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Annual report [Section 13 and 15(d), not S-K Item 405]

Supplemental Oil and Gas Reserve Information (Unaudited)

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Supplemental Oil and Gas Reserve Information (Unaudited)
 12 Months Ended
Dec. 31, 2025
Extractive Industries [Abstract] 听
Supplemental Oil and Gas Reserve Information (Unaudited) Supplemental Oil and Gas Reserve Information (Unaudited)
The Company鈥檚 oil and gas reserves are attributable solely to properties within the United States.

Our Share of Oil and Gas Produced

We measure our share of oil and gas produced in barrels of oil equivalent (鈥淏oe鈥). One Boe equals one barrel of crude oil, condensate, NGLs (natural gas liquids) or approximately 6,000 cubic feet of gas. For the years ended December 31, 2025, 2024, and 2023 our share of oil and gas produced was approximately 34.6, 26.8, and 23.5 thousand Boe per day, respectively.
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Capitalized Oil and Gas Costs

Aggregate capitalized costs related to oil and gas production activities with applicable accumulated depletion are as follows (in thousands):
December 31,
2025		 December 31, 2024
Oil, natural gas and NGL interests
Proved $ 369,282听 $ 150,984听
Unproved 528,155听 296,087听
Total oil, natural gas and NGL interests 897,437听 447,071听
Accumulated depletion (57,413) (14,670)
Net oil, natural gas and NGL interests capitalized $ 840,024听 $ 432,401听

The Company owns approximately 224,000 NRA as of December 31, 2025. Of our total NRA, approximately 191,000 was acquired in 1888 and was recorded with no value. The remaining approximately 33,000 NRA have been acquired over recent years and are included in royalty interests acquired on the consolidated balance sheet. See additional discussion in Note 4, 鈥淥il and Gas Royalty Interests.鈥
Costs Incurred in Oil and Gas Activities

Costs incurred in oil, natural gas and NGL acquisition and development activities are as follows (in thousands):

Years Ended December 31,
2025 2024 2023
Acquisition costs
Proved $ 218,298听 $ 121,018听 $ 3,566听
Unproved 232,068听 274,559听 鈥斕
Total acquisition costs (1)
$ 450,366听 $ 395,577听 $ 3,566听
(1)Total acquisition costs include post-close adjustment from seller related to prior year asset acquisition.

Results of Operations from Oil and Gas Producing Activities

The following table sets forth the revenues and expenses related to the production and sale of oil and gas (in thousands). It does not include any general and administrative costs and, therefore, is not necessarily indicative of the net operating results of the Company鈥檚 oil and gas operations.
Years Ended December 31,
2025 2024 2023
Oil and gas revenues (1)
$ 411,677听 $ 373,331听 $ 357,394听
Ad valorem taxes (7,906) (6,952) (7,200)
Depletion expense (42,743) (9,785) (1,982)
Income tax expense (79,137) (76,917) (75,284)
Results of operations from oil and gas $ 281,891听 $ 279,677听 $ 272,928听
(1)Oil and gas revenues are reported net of production taxes.

Analysis of Changes in Oil and Gas PDP Reserves

PDP reserves are reserves that can be expected to be recovered 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. The Company鈥檚 oil and gas properties are located in the Permian Basin.

The PDP reserve estimates and their associated future net cash flows were prepared by Ryder Scott Company, L.P. (鈥淩yder Scott鈥), an independent third-party petroleum engineering firm, as of December 31, 2025. The reserve report covers only PDP reserves and does not include undeveloped minerals or royalties. The oil and gas PDP reserve estimates represent the Company鈥檚 net ownership interest in its proved properties and were estimated in accordance with guidelines established by the SEC. Reserve studies were not prepared for periods prior to December 31, 2024. Accordingly, comparative reserve information for those periods was derived from the December 31, 2024, reserve report by rolling volumes backwards from 2024 to 2022 to reflect historical production. Therefore, no revisions of prior estimates were recorded for these periods.
The following table presents changes in estimated PDP reserves and was prepared in accordance with the rules and regulations of the SEC:
Crude Oil and Condensate
(MBbls)(1)
Natural Gas (MMcf)(1)
Natural Gas Liquids (MBbls)(1)
Total (MBoe)(1)
Net PDP reserves at December 31, 2022 16,233听 99,996听 15,329听 48,228听
Extensions and discoveries 6,858听 31,196听 5,010听 17,067听
Acquisition of reserves 89听 664听 102听 302听
Production (3,701) (14,528) (2,453) (8,575)
Net PDP reserves at December 31, 2023 19,479听 117,328听 17,988听 57,022听
Extensions and discoveries 5,587听 23,483听 3,824听 13,324听
Acquisition of reserves 2,378听 13,317听 2,042听 6,639听
Production (4,118) (17,074) (2,841) (9,804)
Net PDP reserves at December 31, 2024 23,326听 137,054听 21,013听 67,181听
Extensions and discoveries 5,376听 30,285听 4,636听 15,059听
Acquisition of reserves 3,352听 13,876听 2,237听 7,902听
Production (4,936) (23,359) (3,784) (12,613)
Revisions (2,927) (9,844) 154听 (4,413)
Net PDP reserves at December 31, 2025 24,191听 148,012听 24,256听 73,116听
Net PDP reserves
December 31, 2022 16,233听 99,996听 15,329听 48,228听
December 31, 2023 19,479听 117,328听 17,988听 57,022听
December 31, 2024 23,326听 137,054听 21,013听 67,181听
December 31, 2025 24,191听 148,012听 24,256听 73,116听
(1)Commonly used definitions in the oil and gas industry not previously defined: MBbls represents one thousand barrels of crude oil, condensate or NGLs. MMcf represents one million cubic feet of natural gas. MBoe represents one thousand Boe.

Standardized Measure of Oil and Gas

The standardized measure of discounted future net cash flows before income taxes related to the oil and gas PDP reserves of the interests is as follows (in thousands):
Years Ended December 31,
2025 2024 2023
Future cash inflows $ 2,357,725听 $ 2,566,234听 $ 2,150,816听
Future production costs (175,564) (191,879) (157,805)
Future income taxes (297,366) (423,633) (422,629)
Future net cash flows 1,884,795听 1,950,722听 1,570,382听
Less: 10% annual discount (869,261) (942,086) (748,864)
Standard measure of discounted future net cash flows $ 1,015,534听 $ 1,008,636听 $ 821,518听

Reserve estimates and future cash flows are based on the average market prices for sales of oil and natural gas adjusted for basis differentials, on the first calendar day of each month during the year. The average prices used for 2025, 2024, and 2023 were $65.34, $76.32, and $78.21 per barrel for crude oil and $1.93, $2.13, and $2.64 per Mcf for natural gas, respectively.

Future production costs are computed primarily by the Company鈥檚 petroleum engineers by estimating the expenditures to be incurred in producing the oil and gas PDP reserves at the end of the year, based on year-end costs and assuming continuation of existing economic conditions. A discount factor of 10% was used to reflect the timing of future net cash flows.
The standardized measure of discounted future net cash flows is not intended to represent the replacement cost or fair value of the properties. An estimate of fair value would also take into account, among other things, the recovery of reserves not presently classified as proved, anticipated future changes in prices and costs, and a discount factor more representative of the time value of money and the risks inherent in oil and gas reserve estimates.

Changes in Standardized Measure of Oil and Gas

Changes in the standardized measure of discounted future net cash flows before income taxes related to the oil and gas PDP reserves of the interests are as follows (in thousands):
Years Ended December 31,
2025 2024 2023
Standardized measure - beginning of year $ 1,008,636听 $ 821,518听 $ 995,621听
Sales, net of production costs (403,771) (366,379) (350,194)
Net changes of prices and production costs related to future production (196,250) 10,003听 (426,381)
Extensions and discoveries 327,777听 330,825听 441,343听
Acquisition of reserves 153,962听 125,918听 5,827听
Revisions of previous quantity estimates (81,728) 鈥斕 鈥斕
Net change in income taxes 57,530听 1,424听 51,996听
Accretion of discount 122,839听 104,269听 126,879听
Changes in timing and other 26,539听 (18,942) (23,573)
Standardized measure - end of year $ 1,015,534听 $ 1,008,636听 $ 821,518听