base in accordance with Section 2.14(c)(i); and
(B)in the case of an Interim Redetermination, promptly, and in any event, within 15 days after the Administrative Agent has received the required Engineering Reports.
(iii)Any Proposed Borrowing Base that would increase the Borrowing Base then in effect must be approved or deemed to have been approved by Lenders constituting at least the Borrowing Base Required Lenders, which determination shall be made by each Lender in good faith and in such Lender’s sole discretion and in a manner consistent with such Lender’s usual and customary oil and gas lending criteria as it exists at the particular time as provided in this Section 2.14(c)(iii) and any Proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect must be approved or be deemed to have been approved by Lenders constituting at least the Required Lenders, which determination shall be made by each Lender in good faith and in such Lender’s sole discretion and in a manner consistent with such Lender’s usual and customary oil and gas lending criteria as it exists at the particular time as provided in this Section 2.14(c)(iii). Upon receipt of the Proposed Borrowing Base Notice, each Lender shall have 15 days to agree with the Proposed Borrowing Base or disagree with the Proposed Borrowing Base by proposing an alternate Borrowing Base. If at the end of such 15-day period, any Lender has not communicated its
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approval or disapproval in writing to the Administrative Agent, such silence shall be deemed to be an approval of the Proposed Borrowing Base. If, at the end of such 15-day period, the Borrowing Base Required Lenders, in the case of a Proposed Borrowing Base that would increase the Borrowing Base then in effect, or the Required Lenders, in the case of a Proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect, have approved or deemed to have approved, as aforesaid, then the Proposed Borrowing Base shall become the new Borrowing Base, effective on the date specified in Section 2.14(d). If, however, at the end of such 15-day period, the Borrowing Base Required Lenders or the Required Lenders, as applicable, have not approved or deemed to have approved, as aforesaid, then the Administrative Agent shall promptly thereafter poll the Lenders to ascertain the highest Borrowing Base then acceptable to the Borrowing Base Required Lenders (in the case of any increase to the Borrowing Base) or a number of Lenders sufficient to constitute the Required Lenders (in any other case) and such amount shall become the new Borrowing Base, effective on the date specified in Section 2.14(d).
(d)Effectiveness of a Redetermined Borrowing Base. Subject to Section 2.14(h), after a redetermined Borrowing Base is approved or is deemed to have been approved by the Borrowing Base Required Lenders or the Required Lenders, as applicable, pursuant to Section 2.14(c)(iii), the Administrative Agent shall promptly thereafter notify the Borrower and the Lenders of the amount of the redetermined Borrowing Base (the “New Borrowing Base Notice”), and such amount shall become the new Borrowing Base, effective and applicable to the Borrower, the Administrative Agent, the Letter of Credit Issuers and the Lenders:
(i)in the case of a Scheduled Redetermination, (A) if the Administrative Agent shall have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 9.14(a) and Section 9.14(c) in a timely and complete manner, on the April 1st or October 1st, as applicable, following such notice (or, in the case of the September 2026 Redetermination, on September 1, 2026) or (B) if the Administrative Agent shall not have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 9.14(a) and Section 9.14(c) in a timely and complete manner, then on the Business Day next succeeding delivery of such New Borrowing Base Notice; and
(ii)in the case of an Interim Redetermination, on the Business Day next succeeding delivery of such New Borrowing Base Notice.
Subject to Section 2.14(h), such amount shall then become the Borrowing Base until the next Scheduled Redetermination Date, the next Interim Redetermination Date or the next adjustment to the Borrowing Base under the Borrowing Base Adjustment Provisions or Section 2.14(h), whichever occurs first. Notwithstanding the foregoing, no Scheduled Redetermination or Interim Redetermination shall become effective until the New Borrowing Base Notice related thereto is received by the Borrower.
(e)Reduction of Borrowing Base Upon Incurrence of Permitted Junior Lien Debt and/or Permitted Additional Debt. After the Initial Term Loans Repayment Date, upon the issuance or incurrence of any Permitted Junior Lien Debt and/or Permitted
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Additional Debt in accordance with Section 10.1(o) (other than Permitted Junior Lien Debt or Permitted Additional Debt constituting Permitted Refinancing Indebtedness incurred or issued to Refinance outstanding Permitted Junior Lien Debt or Permitted Additional Debt), unless otherwise determined by the Required Lenders, the Borrowing Base then in effect shall be reduced by an amount equal to the product of 0.25 multiplied by the stated principal amount of such Permitted Additional Debt or Permitted Junior Lien Debt, as applicable, (without regard to any original issue discount), and the Borrowing Base as so reduced shall become the new Borrowing Base one Business Day after such issuance or incurrence, effective and applicable to the Borrower, the Administrative Agent, the Letter of Credit Issuers and the Lenders on such date until the next redetermination or modification thereof hereunder.
(f)Reduction of Borrowing Base Upon Termination of Hedge Positions. After the Initial Term Loans Repayment Date, if the Borrower or any Restricted Subsidiary shall terminate or create any off-setting positions in respect of any commodity hedge positions (whether evidenced by a floor, put or Hedge Agreement) (a “Liquidation”) upon which (i) the Lenders relied in determining the Borrowing Base and (ii) the Hedge PV (as calculated at the time of any such termination or creation of off-setting positions) of such terminated and/or offsetting positions (after taking into account any other Hedge Agreement executed contemporaneously with the taking of such actions) exceeds 5% of the effective Borrowing Base, then no later than two Business Days’ after the date of such termination or creation, the Borrower shall provide notice to the Administrative Agent thereof and thereafter the Required Lenders shall have the right to adjust the Borrowing Base then in effect by an amount up to the Borrowing Base value, if any, attributable to such terminated or off-setting hedge positions in the calculation of the then-effective Borrowing Base and, if the Required Lenders in fact elect to make any such adjustment, the Administrative Agent shall promptly notify the Borrower in writing of the Borrowing Base value, if any, attributable to such hedge positions in the calculation of the then-effective Borrowing Base and the amount by which they have elected to reduce the Borrowing Base and upon receipt of such notice, the Borrowing Base shall be simultaneously reduced by such elected amount; provided that for purposes of this Section 2.14(f), a Hedge Agreement shall not be deemed to have been Liquidated if, (x) such Hedge Agreement is novated from the existing counterparty to a Hedge Bank, with the Borrower or the applicable Credit Party being the “remaining party” for purposes of such novation or (y) upon its termination, it is replaced, in a substantially contemporaneous transaction, with one or more Hedge Agreements (i) with approximately the same aggregate Swap Termination Value and (ii) each of which matures pursuant to its terms after the scheduled effective date of the next Scheduled Redetermination. For the avoidance of doubt, the parties acknowledge that the Borrowing Base value of a Hedge Agreement may be more or less than the mark-to-market or termination value of such Hedge Agreement.
(g)Reduction of Borrowing Base Upon Asset Dispositions. After the Initial Term Loans Repayment Date, if (x) the Borrower or one of the other Credit Parties Disposes of Oil and Gas Properties or Disposes of any Stock or Stock Equivalents in any Restricted Subsidiary or Minority Investment owning Oil and Gas Properties, in each
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case, to a Person other than a Credit Party, (y) such Disposition involves Borrowing Base Properties included in the most recently delivered Reserve Report and (z) the aggregate PV-9 (calculated at the time of such Disposition) of all such Borrowing Base Properties Disposed of (after giving effect to any concurrent acquisitions of and other investments in Oil and Gas Properties by the Borrower and its Restricted Subsidiaries with respect to which the Borrower has delivered a Reserve Report in accordance with Section 9.14(b)), since the later of (A) the later of (1) the Closing Date and (2) the last Redetermination Date and (B) the last adjustment of the Borrowing Base made pursuant to this Section 2.14(g), exceeds 5% of the then-effective Borrowing Base then, no later than two Business Days after the date of consummation of any such Disposition, the Borrower shall provide notice to the Administrative Agent thereof, and upon the consummation of such Disposition, the Required Lenders shall have the right to adjust the Borrowing Base then in effect by an amount up to the Borrowing Base value, if any, attributable to such Disposed of Borrowing Base Properties in the calculation of the then-effective Borrowing Base and, if the Required Lenders in fact elect to make any such adjustment, the Administrative Agent shall promptly notify the Borrower in writing of the Borrowing Base value, if any, attributable to such Disposed of Borrowing Base Properties in the calculation of the then-effective Borrowing Base and the amount by which they have elected to reduce the Borrowing Base and upon receipt of such notice, the Borrowing Base shall be simultaneously reduced by such elected amount.
(h)Borrower’s Right to Elect Reduced Borrowing Base. Within three Business Days of its receipt of a New Borrowing Base Notice, the Borrower may provide written notice to the Administrative Agent and the Lenders that specifies for the period from the effective date of the New Borrowing Base Notice until the next succeeding Scheduled Redetermination Date, the Borrowing Base will be a lesser amount than the amount set forth in such New Borrowing Base Notice, whereupon such specified lesser amount will become the new Borrowing Base. The Borrower’s notice under this Section 2.14(h) shall be irrevocable, but without prejudice to its rights to initiate Interim Redeterminations. Notwithstanding the foregoing, in no event shall the Borrower be entitled to reduce the Borrowing Base pursuant to this Section 2.14(h) to an amount (a) that is less than the sum of the Total Revolving Credit Exposures plus the Total Term Loan Exposures or (b) that would result in a Term Loan Conversion.
(i)Administrative Agent Data. The Administrative Agent hereby agrees to provide, promptly, and in any event within 3 Business Days, following its receipt of a request by the Borrower, an updated Bank Price Deck. In addition, the Administrative Agent and the Lenders agree, upon request, to meet with the Borrower to discuss their evaluation of the reservoir engineering of the Oil and Gas Properties included in the Reserve Report and their respective methodologies for valuing such properties and the other factors considered in calculating the Borrowing Base.
(j)Non-Conforming Borrowing Base. Notwithstanding anything to the contrary contained herein, at all times prior to the Initial Term Loans Repayment Date: (A) the Borrowing Base shall consist of a conforming portion (the “Conforming Borrowing Base”) and a non-conforming portion (the “Non-Conforming Borrowing
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Base”), each as determined or adjusted from time to time as described in this Section 2.14(j), and the Borrowing Base in effect at any time shall be the sum of the Conforming Borrowing Base in effect at such time and the Non-Conforming Borrowing Base in effect at such time (and each reference herein to the term “Borrowing Base” as in effect at any time shall be a reference to the Borrowing Base as so constituted); (B) the Borrowing Base and the Conforming Borrowing Base shall be determined pursuant to Section 2.14(a)-(d); (C) on each Scheduled Redetermination Date and each Interim Redetermination Date, the amount of the Non-Conforming Borrowing Base shall be an amount equal to the Borrowing Base as determined on such date pursuant to Section 2.14(a)-(d) minus the amount of the Conforming Borrowing Base as determined on such date pursuant to Section 2.14(a)-(d), and the Non-Conforming Borrowing Base shall be subject to further reductions from time to time pursuant to Section 2.14(j)(G); (D) at any time a Lender is required to approve or is deemed to have approved the Borrowing Base pursuant to Section 2.14(c)(iii), such Lender shall be required to approve (or it shall be deemed to have approved) the Borrowing Base and the Conforming Borrowing Base; (E) for purposes of Section 2.14(b) through (d), references to (1) the “Proposed Borrowing Base” therein shall be deemed to be references to the “proposed Borrowing Base and the proposed Conforming Borrowing Base” and (2) “the Borrowing Base” therein shall be deemed to be references to “the Borrowing Base and the Conforming Borrowing Base”; (F) each New Borrowing Base Notice delivered pursuant to Section 2.14(d) shall specify the new Borrowing Base, the new Conforming Borrowing Base and the new Non-Conforming Borrowing Base; (G) the amount of the Non-Conforming Borrowing Base and the Borrowing Base shall be immediately reduced upon each prepayment of Initial Term Loans pursuant to Sections 5.2(c)(i)-(iii) by an amount equal to the aggregate principal amount of each such prepayment; and (H) in connection with each prepayment of Initial Term Loans pursuant to Sections 5.2(c)(i)-(iii), the Administrative Agent shall provide to the Lenders a Notice of Excess Cash Prepayment substantially in the form of Exhibit T or a Notice of Net Cash Proceeds Prepayment substantially in the form of Exhibit U, as applicable, which shall set forth the amount of the Borrowing Base, the Conforming Borrowing Base and the Non-Conforming Borrowing Base after giving effect to such prepayment and indicate whether there is any Borrowing Base Deficiency and, if so, the amount of the Borrowing Base Deficiency at the time of such prepayment.
Section 2.15Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender:
(a)Commitment Fees shall cease to accrue on the unfunded portion of the Revolving Commitment of such Defaulting Lender pursuant to Section 4.1(a);
(b)If (x) such Defaulting Lender is a Revolving Lender, the Revolving Commitment and Revolving Credit Exposures of such Defaulting Lender, and (y) such Defaulting Lender is a Term Lender, the Term Loan Exposure, in each case, shall not be included in determining whether all Lenders, the Majority Lenders, the Majority Revolving Lenders, the Majority Term Lenders, the Required Lenders or Borrowing Base Required Lenders, as applicable, have taken or may take any action hereunder (including any consent to any amendment or waiver pursuant to Section 13.1); provided that (i) any waiver, amendment or modification requiring the consent of all Lenders pursuant to Section 13.1 (other than Section 13.1(a)(ii)(I)) or requiring the consent of each affected
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Lender pursuant to Section 13.1(a)(ii)(A) shall require the consent of such Defaulting Lender (which for the avoidance of doubt would include any change to any Maturity Date applicable to such Defaulting Lender, decreasing or forgiving any principal or interest due to such Defaulting Lender, any decrease of any interest rate applicable to Loans made by such Defaulting Lender (other than the waiving of post-default interest rates) and any increase in such Defaulting Lender’s Commitment) and (ii) any redetermination, whether an increase, decrease or affirmation, of the Borrowing Base shall occur without the participation of a Defaulting Lender, but the Commitment of a Defaulting Lender may not be increased without the consent of such Defaulting Lender;
(c)If any Letter of Credit Exposure exists at the time a Revolving Lender becomes a Defaulting Lender, then (i) all or any part of such Letter of Credit Exposure of such Defaulting Lender will, subject to the limitation in the first proviso below, automatically be reallocated (effective on the day such Revolving Lender becomes a Defaulting Lender) among the Non-Defaulting Lenders pro rata in accordance with their respective Revolving Commitment Percentages; provided that (A) each Non-Defaulting Lender’s Revolving Credit Exposures may not in any event exceed the Revolving Commitment of such Non-Defaulting Lender as in effect at the time of such reallocation and (B) subject to Section 2.15(g), neither such reallocation nor any payment by a Non-Defaulting Lender pursuant thereto will constitute a waiver or release of any claim the Borrower, the Administrative Agent, the Letter of Credit Issuers or any other Revolving Lender may have against such Defaulting Lender or cause such Defaulting Lender to be a Non-Defaulting Lender, (ii) to the extent that all or any portion (the “unreallocated portion”) of the Defaulting Lender’s Letter of Credit Exposure cannot, or can only partially, be so reallocated to Non-Defaulting Lenders, whether by reason of the first proviso in Section 2.15(c)(i) or otherwise, the Borrower shall, within two Business Days following notice by the Administrative Agent, Cash Collateralize for the benefit of the applicable Letter of Credit Issuer only the Borrower’s obligations corresponding to such Defaulting Lender’s Letter of Credit Exposure (after giving effect to any partial reallocation pursuant to Section 2.15(c)(i) above), in accordance with the procedures set forth in Section 3.8 for so long as such Letter of Credit Exposure is outstanding, (iii) if the Borrower Cash Collateralizes any portion of such Defaulting Lender’s Letter of Credit Exposure pursuant to Section 2.15(c), the Borrower shall not be required to pay any fees to such Defaulting Lender pursuant to Section 4.1(b) with respect to such Defaulting Lender’s Letter of Credit Exposure during the period such Defaulting Lender’s Letter of Credit Exposure is Cash Collateralized, (iv) if the Letter of Credit Exposure of the Non-Defaulting Lenders is reallocated pursuant to Section 2.15(c), then the Letter of Credit Fees payable for the account of the Revolving Lenders pursuant to Section 4.1(b) shall be adjusted in accordance with such Non-Defaulting Lenders’ Revolving Commitment Percentages and the Borrower shall not be required to pay any Letter of Credit Fees to the Defaulting Lender pursuant to Section 4.1(b) with respect to such Defaulting Lender’s Letter of Credit Exposure during the period that such Defaulting Lender’s Letter of Credit Exposure is reallocated, or (v) if any Defaulting Lender’s Letter of Credit Exposure is neither Cash Collateralized nor reallocated pursuant to this Section 2.15(c), then, without prejudice to any rights or remedies of the Letter of Credit Issuer or any Revolving Lender hereunder, all Letter of Credit Fees payable under Section 4.1(b) with respect to such Defaulting Lender’s Letter of Credit Exposure shall
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be payable to the Letter of Credit Issuer until such Letter of Credit Exposure is Cash Collateralized and/or reallocated;
(d)So long as any Revolving Lender is a Defaulting Lender, no Letter of Credit Issuer will be required to issue any new Letter of Credit or amend any outstanding Letter of Credit to increase the Stated Amount thereof, alter the drawing terms thereunder or extend the expiry date thereof, unless the Letter of Credit Issuer is reasonably satisfied that any exposure that would result from the exposure to such Defaulting Lender is eliminated or fully covered by the Revolving Commitments of the Non-Defaulting Lenders or by Cash Collateralization or a combination thereof in accordance with Section 2.15(c) above or otherwise in a manner reasonably satisfactory to the Letter of Credit Issuer, and participating interests in any such newly issued or increased Letter of Credit shall be allocated among Non-Defaulting Lenders in a manner consistent with Section 2.15(c)(i) (and Defaulting Lenders shall not participate therein); and
(e)If the Borrower, the Administrative Agent and each Letter of Credit Issuer agree in writing in their discretion that a Revolving Lender that is a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon, as of the effective date specified in such notice and subject to any conditions set forth therein, such Revolving Lender will cease to be a Defaulting Lender and will be a Non-Defaulting Lender and any applicable cash collateral shall be promptly returned to the Borrower and any Letter of Credit Exposure of such Revolving Lender reallocated pursuant to Section 2.15(c) shall be reallocated back to such Revolving Lender; provided that, except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Non-Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from such Revolving Lender’s having been a Defaulting Lender.
(f)Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Section 11 or otherwise, and including any amounts made available to the Administrative Agent by that Defaulting Lender pursuant to Section 13.8), shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by that Defaulting Lender to the Administrative Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by that Defaulting Lender to each Letter of Credit Issuer hereunder; third, to Cash Collateralize the fronting exposure of the Letter of Credit Issuers with respect to such Defaulting Lender in accordance with the procedures set forth in Section 3.8; fourth, as the Borrower may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrower, to be held in a non-interest bearing deposit account and released pro rata in order to (A) satisfy obligations of that Defaulting Lender to fund Loans under this Agreement and (B) Cash Collateralize the Letter of Credit Issuers’ future fronting exposure with respect to such Defaulting Lender with respect to future Letters of Credit issued under this Agreement, in accordance with the procedures set forth in Section 3.8;
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sixth, to the payment of any amounts owing to the Lenders or the Letter of Credit Issuers as a result of any judgment of a court of competent jurisdiction obtained by any Lender or such Letter of Credit Issuer against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrower as a result of any judgment of a court of competent jurisdiction obtained by the Borrower against that Defaulting Lender as a result of that Defaulting Lender’s breach of its obligations under this Agreement; and eighth, to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if such payment is a payment of the principal amount of any Loans or Unpaid Drawings, such payment shall be applied solely to pay the relevant Loans of, and Unpaid Drawings owed to, the relevant non-Defaulting Lenders on a pro rata basis prior to being applied in the manner set forth in this Section 2.15(f). Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post cash collateral pursuant to Section 3.8 shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.
(g)Notwithstanding anything to the contrary in any Credit Documents or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Affected Financial Institution arising under any Credit Documents, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of the applicable Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(i)the application of any Write-Down and Conversion Powers by the applicable Resolution Authority to any such liabilities arising hereunder which may be payable to it by any party hereto that is an Affected Financial Institution; and
(ii)the effects of any Bail-In Action on any such liability, including, if applicable:
(A)a reduction in full or in part or cancellation of any such liability;
(B)a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such Affected Financial Institution, its parent entity, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Credit Documents; or
(C)the variation of the terms of such liability in connection with the exercise of the Write-Down and Conversion Powers of the Applicable Resolution Authority.
Section 2.16Increase of Aggregate Maximum Credit Amount and/or Aggregate Elected Commitment Amount.
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(a)After the Initial Term Loans Repayment Date, subject to the conditions set forth in Section 2.16(b), the Borrower may increase the Aggregate Maximum Credit Amount and/or the Aggregate Elected Commitment Amount then in effect (any such increase an “Incremental Increase”) by increasing the Maximum Credit Amount and/or Elected Commitment Amount of a Revolving Lender (an “Increasing Lender”) or by causing a Person that at such time is not a Revolving Lender to become a Revolving Lender (an “Additional Lender”).
(b)Any increase in the Aggregate Maximum Credit Amount or the Aggregate Elected Commitment Amount, as applicable, shall be subject to the following additional conditions:
(i)such increase shall not be less than $5,000,000 (and increments of $1,000,000 above that minimum) unless the Administrative Agent otherwise consents (such consent not to be unreasonably withheld, conditioned or delayed), and no such increase shall be permitted if after giving effect thereto the Aggregate Elected Commitment Amount would exceed the Available Borrowing Base then in effect;
(ii)no Event of Default shall have occurred and be continuing after giving effect to such increase;
(iii)no Revolving Lender’s Maximum Credit Amount or Elected Commitment Amount may be increased without the consent of such Revolving Lender (to be granted or withheld in each such Revolving Lender’s sole discretion);
(iv)the maturity date of such increase shall be the same as the Maturity Date applicable to the Revolving Loans;
(v)the increase shall be on the exact same terms and pursuant to the exact same documentation applicable to this Agreement (other than with respect to any arrangement, structuring, upfront or other fees or discounts payable in connection with such Incremental Increase) (provided that, to the extent applicable, the Applicable Margin with respect to the Revolving Loans shall be increased to be consistent with that for such Incremental Increase); and
(vi)the Borrower may seek commitments in respect of an Incremental Increase, in its sole discretion, from either existing Revolving Lenders (each of which shall be entitled to agree or decline to participate in its sole discretion) with the consent of each Letter of Credit Issuer (such consent not to be unreasonably withheld or delayed) or from additional banks, financial institutions or other institutional lenders or investors who will become Revolving Lenders hereunder with the consent of the Administrative Agent and each Letter of Credit Issuer (in each case, such consent not to be unreasonably withheld or delayed).
(c)Except as otherwise specified above, the other terms of any Incremental Increase, shall be on terms and pursuant to documentation (any such documentation, an “Incremental Agreement”) to be determined between the Borrower and the lenders
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providing such Incremental Increase (and for the avoidance of doubt, without requiring the consent or acknowledgment of any other Lender or the Administrative Agent (except, in the case of the Administrative Agent, to the extent affecting the rights and duties of, or any fees or other amounts payable to, the Administrative Agent)). Each of the parties hereto hereby irrevocably agrees that this Agreement and the other Credit Documents may be amended pursuant to an Incremental Agreement, without the consent of Lenders other than the Lenders providing such Incremental Increase, to the extent necessary to (i) reflect the existence and terms of an Incremental Increase and (ii) address technical issues relating to funding and payments, and the Majority Lenders hereby expressly authorize and direct the Administrative Agent, if necessary, to enter into any such Incremental Agreement.
Section 2.17Extension Offers.
(a)The Borrower may at any time and from time to time request that all or a portion of (i) the Revolving Commitments of any Class, existing at the time of such request (each, an “Existing Revolving Commitment” and any related Revolving Loans under any such facility, “Existing Revolving Loans”; each Existing Revolving Commitment and related Existing Revolving Loans together being referred to as an “Existing Revolving Class”) and/or (ii) the Term Commitments (other than the Initial Term Loan Commitments) of any Class, existing at the time of such request (each, an “Existing Term Commitment” and any related Term Loans (other than Initial Term Loans), “Existing Term Loans”; each Existing Term Commitment and related Existing Term Loans together being referred to as an “Existing Term Class”) be converted to extend the termination date thereof and the scheduled maturity date(s) of any payment of principal with respect to all or a portion of any principal amount of (A) Existing Revolving Loans related to such Existing Revolving Commitments (any such Existing Revolving Commitments which have been so extended, “Extended Revolving Commitments” and any related revolving credit loans, “Extended Revolving Loans”) and/or (B) Existing Term Loans related to such Existing Term Commitments (any such Existing Term Commitments which have been so extended, “Extended Term Commitments” and any related loans, “Extended Term Loans”) and to provide for other terms consistent with this Section 2.17. Prior to entering into any Extension Amendment with respect to any Extended Revolving Commitments or Extended Term Commitments, the Borrower shall provide a notice to the Administrative Agent (who shall provide a copy of such notice to each of the Lenders of the applicable Class of Existing Commitments and which such request shall be offered equally to all Lenders) (an “Extension Request”) setting forth the proposed terms of the Extended Commitments to be established thereunder, which terms shall be substantially similar to those applicable to the Existing Commitments from which they are to be extended (the “Specified Existing Commitment Class”) except that (w) all or any of the final maturity dates of such Extended Commitments may be delayed to later dates than the final maturity dates of the Existing Commitments of the Specified Existing Commitment Class, (x)(A) the interest rates, interest margins, rate floors, upfront fees, funding discounts, original issue discounts and premiums with respect to the Extended Commitments may be different from those for the Existing Commitments of the Specified Existing Commitment Class and/or (B) additional fees and/or premiums may be payable to the Lenders providing such Extended Commitments in addition to or in lieu of any of the items contemplated by the
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preceding clause (A), (y)(1) the undrawn revolving credit commitment fee rate with respect to Extended Revolving Commitments may be different from such rate for Existing Revolving Commitments of the Specified Existing Commitment Class and (2) the Extension Amendment may provide for other covenants and terms that apply to any period after the Latest Maturity Date; provided that, notwithstanding anything to the contrary in this Section 2.17 or otherwise, (1) the borrowing and repayment (other than in connection with a permanent repayment and termination of commitments (which shall be governed by clause (3) below)) of the Extended Loans under any Extended Commitments shall be made on a pro rata basis with any borrowings and repayments of the Existing Loans of the Specified Existing Commitment Class (the mechanics for which may be implemented through the applicable Extension Amendment and may include technical changes related to the borrowing and replacement procedures of the Specified Existing Commitment Class), (2) assignments and participations of Extended Commitments and Extended Loans shall be governed by the assignment and participation provisions set forth in Section 13.6 and (3) subject to the applicable limitations set forth in Section 4.2 and Section 2.17(f), permanent repayments of Extended Loans (and corresponding permanent reduction in the related Extended Commitments) shall be permitted as may be agreed between the Borrower and the Lenders thereof. No Lender shall have any obligation to agree to have any of its Loans or Commitments of any Existing Class converted into Extended Loans or Extended Commitments pursuant to any Extension Request. Any Extended Commitments of any Extension Series shall constitute a separate Class of commitments from Existing Commitments of the Specified Existing Commitment Class and from any other Existing Commitments (together with any other Extended Commitments so established on such date).
(b)The Borrower shall provide the applicable Extension Request at least five Business Days (or such shorter period as the Administrative Agent may determine in its reasonable discretion) prior to the date on which Lenders under the Existing Class are requested to respond, and shall agree to such procedures, if any, as may be established by, or acceptable to, the Administrative Agent, in each case acting reasonably, to accomplish the purpose of this Section 2.17. Any Lender (an “Extending Lender”) wishing to have all or a portion of its Commitments (or any earlier Extended Commitments) of an Existing Class subject to such Extension Request converted into Extended Commitments shall notify the Administrative Agent (an “Extension Election”) on or prior to the date specified in such Extension Request of the amount of its Commitments (and/or any earlier Extended Commitments) which it has elected to convert into Extended Commitments (subject to any minimum denomination requirements imposed by the Administrative Agent). In the event that the aggregate amount of Commitments (and any earlier Extended Commitments) subject to Extension Elections exceeds the amount of Extended Commitments requested pursuant to the Extension Request, Commitments and (and any earlier Extended Commitments) subject to Extension Elections shall be converted to Extended Commitments on a pro rata basis based on the amount of Commitments (and any earlier Extended Commitments) included in each such Extension Election or as may be otherwise agreed to in the applicable Extension Amendment. Notwithstanding the conversion of any Existing Revolving Commitment into an Extended Revolving Commitment, such Extended Revolving Commitment shall be treated identically to all Existing Revolving Commitments of the Specified Existing Commitment Class for purposes of the obligations of a Revolving Lender in respect of Letters of Credit under Section 3, except that the applicable Extension Amendment may
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provide that the last day for issuing Letters of Credit may be extended and the related obligations to issue Letters of Credit may be continued (pursuant to mechanics to be specified in the applicable Extension Amendment) so long as the applicable Letter of Credit Issuer, as applicable, have consented to such extensions (it being understood that no consent of any other Revolving Lender shall be required in connection with any such extension).
(c)Extended Commitments shall be established pursuant to an amendment (an “Extension Amendment”) to this Agreement (which, notwithstanding anything to the contrary set forth in Section 13.1, shall not require the consent of any Lender other than the Extending Lenders with respect to the Extended Commitments established thereby) executed by the Credit Parties, the Administrative Agent and the Extending Lenders. It is understood and agreed that each Lender hereunder has consented, and shall at the effective time thereof be deemed to consent to each amendment to this Agreement and the other Credit Documents authorized by this Section 2.17 and the arrangements described above in connection therewith. No Extension Amendment shall provide for any tranche of Extended Commitments in an aggregate principal amount that is less than $1,000,000. Notwithstanding anything to the contrary in this Section 2.17(c) and without limiting the generality or applicability of Section 13.1 to any Section 2.17 Additional Amendments (as defined below), any Extension Amendment may provide for additional terms and/or additional amendments other than those referred to or contemplated above (any such additional amendment, a “Section 2.17 Additional Amendment”) to this Agreement and the other Credit Documents; provided that such Section 2.17 Additional Amendments are within the requirements of Section 2.17(a) and Section 2.17(f) and do not become effective prior to the time that such Section 2.17 Additional Amendments have been consented to (including, without limitation, pursuant to consents applicable to holders of any Extended Loans provided for in any Extension Amendment) by such of the Lenders, Credit Parties and other parties (if any) as may be required in order for such Section 2.17 Additional Amendments to become effective in accordance with Section 13.1.
(d)Notwithstanding anything to the contrary contained in this Agreement, (A) on any date on which any Class of Existing Commitments is converted to extend the related scheduled maturity date(s) in accordance with paragraph (a) above (an “Extension Date”), in the case of the Existing Commitments of each Extending Lender under any Specified Existing Commitment Class, the aggregate principal amount of such Existing Commitments shall be deemed reduced by an amount equal to the aggregate principal amount of Extended Commitments so converted by such Lender on such date, and such Extended Commitments shall be established as a separate Class of commitments from the Specified Existing Commitment Class and from any other Existing Commitments (together with any other Extended Commitments so established on such date) and (B) if, on any Extension Date, any Existing Loans of any Extending Lender are outstanding under the Specified Existing Commitment Class, such Existing Loans (and any related participations) shall be deemed to be allocated as Extended Loans (and related participations) in the same proportion as such Extending Lender’s Specified Existing Commitments to Extended Commitments.
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(e)No exchange of Loans or Commitments pursuant to any Extension Amendment in accordance with this Section 2.17 shall constitute a voluntary or mandatory payment or prepayment for purposes of this Agreement.
(f)Extension of Term Loans.
(i)Notwithstanding anything to the contrary in this Agreement, any Extension Request requesting Existing Term Loans be converted to Extended Term Loans (each such Extension Request, a “Term Loan Extension Request” and each such extension, a “Term Loan Extension” and any Term Loans extended thereby, a “Term Loan Extension Series”) shall be subject to the following conditions:
(A)no Event of Default shall exist at the time the notice in respect of a Term Loan Extension Request is delivered to the Term Lenders, and no Default or Event of Default shall exist immediately prior to or after giving effect to the effectiveness of any Extended Term Loans;
(B)except as to the aggregate principal amount, interest rates, fees, amortization, final maturity date, premium, required prepayment dates and participation in prepayments (which shall, subject to Section 2.17(f)(i)(C), Section 2.17(f)(i)(D), Section 2.17(f)(i)(E), Section 2.17(f)(i)(G) and Section 2.17(f)(i)(H) be determined by the Borrower and set forth in the relevant Term Loan Extension Request), the Term Loans of any Term Lender that agrees to a Term Loan Extension with respect to such Extended Term Loans shall have the same, or no more restrictive on the Credit Parties (as determined by the Borrower in its reasonable good faith determination) than, those set forth in this Agreement prior to the applicable Term Loan Extension unless any more restrictive mandatory prepayments, representations and warranties, covenants and events of default are incorporated into this Agreement for the benefit of all Lenders upon the effectiveness of the applicable Term Loan Extension;
(C)the final maturity date of any Extended Term Loans shall be no earlier than the then Latest Maturity Date;
(D)any amortization payments in respect of such Extended Term Loans shall only be required if at least 20% of the Revolving Commitments are unused on a Pro Forma Basis after giving effect to such payments;
(E)any Extended Term Loans may participate on a pro rata basis or on a less than pro rata basis (but not on a greater than pro rata basis) in any voluntary or mandatory repayments or prepayments hereunder, as specified in the applicable Term Loan Extension Request;
(F)if the aggregate principal amount of Term Loans (calculated on the face amount thereof) in respect of which Term Lenders shall have accepted the relevant Term Loan Extension Request shall
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exceed the maximum aggregate principal amount of Term Loans (calculated on the face amount thereof) offered to be extended by the Borrower pursuant to such Term Loan Extension Request, then the Term Loans of such Term Lenders shall be extended ratably up to such maximum amount based on the respective principal amounts (but not to exceed actual holdings of record) with respect to which such Term Lenders have accepted such Term Loan Extension Request;
(G)any Extended Term Loans shall rank pari passu in right of payment and of security with the Revolving Loans and any other Term Loans;
(H)on the Extension Date of any Extended Term Loans, after giving effect to the effectiveness of the applicable Section 2.17 Additional Amendment, the sum of the Total Term Loan Exposures and the Term Commitments shall not exceed, as of such date, the greater of (i) the principal amount of such Extended Term Loans outstanding immediately prior to such Extension Date and (ii) the lesser of (A) the Borrowing Base then in effect minus the Aggregate Elected Commitment Amount then in effect and (B) an amount equal to thirty-three and one-third percent (33-⅓%) of the Aggregate Elected Commitment Amount then in effect; and
(I)all documentation in respect of such Term Loan Extension shall be consistent with the foregoing.
Section 2.18Benchmark Replacement Setting.
(a)
(i)Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Credit Document, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred prior to the Reference Time in respect of any setting of the then-current Benchmark, then (x) if a Benchmark Replacement is determined in accordance with clause (a) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Credit Document in respect of such Benchmark setting and subsequent Benchmark settings without any amendment to, or further action or consent of any other party to, this Agreement or any other Credit Document and (y) if a Benchmark Replacement is determined in accordance with clause (b) of the definition of “Benchmark Replacement” for such Benchmark Replacement Date, such Benchmark Replacement will replace such Benchmark for all purposes hereunder and under any Credit Document in respect of any Benchmark setting at or after 5:00 p.m. (New York City time) on the fifth (5th) Business Day after the date notice of such Benchmark Replacement is provided to the Lenders and the Borrower without any amendment to, or further action or consent of any other party to, this Agreement or any other Credit Document so long as the
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Administrative Agent has not received, by such time, written notice of objection to such Benchmark Replacement from Lenders comprising the Majority Lenders.
(ii)No Hedge Agreement shall be deemed to be a “Credit Document” for purposes of this Section 2.18.
(b)Benchmark Replacement Conforming Changes. In connection with the implementation and administration of a Benchmark Replacement, the Administrative Agent will have the right to make (in consultation with the Borrower) Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Credit Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement or any other Credit Document.
(c)Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Borrower and the Lenders of (i) any occurrence of a Benchmark Transition Event, (ii) the implementation of any Benchmark Replacement, (iii) the effectiveness of any Benchmark Replacement Conforming Changes and (iv) the removal or reinstatement of any tenor of a Benchmark pursuant to Section 2.18. Any determination, decision or election that may be made by the Administrative Agent or, if applicable, any Lender (or group of Lenders) pursuant to this Section 2.18, including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action or any selection, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party to this Agreement or any other Credit Document, except, in each case, as expressly required pursuant to this Section 2.18.
(d)Unavailability of Tenor of Benchmark. Notwithstanding anything to the contrary herein or in any other Credit Document, at any time (including in connection with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark is a term rate (including Term SOFR) and either (A) any tenor for such Benchmark is not displayed on a screen or other information service that publishes such rate from time to time as selected by the Administrative Agent in its reasonable discretion or (B) the administrator of such Benchmark or the regulatory supervisor for the administrator of such Benchmark has provided a public statement or publication of information announcing that any tenor for such Benchmark is not or will not be representative, then the Administrative Agent may modify the definition of “Interest Period” for any Benchmark settings at or after such time to remove such unavailable, non-representative, non-compliant or non-aligned tenor and (ii) if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed on a screen or information service for a Benchmark (including a Benchmark Replacement) or (B) is not, or is no longer, subject to an announcement that it is not or will not be representative, then the Administrative Agent may modify the definition of “Interest Period” for all Benchmark settings at or after such time to reinstate such previously removed tenor.
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(e)Benchmark Unavailability Period. Upon the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period, the Borrower may revoke any pending request for a Term SOFR Loan, or a conversion to or continuation of Term SOFR Loans, to be made, converted or continued during any Benchmark Unavailability Period and, failing that, the Borrower will be deemed to have converted any such request into a request for a Borrowing of or conversion to (i) Daily Simple SOFR Loans so long as Daily Simple SOFR is not the subject of a Benchmark Transition Event or (ii) ABR Loans if Daily Simple SOFR is the subject of a Benchmark Transition Event. During a Benchmark Unavailability Period or at any time that a tenor for the then-current Benchmark is not an Available Tenor, the component of ABR based upon the then-current Benchmark or such tenor for such Benchmark, as applicable, will not be used in any determination of ABR. Furthermore, if any Term SOFR Loan is outstanding on the date of the Borrower’s receipt of notice of the commencement of a Benchmark Unavailability Period with respect to Term SOFR applicable to such Term SOFR Loan, then until such time as a Benchmark Replacement is implemented pursuant to this Section 2.18, any Term SOFR Loan shall on the last day of the Interest Period applicable to such Loan (or the next succeeding Business Day if such day is not a Business Day), be converted by the Administrative Agent to, and shall constitute, (x) a Daily Simple SOFR Loan so long as Daily Simple SOFR is not the subject of a Benchmark Transition Event or (y) an ABR Loan if Daily Simple SOFR is the subject of a Benchmark Transition Event, on such day.
Section 2.19Term Loan Facility.
(a)Term Commitments. The Borrower may at any time or from time to time after the Initial Term Loans Repayment Date, by written notice to the Administrative Agent (whereupon the Administrative Agent shall promptly deliver a copy to each of the Lenders) (a “Term Loan Request”), request the establishment of one or more new commitments which may be in the same Term Loan Facility as any outstanding Term Loans of an existing Class of Term Loans (a “Term Loan Increase”) or a new Class of Term Loans (collectively with any Term Loan Increase, the “Term Commitments”) in an aggregate principal amount not to exceed, as of the Term Loan Facility Closing Date for such Term Commitments, the lesser of the following: (i) the Borrowing Base then in effect minus the Aggregate Elected Commitment Amount then in effect minus the Total Term Loan Exposures in effect immediately prior to such Term Loan Facility Closing Date and (ii) an amount equal to the difference of (A) thirty-three and one-third percent (33-⅓%) of the Aggregate Elected Commitment Amount then in effect minus (B) the Total Term Loan Exposures outstanding immediately prior to such Term Loan Facility Closing Date.
(b)Term Loans. Any Term Commitments effected through the establishment of one or more new Term Loans made on a Term Loan Facility Closing Date shall be designated for all purposes of this Agreement as either (A) a new Class of Term Commitments or (B) an increase to an existing Class of Term Loans. On any Term Loan Facility Closing Date on which any Term Commitments of any Class are effected (including through any Term Loan Increase), subject to the satisfaction of the terms and conditions in this Section 2.19, (i) each Term Lender of such Class shall make a Term
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Loan to the Borrower in an amount equal to its Term Commitment of such Class and (ii) each Term Lender of such Class shall become a Lender hereunder with respect to the Term Commitment of such Class and the Term Loans of such Class made pursuant thereto. Notwithstanding the foregoing, any Term Loans may be treated as part of the same Class as any other Term Loans if such Term Loans are fungible for United States federal income tax purposes with such other Term Loans.
(c)Term Loan Request. Each Term Loan Request from the Borrower pursuant to this Section 2.19 shall set forth the requested amount and proposed terms of the relevant Term Loans. Term Loans may be made by any existing Lender (but no existing Lender will have an obligation to make any Term Commitment, nor will the Borrower have any obligation to approach any existing Lenders to provide any Term Commitment) or by any other bank or other financial institution (any such other bank or other financial institution being called an “Additional Term Lender”); provided that (i) the Administrative Agent shall have consented (not to be unreasonably withheld or delayed) to the identity of the Lender or Additional Term Lender that is making such Term Loans or providing such Term Commitments (but not to the provision thereof or the terms thereof) to the extent such consent, if any, would be required under Section 13.6(b) for an assignment of Loans to such Lender or Additional Term Lender, (ii) any Additional Term Lender at the time such Term Loans are made or such Term Commitments are provided shall be a commercial bank that is engaged in oil and gas reserve based lending governed by a borrowing base, as a revolving lender in the ordinary course of its business and (iii) no Additional Term Lender shall be any natural person, any Disqualified Institution or any Defaulting Lender.
(d)Effectiveness of Term Loan Amendment. The effectiveness of any Term Loan Amendment shall be subject to the satisfaction on the date thereof (the “Term Loan Facility Closing Date”) of each of the following conditions:
(i)the Borrower shall be in compliance with the Specified Conditions;
(ii)each Term Commitment shall be in an aggregate principal amount that is not less than $10,000,000 unless the Administrative Agent otherwise consents;
(iii)to the extent reasonably requested by the Administrative Agent, the Administrative Agent shall have received (A) customary legal opinions addressed to the Administrative Agent and the applicable Term Lenders, board resolutions and officers’ certificates and (B) reaffirmation agreements and/or such amendments to the Security Documents (including modifications to the Mortgages), as may be reasonably requested by the Administrative Agent in order to ensure that the enforceability of the Security Documents and the perfection and priority of the Liens thereunder are preserved and maintained;
(iv)on the Term Loan Facility Closing Date, after giving effect to the effectiveness of the Term Loan Facility Closing Date, the Term Commitments and the funding of any Term Loans thereunder, the sum of the Total Term Loan Exposures and the Term Commitments shall not exceed, as of the Term Loan Facility Closing Date for such Term Commitments, the lesser of the following (i)
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the Borrowing Base then in effect minus the Aggregate Elected Commitment Amount then in effect and (ii) an amount equal to thirty-three and one-third percent (33-⅓%) of the Aggregate Elected Commitment Amount then in effect; and
(v)such other conditions as the Borrower and each Term Lender providing such Term Commitments shall agree.
(e)Required Terms. The terms, provisions and documentation of the Term Loans and Term Commitments of any Class shall be as agreed between the Borrower and the applicable Term Lenders providing such Term Commitments. In any event:
(i)the Term Loans:
(A)shall rank pari passu in right of payment and of security with the Revolving Loans and any other Term Loans;
(B)shall not mature earlier than the Latest Maturity Date at the time of incurrence of such Term Loans and no scheduled principal or amortization payments shall be required in respect of such Term Loans except to the extent such payments would not cause the Weighted Average Life to Maturity of such Term Loans at any time to be shorter than 50% of the number of years remaining until the Initial Maturity Date in effect;
(C)shall have an applicable rate, fees, premiums and, subject to Section 2.19(e)(i)(B) and Section 2.19(e)(i)(F), amortization determined by the Borrower and the applicable Term Lenders;
(D)except as provided in Section 2.19(e)(i)(C) above, shall have mandatory prepayments, representations and warranties, covenants and events of default that are the same as, or no more restrictive on the Credit Parties (as determined by the Administrative Agent in its reasonable discretion) than, those set forth in this Agreement prior to the applicable Term Loan Facility Closing Date unless any more restrictive mandatory prepayments, representations and warranties, covenants and events of default are incorporated into this Agreement for the benefit of all Lenders on the applicable Term Loan Facility Closing Date;
(E)may participate on a pro rata basis or less than pro rata basis (but not on a greater than pro rata basis) in any voluntary or mandatory prepayments of Term Loans hereunder, as specified in the applicable Term Loan Amendment; and
(F)shall provide that any amortization payments in respect of such Term Loans shall only be required if at least 20% of the Revolving Commitments are unused on a Pro Forma Basis after giving effect to such payments.
(f)Term Loan Amendment.
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(i)Term Commitments shall become Commitments under this Agreement pursuant to an amendment (a “Term Loan Amendment”) to this Agreement and, as appropriate, amendments to the other Credit Documents, executed by the Borrower, each Term Lender providing such Term Commitments and the Administrative Agent, as applicable. The Term Loan Amendment may, without the consent of any other Credit Party or Lender, effect such amendments to this Agreement and the other Credit Documents as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent and the Borrower, to effect the provisions of this Section 2.19 (including introducing additional or tightening existing mandatory prepayments, representations and warranties, covenants or events of default for the benefit of all Lenders). The Borrower will use the proceeds of the Term Loans for any purpose not prohibited by this Agreement. No Lender shall be obligated to provide any Term Loans unless it so agrees.
(ii)The Lenders hereby irrevocably authorize the Administrative Agent to enter into amendments to this Agreement and the other Credit Documents with the Credit Parties as may be necessary in order to establish new tranches or sub-tranches in respect of Loans or commitments made or established pursuant to this Section 2.19 and such technical amendments as may be necessary or appropriate in the reasonable opinion of the Administrative Agent and the Borrower in connection with the establishment of such new tranches or sub-tranches, in each case on terms consistent with this Section 2.19, including the introduction of additional or the tightening of existing mandatory prepayments, representations and warranties, covenants or events of default for the benefit of all Lenders and any amendments that are not adverse to the interests of any Lender that are made to effectuate changes necessary to enable any Term Loans to be fungible for United States federal income tax purposes with another Class of Term Loans, which shall include any amendments that do not reduce the ratable amortization received by each Lender thereunder.
(iii)Upon the effectiveness of such Term Loan Amendment, this Agreement may be amended by the Administrative Agent (without the consent of any other party hereto) by adding a new Schedule hereto or amending an existing Schedule hereto to reflect the Term Commitment of each Term Lender party thereto and any resulting changes in the Lenders’ Term Loan Commitment Percentages.
(g)This Section 2.19 shall supersede any provisions in Section 13.8(a) to the contrary.
Section 2.20Permitted Debt Exchanges.
(a)Notwithstanding anything to the contrary contained in this Agreement, pursuant to one or more offers (each, a “Permitted Debt Exchange Offer”) made from time to time by the Borrower, the Borrower may from time to time following the Closing Date consummate one or more exchanges of Term Loans (other than the Initial Term Loans) for Permitted Additional Debt in the form of notes (such notes, “Permitted Debt
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Exchange Notes,” and each such exchange a “Permitted Debt Exchange”), so long as the following conditions are satisfied: (i) no Event of Default shall have occurred and be continuing at the time the final offering document in respect of a Permitted Debt Exchange Offer is delivered to the relevant Term Lenders, (ii) the aggregate principal amount (calculated on the face amount thereof) of Term Loans exchanged shall equal no more than the aggregate principal amount (calculated on the face amount thereof) of Permitted Debt Exchange Notes issued in exchange for such Term Loans; provided that the aggregate principal amount of the Permitted Debt Exchange Notes may include accrued interest and premium (if any) under the Term Loans exchanged and underwriting discounts, fees, commissions and expenses in connection with the issuance of such Permitted Debt Exchange Notes, (iii) the aggregate principal amount (calculated on the face amount thereof) of all Term Loans exchanged under each applicable Class by the Borrower pursuant to any Permitted Debt Exchange shall automatically be cancelled and retired by the Borrower on the date of the settlement thereof (and, if requested by the Administrative Agent, any applicable exchanging Lender shall execute and deliver to the Administrative Agent an Assignment and Acceptance, or such other form as may be reasonably requested by the Administrative Agent, in respect thereof pursuant to which the respective Lender assigns its interest in the Term Loans being exchanged pursuant to the Permitted Debt Exchange to the Borrower for immediate cancellation), (iv) if the aggregate principal amount of all Term Loans of a given Class (calculated on the face amount thereof) tendered by Lenders in respect of the relevant Permitted Debt Exchange Offer (with no Lender being permitted to tender a principal amount of Term Loans which exceeds the principal amount thereof of the applicable Class actually held by it) shall exceed the maximum aggregate principal amount of Term Loans of such Class offered to be exchanged by the Borrower pursuant to such Permitted Debt Exchange Offer, then the Borrower shall exchange Term Loans subject to such Permitted Debt Exchange Offer tendered by such Term Lenders ratably up to such maximum amount based on the respective principal amounts so tendered, (v) all documentation in respect of such Permitted Debt Exchange shall be consistent with the foregoing, and all written communications generally directed to the Term Lenders in connection therewith shall be in form and substance consistent with the foregoing and made in consultation with the Borrower and the Auction Agent, and (vi) any applicable Minimum Tender Condition shall be satisfied.
(b)With respect to all Permitted Debt Exchanges effected by the Borrower pursuant to this Section 2.20, (i) such Permitted Debt Exchanges (and the cancellation of the exchanged Term Loans in connection therewith) shall not constitute voluntary or mandatory payments or prepayments for purposes of Section 5.1 or 5.2, and (ii) such Permitted Debt Exchange Offer shall be made for not less than $5,000,000 in aggregate principal amount of Term Loans; provided that subject to the foregoing clause (ii), the Borrower may at its election specify as a condition (a “Minimum Tender Condition”) to consummating any such Permitted Debt Exchange that a minimum amount (to be determined and specified in the relevant Permitted Debt Exchange Offer in the Borrower’s discretion) of Term Loans of any or all applicable Classes be tendered.
(c)In connection with each Permitted Debt Exchange, the Borrower and the Auction Agent shall mutually agree to such procedures as may be necessary or advisable to accomplish the purposes of this Section 2.20 and without conflict with Section 2.20(d); provided that the terms of any Permitted Debt Exchange Offer shall provide that the date
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by which the relevant Lenders are required to indicate their election to participate in such Permitted Debt Exchange shall be not less than a reasonable period (in the discretion of the Borrower and the Auction Agent) of time following the date on which the Permitted Debt Exchange Offer is made. No Lender shall be required to participate in any Permitted Debt Exchange, it being understood and agreed that the decision of any Lender to participate in any Permitted Debt Exchange shall be made by such Lender in such Lender’s sole discretion.
(d)The Borrower shall be responsible for compliance with, and hereby agrees to comply with, all applicable securities and other laws in connection with each Permitted Debt Exchange, it being understood and agreed that (x) none of the Auction Agent, the Administrative Agent nor any Lender assumes any responsibility in connection with the Borrower’s compliance with such laws in connection with any Permitted Debt Exchange and (y) each Lender shall be solely responsible for its compliance with any applicable “insider trading” laws and regulations to which such Lender may be subject under the Securities Exchange Act of 1934, as amended.
ARTICLE III
Letters of Credit
Section 3.1Letters of Credit.
(a)Subject to and upon the terms and conditions herein set forth, at any time and from time to time on and after the Initial Term Loans Repayment Date and prior to the L/C Maturity Date, the Letter of Credit Issuer agrees, in reliance upon the agreements of the Revolving Lenders set forth in this Section 3, to issue upon the request of the Borrower and for the direct or indirect benefit of the Borrower and the Restricted Subsidiaries, a letter of credit or letters of credit (the “Letters of Credit” and each, a “Letter of Credit”) in such form and with such Issuer Documents as may be approved by the Letter of Credit Issuer in its reasonable discretion; provided that the Borrower shall be a co-applicant of, and jointly and severally liable with respect to, each Letter of Credit issued for the account of a Restricted Subsidiary.
(b)Notwithstanding the foregoing, (i) no Letter of Credit shall be issued the Stated Amount of which, when added to the Letters of Credit Outstanding at such time, would exceed the Letter of Credit Commitment then in effect, (ii) (A) no Letter of Credit shall be issued the Stated Amount of which would cause the Total Revolving Credit Exposures at such time to exceed the Loan Limit then in effect or any Revolving Lender’s Revolving Credit Exposures at such time to exceed such Revolving Lender’s Revolving Commitment then in effect and (B) no Letter of Credit Issuer shall be obligated to issue any Letter of Credit, the Stated Amount of which, when added to the Letters of Credit Outstanding issued by such Letter of Credit Issuer at such time, would exceed such Letter of Credit Issuer’s L/C Issuance Limit (it being understood that, without limiting clauses (i) and (ii)(A), upon the Borrower’s request, a Letter of Credit Issuer may agree, in its sole discretion, to issue Letters of Credit in an aggregate amount exceeding such Letter of Credit Issuer’s L/C Issuance Limit), (iii) each Letter of Credit shall have an expiration date occurring no later than one year after the date of issuance (or 18 months with respect to Letters of Credit issued for the benefit of the Texas
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Railroad Commission) or such longer period of time as may be agreed by the applicable Letter of Credit Issuer, unless otherwise agreed upon by the Administrative Agent and the Letter of Credit Issuer or as provided under Section 3.2(b); provided that any Letter of Credit may provide for automatic renewal thereof for additional periods of up to 12 months (or 18 months with respect to Letters of Credit issued for the benefit of the Texas Railroad Commission) or such longer period of time as may be agreed by the applicable Letter of Credit Issuer, subject to the provisions of Section 3.2(b); provided, further, that in no event shall such expiration date occur later than the L/C Maturity Date unless arrangements which are reasonably satisfactory to the Letter of Credit Issuer to Cash Collateralize (or backstop) such Letter of Credit have been made, (iv) each Letter of Credit shall be denominated in Dollars, (v) no Letter of Credit shall be issued if it would be illegal under any applicable Requirement of Law for the beneficiary of the Letter of Credit to have a Letter of Credit issued in its favor and (vi) no Letter of Credit shall be issued by a Letter of Credit Issuer after it has received a written notice from any Credit Party or the Administrative Agent or the Majority Revolving Lenders stating that a Default or Event of Default has occurred and is continuing until such time as the Letter of Credit Issuer shall have received a written notice (A) of rescission of such notice from the party or parties originally delivering such notice, (B) of the waiver of such Default or Event of Default in accordance with the provisions of Section 13.1 or (C) that such Default or Event of Default is no longer continuing.
(c)Upon at least one Business Day’s prior written notice (or telephonic notice promptly confirmed in writing) to the Administrative Agent and the Letter of Credit Issuer (which notice the Administrative Agent shall promptly transmit to each of the Revolving Lenders), the Borrower shall have the right, on any day, permanently to terminate or reduce the Letter of Credit Commitment in whole or in part; provided that, after giving effect to such termination or reduction, the Letters of Credit Outstanding shall not exceed the Letter of Credit Commitment. Any such reduction of the Letter of Credit Commitment shall be applied ratably among the Letter of Credit Issuers based upon their respective L/C Issuance Limits.
Section 3.2Letter of Credit Requests.
(a)Whenever the Borrower desires that a Letter of Credit be issued for its account, the Borrower shall give the Administrative Agent and the Letter of Credit Issuer a Letter of Credit Request by no later than 1:00 p.m. (New York City time) at least three (or such lesser number as may be agreed upon by the Administrative Agent and the Letter of Credit Issuer) Business Days prior to the proposed date of issuance. Each notice shall be executed by the Borrower and shall be in the form of Exhibit K or such other form (including by electronic or fax transmission) as reasonably agreed between the Borrower, the Administrative Agent and the Letter of Credit Issuer (each a “Letter of Credit Request”). No Letter of Credit Issuer shall issue any Letters of Credit unless such Letter of Credit Issuer shall have received notice from the Administrative Agent that the conditions to such issuance have been met, which notice shall be deemed given if the Letter of Credit Issuer has not received notice from the Administrative Agent that the conditions to such issuance have been met within two Business Days after the date of the applicable Letter of Credit Request.
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(b)If the Borrower so requests in any applicable Letter of Credit Request, the Letter of Credit Issuer may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic extension provisions (each, an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension Letter of Credit must permit the Letter of Credit Issuer to prevent any such extension at least once in each 12-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day (the “Non-Extension Notice Date”) in each such 12-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the Letter of Credit Issuer, the Borrower shall not be required to make a specific request to the Letter of Credit Issuer for any such extension. Once an Auto-Extension Letter of Credit has been issued, the Revolving Lenders shall be deemed to have authorized (but may not require) the Letter of Credit Issuer to permit the extension of such Letter of Credit at any time to an expiry date not later than the L/C Maturity Date; provided, however, that the Letter of Credit Issuer shall not permit any such extension if (i) the Letter of Credit Issuer has determined that it would not be permitted, or would have no obligation, at such time to issue such Letter of Credit in its revised form (as extended) under the terms hereof (by reason of the provisions of Section 3.1(b) or otherwise), or (ii) it has received notice (which may be by telephone or in writing) on or before the day that is five Business Days before the Non-Extension Notice Date (A) from the Administrative Agent that the Majority Revolving Lenders have elected not to permit such extension or (B) from the Administrative Agent, any Revolving Lender or the Borrower that one or more of the applicable conditions specified in Section 7 are not then satisfied, and in each such case directing the Letter of Credit Issuer not to permit such extension.
(c)Each Letter of Credit Issuer shall, in addition to its notification obligations set forth elsewhere in this Section, report in writing to the Administrative Agent and each Revolving Lender at least two (or such lesser number as may be agreed upon by the Administrative Agent and the Letter of Credit Issuer) Business Days to the time that such Letter of Credit Issuer issues, amends, renews or extends any Letter of Credit, the date of such issuance, amendment, renewal or extension, and the stated amount of the Letters of Credit issued, amended, renewed or extended by it and outstanding after giving effect to such issuance, amendment, renewal or extension (and whether the amounts thereof shall have changed).
(d)The making of each Letter of Credit Request shall be deemed to be a representation and warranty by the Borrower that the Letter of Credit may be issued in accordance with, and will not violate the requirements of, Section 3.1(b).
Section 3.3Letter of Credit Participations.
(a)Immediately upon the issuance by the Letter of Credit Issuer of any Letter of Credit, the Letter of Credit Issuer shall be deemed to have sold and transferred to each Revolving Lender (each such Revolving Lender, in its capacity under this Section 3.3, an “L/C Participant”), and each such L/C Participant shall be deemed irrevocably and unconditionally to have purchased and received from the Letter of Credit Issuer, without recourse or warranty, an undivided interest and participation (each an “L/C Participation”), to the extent of such L/C Participant’s Revolving Commitment
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Percentage, in each Letter of Credit, each substitute therefor, each drawing made thereunder and the obligations of the Borrower under this Agreement with respect thereto, and any security therefor or guaranty pertaining thereto.
(b)In determining whether to pay under any Letter of Credit, the relevant Letter of Credit Issuer shall have no obligation relative to the L/C Participants other than to confirm that (i) any documents required to be delivered under such Letter of Credit have been delivered, (ii) the Letter of Credit Issuer has examined the documents with reasonable care and (iii) the documents appear to comply on their face with the requirements of such Letter of Credit. Any action taken or omitted to be taken by the relevant Letter of Credit Issuer under or in connection with any Letter of Credit issued by it, if taken or omitted in the absence of gross negligence or willful misconduct, shall not create for the Letter of Credit Issuer any resulting liability.
(c)In the event that the Letter of Credit Issuer makes any payment under any Letter of Credit issued by it and the Borrower shall not have repaid such amount in full to the Administrative Agent for the account of the respective Letter of Credit Issuer pursuant to Section 3.4(a), the Administrative Agent shall notify each L/C Participant, and each such L/C Participant shall promptly and unconditionally pay to the Administrative Agent for the account of the Letter of Credit Issuer, the amount of such L/C Participant’s Revolving Commitment Percentage of such unreimbursed payment in Dollars and in immediately available funds. Each L/C Participant shall make available to the Administrative Agent for the account of the Letter of Credit Issuer such L/C Participant’s Revolving Commitment Percentage of the amount of such payment no later than 1:00 p.m. (New York City time) on the first Business Day after the date notified by the Administrative Agent in immediately available funds. If and to the extent such L/C Participant shall not have so made its Revolving Commitment Percentage of the amount of such payment available to the Administrative Agent for the account of the Letter of Credit Issuer, such L/C Participant agrees to pay to the Administrative Agent for the account of the Letter of Credit Issuer, forthwith on demand, such amount, together with interest thereon for each day from such date until the date such amount is paid to the Administrative Agent for the account of the Letter of Credit Issuer at a rate per annum equal to the Overnight Rate from time to time then in effect, plus any administrative, processing or similar fees customarily charged by the Letter of Credit Issuer in connection with the foregoing. The failure of any L/C Participant to make available to the Administrative Agent for the account of the Letter of Credit Issuer its Revolving Commitment Percentage of any payment under any Letter of Credit shall not relieve any other L/C Participant of its obligation hereunder to make available to the Administrative Agent for the account of the Letter of Credit Issuer its Revolving Commitment Percentage of any payment under such Letter of Credit on the date required, as specified above, but no L/C Participant shall be responsible for the failure of any other L/C Participant to make available to the Administrative Agent such other L/C Participant’s Revolving Commitment Percentage of any such payment.
(d)Whenever the Letter of Credit Issuer receives a payment in respect of an unpaid reimbursement obligation as to which the Administrative Agent has received for the account of the Letter of Credit Issuer any payments from the L/C Participants pursuant to Section 3.3(c) above, the Letter of Credit Issuer shall pay to the
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Administrative Agent and the Administrative Agent shall promptly pay to each L/C Participant that has paid its Revolving Commitment Percentage of such reimbursement obligation, in Dollars and in immediately available funds, an amount equal to such L/C Participant’s share (based upon the proportionate aggregate amount originally funded by such L/C Participant to the aggregate amount funded by all L/C Participants) of the principal amount so paid in respect of such reimbursement obligation and interest thereon accruing after the purchase of the respective L/C Participations at the Overnight Rate.
(e)The obligations of the L/C Participants to make payments to the Administrative Agent for the account of a Letter of Credit Issuer with respect to Letters of Credit shall be irrevocable and not subject to counterclaim, set-off or other defense or any other qualification or exception whatsoever and shall be made in accordance with the terms and conditions of this Agreement under all circumstances, including under any of the following circumstances:
(i)any lack of validity or enforceability of this Agreement or any of the other Credit Documents;
(ii)the existence of any claim, set-off, defense or other right that the Borrower may have at any time against a beneficiary named in a Letter of Credit, any transferee of any Letter of Credit (or any Person for whom any such transferee may be acting), the Administrative Agent, the Letter of Credit Issuer, any Lender or other Person, whether in connection with this Agreement, any Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying transaction between the Borrower and the beneficiary named in any such Letter of Credit);
(iii)any draft, certificate or any other document presented under any Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect;
(iv)the surrender or impairment of any security for the performance or observance of any of the terms of any of the Credit Documents; or
(v)the occurrence of any Default or Event of Default.
Section 3.4Agreement to Repay Letter of Credit Drawings.
(a)The Borrower hereby agrees to reimburse the Letter of Credit Issuer by making payment in Dollars to the Administrative Agent for the account of the Letter of Credit Issuer in immediately available funds, for any payment or disbursement made by the Letter of Credit Issuer under any Letter of Credit issued by it (each such amount so paid until reimbursed, an “Unpaid Drawing”) (i) within one Business Day of the date of such payment or disbursement if the Letter of Credit Issuer provides notice to the Borrower of such payment or disbursement prior to 11:00 a.m. (New York City time) on the date of such payment or disbursement or (ii) if such notice is received after such time, on the next Business Day following the first date when such notice was received prior to 11:00 a.m. (New York City time) (such required date for reimbursement under clause (i) or (ii), as applicable, on such Business Day (the “Reimbursement Date”)), with interest
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on the amount so paid or disbursed by such Letter of Credit Issuer, from and including the date of such payment or disbursement to but excluding the Reimbursement Date, at the per annum rate for each day equal to the rate described in Section 2.8(a); provided that, notwithstanding anything contained in this Agreement to the contrary, with respect to any Letter of Credit, (i) unless the Borrower shall have notified the Administrative Agent and the Letter of Credit Issuer prior to 11:00 a.m. (New York City time) on the Reimbursement Date that the Borrower intends to reimburse the Letter of Credit Issuer for the amount of such drawing with funds other than the proceeds of Revolving Loans, the Borrower shall be deemed to have given a Notice of Borrowing requesting that the Revolving Lenders make Revolving Loans (which shall be ABR Loans) on the Reimbursement Date in an amount equal to the amount at such drawing, and (ii) the Administrative Agent shall promptly notify each L/C Participant of such drawing and the amount of its Revolving Loan to be made in respect thereof, and each L/C Participant shall be irrevocably obligated to make a Revolving Loan to the Borrower in the manner deemed to have been requested in the amount of its Revolving Commitment Percentage of the applicable Unpaid Drawing by 12:00 noon (New York City time) on such Reimbursement Date by making the amount of such Revolving Loan available to the Administrative Agent. Such Revolving Loans made in respect of such Unpaid Drawing on such Reimbursement Date shall be made without regard to the Minimum Borrowing Amount and without regard to the satisfaction of the conditions set forth in Section 7. The Administrative Agent shall use the proceeds of such Revolving Loans solely for purpose of reimbursing the Letter of Credit Issuer for the related Unpaid Drawing. In the event that the Borrower fails to Cash Collateralize any Letter of Credit that is outstanding on the Maturity Date, the full amount of the Letters of Credit Outstanding in respect of such Letter of Credit shall be deemed to be an Unpaid Drawing subject to the provisions of this Section 3.4 except that the Letter of Credit Issuer shall hold the proceeds received from the Revolving Lenders as contemplated above as cash collateral for such Letter of Credit to reimburse any Drawing under such Letter of Credit and shall use such proceeds first, to reimburse itself for any Drawings made in respect of such Letter of Credit following the L/C Maturity Date, second, to the extent such Letter of Credit expires or is returned undrawn while any such cash collateral remains, to the repayment of obligations in respect of any Revolving Loans that have not paid at such time and third, to the Borrower or as otherwise directed by a court of competent jurisdiction. Nothing in this Section 3.4(a) shall affect the Borrower’s obligation to repay all outstanding Loans when due in accordance with the terms of this Agreement.
(b)The obligations of the Borrower under this Section 3.4 to reimburse the Letter of Credit Issuer with respect to Unpaid Drawings (including, in each case, interest thereon) shall be absolute and unconditional under any and all circumstances and irrespective of any set-off, counterclaim or defense to payment that the Borrower or any other Person may have or have had against the Letter of Credit Issuer, the Administrative Agent or any Lender (including in its capacity as an L/C Participant), including any defense based upon the failure of any drawing under a Letter of Credit (each a “Drawing”) to conform to the terms of the Letter of Credit or any non-application or misapplication by the beneficiary of the proceeds of such Drawing; provided, that the Borrower shall not be obligated to reimburse the Letter of Credit Issuer for any wrongful payment made by the Letter of Credit Issuer under the Letter of Credit issued by it as a
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result of acts or omissions constituting willful misconduct, bad faith or gross negligence on the part of the Letter of Credit Issuer as determined by a final judgment of a court of competent jurisdiction.
Section 3.5Increased Costs. If, after the Closing Date, the adoption of any Change in Law shall either (a) impose, modify or make applicable any reserve, deposit, capital adequacy, liquidity or similar requirement against letters of credit issued by the Letter of Credit Issuer, or any L/C Participant’s L/C Participation therein, or (b) impose on the Letter of Credit Issuer or any L/C Participant any other conditions, costs or expenses affecting its obligations under this Agreement in respect of Letters of Credit or L/C Participations therein or any Letter of Credit or such L/C Participant’s L/C Participation therein, and the result of any of the foregoing is to increase the cost to the Letter of Credit Issuer or such L/C Participant of issuing, maintaining or participating in any Letter of Credit, or to reduce the amount of any sum received or receivable by the Letter of Credit Issuer or such L/C Participant hereunder (other than (i) Taxes indemnifiable under Section 5.4, or (ii) Excluded Taxes) in respect of Letters of Credit or L/C Participations therein, then, promptly (and in any event no later than 15 days) after receipt of written demand to the Borrower by the Letter of Credit Issuer or such L/C Participant, as the case may be (a copy of which notice shall be sent by the Letter of Credit Issuer or such L/C Participant to the Administrative Agent), the Borrower shall pay to the Letter of Credit Issuer or such L/C Participant such additional amount or amounts as will compensate the Letter of Credit Issuer or such L/C Participant for such increased cost or reduction, it being understood and agreed, however, that the Letter of Credit Issuer or an L/C Participant shall not be entitled to such compensation as a result of such Person’s compliance with, or pursuant to any request or directive to comply with, any such Requirement of Law as in effect on the Closing Date (except as otherwise set forth in the definition of Change in Law). A certificate submitted to the Borrower by the relevant Letter of Credit Issuer or an L/C Participant, as the case may be (a copy of which certificate shall be sent by the Letter of Credit Issuer or such L/C Participant to the Administrative Agent), setting forth in reasonable detail the basis for the determination of such additional amount or amounts necessary to compensate the Letter of Credit Issuer or such L/C Participant as aforesaid shall be conclusive and binding on the Borrower absent clearly demonstrable error.
Section 3.6New or Successor Letter of Credit Issuer.
(a)The Letter of Credit Issuer may resign as a Letter of Credit Issuer upon 30 days’ prior written notice to the Administrative Agent, the Revolving Lenders and the Borrower. The Borrower may replace the Letter of Credit Issuer for any reason upon written notice to the Letter of Credit Issuer and the Administrative Agent and may add Letter of Credit Issuers at any time upon notice to the Administrative Agent. If the Letter of Credit Issuer shall resign or be replaced, or if the Borrower shall decide to add a new Letter of Credit Issuer under this Agreement, then the Borrower may appoint from among the Revolving Lenders a successor issuer of Letters of Credit or a new Letter of Credit Issuer, as the case may be, or, with the consent of the Administrative Agent (such consent not to be unreasonably withheld) and such new Letter of Credit Issuer, another successor or new issuer of Letters of Credit, whereupon such successor issuer shall succeed to the rights, powers and duties of the replaced or resigning Letter of Credit Issuer under this Agreement and the other Credit Documents, or such new issuer of Letters of Credit shall be granted the rights, powers and duties of a Letter of Credit Issuer hereunder, and the term “Letter of Credit Issuer” shall mean such successor or such new issuer of Letters of
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Credit effective upon such appointment. The acceptance of any appointment as a Letter of Credit Issuer hereunder whether as a successor issuer or new issuer of Letters of Credit in accordance with this Agreement, shall be evidenced by an agreement entered into by such new or successor issuer of Letters of Credit, in a form reasonably satisfactory to the Borrower and the Administrative Agent and, from and after the effective date of such agreement, such new or successor issuer of Letters of Credit shall become a “Letter of Credit Issuer” hereunder. After the resignation or replacement of a Letter of Credit Issuer hereunder, the resigning or replaced Letter of Credit Issuer shall remain a party hereto and shall continue to have all the rights and obligations of a Letter of Credit Issuer under this Agreement and the other Credit Documents with respect to Letters of Credit issued by it prior to such resignation or replacement, but shall not be required to issue additional Letters of Credit. In connection with any resignation or replacement pursuant to this Section 3.6(a) (but, in case of any such resignation, only to the extent that a successor issuer of Letters of Credit shall have been appointed), either (i) the Borrower, the resigning or replaced Letter of Credit Issuer and the successor issuer of Letters of Credit shall arrange to have any outstanding Letters of Credit issued by the resigning or replaced Letter of Credit Issuer replaced with Letters of Credit issued by the successor issuer of Letters of Credit or (ii) the Borrower shall cause the successor issuer of Letters of Credit, if such successor issuer is reasonably satisfactory to the replaced or resigning Letter of Credit Issuer, to issue “back-stop” Letters of Credit naming the resigning or replaced Letter of Credit Issuer as beneficiary for each outstanding Letter of Credit issued by the resigning or replaced Letter of Credit Issuer, which new Letters of Credit shall have a Stated Amount equal to the Letters of Credit being back-stopped and the sole requirement for drawing on such new Letters of Credit shall be a drawing on the corresponding back-stopped Letters of Credit. After any resigning or replaced Letter of Credit Issuer’s resignation or replacement as Letter of Credit Issuer, the provisions of this Agreement relating to a Letter of Credit Issuer shall inure to its benefit as to any actions taken or omitted to be taken by it (A) while it was a Letter of Credit Issuer under this Agreement or (B) at any time with respect to Letters of Credit issued by such Letter of Credit Issuer. The definition of “L/C Issuance Limit” may be amended to add or remove a Letter of Credit Issuer, or modify the L/C Issuance Limit of any Letter of Credit Issuer with the consent solely of the Borrower, the Administrative Agent and such Letter of Credit Issuer (and the consent of the Majority Revolving Lenders shall not be required).
(b)To the extent that there are, at the time of any resignation or replacement as set forth in Section 3.6(a) above, any outstanding Letters of Credit, nothing herein shall be deemed to impact or impair any rights and obligations of any of the parties hereto with respect to such outstanding Letters of Credit (including any obligations related to the payment of fees or the reimbursement or funding of amounts drawn), except that the Borrower, the resigning or replaced Letter of Credit Issuer and the successor issuer of Letters of Credit shall have the obligations regarding outstanding Letters of Credit described in Section 3.6(a) above.
Section 3.7Role of Letter of Credit Issuer. Each Revolving Lender and the Borrower agree that, in paying any drawing under a Letter of Credit, the Letter of Credit Issuer shall not have any responsibility to obtain any document (other than any sight draft, certificates and documents expressly required by the Letter of Credit) or to ascertain or inquire as to the validity or accuracy of any such document or the authority of the Person executing or delivering
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any such document. None of the Letter of Credit Issuer, the Administrative Agent, any of their respective affiliates nor any correspondent, participant or assignee of the Letter of Credit Issuer shall be liable to any Lender for (a) any action taken or omitted in connection herewith at the request or with the approval of the Majority Revolving Lenders, (b) any action taken or omitted in the absence of gross negligence or willful misconduct or (c) the due execution, effectiveness, validity or enforceability of any document or instrument related to any Letter of Credit or Issuer Document. The Borrower hereby assumes all risks of the acts or omissions of any beneficiary or transferee with respect to its use of any Letter of Credit; provided that this assumption is not intended to, and shall not, preclude the Borrower’s pursuing such rights and remedies as it may have against the beneficiary or transferee at law or under any other agreement. None of the Letter of Credit Issuer, the Administrative Agent, any of their respective affiliates nor any correspondent, participant or assignee of the Letter of Credit Issuer shall be liable or responsible for any of the matters described in Section 3.3(e); provided that anything in such Section to the contrary notwithstanding, the Borrower may have a claim against the Letter of Credit Issuer, and the Letter of Credit Issuer may be liable to the Borrower, to the extent, but only to the extent, of any direct, as opposed to consequential or exemplary, damages suffered by the Borrower which the Borrower proves were caused by the Letter of Credit Issuer’s willful misconduct or gross negligence or the Letter of Credit Issuer’s willful failure to pay under any Letter of Credit after the presentation to it by the beneficiary of a sight draft and certificate(s) strictly complying with the terms and conditions of a Letter of Credit, in each case as determined in a final and non-appealable judgment by a court of competent jurisdiction. In furtherance and not in limitation of the foregoing, the Letter of Credit Issuer may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, and the Letter of Credit Issuer shall not be responsible for the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason.
Section 3.8Cash Collateral.
(a)Upon the request of the Majority Revolving Lenders if, as of the L/C Maturity Date, there are any Letters of Credit Outstanding, the Borrower shall immediately Cash Collateralize the then Letters of Credit Outstanding.
(b)If any Event of Default shall occur and be continuing, the Majority Lenders may require that the L/C Obligations be Cash Collateralized; provided that, upon the occurrence of an Event of Default referred to in Section 11.5 with respect to the Borrower, the Borrower shall immediately Cash Collateralize the Letters of Credit then outstanding and no notice or request by or consent from the Majority Revolving Lenders shall be required.
(c)For purposes of this Agreement, “Cash Collateralize” shall mean to pledge and deposit with or deliver to the Administrative Agent, for the benefit of the Letter of Credit Issuer and the Revolving Lenders, as collateral for the L/C Obligations, cash or deposit account balances in an amount equal to the amount of the Letters of Credit Outstanding required to be Cash Collateralized pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and the Letter of Credit
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Issuer (which documents are hereby consented to by the Revolving Lenders). Derivatives of such term have corresponding meanings. The Borrower hereby grants to the Administrative Agent, for the benefit of the Letter of Credit Issuer and the L/C Participants, a security interest in all such cash, deposit accounts and all balances therein and all proceeds of the foregoing. Such cash Collateral shall be maintained in blocked, interest bearing deposit accounts established by and in the name of the Borrower, but under the “control” (as defined in Section 9-104 of the UCC) of the Administrative Agent.
Section 3.9Applicability of ISP and UCP. Unless otherwise expressly agreed by the Letter of Credit Issuer and the Borrower when a Letter of Credit is issued, (a) the rules of the ISP shall apply to each standby Letter of Credit and (b) the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce at the time of issuance, shall apply to each commercial Letter of Credit.
Section 3.10Conflict with Issuer Documents. In the event of any conflict between the terms hereof and the terms of any Issuer Document, the terms hereof shall control.
Section 3.11Letters of Credit Issued for Restricted Subsidiaries. Notwithstanding that a Letter of Credit issued or outstanding hereunder is in support of any obligations of, or is for the account of, a Restricted Subsidiary, the Borrower shall be obligated to reimburse the Letter of Credit Issuer hereunder for any and all drawings under such Letter of Credit. The Borrower hereby acknowledges that the issuance of Letters of Credit for the account of Restricted Subsidiaries inures to the benefit of the Borrower, and that the Borrower’s business derives substantial benefits from the businesses of such Restricted Subsidiaries.
ARTICLE IV
Fees; Commitments
Section 4.1Fees.
(a)The Borrower agrees to pay to the Administrative Agent in Dollars, for the account of each Revolving Lender (in each case pro rata according to the respective Revolving Commitment Percentages of the Revolving Lenders), a commitment fee (the “Commitment Fee”) for each day from the Closing Date until but excluding the Revolving Termination Date. Each Commitment Fee shall be payable by the Borrower (i) quarterly in arrears on the last Business Day of each March, June, September and December (for the three-month period (or portion thereof) ended on such day for which no payment has been received) and (ii) on the Revolving Termination Date (for the period ended on such date for which no payment has been received pursuant to clause (i) above), and shall be computed for each day during such period at a rate per annum equal to the Commitment Fee Rate in effect on such day on the Available Commitment in effect on such day.
(b)The Borrower agrees to pay to the Administrative Agent in Dollars for the account of the Revolving Lenders pro rata on the basis of their respective Letter of Credit Exposure, a fee in respect of each Letter of Credit (the “Letter of Credit Fee”), for the period from the date of issuance of such Letter of Credit until the termination or expiration date of such Letter of Credit computed at the per annum rate for each day
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equal to the Applicable Margin for Term SOFR Loans on the average daily Stated Amount of such Letter of Credit. Such Letter of Credit Fees shall be due and payable (i) quarterly in arrears on the last Business Day of each March, June, September and December and (ii) on the Revolving Termination Date (for the period for which no payment has been received pursuant to clause (i) above).
(c)The Borrower agrees to pay to each Letter of Credit Issuer a fee in respect of each Letter of Credit issued by it (the “Fronting Fee”), for the period from the date of issuance of such Letter of Credit to the termination or expiration date of such Letter of Credit, computed at the rate for each day equal to 0.125% per annum on the average daily Stated Amount of such Letter of Credit (or at such other rate per annum as agreed in writing subsequent to the date hereof between the Borrower and the applicable Letter of Credit Issuer). Such Fronting Fees shall be due and payable by the Borrower (i) quarterly in arrears on the last Business Day of each March, June, September and December and (ii) on the Revolving Termination Date (for the period for which no payment has been received pursuant to clause (i) above).
(d)The Borrower agrees to pay directly to the Letter of Credit Issuer upon each issuance of, drawing under, and/or amendment of, a Letter of Credit issued by it such amount as the Letter of Credit Issuer and the Borrower shall have agreed upon for issuances of, drawings under or amendments of, letters of credit issued by it.
(e)The Borrower agrees to pay to the Administrative Agent the administrative agent fees in the amounts and on the dates as set forth in writing from time to time between the Administrative Agent and the Borrower.
Section 4.2Reduction of Revolving Commitments.
(a)Upon at least two Business Days’ (or such shorter time period as the Administrative Agent may agree) prior written notice (or telephonic notice promptly confirmed in writing) to the Administrative Agent at the Administrative Agent’s Office (which notice the Administrative Agent shall promptly transmit to each of the Lenders), the Borrower shall have the right, without premium or penalty, on any day, permanently to terminate or reduce the Total Revolving Commitments (including the Aggregate Maximum Credit Amount and the Aggregate Elected Commitment Amount) of any Class, as determined by the Borrower, in whole or in part; provided that (a) with respect to the Total Revolving Commitments, any such termination or reduction shall apply proportionately and permanently to reduce the Total Revolving Commitments (including the Aggregate Maximum Credit Amount and the Aggregate Elected Commitment Amount) of each of the Revolving Lenders of such Class, except that, notwithstanding the foregoing, (1) the Borrower may allocate any termination or reduction of the Total Revolving Commitments (including the Aggregate Maximum Credit Amount and the Aggregate Elected Commitment Amount) among classes of Revolving Commitments either (A) ratably among Classes or (B) first to the Revolving Commitments with respect to any Existing Revolving Commitments and second to any Extended Revolving Commitments and (2) in connection with the establishment on any date of any Extended Revolving Commitments pursuant to Section 2.17, the Existing Revolving Commitments of any one or more Revolving Lenders providing any such Extended Revolving
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Commitments on such date shall be reduced in an amount equal to the amount of Specified Existing Commitments so extended on such date (provided that (x) after giving effect to any such reduction and to the repayment of any Revolving Loans made on such date, the Revolving Credit Exposures of any such Revolving Lender does not exceed the Revolving Commitment thereof (such Revolving Credit Exposures and Revolving Commitment being determined in each case, for the avoidance of doubt, exclusive of such Revolving Lender’s Extended Revolving Commitment and any exposure in respect thereof) and (y) for the avoidance of doubt, any such repayment of Loans contemplated by the preceding clause shall be made in compliance with the requirements of Section 5.3(a) with respect to the ratable allocation of payments hereunder, with such allocation being determined after giving effect to any conversion pursuant to Section 2.17 of Existing Revolving Commitments and Existing Revolving Loans into Extended Revolving Commitments and Extended Revolving Loans respectively, and prior to any reduction being made to the Revolving Commitment of any other Revolving Lender), (b) any partial reduction pursuant to this Section 4.2 shall be in the amount of at least $500,000 and in multiples of $100,000 in excess thereof, (c) after giving effect to such termination or reduction and to any prepayments of Revolving Loans or cancellation or Cash Collateralization of Letters of Credit made on the date thereof in accordance with this Agreement, the Total Revolving Credit Exposures shall not exceed the Loan Limit and (d) any election by the Borrower to terminate or reduce the Revolving Commitments (including the Aggregate Maximum Credit Amount and the Aggregate Elected Commitment Amount) pursuant to a notice delivered by the Borrower pursuant to this Section 4.2(a) may be made to be contingent upon the consummation of a refinancing or other event and such notice may otherwise be extended or revoked, in each case, with the requirements of Section 2.11 to apply to any failure of the contingency to occur and any such extension or revocation. Notwithstanding the foregoing or anything to the contrary contained in this Agreement, no such termination or reduction described in this Section 4.2(a) shall be permitted prior to the Initial Term Loans Repayment Date, if such termination or reduction would result in a Term Loan Conversion.
(b) The Borrower may terminate the unused amount of the Revolving Commitment of a Defaulting Lender upon not less than two Business Days’ prior notice to the Administrative Agent (which will promptly notify the Lenders thereof), and in such event the provisions of Section 2.15(f) will apply to all amounts thereafter paid by the Borrower for the account of such Defaulting Lender under this Agreement (whether on account of principal, interest, fees, indemnity or other amounts), provided that such termination will not be deemed to be a waiver or release of any claim the Borrower, the Administrative Agent, any Letter of Credit Issuer or any Lender may have against such Defaulting Lender.
(c)If after giving effect to any redetermination or other adjustment to the Borrowing Base pursuant to this Agreement, the Available Borrowing Base is less than the Aggregate Elected Commitment Amount, then simultaneously with such redetermination or other adjustment to the Borrowing Base, the Aggregate Elected Commitment Amount shall be immediately and automatically reduced without further action by the Borrower, the Administrative Agent, the Letter of Credit Issuers or any Revolving Lender (ratably among the Revolving Lenders in accordance with each
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Revolving Lender’s Revolving Commitment Percentage) to an amount equal to the Available Borrowing Base.
(d)Notwithstanding the foregoing or anything to the contrary contained in this Agreement, at all times prior to the Initial Term Loans Repayment Date, the Borrower may not reduce the Aggregate Maximum Credit Amount or the Aggregate Elected Commitment Amount below the then effective Conforming Borrowing Base.
Section 4.3Mandatory Termination of Commitments. The Total Revolving Commitment shall terminate at 5:00 p.m. (New York City time) on the Revolving Termination Date.
ARTICLE V
Payments
Section 5.1Voluntary Prepayments. The Borrower shall have the right to prepay Loans without premium or penalty, in whole or in part from time to time on the following terms and conditions:
(a)the Borrower shall give the Administrative Agent at the Administrative Agent’s Office written notice (or telephonic notice promptly confirmed in writing) of its intent to make such prepayment, the amount of such prepayment and (in the case of Term SOFR Loans) the specific Borrowing(s) being prepaid, which notice shall be given by the Borrower no later than 1:00 p.m. (New York City time) (i) in the case of Term SOFR Loans, three Business Days (or such shorter time as the Administrative Agent may agree) prior to the date of such prepayment and (ii) in the case of ABR Loans on the date of such prepayment and shall promptly be transmitted by the Administrative Agent to each of the Lenders;
(b)each partial prepayment of (i) Term SOFR Loans shall be in a minimum amount of $500,000 and in multiples of $100,000 in excess thereof, and (ii) any ABR Loans shall be in a minimum amount of $500,000 and in multiples of $100,000 in excess thereof; provided that no partial prepayment of Term SOFR Loans made pursuant to a single Borrowing shall reduce the outstanding Term SOFR Loans made pursuant to such Borrowing to an amount less than the applicable Minimum Borrowing Amount for such Term SOFR Loans; and
(c)any prepayment of Term SOFR Loans pursuant to this Section 5.1 on any day other than the last day of an Interest Period applicable thereto shall be subject to compliance by the Borrower with the applicable provisions of Section 2.11.
Each such notice shall specify the date and amount of such prepayment and the Type of Loans to be prepaid. At the Borrower’s election in connection with any prepayment pursuant to this Section 5.1, such prepayment shall not be applied to any Loans of a Defaulting Lender.
Notwithstanding the foregoing (and as provided in clause (1) of the proviso to Section 2.17(a)), the Borrower may not prepay Extended Loans of any Extension Series unless such prepayment is accompanied by a pro rata repayment of Existing Loans of the Specified Existing Commitment
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Class of the Existing Class from which such Extended Loans and Extended Commitments were converted (or such Loans and Commitments of the Existing Class have otherwise been repaid and terminated in full). Any election by the Borrower to prepay the Loans pursuant to a notice delivered by the Borrower pursuant to this Section 5.1 may be made to be contingent upon the consummation of a refinancing or other event and such notice may otherwise be extended or revoked, in each case, with the requirements of Section 2.11 to apply to any failure of the contingency to occur and any such extension or revocation.
Notwithstanding the foregoing or anything to the contrary contained in this Agreement, (x) the Borrower shall not have the right to voluntarily prepay any Term Loans (other than the Initial Term Loans (subject to clause (y) below) and the Converted Term Loans) (whether in whole or in part) pursuant to this Section 5.1 unless (i) both before and immediately after giving effect to such prepayment, each of the Specified Conditions is satisfied or (ii) such prepayment is made with the proceeds of Permitted Refinancing Indebtedness in respect thereof and (y) at any time when a Borrowing Base Deficiency exists (other than during an Excess Cash Borrowing Base Deficiency Period), the Borrower shall not have the right to voluntarily prepay any Excess Initial Term Loans except with the cash proceeds of a common capital contribution or the cash proceeds of an equity issuance (other than from the issuance of Disqualified Capital Stock), in each case, received by the Borrower.
Section 5.2Mandatory Prepayments.
(a)Repayment following Optional Reduction of Revolving Commitments. If, after giving effect to any termination or reduction of the Revolving Commitments pursuant to Section 4.2(a), the Total Revolving Credit Exposures exceeds the Loan Limit (as reduced), then the Borrower shall on the same Business Day (i) prepay the Revolving Loans on the date of such termination or reduction in an aggregate principal amount equal to such excess and (ii) if any excess remains after prepaying all of the Revolving Loans as a result of any Letter of Credit Exposure, pay to the Administrative Agent on behalf of the Letter of Credit Issuer and the L/C Participants an amount in cash equal to such excess to be held as cash collateral as provided in Section 3.8. Notwithstanding the foregoing, the Borrower shall not terminate or reduce the Revolving Commitments at any time prior to the Initial Term Loans Repayment Date, if such reduction would result in a Term Loan Conversion.
(b)Repayment of Loans Following Redetermination or Adjustment of Borrowing Base.
(i)Upon the effectiveness of any redetermination of the Borrowing Base in accordance with Section 2.14(b) following the Initial Term Loans Repayment Date, if a Borrowing Base Deficiency exists, then the Borrower shall, within 10 Business Days after its receipt of a New Borrowing Base Notice indicating such Borrowing Base Deficiency, inform the Administrative Agent of the Borrower’s election to:
(A)(1) if no Term Loans are then outstanding, within 30 days following such election prepay the Revolving Loans in an aggregate
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principal amount equal to such Borrowing Base Deficiency, and if, because of Letter of Credit Exposure, a Borrowing Base Deficiency remains after prepaying all of the Revolving Loans, Cash Collateralize such remaining Borrowing Base Deficiency as provided in Section 3.8; or (2) if there are any Term Loans and any Revolving Credit Exposures then outstanding, then, within 30 days following such election, at the Borrower’s election, either: (a) (i) prepay the Revolving Loans in an aggregate principal amount equal to such Borrowing Base Deficiency, and (ii) if, because of Letter of Credit Exposure, a Borrowing Base Deficiency remains after prepaying all of the Revolving Loans, the Borrower shall Cash Collateralize such remaining Borrowing Base Deficiency as provided in Section 3.8, and (iii) if a Borrowing Base Deficiency remains after Cash Collateralizing any Letter of Credit Exposure, prepay Term Loans in an aggregate principal amount equal to such remaining Borrowing Base Deficiency; or (b) prepay the Revolving Loans (and if any Revolving Credit Exposures remains after prepaying all of the Revolving Loans as a result of Letter of Credit Exposure, Cash Collateralize such Letter of Credit Exposure) and the Term Loans, on a pro rata basis, in proportion to the Total Revolving Credit Exposures and the Total Term Loan Exposures outstanding at such time, in an aggregate amount equal to such Borrowing Base Deficiency; provided that any Term Loans may be prepaid on a less (but not greater) than a pro rata basis if agreed to by the Term Lenders holding such Term Loans;
(B)(1) if no Term Loans are then outstanding, prepay the Revolving Loans, and if, because of Letter of Credit Exposure, a Borrowing Base Deficiency remains after prepaying all of the Revolving Loans, Cash Collateralize such remaining Borrowing Base Deficiency as provided in Section 3.8, in six equal monthly installments, commencing on the 30th day following its receipt of such New Borrowing Base Notice with each payment being equal to 1/6th of the aggregate principal amount of such Borrowing Base Deficiency; or (2) if there are any Term Loans and any Revolving Credit Exposures then outstanding, then, at the Borrower’s election, either: (a) (i) prepay the Revolving Loans, and (ii) if, because of Letter of Credit Exposure, a Borrowing Base Deficiency remains after prepaying all of the Revolving Loans, Cash Collateralize such remaining Borrowing Base Deficiency as provided in Section 3.8, and (iii) if a Borrowing Base Deficiency remains after Cash Collateralizing any Letter of Credit Exposure, prepay Term Loans in an aggregate principal amount equal to such remaining Borrowing Base Deficiency, in six consecutive equal monthly installments, commencing on the 30th day following its receipt of such New Borrowing Base Notice with each payment being equal to 1/6th of the aggregate principal amount of such Borrowing Base Deficiency (and for the avoidance of doubt, in the case of this clause (2)(a), each such installment shall first be applied solely to the prepayment of outstanding Revolving Loans and/or Cash Collateralization of Letter of Credit Exposure until the prepayment in full
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of all such Revolving Credit Exposures, and, thereafter, each subsequent installment shall be applied to prepay Term Loans); or (b) prepay the Revolving Loans (and if any Revolving Credit Exposures remains after prepaying all of the Revolving Loans as a result of Letter of Credit Exposure, Cash Collateralize such Letter of Credit Exposure) and the Term Loans, on a pro rata basis, in proportion to the Total Revolving Credit Exposures and the Total Term Loan Exposures outstanding at such time, in an aggregate amount equal to such Borrowing Base Deficiency (provided that any Term Loans may be prepaid on a less (but not greater) than a pro rata basis if agreed to by the Term Lenders holding such Term Loans), in six equal monthly installments, commencing on the 30th day following its receipt of such New Borrowing Base Notice with each payment being equal to 1/6th of the aggregate principal amount of such Borrowing Base Deficiency (and for the avoidance of doubt, in the case of this clause (2)(b), each such installment shall be applied to the Revolving Loans (and if any Revolving Credit Exposures remain after prepaying all of the Revolving Loans as a result of Letter of Credit Exposure, to Cash Collateralize such Letter of Credit Exposure) and the Term Loans, on a pro rata basis, in proportion to the Total Revolving Credit Exposures and the Total Term Loan Exposures outstanding at such time (as adjusted to the extent Term Loans are prepaid on a less than pro rata basis if agreed to by the Term Lenders holding such Term Loans)),
(C)within 30 days following such election, provide additional Collateral in the form of additional Oil and Gas Properties not evaluated in the most recently delivered Reserve Report or other Collateral reasonably acceptable to the Administrative Agent having a Borrowing Base value (as proposed by the Administrative Agent and approved by the Required Lenders) sufficient, after giving effect to any other actions taken pursuant to this Section 5.2(b)(i) to eliminate any such Borrowing Base Deficiency, or
(D)undertake a combination of clauses (A), (B) and (C); provided, that (x) in the event the Borrower fails to provide such written notice to the Administrative Agent within the ten Business Day period referred to above, the Borrower shall be deemed to have irrevocably elected the option set forth in clause (B)(1) or (B)(2)(a) above, as applicable, (y) the options set forth above shall not prejudice the occurrence of any Maturity Date and the principal payments required on such date and (z) once a Borrowing Base Deficiency is cured, the Borrower shall not be required to continue to take any such actions.
(ii)Upon any adjustment to the Borrowing Base pursuant to the Borrowing Base Adjustment Provisions after the Initial Term Loans Repayment Date, if a Borrowing Base Deficiency exists, then the Borrower shall (A) if no Term Loans are then outstanding, (1) prepay the Revolving Loans in an aggregate principal amount equal to such Borrowing Base Deficiency and (2) if any Borrowing Base Deficiency remains after prepaying all of the Loans as a result of
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any Letter of Credit Exposure, Cash Collateralize such excess as provided in Section 3.8; and (B) if there are any Term Loans and any Revolving Credit Exposures then outstanding, then, at the Borrower’s election, either: (1) (a) prepay the Revolving Loans in an aggregate principal amount equal to such Borrowing Base Deficiency, (b) if any Borrowing Base Deficiency remains after prepaying all of the Loans as a result of any Letter of Credit Exposure, Cash Collateralize such excess as provided in Section 3.8, and (c) if a Borrowing Base Deficiency remains after Cash Collateralizing any Letter of Credit Exposure, prepay Term Loans in an aggregate principal amount equal to such remaining Borrowing Base Deficiency; or (2) prepay the Revolving Loans (and if any Revolving Credit Exposures remain after prepaying all of the Revolving Loans as a result of Letter of Credit Exposure, Cash Collateralize such Letter of Credit Exposure) and the Term Loans, on a pro rata basis, in proportion to the Total Revolving Credit Exposures and the Total Term Loan Exposures outstanding at such time, in an aggregate amount equal to such Borrowing Base Deficiency; provided that any Term Loans may be prepaid on a less (but not greater) than a pro rata basis if agreed to by the Term Lenders holding such Term Loans. The Borrower shall be obligated to make such prepayment and/or deposit of cash collateral no later than two Business Days following the date it receives written notice from the Administrative Agent of the adjustment of the Borrowing Base and the resulting Borrowing Base Deficiency; provided that the options set forth above shall not prejudice the occurrence of any Maturity Date and the principal payments required on such date.
(c)Mandatory Prepayment of Initial Term Loans. Prior to the Initial Term Loans Repayment Date:
(i)Net Cash Proceeds from Dispositions and Casualty Events. if the Borrower or any of its Restricted Subsidiaries receives Net Cash Proceeds in respect of any Disposition by the Borrower or any of its Restricted Subsidiaries pursuant to Section 10.4(b), Section 10.4(g), Section 10.4(m) or Section 10.4(s), any unwind or termination of any Hedge Agreement pursuant to Section 10.4(l), or any Casualty Event, within three (3) Business Days of receipt of such Net Cash Proceeds (or, in the case of Deferred Net Cash Proceeds, within one (1) Business Day of the Deferred Net Cash Proceeds Payment Date), the Borrower shall prepay the principal amount of the Initial Term Loans in an amount equal to 100% of such Net Cash Proceeds in accordance with this Section 5.2.
(ii)Net Cash Proceeds from Indebtedness. within one (1) Business Day following the receipt of Net Cash Proceeds by the Borrower or any of its Restricted Subsidiaries in respect of the issuance or incurrence of Indebtedness in reliance on Section 10.1(n) or Section 10.1(o), the Borrower or such Restricted Subsidiary shall apply 100% of such Net Cash Proceeds to prepay the Initial Term Loans in accordance with this Section 5.2.
(iii)Excess Cash. if the Borrower and its Restricted Subsidiaries have any Excess Cash on any Excess Cash Prepayment Test Date, the Borrower shall, on or before the end of the third Business Day after such Excess Cash Prepayment Test Date (each such date, an “Excess Cash Prepayment Date”), prepay the
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outstanding principal amount of the Initial Term Loans in an amount equal to the Excess Cash Prepayment Amount.
(iv)Prepayment of Initial Term Loans Following Redetermination of Borrowing Base.
(A)Upon the effectiveness of any redetermination of the Borrowing Base in accordance with Section 2.14(b) prior to the Initial Term Loans Repayment Date, if a Borrowing Base Deficiency exists, then the Borrower shall, within 10 Business Days after its receipt of a New Borrowing Base Notice indicating such Borrowing Base Deficiency, inform the Administrative Agent of the Borrower’s election to:
(1)within 30 days following such election prepay the Initial Term Loans in an aggregate principal amount equal to such Borrowing Base Deficiency;
(2)prepay the Initial Term Loans in six equal monthly installments, the first installment being due and payable on the 30th day following the Borrower’s receipt of such New Borrowing Base Notice and each subsequent installment being due and payable on the same day in each of the subsequent calendar months, with each payment being equal to one-sixth (1/6th) of such Borrowing Base Deficiency;
(3)within 30 days following such election, provide additional Collateral in the form of additional Oil and Gas Properties not evaluated in the most recently delivered Reserve Report or other Collateral reasonably acceptable to the Administrative Agent, in each case, having a Borrowing Base value (as proposed by the Administrative Agent and approved by the Required Lenders) sufficient, after giving effect to any other actions taken pursuant to this Section 5.2(c)(iv) to eliminate any such Borrowing Base Deficiency; or
(4)undertake a combination of clauses (1), (2) and (3); or
(5)prepay the Excess Initial Term Loans on each Excess Cash Prepayment Date in an amount equal to the Excess Cash Prepayment Amount;
(6)provided, that (x) in the event the Borrower fails to provide such written notice to the Administrative Agent within the ten Business Day period referred to above, the Borrower shall be deemed to have irrevocably elected the option set forth in clause (5) above, (y) the options set forth above shall not prejudice the occurrence of any Maturity Date and the principal payments required on such date and (z) once a Borrowing Base Deficiency is
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cured, the Borrower shall not be required to continue to take any such actions.
(B)In connection with each prepayment (including on the occasion of each monthly installment payment made pursuant to Section 5.2(c)(iv)(A)(2)) of Excess Initial Term Loans made pursuant to Section 5.2(c)(iv)(A), the Administrative Agent shall provide to the Lenders a Notice of Excess Initial Term Loan Prepayment substantially in the form of Exhibit V, which shall set forth the amount of the Borrowing Base, the principal amount of the Initial Term Loans then outstanding and the amount of the Excess Initial Term Loans, in each case, after giving effect to such prepayment.
(d)Application to Loans. With respect to each prepayment of Loans elected under Section 5.1 or required by Section 5.2, the Borrower may, subject to Section 5.2(b), designate (i) the Types of Loans that are to be prepaid and the specific Borrowing(s) being repaid and (ii) the Loans to be prepaid; provided that (A) each prepayment of any Loans made pursuant to a Borrowing shall be applied pro rata among such Loans, (B) notwithstanding the provisions of the preceding clause (A), after the Initial Term Loans Repayment Date, no prepayment of Loans shall be applied to the Loans of any Defaulting Lender unless otherwise agreed in writing by the Borrower, (C) each prepayment elected under Section 5.1 prior to the Initial Term Loans Repayment Date shall be applied to the prepayment of the Initial Term Loans, (D) each prepayment made pursuant to Section 5.2(c)(i) and Section 5.2(c)(ii) shall be applied (1) during an Excess Cash Borrowing Base Deficiency Period, to the prepayment of Excess Initial Term Loans, and (2) at any time when a Borrowing Base Deficiency exists (other than during any Excess Cash Borrowing Base Deficiency Period), to the prepayment of Initial Term Loans not constituting Excess Initial Term Loans (and no such prepayment under this clause (2) shall be applied to prepay or cure any Borrowing Base Deficiency), (E) during each Excess Cash Borrowing Base Deficiency Period, each prepayment made pursuant to Section 5.2(c)(iii) shall be applied to the prepayment of Excess Initial Term Loans, (F) at any time when a Borrowing Base Deficiency exists (other than during an Excess Cash Borrowing Base Deficiency Period), each prepayment made pursuant to Section 5.2(c)(iii) shall be applied to the prepayment of Initial Term Loans not constituting Excess Initial Term Loans (and for the avoidance of doubt, the amounts applied pursuant to this clause (F) shall not be applied to prepay or cure or reduce the amount of a Borrowing Base Deficiency), and (G) each prepayment made pursuant to Section 5.2(c)(iv) shall be applied solely to the prepayment of Excess Initial Term Loans. In the absence of a designation by the Borrower as described in the preceding sentence, the Administrative Agent shall, subject to the above, make such designation in its reasonable discretion with a view, but no obligation, to minimize breakage costs owing under Section 2.11.
(e)SOFR Interest Periods. In lieu of making any payment pursuant to this Section 5.2 in respect of any Term SOFR Loan, other than on the last day of the Interest Period therefor so long as no Event of Default shall have occurred and be continuing, the Borrower at its option may deposit, on behalf of the Borrower, with the Administrative Agent an amount equal to the amount of the Term SOFR Loan to be prepaid and such
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Term SOFR Loan shall be repaid on the last day of the Interest Period therefor in the required amount. Such deposit shall be held by the Administrative Agent in a corporate time deposit account established on terms reasonably satisfactory to the Administrative Agent, earning interest at the then customary rate for accounts of such type. Such deposit shall constitute cash collateral for the Term SOFR Loans to be so prepaid; provided that the Borrower may at any time direct that such deposit be applied to make the applicable payment required pursuant to this Section 5.2.
(f)Prepayment of Revolving Loans with Excess Cash. After the Initial Term Loans Repayment Date, if the Borrower and its Restricted Subsidiaries have any Excess Cash as of the end of the 15th day of each month (or if such day is not a Business Day, the following Business Day), the Borrower shall, on or before the end of the third Business Day thereafter, prepay the Revolving Loans in an aggregate principal amount equal to the amount of such Excess Cash.
(g)Application of Proceeds. The application of proceeds pursuant to this Section 5.2 shall not reduce the aggregate amount of Revolving Commitments hereunder, and amounts prepaid may be reborrowed subject to the Available Commitment.
Section 5.3Method and Place of Payment.
(a)Except as otherwise specifically provided herein, all payments under this Agreement shall be made by the Borrower without set-off, counterclaim or deduction of any kind, to the Administrative Agent for the ratable account of the Lenders entitled thereto or the Letter of Credit Issuer entitled thereto, as the case may be, not later than 2:00 p.m. (New York City time), in each case, on the date when due and shall be made in immediately available funds at the Administrative Agent’s Office or at such other office as the Administrative Agent shall specify for such purpose by notice to the Borrower; it being understood that written or facsimile notice by the Borrower to the Administrative Agent to make a payment from the funds in the Borrower’s account at the Administrative Agent’s Office shall constitute the making of such payment to the extent of such funds held in such account. All repayments or prepayments of any Loans (whether of principal, interest or otherwise) hereunder and all other payments under each Credit Document shall be made in Dollars. The Administrative Agent will thereafter cause to be distributed on the same day (if payment was actually received by the Administrative Agent prior to 2:00 p.m. (New York City time) or, otherwise, on the next Business Day in the sole discretion of the Administrative Agent) like funds relating to the payment of principal or interest or fees ratably to the Lenders or the Letter of Credit Issuer, as applicable, entitled thereto.
(b)For purposes of computing interest or fees, any payments under this Agreement that are made later than 2:00 p.m. (New York City time) shall be deemed to have been made on the next succeeding Business Day in the sole discretion of the Administrative Agent. Whenever any payment to be made hereunder shall be stated to be due on a day that is not a Business Day, the due date thereof shall be extended to the next succeeding Business Day and, with respect to payments of principal, interest shall be payable during such extension at the applicable rate in effect immediately prior to such extension.
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Section 5.4Net Payments.
(a)Any and all payments made by or on behalf of the Borrower or any Guarantor under this Agreement or any other Credit Document shall be made free and clear of, and without deduction or withholding for or on account of, any Taxes; provided that if the applicable withholding agent shall be required by applicable Requirements of Law to deduct or withhold any Taxes from such payments, then (i) the applicable withholding agent shall make such deductions or withholdings as are reasonably determined by the applicable withholding agent to be required by any applicable Requirement of Law, (ii) the applicable withholding agent shall timely pay the full amount deducted or withheld to the relevant Governmental Authority within the time allowed and in accordance with applicable Requirements of Law, and (iii) to the extent withholding or deduction is required to be made on account of Indemnified Taxes or Other Taxes, the sum payable by the Borrower or such Guarantor shall be increased as necessary so that after making all required deductions and withholdings of Indemnified Taxes or Other Taxes (including deductions or withholdings of Indemnified Taxes or Other Taxes applicable to additional sums payable under this Section 5.4) the Recipient receives an amount equal to the sum it would have received had no such deductions or withholdings been made. After any payment of Taxes by any Credit Party or the Administrative Agent to a Governmental Authority as provided in this Section 5.4, the Borrower shall deliver to the Administrative Agent or the Administrative Agent shall deliver to the Borrower, as the case may be, a copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of any return required by laws to report such payment or other evidence of such payment reasonably satisfactory to the Borrower or the Administrative Agent, as the case may be.
(b)The Borrower shall timely pay, or at the option of the Administrative Agent, timely reimburse it for the payment of, any Other Taxes.
(c)The Borrower shall indemnify and hold harmless the Recipient within 30 Business Days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes imposed on the Recipient (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 5.4), and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate setting forth in reasonable detail the basis and calculation of the amount of such payment or liability delivered to the Borrower by the Recipient on its own behalf or on behalf of a Lender shall be conclusive absent manifest error.
(d)Each Lender shall deliver to the Borrower and the Administrative Agent, at such time or times reasonably requested by the Borrower or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law and such other reasonably requested information as will permit the Borrower or the Administrative Agent, as the case may be, to determine (A) whether or not any payments made hereunder or under any other Credit Document are subject to Taxes, (B) if applicable, the required rate of withholding or deduction, and (C) such Lender’s entitlement to any available exemption from, or reduction of, applicable Taxes in respect of any payments to be made to such Lender by any Credit Party pursuant to any Credit
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Document or otherwise to establish such Lender’s status for withholding tax purposes in the applicable jurisdiction. In addition, any Lender, if requested by the Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in paragraphs (e)(i)(A), (i)(B) and (i)(C) of this Section 5.4) shall not be required if in the Lender’s reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender.
(e)Without limiting the generality of the foregoing, each Non-U.S. Lender with respect to any Loan made to the Borrower shall, to the extent it is legally entitled to do so:
(i)deliver to the Borrower and the Administrative Agent, prior to the date on which the first payment to the Non-U.S. Lender is due hereunder, two copies of (A) in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, U.S. Internal Revenue Service Form W-8BEN or Form W-8BEN-E (or any applicable successor form) together with a certificate (substantially in the form of Exhibit N-1 hereto) representing that such Non-U.S. Lender is not a “bank” for purposes of Section 881(c)(3)(A) of the Code, is not a 10% shareholder (within the meaning of Section 881(c)(3)(B) of the Code) of the Borrower, is not a “controlled foreign corporation” (within the meaning of Section 881(c)(3)(C) of the Code) and that the interest payments in question are not effectively connected with the U.S. trade or business conducted by such Lender (a “U.S. Tax Compliance Certificate”), (B) Internal Revenue Service Form W-8BEN, Form W-8BEN-E or Form W-8ECI (or any applicable successor form), in each case properly completed and duly executed by such Non-U.S. Lender claiming the benefits of an income tax treaty to which the United States is a party that completely exempts, or reduces the rate of, U.S. Federal withholding tax on payments by the Borrower under this Agreement, (C) to the extent a Non-U.S. Lender is not the beneficial owner, Internal Revenue Service Form W-8IMY, accompanied by the Internal Revenue Service Form W-8ECI, Form W-8BEN-E or Form W-8ECI (or any applicable successor form), a U.S. Tax Compliance Certificate substantially in the form of Exhibit N-2 or Exhibit N-3, and/or other certification documents from each beneficial owner, applicable; provided that if the Non-U.S. Lender is a partnership and one or more direct or indirect partners of such Non-U.S. Lender are claiming the portfolio interest exemption, such non-U.S. Lender may provide a U.S. Tax Compliance Certificate substantially in the form of Exhibit N-4 on behalf of each such direct or indirect partner, or (D) any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in U.S. federal withholding tax duly completed together with such
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supplementary documentation as may be prescribed by applicable law to permit the Borrower to determine the withholding or deduction required to be made; and
(ii)deliver to the Borrower and the Administrative Agent two further copies of any such form or certification (or any applicable successor form) on or before the date that any such form or certification expires or becomes obsolete or invalid, after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Borrower, and from time to time thereafter if reasonably requested by the Borrower and the Administrative Agent;
unless in any such case any Change in Law has occurred prior to the date on which any such delivery would otherwise be required that renders any such form inapplicable or would prevent such Non-U.S. Lender from duly completing and delivering any such form with respect to it and such Non-U.S. Lender promptly so advises the Borrower and the Administrative Agent. Each Person that shall become a Participant pursuant to Section 13.6 or a Lender pursuant to Section 13.6 shall, upon the effectiveness of the related transfer, be required to provide all the forms and statements required pursuant to this Section 5.4(e); provided that in the case of a Participant such Participant shall furnish all such required forms and statements to the Lender from which the related participation shall have been purchased.
(f)If any Recipient, as applicable, determines, in its sole good faith discretion, that it had received and retained a refund of an Indemnified Tax or Other Tax for which a payment has been made by the Borrower or any Guarantor pursuant to this Agreement or any other Credit Document, which refund in the good faith judgment of such Recipient, as the case may be, is attributable to such payment made by the Borrower or any Guarantor, then the Recipient, as the case may be, shall reimburse the Borrower or such Guarantor for such amount (net of all out-of-pocket expenses of such Recipient, as the case may be, and without interest other than any interest received thereon from the relevant Governmental Authority with respect to such refund) as the Recipient, as the case may be, determines in its sole good faith discretion to be the proportion of the refund as will leave it, after such reimbursement, in no better or worse position (taking into account expenses or any taxes imposed on the refund) than it would have been in if the payment had not been required; provided that the Borrower or such Guarantor, upon the request of the Recipient, agrees to repay the amount paid over to the Borrower or such Guarantor (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Recipient in the event the Recipient is required to repay such refund to such Governmental Authority. In such event, such Recipient, as the case may be, shall, at the Borrower’s request, provide the Borrower with a copy of any notice of assessment or other evidence of the requirement to repay such refund received from the relevant Governmental Authority (provided that such Recipient may delete any information therein that it deems confidential). A Recipient shall use commercially reasonable efforts to claim any refund that it determines is available to it, unless it concludes in its sole good faith discretion that it would be adversely impacted by making such a claim. No Lender nor the Administrative Agent nor the Collateral Agent shall be obliged to make available its tax returns (or any other information relating to its taxes that it deems confidential) to any Credit Party in connection with this Section 5.4(f) or any other provision of Section 5.4.
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(g)If the Borrower determines that a reasonable basis exists for contesting a Tax, each Recipient, as the case may be, shall use reasonable efforts to cooperate with the Borrower as the Borrower may reasonably request in challenging such Tax. The Borrower shall indemnify and hold each Recipient harmless against any out-of-pocket expenses incurred by such Person in connection with any request made by the Borrower pursuant to this Section 5.4(g). Nothing in this Section 5.4(g) shall obligate any Recipient to take any action that such Person, in its sole judgment, determines may result in a material detriment to such Person.
(h)Each Lender that is a United States person under Section 7701(a)(30) of the Code (each, a “U.S. Lender”) shall deliver to the Borrower and the Administrative Agent two Internal Revenue Service Forms W-9 (or substitute or successor form), properly completed and duly executed, certifying that such Lender or Agent is exempt from U.S. federal backup withholding (i) on or prior to the Closing Date (or on or prior to the date it becomes a party to this Agreement), (ii) on or before the date that such form expires or becomes obsolete or invalid, (iii) after the occurrence of a change in the Agent’s or Lender’s circumstances requiring a change in the most recent form previously delivered by it to the Borrower and the Administrative Agent, and (iv) from time to time thereafter if reasonably requested by the Borrower or the Administrative Agent.
(i)The Administrative Agent shall deliver to the Borrower, on or prior to the date on which the Administrative Agent becomes the Administrative Agent under this Agreement (or from time to time thereafter upon the reasonable request of the Borrower), either (i) an Internal Revenue Service Form W-9 (or substitute or successor form), properly completed and duly executed, certifying that the Administrative Agent is exempt from U.S. federal backup withholding, or (ii) (x) with respect to any amounts received on its own account, the applicable Internal Revenue Service Form W-8ECI, properly completed and duly executed, and (y) with respect to any amounts received for or on account of any Lender, an Internal Revenue Service Form W-8IMY, properly completed and duly executed, certifying on Part I, Part II and Part VI thereof that it is a U.S. branch that has agreed to be treated as a U.S. person for U.S. federal tax purposes with respect to payments received by it from the Borrower in its capacity as Administrative Agent, as applicable. The Administrative Agent shall promptly notify the Borrower at any time it determines that it is no longer in a position to provide the certification described in the prior sentence.
(j)If a payment made to any Lender or any Agent under this Agreement or any other Credit Document would be subject to U.S. federal withholding tax imposed by FATCA if such Lender or such Agent were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender or such Agent shall deliver to the Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the Borrower or the Administrative Agent as may be necessary for the Borrower and the Administrative Agent to comply with their obligations under FATCA, to determine that such Lender has or has not complied with such Lender’s obligations under FATCA or to determine the amount, if any, to deduct and withhold from such payment. Solely for purposes of this
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Section 5.4(j), “FATCA” shall include any amendments made to FATCA after the date of this Agreement.
(k)Each Lender shall severally indemnify the Administrative Agent, within 10 days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that the Borrower has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Borrower to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 13.6(c)(ii) relating to the maintenance of a Participant Register and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with this Agreement or any other Credit Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Credit Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this paragraph (k).
(l)For the avoidance of doubt, for purposes of this Section 5.4, the term “Lender” includes any Letter of Credit Issuer and the terms “applicable law” and “Requirements of Law” include FATCA.
(m)The agreements in this Section 5.4 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder.
Section 5.5Computations of Interest and Fees.
(a)Except as provided in the next succeeding sentence, interest on the Loans shall be calculated on the basis of a 360-day year for the actual days elapsed. Interest on ABR Loans in respect of which the rate of interest is calculated on the basis of the Prime Rate and interest on overdue interest shall be calculated on the basis of a 365- (or 366-, as the case may be) day year for the actual days elapsed.
(b)Fees and the average daily Stated Amount of Letters of Credit shall be calculated on the basis of a 360-day year for the actual days elapsed.
Section 5.6Limit on Rate of Interest.
(a)No Payment Shall Exceed Lawful Rate. Notwithstanding any other term of this Agreement, the Borrower shall not be obligated to pay any interest or other amounts under or in connection with this Agreement or otherwise in respect to any of the Obligations in excess of the amount or rate permitted under or consistent with any applicable law, rule or regulation.
(b)Payment at Highest Lawful Rate. If the Borrower is not obliged to make a payment that it would otherwise be required to make, as a result of Section 5.6(a), the
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Borrower shall make such payment to the maximum extent permitted by or consistent with applicable laws, rules and regulations.
(c)Adjustment if Any Payment Exceeds Lawful Rate. If any provision of this Agreement or any of the other Credit Documents would obligate the Borrower or any other Credit Party to make any payment of interest or other amount payable to any Lender in an amount or calculated at a rate that would be prohibited by any applicable Requirement of Law, then notwithstanding such provision, such amount or rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by applicable Requirements of Law, such adjustment to be effected, to the extent necessary, by reducing the amount or rate of interest required to be paid by the Borrower to the affected Lender under Section 2.8.
(d)Rebate of Excess Interest. Notwithstanding the foregoing, and after giving effect to all adjustments contemplated thereby, if any Lender shall have received from the Borrower an amount in excess of the maximum permitted by any applicable Requirement of Law, then the Borrower shall be entitled, by notice in writing to the Administrative Agent to obtain reimbursement from that Lender in an amount equal to such excess, and pending such reimbursement, such amount shall be deemed to be an amount payable by that Lender to the Borrower.
ARTICLE VI
Conditions Precedent to Initial Borrowing.
The initial Borrowing under this Agreement is subject to the satisfaction of the following conditions precedent, except as otherwise agreed or waived pursuant to Section 13.1.
Section 6.1Credit Documents. The Administrative Agent shall have received:
(a)this Agreement, executed and delivered by a duly Authorized Officer of each of the Borrower, the Administrative Agent, each Lender and each Letter of Credit Issuer;
(b)the Guarantee, executed and delivered by a duly Authorized Officer of each Person that is a Guarantor as of the Closing Date;
(c)the Security Agreement, executed and delivered by a duly Authorized Officer of the Borrower, the Collateral Agent and each Person that is a Guarantor as of the Closing Date; and
(d)the Pledge Agreement, executed and delivered by a duly Authorized Officer of the Borrower, the Collateral Agent and each other pledgor party thereto as of the Closing Date.
Section 6.2Collateral.
(a)All documents and instruments, including Uniform Commercial Code or other applicable personal property and financing statements, reasonably requested by the
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Collateral Agent to be filed, registered or recorded to create the Liens intended to be created by any Security Document and perfect such Liens to the extent required by, and with the priority required by, such Security Document shall have been delivered to the Collateral Agent for filing, registration or recording and none of the Collateral shall be subject to any other pledges, security interests or mortgages, except for Liens permitted under Section 10.2.
(b)All Stock of each Restricted Subsidiary of the Borrower directly or indirectly owned by the Borrower or any Subsidiary Guarantor, in each case as of the Closing Date, shall have been pledged pursuant to the Pledge Agreement (except that such Credit Parties shall not be required to pledge any Excluded Stock) and the Collateral Agent shall have received all certificates, if any, representing such securities pledged under the Pledge Agreement, accompanied by instruments of transfer and/or undated powers endorsed in blank.
(c)Except with respect to intercompany Indebtedness, all evidences of Indebtedness for borrowed money in a principal amount in excess of $5,000,000 (individually) that is owing to the Borrower or any Subsidiary Guarantor shall be evidenced by a promissory note and shall have been pledged pursuant to the Pledge Agreement, and the Collateral Agent shall have received all such promissory notes, together with undated instruments of transfer with respect thereto endorsed in blank;
(d)All Indebtedness of the Borrower and each of its Restricted Subsidiaries that is owing to any Credit Party shall be evidenced by the Intercompany Note, which shall be executed and delivered by the Borrower and each of the Restricted Subsidiaries and shall have been pledged pursuant to the Pledge Agreement, and the Collateral Agent shall have received such Intercompany Note, together with undated instruments of transfer with respect thereto endorsed in blank.
(e)The Guarantee shall be in full force and effect.
Section 6.3Legal Opinions. The Administrative Agent shall have received the executed legal opinions of (a) Kirkland & Ellis LLP, counsel to the Borrower and (b) local counsel to the Borrower in the applicable jurisdictions in form and substance reasonably satisfactory to the Administrative Agent. The Borrower, the other Credit Parties and the Administrative Agent hereby instruct such counsel to deliver such legal opinions.
Section 6.4Closing Certificates. The Administrative Agent shall have received a certificate of the Credit Parties, dated the Closing Date, substantially in the form of Exhibit L, with appropriate insertions, executed by an Authorized Officer of each Credit Party, and attaching the documents referred to in Section 6.5.
Section 6.5Authorization of Proceedings of Each Credit Party; Organizational Documents. The Administrative Agent shall have received (a) a copy of the resolutions, in form and substance reasonably satisfactory to the Administrative Agent, of the board of directors or managers of each Credit Party (or a duly authorized committee thereof) authorizing (i) the execution, delivery and performance of the Credit Documents (and any agreements relating
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thereto) to which it is a party and (ii) in the case of the Borrower, the extensions of credit contemplated hereunder, (b) true and complete copies of each of the organizational documents of each Person that is a Credit Party as of the Closing Date, (c) certifications as to the incumbency and specimen signature of each officer executing any Credit Document and (d) certificates of the appropriate State agencies (or other customary evidence) with respect to the existence, qualification and good standing (as applicable in each such jurisdiction) of each Credit Party in each jurisdiction where any such Credit Party is organized.
Section 6.6Fees. The Agents and the Lenders shall have received the fees in the amounts previously agreed to in writing by the Agents to be received on, or prior to, the Closing Date and all reasonable out-of-pocket expenses required to be paid on the Closing Date (including the reasonable fees, disbursements and other charges of counsel) payable by the Credit Parties for which invoices have been presented at least three Business Days prior to the Closing Date (except as otherwise reasonably agreed by the Borrower) shall have been, or will be substantially simultaneously, paid.
Section 6.7Solvency Certificate. On the Closing Date, the Administrative Agent shall have received a certificate from an Authorized Officer of the Borrower substantially in the form of Exhibit M.
Section 6.8[Reserved].
Section 6.9Insurance Certificates. The Administrative Agent shall have received copies of insurance certificates, if applicable, evidencing the insurance required to be maintained by the Borrower and the Subsidiaries pursuant to Section 9.3, each of which shall name the Secured Parties, as additional insureds on any such liability insurance and, if casualty insurance is obtained, name the Collateral Agent as additional loss payee under any such casualty insurance, in each case in form and substance reasonably satisfactory to the Administrative Agent (provided that if such endorsement or amendment cannot be delivered by the Closing Date, the Administrative Agent may consent to such endorsement or amendment being delivered at such later date as it reasonably deems appropriate in the circumstances).
Section 6.10Transactions. The Transactions shall have been consummated substantially concurrently with the initial Borrowing under the Agreement.
Section 6.11Patriot Act; Beneficial Ownership. The Administrative Agent and Lenders shall have received, and be reasonably satisfied in form and substance with, (i) all documentation and other information about the Borrower and the Guarantors as shall have been reasonably requested in writing by the Administrative Agent and Lenders at least five days prior to the Closing Date in respect of applicable “know your customer” rules and anti-money laundering laws and regulations, including, without limitation, the Patriot Act, and (ii) to the extent the Borrower qualifies as a “legal entity customer” under the Beneficial Ownership Regulation, a Beneficial Ownership Certification.
Section 6.12Lien Searches; Lien Releases. The Administrative Agent shall have received the results of a recent appropriate UCC search with respect to each Credit Party, and such search shall reveal no Liens on any of the assets of the Credit Parties except for Liens (a)
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permitted by Section 10.2 or (b) to be discharged on or prior to the Closing Date pursuant to documentation reasonably satisfactory to the Administrative Agent.
Section 6.13No Indebtedness. On the Closing Date, after giving effect to the Transactions, neither the Borrower nor any of its Restricted Subsidiaries shall have any Indebtedness for borrowed money other than the Facility and other Indebtedness not prohibited hereunder. The Administrative Agent shall have received (i) evidence satisfactory to it that all Liens on Acquired Assets and on the other properties of the Borrower and its Restricted Subsidiaries (other than Permitted Liens) have been or shall be substantially concurrently released or terminated, subject only to the filing of applicable terminations, releases or assignments and (ii) duly executed recordable terminations, releases or assignments in forms reasonably acceptable to the Administrative Agent with respect thereto.
Section 6.14Acquisition.
(a)The Acquisition shall have been, prior to or substantially concurrently with the Closing Date, consummated in all material respects in accordance with the terms of the Acquisition Agreement, after giving effect to any modifications, amendments or express waivers or consents thereto, but without giving effect to any modifications, amendments or express waivers or consents thereto that are materially adverse to the Lenders in their capacities as such without the consent of the Administrative Agent (not to be unreasonably withheld or delayed).
(b)The Administrative Agent shall have received a certificate of an Authorized Officer of the Borrower certifying: (A) that the Borrower has consummated the Acquisition in accordance with applicable law and the terms of the Acquisition Agreement; and (B) that true and complete executed copies of the Acquisition Agreement together with any amendments or modifications thereof prior to the Closing Date been delivered to the Administrative Agent.
(c)The Administrative Agent shall have received evidence satisfactory to the Administrative Agent that the Closing Date Refinancing shall have, prior to or substantially concurrently with the Closing Date, occurred.
Section 6.15No Default; Representations and Warranties. The Administrative Agent shall have received a certificate of an Authorized Officer of the Borrower with respect to the matters set forth in Section 7.1 as of the Closing Date.
Section 6.16Hedging. The Administrative Agent shall have received evidence reasonably satisfactory to the Administrative Agent that the Borrower or its Restricted Subsidiaries have entered into Hedge Agreements having notional volumes of (a) in the case of crude oil, 2,800 Bbl per day and (b) in the case of natural gas, 20,000 MMBtu per day, in each case, for each calendar month during the period from and including January 1, 2026 through and including December 31, 2027.
Section 6.17Liquidity. On the Closing Date, after giving effect to the Transactions to occur on the Closing Date, the Borrower shall have Liquidity of $1,900,000.
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The Administrative Agent shall notify the Borrower and the Lenders of the Closing Date, and such notice shall be conclusive and binding.
ARTICLE VII
Conditions Precedent to All Credit Events
The agreement of each Lender to make any Loan requested to be made by it on any date (excluding Loans required to be made by the Lenders in respect of Unpaid Drawings pursuant to Section 3.3 and Section 3.4), and the obligation of the Letter of Credit Issuer to issue Letters of Credit on any date, is subject to the satisfaction of the following conditions precedent:
Section 7.1No Default; Representations and Warranties. At the time of each Credit Event and also after giving effect thereto (a) no Default or Event of Default shall have occurred and be continuing and (b) all representations and warranties made by any Credit Party contained herein or in the other Credit Documents shall be true and correct in all material respects or in all respects if already qualified as to materiality (after giving effect to any qualification therein) with the same effect as though such representations and warranties had been made on and as of the date of such Credit Event (except where such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects (or in all respects if already qualified as to materiality (after giving effect to any qualification therein)) as of such earlier date).
Section 7.2Excess Cash. After giving pro forma effect to each Borrowing, including the use of proceeds thereof, the Borrower and its Restricted Subsidiaries shall not have any Excess Cash. The delivery of any Notice of Borrowing by the Borrower shall constitute a certification that the condition set forth in this Section 7.2 shall be satisfied after giving pro forma effect to the requested Borrowing, including the use of proceeds thereof.
Section 7.3Notice of Borrowing.
(a)Prior to the making of each Loan (other than any Loan made pursuant to Section 3.4(a)), the Administrative Agent shall have received a Notice of Borrowing (whether in writing or by telephone) meeting the requirements of Section 2.3(a).
(b)Prior to the issuance of each Letter of Credit, the Administrative Agent and the Letter of Credit Issuer shall have received a Letter of Credit Request meeting the requirements of Section 3.2(a).
(c)The acceptance of the benefits of each Credit Event shall constitute a representation and warranty by each Credit Party to each of the Lenders that all the applicable conditions specified in Section 7 above have been satisfied as of that time.
ARTICLE VIII
Representations, Warranties and Agreements
In order to induce the Lenders to enter into this Agreement, to make the Loans and issue or participate in Letters of Credit as provided for herein, the Borrower makes, on the Closing Date and on each other date as required or otherwise set forth in this Agreement, the following
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representations and warranties to, and agreements with, the Lenders, all of which shall survive the execution and delivery of this Agreement and the making of the Loans and the issuance of the Letters of Credit:
Section 8.1Corporate Status. Each of the Borrower and each Restricted Subsidiary (a) is a duly organized and validly existing corporation or other entity in good standing under the laws of the jurisdiction of its organization and has the corporate or other organizational power and authority to own its property and assets and to transact the business in which it is currently engaged and (b) has duly qualified and is authorized to do business and is in good standing (if applicable) in all jurisdictions where it is required to be so qualified, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
Section 8.2Corporate Power and Authority; Enforceability. Each Credit Party has the corporate or other organizational power and authority to execute, deliver and carry out the terms and provisions of the Credit Documents to which it is a party and has taken all necessary corporate or other organizational action to authorize the execution, delivery and performance of the Credit Documents to which it is a party. Each Credit Party has duly executed and delivered each Credit Document to which it is a party and each such Credit Document constitutes the legal, valid and binding obligation of such Credit Party enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization and other similar laws relating to or affecting creditors’ rights generally and general principles of equity (whether considered in a proceeding in equity or law).
Section 8.3No Violation. None of the execution, delivery or performance by any Credit Party of the Credit Documents to which it is a party will (a) contravene any Requirement of Law, except to the extent such contravention would not reasonably be expected to result in a Material Adverse Effect, (b) result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of such Credit Party or any of the Restricted Subsidiaries (other than Liens created under the Credit Documents and the Liens permitted by Section 10.2) pursuant to the terms of any indenture, loan agreement, lease agreement, mortgage, deed of trust, agreement or other instrument to which such Credit Party or any of the Restricted Subsidiaries is a party or by which it or any of its property or assets is bound (any such term, covenant, condition or provision, a “Contractual Requirement”) except to the extent such breach, default or Lien that would not reasonably be expected to result in a Material Adverse Effect or (c) violate any provision of the certificate of incorporation, by-laws or other organizational documents of such Credit Party or any of the Restricted Subsidiaries.
Section 8.4Litigation. Except as set forth on Schedule 8.4, there are no actions, suits or proceedings pending or, to the knowledge of the Borrower, threatened in writing, at law, in equity, in arbitration or before any Governmental Authority by or against the Borrower or any of its Restricted Subsidiaries or against any of their properties, rights or revenues that would, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.
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Section 8.5Margin Regulations. Neither the making of any Loan hereunder nor the use of the proceeds thereof will violate the provisions of Regulation T, Regulation U or Regulation X of the Board.
Section 8.6Governmental Approvals. The execution, delivery and performance of each Credit Document do not require any consent or approval of, registration or filing with, or other action by, any Governmental Authority, except for (a) such as have been obtained or made and are in full force and effect, (b) filings and recordings in respect of the Liens created pursuant to the Security Documents and (c) such consents, approvals, registrations, filings or actions the failure of which to obtain or make would not reasonably be expected to have a Material Adverse Effect.
Section 8.7Investment Company Act. No Credit Party is an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
Section 8.8True and Complete Disclosure.
(a)None of the written factual information and written data (taken as a whole) heretofore or contemporaneously furnished by or on behalf of the Borrower, any of the Subsidiaries or any of their respective authorized representatives to the Administrative Agent, the Lead Arrangers and/or any Lender on or before the Closing Date (including all such information and data contained in the Credit Documents) for purposes of or in connection with this Agreement or any transaction contemplated herein contained any untrue statement of any material fact or omitted to state any material fact necessary to make such information and data (taken as a whole) not materially misleading at such time (as modified or supplemented by other information so furnished prior to such time) in light of the circumstances under which such information or data was furnished; it being understood and agreed that for purposes of this Section 8.8(a), such factual information and data shall not include pro forma financial and reserve information, projections or estimates (including financial and reserve estimates, forecasts and other forward-looking information) and information of a general economic or general industry nature (collectively, “Pro Forma Projections”).
(b)The projections (including financial and reserve estimates, forecasts and other forward-looking information) contained in the information and data referred to in Section 8.8(a) were based on good faith estimates and assumptions believed by the Borrower to be reasonable at the time made; it being recognized by the Agents and the Lenders that such projections are as to future events and are not to be viewed as facts, the projections are subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrower and the Subsidiaries, that no assurance can be given that any particular projections will be realized and that actual results during the period or periods covered by any such projections may differ from the projected results and such differences may be material.
Section 8.9No MAE. Since the Closing Date, there has been no event or circumstance, either individually or in the aggregate, that has had or would reasonably be expected to have a Material Adverse Effect.
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Section 8.10Tax Matters. Except where the failure of which would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, each of the Borrower and the Subsidiaries has filed all federal income tax returns and all other tax returns, domestic and foreign, required to be filed by it and has paid all taxes payable by it that have become due, other than those (i) not yet delinquent or (ii) being contested in good faith by appropriate proceedings.
Section 8.11Compliance with ERISA.
(a)Except as set forth on Schedule 8.11 or as would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each Plan is in compliance with ERISA, the Code and any applicable Requirement of Law; no Reportable Event has occurred (or is reasonably likely to occur) with respect to any Plan; no Plan is insolvent (or is reasonably likely to be insolvent), and no written notice of any such insolvency has been given to the Borrower or any ERISA Affiliate; no Plan (other than a Multiemployer Plan) has an accumulated or waived funding deficiency (or is reasonably likely to have such a deficiency); on and after the effectiveness of the Pension Act, each Plan that is subject to Title IV of ERISA has satisfied the minimum funding standards (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Plan, and there has been no determination that any such Plan is, or is expected to be, in “at risk” status (within the meaning of Section 4010(d)(2) of ERISA); none of the Borrower or any ERISA Affiliate has incurred (or is reasonably likely to incur) any liability to or on account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Code or has been notified in writing that it will incur any liability under any of the foregoing Sections with respect to any Plan; no proceedings have been instituted (or are reasonably likely to be instituted) to terminate or to reorganize any Plan or to appoint a trustee to administer any Plan, and no written notice of any such proceedings has been given to the Borrower or any ERISA Affiliate; and no lien imposed under the Code or ERISA on the assets of the Borrower or any ERISA Affiliate exists (or is reasonably likely to exist) nor has the Borrower or any ERISA Affiliate been notified in writing that such a lien will be imposed on the assets of the Borrower or any ERISA Affiliate on account of any Plan. No Plan (other than a Multiemployer Plan) has an Unfunded Current Liability that would, individually or when taken together with any other liabilities referenced in this Section 8.11(a), be reasonably likely to have a Material Adverse Effect. With respect to Plans that are Multiemployer Plans, the representations and warranties in this Section 8.11(a), other than any made with respect to (i) liability under Section 4201 or 4204 of ERISA or (ii) liability for termination of such Plans under ERISA, are made to the best knowledge of the Borrower.
(b)All Foreign Plans are in compliance with, and have been established, administered and operated in accordance with, the terms of such Foreign Plans and applicable law, except for any failure to so comply, establish, administer or operate the Foreign Plans as would not reasonably be expected to have a Material Adverse Effect. All contributions or other payments which are due with respect to each Foreign Plan have been made in full and there are no funding deficiencies thereunder, except to the extent
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any such events would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 8.12Subsidiaries. Schedule 8.12 lists each Subsidiary of the Borrower (and the direct and indirect ownership interest of the Borrower therein), in each case existing on the Closing Date (after giving effect to the Transactions). Each Guarantor, Material Subsidiary and Unrestricted Subsidiary as of the Closing Date (after giving effect to the Transactions) has been so designated on Schedule 8.12.
Section 8.13Intellectual Property. The Borrower and each of the Restricted Subsidiaries have obtained all intellectual property, free from burdensome restrictions, that to the knowledge of the Borrower is reasonably necessary for the operation of their respective businesses as currently conducted and as proposed to be conducted, except where the failure to obtain any such rights would not reasonably be expected to have a Material Adverse Effect.
Section 8.14Environmental Laws.
(a)With respect to Oil and Gas Properties of the Borrower and each of the Subsidiaries other than Non-Cost Bearing Interests and except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect: (i) the Borrower and each of the Subsidiaries and all Oil and Gas Properties are in compliance with all applicable Environmental Laws; (ii) neither the Borrower nor any Subsidiary has received written notice of any Environmental Claim against the Borrower or any Subsidiary; and (iii) neither the Borrower nor any Subsidiary is conducting any investigation, removal, remedial or other corrective action pursuant to any Environmental Law related to Hazardous Materials contamination at any location.
(b)Except as would not reasonably be expected to have a Material Adverse Effect, neither the Borrower nor any of the Subsidiaries has, to their knowledge, treated, stored, transported, released or disposed or arranged for disposal or transport for disposal of Hazardous Materials at, on, under or from any currently or formerly owned or leased Oil and Gas Properties or facility in each case in a manner that would reasonably be expected to give rise to liability of the Borrower or any Subsidiary under Environmental Law.
Section 8.15Properties.
(a)Each Credit Party has good and defensible title to the Borrowing Base Properties evaluated in the most recently delivered Reserve Report (other than those (i) disposed of since the date of such Reserve Report, (ii)  leases that have expired in accordance with their terms and (iii) with title defects disclosed in writing to the Administrative Agent), and good title to all its material personal properties, in each case, free and clear of all Liens other than Liens permitted by Section 10.2, except in each case where the failure to have such title would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. After giving full effect to the Liens permitted by Section 10.2, the Borrower or the Restricted Subsidiary specified as the owner owns the working interests and net revenue interests attributable to the
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Hydrocarbon Interests as reflected in the most recently delivered Reserve Report, and the ownership of such properties shall not in any material respect obligate the Borrower or such Restricted Subsidiary to bear the costs and expenses relating to the maintenance, development and operations of each such property in an amount in excess of the working interest of each property set forth in the most recently delivered Reserve Report that is not offset by a corresponding proportionate increase in the Borrower’s or such Restricted Subsidiary’s net revenue interest in such property other than as disclosed to the Administrative Agent in writing.
(b)All leases and agreements necessary for the conduct of the business of the Borrower and the Restricted Subsidiaries are valid and subsisting, in full force and effect, except to the extent that any such failure to be valid or subsisting would not reasonably be expected to have a Material Adverse Effect.
(c)The rights and properties presently owned, leased or licensed by the Credit Parties including all easements and rights of way, include all rights and properties necessary to permit the Credit Parties to conduct their respective businesses as currently conducted, except to the extent any failure to have any such rights or properties would not reasonably be expected to have a Material Adverse Effect.
(d)All of the properties of the Borrower and the Restricted Subsidiaries that are reasonably necessary for the operation of their businesses are in good working condition and are maintained in accordance with prudent business standards, except to the extent any failure to satisfy the foregoing would reasonably be expected to have a Material Adverse Effect.
Section 8.16Solvency. On the Closing Date (after giving effect to the consummation of the Transactions (including the execution and delivery of this Agreement, the making of the Loans on the Closing Date and the use of proceeds of such Loans on the Closing Date)), the Borrower on a consolidated basis with its Restricted Subsidiaries is Solvent.
Section 8.17Gas Imbalances, Prepayments. On the Closing Date, except as set forth on Schedule 8.17, on a net basis, there are no gas imbalances, take or pay or other prepayments exceeding 2.5% of the Credit Parties’ average monthly production of Hydrocarbon volumes, with respect to the Credit Parties’ Oil and Gas Properties that would require any Credit Party to deliver Hydrocarbons either generally or produced from their Oil and Gas Properties (excluding Non-Cost Bearing Interests owned by the Borrower or any of its Subsidiaries) at some future time without then or thereafter receiving full payment therefor.
Section 8.18Marketing of Production. On the Closing Date, except as set forth on Schedule 8.18, no material agreements exist (which are not cancelable on 60 days’ notice or less without penalty or detriment) for the sale of production of the Credit Parties’ Hydrocarbons (excluding production attributable to Borrowing Base Properties in which the Borrower’s or any of its Subsidiaries’ ownership interest therein is derived solely from Non-Cost Bearing Interests owned by the Borrower or any of its Subsidiaries) at a fixed non-index price (including calls on, or other rights to purchase, production, whether or not the same are currently being exercised) that (i) represent in respect of such agreements 2.5% or more of the Borrower’s average monthly
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production of Hydrocarbon volumes and (ii) have a maturity or expiry date of longer than six months from the Closing Date.
Section 8.19Hedge Agreements. Schedule 8.19 sets forth, as of the Closing Date, a true and complete list of all material commodity Hedge Agreements of each Credit Party, the material terms thereof relating to the type, term, effective date, termination date and notional amounts or volumes, the net mark to market value thereof, all credit support agreements relating thereto (including any margin required or supplied) and the counterparty to each such agreement.
Section 8.20Patriot Act. On the Closing Date, each Credit Party is in compliance in all material respects with the material provisions of the Patriot Act, and the Borrower has provided to the Administrative Agent all information related to the Credit Parties (including but not limited to names, addresses and tax identification numbers (if applicable)) reasonably requested in writing by the Administrative Agent and mutually agreed to be required by the Patriot Act to be obtained by the Administrative Agent or any Lender.
Section 8.21Sanctions Laws and Regulations. None of the Credit Parties nor, to their knowledge, any of their respective directors or officers is a Designated Person. The Borrower has implemented and maintains in effect policies and procedures reasonably designed to promote compliance by the Borrower, its Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and Sanctions Laws and Regulations applicable to the Borrower and its Subsidiaries, and the Borrower, its Subsidiaries and their respective officers and directors and, to the knowledge of the Borrower, the employees and agents of the Borrower and its Subsidiaries are in compliance with Anti-Corruption Laws and Sanctions Laws and Regulations applicable to the Borrower and its Subsidiaries in all material respects. No Borrowing or Letter of Credit, use of proceeds or other transaction contemplated by this Agreement will violate any Anti-Corruption Law or applicable Sanctions Laws and Regulations.
Section 8.22Affected Financial Institution. No Credit Party is an Affected Financial Institution.
Section 8.23Beneficial Ownership Certification. As of the Closing Date, to the knowledge of the Borrower, the information included in the Beneficial Ownership Certification is true and correct in all material respects.

ARTICLE IX
Affirmative Covenants
The Borrower hereby covenants and agrees that on the Closing Date and thereafter, until Payment in Full:
Section 9.1Information Covenants. The Borrower will furnish to the Administrative Agent (which shall promptly make such information available to the Lenders in accordance with its customary practice):
(a)Annual Financial Statements. On or before the date that is 120 days after the end of each such fiscal year, beginning with the financial statements for the fiscal
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year ending December 31, 2026, the audited consolidated balance sheets of the Borrower and the Subsidiaries and, if different, the Borrower and the Restricted Subsidiaries, in each case as at the end of such fiscal year, and the related consolidated statements of operations, shareholders’ equity and cash flows for such fiscal year (or, in lieu of such audited financial statements of the Borrower and the Restricted Subsidiaries, a detailed reconciliation, reflecting such financial information for the Borrower and the Restricted Subsidiaries, on the one hand, and the Borrower and the Subsidiaries, on the other hand), all prepared in accordance with GAAP, and, except with respect to such reconciliation, reported on by independent certified public accountants of recognized national standing whose opinion shall not be materially qualified with a “going concern” or like qualification or exception (other than an emphasis of matter paragraph or a qualification or exception with respect to, or resulting from, (i) impending maturities of any Indebtedness occurring prior to the expiry of the first full four fiscal quarter period following such audit or (ii) a breach or anticipated breach of any financial covenants, including the Financial Performance Covenants).
(b)Quarterly Financial Statements. With respect to each of the first three quarterly accounting periods in each fiscal year of the Borrower, on or before the date that is 60 days after the end of each such quarterly accounting period, beginning with the financial statements for the fiscal quarter ending June 30, 2026), the consolidated balance sheets of the Borrower and the Subsidiaries and, if different, the Borrower and the Restricted Subsidiaries, in each case as at the end of such quarterly period, and the related consolidated statements of operations for such quarterly accounting period and for the elapsed portion of the fiscal year ended with the last day of such quarterly period, and the related consolidated statements of shareholders’ equity and cash flows for the elapsed portion of the fiscal year ended with the last day of such quarterly period, and setting forth, commencing with the fiscal quarter ending June 30, 2027, comparative consolidated figures for the related periods in the prior fiscal year or, in the case of such consolidated balance sheet, for the last day of the prior fiscal year (or, in lieu of such unaudited financial statements of the Borrower and the Restricted Subsidiaries, a detailed reconciliation reflecting such financial information for the Borrower and the Restricted Subsidiaries, on the one hand, and the Borrower and the Subsidiaries, on the other hand), all of which shall be certified by an Authorized Officer of the Borrower as fairly presenting in all material respects the financial condition, results of operations, shareholders’ equity and cash flows, of the Borrower and its consolidated Subsidiaries in accordance with GAAP, subject to changes resulting from audit and normal year-end audit adjustments and the absence of footnotes.
(c)Officer’s Certificates - Compliance. Not later than five Business Days after the delivery of the financial statements provided for in Section 9.1(a) and (b), commencing with the fiscal quarter ending June 30, 2026, a certificate of an Authorized Officer of the Borrower substantially in the form of Exhibit B hereto (i) certifying that no Default or Event of Default exists or, if any Default or Event of Default does exist, specifying the nature and extent thereof, (ii) setting forth the calculations required to establish whether the Borrower and its Restricted Subsidiaries were in compliance with the Financial Performance Covenants as at the end of such fiscal year or period, as the case may be, (iii) setting forth a specification of any change in the identity of the Restricted Subsidiaries, Material Subsidiaries, Guarantors and Unrestricted Subsidiaries as at the end of such fiscal year or period, as the case may be, from the Restricted
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Subsidiaries, Material Subsidiaries, Guarantors and Unrestricted Subsidiaries, respectively, provided to the Lenders on the Closing Date or in the most recently delivered Compliance Certificate, (iv) the amount of any Pro Forma Adjustment to the extent not set forth in a previously delivered Compliance Certificate, or any change in the amount of a Pro Forma Adjustment set forth in a previously delivered Compliance Certificate and, in either case, in reasonable detail, the calculations and basis therefor and (v) in each Compliance Certificate provided in respect of the annual financial statements delivered under Section 9.1(a), setting forth in reasonable detail the Applicable Equity Amount as at the end of the fiscal year for which such financial statements are applicable.
(d)Notice of Default; Litigation. Promptly after an Authorized Officer of the Borrower or any of the Restricted Subsidiaries obtains actual knowledge thereof, notice of (i) the occurrence of any event that constitutes a Default or Event of Default, which notice shall specify the nature thereof and what action the Borrower proposes to take with respect thereto and (ii) any litigation or governmental proceeding pending against the Borrower or any of the Subsidiaries that would reasonably be expected to be determined adversely and, if so determined, to result in a Material Adverse Effect.
(e)Environmental Matters. After obtaining actual knowledge of any one or more of the following environmental matters, unless such environmental matters would not, individually, or when aggregated with all other such matters, be reasonably expected to result in a Material Adverse Effect, notice of:
(i)any filed or threatened Environmental Claim against any Credit Party;
(ii)any condition or occurrence on any Oil and Gas Properties that (A) would reasonably be expected to result in noncompliance by any Credit Party with any applicable Environmental Law or (B) would reasonably be expected to result in an Environmental Claim against any Credit Party or any Oil and Gas Properties; and
(iii)the conduct of any investigation, or any removal, remedial or other corrective action in response to the actual or alleged presence, release or threatened release of any Hazardous Material on, at, under or from any Oil and Gas Properties.
All such notices shall describe in reasonable detail the nature of the Environmental Claim, investigation, removal or remedial action.
(f)Other Information. With reasonable promptness, but subject to the limitations set forth in the last sentences of Section 9.2(a) and Section 13.16, such other information (financial or otherwise) as the Administrative Agent on its own behalf or on behalf of any Lender (acting through the Administrative Agent) may reasonably request in writing from time to time.
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(g)Projections. Within 120 days after the end of each fiscal year (beginning with the fiscal year ending on or about December 31, 2026) of the Borrower, a reasonably detailed consolidated budget for the following fiscal year as customarily prepared by management of the Borrower for its internal use (including a projected consolidated balance sheet of the Borrower and its Restricted Subsidiaries as of the end of the following fiscal year, the related consolidated statements of projected capital expenditures, projected cash flow and projected income and a summary of the material underlying assumptions applicable thereto) (collectively, the “Projections”), which Projections shall in each case be accompanied by a certificate of an Authorized Officer stating that such Projections have been prepared in good faith on the basis of the assumptions stated therein, which assumptions were believed to be reasonable at the time of preparation of such Projections, it being recognized by the Agents and the Lenders that such Projections are as to future events and are not to be viewed as facts, the Projections are subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrower and the Subsidiaries, that no assurance can be given that any particular Projections will be realized and that actual results during the period or periods covered by any such Projections may differ from the projected results and such differences may be material.
(h)Excess Cash. So long as any Initial Term Loans are outstanding, on or before the end of the third Business Day following each Excess Cash Prepayment Test Date, a certificate of an Authorized Officer substantially in the form of Exhibit S, setting forth reasonably detailed calculations of Excess Cash for the month for which such certificate is being delivered and the amount of Initial Term Loans to be prepaid pursuant to Section 5.2(c)(iii).
(i)Net Cash Proceeds. So long as any Initial Term Loans are outstanding, on or before each date on which the Borrower or any Restricted Subsidiary is required to make a prepayment with any Net Cash Proceeds pursuant to Section 5.2(c)(i) or Section 5.2(c)(ii), a certificate of an Authorized Officer substantially in the form of Exhibit S, setting forth reasonably detailed calculations of the amount of Net Cash Proceeds and the amount of Initial Term Loans required to be prepaid pursuant to Section 5.2(c)(i) or Section 5.2(c)(ii), as applicable.
Documents required to be delivered pursuant to Section 9.1(a) through Section 9.1(g) may be delivered electronically and if so delivered, shall be deemed to have been delivered on the date (i) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet at the website address listed on Schedule 13.2, (ii) on which such documents are posted on the Borrower’s behalf on IntraLinks, Debtdomain or another relevant website, if any, to which the Lenders and the Administrative Agent have access (whether a commercial, third-party website or whether sponsored by the Administrative Agent) or (iii) on which such documents are transmitted by electronic mail to the Administrative Agent; provided that: the Borrower shall notify (which may be by facsimile or electronic mail) the Administrative Agent of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Each Lender shall be solely responsible for timely accessing posted documents and maintaining its copies of such documents.
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Section 9.2Books, Records and Inspections.
(a)The Borrower will, and will cause each Restricted Subsidiary to, permit designated representatives of the Administrative Agent or the Majority Lenders (as accompanied by the Administrative Agent) to visit and inspect any of the properties of the Borrower or such Restricted Subsidiary, and to examine the books and records of the Borrower and any such Restricted Subsidiary and discuss the affairs, finances and accounts of the Borrower and of any such Restricted Subsidiary with, and be advised as to the same by, its and their officers and independent accountants, upon reasonable advance notice to the Borrower, all at such reasonable times and intervals during normal business hours and to such reasonable extent as the Administrative Agent or the Majority Lenders may desire (and subject, in the case of any such meetings or advice from such independent accountants, to such accountants’ customary policies and procedures); provided that, excluding any such visits and inspections during the continuation of an Event of Default (i) only the Administrative Agent on behalf of the Majority Lenders may exercise rights of the Administrative Agent and the Lenders under this Section 9.2, and (ii) the Administrative Agent shall not exercise such rights more often than two times during any calendar year and only one such visit shall be at the Borrower’s expense; provided, further, that when an Event of Default exists, the Administrative Agent (or any of its representatives or independent contractors) or any representative of the Majority Lenders may do any of the foregoing at any time during normal business hours and upon reasonable advance notice. The Administrative Agent and the Majority Lenders shall give the Borrower the opportunity to participate in any discussions with the Borrower’s independent public accountants. Notwithstanding anything to the contrary in Section 9.1(f) or this Section 9.2, neither the Borrower nor any Restricted Subsidiary will be required to disclose, permit the inspection, examination or making copies or abstracts of, or discussion of, any document, information or other matter (i) that constitutes non-financial trade secrets or non-financial proprietary information, (ii) in respect of which disclosure to the Administrative Agent or any Lender (or their respective representatives or contractors) is prohibited by any Requirement of Law or any binding agreement or (iii) that is subject to attorney-client or similar privilege or constitutes attorney work product.
(b)The Borrower will, and will cause each of the Restricted Subsidiaries to maintain proper books of record and account that permit the preparation of financial statements in conformity with GAAP.
Section 9.3Maintenance of Insurance. The Borrower will, and will cause each Restricted Subsidiary to, at all times maintain in full force and effect, pursuant to self-insurance arrangements or with insurance companies that the Borrower believes (in the good faith judgment of the management of the Borrower) are financially sound and responsible at the time the relevant coverage is placed or renewed, insurance in at least such amounts (after giving effect to any self-insurance which the Borrower believes (in the good faith judgment of management of the Borrower) is reasonable and prudent in light of the size and nature of its business) and against at least such risks (and with such risk retentions) as the Borrower believes (in the good faith judgment of management of the Borrower) is reasonable and prudent in light of the size and nature of its business; and will furnish to the Administrative Agent, upon written request from the Administrative Agent, information presented in reasonable detail as to the insurance so
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carried. The Secured Parties shall be, to the extent applicable, the additional insureds on any such liability insurance as their interests may appear and, if casualty insurance is obtained, the Collateral Agent shall be the additional loss payee under any such casualty insurance; provided that, so long as no Event of Default has occurred and is then continuing, the Secured Parties will provide any proceeds of such casualty insurance to the Borrower to the extent that the Borrower undertakes to apply such proceeds to the reconstruction, replacement or repair of the property insured thereby.
Section 9.4Payment of Taxes. The Borrower will pay and discharge, and will cause each of the Subsidiaries to pay and discharge, all taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits, or upon any properties belonging to it, prior to the date on which material penalties attach thereto, and all lawful material claims in respect of any Taxes imposed, assessed or levied that, if unpaid, would reasonably be expected to become a material Lien upon any properties of the Borrower or any of the Restricted Subsidiaries; provided that neither the Borrower nor any of the Subsidiaries shall be required to pay or discharge any such tax, assessment, charge, levy or claim that is being contested in good faith and by proper proceedings if it has maintained adequate reserves (in the good faith judgment of management of the Borrower) with respect thereto to the extent required by, and in accordance with, GAAP or the failure to pay or discharge would not reasonably be expected to result in a Material Adverse Effect.
Section 9.5Existence; Consolidated Corporate Franchises. The Borrower will do, and will cause each Restricted Subsidiary to do, or cause to be done, all things necessary to preserve and keep in full force and effect its existence, corporate rights and authority, except to the extent that the failure to do so would not reasonably be expected to have a Material Adverse Effect; provided, however, that the Borrower and its Restricted Subsidiaries may consummate any transaction permitted under Section 10.3, Section 10.4 or Section 10.5.
Section 9.6Compliance with Statutes, Regulations, Etc. The Borrower will, and will cause each Restricted Subsidiary to, comply with all Requirements of Law applicable to it or its property except where the failure to do so would not reasonably be expected to have a Material Adverse Effect.
Section 9.7ERISA.
(a)Promptly after the Borrower knows of the occurrence of any of the following events that, individually or in the aggregate (including in the aggregate such events previously disclosed or exempt from disclosure hereunder, to the extent the liability therefor remains outstanding), would be reasonably likely to have a Material Adverse Effect, the Borrower will deliver to the Administrative Agent a certificate of an Authorized Officer or any other senior officer of the Borrower setting forth details as to such occurrence and the action, if any, that the Borrower is required or proposes to take, together with any notices (required or otherwise) given to or filed with or by the Borrower, the PBGC, a Plan participant (other than notices relating to an individual participant’s benefits) or the Plan administrator with respect thereto: that a Reportable Event has occurred; that an accumulated funding deficiency has been incurred or an application is to be made to the Secretary of the Treasury for a waiver or modification of the minimum funding standard (including any required installment payments) or an extension of any amortization period under Section 412 of the Code with respect to a
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Plan; that a Plan having an Unfunded Current Liability has been or is to be terminated, partitioned or declared insolvent under Title IV of ERISA (including the giving of written notice thereof); that a Plan has an Unfunded Current Liability that has or will result in a lien on assets of a Credit Party under ERISA or the Code; that a proceeding has been instituted against the Borrower pursuant to Section 515 of ERISA to collect a delinquent contribution to a Plan; that the PBGC has notified the Borrower of its intention to appoint a trustee to administer any Plan; that the Borrower has failed to make a required installment or other payment pursuant to Section 412 of the Code with respect to a Plan; or that the Borrower has incurred or will incur (or has been notified in writing that it will incur) any liability (including any contingent or secondary liability) to or on account of a Plan pursuant to Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Code.
(b)Promptly following any request therefor, on and after the effectiveness of the Pension Act, the Borrower will deliver to the Administrative Agent copies of (i) any documents described in Section 101(k) of ERISA that the Borrower and any of its Subsidiaries may request with respect to any Multiemployer Plan and (ii) any notices described in Section 101(l) of ERISA that the Borrower and any of its Subsidiaries may request with respect to any Multiemployer Plan; provided that if the Borrower or any of its Subsidiaries has not requested such documents or notices from the administrator or sponsor of the applicable Multiemployer Plan, the Borrower or the applicable Subsidiary(ies) shall promptly make a request for such documents or notices from such administrator or sponsor and shall provide copies of such documents and notices promptly after receipt thereof.
Section 9.8Maintenance of Properties. The Borrower will, and will cause each of the Restricted Subsidiaries to, except in each case, where the failure to so comply would not reasonably be expected to result in a Material Adverse Effect (it being understood that this Section 9.8 shall not restrict any transaction otherwise permitted under Section 10.3, Section 10.4 or Section 10.5):
(a)operate its Oil and Gas Properties and other material properties or make commercially reasonable efforts to cause such Oil and Gas Properties and other material properties to be operated in compliance with all applicable Contractual Requirements and all applicable Requirements of Law, including applicable proration requirements and Environmental Laws;
(b)keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and preserve, maintain and keep in good repair, working order and efficiency (ordinary wear and tear excepted) all of its material Oil and Gas Properties and other material Properties, including all equipment, machinery and facilities; and
(c)to the extent a Credit Party is not the operator of any property, the Borrower shall use reasonable efforts to cause the operator to comply with this Section 9.8 in accordance with the customary practices of the industry.
Section 9.9Transactions with Affiliates. The Borrower will conduct, and cause each of the Restricted Subsidiaries to conduct, all transactions involving aggregate payments or
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consideration in excess of $10,000,000 with any of its Affiliates (other than the Borrower and the Restricted Subsidiaries or any entity that becomes a Restricted Subsidiary as a result of such transaction) on terms that are substantially as favorable to the Borrower or such Restricted Subsidiary as it would obtain at the time in a comparable arm’s-length transaction with a Person that is not an Affiliate, as determined by the board of directors or managers of the Borrower or such Restricted Subsidiary in good faith; provided that the foregoing restrictions shall not apply to:
(a)the consummation of the Transactions, including the payment of Transaction Expenses,
(b)the issuance of Stock or Stock Equivalents of the Borrower (or any direct or indirect parent thereof) to, or any capital contribution by, the Sponsor or any officer, director, employee or consultant of the Borrower (or any direct or indirect parent thereof) or any of its Subsidiaries,
(c)equity issuances, repurchases, retirements, redemptions or other acquisitions or retirements of Stock or Stock Equivalents by the Borrower (or any direct or indirect parent thereof) permitted under Section 10.6,
(d)the payment of indemnities and reasonable expenses incurred by the Sponsor and their Affiliates in connection with management or monitoring or the provision of other services rendered to the Borrower (or any direct or indirect parent entity thereof) or any of its Subsidiaries,
(e)loans, advances and other transactions between or among the Borrower, any Subsidiary or any joint venture (regardless of the form of legal entity) in which the Borrower or any Subsidiary has invested (and which Subsidiary or joint venture would not be an Affiliate of the Borrower or such Subsidiary, but for the Borrower’s or such Subsidiary’s ownership of Stock or Stock Equivalents in such joint venture or such Subsidiary) to the extent permitted under Section 10,
(f)employment and severance arrangements and health, disability and similar insurance or benefit plans between the Borrower (or any direct or indirect parent thereof) and the Subsidiaries and their respective directors, officers, employees or consultants (including management and employee benefit plans or agreements, subscription agreements or similar agreements pertaining to the repurchase of Stock or Stock Equivalents pursuant to put/call rights or similar rights with current or former employees, officers, directors or consultants and equity option or incentive plans and other compensation arrangements) in the ordinary course of business or as otherwise approved by the board of directors or managers of the Borrower (or any direct or indirect parent thereof),
(g)the payment of customary fees and reasonable out-of-pocket costs to, and indemnities provided on behalf of, directors, managers, consultants, advisors, officers and employees of the Borrower (or any direct or indirect parent thereof), the Sponsor and the Subsidiaries in the ordinary course of business to the extent attributable to the ownership
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or operation of, or in connection with any services provided to, the Borrower and the Subsidiaries,
(h)transactions pursuant to agreements in existence on the Closing Date and set forth on Schedule 9.9, or any amendment thereto to the extent such an amendment is not adverse, taken as a whole, to the Lenders in any material respect (as determined by the Borrower in good faith),
(i)Dividends, redemptions, repurchases and other actions permitted under Section 10.6 and Section 10.7,
(j)customary payments (including reimbursement of fees and expenses) by the Borrower and any Subsidiaries to the Sponsor made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities (including in connection with acquisitions or divestitures, whether or not consummated), which payments are approved by the majority of the members of the board of directors or managers or a majority of the disinterested members of the board of directors or managers of the Borrower (or any direct or indirect parent thereof), in good faith,
(k)any issuance of Stock or Stock Equivalents or other payments, awards or grants in cash, securities, Stock, Stock Equivalents or otherwise pursuant to, or the funding of, employment arrangements, equity options and equity ownership plans approved by the board of directors or board of managers of the Borrower (or any direct or indirect parent thereof),
(l)transactions with joint ventures for the purchase or sale of goods, equipment and services entered into in the ordinary course of business and in a manner consistent with prudent business practice followed by companies in the industry of the Borrower and its Subsidiaries,
(m)payments by the Borrower (or any direct or indirect parent thereof) and the Subsidiaries pursuant to tax sharing agreements among the Borrower (and any such parent) and the Subsidiaries on customary terms; provided that payments by Borrower and the Subsidiaries under any such tax sharing agreements shall not exceed the excess (if any) of the amount they would have paid on a standalone basis over the amount they actually pay directly to Governmental Authorities,
(n)sales or conveyances of net profits interests for cash at Fair Market Value allowed under Section 10.4;
(o)customary agreements and arrangements with oil and gas royalty trusts and master limited partnership agreements that comply with the affiliate transaction provisions of such royalty trust or master limited partnership agreement;
(p)any transaction in respect of which the Borrower delivers to the Administrative Agent a letter addressed to the board of directors or managers of the Borrower from an accounting, appraisal or investment banking firm, in each case of
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nationally-recognized standing that is in the good faith determination of the Borrower qualified to render such letter, which letter states that such transaction is (i) fair, from a financial point of view, to the Borrower or such Restricted Subsidiary or (ii) on terms, taken as a whole, that are no less favorable to the Borrower or such Restricted Subsidiary, as applicable, than would be obtained in a comparable arm’s length transaction with a person that is not an Affiliate;
(q)[reserved];
(r)transactions between the Borrower or any of its Restricted Subsidiaries and any Person that is an Affiliate solely because a director of such Person is also a director of the Borrower or any direct or indirect parent of the Borrower; provided, however, that such director abstains from voting as a director of the Borrower or such direct or indirect parent, as the case may be, on any matter involving such other Person;
(s)any lease entered into between the Borrower or any Restricted Subsidiary, as lessee and any Affiliate of the Borrower, as lessor, which is approved by a majority of the disinterested members of the board of directors or managers of the Borrower in good faith or, any lease entered into between the Borrower or any Restricted Subsidiary, as lessee, and any Affiliate of the Borrower, as lessor, in the ordinary course of business;
(t)transactions for the purpose of (a) reorganizing to facilitate any initial public offering of securities of the Borrower or any direct or indirect parent of the Borrower, (b) forming a holding company, (c) reincorporating the Borrower or (d) consummating the IPOCo Transactions;
(u)Permitted Intercompany Activities; and
(v)the formation and maintenance of any consolidated group or subgroup for tax, accounting or cash pooling or management purposes in the ordinary course of business.
Section 9.10Environmental Matters. The Borrower will at its sole expense: (i) comply, and make reasonable efforts to cause its Properties and operations and each Restricted Subsidiary and each Restricted Subsidiary’s Properties and operations to comply, with all applicable Environmental Laws, to the extent the failure to comply or cause such compliance could reasonably be expected to have a Material Adverse Effect; (ii) not Release or threaten to Release, and cause each Restricted Subsidiary not to Release or threaten to Release, any Hazardous Material on, under, about or from any of the Borrower’s or any Restricted Subsidiary’s Properties or any other property offsite such Property to the extent caused by the Borrower’s or any Restricted Subsidiary’s operations except in compliance with applicable Environmental Laws, in each case to the extent such Release or threatened Release or failure to cause could reasonably be expected to have a Material Adverse Effect; (iii) obtain or file, and cause each Restricted Subsidiary to obtain or file, all permits, if any, required under applicable Environmental Laws to be obtained or filed in connection with the operation or use of the Borrower’s or the Restricted Subsidiaries’ Properties, to the extent such failure to obtain or file or cause could reasonably be expected to have a Material Adverse Effect; and (iv) commence and prosecute to completion, and cause each Restricted Subsidiary to commence and prosecute to completion, any corrective actions to the extent any corrective actions are required under
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applicable Environmental Laws because of or in connection with the actual or suspected past, present or future Release or threatened Release of any Hazardous Material on, under, about or from any of the Borrower’s or the Restricted Subsidiaries’ Properties, to the extent failure to commence, prosecute or cause could reasonably be expected to have a Material Adverse Effect.
Section 9.11Additional Guarantors, Grantors and Collateral.
(a)Subject to any applicable limitations set forth in the Guarantee or the Security Documents, the Borrower will cause (i) any direct or indirect Domestic Subsidiary (other than any Excluded Subsidiary) formed or otherwise purchased or acquired after the Closing Date (including pursuant to a Permitted Acquisition) and (ii) any Subsidiary of the Borrower that ceases to be an Excluded Subsidiary, in each case within 45 days from the date of such formation, acquisition or cessation, as applicable (or such longer period as the Administrative Agent may agree in its reasonable discretion) to execute (A) a supplement to each of the Guarantee, the Security Agreement and the Pledge Agreement, substantially in the form of Annex A, Exhibit 1 or Annex A, as applicable, to the respective agreement in order to become a Guarantor under the Guarantee, a grantor under the Security Agreement, and a pledgor under the Pledge Agreement and (B) a joinder to the Intercompany Note, substantially in the form of Annex I thereto.
(b)Subject to any applicable limitations set forth in the Pledge Agreement, the Borrower will pledge, and, if applicable, will cause each other Subsidiary Guarantor (or Person required to become a Subsidiary Guarantor pursuant to Section 9.11(a)) to pledge, to the Collateral Agent, for the benefit of the Secured Parties, (i) all of the Stock (other than any Excluded Stock) of each Subsidiary owned by the Borrower or any Subsidiary Guarantor (or Person required to become a Guarantor pursuant to Section 9.11(a)), in each case, formed or otherwise purchased or acquired after the Closing Date, pursuant to a supplement to the Pledge Agreement substantially in the form of Annex A thereto and, (ii) except with respect to intercompany Indebtedness, all evidences of Indebtedness for borrowed money in a principal amount in excess of $10,000,000 (individually) that is owing to the Borrower or any Guarantor (or Person required to become a Guarantor pursuant to Section 9.11(a)), in each case pursuant to a supplement to the Pledge Agreement substantially in the form of Annex A thereto.
(c)In connection with each redetermination (but not any adjustment) of the Borrowing Base, the Borrower shall review the applicable Reserve Report, if any, and the list of current Mortgaged Properties (as described in Section 9.14(c)), to ascertain whether the PV-9 of the Mortgaged Properties (calculated at the time of redetermination) meets the Collateral Coverage Minimum after giving effect to exploration and production activities, acquisitions, Dispositions and production. In the event that the PV-9 of the Mortgaged Properties (calculated at the time of redetermination) does not meet the Collateral Coverage Minimum, then the Borrower shall, and shall cause its Credit Parties to, grant, within 75 days of delivery of the certificate required under Section 9.14(c) (or such longer period as the Administrative Agent may agree in its reasonable discretion), to the Collateral Agent as security for the Obligations a first-priority Lien interest (subject to Liens permitted by Section 10.2) on additional Oil and Gas Properties not already subject to a Lien of the Security Documents such that, after giving effect thereto, the PV-9 of the
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Mortgaged Properties (calculated at the time of redetermination) meets the Collateral Coverage Minimum. All such Liens will be created and perfected by and in accordance with the provisions of the Security Documents, including, if applicable, any additional Mortgages. In order to comply with the foregoing, if any Restricted Subsidiary places a Lien on its property and such Subsidiary is not a Guarantor, then it shall become a Guarantor and comply with the provisions of Section 9.11(a), Section 9.11(b) and Section 9.11(c).
(d)The Borrower agrees that all Indebtedness of the Borrower and each of its Restricted Subsidiaries that is owing to any Credit Party (or a Person required to become a Guarantor pursuant to Section 9.11(a)) shall be evidenced by the Intercompany Note, which promissory note shall be required to be pledged to the Collateral Agent, for the benefit of the Secured Parties, pursuant to the Pledge Agreement.
(e)Without limitation of clause (a), (b) or (c) above, substantially simultaneously with the delivery of any mortgage or deed of trust on any Oil and Gas Property for the benefit of any other secured party and securing Indebtedness that is subject to a Customary Intercreditor Agreement, the Borrower shall, or shall cause the relevant Credit Party to, grant to the Collateral Agent as security for the Obligations a Lien on such Oil and Gas Property. All such Liens will be created and perfected by and in accordance with the provisions of the Security Documents, including, if applicable, any additional Mortgages. In order to comply with the foregoing, if any Restricted Subsidiary places a Lien on its property and such Subsidiary is not a Guarantor, then it shall become a Guarantor and comply with the provisions of Sections 9.11(a) and (b).
Section 9.12Use of Proceeds.
(a)The Borrower will use the proceeds of the Loans to fund a portion of the Closing Date Refinancing, to consummate the Transactions, to conduct its Oil and Gas Business, for the acquisition, development and exploration of Oil and Gas Properties and for working capital and other general corporate purposes of the Borrower and its Restricted Subsidiaries (including Permitted Acquisitions).
(b)The Borrower will use Letters of Credit for general corporate purposes and to support deposits required under purchase agreements pursuant to which the Borrower or its Restricted Subsidiaries may acquire assets relevant to the Oil and Gas Business and other assets.
Section 9.13Further Assurances.
(a)Subject to the applicable limitations set forth in the Security Documents, the Borrower will, and will cause each other Credit Party to, execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture, filings, assignments of as-extracted collateral, mortgages, deeds of trust and other documents) that may be required under any applicable Requirements of Law, or that the Collateral Agent or the Majority Lenders may reasonably request, in order to grant, preserve, protect and perfect the validity and priority of the security interests created or intended to
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be created by the applicable Security Documents, all at the expense of the Borrower and the Restricted Subsidiaries.
(b)Notwithstanding anything herein to the contrary, if the Collateral Agent and the Borrower reasonably determine in writing that the cost of creating or perfecting any Lien on any property is excessive in relation to the benefits afforded to the Lenders thereby, then such property may be excluded from the Collateral for all purposes of the Credit Documents.
(c)In addition, notwithstanding anything to the contrary in this Agreement or any other Credit Document, (i) the Administrative Agent may grant extensions of time for or waivers of the requirements of the creation or perfection of security interests in or the obtaining of title opinions or other title information, legal opinions, appraisals, insurance and surveys with respect to particular assets (including extensions beyond the Closing Date for the perfection of security interests in the assets of the Credit Parties on such date) where it reasonably determines, in consultation with the Borrower, that perfection or obtaining of such items is not required by law or cannot be accomplished without undue effort or expense by the time or times at which it would otherwise be required by this Agreement or the other Credit Documents, (ii) Liens required to be granted from time to time pursuant to this Agreement and the Security Documents shall be subject to exceptions and limitations set forth in the Security Documents and, to the extent appropriate in any applicable jurisdiction, as otherwise agreed between the Administrative Agent and the Borrower and (iii) the Administrative Agent and the Borrower may make such modifications to the Security Documents, and execute and/or consent to such easements, covenants, rights of way or similar instruments (and Administrative Agent may agree to subordinate the lien of any mortgage to any such easement, covenant, right of way or similar instrument or record or may agree to recognize any tenant pursuant to an agreement in a form and substance reasonably acceptable to the Administrative Agent), as are reasonable or necessary and otherwise permitted by this Agreement and the other Credit Documents.
Section 9.14Reserve Reports.
(a)On or before March 1st and September 1st of each year, commencing March 1, 2027, the Borrower shall furnish to the Administrative Agent a Reserve Report evaluating, as of the immediately preceding December 31st and June 30th, the Proved Reserves of the Borrower and the Credit Parties located within the geographic boundaries of the United States of America (or the Outer Continental Shelf adjacent to the United States of America) that the Borrower desires to have included in any calculation of the Borrowing Base. Each Reserve Report as of December 31st shall be prepared, at the sole election of the Borrower (i) by one or more Approved Petroleum Engineers or (ii) by or under the supervision of the chief engineer of the Borrower or its Subsidiaries; provided that any such Reserve Report prepared in accordance with this clause (ii) shall be accompanied by an audit letter (or similar document) issued by the Approved Petroleum Engineer that has audited at least 85% (by value) of the Proved Reserves attributable to the Borrowing Base Properties of the Credit Parties. Any other Reserve Report prepared in connection with a redetermination may be prepared, at the election of the Borrower (A) by one or more Approved Petroleum Engineers or (B) by or under the supervision of the
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chief engineer of the Borrower and its Subsidiaries. In addition, on or before August 1, 2026, the Borrower shall furnish to the Administrative Agent a Reserve Report prepared at the election of the Borrower (A) by one or more Approved Petroleum Engineers or (B) by or under the supervision of the chief engineer of the Borrower and its Subsidiaries evaluating, as of June 30, 2026, the Proved Reserves of the Borrower and the Credit Parties located within the geographic boundaries of the United States of America (or the Outer Continental Shelf adjacent to the United States of America) that the Borrower desires to have included in any calculation of the Borrowing Base.
(b)In the event of an Interim Redetermination, the Borrower shall furnish to the Administrative Agent a Reserve Report prepared, at the election of the Borrower, (i) by one or more Approved Petroleum Engineers or (ii) by or under the supervision of the chief engineer of the Borrower or by the Borrower or its Subsidiaries. For any Interim Redetermination pursuant to Section 2.14(b), the Borrower shall provide such Reserve Report with an “as of” date as required by the Administrative Agent, as soon as possible, but in any event no later than 45 days, in the case of any Interim Redetermination requested by the Borrower or 60 days, in the case of any Interim Redetermination requested by the Administrative Agent or the Lenders, following the receipt of such request, unless otherwise agreed by the Administrative Agent.
(c)With the delivery of each Reserve Report, the Borrower shall provide to the Administrative Agent a Reserve Report Certificate from an Authorized Officer of the Borrower certifying that in all material respects:
(i)in the case of Reserve Reports prepared by or under the supervision of the chief engineer of the Borrower or by the Borrower and its Subsidiaries (other than the December 31 Reserve Reports), such Reserve Report has been prepared, except as otherwise specified therein, in accordance with the procedures used in the immediately preceding December 31 Reserve Report or the Initial Reserve Report, if no December 31 Reserve Report has been delivered;
(ii)the information contained in the Reserve Report and any other information delivered in connection therewith is true and correct in all material respects; provided, that, with respect to any projections included in such information, such projections were based on good faith estimates and assumptions believed by the Borrower or any Approved Petroleum Engineer, as applicable, to be reasonable at the time made; it being recognized by the Agents and the Lenders that such projections are as to future events and are not to be viewed as facts, the projections are subject to significant uncertainties and contingencies, many of which are beyond the control of the Borrower and the Subsidiaries, that no assurance can be given that any particular projections will be realized and that actual results during the period or periods covered by any such projections may differ from the projected results and such differences may be material;
(iii)except as set forth in an exhibit to such certificate, the Borrower or another Credit Party has good and defensible title to the Borrowing Base Properties evaluated in such Reserve Report (other than those (w) to be acquired in connection with an acquisition, (x) Disposed of in compliance with Section
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10.4 since the date of such Reserve Report, (y) leases that have expired in accordance with their terms and (z) with title defects disclosed in writing to the Administrative Agent) and such Borrowing Base Properties are free (or will be at the time of the acquisition thereof) of all Liens except for Liens permitted by Section 10.2;
(iv)except as set forth on an exhibit to such certificate or previously disclosed to the Administrative Agent in writing, as of the date of such Reserve Report, on a net basis there are no gas imbalances, take or pay or other prepayments in excess of the volume specified in Section 8.17 with respect to the Credit Parties’ Oil and Gas Properties evaluated in such Reserve Report that would require the Borrower or any other Credit Party to deliver Hydrocarbons either generally or produced from such Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor;
(v)none of the Borrowing Base Properties have been Disposed since the date of the immediately preceding Reserve Report to the date of the Reserve Report being delivered, except (A) those Borrowing Base Properties listed on such certificate as having been Disposed, (B) as previously disclosed to the Administrative Agent in writing or (C) Borrowing Base Properties Disposed in the ordinary course in connection with operating agreements, farmouts, joint exploration and development agreements, communitization agreements or orders, pooling agreements or orders and other agreements or orders customary in the oil and gas industry whose aggregate PV-9 (calculated at the time of Disposition) does not exceed 5% of the then-effective Borrowing Base;
(vi)attached as a schedule thereto, a list of, as of the last Business Day of the most recently ended fiscal year or period, as applicable, all material marketing agreements entered into subsequent to the later of the Closing Date and the most recently delivered Reserve Report for the sale of production of the Credit Parties’ Hydrocarbons at a fixed non- index price (including calls on, or other parties rights to purchase, production, whether or not the same are currently being exercised) that (1) represent in respect of such agreements 2.5% or more of the Credit Parties’ average monthly production of Hydrocarbon volumes and (2) have a maturity date or expiry date of longer than six months from the last day of such fiscal year or period, as applicable, and are not cancellable on 60 days’ notice or less without penalty or detriment;
(vii)attached as a schedule thereto, a true and complete list of all material commodity Hedge Agreements of the Borrower and each Credit Party, the material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), the net mark-to-market value thereof (as of the last Business Day of such fiscal year or period, as applicable and for which a mark to-market value is reasonably available), any new credit support agreements relating thereto not listed on Schedule 8.19 or on any previously delivered certificate delivered pursuant to this Section 9.14(c), any margin required or supplied under any credit support document and the counterparty to each such agreement;
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(viii)attached thereto is a schedule setting forth, for each calendar month during the six or twelve month period, as applicable, ending as of the date of such Reserve Report, the volume of production of Hydrocarbons and sales attributable to production of Hydrocarbons (and the prices at which such sales were made and the revenues derived from such sales) for each such calendar month from the Borrowing Base Properties, and setting forth the related ad valorem, severance and production taxes and lease operating expenses attributable thereto and incurred for each such calendar month; and
(ix)all Borrowing Base Properties evaluated by such Reserve Report that are Collateral and demonstrating the extent to which the PV-9 of the Mortgaged Properties (calculated as of the date of such Reserve Report) meets the Collateral Coverage Minimum.
Section 9.15Title Information. On or before the date of delivery to the Administrative Agent of each Reserve Report required by Section 9.14(a), the Borrower will deliver, or will cause the applicable Restricted Subsidiaries to deliver, if requested by the Administrative Agent, title information consistent with usual and customary standards for the geographic regions in which the Borrowing Base Properties are located, taking into account the size, scope and number of leases and wells of the Borrower and its Restricted Subsidiaries (it being understood that standards reasonably acceptable to the Administrative Agent shall be deemed to meet such standard), as is required to demonstrate, to the reasonable satisfaction of the Administrative Agent, satisfactory title on at least 80% of the PV-9 value of the Borrowing Base Properties.
Section 9.16Sanctions Laws and Regulations. The Borrower shall, and shall ensure that its Subsidiaries shall, use the proceeds of the Loans or any Letter of Credit only in a manner that is permitted under this Agreement and in no event: (i) to fund any activities or business of or with any Designated Person, or in any country or territory, that at the time of such funding is the subject of any sanctions under any Sanctions Laws and Regulations, in violation of applicable Sanctions Laws and Regulations or (ii) in any other manner that would result in a violation of any Sanctions Laws and Regulations by any party to this Agreement.
Section 9.17Change in Business. The Borrower and its Restricted Subsidiaries, taken as a whole, will not fundamentally and substantively alter the character of their business, taken as a whole, from the Oil and Gas Business or the business conducted by them on the Closing Date and other business reasonably related, complementary, incidental, synergistic or ancillary thereto (including, for the avoidance of doubt, the acquisition, ownership, management, and investment in royalty interests, overriding royalty interests and Industry Investments) or reasonable extensions to any of the foregoing (the “Permitted Business”); provided that, for the avoidance of doubt, the Borrower and its Restricted Subsidiaries shall be permitted to make investments and expenditures otherwise permitted by this Agreement with respect to the development of technology or infrastructure relating to renewable energy generation, energy storage, advanced fuels, carbon mitigation, hydrogen technologies and fuel cells, in each case that are consistent with the Company’s environmental, social and governance strategy, in each case so long as the making of such investments and expenditures will not fundamentally and substantively alter the character of their business, taken as a whole, from the Permitted Business. Notwithstanding the foregoing, prior to the Initial Term Loans Repayment Date, the Borrower and its Restricted
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Subsidiaries shall cause the portion of value of their Oil and Gas Properties (defined, solely for purpose of this Section 9.17, as the PV-9 value attributable to the Proved Developed Producing Reserves plus the book value of any Oil and Gas Property that does not have PV-9 value), directly attributable to the ownership of the Borrower and its Restricted Subsidiaries in mineral interests, royalty interests and similar holdings to be at least 95%.
Section 9.18Control Agreements. In connection with any deposit account or securities account opened, established, held, acquired or otherwise maintained by the Borrower or any Guarantor (in each case, other than any Excluded Account for so long as it is an Excluded Account), the Borrower will, and will cause each Guarantor to, enter into and deliver to the Collateral Agent an Account Control Agreement no later than the date that any funds or assets are deposited therein or, with respect to any deposit account or securities account that ceases to be an Excluded Account, no later than the date of such cessation (or, in each case, such later date as the Collateral Agent may agree in its sole discretion); provided that the Borrower shall be deemed to have satisfied the requirements of this Section 9.18: (i) with respect to any deposit account or securities account established, held or maintained on the Closing Date, so long as the Borrower or applicable Guarantor delivers an Account Control Agreement to the Collateral Agent no later than 90 days after the Closing Date (or such later date as the Administrative Agent may agree in its sole discretion); and (ii) with respect to any deposit account or securities account that is acquired by the Borrower or any Guarantor as a result of a Permitted Acquisition or other transaction not prohibited by this Agreement, so long as, no later than 45 days after the date of such Permitted Acquisition (or such later date as the Administrative Agent may agree in its sole discretion), the Borrower or such Guarantor (x) causes such account to be subject to an Account Control Agreement or (y) closes such account and transfers any funds or assets therein to an account that otherwise meets the requirements of this Section 9.18.
Section 9.19Post-Closing Date Covenants.
(a)On or before March 31, 2026 (or such later date as the Administrative Agent may agree in its sole discretion), the Borrower shall furnish to the Administrative Agent a Reserve Report prepared by one or more Approved Petroleum Engineers evaluating, as of December 31, 2025, the Proved Reserves attributable to the Acquired Assets (the “Post-Closing Reserve Report”). If (i) the Borrower does not timely deliver the Post-Closing Reserve Report or (ii) the PV-9 of the Proved Developed Producing Reserves attributable to the Acquired Assets as set forth in the Post-Closing Reserve Report is less than 95% of the PV-9 of the Proved Developed Producing Reserves attributable to the Acquired Assets as set forth in the Acquisition Reserve Report, then the Administrative Agent may, at the direction of the Required Lenders, by notifying the Borrower thereof, elect to cause an Interim Redetermination pursuant to the procedures set forth in Section 2.14.
(b)On or before the date that is 30 days after the Closing Date (or such later date as the Administrative Agent may agree in its sole discretion), the Borrower will deliver, or will cause the applicable Restricted Subsidiaries to deliver, Mortgages, executed and delivered by a duly Authorized Officer of the applicable Credit Party, encumbering Mortgaged Properties that constitute Borrowing Base Properties having a PV-9 sufficient to satisfy the Collateral Coverage Minimum. Notwithstanding the foregoing, the Borrower will use commercially reasonable efforts to deliver such
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executed Mortgages encumbering Mortgaged Properties that constitute Borrowing Base Properties having a PV-9 sufficient to satisfy the Collateral Coverage Minimum on the Closing Date.
(c)On or before the date that is 60 days after the Closing Date (or such later date as the Administrative Agent may agree in its sole discretion), the Borrower will deliver, or will cause the applicable Restricted Subsidiaries to deliver, title information consistent with usual and customary standards for the geographic regions in which the Borrowing Base Properties are located, taking into account the size, scope and number of leases and wells of the Borrower and its Restricted Subsidiaries (it being understood that standards reasonably acceptable to the Administrative Agent shall be deemed to meet such standard), as is required to demonstrate, to the reasonable satisfaction of the Administrative Agent, satisfactory title on at least 80% of the PV-9 value of the Borrowing Base Properties. Notwithstanding the foregoing, the Borrower will use commercially reasonable efforts to deliver such satisfactory title information with respect to at least 80% of the PV-9 value of the Borrowing Base Properties on or prior to the Closing Date.
ARTICLE X
Negative Covenants.
The Borrower hereby covenants and agrees that on the Closing Date and thereafter, until Payment in Full:
Section 10.1Limitation on Indebtedness. The Borrower will not, and will not permit any of the Restricted Subsidiaries to, create, incur, assume or suffer to exist any Indebtedness other than the following:
(a)[Reserved];
(b)Indebtedness arising under the Credit Documents (including pursuant to Section 2.16, Section 2.17, Section 2.19 and Section 2.20);
(c)Indebtedness of (i) the Borrower or any Guarantor owing to the Borrower or any Subsidiary; provided that any such Indebtedness owing by a Credit Party to a Subsidiary that is not a Guarantor shall (x) be evidenced by the Intercompany Note or (y) otherwise be outstanding on the Closing Date so long as such Indebtedness is evidenced by an intercompany note substantially in the form of Exhibit O or otherwise subject to subordination terms substantially identical to the subordination terms set forth in Exhibit O, in each case, to the extent permitted by Requirements of Law and not giving rise to material adverse tax consequences, (ii) any Subsidiary that is not a Guarantor owing to any other Subsidiary that is not a Guarantor and (iii) to the extent permitted by Section 10.5, any Subsidiary that is not a Guarantor owing to the Borrower or any Guarantor;
(d)Indebtedness in respect of any bankers’ acceptance, bank guarantees, letters of credit, warehouse receipt or similar facilities entered into in the ordinary course of business or consistent with past practice or industry practice (including in respect of workers compensation claims, health, disability or other employee benefits or property, casualty or liability insurance or self-insurance or other Indebtedness with respect to reimbursement-type obligations regarding workers compensation claims);
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(e)subject to compliance with Section 10.5, Guarantee Obligations incurred by (i) Restricted Subsidiaries in respect of Indebtedness of the Borrower or other Restricted Subsidiaries that is permitted to be incurred under this Agreement (except that a Restricted Subsidiary that is not a Credit Party may not, by virtue of this Section 10.1(e) guarantee Indebtedness that such Restricted Subsidiary could not otherwise incur under this Section 10.1) and (ii) the Borrower in respect of Indebtedness of Restricted Subsidiaries that is permitted to be incurred under this Agreement; provided that (A) if the Indebtedness being guaranteed under this Section 10.1(e) is subordinated to the Obligations, such Guarantee Obligations shall be subordinated to the Guarantee of the Obligations on terms at least as favorable to the Lenders as those contained in the subordination of such Indebtedness and (B) no guarantee by any Restricted Subsidiary of any Permitted Additional Debt or Permitted Junior Lien Debt shall be permitted unless such Restricted Subsidiary shall have also provided a guarantee of the Obligations substantially on the terms set forth in the Guarantee;
(f)Guarantee Obligations (i) incurred in the ordinary course of business in respect of obligations of (or to) suppliers, customers, franchisees, lessors, licensees or sublicensees or (ii) otherwise constituting Investments permitted by Section 10.5(d), Section 10.5(g), Section 10.5(h), Section 10.5(i), Section 10.5(s), Section 10.5(t) and Section 10.5(u);
(g)after the Initial Term Loans Repayment Date, (i) Indebtedness (including Indebtedness arising under Capital Leases) incurred within 365 days of the acquisition, construction, lease, repair, replacement, expansion or improvement of fixed or capital assets (excluding Hydrocarbon Interests) to finance the acquisition, construction, lease, repair, replacement expansion, or improvement of such fixed or capital assets; (ii) Indebtedness arising under Capital Leases, other than (A) Capital Leases in effect on the Closing Date and (B) Capital Leases entered into pursuant to subclause (i) above (provided that, in the case of each of the foregoing subclauses (i) and (ii), the Borrower shall be in compliance on a Pro Forma Basis after giving effect to the incurrence of such Indebtedness with the Financial Performance Covenants, as such covenants are recomputed as at the last day of the most recently ended Test Period as if such incurrence had occurred on the first day of such Test Period); and (iii) any Permitted Refinancing Indebtedness issued or incurred to Refinance any such Indebtedness;
(h)Indebtedness outstanding on the date hereof listed on Schedule 10.1 and any Permitted Refinancing Indebtedness issued or incurred to Refinance such Indebtedness;
(i)Indebtedness in respect of Hedge Agreements, subject to the limitations set forth in Section 10.10;
(j)Indebtedness (or any Permitted Refinancing Indebtedness thereof) of a Person or Indebtedness attaching to the assets of a Person that, in either case, becomes a Restricted Subsidiary (or is a Restricted Subsidiary that survives a merger with such Person or any of its Subsidiaries) or Indebtedness attaching to the assets that are acquired by the Borrower or any Restricted Subsidiary, in each case after the Closing Date as the result of a Permitted Acquisition; provided that, prior to the Initial Term Loans Repayment Date, the aggregate amount of all such Indebtedness incurred after the Closing Date shall not exceed $5,000,000; and provided further that:
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(i)such Indebtedness existed at the time such Person became a Restricted Subsidiary or at the time such assets were acquired and, in each case, was not created in anticipation thereof,
(ii)such Indebtedness is not guaranteed in any respect by the Borrower or any Restricted Subsidiary (other than any such Person that so becomes a Restricted Subsidiary or is the survivor of a merger with such Person or any of its Subsidiaries),
(iii)(1) the Stock of such Person is pledged to the Collateral Agent to the extent required under Section 9.11(b) and (2) such Person executes a supplement to each of the Guarantee, the Security Agreement and the Pledge Agreement and a joinder to the Intercompany Note, in each case to the extent required under Section 9.11; provided that the assets covered by such pledges and security interests may, to the extent permitted by Section 10.2, equally and ratably secure such Indebtedness assumed with the Secured Parties subject to intercreditor arrangements in form and substance reasonably satisfactory to the Administrative Agent; provided, further, that the requirements of this Section 10.1(j)(iii) shall not apply to any Indebtedness of the type that could have been incurred under Section 10.1(g), and
(iv)after giving effect to the assumption of any such Indebtedness, to such acquisition and to any related Pro Forma Adjustment, the Borrower shall be in compliance on a Pro Forma Basis with the Financial Performance Covenants, as such covenants are recomputed as at the last day of the most recently ended Test Period as if such assumption and acquisition had occurred on the first day of such Test Period;
(k)[Reserved];
(l)Indebtedness consisting of secured financings by a Foreign Subsidiary in which no Credit Party’s assets are used to secure such Indebtedness;
(m)Indebtedness in respect of performance bonds, bid bonds, appeal bonds, surety bonds and completion guarantees and similar obligations and obligations in respect of letters of credit, bank guaranties or instruments related thereto, in each case provided in the ordinary course of business or consistent with past practice or industry practice, including those incurred to secure health, safety and environmental obligations in the ordinary course of business or consistent with past practice or industry practice;
(n)(i) other additional Indebtedness (of a type not otherwise described in this Section 10.1); provided that the aggregate principal amount of Indebtedness outstanding at any time pursuant to this Section 10.1(n) shall not at the time of incurrence thereof and after giving Pro Forma Effect thereto and the use of proceeds thereof, exceed (A) prior to the Initial Term Loans Repayment Date, the greater of (x) $5,750,000 and (y) 2.5% of the Conforming Borrowing Base then in effect (measured as of the date of incurrence of such Indebtedness) and (B) after the Initial Term Loans Repayment Date, the greater of (x) $18,000,000 and (y) 3.0% of Total Assets (measured as of the date of incurrence of such
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Indebtedness); and (ii) any Permitted Refinancing Indebtedness issued or incurred to Refinance such Indebtedness;
(o)Indebtedness in respect of Permitted Additional Debt, Permitted Junior Lien Debt and, in each case, any Permitted Refinancing Indebtedness issued or incurred to Refinance such Indebtedness; provided that (i) after giving effect to the incurrence or issuance thereof and the use of proceeds therefrom, the Borrower shall be in compliance on a Pro Forma Basis with the Financial Performance Covenants; (ii) the Borrowing Base shall be adjusted as set forth in Section 2.14(e); and (iii) prior to the Initial Term Loans Repayment Date, the Net Cash Proceeds of the initial incurrence of Permitted Additional Debt or Permitted Junior Lien Debt pursuant to this Section 10.1(o) shall be used to cause and shall be in an amount sufficient to result in the Discharge of Initial Term Loan Obligations;
(p)Cash Management Obligations, Cash Management Services and other Indebtedness in respect of cash and treasury management, netting services, automatic clearing house arrangements, employees’ credit or purchase cards, overdraft protections and similar arrangements;
(q)Indebtedness incurred in the ordinary course of business in respect of obligations of the Borrower or any Restricted Subsidiary to pay the deferred purchase price of goods or services or progress payments in connection with such goods and services;
(r)Indebtedness arising from agreements of the Borrower or any Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations (including earn-outs), in each case assumed or entered into in connection with Permitted Acquisitions, other Investments and the Disposition of any business, assets or Stock permitted hereunder;
(s)Indebtedness of the Borrower or any Restricted Subsidiary consisting of (i) obligations to pay insurance premiums or (ii) obligations contained in firm transportation or supply agreements or other take or pay contracts, in each case arising in the ordinary course of business or consistent with past practice or industry practice;
(t)Indebtedness representing deferred compensation to employees, consultants or independent contractors of the Borrower (or, to the extent such work is done for the Borrower or its Subsidiaries, any direct or indirect parent thereof) and the Restricted Subsidiaries incurred in the ordinary course of business or consistent with past practice or industry practice;
(u)Indebtedness consisting of promissory notes issued by the Borrower or any Guarantor to current or former officers, managers, consultants, directors and employees (or their respective spouses, former spouses, successors, executors, administrators, heirs, legatees or distributees) to finance the purchase or redemption of Stock or Stock Equivalents of the Borrower (or any direct or indirect parent thereof) permitted by Section 10.6;
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(v) Indebtedness consisting of obligations of the Borrower and the Restricted Subsidiaries under deferred compensation or other similar arrangements incurred by such Person in connection with the Transactions, Permitted Acquisitions or any other Investment permitted hereunder;
(w)[reserved];
(x)Indebtedness consisting of the undischarged balance of any Production Payment, subject to adjustment of the Borrowing Base as set forth in Section 2.14(g) to the extent required under Section 10.4(b);
(y)Indebtedness of the Borrower or any Restricted Subsidiary to any joint venture (regardless of the form of legal entity) that is not a Subsidiary arising in the ordinary course of business in connection with the Cash Management Services (including with respect to intercompany self-insurance arrangements) of the Borrower and its Restricted Subsidiaries;
(z)after the Initial Term Loans Repayment Date, Indebtedness (i) incurred on behalf of, or Guarantee Obligations in respect of the Indebtedness of, joint ventures (regardless of the form of legal entity) that are not Subsidiaries and (ii) of Subsidiaries which are not Guarantors, in a principal amount, when aggregated with the outstanding principal amount of all Indebtedness incurred pursuant to this clause (z), not to exceed, at the time of incurrence thereof, the greater of (x) $18,000,000 and (y)  3.0% of Total Assets (measured as of the date of incurrence of such Indebtedness);
(aa)Indebtedness supported by a Letter of Credit, in a principal amount not to exceed the face amount of such Letter of Credit;
(ab)after the Initial Term Loans Repayment Date, (i) Permitted Debt Exchange Notes incurred pursuant to a Permitted Debt Exchange in accordance with Section 2.20 (and which does not generate any additional proceeds); provided that such Indebtedness otherwise complies with the Specified Conditions and (ii) any Permitted Refinancing thereof; and
(ac)all premiums (if any), interest (including post-petition interest), fees, expenses, charges, and additional or contingent interest on obligations described in clauses (a) through (bb) above.
For purposes of determining compliance with Section 10.1, in the event that an item of Indebtedness (or any portion thereof) at any time, whether at the time of incurrence or issuance or upon the application of all or a portion of the proceeds thereof or subsequently, meets the criteria of more than one of the categories of permitted Indebtedness described in Section 10.1(a) through (bb) above, the Borrower, in its sole discretion, will classify and may subsequently reclassify such item of Indebtedness (or any portion thereof) in any one or more of the types of Indebtedness described in Section 10.1(a) through (bb) and will only be required to include the amount and type of such Indebtedness in such of the above clauses as determined by the Borrower at such time. The Borrower will be entitled to divide and classify an item of Indebtedness in more than one of the types of Indebtedness described in Section 10.1(a) through (bb) above.
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    The accrual of interest or dividends, the accretion of accreted value, the accretion or amortization of original issue discount, and the payment of interest or dividends in the form of additional Indebtedness of the same class, accretion or amortization of original issue discount or liquidation preference and increases in the amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies, will, in each case, not be deemed to be an incurrence of Indebtedness for purposes of this Section 10.1. The principal amount of any Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness or Disqualified Stock, as applicable, being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such respective Indebtedness is denominated that is in effect on the date of such refinancing. The principal amount of any non-interest bearing Indebtedness or other discount security constituting Indebtedness at any date shall be the principal amount thereof that would be shown on a balance sheet of the Borrower dated such date prepared in accordance with GAAP.
Section 10.2Limitation on Liens. The Borrower will not, and will not permit any of the Restricted Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any property or assets of any kind (real or personal, tangible or intangible) of the Borrower or any Restricted Subsidiary, whether now owned or hereafter acquired, except:
(a)Liens arising under the Credit Documents to secure the Obligations (including Liens contemplated by Section 3.8) or permitted in respect of any Mortgaged Property by the terms of the applicable Mortgage;
(b)Permitted Liens;
(c)after the Initial Term Loans Repayment date, Liens (including liens arising under Capital Leases to secure Capitalized Lease Obligations) securing Indebtedness permitted pursuant to Section 10.1(g); provided that (i) such Liens attach concurrently with or within 365 days after the acquisition, lease, repair, replacement, construction, expansion or improvement (as applicable) being financed with such Indebtedness, (ii) other than the property financed by such Indebtedness, such Liens do not at any time encumber any property, except for replacements thereof and accessions and additions to such property and the proceeds and the products thereof and customary security deposits and (iii) with respect to Capital Leases, such Liens do not at any time extend to or cover any assets (except for accessions and additions to such assets, replacements and products thereof and customary security deposits) other than the assets subject to such Capital Leases; provided that individual financings provided by one lender may be cross collateralized to other financings provided by such lender (and its Affiliates);
(d)Liens existing on the date hereof; provided that any Lien securing Indebtedness in excess of $1,000,000 individually or in the aggregate (when taken together with all other Liens securing obligations outstanding in reliance on this Section 10.2(d) that are not listed on Schedule 10.2) shall only be permitted to the extent such Lien is listed on Schedule 10.2;
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(e)(i) the modification, replacement, extension or renewal (or successive modifications, replacements, extensions or renewals), in whole or in part, of any Lien permitted by this Section 10.2 upon or in the same assets (plus improvements on and accessions to such property) theretofore subject to such Lien or upon or in after-acquired property that is (A) affixed or incorporated into the property covered by such Lien, (B) in the case of Liens permitted by Section 10.2(f) and Section 10.2(s), subject to a Lien securing Indebtedness permitted under Section 10.1, the terms of which Indebtedness require or include a pledge of after-acquired property (it being understood that such requirement shall not be permitted to apply to any property to which such requirement would not have applied but for such acquisition) and (C) the proceeds and products thereof or (ii) Liens securing Indebtedness incurred in replacement, extension, refinancing, refunding or renewal (without increase in the amount or additional direct or contingent obligors except to the extent otherwise permitted hereunder) of secured Indebtedness, to the extent the replacement, extension, refinancing, refunding or renewal of the Indebtedness secured thereby is permitted by Section 10.1;
(f)Liens existing on the assets of any Person that becomes a Subsidiary, or existing on assets acquired, pursuant to a Permitted Acquisition or other Investment permitted by Section 10.5 to the extent the Liens on such assets secure Indebtedness permitted by Section 10.1(j); provided that such Liens attach at all times only to the same assets that such Liens (or upon or in after-acquired property that is (i) affixed or incorporated into the property covered by such Lien, (ii) after-acquired property subject to a Lien securing Indebtedness permitted under Section 10.1(j), the terms of which Indebtedness require or include a pledge of after-acquired property (it being understood that such requirement shall not be permitted to apply to any property to which such requirement would not have applied but for such acquisition) and (iii) the proceeds and products thereof) attached to, and secure only, the same Indebtedness or obligations (or any Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness) secured, immediately prior to such Permitted Acquisition or other Investment; provided that, prior to the Initial Term Loans Repayment Date, the aggregate amount of Indebtedness secured pursuant to this Section 10.2(f) shall not exceed $5,000,000;
(g)after the Initial Term Loans Repayment Date, Liens placed upon the Stock and Stock Equivalents of any Person that becomes a Restricted Subsidiary pursuant to a Permitted Acquisition or other Investment permitted by Section 10.5, or the assets of such a Restricted Subsidiary, in each case, to secure Indebtedness incurred pursuant to Section 10.1(j); provided that such Liens attach at all times only to the Stock and Stock Equivalents or assets so acquired;
(h)Liens securing Indebtedness or other obligations (i) of the Borrower or a Restricted Subsidiary in favor of a Credit Party and (ii) of any Restricted Subsidiary that is not a Credit Party in favor of any Restricted Subsidiary that is not a Credit Party;
(i)Liens (i) of a collecting bank arising under Section 4-210 of the Uniform Commercial Code on items in the course of collection, (ii) after the Initial Term Loans Repayment Date, attaching to commodity trading accounts or other commodity brokerage
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accounts incurred in the ordinary course of business and (iii) in favor of a banking institution arising as a matter of law encumbering deposits (including the right of set-off) or other funds maintained with a financial institution (including the right of setoff) and that are within the general parameters customary in the banking industry or arising pursuant to such banking institution’s general terms and conditions;
(j)Liens (i) on cash advances in favor of the seller of any property to be acquired in an Investment permitted pursuant to Section 10.5 to be applied against the purchase price for such Investment and (ii) consisting of an agreement to Dispose of any property in a transaction permitted under Section 10.4, in each case, solely to the extent such Investment or Disposition, as the case may be, would have been permitted on the date of the creation of such Lien;
(k)Liens arising out of conditional sale, title retention, consignment or similar arrangements for sale or purchase of goods entered into by the Borrower or any of the Restricted Subsidiaries in the ordinary course of business permitted by this Agreement;
(l)Liens deemed to exist in connection with Investments in repurchase agreements permitted under Section 10.5;
(m)after the Initial Term Loans Repayment Date, Liens encumbering reasonable customary initial deposits and margin deposits and similar Liens attaching to brokerage accounts incurred in the ordinary course of business and not for speculative purposes;
(n)Liens that are contractual rights of set-off (i) relating to the establishment of depository relations with banks not given in connection with the issuance or incurrence of Indebtedness, (ii) relating to pooled deposit or sweep accounts of the Borrower or any Restricted Subsidiary to permit satisfaction of overdraft or similar obligations incurred in the ordinary course of business of the Borrower and the Restricted Subsidiaries or (iii) relating to purchase orders and other agreements entered into with customers of the Borrower or any Restricted Subsidiary in the ordinary course of business;
(o)Liens solely on any cash earnest money deposits made by the Borrower or any of the Restricted Subsidiaries in connection with any letter of intent or purchase agreement permitted hereunder;
(p)Liens on insurance policies and the proceeds thereof securing the financing of the premiums with respect thereto;
(q)Liens in respect of Production Payments, subject to adjustment of the Borrowing Base as set forth in Section 2.14(g) to the extent required under Section 10.4(b) provided that such Liens attach at all times only to the Oil and Gas Properties from which the Production Payments have been conveyed (including produced and unproduced reserves in respect thereof), it being understood that individual financings or Productions Payments provided by one lender or group of lenders may be cross-collateralized to other financings or Production Payments provided by such lender or group of lenders;
(r)the prior right of consignees and their lenders under consignment arrangements entered into in the ordinary course of business;
(s)agreements to subordinate any interest of the Borrower or any Restricted Subsidiary in any accounts receivable or other proceeds arising from inventory consigned
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by the Borrower or any Restricted Subsidiary pursuant to an agreement entered into in the ordinary course of business;
(t)Liens on Stock or Stock Equivalents (i) in a joint venture securing obligations of such joint venture so long as the assets of such joint venture do not constitute Collateral and (ii) of an Unrestricted Subsidiary;
(u)Liens securing any Indebtedness permitted by Sections 10.1(e) (solely and to the same extent that the Indebtedness guaranteed by such Guarantee Obligations is permitted to be subject to a Lien hereunder), (1) (as long as such Liens attach only to assets of Foreign Subsidiaries and Domestic Subsidiaries that are not Guarantors) and (2) (as long as such Liens attach only to cash and securities held by the relevant Cash Management Bank);
(v)Liens arising pursuant to Section 107(l) of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9607(l), or other Environmental Law, unless such Lien (i) by action of the lienholder, or by operation of law, takes priority over any Liens arising under the Credit Documents on the property upon which it is a Lien, and (ii) materially impairs the use of the property covered by such Lien for the purposes for which such property is held;
(w)after the Initial Term Loans Repayment Date, Liens on Collateral securing any Permitted Junior Lien Debt and any Permitted Refinancing Indebtedness permitted by Section 10.1(o); provided that the applicable holders of such Indebtedness (or a representative or trustee thereof on their behalf) shall have entered into a Customary Intercreditor Agreement providing that the Liens securing such obligations shall rank junior to the Liens securing the Obligations; and
(x)additional Liens on property not constituting Borrowing Base Properties, so long as the aggregate principal amount of the obligations secured thereby at the time of the incurrence thereof and after giving Pro Forma Effect thereto and the use of proceeds thereof, does not exceed, (i) prior to the Initial Term Loans Repayment Date, the greater of (x) $5,750,000 and (y) 2.5% of the Borrowing Base (measured as of the date on which such Lien or the Indebtedness secured is incurred), provided that no Indebtedness of the type set forth in clauses (a) or (b) of the definition thereof may be secured by Liens incurred pursuant to this Section 10.2(x)(i)), and (ii) after the Initial Term Loans Repayment Date, the greater of (x) $12,000,000 and (y) 2.0% of Total Assets (measured as of the date on which such Lien or the Indebtedness secured is incurred), provided that Liens on such property not securing Permitted Refinancing Indebtedness of such obligations shall be permitted.
For purposes of determining compliance with this Section 10.2, (A) Liens need not be incurred solely by reference to one category of Liens permitted by this Section 10.2 but are permitted to be incurred in part under any combination thereof and of any other available exemption, (B) in the event that a Lien (or any portion thereof) meets the criteria of one or more of the categories of Liens permitted by this Section 10.2, the Borrower may, in its sole discretion, classify or reclassify such Lien (or any portion thereof) in any manner that complies with this provision and (C) with respect to any Lien securing Indebtedness that was permitted to secure such Indebtedness at the time of the incurrence of such Indebtedness, such Lien shall also be permitted to secure any amount permitted under Section 10.1(bb) in respect of such Indebtedness.
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Section 10.3Limitation on Fundamental Changes. Except as permitted by Section 10.4 or Section 10.5 (other than Section 10.5(x)) the Borrower will not, and will not permit any of the Restricted Subsidiaries to, consummate any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or Dispose of, all or substantially all its business units, assets or other properties, except that:
(a)any Subsidiary of the Borrower or any other Person may be merged, amalgamated or consolidated with or into the Borrower; provided that (i) the Borrower shall be the continuing or surviving Person or, in the case of a merger, amalgamation or consolidation with or into the Borrower, the Person formed by or surviving any such merger, amalgamation or consolidation (if other than the Borrower) shall be an entity organized or existing under the laws of the United States, any state thereof, the District of Columbia or any territory thereof (the Borrower or such Person, as the case may be, being herein referred to as the “Successor Borrower”), (ii) the Successor Borrower (if other than the Borrower) shall expressly assume all the obligations of the Borrower under this Agreement and the other Credit Documents pursuant to a supplement hereto or thereto in form reasonably satisfactory to the Administrative Agent, (iii) no Borrowing Base Deficiency or Event of Default has occurred and is continuing at the date of such merger, amalgamation or consolidation or would result from such consummation of such merger, amalgamation or consolidation, (iv) if such merger, amalgamation or consolidation involves the Borrower and a Person that, prior to the consummation of such merger, amalgamation or consolidation, is not a Subsidiary of the Borrower (A) the Successor Borrower shall be in compliance, on a Pro Forma Basis after giving effect to such merger, amalgamation or consolidation, with the Financial Performance Covenants, as such covenants are recomputed as at the last day of the most recently ended Test Period under such Section as if such merger, amalgamation or consolidation had occurred on the first day of such Test Period, (B) each Subsidiary grantor and each Subsidiary pledgor, unless it is the other party to such merger, amalgamation or consolidation or unless the Successor Borrower is the Borrower, shall have by a supplement to the Credit Documents confirmed that its obligations thereunder shall apply to the Successor Borrower’s obligations under this Agreement, (C) if requested by the Administrative Agent, each mortgagor of a Mortgaged Property, unless it is the other party to such merger or consolidation or unless the Successor Borrower is the Borrower, shall have by an amendment to or restatement of the applicable Mortgage confirmed that its obligations thereunder shall apply to the Successor Borrower’s obligations under this Agreement, (D) the Borrower shall have delivered to the Administrative Agent an officer’s certificate stating that such merger, amalgamation or consolidation and any supplements to the Credit Documents preserve the enforceability of the Guarantee and the perfection and priority of the Liens under the Security Documents, (E) if reasonably requested by the Administrative Agent, an opinion of counsel shall be required to be provided to the effect that such merger, amalgamation or consolidation does not violate this Agreement or any other Credit Document, and as to such other matters regarding the Successor Borrower and the Credit Documents as the Administrative Agent or its counsel may reasonably request, (F) the Administrative Agent and Lenders shall have received all documentation and other information about the Successor Borrower (if other than the Borrower) as shall have been reasonably requested in writing by the Administrative Agent and Lenders at least five days prior to the creation of the such Successor Borrower in respect of applicable “know your customer” and anti-money laundering rules and regulations,
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including, without limitation, the Patriot Act; provided, further, that if the foregoing are satisfied, the Successor Borrower (if other than the Borrower) will succeed to, and be substituted for, the Borrower under this Agreement and (G) such merger, amalgamation or consolidation shall comply with all the conditions set forth in the definition of the term “Permitted Acquisition” or is otherwise permitted under Section 10.5.
(b)any Subsidiary of the Borrower or any other Person may be merged, amalgamated or consolidated with or into any one or more Subsidiaries of the Borrower; provided that (i) in the case of any merger, amalgamation or consolidation involving one or more Restricted Subsidiaries, (A) a Restricted Subsidiary shall be the continuing or surviving Person or (B) the Borrower shall take all steps necessary to cause the Person formed by or surviving any such merger, amalgamation or consolidation (if other than a Restricted Subsidiary) to become a Restricted Subsidiary, (ii) in the case of any merger, amalgamation or consolidation involving one or more Guarantors, unless otherwise permitted by Section 10.5, a Guarantor shall be the continuing or surviving Person or the Person formed by or surviving any such merger, amalgamation or consolidation (if other than a Guarantor) shall execute a supplement to the Guarantee, the Security Agreement, the Pledge Agreement and any applicable Mortgage, and a joinder to the Intercompany Note, each in form and substance reasonably satisfactory to the Collateral Agent in order for the surviving Person to become a Guarantor and pledgor, mortgagor and grantor of Collateral for the benefit of the Secured Parties and to acknowledge and agree to the terms of the Intercompany Note, (iii) no Borrowing Base Deficiency, Default or Event of Default has occurred and is continuing on the date of such merger, amalgamation or consolidation or would result from the consummation of such merger, amalgamation or consolidation and (iv) if such merger, amalgamation or consolidation involves a Subsidiary and a Person that, prior to the consummation of such merger, amalgamation or consolidation, is not a Restricted Subsidiary of the Borrower, (A) the Borrower shall be in compliance, on a Pro Forma Basis after giving effect to such merger, amalgamation or consolidation, with the Financial Performance Covenants, (B) the Borrower shall have delivered to the Administrative Agent an officer’s certificate stating that such merger, amalgamation or consolidation and such supplements to any Credit Document preserve the enforceability of the Guarantee and the perfection and priority of the Liens under the Security Agreement and (C) such merger, amalgamation or consolidation shall comply with all the conditions set forth in the definition of the term “Permitted Acquisition” or is otherwise permitted under Section 10.5;
(c)any Restricted Subsidiary that is not a Guarantor may (i) merge, amalgamate or consolidate with or into any other Restricted Subsidiary and (ii) Dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower, a Guarantor or any other Restricted Subsidiary of the Borrower;
(d)any Guarantor may (i) merge, amalgamate or consolidate with or into any other Guarantor, (ii) merge, amalgamate or consolidate with or into any other Subsidiary which is not a Guarantor or Dispose of any or all of its assets (upon voluntary liquidation or otherwise) to any other Subsidiary that is not a Guarantor; provided that if such Guarantor is not the surviving entity, such merger, amalgamation or consolidation shall be deemed to be, and any such Disposition shall be, (A) an “Investment” and subject to the limitations set forth in Section 10.5 and (B) a “Disposition” and subject to the
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limitations set forth in Section 10.4(b), and (iii) Dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower or any other Guarantor;
(e)any Restricted Subsidiary may liquidate or dissolve if (i) the Borrower determines in good faith that such liquidation or dissolution is in the best interests of the Borrower and is not materially disadvantageous to the Lenders and (ii) to the extent such Restricted Subsidiary is a Credit Party, any assets or business of such Restricted Subsidiary not otherwise Disposed of or transferred in accordance with Section 10.4 or Section 10.5, in the case of any such business, discontinued, shall be transferred to, or otherwise owned or conducted by, a Credit Party after giving effect to such liquidation or dissolution;
(f)the Borrower and its Restricted Subsidiaries may consummate (x) the Transactions or (y) the IPOCo Transactions of the type described in clauses (a) and (b) of the definition thereof;
(g)the Borrower and the Restricted Subsidiaries may consummate a merger, dissolution, liquidation, amalgamation, consolidation or Disposition, the purpose of which is to effect a Disposition permitted pursuant to Section 10.4 or an Investment permitted by Section 10.5; and
(h)any merger the sole purpose of which is to reincorporate or reorganize a Credit Party in another jurisdiction in the United States shall be permitted as long as such merger does not adversely affect the value of the Collateral in any material respect and the surviving entity assumes all Obligations of the applicable Credit Party under the Credit Documents and delivers any applicable information requested by the Administrative Agent or any Lender under applicable “know your customer” and anti-money laundering rules and regulations, including the Patriot Act.
Section 10.4Limitation on Sale of Assets. The Borrower will not, and will not permit any of the Restricted Subsidiaries to, (x) convey, sell, lease, sell and leaseback, assign, farm-out, transfer or otherwise dispose (each of the foregoing a “Disposition”) of any of its property, business or assets (including receivables and leasehold interests), whether now owned or hereafter acquired or (y) sell to any Person (other than the Borrower or a Guarantor) any shares owned by it of any Restricted Subsidiary’s Stock and Stock Equivalents, except that:
(a)the Borrower and the Restricted Subsidiaries may Dispose of (i) inventory and other goods held for sale, including Hydrocarbons, obsolete, worn out, used or surplus equipment, vehicles and other assets (other than accounts receivable) in the ordinary course of business (including equipment that is no longer necessary for the business of the Borrower or its Restricted Subsidiaries or is replaced by equipment of at least comparable value and use), (ii) Permitted Investments, and (iii) assets (other than Borrowing Base Properties) for the purposes of charitable contributions or similar gifts to the extent such assets are not material to the ability of the Borrower and its Restricted Subsidiaries, taken as a whole, to conduct its business in the ordinary course;
(b)the Borrower and the Restricted Subsidiaries may Dispose of any Oil and Gas Properties or any interest therein or the Stock or Stock Equivalents of any Restricted Subsidiary or of any Minority Investment owning Oil and Gas Properties (and including,
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but without limitation, Dispositions in respect of Production Payments and Mineral Interests and in connection with net profits interests, operating agreements, farm-ins, farm-outs, joint exploration and development agreements and other agreements customary in the oil and gas industry for the purpose of developing such Oil and Gas Properties) for Fair Market Value; provided, that, after the Initial Term Loans Repayment Date, if such Disposition of Oil and Gas Properties or of any Stock or Stock Equivalents of any Restricted Subsidiary or Minority Investment owning Oil and Gas Properties involves Borrowing Base Properties included in the most recently delivered Reserve Report and the aggregate PV-9 (calculated at the time of such Disposition) of all such Borrowing Base Properties so directly or indirectly Disposed of since the later of (i) the later of (A) the Closing Date and (B) the last Redetermination Date and (ii) the last adjustment of the Borrowing Base made pursuant to Section 2.14(g) exceeds 5% of the then-effective Borrowing Base, then no later than two Business Days’ after the date of consummation of any such Disposition, the Borrower shall provide notice to the Administrative Agent of such Disposition and the Borrowing Base Properties so Disposed and, at the election of the Required Lenders, the Borrowing Base shall be adjusted in accordance with the provisions of Section 2.14(g);
(c)the Borrower and the Restricted Subsidiaries may Dispose of property or assets to the Borrower or to a Restricted Subsidiary; provided that if the transferor of such property is a Credit Party (i) the transferee thereof must be a Credit Party or (ii) such transaction is permitted under Section 10.5;
(d)the Borrower and any Restricted Subsidiary may effect any transaction permitted by Section 10.2, Section 10.3 (other than Section 10.3(g)), Section 10.5 (other than Section 10.5(x)) or Section 10.6;
(e)the Borrower and the Restricted Subsidiaries may lease, sublease, license or sublicense (on a non-exclusive basis with respect to any intellectual property) real, personal or intellectual property in the ordinary course of business;
(f)after the Initial Term Loans Repayment Date, Dispositions (including like-kind exchanges) of property (other than Borrowing Base Properties) to the extent that (i) such property is exchanged for credit against the purchase price of similar replacement property or (ii) the proceeds of such Disposition are applied to the purchase price of such replacement property, in each case under Section 1031 of the Code or otherwise;
(g)Dispositions of Hydrocarbon Interests to which no Proved Reserves are attributable and farm-outs of undeveloped acreage to which no Proved Reserves are attributable and assignments in connection with such farm-outs;
(h)Dispositions of Investments in joint ventures (regardless of the form of legal entity) to the extent required by, or made pursuant to, customary buy/sell arrangements between the joint venture parties set forth in joint venture arrangements and similar binding arrangements;
(i)Dispositions listed on Schedule 10.4 (“Scheduled Dispositions”);
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(j)transfers of property subject to a Casualty Event or in connection with any condemnation proceeding with respect to Collateral;
(k)Dispositions of accounts receivable (i) in connection with the settlement, collection or compromise thereof or (ii) to the extent the proceeds thereof are used to prepay any Loans then outstanding;
(l)the unwinding or termination of any Hedge Agreement (subject to the terms of Section 2.14(f)); provided that, prior to the Initial Term Loans Repayment date, each unwind or termination of any Hedge Agreement must result in cash payments being received by the Borrower or its Restricted Subsidiaries;
(m)Dispositions of Oil and Gas Properties or any interest therein and other assets not included in the Borrowing Base (including, without limitation, the Stock or Stock Equivalents of any Restricted Subsidiary or any Minority Investment owning Oil and Gas Properties that are not Borrowing Base Properties);
(n)to extent constituting a Disposition, customary after pay-out reversions of Oil and Gas Properties in agreements entered into in the ordinary course of business, provided that the before pay-out and after pay-out interests of the Borrower and its Restricted Subsidiaries are set forth in the Reserve Report;
(o)after the Initial Term Loans Repayment Date, any issuance or sale of Stock or Stock Equivalents in, or sale of Indebtedness or other securities of, an Unrestricted Subsidiary (or a Restricted Subsidiary which owns an Unrestricted Subsidiary so long as such Restricted Subsidiary owns no assets other than the Stock or Stock Equivalents of such Unrestricted Subsidiary);
(p)any surrender, expiration or waiver of contract rights or oil and natural gas leases or the settlement, release, recovery on or surrender of contract, tort or other rights or litigation claims of any kind in the ordinary course of business or consistent with industry practice;
(q)Disposition of any asset between or among the Borrower and/or its Restricted Subsidiaries as a substantially concurrent interim Disposition in connection with a Disposition otherwise permitted pursuant to Section 10.4(a) through (p) above;
(r)the lapse or abandonment in the ordinary course of business of any registrations or applications for registration of any immaterial intellectual property rights; and
(s)Dispositions of any assets having a Fair Market Value not to exceed $5,000,000 in the aggregate during any 12- month period.
To the extent any Collateral is Disposed of as permitted by this Section 10.4 to any Person other than a Credit Party, such Collateral shall be sold free and clear of the Liens created by the Credit Documents, and upon the certification by the Borrower that such Disposition is permitted by this Agreement (if requested by the Administrative Agent), the Administrative Agent shall be authorized (and is hereby directed by each of the Lenders) to take any actions
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reasonably requested by the Borrower in order to effect the foregoing at Borrower’s sole cost and expense. Notwithstanding anything to the contrary contained in this Section 10.4, prior to the Initial Term Loans Repayment Date, all Dispositions of Properties pursuant to Section 10.4(b), Section 10.4(g), Section 10.4(m) and Section 10.4(s) and each unwind or termination of any Hedge Agreement pursuant to Section 10.4(l) shall be for Fair Market Value, and the Borrower or its Restricted Subsidiaries shall receive (a) 75% (or 100% during any Excess Cash Borrowing Base Deficiency Period) of the consideration for such Disposition (except during any Excess Cash Borrowing Base Deficiency Period, other than in respect of a Disposition of Properties pursuant to Section 10.4(s)) in the form of cash and (b) 100% of the consideration for such unwind or termination of any Hedge Agreement pursuant to Section 10.4(l) in the form of cash.
Section 10.5Limitation on Investments. The Borrower will not, and will not permit any of the Restricted Subsidiaries, to make any Investment except:
(a)extensions of trade credit and purchases of assets and services (including purchases of inventory, supplies and materials) in the ordinary course of business;
(b)Investments in assets that constituted Permitted Investments at the time such Investments were made;
(c)after the Initial Term Loans Repayment Date, loans and advances to officers, directors, employees and consultants of the Borrower (or any direct or indirect parent thereof) or any of its Restricted Subsidiaries (i) for reasonable and customary business-related travel, entertainment, relocation and analogous ordinary business purposes (including employee payroll advances), (ii) in connection with such Person’s purchase of Stock or Stock Equivalents of the Borrower (or any direct or indirect parent thereof; provided that, to the extent such loans and advances are made in cash, the amount of such loans and advances used to acquire such Stock or Stock Equivalents shall be contributed to the Borrower in cash) and (iii) for purposes not described in the foregoing subclauses (i) and (ii); provided that the aggregate principal amount outstanding pursuant to subclause (iii) shall not exceed $5,000,000;
(d)(i) Investments existing or contemplated on, or made pursuant to commitments in existence or contemplated on, the Closing Date as set forth on Schedule 10.5, (ii) Investments existing on the Closing Date of the Borrower or any Subsidiary in any other Subsidiary and (iii) any extensions, modifications, replacements, renewals or reinvestments thereof, so long as the amount of any Investment made pursuant to this Section 10.5(d) is not increased at any time above the amount of such Investment set forth on Schedule 10.5 (other than (a) pursuant to an increase as required by the terms of any such Investment as in existence on the Closing Date or (b) as otherwise permitted under this Section 10.5);
(e)any Investments received by the Borrower or any of its Restricted Subsidiaries: (i) in connection with or as a result of the bankruptcy, workout, reorganization or recapitalization of suppliers or customers or settlement of delinquent obligations of, and other disputes with or judgments against, customers, (ii) in satisfaction of judgments against other Persons, (iii) as a result of a foreclosure with respect to any secured Investment or other transfer of title with respect to any secured Investment or (iv)
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as a result of the settlement, compromise or resolution of litigation, arbitration or other disputes with Persons who are not Affiliates;
(f)Investments to the extent that payment for such Investments is made with Stock or Stock Equivalents (other than Disqualified Stock not otherwise permitted by Section 10.1) of the Borrower (or any direct or indirect parent thereof);
(g)Investments (i) by the Borrower in any Guarantor or by any Guarantor in the Borrower, (ii) by any Restricted Subsidiary that is not a Guarantor in the Borrower or any other Restricted Subsidiary (iii) constituting Permitted Intercompany Activities and (iv) by the Borrower or any Guarantor in any Restricted Subsidiary that is not a Guarantor, valued at the Fair Market Value (determined by the Borrower in good faith) of such Investment at the time each such Investment is made, in an aggregate amount pursuant to this Section 10.5(g)(iv) that, at the time such Investment is made, would not exceed the sum of (A) after the Initial Term Loans Repayment Date, the greater of (x) $7,500,000 and (y) 1.25% of Total Assets at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value), (B) the Applicable Equity Amount at such time and (C) to the extent not otherwise included in the determination of the Applicable Equity Amount, an amount equal to any repayments, interest, returns, profits, distributions, income and similar amounts actually received in cash in respect of any such Investment (which amount shall not exceed the amount of such Investment valued at the Fair Market Value of such Investment at the time such Investment was made) (it being understood that to the extent any Investment made pursuant to this Section 10.5(g)(iv) was made by using the Applicable Equity Amount, then the amounts referred to in clause (C) shall, to the extent of the original usage of the Applicable Equity Amount, be deemed to reconstitute such amounts);
(h)Investments constituting Permitted Acquisitions; provided that the aggregate amount of Permitted Acquisition Consideration of such Permitted Acquisitions made or provided by the Borrower or any Restricted Subsidiary to acquire any Person that does not become a Credit Party or merge, consolidate or amalgamate into a Credit Party or any assets that shall not, immediately after giving effect to such Permitted Acquisition, be owned by Credit Party, shall not exceed the sum of (i) after the Initial Term Loans Repayment Date, the greater of (x) $12,000,000 and (y) 2.0% of Total Assets at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value), (ii) the Applicable Equity Amount at such time and (iii) to the extent not otherwise included in the determination of the Applicable Equity Amount, an amount equal to any repayments, interest, returns, profits, distributions, income and similar amounts actually received in cash in respect of any such Investment (which amount shall not exceed the amount of such Investment valued at the Fair Market Value of such Investment at the time such Investment was made) (it being understood that to the extent any Investment made pursuant to this Section 10.5(h) was made by using the Applicable Equity Amount, then the amounts referred to in this clause (iii) shall, to the extent of the original usage of the Applicable Equity Amount, be deemed to reconstitute such amounts);
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(i)Investments (including but not limited to (i) Minority Investments and Investments in Unrestricted Subsidiaries, (ii) Investments in joint ventures (regardless of the form of legal entity) or similar Persons that do not constitute Restricted Subsidiaries, (iii) Investments in Subsidiaries that are not Credit Parties, (iv) Permitted Acquisitions and (v) Investments in respect of royalty trusts and master limited partnerships), in each case valued at the Fair Market Value (determined by the Borrower acting in good faith) of such Investment at the time each such Investment is made, in an aggregate amount pursuant to this Section 10.5(i) that, at the time each such Investment is made, would not exceed the sum of (A) after the Initial Term Loans Repayment Date, the greater of (x) $15,000,000 and (y) 2.5% of Total Assets at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value) plus (B) the Applicable Equity Amount at such time plus (C) to the extent not otherwise included in the determination of the Applicable Equity Amount, an amount equal to any repayments, interest, returns, profits, distributions, income and similar amounts actually received in cash in respect of any such Investment (which amount shall not exceed the amount of such Investment valued at the Fair Market Value of such Investment at the time such Investment was made) (it being understood that to the extent any Investment made pursuant to this Section 10.5(i) was made by using the Applicable Equity Amount, then the amounts referred to in clause (C) shall, to the extent of the original usage of the Applicable Equity Amount, be deemed to reconstitute such amounts); provided that, after the Initial Term Loans Repayment Date, the foregoing limits shall not apply during the period in which, and Investments may be made pursuant to this Section 10.5(i) without limit at any such time during which, after giving Pro Forma Effect to the making of any such Investment, (i) no Event of Default shall have occurred and be continuing, (ii) Liquidity is not less than 15% of the then effective Loan Limit (on a Pro Forma Basis after giving effect to such Investment) and (iii) the Consolidated Total Debt to Consolidated EBITDAX Ratio is not greater than 2.75 to 1.00 (on a Pro Forma Basis after giving effect to such Investment); provided, further, that intercompany Current Liabilities incurred in the ordinary course of business and consistent with past practices, in connection with the cash management operations of the Borrower and the Subsidiaries shall not be included in calculating any limitations in this paragraph at any time;
(j)[reserved];
(k)[reserved];
(l)Investments constituting promissory notes and other non-cash proceeds of Dispositions of assets to the extent permitted by Section 10.4;
(m)Investments made to repurchase or retire Stock or Stock Equivalents of the Borrower or any direct or indirect parent thereof owned by the Sponsor or its Affiliates or any employee or any stock ownership plan or key employee stock ownership plan of the Borrower (or any direct or indirect parent thereof); provided that such Investment is otherwise permitted by Section 10.6(i);
(n)[reserved];
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(o)loans and advances to any direct or indirect parent of the Borrower in lieu of, and not in excess of the amount of, Dividends to the extent permitted to be made to such parent in accordance with Section 10.6;
(p)Investments consisting of extensions of credit in the nature of accounts receivable or notes receivable arising from the grant of trade credit in the ordinary course of business, and Investments received in satisfaction or partial satisfaction thereof from financially troubled account debtors and other credits to suppliers in the ordinary course of business;
(q)Investments in the ordinary course of business consisting of endorsements for collection or deposit and customary trade arrangements with customers consistent with past practices or industry practice;
(r)advances of payroll payments to employees, consultants or independent contractors or other advances of salaries or compensation to employees, consultants or independent contractors, in each case in the ordinary course of business;
(s)guarantee obligations of the Borrower or any Restricted Subsidiary of leases (other than Capital Leases) or of other obligations that do not constitute Indebtedness, in each case entered into in the ordinary course of business;
(t)Investments held by a Person acquired (including by way of merger, amalgamation or consolidation) after the Closing Date otherwise in accordance with this Section 10.5 to the extent that such Investments were not made in contemplation of or in connection with such acquisition, merger, amalgamation or consolidation and were in existence on the date of such acquisition, merger, amalgamation or consolidation;
(u)Investments in (a) after the Initial Term Loans Repayment Date, Industry Investments and (b) in interests in additional Oil and Gas Properties and gas gathering systems, gas processing plants and pipeline systems and any related infrastructure related thereto or Investments related to farm-out, farm-in, joint operating, joint venture (other than a joint venture in the form of a partnership, corporation, or limited liability company), joint development or other area of mutual interest agreements, other similar industry investments, gathering systems, pipelines or other similar oil and gas exploration and production business arrangements whether through direct ownership or ownership through a joint venture or similar arrangement (other than a joint venture in the form of a partnership, corporation, or limited liability company);
(v)to the extent constituting Investments, the Transactions;
(w)Investments in Hedge Agreements permitted by Section 10.1 and Section 10.10;
(x)Investments consisting of Indebtedness, fundamental changes, Dispositions and Dividends permitted under Section 10.1, Section 10.3 (other than Section 10.3(a), (b) and (g)), Section 10.4 (other than Section 10.4(d)) and Section 10.6 (other than Section 10.6(c));
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(y)Investments consisting of licensing of intellectual property pursuant to joint marketing arrangements with other Persons in the ordinary course of business;
(z)Investments resulting from pledges and deposits under clauses (d) and (e) of the definition of “Permitted Liens” and clauses (j) and (o) of Section 10.2;
(aa)advances in the form of a prepayment of expenses, so long as such expenses are being paid in accordance with customary trade terms of the Borrower or the relevant Restricted Subsidiary;
(ab)Investments made in the ordinary course of business in connection with obtaining, maintaining or renewing client contacts and loans or advances made to distributors in the ordinary course of business;
(ac)[reserved];
(ad)Investments consisting of the contribution of Stock or Stock Equivalents of any Foreign Subsidiary or FSHCO to any other Foreign Subsidiary or FSHCO;
(ae)after the Initial Term Loans Repayment Date, Investments in Restricted Subsidiaries which are not Guarantors, joint ventures and Unrestricted Subsidiaries having an aggregate Fair Market Value (determined by the Borrower acting in good faith), taken together with all other Investments made pursuant to this Section 10.5(ee) that are at the time outstanding, without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of marketable securities (until such proceeds are converted to cash equivalents) not to exceed the greater of (x) $7,500,000 and (y) 1.25% of Total Assets at the time of such Investment (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value);
(af)any Investment by any Captive Insurance Subsidiary in connection with its provision of insurance to the Borrower or any of its Subsidiaries, which Investment is made in the ordinary course of business or consistent with industry practice of such Captive Insurance Subsidiary, or by reason of applicable law, rule, regulation or order, or that is required or approved by any regulatory authority having jurisdiction over such Captive Insurance Subsidiary or its business, as applicable;
(ag)prior to the Initial Term Loans Repayment Date, Investments having an aggregate Fair Market Value (determined by the Borrower acting in good faith), taken together with all other Investments made pursuant to this Section 10.5(gg) that are at the time outstanding, not to exceed $5,000,000 (or $10,000,000 with the consent of the Majority Lenders) (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value);
(ah)[reserved];
(ai)any Investment constituting a Disposition or transfer of any asset between or among the Borrower and/or its Restricted Subsidiaries as a substantially concurrent
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interim Disposition or transfer in connection with an Investment otherwise permitted pursuant to clauses (a) through (gg) above.
    For purposes of determining compliance with this Section 10.5, in the event that an item of Investment meets the criteria of more than one of the categories of Investments described in clauses (a) through (ii) above, the Borrower may, in its sole discretion, classify or later divide, classify or reclassify all or a portion of such item of Investment or any portion thereof in a manner that complies with this Section 10.5 and will only be required to include the amount and type of such Investment in one or more of the above clauses. In the event that a portion of the Investments could be classified as incurred under a “ratio-based” basket (giving Pro Forma Effect to the making of such Investments), the Borrower, in its sole discretion, may classify such portion of such Investment as having been incurred pursuant to such “ratio-based” basket and thereafter the remainder of the Investments as having been incurred pursuant to one or more of the other clauses of this Section 10.5 and if any such test would be satisfied in any subsequent fiscal quarter following the relevant date of determination, then such reclassification shall be deemed to have automatically occurred at such time. Notwithstanding anything to the contrary contained in this Agreement, prior to the Initial Term Loans Repayment Date, the Borrower may not make Investments in reliance on the foregoing clauses (g)(iv), (h), (i) or (gg) during any Excess Cash Borrowing Base Deficiency Period.
Section 10.6Limitation on Dividends. The Borrower will not, and will not permit any of its Restricted Subsidiaries to, declare or make (i) any dividends (other than Dividends payable solely in its Stock that is not Disqualified Stock) or return any capital to its equity holders or make any other distribution, payment or delivery of property or cash to its equity holders as such, or redeem, retire, purchase or otherwise acquire for consideration any shares of any class of its Stock or Stock Equivalents or the Stock or Stock Equivalents of any direct or indirect parent now or hereafter outstanding, or set aside any funds for any of the foregoing purposes, or permit any of the Restricted Subsidiaries to purchase or otherwise acquire for consideration (other than in connection with an Investment permitted by Section 10.5) any Stock or Stock Equivalents of the Borrower (or any direct or indirect parent thereof), now or hereafter outstanding or (ii) any payment of fees (including, but not limited to, management, monitoring, consulting, transaction, termination and advisory fees and related indemnities and expenses) or any payments to the Sponsor made for any financial advisory, financing, underwriting or placement services or in respect of other investment banking activities (including in connection with acquisitions or divestitures) by the Credit Parties or their Subsidiaries to the Sponsor (all of the foregoing, “Dividends”); except that:
(a)the Borrower and its Restricted Subsidiaries may (or may pay Dividends to permit any direct or indirect parent thereof to) redeem in whole or in part any of its Stock or Stock Equivalents in exchange for another class of its (or such parent’s) Stock or Stock Equivalents or with proceeds from substantially concurrent equity contributions or issuances of new Stock or Stock Equivalents; provided that such new Stock or Stock Equivalents contain terms and provisions at least as advantageous to the Lenders in all material respects to their interests as those contained in the Stock or Stock Equivalents redeemed thereby; and the Borrower and its Restricted Subsidiaries may pay Dividends payable solely in the Stock and Stock Equivalents (other than Disqualified Stock not otherwise permitted by Section 10.1) of the Borrower;
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(b)after the Initial Term Loans Repayment Date, the Borrower and its Restricted Subsidiaries may (i) (or may pay dividends to permit any direct or indirect parent thereof to) redeem, acquire, retire or repurchase shares of its (or such parent’s) Stock or Stock Equivalents held by any future, present or former officer, manager, consultant, independent contractor, director or employee (or their respective Affiliates, estates, spouses, former spouses, successors, executors, administrators, heirs, legatees, distributees or immediate family members) of the Borrower and its Subsidiaries or any parent thereof, upon the death, disability, retirement or termination of employment of any such Person or otherwise in accordance with any equity option or equity appreciation rights plan, any management, director and/or employee equity ownership, benefit or incentive plan or agreement, equity subscription plan, employment termination agreement or any other employment agreements or equity holders’ agreement; provided that, except with respect to non-discretionary repurchases, acquisitions, retirements or redemptions pursuant to the terms of any equity option or equity appreciation rights plan, any management, director and/or employee equity ownership, benefit or incentive plan or agreement, equity subscription plan, employment termination agreement or any other employment agreements or equity holders’ agreement, the aggregate amount of all cash paid in respect of all such shares of Stock or Stock Equivalents so redeemed, acquired, retired or repurchased in any calendar year does not exceed the sum of (A) $2,000,000 (which shall increase to $4,000,000 subsequent to the consummation of a Qualified IPO) (with unused amounts in any calendar year being carried over to succeeding calendar years subject to a maximum of $3,000,000 in any calendar year (which shall increase to $6,000,000 subsequent to the consummation of a Qualified IPO)) plus (B) all net cash proceeds obtained by or contributed to the Borrower and its Subsidiaries during such calendar year from the sale of such Stock or Stock Equivalents to other future, present or former officers, consultants, employees, directors and managers in connection with any permitted compensation and incentive arrangements plus (C) all net cash proceeds obtained from any key-man life insurance policies received during such calendar year plus (D) the amount of any cash bonuses otherwise payable to members of management, directors or consultants of the Borrower or its Subsidiaries or any parent thereof in connection with the Transactions that are foregone in return for the receipt of Stock or Stock Equivalents; notwithstanding the foregoing, the Borrower may elect to apply all or any portion of the aggregate increase contemplated by clauses (B), (C) and (D) above in any calendar year; and (ii) pay Dividends in an amount equal to withholding or similar Taxes payable or expected to be payable by any future, present or former employee, officer, director, manager or consultant (or their respective Affiliates, estates or immediate family members) and any repurchases of Stock or Stock Equivalents in consideration of such payments including deemed repurchases in connection with the exercise of stock options so long as the amount of such payments does not exceed $10,000,000 in the aggregate; provided, further, that cancellation of Indebtedness owing to the Borrower or any of its Restricted Subsidiaries from any future, present or former employee, officer, director, manager or consultant (or their respective Affiliates, estates or immediate family members), of the Borrower, any Restricted Subsidiary, any direct or indirect parent company of the Borrower or any of the Borrower’s Restricted Subsidiaries in connection with a repurchase of Stock or Stock Equivalents of the Borrower or any of its direct or indirect parent companies will not be deemed to constitute a Dividend for purposes of this covenant or any other provision of this Agreement;
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(c)to the extent constituting Dividends, the Borrower and its Restricted Subsidiaries may (i) make Investments permitted by Section 10.5 (other than Section 10.5(x)) and (ii) enter into and consummate transactions expressly permitted by any provision of Section 10.3;
(d)the Borrower and its Restricted Subsidiaries may pay fees to KKR Capital Markets LLC or any of its Affiliates in connection with a debt or equity capital raise by the Borrower or any of its Subsidiaries that results in the Borrower and its Subsidiaries receiving (including after giving effect to the payment of such fees) a net positive amount of cash proceeds; provided that the aggregate amount of fees paid by the Borrower and/or its Restricted Subsidiaries in connection with any such debt capital raise shall not exceed three (3%) percent of the total amount raised from such debt or equity capital raise for the term of this Agreement;
(e)after the Initial Term Loans Repayment Date, the Borrower and its Restricted Subsidiaries may repurchase Stock or Stock Equivalents of the Borrower (or any direct or indirect parent thereof) and its Restricted Subsidiaries upon exercise of stock options or warrants if such Stock or Stock Equivalents represents all or a portion of the exercise price of such options or warrants;
(f)the Borrower and its Restricted Subsidiaries may make and pay Dividends to any of their direct or indirect parent entities:
(i)the proceeds of which will be used to pay (or to make Dividends to allow any direct or indirect parent of the Borrower to pay) franchise and excise taxes, and other fees and expenses, required to maintain its organizational existence;
(ii)the proceeds of which shall be used to allow any direct or indirect parent of the Borrower and its Restricted Subsidiaries to pay its operating expenses incurred in the ordinary course of business and other corporate overhead costs and expenses (including professional, administrative, legal, accounting and similar expenses provided by third parties, real and personal property Taxes, franchise, excise or similar taxes and fees and expenses required to maintain its corporate existence or good standing under applicable law), which are reasonable and customary and incurred in the ordinary course of business and attributable to the ownership or operations of the Borrower and its Restricted Subsidiaries, including any actual, reasonable and customary indemnification claims made by directors or officers of the Borrower (or any parent thereof) and its Restricted Subsidiaries;
(iii)after the Initial Term Loans Repayment Date, the proceeds of which shall be used by such parents to pay Dividends permitted by Section 10.6(b);
(iv)after the Initial Term Loans Repayment Date, the proceeds of which shall be used to make Dividends to allow any direct or indirect parent thereof to pay fees and expenses (other than to Affiliates) related to any equity issuance or offering or debt issuance, incurrence or offering, Disposition or
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acquisition or investment transaction permitted by this Agreement, whether or not consummated;
(v)the proceeds of which shall be used to pay customary salary, bonus, severance and other benefits payable to officers, employees and consultants of any direct or indirect parent thereof (to the extent such salaries, bonuses, severances and other benefits are attributable to the ownership or operation of the Borrower and its Restricted Subsidiaries);
(vi)in the form of Stock or Stock Equivalents of the Borrower and its Restricted Subsidiaries (other than Disqualified Stock not otherwise permitted by Section 10.1);
(vii)the proceeds of which will be used to pay (or to make Dividends to allow any parent entity to pay) with respect to any taxable period (x) for which the Borrower and/or any of its Subsidiaries are members of a consolidated, combined, affiliated, unitary or similar income tax group for U.S. federal and/or applicable state or local income Tax purposes of which any holding company of the Borrower and/or its Subsidiaries is the common parent, or (y) for which the Borrower and/or its Subsidiaries is a partnership or disregarded entity for U.S. federal income tax purposes that is wholly owned (directly or indirectly) by a C corporation for U.S. federal and/or applicable state or local income Tax purposes, in an amount not to exceed the amount of any U.S. federal, state and/or local income Taxes that the Borrower and/or its Subsidiaries, as applicable, would have paid for such taxable period had the Borrower and/or its Subsidiaries, as applicable, been a stand-alone corporate taxpayer or a stand-alone corporate group; provided that distributions pursuant to this clause (vii) in respect of an Unrestricted Subsidiary shall be permitted to the extent that cash distributions were made by such Unrestricted Subsidiary to the Borrower or any of its Restricted Subsidiaries for such purpose;
(viii)in such amounts as are needed to pay any amounts owed by a direct or indirect parent of the Borrower or IPOCo, as applicable, under any tax receivable agreement as contemplated by the definition of “IPOCo Transactions”;
(ix)with respect to any taxable period ending after the Closing Date for which the Borrower and/or its Subsidiaries is a partnership or disregarded entity for U.S. federal income Tax purposes (other than a partnership or disregarded entity described in clause (vii)(y) above), distributions to each owner in an amount necessary to permit such owner to pay its U.S. federal (including, for the avoidance of doubt, any Taxes imposed on “net investment income” by Section 1411 of the Code), state and/or local income Taxes (including any estimated Taxes payable) (as applicable) attributable (including, for the avoidance of doubt, as a result of any guaranteed payments deemed received by such owner pursuant to Section 707(c) of the Code (other than guaranteed payments in respect of services performed by such owner)) to its direct or indirect ownership of the Borrower and its Subsidiaries with respect to such taxable period (assuming that each owner is subject to Tax at the highest combined marginal federal, state and/
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or local income tax rate applicable to an individual or corporate taxpayer, as applicable, resident of New York, New York for such taxable period and taking into account (i) the deductibility of state and local income taxes for U.S. federal income tax purposes (and any limitations thereon), (ii) any cumulative net taxable loss of the Borrower allocated to such owner for prior taxable periods ending after the Closing Date and not already taken into account in determining the amount of Tax distributions under this clause (ix) to the extent such loss is of a character that would allow such loss to be available to reduce Taxes in the current taxable period (taking into account any limitations on the utilization of such loss to reduce such Taxes and provided such loss had not already been utilized), (iii) the character (e.g. long-term or short-term capital gain or ordinary or exempt) of the applicable income) and (iv) any adjustments made under Section 754 of the Code; provided that distributions pursuant to this clause (ix) in respect of an Unrestricted Subsidiary shall be permitted to the extent that cash distributions were made by such Unrestricted Subsidiary to the Borrower or any of its Restricted Subsidiaries for such purpose; or
(x)to finance Permitted Acquisitions and other Investments or other acquisitions in each case otherwise permitted to be made under Section 10.5 if made by the Borrower and/or its Restricted Subsidiaries; provided, that (A) such Dividend shall be made substantially concurrently with the closing of such Investment or other acquisition, (B) such direct or indirect parent company shall, promptly following the closing thereof, cause (1) all property acquired (whether assets or Stock or Stock Equivalents) to be contributed to the capital of the Borrower or one or more of its Restricted Subsidiaries or (2) the merger, amalgamation, consolidation, or sale of the Person formed or acquired into the Borrower or one of its Restricted Subsidiaries (to the extent not prohibited by Section 10.3) in order to consummate such Investment or other acquisition, (C) such direct or indirect parent company and its Affiliates (other than the Borrower or a Restricted Subsidiary) receives no consideration or other payment in connection with such transaction except to the extent the Borrower or a Restricted Subsidiary would have been permitted to give such consideration or make such payment in compliance herewith, (D) any property received by the Borrower shall not increase the Applicable Equity Amount and (E) to the extent constituting an Investment, such Investment shall be deemed to be made by Borrower or such Restricted Subsidiary pursuant to Section 10.5 for the purposes of calculating compliance with the baskets thereunder;
(g)the Borrower or any of the Restricted Subsidiaries may (i) pay cash in lieu of fractional shares in connection with any dividend, split or combination thereof or any Permitted Acquisition or other Investment permitted under Section 10.5 and (ii) so long as, after giving Pro Forma Effect thereto, (A) no Default or Event of Default shall have occurred and be continuing and (B) no Borrowing Base Deficiency exists, honor any conversion request by a holder of convertible Indebtedness and make cash payments in lieu of fractional shares in connection with any such conversion and may make payments on convertible Indebtedness in accordance with its terms;
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(h)the Borrower and/or its Restricted Subsidiaries may pay or consummate any Dividend (including the consummation of any irrevocable redemption) within 60 days after the date of declaration thereof, if at the date of declaration such payment would have complied with the provisions of this Agreement;
(i)after the Initial Term Loans Repayment Date, so long as, after giving Pro Forma Effect thereto, (i) no Event of Default or Borrowing Base Deficiency shall have occurred and be continuing, (ii) Liquidity is not less than 20% of the then effective Loan Limit (on a Pro Forma Basis after giving effect to such Dividend) and (iii) the Consolidated Total Debt to Consolidated EBITDAX Ratio is not greater than 2.50 to 1.00 (on a Pro Forma Basis after giving effect to such Dividend), the Borrower or its Restricted Subsidiaries may declare and pay additional Dividends without limit in cash or otherwise to the holders of its Stock and Stock Equivalents; provided, that, in the case of any Dividend in the form of assets other than cash, no such Dividend shall be made if a Borrowing Base Deficiency would result from an adjustment to the Borrowing Base resulting from such Dividend (unless the Borrower shall have cash on hand sufficient to eliminate any such potential Borrowing Base Deficiency);
(j)[reserved];
(k)after the Initial Term Loans Repayment Date, in addition to the foregoing Dividends and so long as (x) no Event of Default or Borrowing Base Deficiency shall have occurred and be continuing or would result therefrom before or after giving effect to the payment of any such Dividend and (y) the Borrower shall be in compliance on a Pro Forma Basis with the Financial Performance Covenants as such covenant is re-computed as of the last day of the most recently ended Test Period as if the amount of any Cure Amount made for such Test Period were not made if the amount of the Applicable Equity Amount after paying or declaring the proposed Dividends in this Section 10.6(k) is less than or equal to the amount of such Cure Amount, the Borrower or its Restricted Subsidiaries may declare and pay Dividends in an aggregate amount not to exceed the Applicable Equity Amount at the time such Dividend is paid;
(l)the Borrower and its Restricted Subsidiaries may consummate the Transactions (and pay fees and expenses in connection therewith on or following the Closing Date);
(m)after the Initial Term Loans Repayment Date, payments and distributions to dissenting stockholders pursuant to applicable law, pursuant to or in connection with a consolidation, merger, amalgamation or transfer of all or substantially all of the assets of the Borrower and its Restricted Subsidiaries that complies with the terms of this Agreement; provided that the aggregate amount of all such payments and distributions under this clause (m) shall not exceed $20,000,000;
(n)after the Initial Term Loans Repayment Date, the distribution, by dividend or otherwise, of Stock or Stock Equivalents of, or Indebtedness owed to the Borrower or a Restricted Subsidiary by, an Unrestricted Subsidiary (or a Restricted Subsidiary that owns an Unrestricted Subsidiary); provided that such Restricted Subsidiary owns no assets other than Stock or Stock Equivalents of an Unrestricted Subsidiary (other than
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Unrestricted Subsidiaries the primary assets of which are cash and/or Permitted Investments);
(o)after or in connection with the consummation of a Qualified IPO, (i) the Borrower or any Restricted Subsidiary may make Dividends to any direct or indirect parent of the Borrower to pay costs associated with preparations for and implementation of Public Company Compliance, (ii) payments and distributions made in connection with the IPOCo Transactions of the type described in clauses (a) and (b) of the definition thereof and (iii) the payment of all reasonable and customary fees and expenses incurred in connection therewith or owed by the Borrower, a direct or indirect parent of the Borrower or Restricted Subsidiaries of the Borrower; and
(p)any Restricted Subsidiary may make Dividends to the Borrower or any other Restricted Subsidiary; provided that in the case of any such Dividend by a Restricted Subsidiary that is not a wholly-owned Subsidiary, such Dividend is made to the Borrower or any of its Restricted Subsidiaries and to each other owner of Stock or Stock Equivalents of such Restricted Subsidiary based on their relative ownership interests of the relevant class of Stock or Stock Equivalents.
Section 10.7Limitations on Junior Debt Payments and Amendments.
(a)The Borrower will not, and will not permit any Restricted Subsidiary to, voluntarily prepay, repurchase or redeem or otherwise voluntarily defease prior to maturity any Permitted Additional Debt or Permitted Junior Lien Debt (other than AHYDO payments); provided, however, that the Borrower or any Subsidiary may prepay, repurchase, redeem or defease any such Permitted Additional Debt or Permitted Junior Lien Debt:
(i)with cash from any capital contributions or the net cash proceeds of the issuance of Stock (in each case, other than Disqualified Stock);
(ii)with the proceeds of any Permitted Refinancing Indebtedness;
(iii)by converting or exchanging any such Permitted Additional Debt or Permitted Junior Lien Debt to Stock or Stock Equivalents of the Borrower or any direct or indirect parent of the Borrower (other than Disqualified Stock); and
(iv)so long as, after giving Pro Forma Effect thereto, (i) no Event of Default or Borrowing Base Deficiency shall have occurred and be continuing, (ii) Liquidity is not less than 20% of the then effective Loan Limit (on a Pro Forma Basis after giving effect to such prepayment, repurchase, redemption or defeasance) and (iii) the Consolidated Total Debt to Consolidated EBITDAX Ratio is not greater than 2.50 to 1.00 (on a Pro Forma Basis after giving effect to such prepayment, repurchase, redemption or defeasance).
(b)The Borrower will not amend or modify the documentation governing any Permitted Additional Debt or Permitted Junior Lien Debt or, in each case, the terms applicable thereto to the extent that any such amendment or modification, taken as a whole, would be adverse to the Lenders in any material respect, unless such Indebtedness
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in its amended or modified form could be incurred as Permitted Refinancing Indebtedness or as Indebtedness under Section 10.1.
(c)Notwithstanding the foregoing and for the avoidance of doubt, nothing in this Section 10.7 shall prohibit (i) the repayment or prepayment of intercompany subordinated Indebtedness owed among the Borrower and/or the Restricted Subsidiaries, in either case unless a Payment or Bankruptcy Event of Default has occurred and is continuing and the Borrower has received a notice from the Collateral Agent instructing it not to make or permit the Borrower and/or the Restricted Subsidiaries to make any such repayment or prepayment, (ii) substantially concurrent transfers of credit positions in connection with intercompany debt restructurings so long as such Indebtedness is permitted by Section 10.1 after giving effect to such transfer or (iii) the prepayment, repurchase, redemption or other defeasance of any Permitted Junior Lien Debt or any Permitted Additional Debt with an aggregate amount not to exceed the Applicable Equity Amount (with the Applicable Equity Amount being re-computed as of the last day of the most recently ended Test Period as if (A) such prepayment, repurchase, redemption or other defeasance had occurred on the first day of such Test Period and (B) the amount of any Cure Amount made during such Test Period were not made to the extent (1) the amount of the Applicable Equity Amount after making the proposed prepayment, repurchase, redemption or other defeasance is less than or equal to the amount of such Cure Amount and (2) such Cure Amount was necessary for the Borrower to be in compliance on a Pro Forma Basis with the Financial Performance Covenants) at the time of such prepayment, repurchase, redemption or defeasance.
Section 10.8Negative Pledge Agreements. The Borrower will not, and will not permit any of the Restricted Subsidiaries to, enter into or permit to exist any Contractual Requirement (other than this Agreement or any other Credit Document) that limits the ability of the Borrower or any Guarantor to create, incur, assume or suffer to exist Liens on property of such Person for the benefit of the Secured Parties with respect to the Obligations or under the Credit Documents; provided that the foregoing shall not apply to Contractual Requirements that (i)(x) exist on the Closing Date and (to the extent not otherwise permitted by this Section 10.8) are listed on Schedule 10.8 and (y) to the extent Contractual Requirements permitted by clause (x) are set forth in an agreement evidencing Indebtedness or other obligations, are set forth in any agreement evidencing any Permitted Refinancing Indebtedness incurred to Refinance such Indebtedness or obligation so long as such Permitted Refinancing Indebtedness does not expand the scope of such Contractual Requirement, (ii) are binding on a Restricted Subsidiary at the time such Restricted Subsidiary first becomes a Restricted Subsidiary of the Borrower, so long as such Contractual Requirements were not entered into solely in contemplation of such Person becoming a Restricted Subsidiary of the Borrower, (iii) represent Indebtedness of a Restricted Subsidiary of the Borrower that is not a Guarantor to the extent such Indebtedness is permitted by Section 10.1 so long as such Contractual Requirement applies only to such Subsidiary, (iv) arise pursuant to agreements entered into with respect to any sale, transfer, lease or other Disposition permitted by Section 10.4 and applicable solely to assets under such sale, transfer, lease or other Disposition, (v) are customary provisions in joint venture agreements and other similar agreements permitted by Section 10.5 and applicable solely to joint ventures or otherwise arise in agreements which restrict the Disposition or distribution of assets or property in oil and gas leases, joint operating agreements, joint exploration and/or development agreements, participation agreements and other similar agreements entered into in the ordinary course of the
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oil and gas exploration and development business, (vi) are negative pledges and restrictions on Liens in favor of any holder of secured Indebtedness permitted under Section 10.1, but solely to the extent any negative pledge relates to the property financed by or the subject of such Indebtedness, (vii) are customary restrictions on leases, subleases, licenses or asset sale agreements otherwise permitted hereby so long as such restrictions relate to the assets subject thereto, (viii) are restrictions imposed by any agreement relating to Indebtedness permitted pursuant to Section 10.1 or Permitted Refinancing Indebtedness thereof to the extent that such restrictions are not materially more restrictive, taken as a whole, than the restrictions contained in the Credit Documents as determined by the Borrower in good faith, (ix) are customary provisions restricting subletting or assignment of any lease governing a leasehold interest of the Borrower or any Subsidiary, (x) are customary provisions restricting assignment of any agreement entered into in the ordinary course of business, (xi) restrict the use of cash or other deposits imposed by customers under contracts entered into in the ordinary course of business, (xii) are imposed by Requirements of Law, (xiii) exist under any documentation governing any Permitted Refinancing Indebtedness incurred to Refinance any Indebtedness but only to the extent such Contractual Requirement is not materially more restrictive, taken as a whole, than the Contractual Requirement in the Indebtedness being refinanced, (xiv) customary net worth provisions contained in real property leases entered into by Subsidiaries of the Borrower, so long as the Borrower has determined in good faith that such net worth provisions would not reasonably be expected to impair the ability of the Borrower and its Subsidiaries to meet their ongoing obligation and (xv) any restrictions regarding licenses or sublicenses by the Borrower and its Restricted Subsidiaries of intellectual property in the ordinary course of business (in which case such restriction shall relate only to such intellectual property).
Section 10.9Limitation on Subsidiary Distributions. The Borrower will not, and will not permit any of its Restricted Subsidiaries that are not Guarantors to create or otherwise cause or suffer to exist or become effective any consensual encumbrance or consensual restriction on the ability of any such Restricted Subsidiary to pay dividends or make any other distributions to the Borrower or any Restricted Subsidiary on its Stock or with respect to any other interest or participation in, or measured by, its profits or transfer any property to the Borrower or any Restricted Subsidiary except (in each case) for such encumbrances or restrictions existing under or by reason of:
(a)contractual encumbrances or restrictions in effect on the Closing Date, including pursuant to the Credit Documents and any Hedging Obligations;
(b)purchase money obligations for property acquired in the ordinary course of business and Capitalized Lease Obligations that impose restrictions on transferring the property so acquired;
(c)Requirement of Law or any applicable rule, regulation or order;
(d)any agreement or other instrument of a Person acquired by or merged or consolidated with or into the Borrower or any Restricted Subsidiary, or of an Unrestricted Subsidiary that is designated a Restricted Subsidiary, or that is assumed in connection with the acquisition of assets from such Person, in each case that is in existence at the time of such transaction (but not created in contemplation thereof), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person,
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other than the Person and its Subsidiaries, or the property or assets of the Person and its Subsidiaries, so acquired or designated;
(e)contracts for the sale of assets, including customary restrictions with respect to a Subsidiary of the Borrower pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Stock or assets of such Subsidiary;
(f)secured Indebtedness otherwise permitted to be incurred pursuant to Section 10.1 and Section 10.2 as it relates to the right of the debtor to dispose of the assets securing such Indebtedness;
(g)restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;
(h)other Indebtedness, Disqualified Stock or preferred stock of the Borrower and its Restricted Subsidiaries permitted to be incurred subsequent to the Closing Date pursuant to Section 10.1 and either (A) the provisions relating to such encumbrance or restriction contained in such Indebtedness are no less favorable to the Borrower, taken as a whole, as determined by the board of directors of the Borrower in good faith, than the provisions contained in this Agreement as in effect on the Closing Date or (B) any such encumbrance or restriction contained in such Indebtedness does not prohibit (except upon a default or an event of default thereunder) the payment of dividends in an amount sufficient, as determined by the board of directors of the Borrower in good faith, to make scheduled payments of cash interest on the Loans when due;
(i)customary provisions in joint venture agreements or agreements governing property held with a common owner and other similar agreements or arrangements relating solely to such joint venture or property or are otherwise customary encumbrances or restrictions imposed pursuant to any agreement of the type described in the definition of “Industry Investment” entered into in the ordinary course of business;
(j)customary provisions contained in leases, sub-leases, licenses, sub-licenses or similar agreements, in each case, entered into in the ordinary course of business;
(k)any agreements entered into with respect to any sale, transfer, lease or other Disposition permitted by Section 10.4 and applicable solely to assets under such sale, transfer, lease or other Disposition; and
(l)any encumbrances or restrictions imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in Section 10.9(a) through Section 10.9(k) above; provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of the Borrower’s board of directors or managers, no more restrictive in any material respect with respect to such encumbrance and other restrictions taken as a whole than those prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.
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Section 10.10Hedge Agreements. The Borrower will not, and will not permit any Restricted Subsidiary to, enter into any Hedge Agreements with any Person other than:
(a)Hedge Agreements in respect of commodities entered into not for speculative purposes the net notional volumes for which (when aggregated with other commodity Hedge Agreements then in effect, other than puts and floors that are not related to corresponding calls, collars or swaps and with respect to which the Borrower or any Restricted Subsidiary has no payment obligation other than premiums and charges the total amount of which are fixed and known at the time such transaction is entered into, and basis differential swaps on volumes already hedged pursuant to other Hedge Agreements) do not exceed, as of the date the latest hedging transaction is entered into under a Hedge Agreement 85% of the reasonably anticipated Hydrocarbon production from the Credit Parties’ total Proved Reserves (as forecast based upon the most recent Reserve Report); provided that the Borrower may at any time update any such forecast by providing the Administrative Agent additional information reasonably satisfactory to the Administrative Agent reflecting new reasonably anticipated Hydrocarbon production from new wells or other production improvements (any such information, a “Production Forecast Update”) for the 60 month period from the date such hedging arrangement is created (the “Ongoing Hedges”).
(b)In addition to the Ongoing Hedges, in connection with a proposed Permitted Acquisition or pending acquisition of Oil and Gas Properties (a “Proposed Acquisition”), the Credit Parties may also enter into incremental hedging contracts with respect to the Credit Parties’ reasonably anticipated projected production from the total Proved Reserves to be acquired pursuant to such Proposed Acquisition, having notional volumes not in excess of 85% of such projected production from the total Proved Reserves to be acquired pursuant to such Proposed Acquisition for a period not exceeding 48 months (the “Acquisition Hedges”) from the date such hedging arrangement is created during the period between (i) the date on which such Credit Party signs a definitive acquisition agreement in connection with a Proposed Acquisition and (ii) the earliest of (A) the date such Proposed Acquisition is consummated, (B) the date such acquisition is terminated and (C) 90 days after such definitive acquisition agreement was executed (or such longer period as to which the Administrative Agent may agree); provided that to the extent notional volumes hedged by the Credit Parties in connection with a Proposed Acquisition (when aggregated with other commodity Hedge Agreements then in effect) exceed more than 100% of the reasonably anticipated projected production of the Credit Parties (based on the most recently delivered Reserve Report, subject to Production Forecast Updates) prior to such Proposed Acquisition calculated separately for oil and natural gas, the Borrower shall maintain Liquidity of not less than 15.0% of the Borrowing Base while the notional volumes hedged by the Credit Parties exceed 100% of such reasonably anticipated projected production of the Credit Parties (based on the most recently delivered Reserve Report, subject to Production Forecast Updates). However, in its sole discretion, the Administrative Agent may require that all such Acquisition Hedges entered into with respect to a Proposed Acquisition be terminated or unwound within 90 days following the date such acquisition is terminated (it being understood, for avoidance of doubt, that the Acquisition Hedges may be permitted as Ongoing Hedges to the extent such Acquisition Hedges could be entered into pursuant to Section 10.10(a)). It is understood that commodity Hedge Agreements which may, from time to time, “hedge”
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the same volumes, but different elements of commodity risk thereof, shall not be aggregated together when calculating the foregoing limitations on notional volumes.
(c)Other Hedge Agreements (other than those contemplated in clauses (a) through (b) above and any Hedge Agreements in respect of equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions) entered into not for speculative purposes.
(d)If, after the end of any calendar month, the Borrower determines that the aggregate volume of all Ongoing Hedges for which settlement payments were calculated in such calendar month exceeded 100% of actual production of Hydrocarbons in such calendar month, then the Borrower shall terminate, create off-setting positions, allocate volumes to other production for which the Borrower or any Restricted Subsidiaries is marketing, or otherwise unwind existing Hedge Agreements such that, at such time, future hedging volumes will not exceed 100% of reasonably anticipated projected production for the then-current and any succeeding calendar months.
(e)It is understood that for purposes of this Section 10.10, the following Hedge Agreements shall not be deemed speculative or entered into for speculative purposes: (i) any commodity Hedge Agreement intended, at inception of execution, to hedge or manage any of the risks related to existing and or forecasted Hydrocarbon production of the Borrower or its Restricted Subsidiaries (whether or not contracted) and (ii) any Hedge Agreement intended, at inception of execution, (A) to hedge or manage the interest rate exposure associated with any debt securities, debt facilities or leases (existing or forecasted) of the Borrower or its Restricted Subsidiaries, (B) for foreign exchange or currency exchange management, (C) to manage commodity portfolio exposure associated with changes in interest rates or (D) to hedge any exposure that the Borrower or its Restricted Subsidiaries may have to counterparties under other Hedge Agreements such that the combination of such Hedge Agreements is not speculative taken as a whole.
(f)For purposes of entering into or maintaining Ongoing Hedges under Section 10.10(a), forecasts of reasonably projected Hydrocarbon production volumes and reasonably anticipated Hydrocarbon production from the Credit Parties’ total Proved Reserves based upon the Initial Reserve Report or the most recent Reserve Report delivered pursuant to Section 9.14(a), as applicable, shall be revised to account for any increase or decrease therein anticipated because of information obtained by Borrower or any other Credit Party subsequent to the publication of such Reserve Report including the Borrower’s or any other Credit Party’s internal forecasts of production decline rates for existing wells and additions to or deletions from anticipated future production from new wells and acquisitions coming on stream or failing to come on stream.
(g)Notwithstanding anything to the contrary herein, in no event shall any Hedge Agreement with any party other than a Hedge Bank contain any requirement, agreement or covenant for any Credit Party to post collateral or margin.
Section 10.11Financial Performance Covenants.
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(a)Consolidated Total Debt to Consolidated EBITDAX Ratio. Commencing with the Test Period ending June 30, 2026, the Borrower will not permit the Consolidated Total Debt to Consolidated EBITDAX Ratio as of the last day for any Test Period to be greater than 3.5 to 1.0.
(b)Current Ratio. Commencing with the Test Period ending June 30, 2026, the Borrower will not permit the Current Ratio as of the last day of any Test Period to be less than 1.0 to 1.0.
ARTICLE XI
Events of Default
Upon the occurrence of any of the following specified events (each an “Event of Default”):
Section 11.1Payments. The Borrower shall (a) default in the payment when due of any principal of the Loans or (b) default, and such default shall continue for five or more days, in the payment when due of any interest on the Loans or any Unpaid Drawings, fees or of any other amounts owing hereunder or under any other Credit Document (other than any amount referred to in Section 11.1(a) above).
Section 11.2Representations, Etc. Any representation, warranty or statement made or deemed made by any Credit Party herein or in any other Credit Document or any certificate delivered or required to be delivered pursuant hereto or thereto shall prove to be untrue in any material respect on the date as of which made or deemed made.
Section 11.3Covenants. Any Credit Party shall:
(a)default in the due performance or observance by it of any term, covenant or agreement contained in Section 9.1(d)(i), 9.5 (solely with respect to the Borrower), 9.17, 9.18, 9.19 or Section 10 (provided that any Default due to a breach of Section 10.11 is subject to a cure pursuant to Section 11.13); or
(b)default in the due performance or observance by it of any term, covenant or agreement (other than those referred to in Section 11.1 or Section 11.2 or Section 11.3(a)) contained in this Agreement or any Security Document and such default shall continue unremedied for a period of at least 30 days after receipt of written notice thereof by the Borrower from the Administrative Agent.
Section 11.4Default Under Other Agreements.
(a)The Borrower or any of the Restricted Subsidiaries shall (i) default in any payment with respect to any Indebtedness (other than Indebtedness described in Section 11.1) in excess of $50,000,000, beyond the period of grace, if any, provided in the instrument or agreement under which such Indebtedness was created or (ii) default in the observance or performance of any agreement or condition relating to any such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist (other than, (1) with respect to Indebtedness consisting of any Hedging Obligations, termination events or
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equivalent events pursuant to the terms of the related Hedge Agreements, (2) any event requiring prepayment pursuant to customary asset sale or change of control provisions and (3) secured Indebtedness that becomes due as a result of a Disposition (including as a result of Casualty Event) of the property or assets securing such Indebtedness permitted under this Agreement), the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness (or a trustee or agent on behalf of such holder or holders) to cause, any such Indebtedness to become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such Indebtedness to be made, prior to its stated maturity, unless, in the case of each of the foregoing, such holder or holders shall have (or through its or their trustee or agent on its or their behalf) waived such default in a writing to the Borrower; or
(b)without limiting the provisions of clause (a) above, any such default under any such Indebtedness shall cause such Indebtedness to be declared to be due and payable, or required to be prepaid other than by a regularly scheduled required prepayment or as a mandatory prepayment (and (i) with respect to Indebtedness consisting of any Swap Obligations, other than due to a termination event or equivalent event pursuant to the terms of the related Hedge Agreements, (ii) other than pursuant to customary asset sale or change of control provisions and (iii) other than secured Indebtedness that becomes due as a result of a Disposition (including as a result of Casualty Event) of the property or assets securing such Indebtedness permitted under this Agreement), prior to the stated maturity thereof.
Section 11.5Bankruptcy, Etc. The Borrower or any Specified Subsidiary shall commence a voluntary case, proceeding or action concerning itself under (a) Title 11 of the United States Code entitled “Bankruptcy”; or (b) in the case of any Foreign Subsidiary that is a Specified Subsidiary, any domestic or foreign law relating to bankruptcy, judicial management, insolvency, reorganization, administration or relief of debtors in effect in its jurisdiction of incorporation, in each case as now or hereafter in effect, or any successor thereto (collectively, the “Bankruptcy Code”); or an involuntary case, proceeding or action is commenced against the Borrower or any Specified Subsidiary and the petition is not dismissed within 60 days after commencement of the case, proceeding or action or, in connection with any such voluntary proceeding or action, the Borrower or any Specified Subsidiary commences any other proceeding or action under any reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating to the Borrower or any Specified Subsidiary; or a custodian (as defined in the Bankruptcy Code), receiver, receiver manager, trustee or similar Person is appointed for, or takes charge of, all or substantially all of the property of the Borrower or any Specified Subsidiary; or there is commenced against the Borrower or any Specified Subsidiary any such proceeding or action that remains undismissed for a period of 60 days; or any order of relief or other order approving any such case or proceeding or action is entered; or the Borrower or any Specified Subsidiary suffers any appointment of any custodian, receiver, receiver manager, trustee or the like for it or any substantial part of its property to continue undischarged or unstayed for a period of 60 days; or the Borrower or any Specified Subsidiary makes a general assignment for the benefit of creditors.
Section 11.6ERISA.
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(a)Any Plan shall fail to satisfy the minimum funding standard required for any plan year or part thereof or a waiver of such standard or extension of any amortization period is sought or granted under Section 412 of the Code; any Plan is or shall have been terminated or is the subject of termination proceedings under ERISA (including the giving of written notice thereof); an event shall have occurred or a condition shall exist in either case entitling the PBGC to terminate any Plan or to appoint a trustee to administer any Plan (including the giving of written notice thereof); any Plan shall have an accumulated funding deficiency (whether or not waived); the Borrower or any ERISA Affiliate has incurred or is likely to incur a liability to or on account of a Plan under Section 409, 502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201 or 4204 of ERISA or Section 4971 or 4975 of the Code (including the giving of written notice thereof);
(b)there would result from any event or events set forth in Section 11.6(a) the imposition of a lien, the granting of a security interest, or a liability, or the reasonable likelihood of incurring a lien, security interest or liability; and
(c)such lien, security interest or liability will or would be reasonably likely to have a Material Adverse Effect.
Section 11.7Guarantee. The Guarantee or any material provision thereof shall cease to be in full force or effect (other than pursuant to the terms hereof and thereof) or any Guarantor or any other Credit Party shall deny or disaffirm in writing any such Guarantor’s obligations under the Guarantee are in effect or legal, valid and binding obligations (other than pursuant to the terms hereof or thereof).
Section 11.8Security Documents. The Security Agreement, Mortgage or any other Security Document pursuant to which the assets of the Borrower or any Credit Party are pledged as Collateral or any material provision thereof shall cease to be in full force or effect (other than pursuant to the terms hereof or thereof) or any grantor thereunder or any other Credit Party shall deny or disaffirm in writing any grantor’s obligations under the Security Agreement, the Mortgage or any other Security Document are in effect or legal, valid and binding obligations (other than pursuant to the terms hereof or thereof).
Section 11.9Judgments. One or more monetary judgments or decrees shall be entered against the Borrower or any of the Restricted Subsidiaries involving a liability in excess of $50,000,000 in the aggregate for all such judgments and decrees for the Borrower and the Restricted Subsidiaries (to the extent not paid or covered by insurance provided by a carrier not disputing coverage) and any such judgments or decrees shall not have been satisfied, vacated, discharged or stayed or bonded pending appeal within 60 days after the entry thereof.
Section 11.10Change of Control. A Change of Control shall occur.
Section 11.11Intercreditor Agreement. (i) Any of the Obligations of the Credit Parties under the Credit Documents for any reason shall cease to be (x) “Senior Debt,” “Senior Indebtedness,” “Guarantor Senior Debt” or “Senior Secured Financing” (or any comparable term) under, and as defined in, any Permitted Junior Lien Debt Document or (y) “Controlling Senior Obligations,” “Initial Credit Agreement Obligations” or “Senior Obligations” (or any comparable term) under, and as defined in, any Customary Intercreditor Agreement or (ii) the subordination provisions set forth in any Permitted Junior Lien Debt Document shall, in whole or
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in part, cease to be effective or cease to be legally valid, binding and enforceable against the holders of such Permitted Junior Lien Debt, if applicable.
then, and in any such event, and at any time thereafter, if any Event of Default shall then be continuing, the Administrative Agent may and, upon the written request of the Majority Lenders, shall, by written notice to the Borrower, take any or all of the following actions, without prejudice to the rights of the Administrative Agent or any Lender to enforce its claims against the Borrower or any other Credit Party, except as otherwise specifically provided for in this Agreement (provided that, if an Event of Default specified in Section 11.5 shall occur, the result that would occur upon the giving of written notice by the Administrative Agent as specified in clauses (a), (b) and (d) below shall occur automatically without the giving of any such notice): (a) declare the all of the Commitments terminated, whereupon the Commitment of each Lender, as the case may be, shall forthwith terminate immediately and any fees theretofore accrued shall forthwith become due and payable without any other notice of any kind; (b) declare the principal of and any accrued interest and fees in respect of any or all Loans and any or all Obligations owing hereunder and under the other Credit Documents to be, whereupon the same shall become, forthwith due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower; (c) terminate any outstanding Letter of Credit that may be terminated in accordance with its terms; and/or (d) direct the Borrower to pay (and the Borrower agrees that upon receipt of such notice, or upon the occurrence of an Event of Default specified in Section 11.5, it will pay) to the Administrative Agent at the Administrative Agent’s Office such additional amounts of cash, to be held as security for the Borrower’s respective reimbursement obligations for Drawings that may subsequently occur thereunder, equal to the aggregate Stated Amount of all Letters of Credit issued and then outstanding. In addition, after the occurrence and during the continuance of an Event of Default, the Administrative Agent and the Lenders will have all other rights and remedies available at law and equity.
Section 11.12Application of Proceeds. Any amount received by the Administrative Agent or the Collateral Agent from any Credit Party (or from proceeds of any Collateral) following any acceleration of the Obligations under this Agreement or any Event of Default under Section 11.5 shall be applied:
(a)first, to payment or reimbursement of that portion of the Obligations constituting fees, expenses and indemnities payable to the Administrative Agent and/or Collateral Agent in each Person’s capacity as such;
(b)second, to payment of that portion of the Obligations constituting fees, expenses and indemnities (other than principal, interest and Letter of Credit Fees) payable to the Lenders and any Letter of Credit Issuer arising under the Credit Documents, ratably among them in proportion to the respective amounts described in this clause second;
(c)third, to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees and interest on the Loans and Unpaid Drawings, ratably among the Lenders and the Letter of Credit Issuers, in proportion to the respective amounts described in this clause third payable to them;
(d)fourth, (a) to payment of that portion of the Obligations constituting unpaid principal of the Loans, the Unpaid Drawings and Obligations then owing under Secured
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Hedge Agreements and the Secured Cash Management Agreements and (b) to Cash Collateralize that portion of Letters of Credit Outstanding comprising the aggregate undrawn amount of Letters of Credit to the extent not otherwise Cash Collateralized by the Borrower pursuant to Section 3.8, ratably among the Lenders, the Letter of Credit Issuers, the Hedge Banks and the Cash Management Banks in proportion to the respective amounts described in this clause fourth held by them; provided that (x) any such amounts applied pursuant to the foregoing clause (b) shall be paid to the Administrative Agent for the ratable account of the applicable Letter of Credit Issuer to Cash Collateralize such Letters of Credit, (y) subject to Section 3.8, amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to this clause fourth shall be applied to satisfy drawings under such Letters of Credit as they occur and (z) upon the expiration of any Letter of Credit, the pro rata share of cash collateral attributable to such expired Letter of Credit shall be distributed in accordance with this clause fourth;
(e)fifth, to the payment of all other Obligations that are due and payable to the Administrative Agent and the other Secured Parties on such date, ratably based upon the respective aggregate amounts of all such Obligations owing to the Administrative Agent and the other Secured Parties on such date; and
(f)sixth, any surplus then remaining, after all of the Obligations then due shall have been indefeasibly paid in full in cash, shall be paid to the Borrower or its successors or assigns or to whomever may be lawfully entitled to receive the same or as a court of competent jurisdiction may award.
Notwithstanding the foregoing, amounts received from any Credit Party that is not an “eligible contract participant” under the Commodity Exchange Act shall not be applied to any Excluded Swap Obligations; it being understood, that if any amount is applied to any Obligations other than Excluded Swap Obligations as a result of this clause, Administrative Agent shall make such adjustments as it reasonably determines are appropriate to distributions pursuant to priority fourth and fifth above from amounts received from “eligible contract participants” under the Commodity Exchange Act to ensure, as nearly as possible, that the proportional aggregate recoveries with respect to Obligations described in priority fourth and fifth above by the holders of any Excluded Swap Obligations are the same as the proportional aggregate recoveries with respect to other Obligations pursuant to priority fourth and fifth above.
Section 11.13Equity Cure. (a) Notwithstanding anything to the contrary contained in this Section 11 or any Credit Document, in the event that the Borrower fails to comply with the Financial Performance Covenants, then until the expiration of the tenth Business Day subsequent to the date the compliance certificate for calculating such Financial Performance Covenants is required to be delivered pursuant to Section 9.1(c) (the “Cure Deadline”), the Borrower shall have the right to cure such failure (the “Cure Right”) by receiving cash proceeds (which cash proceeds shall be received no earlier than the first day of the applicable fiscal quarter for which there is a failure to comply with the Financial Performance Covenants and no later than the expiration of such tenth Business Day) from an issuance of Stock or Stock Equivalents (other than Disqualified Stock) for cash as a cash capital contribution (or from any other contribution of cash to capital or issuance or sale of any other Stock or Stock Equivalents on terms reasonably acceptable to the Administrative Agent), and upon receipt by the Borrower of such cash proceeds (such cash amount being referred to as the “Cure Amount”) pursuant to the exercise of such Cure
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Right, the Financial Performance Covenants shall be recalculated giving effect to the following Pro Forma Adjustments:
(i)Consolidated EBITDAX and/or Current Assets, as applicable, shall be increased, solely for the purpose of determining the existence of an Event of Default resulting from a breach of the Financial Performance Covenants with respect to any Test Period that includes the fiscal quarter for which the Cure Right was exercised and not for any other purpose under this Agreement, by an amount equal to the Cure Amount;
(ii)Consolidated Total Debt, for such Test Period shall be decreased solely to the extent proceeds of the Cure Amount are actually applied to prepay any such Indebtedness (provided that any such Indebtedness so prepaid shall be a permanent repayment of such Indebtedness and termination of commitments thereunder) included in the calculation of Consolidated Total Debt;
(iii)if, after giving effect to the foregoing recalculations, the Borrower shall then be in compliance with the Financial Performance Covenants, the Borrower shall be deemed to have satisfied the requirements of the Financial Performance Covenants as of the relevant date of determination with the same effect as though there had been no failure to comply therewith at such date, and the applicable breach or default of the Financial Performance Covenants that had occurred shall be deemed cured for the purposes of this Agreement; provided that (A) in each period of four consecutive fiscal quarters there shall be at least two fiscal quarters in which no Cure Right is made, (B) there shall be a maximum of five Cure Rights made during the term of this Agreement, (C) each Cure Amount shall be no greater than the amount required to cause the Borrower to be in compliance with the Financial Performance Covenants (such amount, the “Necessary Cure Amount”); provided further that if the Cure Right is exercised prior to the date financial statements are required to be delivered for such fiscal quarter then the Cure Amount shall be equal to the amount reasonably determined by the Borrower in good faith that is required for purposes of complying with the Financial Performance Covenants for such fiscal quarter (such amount, the “Expected Cure Amount”), (D) all Cure Amounts shall be disregarded for the purposes of any financial ratio determination under the Credit Documents other than for determining compliance with the Financial Performance Covenants; (E) no Lender or Letter of Credit Issuer shall be required to make any extension of credit hereunder during the 10 Business Day period referred to above, unless the Borrower shall have received the Cure Amount; and (F) for the purposes of calculating Consolidated EBITDAX for any annualized Test Period, any Cure Amount shall be taken into account after multiplying EBITDAX by the applicable annualization factor and shall be disregarded for purposes of annualizing EBITDAX; and
(iv)upon receipt by the Administrative Agent of written notice, on or prior to the Cure Deadline, that the Borrower intends to exercise the Cure Right in respect of a fiscal quarter, the Lenders shall not be permitted to accelerate Loans held by them or to exercise remedies against the Collateral on the basis of a
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failure to comply with the requirements of the Financial Performance Covenants, unless such failure is not cured pursuant to the exercise of the Cure Right on or prior to the Cure Deadline.
(a)Expected Cure Amount. Notwithstanding anything herein to the contrary, to the extent that the Expected Cure Amount is (i) greater than the Necessary Cure Amount, then such difference may be used for the purposes of determining the Applicable Equity Amount and (ii) less than the Necessary Cure Amount, then not later than the applicable Cure Deadline, the Borrower must receive cash proceeds from issuance of Stock or Stock Equivalents (other than Disqualified Stock) or a cash capital contribution, which cash proceeds received by Borrower shall be equal to the shortfall between such Expected Cure Amount and such Necessary Cure Amount.
Section 11.14Action by Secured Parties. Without limiting the provisions of Section 13.3 or Section 13.8(b), each Letter of Credit Issuer and each Lender, and each Hedge Bank and Cash Management Bank, by its acceptance of the benefits of the Security Documents, agrees that:
(a)it will not, without the prior written consent of the Administrative Agent, exercise any right to set off or apply any deposits of any kind, or any other obligations owing by it to or for the order of the Borrower or any of its Subsidiaries, against any Hedging Obligations or Cash Management Obligations or any other amounts secured by Liens on Collateral; provided that nothing contained in this Section 11.14 or elsewhere in this Agreement shall impair the right of any Hedge Bank to declare an early termination date in respect of any Hedge Agreements, or to undertake payment or close-out netting or to otherwise setoff trades or transactions then existing under such Hedge Agreements;
(b)it will not, without the prior written consent of the Administrative Agent, (i) pursue or attempt to realize upon any Collateral or any part or portion thereof, or (ii) bid on any Collateral at a foreclosure sale, or take possession or operate any portion of the Collateral which constitutes real property;
(c)it will not transfer any portion of its rights in respect of any Secured Hedge Agreement or Hedging Obligations or Secured Cash Management Agreement or Cash Management Obligations, unless the assignee agrees in writing to be bound by the terms of this Section 11.14 and a copy of such writing is delivered to the Administrative Agent; and
(d)if it exercises any right of setoff in contravention of this Section 11.14 or in contravention of Section 13.8(b), it shall indemnify the Administrative Agent and each other Lender, the Letter of Credit Issuer, each Hedge Bank and each Cash Management Bank, from any and all losses, expenses and damages (including attorneys’ fees and costs) it shall suffer or incur by reason of such setoff or other action, including losses, expenses and damages (including attorneys’ fees and costs) caused by or resulting from the release, loss or waiver of any Collateral or any Lien thereon securing Obligations, or the unenforceability of any Security Document or Credit Document or any assertions that any Collateral or Lien securing Obligations thereon was released, lost or waived.
The provisions of this Section 11.14 shall apply to the Letter of Credit Issuer, all Lenders, all Hedge Banks, all Cash Management Banks and their respective successors and assigns. The
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provisions of this Section 11.14 are solely for the benefit of the Administrative Agent, the Letter of Credit Issuer, the Lenders, the Hedge Banks and the Cash Management Banks, and neither the Borrower nor any Subsidiary shall have rights as a third party beneficiary of any such provisions. The provisions of this Section 11.14 are not intended to nor shall override, alter or amend any rights or obligations set forth in Section 12 that inure to the benefit of the Borrower.
ARTICLE XII
The Agents
Section 12.1Appointment.
(a)Each Lender hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender under this Agreement and the other Credit Documents and irrevocably authorizes the Administrative Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Credit Documents and to exercise such powers and perform such duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Credit Documents, together with such other powers as are reasonably incidental thereto. The provisions of this Section 12 (other than Section 12.1(c) with respect to the Lead Arrangers and Section 12.9 with respect to the Borrower) are solely for the benefit of the Agents and the Lenders, and the Borrower shall not have rights as third party beneficiary of any such provision. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Credit Document or otherwise exist against the Administrative Agent.
(b)The Administrative Agent, each Lender and each Letter of Credit Issuer hereby irrevocably designate and appoint the Collateral Agent as the agent with respect to the Collateral, and each of the Administrative Agent, each Lender and the Letter of Credit Issuer irrevocably authorizes the Collateral Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Credit Documents and to exercise such powers and perform such duties as are expressly delegated to the Collateral Agent by the terms of this Agreement and the other Credit Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Collateral Agent shall not have any duties or responsibilities except those expressly set forth herein, or any fiduciary relationship with any of the Administrative Agent, the Lenders or the Letter of Credit Issuers, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Credit Document or otherwise exist against the Collateral Agent.
(c)Each Lead Arranger, in its capacity as such, shall not have any obligations, duties or responsibilities under this Agreement but shall be entitled to all benefits of this Section 12.
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Section 12.2Delegation of Duties. The Administrative Agent and the Collateral Agent may each execute any of its duties under this Agreement and the other Credit Documents by or through agents, sub-agents, employees or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. Neither the Administrative Agent nor the Collateral Agent shall be responsible for the negligence or misconduct of any agents, sub-agents or attorneys-in-fact selected by it in the absence of gross negligence or willful misconduct (as determined in the final judgment of a court of competent jurisdiction).
Section 12.3Exculpatory Provisions. No Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by any of them under or in connection with this Agreement or any other Credit Document (except for its or such Person’s own gross negligence or willful misconduct, as determined in the final judgment of a court of competent jurisdiction, in connection with its duties expressly set forth herein) or (b) responsible in any manner to any of the Lenders or any participant for any recitals, statements, representations or warranties made by any of the Borrower, any other Credit Party or any officer thereof contained in this Agreement or any other Credit Document or in any certificate, report, statement or other document referred to or provided for in, or received by such Agent under or in connection with, this Agreement or any other Credit Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Credit Document, or the perfection or priority of any Lien or security interest created or purported to be created under the Security Documents, or for any failure of the Borrower or any other Credit Party to perform its obligations hereunder or thereunder. No Agent shall be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Credit Document, or to inspect the properties, books or records of any Credit Party or any Affiliate thereof. The Collateral Agent shall not be under any obligation to the Administrative Agent, any Lender or any Letter of Credit Issuer to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Credit Document, or to inspect the properties, books or records of any Credit Party.
Section 12.4Reliance by Agents. The Administrative Agent and the Collateral Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document or instruction believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including counsel to the Borrower), independent accountants and other experts selected by the Administrative Agent or the Collateral Agent. The Administrative Agent may deem and treat the Lender specified in the Register with respect to any amount owing hereunder as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent. The Administrative Agent and the Collateral Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Credit Document unless it shall first receive such advice or concurrence of the Majority Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent and the Collateral Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Credit Documents in accordance with a request of the Majority Lenders, and such
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request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans; provided that the Administrative Agent and Collateral Agent shall not be required to take any action that, in its opinion or in the opinion of its counsel, may expose it to liability or that is contrary to any Credit Document or applicable Requirements of Law. For purposes of determining compliance with the conditions specified in Sections 6 and 7 on the Closing Date, each Lender that has signed this Agreement shall be deemed to have consented to, approved or accepted or to be satisfied with, each document or other matter required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed Closing Date specifying its objection thereto.
Section 12.5Notice of Default. Neither the Administrative Agent nor the Collateral Agent shall be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent or Collateral Agent, as applicable, has received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default”. In the event that the Administrative Agent receives such a notice, it shall give notice thereof to the Lenders and the Collateral Agent. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Majority Lenders; provided that unless and until the Administrative Agent shall have received such directions, the Administrative Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders.
Section 12.6Non-Reliance on Administrative Agent, Collateral Agent and Other Lenders.
(a)    Each Lender and each Letter of Credit Issuer expressly acknowledges that neither the Administrative Agent nor the Collateral Agent nor any of their respective officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Administrative Agent or Collateral Agent hereinafter taken, including any review of the affairs of the Borrower or any other Credit Party, shall be deemed to constitute any representation or warranty by the Administrative Agent or Collateral Agent to any Lender or any Letter of Credit Issuer as to any matter, including whether the Administrative Agent, the Collateral Agent or any of their respective officers, directors, employees, agents, attorneys-in-fact or Affiliates have disclosed material information in their possession. Each Lender and each Letter of Credit Issuer represents and warrants to the Administrative Agent and the Collateral Agent that (a) the Credit Documents set forth the terms of a commercial lending facility, (b) it is engaged in making, acquiring, purchasing or holding commercial loans in the ordinary course and is entering into this Agreement and the other Credit Documents to which it is a party as a Lender for the purpose of making, acquiring, purchasing and/or holding the commercial loans set forth herein as may be applicable to it, and not for the purpose of investing in the general performance or operations of the Borrower and its Subsidiaries, or for the purpose of making, acquiring, purchasing or holding any other type of financial instrument such as a security, (c) it is sophisticated with respect to decisions to make, acquire, purchase or hold the commercial loans applicable to it and either it or the Person exercising discretion in making its decisions to make, acquire, purchase or hold such commercial loans is experienced in making, acquiring, purchasing or holding commercial loans, (d) it has, independently and without reliance upon the
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Administrative Agent, Collateral Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Borrower and each other Credit Party and made its own decision to make its Loans hereunder and enter into this Agreement and (e) it has made its own independent decision to enter into this Agreement and the other Credit Documents to which it is a party and to extend credit hereunder and thereunder. Each Lender also represents, acknowledges and agrees that (i) it will, independently and without reliance upon the Administrative Agent, Collateral Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Credit Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrower and any other Credit Party and (ii) it will not assert any claim under any federal or state securities law or otherwise in contravention of this Section 12.6(a). Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, neither the Administrative Agent nor the Collateral Agent shall have any duty or responsibility to provide any Lender with any credit or other information concerning the business, assets, operations, properties, financial condition, prospects or creditworthiness of the Borrower or any other Credit Party that may come into the possession of the Administrative Agent or Collateral Agent any of their respective officers, directors, employees, agents, attorneys-in-fact or Affiliates.
(b)    The Lenders acknowledge that the Administrative Agent, the Collateral Agent and the Lead Arrangers are acting solely in administrative capacities with respect to the structuring and syndication of the Facilities and have no duties, responsibilities or liabilities under this Agreement and the other Credit Documents other than their administrative duties, responsibilities and liabilities specifically as set forth in the Credit Documents and in their capacity as Lenders hereunder. In structuring, arranging or syndicating the Facilities, each Lender acknowledges that the Administrative Agent, the Collateral Agent and/or the Lead Arrangers may be agents or lenders under this Agreement, other loans or other securities and waives any existing or future conflicts of interest associated with their role in such other debt instruments.
Section 12.7Indemnification. The Lenders agree to indemnify the Administrative Agent, the Collateral Agent and each Letter of Credit Issuer, each in its capacity as such (to the extent not reimbursed by the Credit Parties and without limiting the obligation of the Credit Parties to do so), ratably according to their pro rata share of the Total Credit Exposure outstanding on the date on which indemnification is sought (or, if indemnification is sought after the date upon which the Commitments shall have terminated and the Loans shall have been paid in full, ratably in accordance with their respective portions of the Total Revolving Credit Exposures plus the Total Term Loan Exposures in effect immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time occur (including at any time following the payment of the Loans) be imposed on, incurred by or asserted against the Administrative Agent, the Collateral Agent or any Letter of Credit Issuer in any way relating to or arising out of the Commitments, this Agreement, any of the other Credit Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Administrative Agent, the Collateral Agent or any Letter of Credit Issuer under or in connection with any of the foregoing;
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provided that no Lender shall be liable to the Administrative Agent, the Collateral Agent or any Letter of Credit Issuer for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Administrative Agent’s, the Collateral Agent’s or such Letter of Credit Issuer’s, as applicable, gross negligence, bad faith or willful misconduct as determined by a final judgment of a court of competent jurisdiction; provided, further, that no action taken in accordance with the directions of the Majority Lenders (or such other number or percentage of the Lenders as shall be required by the Credit Documents) shall be deemed to constitute gross negligence, bad faith or willful misconduct for purposes of this Section 12.7. In the case of any investigation, litigation or proceeding giving rise to any liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time occur (including at any time following the payment of the Loans), this Section 12.7 applies whether any such investigation, litigation or proceeding is brought by any Lender or any other Person. Without limitation of the foregoing, each Lender shall reimburse the Administrative Agent and the Collateral Agent upon demand for its ratable share of any costs or out-of-pocket expenses (including attorneys’ fees) incurred by such Agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice rendered in respect of rights or responsibilities under, this Agreement, any other Credit Document, or any document contemplated by or referred to herein, to the extent that such Agent is not reimbursed for such expenses by or on behalf of the Borrower; provided that such reimbursement by the Lenders shall not affect the Borrower’s continuing reimbursement obligations with respect thereto. If any indemnity furnished to any Agent or any Letter of Credit Issuer for any purpose shall, in the opinion of such Agent Letter of Credit Issuer, be insufficient or become impaired, such Agent or Letter of Credit Issuer may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished; provided, in no event shall this sentence require any Lender to indemnify any Agent or Letter of Credit Issuer against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement in excess of such Lender’s pro rata portion thereof; and provided further, this sentence shall not be deemed to require any Lender to indemnify any Agent or Letter of Credit Issuer against any liability, obligation, loss, damage, penalty, action, judgment, suit, cost, expense or disbursement resulting from such Agent’s or Letter of Credit Issuer’s gross negligence, bad faith or willful misconduct as determined by a final judgment of a court of competent jurisdiction. The agreements in this Section 12.7 shall survive the payment of the Loans and all other amounts payable hereunder.
Section 12.8Agents in Its Individual Capacities. Each Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower and any other Credit Party as though such Agent were not an Agent hereunder and under the other Credit Documents. With respect to the Loans made by it, each Agent shall have the same rights and powers under this Agreement and the other Credit Documents as any Lender and may exercise the same as though it were not an Agent, and the terms “Lender” and “Lenders” shall include each Agent in its individual capacity.
Section 12.9Successor Agents. Each of the Administrative Agent and Collateral Agent may at any time give notice of its resignation to the Lenders, the Letter of Credit Issuer and the Borrower. If the Administrative Agent and/or Collateral Agent becomes a Defaulting Lender, then such Administrative Agent or Collateral Agent may be removed as the
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Administrative Agent or Collateral Agent, as the case may be, at the reasonable request of the Borrower and the Required Lenders. Upon receipt of any such notice of resignation or removal, as the case may be, the Majority Lenders shall have the right, subject to the consent of the Borrower (not to be unreasonably withheld or delayed) so long as no Payment or Bankruptcy Event of Default is continuing, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. If, in the case of a resignation of a retiring Agent, no such successor shall have been so appointed by the Majority Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may on behalf of the Lenders and the Letter of Credit Issuer, appoint a successor Agent meeting the qualifications set forth above. Upon the acceptance of a successor’s appointment as the Administrative Agent or Collateral Agent, as the case may be, hereunder, and upon the execution and filing or recording of such financing statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as the Majority Lenders may request, in order to continue the perfection of the Liens granted or purported to be granted by the Security Documents, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Agent, and the retiring Agent shall be discharged from all of its duties and obligations hereunder or under the other Credit Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Borrower (following the effectiveness of such appointment) to such Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrower and such successor. After the retiring Agent’s resignation hereunder and under the other Credit Documents, the provisions of this Section 12 (including Section 12.7) and Section 13.5 shall continue in effect for the benefit of such retiring Agent, its sub agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Agent was acting as an Agent.
Any resignation of any Person as Administrative Agent pursuant to this Section may also constitute its resignation as Letter of Credit Issuer. In such case, upon the acceptance of a successor’s appointment as Administrative Agent hereunder, (a) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Letter of Credit Issuer, (b) the retiring Letter of Credit Issuer shall be discharged from all of their respective duties and obligations hereunder or under the other Credit Documents, and (c) the successor Letter of Credit Issuer shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring Letter of Credit Issuer to effectively assume the obligations of the retiring Letter of Credit Issuer with respect to such Letters of Credit.
Section 12.10Withholding Tax. To the extent required by any applicable Requirement of Law, the Administrative Agent may withhold from any payment to any Lender an amount equivalent to any applicable withholding tax. If the Internal Revenue Service or any authority of the United States or other jurisdiction asserts a claim that the Administrative Agent did not properly withhold tax from amounts paid to or for the account of any Lender (because the appropriate form was not delivered, was not properly executed, or because such Lender failed to notify the Administrative Agent of a change in circumstances that rendered the exemption from, or reduction of, withholding tax ineffective, or for any other reason), such Lender shall indemnify the Administrative Agent (to the extent that the Administrative Agent has not already been reimbursed by any applicable Credit Party and without limiting the obligation of any applicable Credit Party to do so) fully for all amounts paid, directly or indirectly, by the
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Administrative Agent as Tax or otherwise, including penalties, additions to Tax and interest, together with all expenses incurred, including legal expenses, allocated staff costs and any out of pocket expenses. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under this Agreement or any other Credit Document against any amount due to the Administrative Agent under this Section 12.10. For the avoidance of doubt, for purposes of this Section 12.10, the term “Lender” includes any Letter of Credit Issuer.
Section 12.11Security Documents and Collateral Agent under Security Documents and Guarantee. Each Secured Party hereby further expressly and irrevocably authorizes and directs the Administrative Agent or Collateral Agent, as applicable, on behalf of and for the benefit of Secured Parties, to be the agent for and representative of the Secured Parties with respect to the Collateral and the Security Documents and irrevocably agrees that it will not take any action that will hinder the automatic release of any security interest, Lien or Guarantee provided for this Agreement or the other Credit Documents. Subject to Section 13.1, without further written consent or authorization from any Secured Party, the Administrative Agent or Collateral Agent, as applicable, shall (a) execute any documents or instruments necessary in connection with a Disposition of assets permitted by this Agreement, (b) release any Lien encumbering any item of Collateral that is the subject of such Disposition of assets or with respect to which Majority Lenders (or such other Lenders as may be required to give such consent under Section 13.1) have otherwise consented, (c) subordinate any Lien to the extent permitted by the terms of this Agreement or (d) release any Guarantor from the Guarantee with respect to which Majority Lenders (or such other Lenders as may be required to give such consent under Section 13.1) have otherwise consented.
Section 12.12Right to Realize on Collateral and Enforce Guarantee. Notwithstanding anything contained in any of the Credit Documents to the contrary, the Borrower, the Agents and each Secured Party hereby agree that (a) (i) no Secured Party shall have any right individually to realize upon any of the Collateral or to enforce any Guarantee, it being understood and agreed that all powers, rights and remedies under the Credit Documents, in connection with any Loan or otherwise may be exercised solely by the Collateral Agent on behalf of the Secured Parties in accordance with the terms thereof and (ii) each Lender (in its capacity as such and not, for the avoidance of doubt, in its capacity, if applicable, as an Administrative Agent, Collateral Agent, Hedge Bank or Cash Management Bank), whether or not a party hereto, expressly and irrevocably waives any right to take or institute any actions or proceedings, judicial or otherwise, for any right or remedy or assert any other cause of action against any Credit Party (including the exercise of any right of setoff, rights on account of any banker’s lien or similar claim or other rights of self-help), or institute any actions or proceedings or any other cause of action, or otherwise commence any remedial procedures, against the Borrower and/or any of its Subsidiaries or parent companies with respect to any Collateral or any other property of any such Person, without the prior written consent of the Majority Lenders and the Collateral Agent, including any actions, proceedings, any other cause of action, or any remedial procedures with respect to the Transactions; provided, that, for the avoidance of doubt, (1) this sentence may be enforced against any Lender by the Majority Lenders, the Agents or the Borrower (or any of its Affiliates) and each Lender and the Agents expressly acknowledge that this sentence shall be available as a defense of the Borrower (or any of its Affiliates) in any action, proceeding, cause of action or remedial procedure and (2) this sentence shall not impair or restrict the Agents’ powers, rights and remedies under the Credit Documents exercised in
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accordance with the terms thereof, and (b) in the event of a foreclosure by the Collateral Agent on any of the Collateral pursuant to a public or private sale or other disposition, the Collateral Agent or any Lender may be the purchaser or licensor of any or all of such Collateral at any such sale or other disposition, and the Collateral Agent, as agent for and representative of the Secured Parties (but not any Lender or Lenders in its or their respective individual capacities unless Majority Lenders shall otherwise agree in writing) shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Collateral sold at any such public sale, to use and apply any of the Obligations as a credit on account of the purchase price for any collateral payable by the Collateral Agent on behalf of the Lenders at such sale or other disposition. Each Lender, whether or not a party hereto, will be deemed, by its acceptance of the benefits of the Collateral and of the Guarantees of the Obligations, to have agreed to the foregoing provisions.
Section 12.13Credit Bidding. The Secured Parties hereby irrevocably authorize the Administrative Agent, at the direction of the Required Lenders, to credit bid all or any portion of the Obligations (including accepting some or all of the Collateral in satisfaction of some or all of the Obligations pursuant to a deed in lieu of foreclosure or otherwise) and in such manner purchase (either directly or through one or more acquisition vehicles) all or any portion of the Collateral (a) at any sale thereof conducted under the provisions of the Bankruptcy Code of the United States, including under Sections 363, 1123 or 1129 of the Bankruptcy Code of the United States, or any similar laws in any other jurisdictions to which a Credit Party is subject or (b) at any other sale or foreclosure or acceptance of collateral in lieu of debt conducted by (or with the consent or at the direction of) the Administrative Agent (whether by judicial action or otherwise) in accordance with any applicable law. In connection with any such credit bid and purchase, the Obligations owed to the Secured Parties shall be entitled to be, and shall be, credit bid on a ratable basis (with Obligations with respect to contingent or unliquidated claims receiving contingent interests in the acquired assets on a ratable basis that would vest upon the liquidation of such claims in an amount proportional to the liquidated portion of the contingent claim amount used in allocating the contingent interests) in the asset or assets so purchased (or in the Stock or Stock Equivalents or debt instruments of the acquisition vehicle or vehicles that are used to consummate such purchase). In connection with any such bid (i) the Administrative Agent shall be authorized to form one or more acquisition vehicles to make a bid, (ii) the Administrative Agent shall be authorized to adopt documents providing for the governance of the acquisition vehicle or vehicles (provided that any actions by the Administrative Agent with respect to such acquisition vehicle or vehicles, including any disposition of the assets or Stock or Stock Equivalents thereof shall be governed, directly or indirectly, by the vote of the Required Lenders, irrespective of the termination of this Agreement and without giving effect to the limitations on actions by the Required Lenders contained in 13.1), and (iii) to the extent that Obligations that are assigned to an acquisition vehicle are not used to acquire Collateral for any reason (as a result of another bid being higher or better, because the amount of Obligations assigned to the acquisition vehicle exceeds the amount of debt credit bid by the acquisition vehicle or otherwise), such Obligations shall automatically be reassigned to the Lenders pro rata and the Stock or Stock Equivalents and/or debt instruments issued by any acquisition vehicle on account of the Obligations that had been assigned to the acquisition vehicle shall automatically be cancelled, without the need for any Secured Party or any acquisition vehicle to take any further action.
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Section 12.14Administrative Agent May File Proofs of Claim. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding, constituting an Event of Default under Section 11.5, the Administrative Agent (irrespective of whether the principal of any Loan shall then be due and payable as herein expressed or by declaration or otherwise and irrespective of whether the Administrative Agent shall have made any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding or otherwise:
(a)to file and prove a claim for the whole amount of the principal and interest owing and unpaid in respect of the Loans and all other Indebtedness that are owing and unpaid and to file such other documents as may be necessary or advisable in order to have the claims of the Lenders and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders and the Administrative Agent and their respective agents and counsel, to the extent due under Section 13.5) allowed in such judicial proceeding; and
(b)to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Lender to make such payments to the Administrative Agent and, in the event that the Administrative Agent shall consent to the making of such payments directly to the Lenders, to pay to the Administrative Agent any amount due for the reasonable compensation, expenses, disbursements and advances of the Administrative Agent and its agents and counsel, to the extent due under Section 13.5.
Nothing contained herein shall be deemed to authorize the Administrative Agent to authorize or consent to or accept or adopt on behalf of any Lender any plan of reorganization, arrangement, adjustment or composition affecting the Indebtedness or the rights of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any Lender in any such proceeding.
Section 12.15Intercreditor Agreement. (a) Each Lender (and each Person that becomes a Lender hereunder pursuant to Section 13.6 or an Incremental Agreement) hereby irrevocably authorizes and directs the Administrative Agent and the Collateral Agent to enter into any Customary Intercreditor Agreement on behalf of such Lender, in each case, as needed to effectuate the transactions permitted by this Agreement and agrees that the Administrative Agent and the Collateral Agent may take such actions on its behalf as is contemplated by the terms of such applicable intercreditor agreement. Without limiting the provisions of Section 12.2, each Lender hereby irrevocably consents to the Administrative Agent and the Collateral Agent and any successor serving in either such capacity and agrees not to assert any claim (including as a result of any conflict of interest) against the Administrative Agent, the Collateral Agent, or any such successor, arising from the role of the Administrative Agent, the Collateral Agent or such successor under the Credit Documents or any such intercreditor agreement so long as it is either acting in accordance with the terms of such documents and otherwise has not engaged in gross negligence or willful misconduct (as determined in a final and non-appealable judgment by a court of competent jurisdiction). In addition, the Administrative Agent, the Collateral Agent, or any such successor, shall be authorized, without the consent of any Lender, to execute or to enter
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into amendments of, and amendments and restatements of, the Security Documents, any such intercreditor agreement and any additional and replacement intercreditor agreements, in each case, in order to effect transactions permitted by this Agreement, and to establish certain relative rights as between the holders of the Obligations and the holders of the Indebtedness secured by such Liens junior or pari passu with the Obligations.
Section 12.16Erroneous Payments.
(a)Each Lender and each Letter of Credit Issuer hereby severally agrees that if (i) the Administrative Agent notifies (which such notice shall be conclusive absent manifest error) such Lender or Letter of Credit Issuer that the Administrative Agent has determined in its sole discretion that any funds received by such Lender or Letter of Credit Issuer from the Administrative Agent or any of its Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received by, such Lender or Letter of Credit Issuer (whether or not known to such Lender or Letter of Credit Issuer) or (ii) it receives any payment from the Administrative Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date from, that specified in a notice of payment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment, (y) that was not preceded or accompanied by a notice of payment sent by the Administrative Agent (or any of its Affiliates) with respect to such payment or (z) that such Lender or Letter of Credit Issuer otherwise becomes aware was transmitted, or received, in error or by mistake (in whole or in part) then, in each case an error in payment has been made (any such amounts specified in clauses (i) or (ii) of this Section 12.16(a), whether received as a payment, prepayment or repayment of principal, interest, fees or otherwise; individually and collectively, an “Erroneous Payment”) and the Lender or Letter of Credit Issuer, as the case may be, is deemed to have knowledge of such error at the time of its receipt of such Erroneous Payment and to the extent permitted by applicable law, such Lender or Letter of Credit Issuer shall not assert any right or claim to the Erroneous Payment, and hereby waives, any claim, counterclaim, defense or right of set-off or recoupment with respect to any demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous Payments received, including without limitation waiver of any defense based on “discharge for value” or any similar doctrine.
(b)The Borrower hereby agrees that (x) in the event an Erroneous Payment (or portion thereof) has been demanded by the Administrative Agent pursuant to Section 12.16(b) and has not been recovered from any Lender or Letter of Credit Issuer that has received such Erroneous Payment (or portion thereof) for any reason, the Administrative Agent shall be subrogated to all the rights of such Lender or Letter of Credit Issuer with respect to such amount unless and until such amounts are recovered by the Administrative Agent, (y) an Erroneous Payment shall not pay, prepay, repay, discharge or otherwise satisfy any Obligations owed by the Borrower or any other Credit Party and (z) to the extent that an Erroneous Payment was in any way or at any time credited as payment or satisfaction of any of the Obligations, the Obligations or any part thereof that were so credited, and all rights of the applicable Lender or Letter of Credit Issuer (as subrogated by the Administrative Agent pursuant to the terms of clause (x) above), the Administrative Agent or other Secured Party, as the case may be, shall be reinstated and
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continue in full force and effect as if such payment or satisfaction had never been received.
(c)Without limiting the immediately preceding clause (a), each Lender and each Letter of Credit Issuer agrees that, in the case of clause (a)(ii) above, it shall promptly (and, in all events, within one Business Day of its knowledge (or deemed knowledge) of such error) notify the Administrative Agent in writing of such occurrence and, in the case of either clause (a)(i) or (a)(ii) above upon demand from the Administrative Agent, it shall promptly, but in all events no later than two Business Days thereafter, return to the Administrative Agent the amount of any such Erroneous Payment (or portion thereof) as to which such a demand was made in same day funds (in the currency so received), together with interest thereon in respect of each day from and including the date such Erroneous Payment (or portion thereof) was received by such Lender or Letter of Credit Issuer to the date such amount is repaid to the Administrative Agent in same day funds at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation from time to time in effect.
(d)The Credit Parties’ agreements, and the Administrative Agent’s, each Letter of Credit Issuer’s and each Lender’s obligations, under this Section 12.16 shall survive the resignation or replacement of the Administrative Agent, any transfer of rights or obligations by, or the replacement of, a Lender, and Payment in Full.
ARTICLE XIII
Miscellaneous
Section 13.1Amendments, Waivers and Releases.
(a)Except as expressly set forth in this Agreement, neither this Agreement nor any other Credit Document, nor any terms hereof or thereof, may be amended, supplemented or modified except in accordance with the provisions of this Section 13.1. The Majority Lenders may, or, with the written consent of the Majority Lenders, the Administrative Agent and/or the Collateral Agent shall, from time to time:
(i)enter into with the relevant Credit Party or Credit Parties written amendments, supplements or modifications hereto and to the other Credit Documents for the purpose of adding any provisions to this Agreement or the other Credit Documents or changing in any manner the rights of the Lenders or of the Credit Parties hereunder or thereunder or
(ii)waive in writing, on such terms and conditions as the Majority Lenders or the Administrative Agent and/or Collateral Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Credit Documents or any Default or Event of Default and its consequences; provided, however, that each such waiver and each such amendment, supplement or modification shall be effective only in the specific instance and for the specific purpose for which given; provided, further, that no such waiver and no such amendment, supplement or modification shall:
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(A)forgive or reduce any portion of any Loan or reduce the stated rate (it being understood that only the consent of the Majority Lenders shall be necessary to waive any obligation of the Borrower to pay interest at the Default Rate or amend Section 2.8(e)), or forgive any portion, or extend the date for the payment (including the Maturity Date), of any principal, interest or fee payable hereunder (other than as a result of waiving the applicability of any post-default increase in interest rates), or extend the final expiration date of any Lender’s Commitment (provided that any Lender, upon the request of the Borrower, may extend the final expiration date of its Commitment without the consent of any other Lender, including the Majority Lenders) or extend the final expiration date of any Letter of Credit beyond the L/C Maturity Date, or increase the amount of the Commitment, Elected Commitment Amount or Maximum Credit Amount of any Lender (provided that, any Lender, upon the request of the Borrower, may increase the amount of its Commitment, Elected Commitment Amount or Maximum Credit Amount without the consent of any other Lender, including the Majority Lenders), or make any Loan, interest, fee or other amount payable in any currency other than Dollars, in each case without the written consent of each Lender directly and adversely affected thereby, or
(B)amend, modify or waive any provision of this Section 13.1 (other than Section 13.1(g)), amend or modify any of the provisions of Section 13.8(a) to the extent it would alter the ratable allocation of payments thereunder, consent to the assignment or transfer by the Borrower of its rights and obligations under any Credit Document to which it is a party (except as permitted pursuant to Section 10.3), alter the order of application set forth in Section 11.12 or modify any definition used in such section, if the effect thereof would be to alter the order of payment specified therein, in each case without the written consent of each Lender directly and adversely affected thereby, or
(C)reduce the percentages specified in the definitions of the terms “Majority Lenders”, “Majority Revolving Lenders”, “Majority Term Lenders”, “Required Lenders”, “Borrowing Base Required Lenders”, “Revolving Commitment Percentage”, or “Term Loan Commitment Percentage” without the written consent of each Lender directly and adversely affected thereby, or
(D)amend, modify or waive any provision of Section 12 without the written consent of the then-current Administrative Agent and Collateral Agent, as applicable, or any other former or current Agent to whom Section 12 then applies in a manner that directly and adversely affects such Person, or
(E)amend, modify or waive any provision of Section 3 with respect to any Letter of Credit without the written consent of each Letter of Credit Issuer to whom Section 3 then applies in a manner that directly
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and adversely affects such Person, or otherwise amend, modify or otherwise affect the rights or duties of any Letter of Credit Issuer without the written consent of such Letter of Credit Issuer, or
(F)release all or substantially all of the Guarantors under the Guarantee (except as expressly permitted by the Guarantee or this Agreement) without the prior written consent of each Lender, or
(G)release all or substantially all of the Collateral under the Security Documents (except as expressly permitted by the Security Documents or this Agreement) without the prior written consent of each Lender, or
(H)amend Section 2.9 so as to permit Interest Period intervals greater than six months without regard to availability to Lenders, without the written consent of each Lender directly and adversely affected thereby, or
(I)increase the Borrowing Base without the written consent of the Borrowing Base Required Lenders (other than Defaulting Lenders) or decrease or maintain the Borrowing Base without the written consent of the Required Lenders (other than Defaulting Lenders); provided that a Scheduled Redetermination and the delivery of a Reserve Report or any other Engineering Report may be postponed by the Majority Lenders; provided further, that it is understood (a) that any waiver (or amendment or modification that would have the effect of a waiver) of the right of the Required Lenders to adjust, or automatic adjustment of, the Borrowing Base under the Borrowing Base Adjustment Provisions in connection with the occurrence of a relevant event giving rise to such right shall require the consent of the Required Lenders and (b) that this clause (I) shall not apply (or be deemed to apply) to any waiver, consent, amendment or other modification that directly or indirectly reduces the amount of, or waives the implementation of, any provision that would otherwise reduce the Borrowing Base, or
(J)affect the rights or duties of, or any fees or other amounts payable to, any Agent under this Agreement or any other Credit Document without the prior written consent of such Agent, or
(K)waive or amend Section 5.2(b) without the consent of the Majority Revolving Lenders and the Majority Lenders which are directly and adversely affected thereby, or
(L)amend or modify the definition of “Available Borrowing Base”, “Borrowing Base”, “Borrowing Base Deficiency”, “Borrowing Base Properties”, “Borrowing Base Utilization Percentage”, “Conforming Borrowing Base”, “Non-Conforming Borrowing Base”, Section 2.17(f), Section 2.19, Section 9.11, Section 9.14, Section 9.15 or Section 9.18, in
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each case without the consent of the Majority Revolving Lenders and the Majority Lenders.
(iii)Notwithstanding the foregoing, Article III and Article VII may be amended, modified or waived solely by the Majority Revolving Lenders.
(iv)Notwithstanding the foregoing, (A) each of Section 2.17(f)(i)(G) and Section 2.19(e)(i)(A) may be amended, modified or waived, in each case, solely with the consent of each of the Lenders, and (B) each of Section 2.17(f)(i)(H), Section 2.19(a) and Section 2.19(d)(iv) may be amended, modified or waived, in each case, solely with the consent of each of the Revolving Lenders.
(b)Notwithstanding anything to the contrary in the Credit Documents, the provisions of this Agreement or any other Credit Document may be amended by an agreement in writing entered into by the Borrower and the Administrative Agent and/or the Collateral Agent, as applicable, to (i) cure any ambiguity, omission, defect, typographical error, inconsistency or other manifest error, (ii) make administrative or operational changes not adverse to any Lender or make changes favorable to the Lenders or (iii) adhere to any local Requirement of Law or advice of local counsel so long as, in each case, the Lenders shall have received at least five Business Days’ prior written notice thereof and the Administrative Agent shall not have received, within five Business Days of the date of such notice to the Lenders, a written notice from the Majority Lenders stating that the Majority Lenders object to such amendment. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the affected Lenders and shall be binding upon the Borrower, such Lenders, the Administrative Agent and all future holders of the affected Loans. In the case of any waiver, the Borrower, the Lenders and the Administrative Agent shall be restored to their former positions and rights hereunder and under the other Credit Documents after giving effect to such waiver, and any Default or Event of Default waived shall be deemed to be cured and not continuing; it being understood that no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. In connection with the foregoing provisions, the Administrative Agent may, but shall have no obligations to, with the concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of such Lender.
(c)Notwithstanding anything to the contrary contained in the Credit Documents, the Administrative Agent and/or the Collateral Agent, as applicable, without the consent of any Lender, shall be permitted (and each Lender hereby directs the Administrative Agent and/or the Collateral Agent) to enter into any amendments, waivers, modifications or supplements to any Customary Intercreditor Agreement, if the Administrative Agent and/or the Collateral Agent, as applicable, would have been permitted hereunder to enter into a new Customary Intercreditor Agreement, which contained the terms set forth in such amendment, waiver, modification or supplement, at the time when such amendment, waiver, modification or supplement is entered into.
(d)Notwithstanding anything to the contrary herein, the Administrative Agent (and, if applicable, the Borrower) may, without the consent of any Lender, enter into amendments or modifications to this Agreement or any of the other Credit Documents or
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to enter into additional Credit Documents in order to implement any Benchmark Replacement or any Benchmark Replacement Conforming Changes or otherwise effectuate the terms of Section 2.18 in accordance with the terms of Section 2.18.
(e)Notwithstanding anything to the contrary herein, no Lender consent is required to effect any amendment, modification or supplement to any Customary Intercreditor Agreement, any subordination agreement or other intercreditor agreement or arrangement permitted under this Agreement or in any document pertaining to any Indebtedness permitted hereby that is permitted to be secured by the Collateral (i) that is for the purpose of adding the holders of such secured or subordinated Indebtedness permitted to be incurred under this Agreement (or, in each case, a representative with respect thereto), as parties thereto, as expressly contemplated by the terms of such Customary Intercreditor Agreement, such subordination agreement or such other intercreditor agreement or arrangement permitted under this Agreement, as applicable (it being understood that any such amendment or supplement may make such other changes to the applicable intercreditor agreement as, in the good faith determination of the Administrative Agent, are required to effectuate the foregoing and provided that such other changes are not adverse, in any material respect (taken as a whole), to the interests of the Lenders) or (ii) that is expressly contemplated by any Customary Intercreditor Agreement, any subordination agreement or other intercreditor agreement or arrangement permitted under this Agreement or in any document pertaining to any Indebtedness permitted hereby that is permitted to be secured by the Collateral or (iii) otherwise, with respect to any material amendments, modifications or supplements, to the extent such amendment, modification or supplement is reasonably satisfactory to the Administrative Agent; provided, further, that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent or Collateral Agent hereunder or under any other Credit Document without the prior written consent of the Administrative Agent or Collateral Agent, as applicable.
(f)Notwithstanding anything to the contrary contained in the Credit Documents, the Administrative Agent and/or the Collateral Agent, as applicable, and the Borrower may enter into any amendment, modification or waiver of this Agreement or any other Credit Document or enter into any agreement or instrument to effect the granting, perfection, protection, expansion or enhancement of any security interest in any Collateral or property to become Collateral for the benefit of the Secured Parties or as required by any Requirement of Law to give effect to, protect or otherwise enhance the rights or benefits of any Secured Party under the Credit Documents without the consent of any Lender.
(g)Notwithstanding the foregoing, this Agreement may be amended (or amended and restated) with the written consent of the Majority Lenders, the Administrative Agent and the Borrower (a) to add one or more additional credit or debt facilities to this Agreement and to permit the extensions of credit from time to time outstanding thereunder and the accrued interest and fees in respect thereof to share ratably in the benefits of this Agreement and the other Credit Documents with the Loans and the Commitments and the accrued interest and fees in respect thereof and (b) to include appropriately the Lenders holding such credit or debt facilities in any
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determination of the Majority Lenders and the Required Lenders on substantially the same basis as the Lenders prior to such inclusion.
(h)In addition, notwithstanding the foregoing, this Agreement may be amended with the written consent of the Administrative Agent, the Borrower and the Lenders providing the Replacement Loans (as defined below) to permit the refinancing or replacement of all or any portion of the outstanding Loans of any Class (“Replaced Loans”) with replacement loans (“Replacement Loans”) hereunder; provided that (i) the aggregate principal amount of such Replacement Loans shall not exceed the aggregate principal amount of such Replaced Loans, plus accrued interest, fees, premiums (if any) and penalties thereon and reasonable fees, expenses, original issue discount, underwriting, discounts, commissions and upfront fees associated with such Replacement Loans, (ii) solely with respect to Replacement Loans which are Revolving Loans, the All-In Yield with respect to such Replacement Loans shall not be higher than the All-In Yield for such Replaced Loans immediately prior to such refinancing unless the maturity of the Replacement Loans is at least one year later than the maturity of the Replaced Loans, (iii) all other terms applicable to such Replacement Loans shall be substantially identical to, or less favorable to the Lenders providing such Replacement Loans than, those applicable to such Replaced Loans, except to the extent necessary to provide for covenants and other terms applicable to any period after the Latest Maturity Date of the Loans in effect immediately prior to such refinancing and (iv) if such Replaced Loans constitute Term Loans, such Replacement Loans shall comply with Section 2.19; provided, further, that, in respect of clause (i) above, any Affiliated Lender and Affiliated Institutional Lender shall be permitted (without Administrative Agent consent) to provide such Replacement Loans that constitute Term Loans (other than Initial Term Loans), it being understood that in connection with such Replacement Loans, any such Affiliated Lender or Affiliated Institutional Lender, as applicable, shall be subject to the restrictions applicable to such Persons under Section 13.6 as if such Replacement Loans were Term Loans (and for the avoidance of doubt, any Replacement Loan that constitutes a Term Loan shall be subject to the condition set forth in Section 13.6(g)(ii), mutatis mutandis, at the time such Replacement Loan is made (after giving effect to the making of such Replacement Loan)). Each amendment to this Agreement providing for Replacement Loans may, without the consent of any other Lenders, effect such amendments to this Agreement and the other Credit Documents as may be necessary or appropriate, in the opinion of the Administrative Agent and the Borrower to effect the provisions of this paragraph, and for the avoidance of doubt, this paragraph shall supersede any other provisions in this Section 13.1 to the contrary.
Section 13.2Notices. Unless otherwise expressly provided herein, all notices and other communications provided for hereunder or under any other Credit Document shall be in writing (including by facsimile transmission). All such written notices shall be mailed, faxed or delivered to the applicable address, facsimile number or electronic mail address, and all notices and other communications expressly permitted hereunder to be given by telephone shall be made to the applicable telephone number, as follows:
(a)if to the Borrower, the Administrative Agent, the Collateral Agent or the Letter of Credit Issuer, to the address, facsimile number, electronic mail address or telephone number specified for such Person on Schedule 13.2 or to such other address,
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facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the other parties; and
(b)if to any other Lender, to the address, facsimile number, electronic mail address or telephone number specified in its Administrative Questionnaire or to such other address, facsimile number, electronic mail address or telephone number as shall be designated by such party in a notice to the Borrower, the Administrative Agent, the Collateral Agent and the Letter of Credit Issuer.
All such notices and other communications shall be deemed to be given or made upon the earlier to occur of (i) actual receipt by the relevant party hereto and (ii)(A) if delivered by hand or by courier, when signed for by or on behalf of the relevant party hereto; (B) if delivered by mail, three Business Days after deposit in the mails, postage prepaid; (C) if delivered by facsimile, when sent and receipt has been confirmed by telephone; and (D) if delivered by electronic mail, when delivered; provided that notices and other communications to the Administrative Agent or the Lenders pursuant to Section 2.3, Section 2.6, Section 2.9, Section 4.2 and Section 5.1 shall not be effective until received.
Section 13.3No Waiver; Cumulative Remedies.
(a)No failure to exercise and no delay in exercising, on the part of the Administrative Agent, the Collateral Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Credit Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by Requirements of Law.
(b)Notwithstanding anything to the contrary contained herein or in any other Credit Document, and without limiting the provisions of Section 11.13, the authority to enforce rights and remedies hereunder and under the other Credit Documents against the Credit Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Agents for the benefit of the Secured Parties; provided, however, that the foregoing shall not prohibit (a) any Agent from exercising on its own behalf the rights and remedies that inure to its benefit (solely in its capacity as an Agent) hereunder and under the other Credit Documents, (b) the Letter of Credit Issuer from exercising, with the consent of the Administrative Agent, the rights and remedies that inure to its benefit (solely in its capacity as Letter of Credit Issuer) hereunder and under the other Credit Documents, (c) any Lender from exercising, with the consent of the Administrative Agent, setoff rights in accordance with Section 13.8 (subject to the limitations set forth therein and subject to terms of Section 11.13), or (d) any Secured Party from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Credit Party under the Bankruptcy Code or other debtor relief law.
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Section 13.4Survival of Representations and Warranties. All representations and warranties made hereunder, in the other Credit Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans hereunder.
Section 13.5Payment of Expenses; Indemnification. The Borrower agrees (a) if the Closing Date occurs, to pay or reimburse the Agents for all their reasonable and documented out-of-pocket costs and expenses incurred in connection with the preparation and execution and delivery of, and any amendment, waiver, supplement or modification to, this Agreement and the other Credit Documents and any other documents prepared in connection herewith or therewith, and the consummation and administration of the transactions contemplated hereby and thereby, including the reasonable fees, disbursements and other charges of Paul Hastings LLP, in their capacity as counsel to the Administrative Agent, and one counsel in each appropriate local jurisdiction (other than any allocated costs of in-house counsel), (b) to pay or reimburse each Agent and each Letter of Credit Issuer for all its reasonable and documented out-of-pocket costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Credit Documents and any such other documents, including the reasonable fees, disbursements and other charges of one counsel to the Administrative Agent, Collateral Agent and the other Agents (unless there is an actual or perceived conflict of interest in which case each such Person may retain its own counsel), (c) to pay, indemnify, and hold harmless each Lender, Letter of Credit Issuer and Agent from, any and all recording and filing fees and (d) to pay, indemnify, and hold harmless each Lender, Letter of Credit Issuer and Agent and their respective Related Parties from and against any and all other liabilities, obligations, losses, damages, penalties, claims, demands, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever, whether or not such proceedings are brought by the Borrower, any of its Related Parties or any other third Person, including reasonable and documented fees, disbursements and other charges of one counsel for all such Persons, taken as a whole, and, if necessary, by a single firm of local counsel in each appropriate jurisdiction for all such Persons, taken as a whole (unless there is an actual or perceived conflict of interest in which case each such Person may, with the consent of the Borrower (not to be unreasonably withheld or delayed) retain its own counsel), with respect to (i) any claim, litigation, investigation or proceeding (each, a “Proceeding”) arising from the execution, delivery, enforcement, performance and administration of this Agreement, the other Credit Documents and any such other documents and (ii) any Loan or Letter of Credit or the use of proceeds therefrom (including any refusal by any Letter of Credit Issuer to honor a demand for payment under a Letter of Credit if the document presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), including, without limitation, any of the foregoing relating to violation by the Borrower, any of its Subsidiaries or any of the Oil and Gas Properties of, noncompliance by the Borrower, any of its Subsidiaries or any of the Oil and Gas Properties with or liability of the Borrower or any of its Subsidiaries under, any Environmental Law (other than by such indemnified Person or any of its Related Parties (other than any trustee or advisor)) or to any actual or alleged presence, release or threatened release of Hazardous Materials involving or attributable to the operations of the Borrower, any of its Subsidiaries or any of the Oil and Gas Properties (all the foregoing in this clause (d), collectively, the “Indemnified Liabilities”); provided that the Borrower shall have no obligation hereunder to any Agent or any Lender or any of their respective Related Parties with respect to Indemnified Liabilities to the extent it has been determined by a final non-appealable judgment of a court of competent jurisdiction to have resulted from (i) the gross negligence, bad faith or willful misconduct of the party to be
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indemnified or any of its Related Parties, (ii) any material breach (or, in the case of a Proceeding brought by the Borrower, any breach) of any Credit Document by the party to be indemnified or (iii) Proceedings not arising from any act or omission by the Borrower or its Affiliates, brought by an indemnified Person against any other indemnified Person (in the case of this clause (iii), other than Proceedings involving claims against any Agent in its capacity as such). No Person entitled to indemnification under Section 13.5(d) shall be liable for any damages arising from the use by others of any information or other materials obtained through internet, electronic, telecommunications or other information transmission systems (including IntraLinks or SyndTrak Online) in connection with this Agreement, except to the extent that such damages have resulted from the willful misconduct, bad faith or gross negligence of the party to be indemnified or any of its Related Parties (as determined by a court of competent jurisdiction in a final and non-appealable decision), nor shall any such Person, the Borrower or any of its Affiliates have any liability for any special, punitive, indirect or consequential damages (including, without limitation, any loss of profits, business or anticipated savings) relating to this Agreement or any other Credit Document or arising out of its activities in connection herewith or therewith (whether before or after the Closing Date); provided that that the foregoing shall not limit the Borrower’s and the other Credit Parties’ indemnification obligations to the indemnified Persons pursuant to this Section 13.5 in respect of damages incurred or paid by an indemnified Person to a third party. All amounts payable under this Section 13.5 shall be paid within 10 Business Days of receipt by the Borrower of an invoice relating thereto setting forth such expense in reasonable detail. The agreements in this Section 13.5 shall survive repayment of the Loans and all other amounts payable hereunder. This Section 13.5 shall not apply with respect to any Taxes other than any Taxes that represent losses, claims, damages, etc. arising from any non-Tax claim.
Section 13.6Successors and Assigns; Participations and Assignments.
(a)The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Letter of Credit Issuer that issues any Letter of Credit), except that (i) except as expressly permitted by Section 10.3, the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender (and any attempted assignment or transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights or obligations hereunder except in accordance with this Section 13.6. Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the Letter of Credit Issuer that issues any Letter of Credit), Participants (to the extent provided in Section 13.6(c)) and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent, the Collateral Agent, the Letter of Credit Issuer and the Lenders and each other Person entitled to indemnification under Section 13.5) any legal or equitable right, remedy or claim under or by reason of this Agreement.
(b)(i) Subject to the conditions set forth in Section 13.6(b)(ii) below, any Lender may at any time assign to one or more assignees (other than the Borrower, its Subsidiaries, the Sponsor or its Affiliates, any natural person, any Disqualified Institution or any Defaulting Lender) all or a portion of its rights and obligations under this
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Agreement (including all or a portion of its Commitments and the Loans (including participations in L/C Obligations) at the time owing to it) with the prior written consent (such consent not be unreasonably withheld or delayed; it being understood that the Borrower shall have the right to withhold or delay its consent to any assignment solely if, in order for such assignment to comply with applicable Requirements of Law, the Borrower would be required to obtain the consent of, or make any filing or registration with, any Governmental Authority) of:
(A)the Borrower; provided that no consent of the Borrower shall be required for (1) an assignment if a Payment or Bankruptcy Event of Default has occurred and is continuing or (2) the assignee is a Lender or an Affiliate of a Lender;
(B)the Administrative Agent (not to be unreasonably withheld or delayed); provided that no consent of the Administrative Agent shall be required for an assignment: (1) by a Revolving Lender of all or a portion of its Revolving Commitment and Revolving Loans at the time owing to it (and participations in Letters of Credit and LC Disbursements), to an assignee that is a Revolving Lender, an Affiliate of a Revolving Lender or an Approved Revolving Fund; and (2) by a Term Lender of all or a portion of its Term Commitment and Term Loans at the time owing to it, to an assignee that is a Term Lender, an Affiliate of a Term Lender or an Approved Term Fund; and
(C)each Letter of Credit Issuer (not to be unreasonably withheld or delayed).
(i)Assignments shall be subject to the following additional conditions:
(A)except in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than $1,000,000 and increments of $500,000 in excess thereof, unless each of the Borrower, each Letter of Credit Issuer and the Administrative Agent otherwise consents (which consents shall not be unreasonably withheld or delayed); provided that no such consent of the Borrower shall be required if a Payment or Bankruptcy Event of Default has occurred and is continuing; provided, further, that contemporaneous assignments to a single assignee made by Affiliates of Lenders and related Approved Funds shall be aggregated for purposes of meeting the minimum assignment amount requirements stated above;
(B)each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender’s rights and obligations
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under this Agreement with respect to the Loan or the Commitment assigned (it being understood that assignments under separate Facilities shall not be required to be made on a pro rata basis);
(C)the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee in the amount of $3,500; provided that the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any assignment;
(D)the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire; and
(E)prior to the Initial Term Loans Repayment Date, (i) any assignment of Revolving Loans or Revolving Commitments, must also include the assignment of Initial Term Loans and Initial Term Loan Commitments in an amount equal to the amount of such assignor’s Initial Term Loans and Initial Term Loan Commitments multiplied by the ratio of (x) such assignor’s Revolving Commitments immediately after giving effect to such assignment over (y) such assignor’s Revolving Commitments immediately prior to giving effect to such assignment; and (ii) any assignment of Initial Term Loans and Initial Term Loan Commitments, must also include the assignment of Revolving Loans and Revolving Commitments in an amount equal to the amount of such assignor’s Revolving Loans and Revolving Commitments multiplied by the ratio of (x) such assignor’s Initial Term Loans immediately after giving effect to such assignment over (y) such assignor’s Initial Term Loans immediately prior to giving effect to such assignment.
(ii)Subject to acceptance and recording thereof pursuant to Section 13.6(b)(iv), from and after the effective date specified in each Assignment and Acceptance, the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Section 2.10, Section 2.11, Section 3.5, Section 5.4 and Section 13.5). Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 13.6 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with Section 13.6(c).
(iii)The Administrative Agent, acting for this purpose as a non-fiduciary agent of the Borrower, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Acceptance delivered to it and a register
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for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount (and stated interest amounts) of the Loans and L/C Obligations and any payment made by the Letter of Credit Issuer under any Letter of Credit owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). Further, the Register shall contain the name and address of the Administrative Agent and the lending office through which each such Person acts under this Agreement. The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent, the Collateral Agent, the Letter of Credit Issuer and the Lenders shall treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by the Borrower, the Collateral Agent, the Letter of Credit Issuer and, solely with respect to itself, each other Lender, at any reasonable time and from time to time upon reasonable prior notice.
(iv)Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in Section 13.6(b) (unless waived) and any written consent to such assignment required by Section 13.6(b), the Administrative Agent shall accept such Assignment and Acceptance and record the information contained therein in the Register.
(c)
(i)Any Lender may, with the prior written consent of the Borrower (such consent not to be unreasonably withheld or delayed; provided, that no consent of the Borrower shall be required for any participation if (A) a Payment or Bankruptcy Event of Default has occurred and is continuing or (B) the assignee is a Lender or an Affiliate of a Lender), sell participations to one or more banks or other entities other than the Borrower or Subsidiary of the Borrower or the Sponsor or any of their Affiliates or any natural person (each, a “Participant”) in all or a portion of such Lender’s rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it); provided that (1) such Lender’s obligations under this Agreement shall remain unchanged, (2) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (3) the Borrower, the Administrative Agent, the Letter of Credit Issuer and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement or any other Credit Document; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in Section 13.1(a)(ii)(A), Section 13.1(a)(ii)(B) and Section 13.1(a)(ii)(C) that affects such Participant.
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Subject to Section 13.6(c)(i)(B), the Borrower agrees that each Participant shall be entitled to the benefits of Section 2.10, Section 2.11, Section 3.5 and Section 5.4 to the same extent as if it were a Lender (subject to the limitations and requirements of those Sections as though it were a Lender and had acquired its interest by assignment pursuant to Section 13.6(b), including the requirements of Section 5.4(e)). To the extent permitted by Requirements of Law, each Participant also shall be entitled to the benefits of Section 13.8(b) as though it were a Lender; provided such Participant agrees to be subject to Section 13.8(a) as though it were a Lender.
(ii)Notwithstanding anything to the contrary in this Agreement, a Participant shall not be entitled to receive any greater payment under Section 2.9, Section 2.10, Section 3.5 or Section 5.4 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent expressly acknowledging that such Participant is entitled to the benefit of such provisions of this Agreement; provided that the Participant shall be subject to the provisions in Section 2.10 as if it were an assignee under Section 13.6(a) and Section 13.6(b). Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrower, maintain a register on which it enters the name and address of each participant and the principal amounts (and related interest amounts) of each participant’s interest in the Loans or other obligations under this Agreement (the “Participant Register”). The entries in the Participant Register shall be conclusive, absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. No Lender shall have any obligation to disclose all or any portion of the Participant Register to any Person (including the identity of any Participant or any information relating to a Participant’s interest in any commitments, loans, letters of credit or its other obligations under any Credit Document) except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the Treasury Regulations. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register.
(d)Any Lender may, without the consent of the Borrower or the Administrative Agent, at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank or any central bank having jurisdiction over such Lender, and this Section 13.6 shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. In order to facilitate such pledge or assignment or for any other reason, the Borrower hereby agrees that, upon request of any Lender at any time and from time to time after the Borrower has made its initial borrowing hereunder, the Borrower shall provide to such Lender, at the
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Borrower’s own expense, a promissory note, substantially in the form of Exhibit O and/or Exhibit P, as the case may be, evidencing the Loans owing to such Lender.
(e)Subject to Section 13.16, the Borrower authorizes each Lender to disclose to any Participant, secured creditor of such Lender or assignee (each, a “Transferee”) and any prospective Transferee any and all financial information in such Lender’s possession concerning the Borrower and its Affiliates that has been delivered to such Lender by or on behalf of the Borrower and its Affiliates pursuant to this Agreement or that has been delivered to such Lender by or on behalf of the Borrower and its Affiliates in connection with such Lender’s credit evaluation of the Borrower and its Affiliates prior to becoming a party to this Agreement.
(f)The Administrative Agent shall not be responsible or have any liability for, or have any duty to ascertain, inquire into, monitor or enforce, compliance with the provisions hereof relating to Disqualified Institutions. Without limiting the generality of the foregoing, the Administrative Agent shall not (a) be obligated to ascertain, monitor or inquire as to whether any Lender or participant or prospective Lender or participant is a Disqualified Institution or (b) have any liability with respect to or arising out of any assignment or participation of Loans, or disclosure of confidential information, to any Disqualified Institution.
(g)Notwithstanding anything to the contrary contained herein, any Lender may, at any time, assign all or a portion of its rights and obligations under this Agreement in respect of its Term Loans (other than the Initial Term Loans) to an Affiliated Lender; provided that:
(i)by its acquisition of Term Loans, an Affiliated Lender shall be deemed to have acknowledged and agreed that:
(A)it shall not have any right to (i) attend or participate in (including, in each case, by telephone) any meeting (including “Lender only” meetings) or discussions (or portion thereof) among the Administrative Agent or any Lender to which representatives of the Borrower are not then present, (ii) receive any information or material prepared by the Administrative Agent or any Lender or any communication by or among the Administrative Agent and one or more Lenders or any other material which is “Lender only”, except to the extent such information or materials have been made available to the Borrower or its representatives (and in any case, other than the right to receive notices of prepayments and other administrative notices in respect of its Loans required to be delivered to Lenders pursuant to Section 2) or receive any advice of counsel to the Administrative Agent or (iii) make any challenge to the Administrative Agent’s or any other Lender’s attorney-client privilege on the basis of its status as a Lender; and
(B)except with respect to any amendment, modification, waiver, consent or other action (I) in Section 13.1 requiring the consent of all Lenders, all Lenders directly and adversely affected or specifically such
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Lender, (II) that alters an Affiliated Lender’s pro rata share of any payments given to all Lenders, or (III) affects the Affiliated Lender (in its capacity as a Lender) in a manner that is disproportionate to the effect on any Lender in the same Class, the Loans held by an Affiliated Lender shall be disregarded in both the numerator and denominator in the calculation of any Lender vote (and, in the case of a plan of reorganization that does not affect the Affiliated Lender in a manner that is materially adverse to such Affiliated Lender relative to other Lenders, shall be deemed to have voted its interest in the Term Loans in the same proportion as the other Lenders) (and shall be deemed to have been voted in the same percentage as all other applicable Lenders voted if necessary to give legal effect to this paragraph); and
(ii)the aggregate principal amount of Term Loans held at any one time by Affiliated Lenders and Affiliated Institutional Lenders, collectively, in the aggregate, may not exceed 25% of the aggregate principal amount of all Term Loans outstanding at the time of (after giving effect to) such purchase; and
(iii)any such Term Loans acquired by an Affiliated Lender may, with the consent of the Borrower, be contributed to the Borrower and exchanged for debt or equity securities that are otherwise permitted to be issued hereunder at such time (and such Term Loans shall be retired and cancelled promptly).
(h)For avoidance of doubt, with the exception of Section 13.6(g)(ii), the foregoing limitations shall not be applicable to Affiliated Institutional Lenders. No Affiliated Lender shall be required to make any representation that it is not in possession of information which is not publicly available and/or material with respect to the Borrower and its Subsidiaries or their respective securities for purposes of U.S. federal and state securities laws.
Section 13.7Replacements of Lenders under Certain Circumstances.
(a)The Borrower shall be permitted to replace any Lender that (i) requests reimbursement for amounts owing pursuant to Section 2.10, Section 3.5 or Section 5.4, (ii) is affected in the manner described in Section 2.10(a)(iii) and as a result thereof any of the actions described in such Section is required to be taken or (iii) becomes a Defaulting Lender, with a replacement bank, lending institution or other financial institution; provided that (A) such replacement does not conflict with any Requirement of Law, (B) no Payment or Bankruptcy Event of Default shall have occurred and be continuing at the time of such replacement, (C) the replacement bank or institution shall purchase, at par, all Loans and the Borrower shall pay all other amounts (other than any disputed amounts), pursuant to Section 2.10, Section 3.5 or Section 5.4, as the case may be, owing to such replaced Lender prior to the date of replacement, (D) the replacement bank or institution, if not already a Lender, and the terms and conditions of such replacement, shall be reasonably satisfactory to the Administrative Agent, (E) the replaced Lender shall be obligated to make such replacement in accordance with the provisions of Section 13.6(b) (provided that the Borrower shall be obligated to pay the registration and processing fee referred to therein) and (F) any such replacement shall not
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be deemed to be a waiver of any rights that the Borrower, the Administrative Agent or any other Lender shall have against the replaced Lender.
(b)If any Lender (such Lender, a “Non-Consenting Lender”) has failed to consent to a proposed amendment, waiver, discharge or termination that pursuant to the terms of Section 13.1 requires the consent of all of the Lenders affected or the Required Lenders and with respect to which the Majority Lenders shall have granted their consent, then provided no Event of Default then exists, the Borrower shall have the right (unless such Non-Consenting Lender grants such consent) to replace such Non-Consenting Lender by requiring such Non-Consenting Lender to assign its Loans and its Commitments hereunder to one or more assignees reasonably acceptable to the Administrative Agent; provided that: (i) all Obligations of the Borrower owing to such Non-Consenting Lender being replaced (other than principal and interest) shall be paid in full to such Non-Consenting Lender concurrently with such assignment and (ii) the replacement Lender shall purchase the foregoing by paying to such Non-Consenting Lender a price equal to the principal amount thereof plus accrued and unpaid interest thereon. In connection with any such assignment, the Borrower, Administrative Agent, such Non-Consenting Lender and the replacement Lender shall otherwise comply with Section 13.6.
(c)Notwithstanding anything herein to the contrary, each party hereto agrees that any assignment pursuant to the terms of this Section 13.7 may be effected pursuant to an Assignment and Acceptance executed by the Borrower, the Administrative Agent and the assignee and that the Lender making such assignment need not be a party thereto.
Section 13.8Adjustments; Set-off.
(a)If any Lender (a “Benefited Lender”) shall at any time receive any payment in respect of any principal of or interest on all or part of the Loans made by it, or the participations in L/C Obligations held by it, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 11.5, or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender’s Loans or interest thereon or participations in L/C Obligations, such Benefited Lender shall (i) notify the Administrative Agent of such fact, and (ii) purchase for cash at face value from the other Lenders a participating interest in such portion of each such other Lender’s Loans and Letters of Credit, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such collateral or proceeds ratably in accordance with the aggregate principal of and accrued interest on their respective Loans and other amounts owing them; provided, however, that, (A) if all or any portion of such excess payment or benefits is thereafter recovered from such Benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest and (B) the provisions of this paragraph shall not be construed to apply to (1) any payment made by the Borrower or any other Credit Party pursuant to and in accordance with the express terms of this Agreement and the other Credit Documents, (2) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans,
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Commitments or participations in Drawings to any assignee or participant or (3) any disproportionate payment obtained by a Lender as a result of the extension by Lenders of the maturity date or expiration date of some but not all Loans or Commitments or any increase in the Applicable Margin in respect of Loans or Commitments of Lenders that have consented to any such extension. Each Credit Party consents to the foregoing and agrees, to the extent it may effectively do so under Requirements of Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Credit Party rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Credit Party in the amount of such participation.
(b)Subject to Section 11.14, after the occurrence and during the continuance of an Event of Default, in addition to any rights and remedies of the Lenders provided by Requirements of Law, each Lender shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable Requirements of Law, upon any amount becoming due and payable by the Borrower hereunder or under any Credit Document (whether at the stated maturity, by acceleration or otherwise) to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of the Borrower. Each Lender agrees promptly to notify the Borrower (and the Credit Parties, if applicable) and the Administrative Agent after any such set-off and application made by such Lender; provided that the failure to give such notice shall not affect the validity of such set-off and application.
Section 13.9Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile or other electronic transmission, i.e. a “pdf” or a “tif”), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Administrative Agent. The words “execute,” “execution,” “signed,” “signature,” “delivery” and words of like import in or related to this Agreement, any other Credit Document or any document, amendment, approval, consent, waiver, modification, information, notice, certificate, report, statement, disclosure, or authorization to be signed or delivered in connection with this Agreement or any other Credit Document or the transactions contemplated hereby shall be deemed to include Electronic Signatures or execution in the form of an Electronic Record, and contract formations on electronic platforms approved by the Administrative Agent, deliveries or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.  Each party hereto agrees that any Electronic Signature or execution in the form of an Electronic Record shall be valid and binding on itself and each of the other parties hereto to the same extent as a manual, original signature.  For the avoidance of doubt, the authorization under this paragraph may include, without limitation, use or acceptance by the parties of a manually signed
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paper which has been converted into electronic form (such as scanned into PDF format), or an electronically signed paper converted into another format, for transmission, delivery and/or retention.  Notwithstanding anything contained herein to the contrary, the Administrative Agent is under no obligation to accept an Electronic Signature in any form or in any format unless expressly agreed to by the Administrative Agent pursuant to procedures approved by it; provided that without limiting the foregoing, (a) to the extent the Administrative Agent has agreed to accept such Electronic Signature from any party hereto, the Administrative Agent and the other parties hereto shall be entitled to rely on any such Electronic Signature purportedly given by or on behalf of the executing party without further verification and (b) upon the request of the Administrative Agent or any Lender, any Electronic Signature shall be promptly followed by an original manually executed counterpart thereof.  Without limiting the generality of the foregoing, each party hereto hereby (i) agrees that, for all purposes, including without limitation, in connection with any workout, restructuring, enforcement of remedies, bankruptcy proceedings or litigation among the Administrative Agent, the Lenders and any of the Credit Parties, electronic images of this Agreement or any other Credit Document (in each case, including with respect to any signature pages thereto)  shall have the same legal effect, validity and enforceability as any paper original, and (ii) waives any argument, defense or right to contest the validity or enforceability of the Credit Documents based solely on the lack of paper original copies of any Credit Documents, including with respect to any signature pages thereto.
Section 13.10Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
Section 13.11Integration. This Agreement and the other Credit Documents represent the agreement of the Borrower, the Guarantors, the Collateral Agent, the Administrative Agent and the Lenders with respect to the subject matter hereof and thereof, and there are no promises, undertakings, representations or warranties by the Borrower, the Guarantors, any Agent nor any Lender relative to subject matter hereof not expressly set forth or referred to herein or in the other Credit Documents.
Section 13.12GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 13.13Submission to Jurisdiction; Waivers. Each party hereto hereby irrevocably and unconditionally:
(a)submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Credit Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the exclusive general jurisdiction of the courts of the State of New York located in New York County, the courts of the United States of America for the Southern District of New York located in New York County and appellate courts from any thereof;
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(b)consents that any such action or proceeding shall be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same;
(c)agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such Person at its address set forth on Schedule 13.2 at such other address of which the Administrative Agent shall have been notified pursuant to Section 13.2;
(d)agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by Requirements of Law or shall limit the right to sue in any other jurisdiction;
(e)waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this Section 13.13 any special, exemplary, punitive or consequential damages; and
(f)agrees that a final judgment in any action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.
Section 13.14Acknowledgments. The Borrower hereby acknowledges that:
(a)it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Credit Documents;
(b)(i) the credit facilities provided for hereunder and any related arranging or other services in connection therewith (including in connection with any amendment, waiver or other modification hereof or of any other Credit Document) are an arm’s-length commercial transaction between the Borrower and the other Credit Parties, on the one hand, and the Administrative Agent, the Lenders and the other Agents on the other hand, and the Borrower and the other Credit Parties are capable of evaluating and understanding and understand and accept the terms, risks and conditions of the transactions contemplated hereby and by the other Credit Documents (including any amendment, waiver or other modification hereof or thereof); (ii) in connection with the process leading to such transaction, each of the Administrative Agent, other Agents and the Lenders, is and has been acting solely as a principal and is not the financial advisor, agent or fiduciary for any of the Borrower, any other Credit Parties or any of their respective Affiliates, equity holders, creditors or employees or any other Person; (iii) neither the Administrative Agent, any other Agent, any Lead Arranger nor any Lender has assumed or will assume an advisory, agency or fiduciary responsibility in favor of the Borrower or any other Credit Party with respect to any of the transactions contemplated hereby or the process leading thereto, including with respect to any amendment, waiver or other modification hereof or of any other Credit Document (irrespective of whether the Administrative Agent or any other Agent or any Lead Arranger or any Lender has advised or is currently advising any of the Borrower, the other Credit Parties or their respective Affiliates on other matters) and none of the Administrative Agent, any Agent,
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any Lead Arranger or any Lender has any obligation to any of the Borrower, the other Credit Parties or their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Credit Documents; (iv) the Administrative Agent and its Affiliates, each other Agent and each of its Affiliates and each Lender and its Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower and its respective Affiliates, and none of the Administrative Agent, any other Agent or any Lender has any obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary relationship; and (v) none of the Administrative Agent, any Agent or any Lender has provided and none will provide any legal, accounting, regulatory or tax advice with respect to any of the transactions contemplated hereby (including any amendment, waiver or other modification hereof or of any other Credit Document) and the Borrower has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate. The Borrower hereby waives and releases, to the fullest extent permitted by law, any claims that it may have against the Administrative Agent and each Agent with respect to any breach or alleged breach of agency or fiduciary duty; and
(c)no joint venture is created hereby or by the other Credit Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Borrower, on the one hand, and any Lender, on the other hand.
Section 13.15WAIVERS OF JURY TRIAL. THE BORROWER, EACH AGENT, EACH LETTER OF CREDIT ISSUER AND EACH LENDER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
Section 13.16Confidentiality. The Administrative Agent, each other Agent, any Letter of Credit Issuer and each other Lender shall hold all non-public information furnished by or on behalf of the Borrower or any of its Subsidiaries in connection with such Lender’s evaluation of whether to become a Lender hereunder or obtained by such Lender, the Administrative Agent, any Letter of Credit Issuer or such other Agent pursuant to the requirements of this Agreement (“Confidential Information”), confidential in accordance with its customary procedure for handling confidential information of this nature and in any event may make disclosure (a) as required or requested by any Governmental Authority, self-regulatory agency or representative thereof or pursuant to legal process or applicable Requirements of Law, (b) to such Lender’s or the Administrative Agent’s, any Letter of Credit Issuer’s or such other Agent’s attorneys, professional advisors, independent auditors, trustees or Affiliates, in each case who need to know such information in connection with the administration of the Credit Documents and are informed of the confidential nature of such information, (c) to an investor or prospective investor in a securitization that agrees its access to information regarding the Credit Parties, the Loans and the Credit Documents is solely for purposes of evaluating an investment in a securitization and who agrees to treat such information as confidential, (d) to a trustee, collateral manager, servicer, backup servicer, noteholder or secured party in connection with the administration, servicing and reporting on the assets serving as collateral for a securitization and who agrees to treat such information as confidential, (e) to a nationally recognized ratings agency that requires access to information regarding the Credit Parties, the Loans and Credit Documents in connection with ratings issued with respect to a securitization, (f) to any other party hereto, (g) in
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connection with the exercise of any remedies hereunder or under any other Credit Document or any action or proceeding relating to this Agreement or any other Credit Document or the enforcement of rights hereunder or thereunder, (h) with the consent of the Borrower, (i) to the extent such information (x) becomes publicly available other than as a result of a breach of this section, or (y) becomes available to the Administrative Agent, any Lender, any Letter of Credit Issuer or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower who did not acquire such information as a result of a breach of this section or (j) to prospective Transferees or to any pledgee referred to in Section 13.6 or to prospective direct or indirect contractual counterparties in Hedge Agreements to be entered into in connection with Loans made hereunder as long as such Person is advised of and agrees to be bound by the provisions of this Section 13.16 or confidentiality provisions at least as restrictive as those set forth in the Section 13.16; provided that unless specifically prohibited by applicable Requirements of Law, each Lender, the Administrative Agent, any Letter of Credit Issuer and each other Agent shall endeavor to notify the Borrower (without any liability for a failure to so notify the Borrower) of any request made to such Lender, the Administrative Agent, any Letter of Credit Issuer or such other Agent, as applicable, by any governmental, regulatory or self-regulatory agency or representative thereof (other than any such request in connection with an examination of the financial condition of such Lender by such governmental agency) for disclosure of any such non-public information prior to disclosure of such information; provided further that in no event shall any Lender, the Administrative Agent, any Letter of Credit Issuer or any other Agent be obligated or required to return any materials furnished by the Borrower or any Subsidiary. In addition, the Administrative Agent and the Lenders may disclose the existence of this Agreement and information about this Agreement to market data collectors, similar service providers to the lending industry and service providers to the Agents or any Lender in connection with the administration of this Agreement and the other Credit Documents. For the avoidance of doubt, nothing herein prohibits any individual from communicating or disclosing information regarding suspected violations of laws, rules, or regulations to a governmental, regulatory, or self-regulatory authority.
Section 13.17Release of Collateral and Guarantee Obligations.
(a)Each Secured Party hereby irrevocably agrees that the Liens granted to the Collateral Agent by the Credit Parties on any Collateral shall be automatically released (i) in full, as set forth in clause (b) below, (ii) upon the Disposition of such Collateral (including as part of or in connection with any other Disposition permitted hereunder) to any Person other than another Credit Party, to the extent such Disposition is made in compliance with the terms of this Agreement (and the Collateral Agent may rely conclusively on a certificate to that effect provided to it by any Credit Party upon its reasonable request without further inquiry), (iii) to the extent such Collateral is comprised of property leased to a Credit Party, upon termination or expiration of such lease, (iv) if the release of such Lien is approved, authorized or ratified in writing by the Majority Lenders (or such other percentage of the Lenders whose consent may be required in accordance with Section 13.1), (v) to the extent the property constituting such Collateral is owned by any Guarantor, upon the release of such Guarantor from its obligations under the Guarantee (in accordance with the second succeeding sentence and Section 5.14(b) of the Guarantee), (vi) as required by the Collateral Agent to effect any Disposition of Collateral in connection with any exercise of remedies of the Collateral Agent pursuant to the Security Documents and (vii) upon such Collateral no longer constituting Collateral
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pursuant to the terms of the Credit Documents. Any such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those being released) upon (or obligations (other than those being released) of the Credit Parties in respect of) all interests retained by the Credit Parties, including the proceeds of any Disposition, all of which shall continue to constitute part of the Collateral except to the extent otherwise released in accordance with the provisions of the Credit Documents. Additionally, the Secured Parties hereby irrevocably agree that the Guarantors shall be released from the Guarantees upon consummation of any transaction permitted hereunder resulting in such Subsidiary ceasing to constitute a Restricted Subsidiary or otherwise becoming an Excluded Subsidiary. The Secured Parties hereby authorize the Administrative Agent and the Collateral Agent, as applicable, to execute and deliver any instruments, documents, and agreements necessary or desirable to evidence and confirm the release of any Guarantor or Collateral pursuant to the foregoing provisions of this paragraph, all without the further consent or joinder of any Secured Party. Any representation, warranty or covenant contained in any Credit Document relating to any such Collateral or Guarantor shall no longer be deemed to be repeated.
(b)Notwithstanding anything to the contrary contained herein or any other Credit Document, upon Payment in Full, upon request of the Borrower, the Administrative Agent and/or Collateral Agent, as applicable, shall (without notice to, or vote or consent of, any Secured Party) take such actions as shall be required to release its security interest in all Collateral, and to release all obligations under any Credit Document, whether or not on the date of such release there may be any (i) Hedging Obligations in respect of any Secured Hedge Agreements, (ii) Cash Management Obligations in respect of any Secured Cash Management Agreements and (iii) any contingent or indemnification obligations not then due. Any such release of Obligations shall be deemed subject to the provision that such Obligations shall be reinstated if after such release any portion of any payment in respect of the Obligations guaranteed thereby shall be rescinded or must otherwise be restored or returned upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any Guarantor, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any Guarantor or any substantial part of its property, or otherwise, all as though such payment had not been made.
Section 13.18USA PATRIOT Act. The Agents and each Lender hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify and record information that identifies each Credit Party, which information includes the name and address of each Credit Party and other information that will allow such Agent and such Lender to identify each Credit Party in accordance with the Patriot Act.
Section 13.19Payments Set Aside. To the extent that any payment by or on behalf of the Borrower is made to any Agent or any Lender, or any Agent or any Lender exercises its right of setoff, and such payment or the proceeds of such setoff or any part thereof is subsequently invalidated, declared to be fraudulent or preferential, set aside or required (including pursuant to any settlement entered into by such Agent or such Lender in its discretion) to be repaid to a trustee, receiver or any other party, in connection with any proceeding or otherwise, then (a) to the extent of such recovery, the obligation or part thereof originally intended to be satisfied shall
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be revived and continued in full force and effect as if such payment had not been made or such setoff had not occurred, and (b) each Lender severally agrees to pay to the Administrative Agent upon demand its applicable share of any amount so recovered from or repaid by any Agent, plus interest thereon from the date of such demand to the date such payment is made at a rate per annum equal to the applicable Overnight Rate from time to time in effect.
Section 13.20Reinstatement. This Agreement shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any other Secured Party upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of the Borrower or any other Credit Party, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, the Borrower or any other Credit Party or any substantial part of its property, or otherwise, all as though such payments had not been made.
Section 13.21Disposition of Proceeds. The Security Documents contain an assignment by the Borrower and/or the Guarantors unto and in favor of the Collateral Agent for the benefit of the Lenders of all of the Borrower’s or each Guarantor’s interest in and to their as-extracted collateral in the form of production and all proceeds attributable thereto which may be produced from or allocated to the Mortgaged Property. The Security Documents further provide in general for the application of such proceeds to the satisfaction of the Obligations described therein and secured thereby. Notwithstanding the assignment contained in such Security Documents, until the occurrence and during the continuance of an Event of Default, (a) the Administrative Agent and the Lenders agree that they will neither notify the purchaser or purchasers of such production nor take any other action to cause such proceeds to be remitted to the Administrative Agent or the Lenders, but the Lenders will instead permit such proceeds to be paid to the Borrower and its Subsidiaries and (b) the Lenders hereby authorize the Administrative Agent to take such actions as may be necessary to cause such proceeds to be paid to the Borrower and/or such Subsidiaries.
Section 13.22Collateral Matters; Hedge Agreements. The benefit of the Security Documents and of the provisions of this Agreement relating to any Collateral securing the Obligations shall also extend to and be available on a pro rata basis to any Secured Party (a) under any Secured Hedge Agreement, in each case, after giving effect to all netting arrangements relating to such Hedge Agreements or (b) under any Secured Cash Management Agreement. No Secured Party shall have any voting rights under any Credit Document solely as a result of the existence of obligations owed to it under any Secured Hedge Agreement or Secured Cash Management Agreement.
Section 13.23Flood Insurance Provisions. Notwithstanding anything in this Agreement or any other Credit Document to the contrary, in no event is any “Building” (as defined in the applicable Flood Insurance Law) or “Manufactured (Mobile) Home” (as defined in the applicable Flood Insurance Law) included in the definition of “Mortgaged Property” (as defined in any Credit Document) and no “Building” or “Manufactured (Mobile) Home” is hereby encumbered by this Agreement or any other Credit Document.
Section 13.24Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.
Section 13.25No Third Party Beneficiaries. This Agreement, the other Credit Documents, and the agreement of the Lenders to make Loans and the Letter of Credit Issuers to issue, amend, renew or extend Letters of Credit hereunder are solely for the benefit of the Borrower, and no other Person (including, without limitation, any other Credit Party, any obligor, contractor, subcontractor, supplier or materialsman) shall have any rights, claims,
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remedies or privileges hereunder or under any other Credit Document against the Administrative Agent, any other Agent, the Letter of Credit Issuer or any Lender for any reason whatsoever. Except as specified in Section 13.5, there are no third party beneficiaries.
Section 13.26Keepwell. The Borrower hereby guarantees the payment and performance of all Swap Obligations of each Credit Party (other than the Borrower) and absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each Credit Party (other than the Borrower) in order for such Credit Party to honor its obligations under the Guarantee including obligations with respect to Hedge Agreements (provided, however, that the Borrower shall only be liable under this Section 13.26 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 13.26, or otherwise under this Agreement or any Credit Document, as it relates to such other Credit Parties, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of the Borrower under this Section 13.26 shall remain in full force and effect until Payment in Full. The Borrower intends that this Section 13.26 constitute, and this Section 13.26 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Credit Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.
Section 13.27Certain ERISA Matters.
(a)Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of the Administrative Agent, the Lead Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefits of the Borrower or any other Credit Party, that at least one of the following is and will be true:
(i)such Lender is not using “plan assets” (within the meaning of 29 CFR § 2510.3-101, as modified by Section 3(42) of ERISA) of one or more Benefit Plans in connection with the Loans, the Letters of Credit or the Commitments;
(ii)the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement and will not result in a non-exempt prohibited transaction under ERISA or Section 4975 of the Code; or
(iii)(A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation
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in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement; or
(iv)such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender.
(b)In addition, unless sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or such Lender has not provided another representation, warranty and covenant as provided in sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of the Administrative Agent, the Lead Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Credit Party that the Administrative Agent is not a fiduciary with respect to the assets of such Lender (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Credit Document or any documents related to hereto or thereto).
Section 13.28Acknowledgement Regarding Any Supported QFCs.
(a)To the extent that the Credit Documents provide support, through a guarantee or otherwise, for any Hedge Agreement or any other agreement or instrument that is a QFC (such support, “QFC Credit Support”, and each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Credit Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
(b)In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Credit Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special
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Resolution Regime if the Supported QFC and the Credit Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
[Signature pages follow.]
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written.
CRESCENT ROYALTY FINANCE LLC,
as Borrower
/s/ Brandi Kendall    
Name:    Brandi Kendall
Title:    Chief Financial Officer
Signature Page to Credit Agreement

WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent, Collateral Agent, Letter of Credit Issuer and a Lender
/s/ Shilo Davila    
Name:    Shiloh Davila
Title:    Executive Director

Signature Page to Credit Agreement

Bank of America, N.A., as a Lender
/s/ Ajay Prakash    
Name:    Ajay Prakash
Title:    Director
    

Signature Page to Credit Agreement

CAPITAL ONE, NATIONAL ASSOCIATION, as a Lender
/s/ Jason Groll    
Name:    Jason Groll
Title:    Director


Signature Page to Credit Agreement

CANADIAN IMPERIAL BANK OF COMMERCE, NEW YORK BRANCH., as a Lender
/s/ Scott W. Danvers    
Name:    Scott W. Danvers
Title:    Authorized Signatory


/s/ Donovan C. Broussard    
Name:    Donovan C. Broussard
Title:    Authorized Signatory


Signature Page to Credit Agreement

FIFTH THIRD BANK, NATIONAL ASSOCIATION, as a Lender
/s/ Thomas Kleiderer    
Name:    Thomas Kleiderer
Title:    Managing Director

Signature Page to Credit Agreement

JPMORGAN CHASE BANK, N.A., as a Lender
/s/ Dalton Harris    
Name:    Dalton Harris
Title:    Authorized Officer

Signature Page to Credit Agreement

KeyBank National Association, as a Lender
/s/ David Bornstein    
Name:    David Bornstein
Title:    Senior Vice President
Signature Page to Credit Agreement

Mizuho Bank, Ltd., as a Lender
/s/ Edward Sacks    
Name:    Edward Sacks
Title:    Managing Director


Signature Page to Credit Agreement

Royal Bank of Canada, as a Lender
/s/ Kristan Spivey    
Name:    Kristan Spivey
Title:    Authorized Signatory


Signature Page to Credit Agreement

TRUIST BANK, as a Lender
/s/ Greg Krablin    
Name:    Greg Krablin
Title:    Director


Signature Page to Credit Agreement
Exhibit 10.54

CRESCENT ENERGY COMPANY
2021 EQUITY INCENTIVE PLAN
PERFORMANCE STOCK UNIT GRANT NOTICE
Pursuant to the terms and conditions of the Crescent Energy Company 2021 Equity Incentive Plan, as amended from time to time (the “Plan”), Crescent Energy Company, a Delaware corporation (the “Company”), hereby grants to the individual listed below (“you” or the “Participant”) the number of Restricted Stock Units subject to performance-based vesting (the “PSUs”) set forth below. This award of PSUs (this “Award”) is subject to the terms and conditions set forth herein and in the Performance Stock Unit Agreement attached hereto as Exhibit A (the “Agreement”) and the Plan, each of which is incorporated herein by reference. Capitalized terms used but not defined herein shall have the meanings set forth in the Plan.
Participant:
_______________
Date of Grant:
_______________
Award Type and Description:
This Award is granted pursuant to Article IX of the Plan. This Award represents the right to receive shares of Common Stock in an amount ranging from _____% to _____% of the Target PSUs (as defined below), subject to the terms and conditions set forth herein and in the Agreement.
Your right to receive settlement of this Award in an amount ranging from _____% to _____% of the Target PSUs shall vest and become earned and nonforfeitable upon (i) your satisfaction of the continued employment or service requirements described below under “Service Requirement” and (ii) the Committee’s certification of the level of achievement with respect to the Performance Goals (as defined below) following each Performance Period End Date (as defined below). The portion of the Target PSUs actually earned upon satisfaction of the foregoing requirements is referred to herein as the “Earned PSUs.”
Target Number of PSUs:
_______________ (the “Target PSUs”).
Performance Period:
_____% of the Target PSUs will become earned based on performance with respect to the performance goals described in Exhibit B attached hereto (the “Performance Goals”) during the period beginning _____ (the “Performance Period Commencement Date”) and ending _____ (the “Performance Period End Date” and such period, the “Performance Period”);
For purposes of this Agreement, references to “each” or the “applicable” Performance Period Commencement Date, Performance Period End Date or Performance Period shall be construed to refer to the single time period covered by this Agreement, unless otherwise expressly stated.


Service Requirement
Except as expressly provided in Section 3 or 4 of the Agreement, you must remain continuously employed by, or continuously provide services to, the Company or an Affiliate, as applicable, from the Date of Grant through the last day of each applicable Performance Period End Date to be eligible to receive payment of the portion of this Award that corresponds to such applicable Performance Period, which is based on the level of achievement with respect to the Performance Goals.
Settlement:
Settlement of the PSUs shall be made in shares of Common Stock, cash or a combination thereof, as determined by the Committee, which shall be delivered to you in accordance with Section 5 of the Agreement.
By your signature below, you agree to be bound by the terms and conditions of the Plan, the Agreement and this Performance Stock Unit Grant Notice (this “Grant Notice”). You acknowledge that you have reviewed the Agreement, the Plan and this Grant Notice in their entirety and fully understand all provisions of the Agreement, the Plan and this Grant Notice. You hereby agree to accept as binding, conclusive and final all decisions or interpretations of the Committee regarding any questions or determinations that arise under the Agreement, the Plan or this Grant Notice. This Grant Notice may be executed in one or more counterparts (including portable document format (.pdf) and facsimile counterparts or through an electronic administrative system designated by the Company), each of which shall be deemed to be an original, but all of which together shall constitute one and the same agreement.
[Signature Page Follows]



IN WITNESS WHEREOF, the Company has caused this Grant Notice to be executed by an officer thereunto duly authorized, and the Participant has executed this Grant Notice, effective for all purposes as provided above.
COMPANY
Crescent Energy Company
By:        
Name:        
Title:        
PARTICIPANT
Signature:    
Name:        


Signature Page to
Performance Stock Unit Grant Notice

Exhibit A

PERFORMANCE STOCK UNIT AGREEMENT
This Performance Stock Unit Agreement (together with the Grant Notice to which this Agreement is attached, this “Agreement”) is made as of the Date of Grant set forth in the Grant Notice to which this Agreement is attached by and between Crescent Energy Company, a Delaware corporation (the “Company”), and                      (the “Participant”). Capitalized terms used but not specifically defined herein shall have the meanings specified in the Plan or the Grant Notice.
1.Award. In consideration of the Participant’s past and/or continued employment with, or service to, the Company or its Affiliates and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, effective as of the Date of Grant set forth in the Grant Notice (the “Date of Grant”), the Company hereby grants to the Participant the Award described in the Grant Notice on the terms and conditions set forth in the Grant Notice, this Agreement and the Plan, which is incorporated herein by reference as a part of this Agreement. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan shall control. To the extent earned and vested, this Award represents the right to receive shares of Common Stock, cash or a combination thereof, as applicable, subject to the terms and conditions set forth in the Grant Notice, this Agreement and the Plan; provided, however, that, depending on the level of performance determined to be attained with respect to the Performance Goals, an amount ranging from _____% to _____% of the Target PSUs may be earned hereunder in respect of this Award. Unless and until any portion of this Award vests and becomes earned in the manner set forth in the Grant Notice, the Participant will have no right to receive any Common Stock or other payments in respect of this Award. Prior to settlement of this Award, the Target PSUs and this Award represent an unsecured obligation of the Company, payable only from the general assets of the Company.
2.Earning and Vesting of PSUs. Except as otherwise set forth in Sections 3, and 4, the PSUs shall vest and become earned in accordance with the Participant’s satisfaction of the vesting schedule set forth in the Grant Notice (the “Service Requirement”) based on the extent to which the Company has satisfied the Performance Goals, which shall be determined by the Committee in its sole discretion following the end of each applicable Performance Period End Date (and any Target PSUs that do not become Earned PSUs during the applicable Performance Period shall be automatically forfeited without further notice and at no cost to the Company).
3.Effect of Termination of Employment or Service.
(a)If the Participant voluntarily terminates employment or service with the Company and its Affiliates other than for Cause (as defined below) and satisfies each of the conditions set forth in Section 3(b) (such termination, a “Qualifying Resignation”), then the Participant shall be deemed to have satisfied the Service Requirement with respect to a portion of the PSUs determined by multiplying (x) the Target PSUs by (y) a fraction, the numerator of which is the number of days that elapsed between the Performance Period Commencement Date and the date of the Participant’s termination of employment or service (the “Separation Date”), and the denominator of which is the total number of days in the Performance Period, and such PSUs shall remain outstanding and, subject to the satisfaction of the Performance Goals, become Earned PSUs at the end of the Performance Period which shall be eligible for settlement at the time provided for in, and otherwise in accordance with, Section 5. For the avoidance of doubt, to the extent that a Change in Control (as defined in the Plan and, for the avoidance of doubt, such Change in Control is a “change in control event” as defined in Section 409A of the Code) of the Company occurs prior to the Separation Date, the Participant shall be entitled to accelerated vesting in accordance with Section 4, which shall be settled at the time provided for in, and otherwise in accordance with, Section 5.
    

(b)A “Qualifying Resignation” shall occur only if all of the following conditions are met: (i) the Participant delivers to the Company a written notice of resignation at least six (6) months prior to the Separation Date; (ii) the Participant remains continuously employed by, or continuously provides services to, the Company or an Affiliate from the Date of Grant through the Separation Date; and (iii) no event constituting Cause shall have occurred prior to or on the Separation Date and the Participant shall not have engaged in any act or omission that would constitute grounds for termination for Cause.
(c)“Cause” means “cause” (or a term of like import) as defined in any employment or severance agreement between the Participant and the Company or an Affiliate or, in the absence of such an agreement that defines “cause” (or a term of like import), then Cause shall mean (i) the Participant’s material breach of any written agreement between the Participant and the Company or an Affiliate; (ii) the Participant’s material breach of any law applicable to the workplace or employment relationship, or the Participant’s material breach of any material policy or code of conduct established by the Company, an Affiliate, or a successor to the Company applicable to the Participant, including policies on discrimination, harassment and sexual harassment; (iii) gross negligence, willful misconduct, breach of fiduciary duty, fraud, theft or embezzlement on the part of the Participant; (iv) the commission by the Participant of, or conviction or indictment of the Participant for, or plea of nolo contendere by the Participant to, any felony (or state law equivalent) or any crime involving moral turpitude; or (v) the Participant’s willful failure or refusal, other than due to disability to perform the Participant’s obligations or to follow any lawful directive from the Company, as determined by the Company; provided, however, that if the Participant’s action or omissions as set forth in clause (v) are of such a nature that the Company or a successor of the Company determines that they are curable by the Participant, such actions or omissions must remain uncured for 30 days after the Company or a successor of the Company provides the Participant written notice of the obligation to cure such actions or omissions.
(d)Except as otherwise set forth in this Section 3 or Section 4 or as provided otherwise in any employment agreement between the Participant and the Company or an Affiliate, if the Participant has not satisfied the Service Requirement, then upon the termination of the Participant’s employment or service relationship with the Company or an Affiliate, as applicable, for any reason, any portion of this Award that has not yet otherwise vested and been earned (and all rights arising from such portion of this Award and from being a holder thereof), unless otherwise determined by the Committee, will terminate automatically without any further action by the Company and will be forfeited without further notice and at no cost to the Company.
4.Change in Control. Upon the occurrence of a Change in Control (as defined in the Plan and, for the avoidance of doubt, such Change in Control is a “change in control event” as defined in Section 409A of the Code) of the Company, any unvested portion of this Award shall become fully vested, earned and non-forfeitable on the Control Change Date, so long as the Participant remains continuously employed by, or continuously provides services to, the Company or an Affiliate until the Control Change Date, based on target (i.e., the Earned PSUs shall be equal to the Target PSUs for each incomplete Performance Period).
5.Settlement of Earned PSUs. As soon as administratively practicable following each Performance Period End Date, but in no event later than 60 days thereafter, or, if applicable, as soon as administratively practicable following the date of the accelerated vesting of any portion of this Award pursuant to Section 4, but in no event later than 60 days thereafter, the Company shall deliver to the Participant (or the Participant’s permitted transferee, if applicable), in the sole discretion of the Committee, (a) a number of shares of Common Stock equal to the portion of the Earned PSUs that relates to the applicable Performance Period or any accelerated portion, as applicable, or, (b) a cash amount equal to the product of the Fair Market Value of a share of Common Stock on the applicable vesting date and the number of Earned PSUs that relates to the applicable Performance Period or (c) any combination of the foregoing. No fractional shares of Common Stock, nor the cash value of any fractional shares of
    

Common Stock, shall be issuable or payable to the Participant pursuant to this Agreement. All shares of Common Stock, if any, issued hereunder shall be delivered either by delivering one or more certificates for such shares to the Participant or by entering such shares in book-entry form, as determined by the Committee in its sole discretion. The value of shares of Common Stock shall not bear any interest owing to the passage of time. Neither this Section 5 nor any action taken pursuant to or in accordance with this Agreement shall be construed to create a trust or a funded or secured obligation of any kind.
6.Tax Withholding. To the extent that the receipt, vesting or settlement of this Award results in compensation income or wages to the Participant for federal, state, local and/or foreign tax purposes, any applicable tax obligations shall be satisfied through net settlement (i.e., a reduction of the number of shares of Common Stock or cash otherwise issuable or deliverable pursuant to this Award) and the maximum number of shares of Common Stock (or equivalent amount of cash) that may be so withheld shall be the number of shares of Common Stock (or equivalent amount of cash) that have an aggregate Fair Market Value on the date of withholding equal to the aggregate amount of such tax liabilities determined based on the greatest withholding rates for federal, state, local and/or foreign tax purposes, including payroll taxes, that may be utilized without creating adverse accounting treatment for the Company with respect to this Award, as determined by the Committee. The Participant acknowledges there may be adverse tax consequences on the receipt, vesting or settlement of this Award or disposition of the underlying shares (or cash, as applicable) and that the Participant has been advised, and is advised, to consult a tax advisor. The Participant represents that the Participant is in no manner relying on the Board, the Committee, the Company or any of its Affiliates or any of their respective managers, directors, officers, employees or authorized representatives (including, without limitation, attorneys, accountants, consultants, bankers, lenders, prospective lenders and financial representatives) for tax advice or an assessment of such tax consequences.
7.Non-Transferability. During the lifetime of the Participant, this Award may not be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution, unless and until the shares of Common Stock, if any, (or cash, as applicable) delivered in settlement of this Award have been issued, and all restrictions applicable to such shares have lapsed. Neither this Award nor any interest or right therein shall be liable for the debts, contracts or engagements of the Participant or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means, whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence.
8.Compliance with Applicable Law. Notwithstanding any provision of this Agreement to the contrary, the issuance of shares of Common Stock hereunder will be subject to compliance with all applicable requirements of applicable law with respect to such securities and with the requirements of any stock exchange or market system upon which the shares of Common Stock may then be listed. No shares of Common Stock will be issued hereunder if such issuance would constitute a violation of any applicable law or regulation or the requirements of any stock exchange or market system upon which the shares of Common Stock may then be listed. In addition, shares of Common Stock will not be issued hereunder unless (a) a registration statement under the Securities Act of 1933, as amended, is in effect at the time of such issuance with respect to the shares to be issued or (b) the shares to be issued are permitted to be issued in accordance with the terms of an applicable exemption from the registration requirements of the Securities Act of 1933, as amended. The inability of the Company to obtain from any regulatory body having jurisdiction the authority, if any, deemed to be necessary for the lawful issuance and sale of any shares of Common Stock hereunder will relieve the Company of any liability in respect of the failure to issue such shares as to which such requisite authority has not been obtained. As a condition to any issuance of shares of Common Stock hereunder, the Company may require the Participant to satisfy any requirements that may be necessary or appropriate to evidence compliance with any applicable law or
    

regulation and to make any representation or warranty with respect to such compliance as may be requested by the Company.
9.Legends. If a stock certificate is issued with respect to shares of Common Stock delivered hereunder, such certificate shall bear such legend or legends as the Committee deems appropriate in order to reflect the restrictions set forth in this Agreement and to ensure compliance with the terms and provisions of this Agreement, the rules, regulations and other requirements of the Securities and Exchange Commission, any applicable laws or the requirements of any stock exchange on which the shares of Common Stock is then listed. If the shares of Common Stock issued hereunder are held in book-entry form, then such entry will reflect that the shares are subject to the restrictions set forth in this Agreement.
10.Rights as a Stockholder; Dividends.
(a)The Participant shall have no rights as a stockholder of the Company with respect to any shares of Common Stock that may become deliverable hereunder unless and until the Participant has become the holder of record of such shares of Common Stock, and no adjustments shall be made for dividends in cash or other property, distributions or other rights in respect of any such shares of Common Stock, except as otherwise specifically provided for in the Plan or this Agreement (including Section 10(b)).
(b) If, during the period beginning on each Performance Period End Date and ending on the date that the Participant receives settlement of any Earned PSUs that relate to such Performance Period End Date pursuant to Section 5, the Company declares and pays a cash dividend on the Common Stock, then the Company shall pay to the Participant an amount equal to the dividends that would have been paid to the Participant if the Participant owned, as of such dividend payment date, a number of shares of Common Stock equal to the number of Earned PSUs that relate to such Performance Period End Date, such payment to be made on the date that the Participant receives settlement of such Earned PSUs that relate to such Performance Period End Date pursuant to Section 5.
11.Execution of Receipts and Releases. Any issuance or transfer of shares of Common Stock or other property (including cash) to the Participant or the Participant’s legal representative, heir, legatee or distributee, in accordance with this Agreement shall be in full satisfaction of all claims of such person hereunder. As a condition precedent to such payment or issuance, the Company may require the Participant or the Participant’s legal representative, heir, legatee or distributee to execute (and not revoke within any time provided to do so) a release and receipt therefor in such form as it shall determine appropriate; provided, however, that any review period under such release will not modify the date of settlement with respect to any portion of this Award that becomes earned or vested.
12.No Right to Continued Employment, Service or Awards. Nothing in the adoption of the Plan, nor the grant of this Award pursuant to the Grant Notice and this Agreement, shall confer upon the Participant the right to continued employment by, or a continued service relationship with, the Company or any Affiliate, or any other entity, or affect in any way the right of the Company or any such Affiliate, or any other entity to terminate such employment or other service relationship at any time. The grant of this Award is a one-time benefit and does not create any contractual or other right to receive a grant of Awards or benefits in lieu of Awards in the future. Any future Awards will be granted at the sole discretion of the Company.
13.Lock-Up Period. If so requested by the Company or any representative of the underwriters in connection with any offering of the Company’s securities, the Participant (or other holder) shall not sell or otherwise transfer or distribute any shares of Common Stock or other securities of the Company (or any securities convertible or exchangeable or exercisable for shares of Common Stock or
    

engage in any hedging transactions relating to shares of Common Stock) during such period as may be requested in writing by such underwriters and agreed to in writing by the Company.
14.Notices. Notices hereunder shall be mailed or delivered to the Company at its principal place of business and shall be mailed or delivered to the Participant at the address on file with the Company or, in either case, at such other address as one party may subsequently furnish to the other party in writing. Any notice that is delivered personally or by overnight courier or telecopier in the manner provided herein shall be deemed to have been duly given to the Participant when it is mailed by the Company or, if such notice is not mailed to the Participant, upon receipt by the Participant. Any notice that is addressed and mailed in the manner herein provided shall be conclusively presumed to have been given to the party to whom it is addressed at the close of business, local time of the recipient, on the fourth day after the day it is so placed in the mail.
15.Consent to Electronic Delivery; Electronic Signature. In lieu of receiving documents in paper format, the Participant agrees, to the fullest extent permitted by law, to accept electronic delivery of any documents that the Company may be required to deliver (including, but not limited to, prospectuses, prospectus supplements, grant or award notifications and agreements, account statements, annual and quarterly reports and all other forms of communications) in connection with this and any other Award made or offered by the Company. Electronic delivery may be via a Company electronic mail system or by reference to a location on a Company intranet to which the Participant has access. The Participant hereby consents to any and all procedures the Company has established or may establish for an electronic signature system for delivery and acceptance of any such documents that the Company may be required to deliver, and agrees that the Participant’s electronic signature is the same as, and shall have the same force and effect as, the Participant’s manual signature.
16.Agreement to Furnish Information. The Participant agrees to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirement imposed upon the Company by or under any applicable statute or regulation.
17.Entire Agreement; Amendment. This Agreement constitutes the entire agreement of the parties with regard to the subject matter hereof, and contains all the covenants, promises, representations, warranties and agreements between the parties with respect to this Award granted hereby. Without limiting the scope of the preceding sentence, except as provided therein, all prior understandings and agreements, if any, among the parties hereto relating to the subject matter hereof are hereby null and void and of no further force and effect. The Committee may, in its sole discretion, amend this Agreement from time to time in any manner that is not inconsistent with the Plan; provided, however, that except as otherwise provided in the Plan or this Agreement, any such amendment that materially reduces the rights of the Participant shall be effective only if it is in writing and signed by both the Participant and an authorized officer of the Company.
18.Severability and Waiver. If a court of competent jurisdiction determines that any provision of this Agreement is invalid or unenforceable, then the invalidity or unenforceability of such provision shall not affect the validity or enforceability of any other provision of this Agreement, and all other provisions shall remain in full force and effect. Waiver by any party of any breach of this Agreement or failure to exercise any right hereunder shall not be deemed to be a waiver of any other breach or right. The failure of any party to take action by reason of such breach or to exercise any such right shall not deprive the party of the right to take action at any time while or after such breach or condition giving rise to such rights continues.
19.Clawback. Notwithstanding any provision in the Grant Notice, this Agreement or the Plan to the contrary, to the extent required by (a) applicable law, including, without limitation, the
    

requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, any Securities and Exchange Commission rule or any applicable securities exchange listing standards and/or (b) any policy that may be adopted or amended by the Board from time to time, all cash or shares of Common Stock issued hereunder shall be subject to forfeiture, repurchase, recoupment and/or cancellation to the extent necessary to comply with such law(s) and/or policy.
20.Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED THEREIN, EXCLUSIVE OF THE CONFLICT OF LAWS PROVISIONS OF DELAWARE LAW.
21.Successors and Assigns. The Company may assign any of its rights under this Agreement without the Participant’s consent. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein and in the Plan, this Agreement will be binding upon the Participant and the Participant’s beneficiaries, executors, administrators and the person(s) to whom this Award may be transferred by will or the laws of descent or distribution.
22.Headings. Headings are for convenience only and are not deemed to be part of this Agreement.
23.Section 409A. Notwithstanding anything herein or in the Plan to the contrary, the Award granted pursuant to this Agreement is intended to comply with the applicable requirements of Section 409A of the Code, as amended from time to time, or an exemption thereunder, and the guidance and regulations promulgated thereunder and successor provisions, guidance and regulations thereto (the “Nonqualified Deferred Compensation Rules”) and shall be construed and interpreted in accordance with such intent. If the Participant is deemed to be a “specified employee” within the meaning of the Nonqualified Deferred Compensation Rules, as determined by the Committee, at a time when the Participant becomes eligible for settlement of this Award upon his or her “separation from service” within the meaning of the Nonqualified Deferred Compensation Rules, then to the extent necessary to prevent any accelerated or additional tax under the Nonqualified Deferred Compensation Rules, such settlement will be delayed until the earlier of: (a) the date that is six months following the Participant’s separation from service and (b) the Participant’s death. Notwithstanding the foregoing, the Company and its Affiliates make no representations that the Award provided under this Agreement is compliant with or exempt from the Nonqualified Deferred Compensation Rules and in no event shall the Company or any Affiliate be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Participant on account of non-compliance with the Nonqualified Deferred Compensation Rules.

    

EXHIBIT B
PERFORMANCE GOALS FOR PERFORMANCE STOCK UNITS
    
Exhibit 19.1
CRESCENT ENERGY COMPANY
INSIDER TRADING POLICY
This Insider Trading Policy (this “Policy”) sets forth the policies of Crescent Energy Company (the “Company”) with respect to transactions by the Company’s directors, executive officers and employees (and other individuals serving in similar capacities) in the Company’s securities (such as Class A common stock, options to buy or sell common stock, warrants, convertible securities and debt securities) and derivative securities relating to the Company’s common stock, whether or not issued by the Company (such as exchange-traded options). The people to whom this Policy applies are referred to in this Policy as “insiders.”
The Company reserves the right to amend or rescind this Policy or any portion of it at any time and to adopt different policies and procedures at any time. In the event of any conflict or inconsistency between this Policy and any other materials distributed by the Company, this Policy shall govern. If a law conflicts with this Policy, you must comply with the law. All determinations and interpretations by the Company’s General Counsel shall be final and not subject to further review.
You should read this Policy carefully, ask questions of the Company’s General Counsel, and, if required pursuant to this policy, promptly sign and return the certification attached as Annex A acknowledging receipt of this Policy to:
Crescent Energy Company
600 Travis Street, Suite 7200
Houston, Texas 77002
Attention: General Counsel
The Company’s directors, executive officers and certain other employees (and other individuals serving in similar capacities) must promptly sign and return the attached certification acknowledging receipt of this Policy when requested to do so by the Company’s General Counsel.
I.Definitions and Explanations
A.Material, Non-Public Information
1.What Information is “Material”?
•Information is material if there is a substantial likelihood a reasonable investor would consider the information as significantly altering the total mix of information available with respect to an investment decision. Thus, information may be material if it is likely that a reasonable investor would consider it important in deciding whether to buy, hold, or sell a security. Similarly,


information may be material if you reasonably expect that it would affect the price of the security. Both positive and negative information can be material. Common examples of information that could be, but are not necessarily, material include, but are not limited to: Financial results (annual, quarterly or otherwise);
•Projections of future earnings or losses;
•News of a pending or proposed merger;
•News of a significant acquisition or a sale of significant assets;
•Impending announcements of bankruptcy or financial liquidity problems;
•Gain or loss of a substantial customer or supplier;
•Significant changes in the Company’s distribution or dividend policy;
•Stock splits;
•Significant changes in the Company’s credit ratings;
•New significant equity or debt offerings;
•Significant developments in litigation or regulatory proceedings;
•Significant corporate events, including material cyber, data or personnel matters; and
•Major personnel changes, particularly departures or elections of executive officers or certain directors.
2.What Information is “Non-Public”?
Information is “non-public” if it has not been previously disclosed to the general public and is otherwise not generally available to the investing public. In order for information to be considered “public,” it must be widely disseminated in a manner making it generally available to the investing public with enough time for the investing public to absorb the information fully. Although timing may vary depending on the circumstances, generally, one full Trading Day following publication represents a reasonable waiting period before information is deemed to be public. Depending on the particular circumstances, the Company may determine that a longer or shorter period should apply to the release of Material, Non-Public Information.
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B.Related Person
“Related Person” means, with respect to the Company’s insiders:
•Any family member living in the insider’s household (including a spouse, minor child, minor stepchild, parent, stepparent, grandparent, sibling, in-law) and anyone else living in the insider’s household;
•Any family members who do not live in the insider’s household but whose transactions in Company securities are directed by the insider or subject to the insider’s influence or control (such as parents or children who consult with the insider before transacting in Company securities); and
•Partnerships, trusts, estates and other equivalent legal entities that such insider controls.
C.Trading Day
“Trading Day” means a day on which national stock exchanges or the Over-The-Counter Bulletin Board Quotation System are open for trading, and a “Trading Day” begins at the time trading begins.
D.Section 16 Officer
“Section 16 Officer” means the Company’s president, principal financial officer, principal accounting officer (or if none, the controller), any vice-president of the Company in charge of a principal business unit, division or function (such as sales, administration or finance), and any other executive officer who performs a policy-making function, as determined from time to time by the Company’s board of directors (the “Board”), or any other person who performs similar policy-making functions of the Company, as determined from time to time by the Board. Executive officers of the Company’s parents or subsidiaries shall also be deemed executive officers of the Company if they perform policy-making functions for the Company, as determined from time to time by the Board.
II.Insider Transactions
This Policy prohibits insiders from (i) transacting in or (ii) “tipping,” either directly or indirectly, others who may transact in the Company’s securities, in each case, while aware of Material, Non-Public Information about the Company. This Policy also prohibits from transacting in or tipping others who may transact in the securities of another company with which the Company does business in circumstances where insiders receive Material, Non-Public Information about such other company that has been provided to the Company and as to which the Company has a duty of confidentiality that is known to the insider regarding such information. These transactions are commonly referred to as “insider trading.”
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A.Transacting on Material, Non-Public Information
Except as otherwise specified in this Policy, no insider or Related Person shall engage in any transaction in the Company’s securities, including any offer to purchase or offer to sell, or gifting any of the Company’s securities, during any period commencing with the date that such person is aware of Material, Non-Public Information concerning the Company, and ending at the beginning after one full Trading Day following the date of public disclosure of the Material, Non-Public Information, or at the time that the information is no longer material.
B.Tipping Others of Material, Non-Public Information
No insider shall disclose or tip, either directly or indirectly, Material, Non-Public Information about the Company to any other person (including Related Persons) where the Material, Non-Public Information about the Company may be used by that person to such person’s profit by transacting in the securities of the Company. No insider or Related Person shall make recommendations, either directly or indirectly, or express opinions on the basis of Material, Non-Public Information about the Company as to transacting in the Company’s securities. Insiders are not authorized to recommend the purchase or sale of the Company’s securities to any other person (other than Related Persons) regardless of whether the insider is aware of Material, Non-Public Information about the Company.
C.Special and Prohibited Transactions
The Company has adopted policies regarding certain special and prohibited transactions applicable to those insiders specified for each of the transactions listed below.
1.Transactions in Company Debt Securities. Transactions in Company debt securities, whether or not those securities are convertible into Company common stock, are prohibited by this Policy for all insiders.
2.Hedging Transactions and Other Transactions Involving Company Derivative Securities. Hedging or monetization transactions, whether direct or indirect, involving the Company’s securities are prohibited for all insiders, regardless of whether such insiders are in possession of Material, Non-Public Information. Short sales are also prohibited for all insiders. “Hedging” includes entering into any financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds), or otherwise engaging in any transactions that hedge or offset, or are designed
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to hedge or offset, any decrease in the market value of the Company’s securities.
Transactions involving Company-based derivative securities are prohibited for all insiders, whether or not such insiders are in possession of Material, Non-Public Information. “Derivative securities” are options, warrants, stock appreciation rights, convertible notes or similar rights whose value is derived from the value of an equity security, such as Company common stock. Transactions in derivative securities include, but are not limited to, trading in Company-based option contracts, transactions in straddles or collars, and writing or buying puts or calls. Transactions in debt securities that may be convertible into Company common stock would also constitute a transaction in derivative securities prohibited by this Policy. This Policy does not, however, restrict holding, exercising, or settling awards such as options, restricted stock, restricted stock units, or other derivative securities granted under a Company equity-based compensation plan as described in more detail below in Section II.D, or as otherwise expressly permitted by this Policy.

3.Purchases of Company Securities on Margin. Any of the Company’s securities purchased in the open market by an insider should be paid for in full at the time of purchase. Purchasing the Company’s securities on margin (e.g., borrowing money from a brokerage firm or other third party to fund the purchase) is prohibited for all insiders by this Policy.
4.Pledges of Company Securities. Directors and executive officers are prohibited from pledging Company securities as collateral. For all other insiders, pledging Company securities as collateral shall require pre-approval from the Chief Executive Officer or General Counsel of the Company.
5.Standing and Limit Orders. Standing and limit orders (except standing and limit orders under approved Rule 10b5-1 Plans) should be used only for a very brief period of time.
D.Exceptions
Except as otherwise specifically noted, this Policy does not apply in the case of the following transactions:

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1.Stock Option and Other Stock-Based Compensation. This exception applies to the exercise or settlement of an employee stock option or other stock-based compensation acquired pursuant to the Company’s plans, or to the exercise of a tax withholding right or net settlement pursuant to which the Company withholds shares subject to an option to satisfy tax withholding requirements or the exercise price. This exception does not apply to any sale of stock in the market as part of a broker-assisted cashless exercise of an option, or any other market sale for the purpose of generating the cash needed to pay the exercise price of an option.
2.Restricted Stock Awards. This exception applies to the grant or vesting of an award of restricted stock, or the exercise of a tax withholding right pursuant to which the insider elects to have the Company withhold shares of stock to satisfy tax withholding requirements upon the vesting of any restricted stock. This exception does not apply to any market sale of restricted stock.
3.401(k) Plan. This exception applies to purchases or sales of Company securities in the Company’s 401(k) plan resulting from an insider’s periodic contribution of money to the plan pursuant to the insider’s payroll deduction election. This exception does not apply, however, to certain elections the insider may make under the 401(k) plan, including:
(a)    an election to increase or decrease the percentage of the insider’s periodic contributions that will be allocated to the Company stock fund;

(b)     an election to make an intra-plan transfer of an existing account balance into or out of the Company stock fund;

(c)     an election to borrow money against the insider’s 401(k) plan account if the loan will result in a liquidation of some or all of the insider’s Company stock fund balance; and

(d)     an election to pre-pay a plan loan if the pre-payment will result in allocation of loan proceeds to the Company stock fund.

4.Employee Stock Purchase Plan. This exception applies to purchases of Company securities in any employee stock purchase plan resulting from the insider’s periodic contribution of money to the plan pursuant to the election the insider made at the time of the insider’s enrollment in the plan. This exception also applies to purchases of Company securities resulting from lump sum contributions to the plan, provided that the insider elected to participate by lump sum payment at the beginning of the applicable enrollment period. This exception does not apply to the insider’s
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election to participate in the plan for any enrollment period, and to the insider’s sales of Company securities purchased pursuant to the plan.
5.Automatic Reinvestment in Dividends. This exception applies to the automatic reinvestment plan resulting from the insider’s reinvestment of dividends paid on Company securities. This exception does not apply to (i) voluntary, additional purchases of Company securities resulting from the automatic reinvestment of dividends, (ii) the insider’s election to participate in the automatic reinvestment of dividends and (iii) the insider’s election to increase or decrease the insider’s level of automatic reinvestment of dividends.
6.Diversified Mutual Funds. This exception applies to transactions in diversified mutual funds that are invested in Company securities.
7.Rule 10b5-1 Plans. This exception applies to transactions made pursuant to a “Rule 10b5-1 Plan.” A Rule 10b5-1 Plan is a written plan for transacting in Company securities that, at the time it is adopted or modified, conforms to all of the requirements of Rule 10b5-1 as then in effect. Members of the Window Group (as defined in Section III.A), whether or not members of the Pre-Clearance Group, must obtain authorization from the General Counsel (or by the Chief Financial Officer if the person seeking preclearance is the General Counsel) before entering into or modifying a Rule 10b5-1 Plan.
8.Other Approved Transactions. This exception applies to any transaction specifically approved in advance by the General Counsel (or the Chief Financial Officer if the person engaging in the transaction is the General Counsel).
E.Post-Termination Transactions
If an insider is aware of Material, Non-Public Information at the time that such insider’s employment or service relationship terminates, the insider may not transact in Company securities or the securities of another company as set forth in Sections II and III.B until that information has become public or is no longer material.
III.Additional Transaction Requirements for Certain Insiders
A.Scheduled Restrictive Periods and the Window Group
Except as set forth in Section II.D, all directors, Section 16 Officers (as defined below) and others identified by the Company who are notified from time to time by the General Counsel that they have been so identified (the “Window Group”) are prohibited from transacting in Company securities beginning seven days prior
7

to the end of the fiscal quarter until one full Trading Day following the date of public disclosure of the financial results for that fiscal quarter (the “Scheduled Restrictive Period”). Insiders who have not been identified as being in the Window Group should adhere to the other applicable prohibitions set forth in this Policy. Insiders who have been designated as members of the Window Group and notified of the Scheduled Restrictive Period must comply with the Scheduled Restrictive Period whether or not they receive a reminder of the commencement of each Scheduled Restrictive Period.
B.Unscheduled Restrictive Periods
From time to time, the Company may also prohibit some or all of its directors, executive officers or employees (and other individuals serving in similar capacities) from transacting in Company securities or the securities of another company because of developments known to the Company and not yet disclosed to the public (an “Unscheduled Restrictive Period”). In this event, the General Counsel will notify the affected persons, and those persons, except as set forth in Section II.D, may not engage in any transaction involving Company securities or the securities of a specified company, as applicable, until the General Counsel notifies them that the Unscheduled Restrictive Period is over. In addition, any person made aware of the existence of an Unscheduled Restrictive Period should not disclose the existence of the Unscheduled Restrictive Period to any other person (outside of those subject to the Unscheduled Restrictive Period).
Transacting in the Company’s securities outside of a Scheduled Restrictive Period or an Unscheduled Restrictive Period should not be considered a “safe harbor,” and all insiders should use good judgment at all times.
C.Mandatory Pre-Clearance for the Pre-Clearance Group
The Company has determined that some or all of its directors, Section 16 Officers, and others as identified by the Company and who have been notified that they have been so identified (collectively, the “Pre-Clearance Group”) must not transact in the Company’s securities, even outside of a Scheduled Restrictive Period or an Unscheduled Restricted Period, without first complying with the Company’s “pre-clearance” process. Each member of the Pre-Clearance Group should contact the Company’s General Counsel (or by the Chief Financial Officer if the person seeking preclearance is the General Counsel) prior to commencing any transactions in the Company’s securities (other than those to which preclearance does not apply as set forth in Section II.D). Members of the Pre-Clearance Group must obtain written clearance (which may include clearance via email) from the General Counsel (or from the Chief Financial Officer if the person seeking preclearance is the General Counsel); oral pre-clearance is not sufficient. Members of the Pre-Clearance Group that receive permission to engage in a transaction from the General Counsel (or from the Chief Financial Officer, as
8

applicable) must complete their transaction within (i) five Trading Days or (ii) such shorter or longer period as is designated by the General Counsel (or by the Chief Financial Officer if the person seeking preclearance is the General Counsel), or make a new request for clearance.
Please note that clearance of a proposed transaction by the General Counsel does not constitute legal advice regarding, or otherwise acknowledge that a member of the Pre-Clearance Group does not possess Material, Non-Public Information. Insiders must ultimately make their own judgments regarding, and are personally responsible for determining, whether they are in possession of Material, Non-Public Information.
IV.Potential Criminal and Civil Liability and/or Disciplinary Action
Civil and criminal penalties and disciplinary action by the Company, which may include termination or other appropriate action, may result from transacting on Material, Non-Public Information regarding the Company.

V.Transactions by the Company
From time to time, the Company may engage in transactions in its own securities. It is the Company’s policy to comply with all applicable securities laws (including appropriate approvals by the Board or appropriate committee, if required) when engaging in transactions in the Company’s securities.

* * * *
This document states a policy of Crescent Energy Company and is not intended to be regarded as the rendering of legal advice.
Last updated: February 19, 2025
9

ANNEX A
INSIDER TRADING POLICY
CERTIFICATION
I have read and understand the Insider Trading Policy (the “Policy”) of Crescent Energy Company (the “Company”). I agree that I will comply with the policies and procedures set forth in the Policy. I understand and agree that, if I am a director, executive officer or employee (or other individual serving in a similar capacity) of the Company or one of its subsidiaries or other affiliates, my failure to comply in all respects with the Company’s policies, including the Policy, is a basis for termination for cause of my employment or service with the Company and any subsidiary or other affiliate to which my employment or service now relates or may in the future relate.
I am aware that this signed Certification will be filed with my personal records in the Company’s Human Resources Department.
______________________________________
Signature

______________________________________
Type or Print Name

______________________________________
Date

    A-1


Exhibit 21.1

Crescent Energy Company Subsidiaries
Jurisdiction
1.Artemis Acquisition Holdings Inc.Delaware
2.Artemis Merger Sub II LLCDelaware
3.Bridge Energy Holdings LLCDelaware
4.Bridge Energy LLCDelaware
5.CMP Legacy Co. LLCDelaware
6.CMP Venture Co. LLCDelaware
7.CMP Crescent Minerals I (Gray) LLCDelaware
8.Colt Admiral A Holding GP LLCDelaware
9.Colt Admiral A Holding L.P.Delaware
10.Contango Crescent Renee LLCDelaware
11.Contango Crescent VentureCo I LLCDelaware
12.Crescent Conventional LLCDelaware
13.Crescent Energy Finance LLCDelaware
14.Crescent Energy Midland Services LLCOklahoma
15.Crescent Energy OpCo LLCDelaware
16.Crescent Energy Operating, LLCDelaware
17.DMA Royalty Investments L.P.Delaware
18.EIGF Minerals GP LLCDelaware
19.EIGF Minerals L.P.Delaware
20.Falcon Holding L.P.Delaware
21.IE Buffalo Holdings LLCDelaware
22.IE Buffalo Minerals LLCDelaware
23.IE L Merger Sub LLCDelaware
24.Independence Minerals GP LLCDelaware
25.Independence Minerals Holdings LLCDelaware
26.Independence Minerals L.P.Delaware
27.Independence Upstream GP LLCDelaware
28.Independence Upstream Holdings GP LLCDelaware
29.Independence Upstream Holdings L.P.Delaware
30.Independence Upstream L.P.Delaware
31.Crescent EF Aggregator L.P.Delaware
32.Javelin EF GP LLCDelaware
33.Javelin EF L.P. Delaware
34.Crescent EFA GP LLC Delaware
35.Crescent EFA Holdings LLC Delaware
36.Crescent Energy Marketing, LLCDelaware
37.Crescent Gladiator LLC Delaware
38.Javelin Oil & Gas, LLC Delaware
39.Crescent Palo Verde Aggregator L.P. Delaware
40.Crescent Palo Verde GP LLC Delaware
41.Crescent Palo Verde LP Delaware
42.
Crescent Uinta, LLC Texas
Page 1 of 2



43.
Javelin VentureCo LLCDelaware
44.Mineral Acquisition Company I, LPDelaware
45.Newark Acquisition GP I LLCDelaware
46.Newark Acquisition I L.P.Delaware
47.Newark C-I Holding L.P.Delaware
48.Newark Holding Agent Corp.Delaware
49.SilverBow AgentCo Inc.Delaware
50.Springfield GS Holdings LLCDelaware
51.Titan Energy Holdings L.P.Delaware
52.Vine Royalty GP LLCDelaware
53.Vine Royalty L.P.Delaware
54.Crescent (Eagle Ford) LLC Delaware
55.Crescent Minerals Assets GP LLC Delaware
56.Crescent Minerals Assets II LLC Delaware
57.Crescent Minerals Assets Intermediate GP LLC Delaware
58.Crescent Minerals Assets Intermediate L.P. Delaware
59.Crescent Royalty Finance LLC Delaware
60.Crescent Royalty Assets L.P. Delaware
61.The Prospect Company LLC Delaware
62.Vital Midstream Services, LLCDelaware

Page 2 of 2





CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in Registration Statement Nos. 333-269152 and 333-277702 on Form S-3 and Registration Statement Nos. 333-261604, 333-275472 and 333-283004 on Form S-8 of our reports dated February 25, 2026, relating to the financial statements of Crescent Energy Company and the effectiveness of Crescent Energy Company’s internal control over financial reporting appearing in this Annual Report on Form 10-K for the year ended December 31, 2025.

/s/ DELOITTE & TOUCHE LLP

Houston, Texas
February 25, 2026




image_0b.jpgimage_1b.jpg

TBPELS REGISTERED ENGINEERING FIRM F-1580 FAX (713) 651-0849
1100 LOUISIANA SUITE 4600 HOUSTON, TEXAS 77002-5294 TELEPHONE (713) 651-9191
Consent of Independent Petroleum Engineers
To the Board of Directors
Crescent Energy Company:
We have issued our report dated January 20, 2026, on estimates of oil, natural gas and NGL reserves estimates and forecasts of economics with respect to certain leasehold and royalty interests of Crescent Energy Company (the “Company”) as of December 31, 2025. As independent oil and gas consultants, we hereby consent to the inclusion or incorporation by reference of our report and the information contained therein included in or made part of this Annual Report on Form 10-K of the Company. Furthermore, we hereby consent to the incorporation by reference in that certain (i) Registration Statement on Form S-3 (File No. 333-277702), as may be amended from time to time, as originally filed with the U.S. Securities and Exchange Commission (the “Commission”) on March 6, 2024, (ii) Registration Statement on Form S-3 (File No. 333-269152), as originally filed with the Commission on January 6, 2023 and (iii) Registration Statement on Form S-8 (File No. 333-283004), as may be amended from time to time, as originally filed with the Commission on November 5, 2024.
/s/ Ryder Scott Company, L.P.    
RYDER SCOTT COMPANY, L.P.

Houston, Texas
February 25, 2026
SUITE 2800, 350 7TH AVENUE, S.W. CALGARY, ALBERTA T2P 3N9 TEL (403) 262-2799
555 17TH STREET, SUITE 985 DENVER, COLORADO 80202 TEL (303) 339-8110


image_0b.jpgimage_1b.jpg

TBPELS REGISTERED ENGINEERING FIRM F-1580 FAX (713) 651-0849
1100 LOUISIANA SUITE 4600 HOUSTON, TEXAS 77002-5294 TELEPHONE (713) 651-9191
Consent of Independent Petroleum Engineers
To the Board of Directors
Crescent Energy Company:
We have issued our report dated January 21, 2026, on estimates of oil, natural gas and NGL reserves and forecasts of economics with respect to certain leasehold and royalty interests of Crescent Energy Company (the “Company”), which were acquired through the Company’s acquisition of Vital Energy, Inc. As independent oil and gas consultants, we hereby consent to the inclusion or incorporation by reference of our report and the information contained therein included in or made part of this Annual Report on Form 10-K of the Company. Furthermore, we hereby consent to the incorporation by reference in that certain (i) Registration Statement on Form S-3 (File No. 333-277702), as may be amended from time to time, as originally filed with the U.S. Securities and Exchange Commission (the “Commission”) on March 6, 2024, (ii) Registration Statement on Form S-3 (File No. 333-269152), as originally filed with the Commission on January 6, 2023 and (iii) Registration Statement on Form S-8 (File No. 333-283004), as may be amended from time to time, as originally filed with the Commission on November 5, 2024.
/s/ Ryder Scott Company, L.P.    
RYDER SCOTT COMPANY, L.P.

Houston, Texas
February 25, 2026
SUITE 2800, 350 7TH AVENUE, S.W. CALGARY, ALBERTA T2P 3N9 TEL (403) 262-2799
555 17TH STREET, SUITE 985 DENVER, COLORADO 80202 TEL (303) 339-8110


image_0d.jpgimage_1d.jpg

TBPELS REGISTERED ENGINEERING FIRM F-1580 FAX (713) 651-0849
1100 LOUISIANA SUITE 4600 HOUSTON, TEXAS 77002-5294 TELEPHONE (713) 651-9191
Consent of Independent Petroleum Engineers
To the Board of Directors
Crescent Energy Company:
We have issued our report dated January 21, 2026, on estimates of oil, natural gas and NGL reserves estimates and forecasts of economics with respect to the proved reserves of Independence Mineral Holdings LLC, a subsidiary of Crescent Energy Company (the “Company”), as of December 31, 2025. As independent oil and gas consultants, we hereby consent to the inclusion or incorporation by reference of our report and the information contained therein included in or made part of this Annual Report on Form 10-K of the Company. Furthermore, we hereby consent to the incorporation by reference in that certain (i) Registration Statement on Form S-3 (File No. 333-277702), as may be amended from time to time, as originally filed with the U.S. Securities and Exchange Commission (the “Commission”) on March 6, 2024, (ii) Registration Statement on Form S-3 (File No. 333-269152), as originally filed with the Commission on January 6, 2023 and (iii) Registration Statement on Form S-8 (File No. 333-283004), as may be amended from time to time, as originally filed with the Commission on November 5, 2024.
/s/ Ryder Scott Company, L.P.    
RYDER SCOTT COMPANY, L.P.

Houston, Texas
February 25, 2026
SUITE 2800, 350 7TH AVENUE, S.W. CALGARY, ALBERTA T2P 3N9 TEL (403) 262-2799
555 17TH STREET, SUITE 985 DENVER, COLORADO 80202 TEL (303) 339-8110


Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, David C. Rockecharlie, certify that:
 
1.I have reviewed this Annual Report on Form 10-K of Crescent Energy Company (“registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
February 25, 2026
/s/ David Rockecharlie
David Rockecharlie
Chief Executive Officer
(Principal Executive Officer)



Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13A-14(A) AND RULE 15D-14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Brandi Kendall, certify that:

1.I have reviewed this Annual Report on Form 10-K of Crescent Energy Company (“registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


February 25, 2026
/s/ Brandi Kendall
Brandi Kendall
Chief Financial Officer
(Principal Financial Officer)




Exhibit 32.1

CERTIFICATION OF
CHIEF EXECUTIVE OFFICER AND
CHIEF FINANCIAL OFFICER
UNDER SECTION 906 OF THE
SARBANES OXLEY ACT OF 2002, 18 U.S.C. § 1350

In connection with the accompanying Annual Report on Form 10-K of Crescent Energy Company (the “Company”) for the year ended December 31, 2025 that is being filed concurrently with the Securities and Exchange Commission on the date hereof (the “Report”), David Rockecharlie, Chief Executive Officer of the Company, and Brandi Kendall, Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his/her knowledge:

i. the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

ii. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

February 25, 2026
/s/ David Rockecharlie
David Rockecharlie
Chief Executive Officer
(Principal Executive Officer)
/s/ Brandi Kendall
Brandi Kendall
Chief Financial Officer
(Principal Financial Officer)






















CRESCENT ENERGY COMPANY





Estimated

Future Reserves and Income

Attributable to Certain

Leasehold and Royalty Interests





SEC Parameters





As of

December 31, 2025










/s/ Stephen E. Gardner
Stephen E. Gardner, P.E.
TBPELS License No. 100578
Managing Senior Vice President
                    [SEAL]
RYDER SCOTT COMPANY, L.P.
TBPELS Firm Registration No. F-1580
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

image_0c.jpgimage_1c.jpg



    TBPELS REGISTERED ENGINEERING FIRM F-580        
    1100 LOUISIANA SUITE 4600    HOUSTON, TEXAS 77002-5294    TELEPHONE (713) 651-9191



        January 20, 2026



Brian Periman
Vice President of Corporate Reserves
Crescent Energy Company
600 Travis Street, Suite 7200
Houston, Texas 77002


Dear Mr. Periman:

At your request, Ryder Scott Company, L.P. (Ryder Scott) has prepared an estimate of the proved reserves, future production, and income attributable to certain leasehold and royalty interests of Crescent Energy Company (Crescent) as of December 31, 2025. The subject properties are located within the contiguous United States, primarily in the states of New Mexico, Texas, and Utah. The reserves and income data were estimated based on the definitions and disclosure guidelines of the United States Securities and Exchange Commission (SEC) contained in Title 17, Code of Federal Regulations, Modernization of Oil and Gas Reporting, Final Rule released January 14, 2009 in the Federal Register (SEC regulations). Our third-party study, completed on January 20, 2026 and presented herein, was prepared for public disclosure by Crescent in filings made with the SEC in accordance with the disclosure requirements set forth in the SEC regulations.

The properties evaluated by Ryder Scott account for a portion of Crescent’s total net proved liquid hydrocarbon and gas reserves as of December 31, 2025. Based on information provided by Crescent, the third-party estimate conducted by Ryder Scott addresses approximately 63 percent of the total proved net reserves of Crescent on a barrel of oil equivalent, BOE basis as of December 31, 2025.

The estimated reserves and future net income amounts presented in this report, as of December 31, 2025 are related to hydrocarbon prices. The hydrocarbon prices used in the preparation of this report are based on the average prices during the 12-month period prior to the “as of date” of this report, determined as the unweighted arithmetic averages of the prices in effect on the first-day-of-the-month for each month within such period, as required by the SEC regulations. Actual future prices may vary considerably from the prices required by SEC regulations. The reserves volumes and the income attributable thereto have a direct relationship to the hydrocarbon prices actually received; therefore, volumes of reserves actually recovered and the amounts of income actually received may differ significantly from the estimated quantities presented in this report. The results of this study are summarized as follows.
    SUITE 2800, 350 7TH AVENUE, S.W.    CALGARY, ALBERTA T2P 3N9    TEL (403) 262-2799
    555 17TH STREET, SUITE 985    DENVER, COLORADO 80202    TEL (303) 339-8110
Crescent Energy Company
January 20, 2026
Page 2


SEC PARAMETERS
Estimated Net Reserves and Income Data
Certain Leasehold and Royalty Interests of
Crescent Energy Company
As of December 31, 2025



Proved


Developed



Total


Producing

Non-Producing*

Undeveloped

Proved
Net Reserves








  Oil/Condensate – Mbbl

162,930

     1,188

70,636

234,754
  Plant Products – Mbbl

84,722

        131

31,208

116,061
  Gas – MMcf

1,145,961

        680

416,612

1,563,253









Income Data ($M)








  Future Gross Revenue

$14,933,331

$ 78,365

$6,131,142

$21,142,838
  Deductions

    8,065,835

   96,559

  3,824,354

  11,986,748
  Future Net Income (FNI)

$ 6,867,496

$(18,194)

$2,306,788

$ 9,156,090









  Discounted FNI @ 10%

$ 4,426,994

$(22,239)

$ 916,054

$ 5,320,809

*Deductions for the non-producing category include abandonment costs for numerous shut-in wells with.


Liquid hydrocarbons are expressed in standard 42 U.S. gallon barrels and shown herein as thousands of barrels (Mbbl). All gas volumes are reported on an “as sold basis” expressed in millions of cubic feet (MMcf) at the official temperature and pressure bases of the areas in which the gas reserves are located. In this report, the revenues, deductions, and income data are expressed as thousands of U.S. dollars ($M).

The estimates of the reserves, future production, and income attributable to properties in this report were prepared using the economic software package ARIESTM Petroleum Economics and Reserves Software, a copyrighted program of Halliburton. The program was used at the request of Crescent. Ryder Scott has found this program to be generally acceptable, but notes that certain summaries and calculations may vary due to rounding and may not exactly match the sum of the properties being summarized. Furthermore, one line economic summaries may vary slightly from the more detailed cash flow projections of the same properties, also due to rounding. The rounding differences are not material.

The future gross revenue is after the deduction of production taxes. The deductions incorporate the normal direct costs of operating the wells, gathering and transportation fees, ad valorem taxes, workover and development costs, and certain abandonment costs net of salvage. The future net income is before the deduction of state and federal income taxes and general administrative overhead, and has not been adjusted for outstanding loans that may exist nor does it include any adjustment for cash on hand or undistributed income.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Crescent Energy Company
January 20, 2026
Page 3


Liquid hydrocarbon reserves account for approximately 81 percent and gas reserves account for the remaining 19 percent of total future gross revenue from proved reserves.

    The discounted future net income shown above was calculated using a discount rate of 10 percent per annum compounded monthly. Future net income was discounted at four other discount rates which were also compounded monthly. These results are shown in summary form as follows.



Discounted Future Net Income ($M)


As of December 31, 2025
Discount Rate

Total
Percent

Proved



  5.0

$6,752,124
  7.5

$5,952,225
  9.0

$5,556,497
12.5

$4,811,857


The results shown above are presented for your information and should not be construed as our estimate of fair market value.


Reserves Included in This Report

The proved reserves included herein conform to the definition as set forth in the Securities and Exchange Commission’s Regulations Part 210.4-10(a). An abridged version of the SEC reserves definitions from 210.4-10(a) entitled “PETROLEUM RESERVES DEFINITIONS” is included as an attachment to this report.

The various reserves status categories are defined in the attachment entitled “PETROLEUM RESERVES STATUS DEFINITIONS AND GUIDELINES” in this report. The proved developed non-producing reserves included herein consist of the shut-in and behind pipe status categories.

No attempt was made to quantify or otherwise account for any accumulated gas production imbalances that may exist. The proved gas volumes presented herein do not include volumes of gas consumed in operations as reserves.

Reserves are “estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations.” All reserves estimates involve an assessment of the uncertainty relating the likelihood that the actual remaining quantities recovered will be greater or less than the estimated quantities determined as of the date the estimate is made. The uncertainty depends primarily on the amount of reliable geologic and engineering data available at the time of the estimate and the interpretation of these data. The relative degree of uncertainty may be conveyed by placing reserves into one of two principal categories, either proved or unproved. Unproved reserves are less certain to be recovered than proved reserves and may be further sub-categorized as probable and possible reserves to denote
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Crescent Energy Company
January 20, 2026
Page 4


progressively increasing uncertainty in their recoverability. At Crescent’s request, this report addresses only the proved reserves attributable to the properties evaluated herein.

Proved oil and gas reserves are “those quantities of oil and gas which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward.” The proved reserves included herein were estimated using deterministic methods. The SEC has defined reasonable certainty for proved reserves, when based on deterministic methods, as a “high degree of confidence that the quantities will be recovered.”

Proved reserves estimates will generally be revised only as additional geologic or engineering data become available or as economic conditions change. For proved reserves, the SEC states that “as changes due to increased availability of geoscience (geological, geophysical, and geochemical), engineering, and economic data are made to the estimated ultimate recovery (EUR) with time, reasonably certain EUR is much more likely to increase or remain constant than to decrease.” Moreover, estimates of proved reserves may be revised as a result of future operations, effects of regulation by governmental agencies or geopolitical or economic risks. Therefore, the proved reserves included in this report are estimates only and should not be construed as being exact quantities, and if recovered, the revenues therefrom, and the actual costs related thereto, could be more or less than the estimated amounts.

Crescent’s operations may be subject to various levels of governmental controls and regulations. These controls and regulations may include, but may not be limited to, matters relating to land tenure and leasing, the legal rights to produce hydrocarbons, drilling and production practices, environmental protection, marketing and pricing policies, royalties, various taxes and levies including income tax and are subject to change from time to time. Such changes in governmental regulations and policies may cause volumes of proved reserves actually recovered and amounts of proved income actually received to differ significantly from the estimated quantities.

The estimates of proved reserves presented herein were based upon a detailed study of the properties in which Crescent owns an interest; however, we have not made any field examination of the properties. No consideration was given in this report to potential environmental liabilities that may exist nor were any costs included for potential liabilities to restore and clean up damages, if any, caused by past operating practices.


Estimates of Reserves

The estimation of reserves involves two distinct determinations. The first determination results in the estimation of the quantities of recoverable oil and gas and the second determination results in the estimation of the uncertainty associated with those estimated quantities in accordance with the definitions set forth by the Securities and Exchange Commission’s Regulations Part 210.4-10(a). The process of estimating the quantities of recoverable oil and gas reserves relies on the use of certain generally accepted analytical procedures. These analytical procedures fall into three broad categories or methods: (1) performance-based methods, (2) volumetric-based methods and (3) analogy. These methods may be used individually or in combination by the reserves evaluator in the process of estimating the quantities of reserves. Reserves evaluators must select the method or combination of methods which in their professional judgment is most appropriate given the nature and amount of reliable geoscience and engineering data available at the time of the estimate, the established or
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Crescent Energy Company
January 20, 2026
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anticipated performance characteristics of the reservoir being evaluated, and the stage of development or producing maturity of the property.

In many cases, the analysis of the available geoscience and engineering data and the subsequent interpretation of this data may indicate a range of possible outcomes in an estimate, irrespective of the method selected by the evaluator. When a range in the quantity of reserves is identified, the evaluator must determine the uncertainty associated with the incremental quantities of the reserves. If the reserves quantities are estimated using the deterministic incremental approach, the uncertainty for each discrete incremental quantity of the reserves is addressed by the reserves category assigned by the evaluator. Therefore, it is the categorization of reserves quantities as proved, probable and/or possible that addresses the inherent uncertainty in the estimated quantities reported. For proved reserves, uncertainty is defined by the SEC as reasonable certainty wherein the “quantities actually recovered are much more likely to be achieved than not.” The SEC states that “probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered.” The SEC states that “possible reserves are those additional reserves that are less certain to be recovered than probable reserves and the total quantities ultimately recovered from a project have a low probability of exceeding proved plus probable plus possible reserves.” All quantities of reserves within the same reserves category must meet the SEC definitions as noted above.

Estimates of reserves quantities and their associated reserves categories may be revised in the future as additional geoscience or engineering data become available. Furthermore, estimates of reserves quantities and their associated reserves categories may also be revised due to other factors such as changes in economic conditions, results of future operations, effects of regulation by governmental agencies or geopolitical or economic risks as previously noted herein.

The reserves for the properties included herein were estimated by performance methods, analogy, or a combination of methods. In general, the reserves attributable to producing wells and/or reservoirs were estimated by performance methods or a combination of methods. These performance methods include, but may not be limited to, decline curve analysis which utilized extrapolations of historical production and pressure data ending between July 2025 and October 2025, depending on the availability of data for a given case and in those cases where such data were considered to be definitive. The data used in these analyses were furnished to Ryder Scott by Crescent or obtained from public data sources and were considered sufficient for the purpose thereof. In certain cases, producing reserves were estimated by analogy or a combination of methods. These methods were used where there were inadequate historical performance data to establish a definitive trend and where the use of production performance data as a basis for the estimates was considered to be inappropriate.

The reserves for the properties included herein attributable to the non-producing and the undeveloped status categories were estimated by analogy. The data utilized from the analogues incorporated into our analysis were considered sufficient for the purpose thereof.

To estimate economically producible proved oil and gas reserves and related future net cash flows, we consider many factors and assumptions including, but not limited to, the use of reservoir parameters derived from geological, geophysical and engineering data which cannot be measured directly, economic criteria based on current costs and SEC pricing requirements, and forecasts of future production rates. Under the SEC regulations 210.4-10(a)(22)(v) and (26), proved reserves must be anticipated to be economically producible from a given date forward based on existing economic conditions including the prices and costs at which economic producibility from a reservoir is to be
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Crescent Energy Company
January 20, 2026
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determined. While it may reasonably be anticipated that the future prices received for the sale of production and the operating costs and other costs relating to such production may increase or decrease from those under existing economic conditions, such changes were, in accordance with rules adopted by the SEC, omitted from consideration in making this evaluation.

Crescent has informed us that they have furnished us all of the material accounts, records, geological and engineering data, and reports and other data required for this investigation. In preparing our forecast of future proved production and income, we have relied upon data furnished by Crescent with respect to property interests owned, production and well tests from examined wells, normal direct costs of operating the wells or leases, other costs such as transportation and/or processing fees, ad valorem and production taxes, workover costs and development costs, development plans, certain abandonment costs after salvage, product prices based on the SEC regulations, adjustments or differentials to product prices, geological structural and isochore maps, and pressure measurements. Ryder Scott reviewed such factual data for its reasonableness; however, we have not conducted an independent verification of the data furnished by Crescent. We consider the factual data used in this report appropriate and sufficient for the purpose of preparing the estimates of reserves and future net revenues herein.

In summary, we consider the assumptions, data, methods and analytical procedures used in this report appropriate for the purpose hereof, and we have used all such methods and procedures that we consider necessary and appropriate to prepare the estimates of reserves herein. The proved reserves included herein were determined in conformance with the United States Securities and Exchange Commission (SEC) Modernization of Oil and Gas Reporting; Final Rule, including all references to Regulation S-X and Regulation S-K, referred to herein collectively as the “SEC Regulations.” In our opinion, the proved reserves presented in this report comply with the definitions, guidelines and disclosure requirements as required by the SEC regulations.


Future Production Rates

For wells currently on production, our forecasts of future production rates are based on historical performance data. If no production decline trend has been established, future production rates were held constant until a decline in ability to produce was anticipated. An estimated rate of decline was then applied until depletion of the reserves. If a decline trend has been established, this trend was used as the basis for estimating future production rates.

Test data and other related information were used to estimate the anticipated initial production rates for those wells or locations that are not currently producing. For reserves not yet on production, sales were estimated to commence at an anticipated date furnished by Crescent. Wells or locations that are not currently producing may start producing earlier or later than anticipated in our estimates due to unforeseen factors causing a change in the timing to initiate production. Such factors may include delays due to weather, the availability of rigs, the sequence of drilling, completing and/or recompleting wells and/or constraints set by regulatory bodies.

The future production rates from wells currently on production or wells or locations that are not currently producing may be more or less than estimated because of changes including, but not limited to, reservoir performance, operating conditions related to surface facilities, compression and artificial lift, pipeline capacity and/or operating conditions, producing market demand and/or allowables or other constraints set by regulatory bodies.
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Crescent Energy Company
January 20, 2026
Page 7




Hydrocarbon Prices

The hydrocarbon prices used herein are based on SEC price parameters using the average prices during the 12-month period prior to the “as of date” of this report, determined as the unweighted arithmetic averages of the prices in effect on the first-day-of-the-month for each month within such period.

We furnished Crescent with the above-mentioned average benchmark prices in effect on December 31, 2025. These initial SEC hydrocarbon prices were determined using the 12-month average first-day-of-the-month benchmark prices appropriate to the geographic area where the hydrocarbons are sold. These benchmark prices are prior to the adjustments for differentials as described herein. The table below summarizes the “benchmark prices” and “price reference” used for the geographic area included in the report.

The product prices that were actually used to determine the future gross revenue for each property reflect adjustments to the benchmark prices for gravity, quality, local conditions, and/or distance from market, referred to herein as “differentials.” The differentials used in the preparation of this report were furnished to us by Crescent. The differentials furnished to us were accepted as factual data and reviewed by us for their reasonableness; however, we have not conducted an independent verification of the data used by Crescent to determine these differentials.

In addition, the table below summarizes the net volume weighted benchmark prices adjusted for differentials and referred to herein as the “average realized prices.” The average realized prices shown in the table below were determined from the total future gross revenue before production taxes and the total net reserves for the geographic area and presented in accordance with SEC disclosure requirements for the geographic area included in the report.


Geographic Area
Product
Price
Reference
Average
Benchmark
Prices
Average Realized
Prices
  North America




    United States
Oil/Condensate
WTI Cushing
$65.34/bbl
$63.38/Bbl
NGLs
WTI Cushing
$65.34/bbl
$24.79/Bbl
Gas
Henry Hub
$3.39/MMBTU
$2.72/Mcf


The effects of derivative instruments designated as price hedges of oil and gas quantities are not reflected in our individual property evaluations.


Costs

Operating costs for the leases and wells in this report were furnished by Crescent and are based on the operating expense reports of Crescent and include only those costs directly applicable to the leases or wells. The operating costs include a portion of general and administrative costs allocated
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Crescent Energy Company
January 20, 2026
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directly to the leases and wells. For operated properties, the operating costs include an appropriate level of corporate general administrative and overhead costs. The operating costs for non-operated properties include the COPAS overhead costs that are allocated directly to the leases and wells under terms of operating agreements. The operating costs furnished to us were accepted as factual data and reviewed by us for their reasonableness; however, we have not conducted an independent verification of the operating cost data used by Crescent. No deduction was made for loan repayments, interest expenses, or exploration and development prepayments that were not charged directly to the leases or wells.

Development costs were furnished to us by Crescent and are based on authorizations for expenditure for the proposed work or actual costs for similar projects. The development costs furnished to us were accepted as factual data and reviewed by us for their reasonableness; however, we have not conducted an independent verification of these costs.

The estimated net cost of abandonment after salvage was included for properties where certain abandonment costs net of salvage were provided by Crescent and which they requested be included in our report. The estimates of the net abandonment costs furnished by Crescent were accepted without independent verification. We have made no inspections to determine if any additional abandonment, decommissioning, and /or restoration costs may be necessary in addition to the costs provided by Crescent and included herein.

The proved developed non-producing and undeveloped reserves in this report have been incorporated herein in accordance with Crescent’s plans to develop these reserves as of December 31, 2025. The implementation of Crescent’s development plans as presented to us and incorporated herein is subject to the approval process adopted by Crescent’s management. As the result of our inquiries during the course of preparing this report, Crescent has informed us that the development activities included herein have been subjected to and received the internal approvals required by Crescent’s management at the appropriate local, regional and/or corporate level. In addition to the internal approvals as noted, certain development activities may still be subject to specific partner AFE processes, Joint Operating Agreement (JOA) requirements or other administrative approvals external to Crescent. Crescent has provided written documentation supporting their commitment to proceed with the development activities as presented to us. Additionally, Crescent has informed us that they are not aware of any legal, regulatory, or political obstacles that would significantly alter their plans. While these plans could change from those under existing economic conditions as of December 31, 2025, such changes were, in accordance with rules adopted by the SEC, omitted from consideration in making this evaluation.

Current costs used by Crescent were held constant throughout the life of the properties.


Standards of Independence and Professional Qualification

Ryder Scott is an independent petroleum engineering consulting firm that has been providing petroleum consulting services throughout the world since 1937. Ryder Scott is employee-owned and maintains offices in Houston, Texas; Denver, Colorado; and Calgary, Alberta, Canada. We have approximately eighty engineers and geoscientists on our permanent staff. By virtue of the size of our firm and the large number of clients for which we provide services, no single client or job represents a material portion of our annual revenue. We do not serve as officers or directors of any privately-owned or publicly-traded oil and gas company and are separate and independent from the operating and
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Crescent Energy Company
January 20, 2026
Page 9


investment decision-making process of our clients. This allows us to bring the highest level of independence and objectivity to each engagement for our services.

Ryder Scott actively participates in industry-related professional societies and organizes an annual public forum focused on the subject of reserves evaluations and SEC regulations. Many of our staff have authored or co-authored technical papers on the subject of reserves related topics. We encourage our staff to maintain and enhance their professional skills by actively participating in ongoing continuing education.

Prior to becoming an officer of the Company, Ryder Scott requires that staff engineers and geoscientists receive professional accreditation in the form of a registered or certified professional engineer’s license or a registered or certified professional geoscientist’s license, or the equivalent thereof, from an appropriate governmental authority or a recognized self-regulating professional organization. Regulating agencies require that, in order to maintain active status, a certain amount of continuing education hours be completed annually, including an hour of ethics training. Ryder Scott fully supports this technical and ethics training with our internal requirement mentioned above.

We are independent petroleum engineers with respect to Crescent. Neither we nor any of our employees have any financial interest in the subject properties and neither the employment to do this work nor the compensation is contingent on our estimates of reserves for the properties which were reviewed.

The results of this study, presented herein, are based on technical analyses conducted by teams of geoscientists and engineers from Ryder Scott. The professional qualifications of the undersigned, the technical persons primarily responsible for overseeing, reviewing and approving the evaluation of the reserves information discussed in this report, are included as an attachment to this letter.

Terms of Usage

The results of our third-party study, presented in report form herein, were prepared in accordance with the disclosure requirements set forth in the SEC regulations and intended for public disclosure as an exhibit in filings made with the SEC by Crescent.

Crescent makes periodic filings on Form 10-K with the SEC under the 1934 Exchange Act. Furthermore, Crescent has certain registration statements filed with the SEC under the 1933 Securities Act into which certain subsequently filed reports are incorporated by reference. We consent to the incorporation by reference in the registration statements on Form S-3 and Form S-8 of Crescent, of the references to our name, as well as to the references to our third-party report for Crescent, which appears in certain reports filed by Crescent. Our written consent for such use is included as a separate exhibit to the filings made with the SEC by Crescent.

We have provided Crescent with a digital version of the original signed copy retained in our files. In the event there are any differences between the digital version included in filings made by Crescent and the original signed copy, the original signed file copy shall control and supersede.

The data and work papers used in the preparation of this report are available for examination by authorized parties in our offices. Please contact us if we can be of further service.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Crescent Energy Company
January 20, 2026
Page 10



Very truly yours,

RYDER SCOTT COMPANY, L.P.
TBPELS Firm Registration No. F-1580



        /s/ Stephen E. Gardner
    Stephen E. Gardner, P.E.
        TBPELS License No. 100578        [SEAL]
        Managing Senior Vice President

SEG (DRO)/pl
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS









Professional Qualifications of Primary Technical Person

The conclusions presented in this report are the result of technical analysis conducted by teams of geoscientists and engineers from Ryder Scott Company, L.P. Mr. Stephen E. Gardner is the primary technical person responsible for the estimate of the reserves, future production and income.

Mr. Gardner, an employee of Ryder Scott Company, L.P. (Ryder Scott) since 2006, is a Managing Senior Vice President responsible for ongoing reservoir evaluation studies worldwide, as well as for coordinating and supervising the evaluations of staff and consulting engineers of the company. Mr. Gardner is also a member of Ryder Scott’s Board of Directors. Before joining Ryder Scott, Mr. Gardner served in a number of engineering positions with Exxon Mobil Corporation. For more information regarding Mr. Gardner’s geographic and job specific experience, please refer to the Ryder Scott Company website at https://ryderscott.com/employees/denver-employees.

Mr. Gardner earned a Bachelor of Science degree in Mechanical Engineering from Brigham Young University in 2001 (summa cum laude). He is a licensed Professional Engineer in the States of Colorado and Texas. Mr. Gardner is a member of the Society of Petroleum Engineers (SPE) and a former director of the Society of Petroleum Evaluation Engineers (SPEE). He currently serves as an officer for SPEE at the international level.
In addition to gaining experience and competency through prior work experience, the Texas Board of Professional Engineers requires a minimum of 15 hours of continuing education annually, including at least one hour in the area of professional ethics, which Mr. Gardner fulfills. As part of his 2025 continuing education hours, Mr. Gardner attended multiple technical conferences, including the SPEE Annual Meeting, which he directed, and the annual Ryder Scott Reserves Conference. These conferences covered a variety of reserves topics including analysis techniques for unconventional reservoirs, geothermal energy, reserves definitions and guidelines, SEC comment letter trends, ethics, and others. In addition, Mr. Gardner participated in various local technical seminars and other internal company training courses throughout the year covering topics such as reserves evaluation methods and evaluation software, ethics, M&A trends, regulatory issues, enhanced geothermal systems, and more.
Based on his educational background, professional training and approximately 20 years of practical experience in the estimation and evaluation of petroleum reserves, Mr. Gardner has attained the professional qualifications as a Reserves Estimator set forth in Article III of the “Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information” promulgated by the Society of Petroleum Engineers as of June 2019.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS





PETROLEUM RESERVES DEFINITIONS

As Adapted From:
RULE 4-10(a) of REGULATION S-X PART 210
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC)


PREAMBLE

On January 14, 2009, the United States Securities and Exchange Commission (SEC) published the “Modernization of Oil and Gas Reporting; Final Rule” in the Federal Register of National Archives and Records Administration (NARA). The “Modernization of Oil and Gas Reporting; Final Rule” includes revisions and additions to the definition section in Rule 4-10 of Regulation S-X, revisions and additions to the oil and gas reporting requirements in Regulation S-K, and amends and codifies Industry Guide 2 in Regulation S-K. The “Modernization of Oil and Gas Reporting; Final Rule”, including all references to Regulation S-X and Regulation S-K, shall be referred to herein collectively as the “SEC regulations”. The SEC regulations take effect for all filings made with the United States Securities and Exchange Commission as of December 31, 2009, or after January 1, 2010. Reference should be made to the full text under Title 17, Code of Federal Regulations, Regulation S-X Part 210, Rule 4-10(a) for the complete definitions (direct passages excerpted in part or wholly from the aforementioned SEC document are denoted in italics herein).

Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. All reserve estimates involve an assessment of the uncertainty relating the likelihood that the actual remaining quantities recovered will be greater or less than the estimated quantities determined as of the date the estimate is made. The uncertainty depends primarily on the amount of reliable geologic and engineering data available at the time of the estimate and the interpretation of these data. The relative degree of uncertainty may be conveyed by placing reserves into one of two principal categories, either proved or unproved. Unproved reserves are less certain to be recovered than proved reserves and may be further sub-categorized as probable and possible reserves to denote progressively increasing uncertainty in their recoverability. Under the SEC regulations as of December 31, 2009, or after January 1, 2010, a company may optionally disclose estimated quantities of probable or possible oil and gas reserves in documents publicly filed with the SEC. The SEC regulations continue to prohibit disclosure of estimates of oil and gas resources other than reserves and any estimated values of such resources in any document publicly filed with the SEC unless such information is required to be disclosed in the document by foreign or state law as noted in §229.1202 Instruction to Item 1202.

Reserves estimates will generally be revised only as additional geologic or engineering data become available or as economic conditions change.

Reserves may be attributed to either natural energy or improved recovery methods. Improved recovery methods include all methods for supplementing natural energy or altering natural forces in the reservoir to increase ultimate recovery. Examples of such methods are pressure maintenance, natural gas cycling, waterflooding, thermal methods, chemical flooding, and the use of miscible and immiscible displacement fluids. Other improved recovery methods may be developed in the future as petroleum technology continues to evolve.
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
PETROLEUM RESERVES DEFINITIONS
Page 2



Reserves may be attributed to either conventional or unconventional petroleum accumulations. Petroleum accumulations are considered as either conventional or unconventional based on the nature of their in-place characteristics, extraction method applied, or degree of processing prior to sale. Examples of unconventional petroleum accumulations include coalbed or coalseam methane (CBM/CSM), basin-centered gas, shale gas, gas hydrates, natural bitumen and oil shale deposits. These unconventional accumulations may require specialized extraction technology and/or significant processing prior to sale.

Reserves do not include quantities of petroleum being held in inventory.

Because of the differences in uncertainty, caution should be exercised when aggregating quantities of petroleum from different reserves categories.


RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(26) defines reserves as follows:

Reserves. Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and gas or related substances to market, and all permits and financing required to implement the project.

Note to paragraph (a)(26): Reserves should not be assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir, or negative test results). Such areas may contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations).


PROVED RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(22) defines proved oil and gas reserves as follows:

Proved oil and gas reserves. Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

(i) The area of the reservoir considered as proved includes:

(A) The area identified by drilling and limited by fluid contacts, if any, and
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
PETROLEUM RESERVES DEFINITIONS
Page 3



(B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data.

(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.

(iii) Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty.

(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when:
(A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and

(B) The project has been approved for development by all necessary parties and entities, including governmental entities.

(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS





PETROLEUM RESERVES STATUS DEFINITIONS AND GUIDELINES

As Adapted From:
RULE 4-10(a) of REGULATION S-X PART 210
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC)

and

2018 PETROLEUM RESOURCES MANAGEMENT SYSTEM (SPE-PRMS)
Sponsored and Approved by:
SOCIETY OF PETROLEUM ENGINEERS (SPE)
WORLD PETROLEUM COUNCIL (WPC)
AMERICAN ASSOCIATION OF PETROLEUM GEOLOGISTS (AAPG)
SOCIETY OF PETROLEUM EVALUATION ENGINEERS (SPEE)
SOCIETY OF EXPLORATION GEOPHYSICISTS (SEG)
SOCIETY OF PETROPHYSICISTS AND WELL LOG ANALYSTS (SPWLA)
EUROPEAN ASSOCIATION OF GEOSCIENTISTS & ENGINEERS (EAGE)


Reserves status categories define the development and producing status of wells and reservoirs. Reference should be made to Title 17, Code of Federal Regulations, Regulation S-X Part 210, Rule 4-10(a) and the SPE-PRMS as the following reserves status definitions are based on excerpts from the original documents (direct passages excerpted from the aforementioned SEC and SPE-PRMS documents are denoted in italics herein).


DEVELOPED RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(6) defines developed oil and gas reserves as follows:

Developed oil and gas reserves are reserves of any category that can be expected to be recovered:

(i) Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and

(ii) Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.

Developed Producing (SPE-PRMS Definitions)

While not a requirement for disclosure under the SEC regulations, developed oil and gas reserves may be further sub-classified according to the guidance contained in the SPE-PRMS as Producing or Non-Producing.
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
PETROLEUM RESERVES STATUS DEFINITIONS AND GUIDELINES
Page 2



Developed Producing Reserves
Developed Producing Reserves are expected quantities to be recovered from completion intervals that are open and producing at the effective date of the estimate.

Improved recovery reserves are considered producing only after the improved recovery project is in operation.

Developed Non-Producing
Developed Non-Producing Reserves include shut-in and behind-pipe Reserves.

Shut-In
Shut-in Reserves are expected to be recovered from:
(1)completion intervals that are open at the time of the estimate but which have not yet started producing;
(2)wells which were shut-in for market conditions or pipeline connections; or
(3)wells not capable of production for mechanical reasons.

Behind-Pipe
Behind-pipe Reserves are expected to be recovered from zones in existing wells that will require additional completion work or future re-completion before start of production with minor cost to access these reserves.

In all cases, production can be initiated or restored with relatively low expenditure compared to the cost of drilling a new well.


UNDEVELOPED RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(31) defines undeveloped oil and gas reserves as follows:

Undeveloped oil and gas reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.

(i)Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.

(ii) Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify a longer time.

(iii) Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, as defined in paragraph (a)(2) of this section, or by other evidence using reliable technology establishing reasonable certainty.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS







CRESCENT ENERGY COMPANY





Estimated

Future Reserves and Income

Attributable to Certain

Leasehold and Royalty Interests





SEC Parameters





As of

December 31, 2025










/s/ Marsha E. Wellmann
Marsha E. Wellmann, P.E.
TBPELS License No. 116149
Managing Senior Vice President
[SEAL]
RYDER SCOTT COMPANY, L.P.
TBPELS Firm Registration No. F-1580
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

image_0a.jpgimage_1a.jpg



    TBPELS REGISTERED ENGINEERING FIRM F-1580        
    1100 LOUISIANA SUITE 4600    HOUSTON, TEXAS 77002-5294    TELEPHONE (713) 651-9191


        January 21, 2026


Mr. Brian Periman
Vice President of Corporate Reserves
Crescent Energy Company
600 Travis Street, Suite 7200
Houston, Texas 77002

Dear Mr. Periman:

At your request, Ryder Scott Company, L.P. (Ryder Scott) has prepared an estimate of the proved reserves, future production, and income attributable to certain leasehold and royalty interests of Crescent Energy Company (Crescent) as of December 31, 2025. These interests were acquired through Crescent’s acquisition of Vital Energy, Inc. (Vital) on December 15, 2025 (the “Closing Date”). Unless the context otherwise indicates, references herein to Crescent refer to Crescent and its subsidiaries, and, for periods prior to the Closing Date, Vital and its subsidiaries. The subject properties are located in the state of Texas. The reserves and income data were estimated based on the definitions and disclosure guidelines of the United States Securities and Exchange Commission (SEC) contained in Title 17, Code of Federal Regulations, Modernization of Oil and Gas Reporting, Final Rule released January 14, 2009 in the Federal Register (SEC regulations). Our third-party study, completed on January 15, 2026 and presented herein, was prepared for public disclosure by Crescent in filings made with the SEC in accordance with the disclosure requirements set forth in the SEC regulations.
The properties evaluated by Ryder Scott in this report account for 100 percent of the proved liquid hydrocarbon and gas reserves acquired through the acquisition of Vital but only a portion of Crescent’s total net proved reserves as of December 31, 2025.  Based on information provided by Crescent, our third-party estimate addresses approximately 35 percent of the total net proved reserves of Crescent on a barrel of oil equivalent, BOE basis as of December 31, 2025.

The estimated reserves and future net income amounts presented in this report, as of December 31, 2025 are related to hydrocarbon prices. The hydrocarbon prices used in the preparation of this report are based on the average prices during the 12-month period prior to the “as of date” of this report, determined as the unweighted arithmetic averages of the prices in effect on the first-day-of-the-month for each month within such period, as required by the SEC regulations. Actual future prices may vary considerably from the prices required by SEC regulations. The reserves volumes and the income attributable thereto have a direct relationship to the hydrocarbon prices actually received; therefore, volumes of reserves actually recovered and the amounts of income actually received may differ significantly from the estimated quantities presented in this report. The results of this study are summarized as follows.
    SUITE 2800, 350 7TH AVENUE, S.W.    CALGARY, ALBERTA T2P 3N9    TEL (403) 262-2799
    555 17TH STREET, SUITE 985    DENVER, COLORADO 80202    TEL (303) 339-8110
Crescent Energy Company
January 21, 2026
Page 2


SEC PARAMETERS
Estimated Net Reserves and Income Data
Certain Leasehold and Royalty Interests of
Crescent Energy Company
As of December 31, 2025



Proved


Developed

Total


Producing

Undeveloped

Proved
Net Reserves






  Oil/Condensate – Mbbl

108,227

12,707

120,933
  Plant Products – Mbbl

109,474

7,245

116,719
  Gas – MMcf

613,942

39,084

653,025
  MBOE

320,025

26,466

346,490







Income Data ($M)






  Future Gross Revenue

$8,902,729

$938,982

$9,841,711
  Deductions

  4,404,069

  608,620

  5,012,689
  Future Net Income (FNI)

$4,498,660

$330,362

$4,829,022







  Discounted FNI @ 10%

$2,885,903

$164,930

$3,050,834

    Values may not sum to total due to rounding.


Liquid hydrocarbons are expressed in standard 42 U.S. gallon barrels and shown herein as thousands of barrels (Mbbl). All gas volumes are reported on an “as sold basis” expressed in millions of cubic feet (MMcf) at the official temperature and pressure bases of the areas in which the gas reserves are located. The net reserves are also shown herein on an equivalent unit basis wherein natural gas is converted to oil equivalent using a factor of 6,000 cubic feet of natural gas per one barrel of oil equivalent. MBOE means thousand barrels of oil equivalent. In this report, the revenues, deductions, and income data are expressed as thousands of U.S. dollars ($M).

The estimates of the reserves, future production, and income attributable to properties in this report were prepared using the economic software package ARIESTM Petroleum Economics and Reserves Software, a copyrighted program of Halliburton. The program was used at the request of Crescent. Ryder Scott has found this program to be generally acceptable, but notes that certain summaries and calculations may vary due to rounding and may not exactly match the sum of the properties being summarized. Furthermore, one-line economic summaries may vary slightly from the more detailed cash flow projections of the same properties, also due to rounding. The rounding differences are not material.

The future gross revenue is after the deduction of production taxes. The deductions incorporate the normal direct costs of operating the wells, ad valorem taxes, recompletion costs, development costs, and certain abandonment costs. Other costs include variable costs associated with transportation and processing fees. The future net income is before the deduction of state and federal income taxes and general administrative overhead, and has not been adjusted for outstanding loans that may exist nor does it include any adjustment for cash on hand or undistributed income.
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Crescent Energy Company
January 21, 2026
Page 3



Liquid hydrocarbon reserves account for approximately 94 percent and gas reserves account for the remaining 6 percent of total future gross revenue from proved reserves.

    The discounted future net income shown above was calculated using a discount rate of 10 percent per annum compounded monthly. Future net income was discounted at four other discount rates which were also compounded monthly. These results are shown in summary form as follows.




Discounted Future Net Income ($M)


As of December 31, 2025
Discount Rate

Total
Percent

Proved



  5.0

$3,726,135
  7.5

$3,351,450
  9.0

$3,163,606
12.5

$2,804,779


The results shown above are presented for your information and should not be construed as our estimate of fair market value.


Reserves Included in This Report

The proved reserves included herein conform to the definition as set forth in the Securities and Exchange Commission’s Regulations Part 210.4-10(a). An abridged version of the SEC reserves definitions from 210.4-10(a) entitled “PETROLEUM RESERVES DEFINITIONS” is included as an attachment to this report.

The various reserves status categories are defined in the attachment entitled “PETROLEUM RESERVES STATUS DEFINITIONS AND GUIDELINES” in this report.

No attempt was made to quantify or otherwise account for any accumulated gas production imbalances that may exist. The proved gas volumes presented herein do not include volumes of gas consumed in operations as reserves.

Reserves are “estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations.” All reserves estimates involve an assessment of the uncertainty relating the likelihood that the actual remaining quantities recovered will be greater or less than the estimated quantities determined as of the date the estimate is made. The uncertainty depends primarily on the amount of reliable geologic and engineering data available at the time of the estimate and the interpretation of these data. The relative degree of uncertainty may be conveyed by placing reserves into one of two principal categories, either proved or unproved. Unproved reserves are less certain to be recovered than proved reserves and may be further sub-categorized as probable and possible reserves to denote progressively increasing uncertainty in their recoverability. At Crescent’s request, this report addresses only the proved reserves attributable to the properties evaluated herein.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Crescent Energy Company
January 21, 2026
Page 4


Proved oil and gas reserves are “those quantities of oil and gas which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward.” The proved reserves included herein were estimated using deterministic methods. The SEC has defined reasonable certainty for proved reserves, when based on deterministic methods, as a “high degree of confidence that the quantities will be recovered.”

Proved reserves estimates will generally be revised only as additional geologic or engineering data become available or as economic conditions change. For proved reserves, the SEC states that “as changes due to increased availability of geoscience (geological, geophysical, and geochemical), engineering, and economic data are made to the estimated ultimate recovery (EUR) with time, reasonably certain EUR is much more likely to increase or remain constant than to decrease.” Moreover, estimates of proved reserves may be revised as a result of future operations, effects of regulation by governmental agencies or geopolitical or economic risks. Therefore, the proved reserves included in this report are estimates only and should not be construed as being exact quantities, and if recovered, the revenues therefrom, and the actual costs related thereto, could be more or less than the estimated amounts.

Crescent’s operations may be subject to various levels of governmental controls and regulations. These controls and regulations may include, but may not be limited to, matters relating to land tenure and leasing, the legal rights to produce hydrocarbons, drilling and production practices, environmental protection, marketing and pricing policies, royalties, various taxes and levies including income tax and are subject to change from time to time. Such changes in governmental regulations and policies may cause volumes of proved reserves actually recovered and amounts of proved income actually received to differ significantly from the estimated quantities.

The estimates of proved reserves presented herein were based upon a detailed study of the properties in which Crescent owns an interest; however, we have not made any field examination of the properties. No consideration was given in this report to potential environmental liabilities that may exist nor were any costs included for potential liabilities to restore and clean up damages, if any, caused by past operating practices.


Estimates of Reserves

The estimation of reserves involves two distinct determinations. The first determination results in the estimation of the quantities of recoverable oil and gas and the second determination results in the estimation of the uncertainty associated with those estimated quantities in accordance with the definitions set forth by the Securities and Exchange Commission’s Regulations Part 210.4-10(a). The process of estimating the quantities of recoverable oil and gas reserves relies on the use of certain generally accepted analytical procedures. These analytical procedures fall into three broad categories or methods: (1) performance-based methods, (2) volumetric-based methods and (3) analogy. These methods may be used individually or in combination by the reserves evaluator in the process of estimating the quantities of reserves. Reserves evaluators must select the method or combination of methods which in their professional judgment is most appropriate given the nature and amount of reliable geoscience and engineering data available at the time of the estimate, the established or anticipated performance characteristics of the reservoir being evaluated, and the stage of development or producing maturity of the property.

In many cases, the analysis of the available geoscience and engineering data and the subsequent interpretation of this data may indicate a range of possible outcomes in an estimate, irrespective of the method selected by the evaluator. When a range in the quantity of reserves is identified, the evaluator must determine the uncertainty associated with the incremental quantities of the reserves. If the reserves quantities are estimated using the deterministic incremental approach, the uncertainty for each discrete incremental quantity of the reserves is addressed by the reserves category assigned by the evaluator.
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Crescent Energy Company
January 21, 2026
Page 5


Therefore, it is the categorization of reserves quantities as proved, probable and/or possible that addresses the inherent uncertainty in the estimated quantities reported. For proved reserves, uncertainty is defined by the SEC as reasonable certainty wherein the “quantities actually recovered are much more likely to be achieved than not.” The SEC states that “probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered.” The SEC states that “possible reserves are those additional reserves that are less certain to be recovered than probable reserves and the total quantities ultimately recovered from a project have a low probability of exceeding proved plus probable plus possible reserves.” All quantities of reserves within the same reserves category must meet the SEC definitions as noted above.

Estimates of reserves quantities and their associated reserves categories may be revised in the future as additional geoscience or engineering data become available. Furthermore, estimates of reserves quantities and their associated reserves categories may also be revised due to other factors such as changes in economic conditions, results of future operations, effects of regulation by governmental agencies or geopolitical or economic risks as previously noted herein.

The reserves for the properties included herein were estimated by performance methods, analogy, or a combination of methods. In general, the reserves attributable to producing wells and/or reservoirs were estimated by performance methods or a combination of methods. These performance methods include, but may not be limited to, decline curve analysis, which utilized extrapolations of historical production and pressure data available through December 2025 in those cases where such data were considered definitive. The data used in these analyses were furnished to Ryder Scott by Crescent or obtained from public data sources and were considered sufficient for the purpose thereof. In certain cases, producing reserves were estimated by analogy. This method was used where there were inadequate historical performance data to establish a definitive trend and where the use of production performance data as a basis for the estimates was considered to be inappropriate.

The reserves for the properties included herein attributable to the undeveloped status category were estimated by analogy. The data utilized from the analogues were considered sufficient for the purpose thereof.

To estimate economically producible proved oil and gas reserves and related future net cash flows, we consider many factors and assumptions including, but not limited to, the use of reservoir parameters derived from geological, geophysical and engineering data which cannot be measured directly, economic criteria based on current costs and SEC pricing requirements, and forecasts of future production rates. Under the SEC regulations 210.4-10(a)(22)(v) and (26), proved reserves must be anticipated to be economically producible from a given date forward based on existing economic conditions including the prices and costs at which economic producibility from a reservoir is to be determined. While it may reasonably be anticipated that the future prices received for the sale of production and the operating costs and other costs relating to such production may increase or decrease from those under existing economic conditions, such changes were, in accordance with rules adopted by the SEC, omitted from consideration in making this evaluation.

Crescent has informed us that they have furnished us all of the material accounts, records, geological and engineering data, and reports and other data required for this investigation. In preparing our forecast of future proved production and income, we have relied upon data furnished by Crescent with respect to property interests owned, production and well tests from examined wells, normal direct costs of operating the wells or leases, other costs such as transportation and/or processing fees, ad valorem and production taxes, workover and development costs, development plans, abandonment costs, adjustments or differentials to product prices, geological structural and isochore maps, well logs, core analyses, and pressure measurements. Ryder Scott reviewed such factual data for its reasonableness; however, we have not conducted an independent verification of the data furnished by Crescent. We consider the factual data
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Crescent Energy Company
January 21, 2026
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used in this report appropriate and sufficient for the purpose of preparing the estimates of reserves and future net revenues herein.

In summary, we consider the assumptions, data, methods and analytical procedures used in this report appropriate for the purpose hereof, and we have used all such methods and procedures that we consider necessary and appropriate to prepare the estimates of reserves herein. The proved reserves included herein were determined in conformance with the United States Securities and Exchange Commission (SEC) Modernization of Oil and Gas Reporting; Final Rule, including all references to Regulation S-X and Regulation S-K, referred to herein collectively as the “SEC Regulations.” In our opinion, the proved reserves presented in this report comply with the definitions, guidelines and disclosure requirements as required by the SEC regulations.


Future Production Rates

For wells currently on production, our forecasts of future production rates are based on historical performance data. If no production decline trend has been established, future production rates were held constant until a decline in ability to produce was anticipated. An estimated rate of decline was then applied until depletion of the reserves. If a decline trend has been established, this trend was used as the basis for estimating future production rates.

Test data and other related information were used to estimate the anticipated initial production rates for those locations that are not currently producing. For reserves not yet on production, sales were estimated to commence at an anticipated date furnished by Crescent. Locations that are not currently producing may start producing earlier or later than anticipated in our estimates due to unforeseen factors causing a change in the timing to initiate production. Such factors may include delays due to weather, the availability of rigs, the sequence of drilling, completing and/or recompleting wells and/or constraints set by regulatory bodies.

The future production rates from wells currently on production or locations that are not currently producing may be more or less than estimated because of changes including, but not limited to, reservoir performance, operating conditions related to surface facilities, compression and artificial lift, pipeline capacity and/or operating conditions, producing market demand and/or allowables or other constraints set by regulatory bodies.


Hydrocarbon Prices

The hydrocarbon prices used herein are based on SEC price parameters using the average prices during the 12-month period prior to the “as of date” of this report, determined as the unweighted arithmetic averages of the prices in effect on the first-day-of-the-month for each month within such period.

We furnished Crescent with the above-mentioned average benchmark prices in effect on December 31, 2025. These initial SEC hydrocarbon prices were determined using the 12-month average first-day-of-the-month benchmark prices appropriate to the geographic area where the hydrocarbons are sold. These benchmark prices are prior to the adjustments for differentials as described herein. The table below summarizes the “benchmark prices” and “price reference” used for the geographic area included in the report.

The product prices that were actually used to determine the future gross revenue for each property reflect adjustments to the benchmark prices for gravity, quality, local conditions, and/or distance from market, referred to herein as “differentials.” The differentials used in the preparation of this report were furnished to
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Crescent Energy Company
January 21, 2026
Page 7


us by Crescent. The differentials furnished to us were accepted as factual data and reviewed by us for their reasonableness; however, we have not conducted an independent verification of the data used by Crescent to determine these differentials.

In addition, the table below summarizes the net volume weighted benchmark prices adjusted for differentials and referred to herein as the “average realized prices.” The average realized prices shown in the table below were determined from the total future gross revenue before production taxes and the total net reserves for the geographic area and presented in accordance with SEC disclosure requirements for the geographic area included in the report.


Geographic Area
Product
Price
Reference
Average
Benchmark
Prices
Average Realized
Prices
  North America




    United States
Oil/Condensate
WTI Cushing
$65.34/Bbl
$66.42/Bbl
NGLs
WTI Cushing
$65.34/Bbl
$13.81/Bbl
Gas
Henry Hub
$3.387/MMBTU
$1.02/Mcf


The effects of derivative instruments designated as price hedges of oil and gas quantities are not reflected in our individual property evaluations.


Costs

Operating costs for the leases and wells in this report were furnished by Crescent and are based on the operating expense reports of Crescent and include only those costs directly applicable to the leases or wells. The operating costs include a portion of general and administrative costs allocated directly to the leases and wells. For operated properties, the operating costs include an appropriate level of corporate general administrative and overhead costs. The operating costs for non-operated properties include the COPAS overhead costs that are allocated directly to the leases and wells under terms of operating agreements. The operating costs furnished to us were accepted as factual data and reviewed by us for their reasonableness; however, we have not conducted an independent verification of the operating cost data used by Crescent. No deduction was made for loan repayments, interest expenses, or exploration and development prepayments that were not charged directly to the leases or wells.

Development costs were furnished to us by Crescent and are based on authorizations for expenditure for the proposed work or actual costs for similar projects. The development costs furnished to us were accepted as factual data and reviewed by us for their reasonableness; however, we have not conducted an independent verification of these costs.

The estimated cost of abandonment was included for properties where certain abandonment costs were provided by Crescent and for which they requested be included in our report. The estimates of the abandonment costs furnished by Crescent were accepted without independent verification. We have made no inspections to determine if any additional abandonment, decommissioning, and /or restoration costs may be necessary in addition to the costs provided by Crescent and included herein.

Current costs used by Crescent were held constant throughout the life of the properties.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Crescent Energy Company
January 21, 2026
Page 8


The proved undeveloped reserves in this report have been incorporated herein in accordance with Crescent’s plans to develop these reserves as of December 31, 2025. The implementation of Crescent’s development plans as presented to us and incorporated herein is subject to the approval process adopted by Crescent’s management. As the result of our inquiries during the course of preparing this report, Crescent has informed us that the development activities included herein have been subjected to and received the internal approvals required by Crescent’s management at the appropriate local, regional and/or corporate level. In addition to the internal approvals as noted, certain development activities may still be subject to specific partner AFE processes, Joint Operating Agreement (JOA) requirements or other administrative approvals external to Crescent. Crescent has provided written documentation supporting their commitment to proceed with the development activities as presented to us. Additionally, Crescent has informed us that they are not aware of any legal, regulatory, or political obstacles that would significantly alter their plans. While these plans could change from those under existing economic conditions as of December 31, 2025, such changes were, in accordance with rules adopted by the SEC, omitted from consideration in making this evaluation.


Standards of Independence and Professional Qualification

Ryder Scott is an independent petroleum engineering consulting firm that has been providing petroleum consulting services throughout the world since 1937. Ryder Scott is employee-owned and maintains offices in Houston, Texas; Denver, Colorado; and Calgary, Alberta, Canada. We have approximately eighty engineers and geoscientists on our permanent staff. By virtue of the size of our firm and the large number of clients for which we provide services, no single client or job represents a material portion of our annual revenue. We do not serve as officers or directors of any privately-owned or publicly-traded oil and gas company and are separate and independent from the operating and investment decision-making process of our clients. This allows us to bring the highest level of independence and objectivity to each engagement for our services.

Ryder Scott actively participates in industry-related professional societies and organizes an annual public forum focused on the subject of reserves evaluations and SEC regulations. Many of our staff have authored or co-authored technical papers on the subject of reserves related topics. We encourage our staff to maintain and enhance their professional skills by actively participating in ongoing continuing education.

Prior to becoming an officer of the Company, Ryder Scott requires that staff engineers and geoscientists receive professional accreditation in the form of a registered or certified professional engineer’s license or a registered or certified professional geoscientist’s license, or the equivalent thereof, from an appropriate governmental authority or a recognized self-regulating professional organization. Regulating agencies require that, in order to maintain active status, a certain amount of continuing education hours be completed annually, including an hour of ethics training. Ryder Scott fully supports this technical and ethics training with our internal requirement mentioned above.

We are independent petroleum engineers with respect to Crescent Energy Company and Vital Energy, Inc. Neither we nor any of our employees have any financial interest in the subject properties and neither the employment to do this work nor the compensation is contingent on our estimates of reserves for the properties which were reviewed.

The results of this study, presented herein, are based on technical analyses conducted by teams of geoscientists and engineers from Ryder Scott. The professional qualifications of the undersigned, the technical person primarily responsible for overseeing the evaluation of the reserves information discussed in this report, are included as an attachment to this letter.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Crescent Energy Company
January 21, 2026
Page 9


Terms of Usage

The results of our third-party study, presented in report form herein, were prepared in accordance with the disclosure requirements set forth in the SEC regulations and intended for public disclosure as an exhibit in filings made with the SEC by Crescent.

Crescent makes periodic filings on Form 10-K with the SEC under the 1934 Exchange Act. Furthermore, Crescent has certain registration statements filed with the SEC under the 1933 Securities Act into which any subsequently filed Form 10-K is incorporated by reference. We have consented to the incorporation by reference in the registration statements on Form S-3 and Form S-8 of Crescent, of the references to our name, as well as to the references to our third-party report for Crescent, which appears in the December 31, 2025 annual report on Form 10-K of Crescent. Our written consent for such use is included as a separate exhibit to the filings made with the SEC by Crescent.

We have provided Crescent with a digital version of the original signed copy retained in our files. In the event there are any differences between the digital version included in filings made by Crescent and the original signed copy in our files, the original signed file copy shall control and supersede.

The data and work papers used in the preparation of this report are available for examination by authorized parties in our offices. Please contact us if we can be of further service.

Very truly yours,

RYDER SCOTT COMPANY, L.P.
TBPELS Firm Registration No. F-1580


        /s/ Marsha E. Wellmann

        Marsha E. Wellmann, P.E.
        TBPELS License No. 116149
        Managing Senior Vice President    [SEAL]

MEW (DRO)/pl


RYDER SCOTT COMPANY PETROLEUM CONSULTANTS









Professional Qualifications of Primary Technical Person

The conclusions presented in this report are the result of technical analysis conducted by teams of geoscientists and engineers from Ryder Scott Company, L.P. Ms. Marsha E. Wellmann was the primary technical person responsible for overseeing the estimate of the reserves, future production and income prepared by Ryder Scott presented herein.

Ms. Wellmann, an employee of Ryder Scott Company L.P. (Ryder Scott) since 2012, is a Managing Senior Vice President responsible for coordinating and supervising staff and consulting engineers of the company in ongoing reservoir evaluation studies throughout North America and the Gulf of Mexico. Before joining Ryder Scott, Ms. Wellmann served in a number of engineering positions. For more information regarding Ms. Wellmann geographic and job specific experience, please refer to the Ryder Scott Company website at www.ryderscott.com/Company/Employees.

Ms. Wellmann earned a Bachelor of Science degree in Petroleum Engineering and a Business Foundations Certificate from The University of Texas at Austin in 2002 and is a registered Professional Engineer in the State of Texas. She is also a member of the Society of Petroleum Engineers.

In addition to gaining experience and competency through prior work experience, the Texas Board of Professional Engineers requires a minimum of fifteen hours of continuing education annually, including at least one hour in the area of professional ethics, which Ms. Wellmann fulfills. As part of her 2025 continuing education hours, Ms. Wellmann attended 32 hours of formalized training including various professional society presentations covering such topics as the definitions and disclosure guidelines contained in the United States Securities and Exchange Commission Title 17, Code of Federal Regulations, Modernization of Oil and Gas Reporting, Final Rule released January 14, 2009 in the Federal Register, the SPE/WPC/AAPG/SPEE Petroleum Resources Management System, reservoir engineering, geoscience and petroleum economics evaluation methods, procedures and software and ethics for consultants.

Based on her educational background, professional training and more than 15 years of practical experience in the estimation and evaluation of petroleum reserves, Ms. Wellmann has attained the professional qualifications as a Reserves Estimator and Reserves Auditor set forth in Article III of the “Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information” promulgated by the Society of Petroleum Engineers as of June 2019.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS





PETROLEUM RESERVES DEFINITIONS

As Adapted From:
RULE 4-10(a) of REGULATION S-X PART 210
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC)


PREAMBLE

On January 14, 2009, the United States Securities and Exchange Commission (SEC) published the “Modernization of Oil and Gas Reporting; Final Rule” in the Federal Register of National Archives and Records Administration (NARA). The “Modernization of Oil and Gas Reporting; Final Rule” includes revisions and additions to the definition section in Rule 4-10 of Regulation S-X, revisions and additions to the oil and gas reporting requirements in Regulation S-K, and amends and codifies Industry Guide 2 in Regulation S-K. The “Modernization of Oil and Gas Reporting; Final Rule”, including all references to Regulation S-X and Regulation S-K, shall be referred to herein collectively as the “SEC regulations”. The SEC regulations take effect for all filings made with the United States Securities and Exchange Commission as of December 31, 2009, or after January 1, 2010. Reference should be made to the full text under Title 17, Code of Federal Regulations, Regulation S-X Part 210, Rule 4-10(a) for the complete definitions (direct passages excerpted in part or wholly from the aforementioned SEC document are denoted in italics herein).

Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. All reserve estimates involve an assessment of the uncertainty relating the likelihood that the actual remaining quantities recovered will be greater or less than the estimated quantities determined as of the date the estimate is made. The uncertainty depends primarily on the amount of reliable geologic and engineering data available at the time of the estimate and the interpretation of these data. The relative degree of uncertainty may be conveyed by placing reserves into one of two principal categories, either proved or unproved. Unproved reserves are less certain to be recovered than proved reserves and may be further sub-categorized as probable and possible reserves to denote progressively increasing uncertainty in their recoverability. Under the SEC regulations as of December 31, 2009, or after January 1, 2010, a company may optionally disclose estimated quantities of probable or possible oil and gas reserves in documents publicly filed with the SEC. The SEC regulations continue to prohibit disclosure of estimates of oil and gas resources other than reserves and any estimated values of such resources in any document publicly filed with the SEC unless such information is required to be disclosed in the document by foreign or state law as noted in §229.1202 Instruction to Item 1202.

Reserves estimates will generally be revised only as additional geologic or engineering data become available or as economic conditions change.

Reserves may be attributed to either natural energy or improved recovery methods. Improved recovery methods include all methods for supplementing natural energy or altering natural forces in the reservoir to increase ultimate recovery. Examples of such methods are pressure maintenance, natural gas cycling, waterflooding, thermal methods, chemical flooding, and the use of miscible and immiscible displacement fluids. Other improved recovery methods may be developed in the future as petroleum technology continues to evolve.

Reserves may be attributed to either conventional or unconventional petroleum accumulations. Petroleum accumulations are considered as either conventional or unconventional based on the nature of their in-place characteristics, extraction method applied, or degree of processing prior to sale. Examples of
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
PETROLEUM RESERVES DEFINITIONS
Page 2


unconventional petroleum accumulations include coalbed or coalseam methane (CBM/CSM), basin-centered gas, shale gas, gas hydrates, natural bitumen and oil shale deposits. These unconventional accumulations may require specialized extraction technology and/or significant processing prior to sale.

Reserves do not include quantities of petroleum being held in inventory.

Because of the differences in uncertainty, caution should be exercised when aggregating quantities of petroleum from different reserves categories.


RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(26) defines reserves as follows:

Reserves. Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and gas or related substances to market, and all permits and financing required to implement the project.

Note to paragraph (a)(26): Reserves should not be assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir, or negative test results). Such areas may contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations).


PROVED RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(22) defines proved oil and gas reserves as follows:

Proved oil and gas reserves. Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

(I) The area of the reservoir considered as proved includes:

(A) The area identified by drilling and limited by fluid contacts, if any, and

(B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data.

(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.

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PETROLEUM RESERVES DEFINITIONS
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(iii) Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty.

(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when:
(A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and

(B) The project has been approved for development by all necessary parties and entities, including governmental entities.

(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS





PETROLEUM RESERVES STATUS DEFINITIONS AND GUIDELINES

As Adapted From:
RULE 4-10(a) of REGULATION S-X PART 210
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC)

and

2018 PETROLEUM RESOURCES MANAGEMENT SYSTEM (SPE-PRMS)
Sponsored and Approved by:
SOCIETY OF PETROLEUM ENGINEERS (SPE)
WORLD PETROLEUM COUNCIL (WPC)
AMERICAN ASSOCIATION OF PETROLEUM GEOLOGISTS (AAPG)
SOCIETY OF PETROLEUM EVALUATION ENGINEERS (SPEE)
SOCIETY OF EXPLORATION GEOPHYSICISTS (SEG)
SOCIETY OF PETROPHYSICISTS AND WELL LOG ANALYSTS (SPWLA)
EUROPEAN ASSOCIATION OF GEOSCIENTISTS & ENGINEERS (EAGE)


Reserves status categories define the development and producing status of wells and reservoirs. Reference should be made to Title 17, Code of Federal Regulations, Regulation S-X Part 210, Rule 4-10(a) and the SPE-PRMS as the following reserves status definitions are based on excerpts from the original documents (direct passages excerpted from the aforementioned SEC and SPE-PRMS documents are denoted in italics herein).


DEVELOPED RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(6) defines developed oil and gas reserves as follows:

Developed oil and gas reserves are reserves of any category that can be expected to be recovered:

(i) Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and

(ii) Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.

Developed Producing (SPE-PRMS Definitions)

While not a requirement for disclosure under the SEC regulations, developed oil and gas reserves may be further sub-classified according to the guidance contained in the SPE-PRMS as Producing or Non-Producing.

Developed Producing Reserves
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
PETROLEUM RESERVES STATUS DEFINITIONS AND GUIDELINES
Page 2



Developed Producing Reserves are expected quantities to be recovered from completion intervals that are open and producing at the effective date of the estimate.

Improved recovery reserves are considered producing only after the improved recovery project is in operation.

Developed Non-Producing
Developed Non-Producing Reserves include shut-in and behind-pipe Reserves.

Shut-In
Shut-in Reserves are expected to be recovered from:
(1)completion intervals that are open at the time of the estimate but which have not yet started producing;
(2)wells which were shut-in for market conditions or pipeline connections; or
(3)wells not capable of production for mechanical reasons.

Behind-Pipe
Behind-pipe Reserves are expected to be recovered from zones in existing wells that will require additional completion work or future re-completion before start of production with minor cost to access these reserves.

In all cases, production can be initiated or restored with relatively low expenditure compared to the cost of drilling a new well.


UNDEVELOPED RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(31) defines undeveloped oil and gas reserves as follows:

Undeveloped oil and gas reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.

(i)Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.

(ii) Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify a longer time.

(iii) Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, as defined in paragraph (a)(2) of this section, or by other evidence using reliable technology establishing reasonable certainty.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS










INDEPENDENCE MINERAL HOLDINGS LLC





Estimated

Future Reserves and Income

Attributable to Certain

Royalty Interests





SEC Parameters





As of

December 31, 2025










/s/ Stephen E. Gardner
Stephen E. Gardner, P.E.
TBPELS License No. 100578
Managing Senior Vice President
                [SEAL]
RYDER SCOTT COMPANY, L.P.
TBPELS Firm Registration No. F-1580
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS

image_02.jpgimage_12.jpg



    TBPELS REGISTERED ENGINEERING FIRM F-580        
    1100 LOUISIANA SUITE 4600    HOUSTON, TEXAS 77002-5294    TELEPHONE (713) 651-9191



        January 21, 2026



Brian Periman
Vice President of Corporate Reserves
Independence Mineral Holdings LLC
c/o Crescent Energy Company
600 Travis Street, Suite 7200
Houston, Texas 77002


Dear Mr. Periman:

At the request of Crescent Energy Company (Crescent), Ryder Scott Company, L.P. (Ryder Scott) has conducted a reserves audit of the estimates of the proved reserves, future production and discounted future net income of Independence Mineral Holdings LLC (IMH) as of December 31, 2025 prepared by Crescent’s engineering and geological staff based on the definitions and disclosure guidelines of the United States Securities and Exchange Commission (SEC) contained in Title 17, Code of Federal Regulations, Modernization of Oil and Gas Reporting, Final Rule released January 14, 2009 in the Federal Register (SEC regulations). IMH is a wholly-owned subsidiary of Crescent. Our reserves audit, completed on January 21, 2026 and presented herein, was prepared for public disclosure by Crescent in filings made with the SEC in accordance with the disclosure requirements set forth in the SEC regulations. The estimated reserves and income data shown herein represent Crescent’s estimated net reserves and income data attributable to the royalty interests in certain properties owned by IMH and the portion of those reserves and income data reviewed by Ryder Scott, as of December 31, 2025. The properties reviewed by Ryder Scott incorporate Crescent’s reserves determinations and are located within the contiguous United States, primarily in the states of Colorado, Oklahoma, Pennsylvania, and Texas.

The properties reviewed by Ryder Scott account for a portion of IMH’s total net proved liquid hydrocarbon and gas reserves as of December 31, 2025. Based on the estimates of total net proved reserves and income prepared by Crescent, the reserves audit conducted by Ryder Scott addresses approximately 87 percent of the total proved net reserves of IMH on a barrel of oil equivalent, BOE basis or 88 percent of the total proved discounted future net income discounted at 10% of IMH as of December 31, 2025. In addition, and based on information provided by Crescent, the total properties owned by IMH account for approximately 2% of Crescent’s total net proved reserves, on a barrel of oil equivalent, BOE basis as of December 31, 2025.

As prescribed by the Society of Petroleum Engineers in Paragraph 2.2(f) of the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information (SPE auditing standards), a reserves audit is defined as “the process of reviewing certain of the pertinent facts interpreted and assumptions made that have resulted in an estimate of reserves and/or Reserves Information prepared by others and the rendering of an opinion about (1) the appropriateness of the methodologies employed; (2) the adequacy and quality of the data relied upon; (3) the depth and thoroughness of the reserves estimation process; (4) the classification of reserves appropriate to the relevant definitions used; and (5) the reasonableness of the estimated reserves quantities and/
    SUITE 2800, 350 7TH AVENUE, S.W.    CALGARY, ALBERTA T2P 3N9    TEL (403) 262-2799
    555 17TH STREET, SUITE 985    DENVER, COLORADO 80202    TEL (303) 339-8110
Independence Mineral Holdings LLC
January 21, 2026
2


or Reserves Information.” Reserves Information may consist of various estimates pertaining to the extent and value of petroleum properties.

Based on our review, including the data, technical processes and interpretations presented by Crescent, it is our opinion that the overall procedures and methodologies utilized by Crescent in preparing their estimates of the proved reserves, future production and discounted future net income as of December 31, 2025 comply with the current SEC regulations and that the overall proved reserves, future production and discounted future net income for the reviewed properties as estimated by Crescent are, in the aggregate, reasonable within the established audit tolerance guidelines of 10 percent as set forth in the SPE auditing standards.

The estimated reserves and future net income amounts presented in this report are related to hydrocarbon prices. Crescent has informed us that in the preparation of their reserves and income projections, as of December 31, 2025, they used average prices during the 12-month period prior to the “as of date” of this report, determined as the unweighted arithmetic averages of the prices in effect on the first-day-of-the-month for each month within such period, as required by the SEC regulations. Actual future prices may vary considerably from the prices required by SEC regulations. The reserves volumes and the income attributable thereto have a direct relationship to the hydrocarbon prices actually received; therefore, volumes of reserves actually recovered and amounts of income actually received may differ significantly from the estimated quantities presented in this report. The net reserves and net income data as estimated by Crescent attributable to IMH's interest in properties that we reviewed and for those that we did not review are summarized below:






































RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Independence Mineral Holdings LLC
January 21, 2026
3


SEC PARAMETERS
Estimated Net Reserves and Income Data
Certain Royalty Interests of
Independence Mineral Holdings LLC
As of December 31, 2025



Proved


Developed



Total


Producing

Non-Producing

Undeveloped

Proved
Audited by Ryder Scott

Net Reserves








   Oil/Condensate – MBBL

2,775

185

566

3,526
   Plant Products – MBBL

2,584

104

300

2,988
   Gas – MMCF

50,322

738

2,381

53,441









Income Data ($M)








   Future Gross Revenue

$384,738

$15,848

$49,077

$449,663
   Deductions

    26,238

    1,295

    3,640

    31,173
   Future Net Income (FNI)

$358,500

$14,553

$45,437

$418,490









   Discounted FNI @ 10%

$187,937

$10,598

$31,939

$230,474

Not Audited by Ryder Scott

Net Reserves








   Oil/Condensate – MBBL

419

9

54

482
   Plant Products – MBBL

332

19

27

378
   Gas – MMCF

7,362

471

507

8,340









Income Data ($M)








   Future Gross Revenue

$55,418

$2,306

$5,609

$63,333
   Deductions

    4,813

     229

     304

    5,346
   Future Net Income (FNI)

$50,605

$2,077

$5,305

$57,987









   Discounted FNI @ 10%

$26,059

$1,296

$3,591

$30,946

Total Net Reserves








   Oil/Condensate – MBBL

3,194

194

620

4,008
   Plant Products – MBBL

2,916

123

327

3,366
   Gas – MMCF

57,684

1,209

2,888

61,781









Income Data ($M)








   Future Gross Revenue

$440,156

$18,154

$54,686

$512,996
   Deductions

    31,051

    1,524

    3,944

    36,519
   Future Net Income (FNI)

$409,105

$16,630

$50,742

$476,477









   Discounted FNI @ 10%

$213,996

$11,894

$35,530

$261,420


RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Independence Mineral Holdings LLC
January 21, 2026
4


Liquid hydrocarbons are expressed in standard 42 U.S. gallon barrels and shown herein as thousands of barrels (MBBL). All gas volumes are reported on an “as sold basis” expressed in millions of cubic feet (MMCF) at the official temperature and pressure bases of the areas in which the gas reserves are located.

The future gross revenue is after the deduction of production taxes. Since the properties in this report just comprise royalty interests, the deductions only include certain gathering, processing, and transportation fees, as well as ad valorem taxes. However, additional direct operating costs were incorporated in Crescent’s determination of economic limits. The future net income is before the deduction of state and federal income taxes and general administrative overhead, and has not been adjusted for outstanding loans that may exist nor does it include any adjustment for cash on hand or undistributed income.


Reserves Included in This Report

In our opinion, the proved reserves presented in this report conform to the definition as set forth in the Securities and Exchange Commission’s Regulations Part 210.4-10(a). An abridged version of the SEC reserves definitions from 210.4-10(a) entitled “PETROLEUM RESERVES DEFINITIONS” is included as an attachment to this report.

The various proved reserves status categories are defined in the attachment entitled “PETROLEUM RESERVES STATUS DEFINITIONS AND GUIDELINES” in this report. The proved developed non-producing reserves included herein consist of the shut-in status category.

Reserves are “estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations.” All reserves estimates involve an assessment of the uncertainty relating the likelihood that the actual remaining quantities recovered will be greater or less than the estimated quantities determined as of the date the estimate is made. The uncertainty depends primarily on the amount of reliable geologic and engineering data available at the time of the estimate and the interpretation of these data. The relative degree of uncertainty may be conveyed by placing reserves into one of two principal categories, either proved or unproved. Unproved reserves are less certain to be recovered than proved reserves and may be further sub-categorized as probable and possible reserves to denote progressively increasing uncertainty in their recoverability. At Crescent’s request, this report addresses only the proved reserves attributable to the properties reviewed herein.

Proved oil and gas reserves are “those quantities of oil and gas which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward.” The proved reserves included herein were estimated using deterministic methods. The SEC has defined reasonable certainty for proved reserves, when based on deterministic methods, as a “high degree of confidence that the quantities will be recovered.”

Proved reserves estimates will generally be revised only as additional geologic or engineering data become available or as economic conditions change. For proved reserves, the SEC states that “as changes due to increased availability of geoscience (geological, geophysical, and geochemical), engineering, and economic data are made to the estimated ultimate recovery (EUR) with time, reasonably certain EUR is much more likely to increase or remain constant than to decrease.” Moreover, estimates of proved reserves may be revised as a result of future operations, effects of regulation by governmental agencies or geopolitical or economic risks. Therefore, the proved reserves included in this report are estimates only and should not be construed as being exact quantities. They may or may not be actually recovered, and if recovered, the revenues therefrom, and the actual costs related thereto, could be more or less than the estimated amounts.






RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Independence Mineral Holdings LLC
January 21, 2026
5


Audit Data, Methodology, Procedure and Assumptions

The estimation of reserves involves two distinct determinations. The first determination results in the estimation of the quantities of recoverable oil and gas and the second determination results in the estimation of the uncertainty associated with those estimated quantities in accordance with the definitions set forth by the Securities and Exchange Commission’s Regulations Part 210.4-10(a). The process of estimating the quantities of recoverable oil and gas reserves relies on the use of certain generally accepted analytical procedures. These analytical procedures fall into three broad categories or methods: (1) performance-based methods; (2) volumetric-based methods; and (3) analogy. These methods may be used individually or in combination by the reserves evaluator in the process of estimating the quantities of reserves. Reserves evaluators must select the method or combination of methods which in their professional judgment is most appropriate given the nature and amount of reliable geoscience and engineering data available at the time of the estimate, the established or anticipated performance characteristics of the reservoir being evaluated and the stage of development or producing maturity of the property.

In many cases, the analysis of the available geoscience and engineering data and the subsequent interpretation of this data may indicate a range of possible outcomes in an estimate, irrespective of the method selected by the evaluator. When a range in the quantity of reserves is identified, the evaluator must determine the uncertainty associated with the incremental quantities of the reserves. If the reserves quantities are estimated using the deterministic incremental approach, the uncertainty for each discrete incremental quantity of the reserves is addressed by the reserves category assigned by the evaluator. Therefore, it is the categorization of reserves quantities as proved, probable and/or possible that addresses the inherent uncertainty in the estimated quantities reported. For proved reserves, uncertainty is defined by the SEC as reasonable certainty wherein the “quantities actually recovered are much more likely to be achieved than not.” The SEC states that “probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered.” The SEC states that “possible reserves are those additional reserves that are less certain to be recovered than probable reserves and the total quantities ultimately recovered from a project have a low probability of exceeding proved plus probable plus possible reserves.” All quantities of reserves within the same reserves category must meet the SEC definitions as noted above.

Estimates of reserves quantities and their associated reserves categories may be revised in the future as additional geoscience or engineering data become available. Furthermore, estimates of reserves quantities and their associated reserves categories may also be revised due to other factors such as changes in economic conditions, results of future operations, effects of regulation by governmental agencies or geopolitical or economic risks as previously noted herein.

The reserves for the properties included herein were estimated by performance methods, analogy, or a combination of methods. In general, the reserves attributable to producing wells and/or reservoirs were estimated by performance methods or a combination of methods. These performance methods include, but may not be limited to, decline curve analysis which utilized extrapolations of historical production and pressure data ending between April 2025 and November 2025, depending on the availability of data for a given case and in those cases where such data were considered to be definitive. The data used in these analyses were furnished to Ryder Scott by Crescent or obtained from public data sources and were considered sufficient for the purpose thereof. In certain cases, producing reserves were estimated by analogy or a combination of methods. These methods were used where there were inadequate historical performance data to establish a definitive trend and where the use of production performance data as a basis for the estimates was considered to be inappropriate

The reserves for the properties included herein attributable to the non-producing and the undeveloped status categories were estimated by analogy. The data utilized from the analogues incorporated into our analysis were considered sufficient for the purpose thereof.

To estimate economically producible proved oil and gas reserves and related future net cash flows, many factors and assumptions are considered including, but not limited to, the use of reservoir parameters derived from
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Independence Mineral Holdings LLC
January 21, 2026
6


geological, geophysical and engineering data which cannot be measured directly, economic criteria based on current costs and SEC pricing requirements, and forecasts of future production rates. Under the SEC regulations 210.4-10(a)(22)(v) and (26), proved reserves must be anticipated to be economically producible from a given date forward based on existing economic conditions including the prices and costs at which economic producibility from a reservoir is to be determined. While it may reasonably be anticipated that the future prices received for the sale of production and the operating costs and other costs relating to such production may increase or decrease from those under existing economic conditions, such changes were, in accordance with rules adopted by the SEC, omitted from consideration in conducting this review.

As stated previously, proved reserves must be anticipated to be economically producible from a given date forward based on existing economic conditions including the prices and costs at which economic producibility from a reservoir is to be determined. To confirm that the proved reserves reviewed by us meet the SEC requirements to be economically producible, we have reviewed certain primary economic data utilized by Crescent relating to hydrocarbon prices and costs as noted herein.

The hydrocarbon prices furnished by Crescent for the properties reviewed by us are based on SEC price parameters using the average prices during the 12-month period prior to the “as of date” of this report, determined as the unweighted arithmetic averages of the prices in effect on the first-day-of-the-month for each month within such period.

The initial SEC hydrocarbon benchmark prices in effect on December 31, 2025 for the properties reviewed by us were determined using the 12-month average first-day-of-the-month benchmark prices appropriate to the geographic area where the hydrocarbons are sold. These benchmark prices are prior to the adjustments for differentials as described herein. The table below summarizes the “benchmark prices” and “price reference” used by Crescent for the geographic area reviewed by us.

The product prices that were actually used by Crescent to determine the future gross revenue for each property reviewed by us reflect adjustments to the benchmark prices for gravity, quality, local conditions, and/or distance from market, referred to herein as “differentials.” The differentials used by Crescent were accepted as factual data and reviewed by us for their reasonableness using information furnished by Crescent for this purpose.

The table below summarizes Crescent’s net volume weighted benchmark prices adjusted for differentials for the properties reviewed by us and referred to herein as Crescent’s “average realized prices.” The average realized prices shown in the table below were determined from Crescent’s estimate of the total future gross revenue before production taxes for the properties reviewed by us and Crescent’s estimate of the total net reserves for the properties reviewed by us for the geographic area. The data shown in the table below is presented in accordance with SEC disclosure requirements for the geographic area reviewed by us.


Geographic Area
Product
Price
Reference
Average
Benchmark
Prices
Average Realized
Prices
  North America




    United States
Oil/Condensate
WTI Cushing
$65.34/Bbl
$64.46/Bbl
NGLs
WTI Cushing
$65.34/Bbl
$24.53/Bbl
Gas
Henry Hub
$3.387/MMBTU
$3.06/Mcf


The effects of derivative instruments designated as price hedges of oil and gas quantities are not reflected in Crescent’s individual property evaluations.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Independence Mineral Holdings LLC
January 21, 2026
7


Accumulated gas production imbalances, if any, were not taken into account in the proved gas reserves estimates reviewed. The proved gas volumes presented herein do not include volumes of gas consumed in operations as reserves.

Gathering, processing, and transportation costs were furnished by Crescent are based on the operating expense reports of IMH and include only those costs directly applicable to the leases or wells for the properties reviewed by us. The operating costs furnished by Crescent were accepted as factual data and reviewed by us for their reasonableness using information furnished by Crescent for this purpose. Since the properties evaluated herein include only royalty interests, Crescent assumed and applied additional fixed operating costs in order to calculate economic limits. We accepted these additional fixed operating costs as presented to us and reviewed them for reasonableness; however, we have not conducted an independent verification of the data used by Crescent for their estimates. No deduction was made for loan repayments, interest expenses, or exploration and development prepayments that were not charged directly to the leases or wells.

Since the properties in this report only comprise royalty interests, no abandonment or development costs were incorporated by Crescent in their economic evaluation. Furthermore, no economic feasibility test was necessary for the non-producing and undeveloped cases due to their in-progress development status, as described below.

All of the proved non-producing and undeveloped reserves for the properties reviewed by us are associated with wells that are known to be in progress from public data sources (i.e., spudded, drilled, or completed). Crescent utilized this development status as evidence of development commitment by the operators involved and their intention to bring the applicable reserves online in 2026. Ryder Scott has accepted Crescent’s development assumptions and estimated schedule for the start of production as reasonable. Additionally, Crescent has informed us that they are not aware of any legal, regulatory, or political obstacles that would significantly alter their assumed plans. While these plans could change from those under existing economic conditions as of December 31, 2025, such changes were, in accordance with rules adopted by the SEC, omitted from consideration in making this evaluation.

Current costs used by Crescent were held constant throughout the life of the properties.

For wells currently on production, Crescent’s forecasts of future production rates are based on the historical performance of each individual well. If no production decline trend has been established for a given well, future production rates and decline trends were based on analogous wells.

The initial rates performance trends of analogous wells were used by Crescent to estimate the anticipated initial production rates for those wells or locations that are not currently producing. For reserves not yet on production, sales were estimated to commence at an anticipated date furnished by Crescent. Wells or locations that are not currently producing may start producing earlier or later than anticipated in Crescent’s estimates due to unforeseen factors causing a change in the timing to initiate production. Such factors may include delays due to weather, the availability of rigs, the sequence of drilling, completing and/or recompleting wells and/or constraints set by regulatory bodies.

The future production rates from wells currently on production or wells or locations that are not currently producing may be more or less than estimated because of changes including, but not limited to, reservoir performance, operating conditions related to surface facilities, compression and artificial lift, pipeline capacity and/or operating conditions, producing market demand and/or allowables or other constraints set by regulatory bodies.

The operations for the properties in which IMH owns an interest may be subject to various levels of governmental controls and regulations. These controls and regulations may include, but may not be limited to, matters relating to land tenure and leasing, the legal rights to produce hydrocarbon, drilling and production practices, environmental protection, marketing and pricing policies, royalties, various taxes and levies including income tax and are subject to change from time to time. Such changes in governmental regulations and policies
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Independence Mineral Holdings LLC
January 21, 2026
8


may cause volumes of proved reserves actually recovered and amounts of proved income actually received to differ significantly from the estimated quantities.

The estimates of proved reserves presented herein were based upon a review of the properties in which IMH owns an interest; however, we have not made any field examination of the properties. No consideration was given in this report to potential environmental liabilities that may exist nor were any costs included by Crescent for potential liabilities to restore and clean up damages, if any, caused by past operating practices.

Certain technical personnel of Crescent are responsible for the preparation of reserves estimates on new properties and for the preparation of revised estimates, when necessary, on old properties. These personnel assembled the necessary data and maintained the data and workpapers in an orderly manner. We consulted with these technical personnel and had access to their worknotes and supporting data in the course of our audit.

Crescent has informed us that they have furnished us all of the material accounts, records, geological and engineering data, and reports and other data required for this investigation. In performing our audit of Crescent’s forecast of future proved production and income, we have relied upon data furnished by Crescent with respect to property interests owned, production and well tests from examined wells, normal direct costs of operating the wells or leases, other costs such as transportation and/or processing fees, ad valorem and production taxes, development plans, product prices based on the SEC regulations, adjustments or differentials to product prices, and base maps. Ryder Scott reviewed such factual data for its reasonableness; however, we have not conducted an independent verification of the data furnished by Crescent. We consider the factual data furnished to us by Crescent to be appropriate and sufficient for the purpose of our review of Crescent’s estimates of reserves and future net income. In summary, we consider the assumptions, data, methods and analytical procedures used by Crescent and as reviewed by us appropriate for the purpose hereof, and we have used all such methods and procedures that we consider necessary and appropriate under the circumstances to render the conclusions set forth herein.


Audit Opinion

Based on our review, including the data, technical processes and interpretations presented by Crescent, it is our opinion that the overall procedures and methodologies utilized by Crescent in preparing their estimates of the proved reserves, future production and discounted future net income as of December 31, 2025 comply with the current SEC regulations and that the overall proved reserves, future production and discounted future net income for the reviewed properties as estimated by Crescent are, in the aggregate, reasonable within the established audit tolerance guidelines of 10 percent as set forth in the SPE auditing standards. Ryder Scott found the processes and controls used by Crescent in their estimation of proved reserves to be effective and, in the aggregate, we found no bias in the utilization and analysis of data in estimates for these properties.

We were in reasonable agreement with Crescent’s estimates of proved reserves, future production and discounted future net income for the properties which we reviewed; although in certain cases there was more than an acceptable variance between Crescent's estimates and our estimates due to a difference in interpretation of data. However notwithstanding, it is our opinion that on an aggregate basis the data presented herein for the properties that we reviewed fairly reflects the estimated net reserves, future production and discounted future net income owned by IMH.


Other Properties

Other properties, as used herein, are those properties of IMH which we did not review. The proved net reserves attributable to the other properties account for approximately 13 percent of the total proved net liquid hydrocarbon and gas reserves of IMH on a barrel of oil equivalent, BOE basis, based on estimates prepared by Crescent as of December 31, 2025. The other properties represent approximately 12 percent of the total proved
RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Independence Mineral Holdings LLC
January 21, 2026
9


discounted future net income at 10% based on SEC price and cost parameters as taken from reserves and income projections prepared by Crescent as of December 31, 2025.

The same technical personnel of Crescent were responsible for the preparation of the reserves estimates for the properties that we reviewed as well as for the properties not reviewed by Ryder Scott.


Standards of Independence and Professional Qualification

Ryder Scott is an independent petroleum engineering consulting firm that has been providing petroleum consulting services throughout the world since 1937. Ryder Scott is employee-owned and maintains offices in Houston, Texas; Denver, Colorado; and Calgary, Alberta, Canada. We have approximately eighty engineers and geoscientists on our permanent staff. By virtue of the size of our firm and the large number of clients for which we provide services, no single client or job represents a material portion of our annual revenue. We do not serve as officers or directors of any privately-owned or publicly-traded oil and gas company and are separate and independent from the operating and investment decision-making process of our clients. This allows us to bring the highest level of independence and objectivity to each engagement for our services.

Ryder Scott actively participates in industry-related professional societies and organizes an annual public forum focused on the subject of reserves evaluations and SEC regulations. Many of our staff have authored or co-authored technical papers on the subject of reserves related topics. We encourage our staff to maintain and enhance their professional skills by actively participating in ongoing continuing education.

Prior to becoming an officer of the Company, Ryder Scott requires that staff engineers and geoscientists receive professional accreditation in the form of a registered or certified professional engineer’s license or a registered or certified professional geoscientist’s license, or the equivalent thereof, from an appropriate governmental authority or a recognized self-regulating professional organization. Regulating agencies require that, in order to maintain active status, a certain amount of continuing education hours be completed annually, including an hour of ethics training. Ryder Scott fully supports this technical and ethics training with our internal requirement mentioned above.

We are independent petroleum engineers with respect to Crescent and IMH. Neither we nor any of our employees have any financial interest in the subject properties, and neither the employment to do this work nor the compensation is contingent on our estimates of reserves for the properties which were reviewed.

The results of this audit, presented herein, are based on technical analyses conducted by teams of geoscientists and engineers from Ryder Scott. The professional qualifications of the undersigned, the technical person primarily responsible for overseeing the review of the reserves information discussed in this report, are included as an attachment to this letter.


Terms of Usage

The results of our third-party study, presented in report form herein, were prepared in accordance with the disclosure requirements set forth in the SEC regulations and intended for public disclosure as an exhibit in filings made with the SEC by Crescent.

Crescent makes periodic filings on Form 10-K with the SEC under the 1934 Exchange Act. Furthermore, Crescent has certain registration statements filed with the SEC under the 1933 Securities Act into which certain subsequently filed reports are incorporated by reference. We consent to the incorporation by reference in the registration statements on Form S-3 and Form S-8 of Crescent, of the references to our name, as well as to the references to our third-party report for Crescent, which appears in certain reports filed by Crescent. Our written consent for such use is included as a separate exhibit to the filings made with the SEC by Crescent.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Independence Mineral Holdings LLC
January 21, 2026
10


We have provided Crescent with a digital version of the original signed copy retained in our files. In the event there are any differences between the digital version included in filings made by Crescent and the original signed copy, the original signed file copy shall control and supersede.


RYDER SCOTT COMPANY PETROLEUM CONSULTANTS
Independence Mineral Holdings LLC
January 21, 2026
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    The data and work papers used in the preparation of this report are available for examination by authorized parties in our offices. Please contact us if we can be of further service.


Very truly yours,

RYDER SCOTT COMPANY, L.P.
TBPELS Firm Registration No. F-1580



        /s/ Stephen E. Gardner
    Stephen E. Gardner, P.E.
        TBPELS License No. 100578        [SEAL]
        Managing Senior Vice President

SEG (DRO)/pl

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS









Professional Qualifications of Primary Technical Person

The conclusions presented in this report are the result of technical analysis conducted by teams of geoscientists and engineers from Ryder Scott Company, L.P. Mr. Stephen E. Gardner is the primary technical person responsible for the estimate of the reserves, future production and income.

Mr. Gardner, an employee of Ryder Scott Company, L.P. (Ryder Scott) since 2006, is a Managing Senior Vice President responsible for ongoing reservoir evaluation studies worldwide, as well as for coordinating and supervising the evaluations of staff and consulting engineers of the company. Mr. Gardner is also a member of Ryder Scott’s Board of Directors. Before joining Ryder Scott, Mr. Gardner served in a number of engineering positions with Exxon Mobil Corporation. For more information regarding Mr. Gardner’s geographic and job specific experience, please refer to the Ryder Scott Company website at https://ryderscott.com/employees/denver-employees.

Mr. Gardner earned a Bachelor of Science degree in Mechanical Engineering from Brigham Young University in 2001 (summa cum laude). He is a licensed Professional Engineer in the States of Colorado and Texas. Mr. Gardner is a member of the Society of Petroleum Engineers (SPE) and a former director of the Society of Petroleum Evaluation Engineers (SPEE). He currently serves as an officer for SPEE at the international level.
In addition to gaining experience and competency through prior work experience, the Texas Board of Professional Engineers requires a minimum of 15 hours of continuing education annually, including at least one hour in the area of professional ethics, which Mr. Gardner fulfills. As part of his 2025 continuing education hours, Mr. Gardner attended multiple technical conferences, including the SPEE Annual Meeting, which he directed, and the annual Ryder Scott Reserves Conference. These conferences covered a variety of reserves topics including analysis techniques for unconventional reservoirs, geothermal energy, reserves definitions and guidelines, SEC comment letter trends, ethics, and others. In addition, Mr. Gardner participated in various local technical seminars and other internal company training courses throughout the year covering topics such as reserves evaluation methods and evaluation software, ethics, M&A trends, regulatory issues, enhanced geothermal systems, and more.
Based on his educational background, professional training and approximately 20 years of practical experience in the estimation and evaluation of petroleum reserves, Mr. Gardner has attained the professional qualifications as a Reserves Estimator set forth in Article III of the “Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information” promulgated by the Society of Petroleum Engineers as of June 2019.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS





PETROLEUM RESERVES DEFINITIONS

As Adapted From:
RULE 4-10(a) of REGULATION S-X PART 210
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC)


PREAMBLE

On January 14, 2009, the United States Securities and Exchange Commission (SEC) published the “Modernization of Oil and Gas Reporting; Final Rule” in the Federal Register of National Archives and Records Administration (NARA). The “Modernization of Oil and Gas Reporting; Final Rule” includes revisions and additions to the definition section in Rule 4-10 of Regulation S-X, revisions and additions to the oil and gas reporting requirements in Regulation S-K, and amends and codifies Industry Guide 2 in Regulation S-K. The “Modernization of Oil and Gas Reporting; Final Rule”, including all references to Regulation S-X and Regulation S-K, shall be referred to herein collectively as the “SEC regulations”. The SEC regulations take effect for all filings made with the United States Securities and Exchange Commission as of December 31, 2009, or after January 1, 2010. Reference should be made to the full text under Title 17, Code of Federal Regulations, Regulation S-X Part 210, Rule 4-10(a) for the complete definitions (direct passages excerpted in part or wholly from the aforementioned SEC document are denoted in italics herein).

Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. All reserve estimates involve an assessment of the uncertainty relating the likelihood that the actual remaining quantities recovered will be greater or less than the estimated quantities determined as of the date the estimate is made. The uncertainty depends primarily on the amount of reliable geologic and engineering data available at the time of the estimate and the interpretation of these data. The relative degree of uncertainty may be conveyed by placing reserves into one of two principal categories, either proved or unproved. Unproved reserves are less certain to be recovered than proved reserves and may be further sub-categorized as probable and possible reserves to denote progressively increasing uncertainty in their recoverability. Under the SEC regulations as of December 31, 2009, or after January 1, 2010, a company may optionally disclose estimated quantities of probable or possible oil and gas reserves in documents publicly filed with the SEC. The SEC regulations continue to prohibit disclosure of estimates of oil and gas resources other than reserves and any estimated values of such resources in any document publicly filed with the SEC unless such information is required to be disclosed in the document by foreign or state law as noted in §229.1202 Instruction to Item 1202.

Reserves estimates will generally be revised only as additional geologic or engineering data become available or as economic conditions change.

Reserves may be attributed to either natural energy or improved recovery methods. Improved recovery methods include all methods for supplementing natural energy or altering natural forces in the reservoir to increase ultimate recovery. Examples of such methods are pressure maintenance, natural gas cycling, waterflooding, thermal methods, chemical flooding, and the use of miscible and immiscible displacement fluids. Other improved recovery methods may be developed in the future as petroleum technology continues to evolve.

Reserves may be attributed to either conventional or unconventional petroleum accumulations. Petroleum accumulations are considered as either conventional or unconventional based on the nature of their in-place characteristics, extraction method applied, or degree of processing prior to sale. Examples of unconventional petroleum accumulations include coalbed or coalseam methane (CBM/CSM), basin-centered gas, shale gas, gas hydrates, natural bitumen and oil shale deposits. These unconventional accumulations may require specialized extraction technology and/or significant processing prior to sale.

Reserves do not include quantities of petroleum being held in inventory.
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Because of the differences in uncertainty, caution should be exercised when aggregating quantities of petroleum from different reserves categories.


RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(26) defines reserves as follows:

Reserves. Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and gas or related substances to market, and all permits and financing required to implement the project.

Note to paragraph (a)(26): Reserves should not be assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir, or negative test results). Such areas may contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations).


PROVED RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(22) defines proved oil and gas reserves as follows:

Proved oil and gas reserves. Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

(i) The area of the reservoir considered as proved includes:

(A) The area identified by drilling and limited by fluid contacts, if any, and

(B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data.

(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.

(iii) Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty.

(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when:
(A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or
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an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and

(B) The project has been approved for development by all necessary parties and entities, including governmental entities.

(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS





PETROLEUM RESERVES STATUS DEFINITIONS AND GUIDELINES

As Adapted From:
RULE 4-10(a) of REGULATION S-X PART 210
UNITED STATES SECURITIES AND EXCHANGE COMMISSION (SEC)

and

2018 PETROLEUM RESOURCES MANAGEMENT SYSTEM (SPE-PRMS)
Sponsored and Approved by:
SOCIETY OF PETROLEUM ENGINEERS (SPE)
WORLD PETROLEUM COUNCIL (WPC)
AMERICAN ASSOCIATION OF PETROLEUM GEOLOGISTS (AAPG)
SOCIETY OF PETROLEUM EVALUATION ENGINEERS (SPEE)
SOCIETY OF EXPLORATION GEOPHYSICISTS (SEG)
SOCIETY OF PETROPHYSICISTS AND WELL LOG ANALYSTS (SPWLA)
EUROPEAN ASSOCIATION OF GEOSCIENTISTS & ENGINEERS (EAGE)


Reserves status categories define the development and producing status of wells and reservoirs. Reference should be made to Title 17, Code of Federal Regulations, Regulation S-X Part 210, Rule 4-10(a) and the SPE-PRMS as the following reserves status definitions are based on excerpts from the original documents (direct passages excerpted from the aforementioned SEC and SPE-PRMS documents are denoted in italics herein).


DEVELOPED RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(6) defines developed oil and gas reserves as follows:

Developed oil and gas reserves are reserves of any category that can be expected to be recovered:

(i) Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and

(ii) Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.

Developed Producing (SPE-PRMS Definitions)

While not a requirement for disclosure under the SEC regulations, developed oil and gas reserves may be further sub-classified according to the guidance contained in the SPE-PRMS as Producing or Non-Producing.

Developed Producing Reserves
Developed Producing Reserves are expected quantities to be recovered from completion intervals that are open and producing at the effective date of the estimate.

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Improved recovery reserves are considered producing only after the improved recovery project is in operation.

Developed Non-Producing
Developed Non-Producing Reserves include shut-in and behind-pipe Reserves.

Shut-In
Shut-in Reserves are expected to be recovered from:
(1)completion intervals that are open at the time of the estimate but which have not yet started producing;
(2)wells which were shut-in for market conditions or pipeline connections; or
(3)wells not capable of production for mechanical reasons.

Behind-Pipe
Behind-pipe Reserves are expected to be recovered from zones in existing wells that will require additional completion work or future re-completion before start of production with minor cost to access these reserves.

In all cases, production can be initiated or restored with relatively low expenditure compared to the cost of drilling a new well.


UNDEVELOPED RESERVES (SEC DEFINITIONS)

Securities and Exchange Commission Regulation S-X §210.4-10(a)(31) defines undeveloped oil and gas reserves as follows:

Undeveloped oil and gas reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.

(i)Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.

(ii) Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify a longer time.

(iii) Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, as defined in paragraph (a)(2) of this section, or by other evidence using reliable technology establishing reasonable certainty.

RYDER SCOTT COMPANY PETROLEUM CONSULTANTS