BSIN 10-K & 10-Q changes, risk factors and insider trading
Big Sky Industrial Inc. · Nasdaq · Crude Petroleum & Natural Gas · CIK 101594 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “The construction of our planned processing facility, gathering and transportation system, and power infrastructure is subject to significant risks that could increase costs, delay operations, or prevent completion.”
New heading “Risks Related to U.S. Government Operations”
New heading “A U.S. federal government shutdown could adversely affect our business, results of operations, and financial condition.”
New heading “Our business is subject to risks associated with imposition of tariffs or other trade barriers by the United States or foreign governments.”
New heading “Risks Relating to our Purchase Agreement with Roth Principal Investments”
New heading “The issuance and sale of our Common Stock to Roth Principal Investments may cause dilution to our other stockholders and the sale of the shares of Common Stock acquired by Roth Principal Investments, or the perception that such sales may occur, could cause the price of our Common Stock to fall.”
New heading “It is not possible to predict the actual number of shares we will sell under the Purchase Agreement to Roth Principal Investments, or the actual gross proceeds resulting from those sales.”
New heading “The Roth Principal Investments will pay less than the then-prevailing market price for our shares of Common Stock, which could cause the price of our Common Stock to decline.”
New heading “We will owe the Roth Principal Investments additional consideration in the event it does not generate at least $450,000 in proceeds from the Roth Principal Investments’ resale of the Commitment Shares.”
New heading “Anti-takeover provisions in our Certificate of Incorporation and our Amended and Restated Bylaws, as well as provisions of Delaware law, might discourage, delay or prevent an acquisition of the Company, a change in control of our company or changes in our management and, therefore, depress the trading price of our common stock.”
Removed heading “We have identified material weaknesses in our internal control over financial reporting, and our management has concluded that our disclosure controls and procedures were not effective for periods since 2017. We cannot assure you that additional material weaknesses or significant deficiencies do not exist or that they will not occur in the future. If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results or prevent fraud, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price.”
Removed heading “Certain of our directors beneficially own approximately 52.9% of our outstanding common stock, which gives them majority voting control over stockholder matters, and each are also party to a Nominating and Voting Agreement, which allows them to control who is appointed to the Board of Directors of the Company and their interests may be different from your interests; and as a result of such ownership, we are a “controlled company” under applicable Nasdaq Capital Market Rules.”
Removed heading “Anti-takeover provisions may impede the acquisition of the Company.”
Removed heading “Anti-takeover provisions in our Certificate of Incorporation and our Amended and Restated Bylaws, as well as provisions of Delaware law, might discourage, delay or prevent a change in control of our company or changes in our management and, therefore, depress the trading price of our common stock.”
Removed heading “SEC rules could limit our ability to book proved undeveloped reserves (“PUDs”) in the future.”
Largest changes
“Our ability to execute our business plan depends on the successful construction and commissioning of new processing, gathering, transportation, and power infrastructure. These projects are complex and subject to risks beyond our control, including permitting and regulatory approvals, supply chain disruptions, labor availability and productivity, contractor performance, design or engineering changes, adverse weather conditions, utility interconnection delays, equipment delivery delays, and unanticipated site or subsurface conditions. …”see in full comparison
“We have identified material weaknesses in our internal control over financial reporting, and our management has concluded that our disclosure controls and procedures were not effective for periods since 2017. We cannot assure you that additional material weaknesses or significant deficiencies do not exist or that they will not occur in the future. …”see in full comparison
“Maintaining effective disclosure controls and procedures and effective internal control over financial reporting are necessary for us to produce reliable financial statements and the Company is committed to remediating its material weaknesses in such controls as promptly as possible. However, there can be no assurance as to when these material weaknesses will be remediated or that additional material weaknesses will not arise in the future. …”see in full comparison
“Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. …”see in full comparison
“Our business is subject to risks associated with imposition of tariffs or other trade barriers by the United States or foreign governments.”see in full comparison
“Certain of our directors beneficially own approximately 52.9% of our outstanding common stock, which gives them majority voting control over stockholder matters, and each are also party to a Nominating and Voting Agreement, which allows them to control who is appointed to the Board of Directors of the Company and their interests may be different from your interests; and as a result of such ownership, we are a “controlled company” under applicable Nasdaq Capital Market Rules.”see in full comparison
Full comparison: every changed paragraph (54)
We may need to raise additional funding to complete future potential acquisitions and will be required to raise additional funds through public or private debt or equity financing or other various means to fund our operations and complete workovers and acquire assets. In such a case, adequate funds may not be available when needed or may not be available on favorable terms. If we need to raise additional funds in the future by issuing equity securities, (including pursuant to our purchase agreement with Roth Principal Investments), dilution to existing stockholders will result, and such securities may have rights, preferences, and privileges senior to those of our common stock. If funding is insufficient at any time in the future and we are unable to generate sufficient revenue from new business arrangements, to complete future acquisitions or operations, our results of operations and the value of our securities could be adversely affected.
DeclinesDecline in the prices we receive for our oil and natural gas can also adversely affect our ability to finance capital expenditures, make acquisitions, raise capital and satisfy our financial obligations. In addition, declines in prices can reduce the amount of industrial gas, oil and natural gas that we can produce economically and the estimated future cash flow from that production and, as a result, adversely affect the quantity and present value of our proved reserves. Among other things, a reduction in the amount or present value of our reserves can limit the capital available to us, and the availability of other sources of capital likely will be based to a significant degree on the estimated quantity and value of the reserves.
DeclinesA decline in industrial gas, oil, NGL, or natural gas prices will reduce not only our revenue but also the quantity of production that can be produced economically. Should industrial gas, oil, natural gas and prices decline in the future, our operated wells, may be forced to be shut-in, and exploration and development plans for prospects and exploration or development activities may need to be postponed or abandoned. As a result, we may have to make substantial downward adjustments to our estimated proved reserves or industrial gas resources, each of which would have a material adverse effect on our business, financial condition, and results of operations.
The construction of our planned processing facility, gathering and transportation system, and power infrastructure is subject to significant risks that could increase costs, delay operations, or prevent completion.
Our ability to execute our business plan depends on the successful construction and commissioning of new processing, gathering, transportation, and power infrastructure. These projects are complex and subject to risks beyond our control, including permitting and regulatory approvals, supply chain disruptions, labor availability and productivity, contractor performance, design or engineering changes, adverse weather conditions, utility interconnection delays, equipment delivery delays, and unanticipated site or subsurface conditions. Inflationary pressures, changes in interest rates, or increases in material, labor, or energy costs could materially increase capital expenditures beyond current estimates. Delays or cost overruns could defer the commencement of commercial operations, reduce expected returns, require additional financing on unfavorable terms, or result in the impairment of capitalized costs.
The success of the Company will also depend upon the Company having access to sufficient development capital, being able to maintain title to its properties and obtain all required approvals for its activities. In the event that exploration programs prove to be unsuccessful this could lead to a diminution in the value of the Company’s properties, a reduction in the cash reserves of the Company and possible relinquishment of the Company’s properties.
Concerns over global economic conditions, the threat of pandemic diseases and the results thereof, energy costs, geopolitical issues, tariffs, trade wars, wars, the value of the U.S. dollar, changing inflation and interest rates, the availability and cost of credit have contributed to increased economic uncertainty and diminished expectations for the global economy. These factors, combined with volatile prices of industrial gas, oil and natural gas, declining business and consumer confidence, and increased unemployment, may result in an economic slowdown and/or a recession, which could expand to a global depression. Concerns about global economic growth have had a significant adverse impact on global financial markets and commodity prices and are expected to continue having a material adverse effect for the foreseeable future. If the economic climate in the United States or abroad continues to deteriorate, demand for petroleum products could diminish, which could further impact the price at which we can sell industrial gas, oil, natural gas, and natural gas liquids, and/or affect the ability of our vendors, suppliers and customers to continue operations, and ultimately adversely impact our results of operations, liquidity and financial condition. In addition, a decline in consumer confidence or changing patterns in the availability and use of disposable income by consumers can negatively affect the demand for oil and gas and as a result our results of operations.
Global economic conditions continue to be volatile and uncertain due to, among other things, consumer confidence in future economic conditions, fears of recession, application of tariffs and trade wars, the price of energy, fluctuating interest rates and inflation, the availability and cost of consumer credit, the availability and timing of government stimulus programs, levels of unemployment, and tax rates. These conditions remain unpredictable and create uncertainties about our ability to raise capital in the future.future at commercially acceptable terms. In the event required capital becomes unavailable in the future, or more costly, it could have a material adverse effect on our business, results of operations, and financial condition.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) provides for statutory and regulatory requirements for derivative transactions, including crude oil and natural gas derivative transactions. Among other things, the Dodd-Frank Act provides for the creation of position limits for certain derivatives transactions, as well as requiring certain transactions to be cleared on exchanges for which cash collateral will be required. The Dodd-Frank Act requires the CommoditiesCommodity Futures and Trading Commission (the “CFTC”), the SEC and other regulators to promulgate rules and regulations implementing the Dodd-Frank Act.
We have identified material weaknesses in our internal control over financial reporting, and our management has concluded that our disclosure controls and procedures were not effective for periods since 2017. We cannot assure you that additional material weaknesses or significant deficiencies do not exist or that they will not occur in the future. If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results or prevent fraud, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price.
Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. We maintain a system of internal control over financial reporting, which is defined as a process designed by, or under the supervision of, our principal executive officer and principal financial officer, or persons performing similar functions, and effected by our board of directors, management and other personnel, 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 in the United States of America ("GAAP"). A “material weakness” is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.
Based on the results of management’s assessment and evaluation of our internal controls, our principal executive officer and principal financial officer concluded that our internal control over financial reporting was not effective as of December 31, 2024 due to a material weakness related to the ineffective design of our accounting system. Specifically, reliance could not be placed on some of the control elements of the accounting system. These control elements include a lack of certain functionality related to system-based account reconciliations, missing systematic controls in areas such as segregation of duties enforcement and data input validation, and an absence of independent evaluation of third-party information technology general controls (“ITGCs”). The Company's manual review controls partially compensate for the system design limitations, but this material weakness cannot be remediated without the implementation of a system-based solution.
As a result, our management also concluded that our disclosure controls and procedures were not effective as of
December 31, 2024, such that the information relating to us required to be disclosed in the reports we file with the SEC (a) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) is accumulated and communicated to our management to allow timely decisions regarding required disclosures and such disclosure controls and procedures have not been deemed effective since approximately December 31, 2016.
Maintaining effective disclosure controls and procedures and effective internal control over financial reporting are necessary for us to produce reliable financial statements and the Company is committed to remediating its material weaknesses in such controls as promptly as possible. However, there can be no assurance as to when these material weaknesses will be remediated or that additional material weaknesses will not arise in the future. Any failure to remediate the material weaknesses, or the development of new material weaknesses in our internal control over financial reporting, could result in material misstatements in our financial statements and cause us to fail to meet our reporting and financial obligations, which in turn could have a material adverse effect on our financial condition and the trading price of our common stock, and/or result in litigation against us or our management. In addition, even if we are successful in strengthening our controls and procedures, those controls and procedures may not be adequate to prevent or identify irregularities or facilitate the fair presentation of our financial statements or our periodic reports filed with the SEC.
Risks Related to U.S. Government Operations
A U.S. federal government shutdown could adversely affect our business, results of operations, and financial condition.
The U.S. federal government periodically experiences funding gaps that result in partial or complete shutdowns of government operations. A prolonged shutdown could adversely impact the U.S. economy, financial markets, and our business directly and indirectly. During a shutdown, many federal agencies suspend or delay regulatory approvals, contract awards, payments, and other routine functions. To the extent that our business depends on U.S. government contracts, grants, permits, licenses, or other approvals, a shutdown could result in the delay, suspension, or cancellation of such activities, which could materially impact our operations and development activities.
Additionally, even though the Company does not contract directly with the federal government, a shutdown could have broader negative effects on consumer and business confidence, supply chains, access to financing, and the overall economy. In addition, uncertainty regarding the duration or frequency of government shutdowns may contribute to market volatility and reduced customer spending. Any of these events, individually or in the aggregate, could have a material adverse effect on our business, financial condition, results of operations, and stock price.
Our business is subject to risks associated with imposition of tariffs or other trade barriers by the United States or foreign governments.
Recently there has been increasing uncertainty regarding international trade policies, including the ongoing implementation of tariffs and trade wars on a wide range of goods and materials, as well as retaliatory measures by other countries. These developments may result in higher costs for certain raw materials, components, and finished products, and may adversely impact our supply chain, including pricing, delivery timeline and general availability of products needed for our operations.
The Company may be unable to fully mitigate any cost increases through price adjustments, supplier diversification, or other measures. Accordingly, continued or heightened global trade tensions or changes in tariff regimes, or the imposition of new trade restrictions could have a material adverse effect on our business, financial condition, results of operations, and cash flows.
John A. Weinzierl,Weinzierl and Duane H. King and Joshua Batchelor,King, each a member of the Board of Directors of the Company, may hold various other management positions with privately-held companies, some of which are involved in the oil and gas industry, and together such persons controlown ormore havethan joint30 control, over a majoritypercent of our common stock. We believe these positions will not conflict with their roles or responsibilities with our company. Certain of these entities are party to agreements with the Company and if any of these companies enter into any additional transactions or agreements with our company, or other related party transactions or matters exist, potential conflicts of interest could arise from the directors performing services for us and these other entities.
Certain of our directors beneficially own approximately 52.9% of our outstanding common stock, which gives them majority voting control over stockholder matters, and each are also party to a Nominating and Voting Agreement, which allows them to control who is appointed to the Board of Directors of the Company and their interests may be different from your interests; and as a result of such ownership, we are a “controlled company” under applicable Nasdaq Capital Market Rules.
John A. Weinzierl, Duane H. King and Joshua Batchelor, our Chairman, director, and director, respectively, beneficially own an aggregate of 18,366,735 shares of our common stock, representing approximately 51.1% of our outstanding common stock, including approximately 27.5%, 10.1% and 17.4% of our common stock beneficially owned by each of John A. Weinzierl, Duane H. King and Joshua Batchelor, including the recent grants approved as of February 14, 2025. Ownership splits include shares owned directly and indirectly by each director. As such, Messrs. Weinzierl, King and Batchelor can control the outcome of all matters requiring a stockholder vote, including the election of directors, the adoption of amendments to our Certificate of Incorporation or Bylaws and the approval of mergers and other significant corporate transactions. Subject to any fiduciary duties owed to the stockholders generally, while Messrs. Weinzierl’s, King’s and Batchelor’s interests may generally be aligned with the interests of our stockholders, in some instances Messrs. Weinzierl, King and Batchelor may have interests different than the rest of our stockholders. Messrs. Weinzierl’s, King’s and Batchelor’s influence or control of our company as stockholders may have the effect of delaying or preventing a change of control of our company and may adversely affect the voting and other rights of other stockholders. Because Messrs. Weinzierl, King and Batchelor control the stockholder vote, investors may find it difficult to replace Messrs. Weinzierl, King and Batchelor (and such persons as they may appoint from time to time) as members of our management and board of directors if they disagree with the way our business is being operated. Additionally, the interests of Messrs. Weinzierl, King and Batchelor may differ from the interests of the other stockholders and thus result in corporate decisions that are adverse to other stockholders.
Separately, each of the entities controlled by Messrs. Weinzierl, King and Batchelor entered into an Amended and Restated Nominating and Voting Agreement with us and certain of their affiliates and other third parties on September 16, 2022 (the “A&R Voting Agreement”). The A&R Voting Agreement provides that each of Lubbock Energy Partners LLC; Banner Oil & Gas, LLC, Woodford Petroleum, LLC and Llano Energy LLC (each a “Nominating Party”), each of which were at the time of entry into the A&R Voting Agreement, beneficially owned by one or more of Messrs. Weinzierl, King and Batchelor, has the right to designate for nomination to the Board two nominees (for so long as such Nominating Party (and its affiliates) beneficially owns at least 15% of the Company’s outstanding common stock) and one nominee (for so long as such Nominating Party (and its affiliates) beneficially owns at least 5% of the Company’s common stock), for appointment at any stockholder meeting or via any consent to action without meeting of the stockholders of the Company. The A&R Voting Agreement also requires the Board to include such nominees in the slate of directors up for appointment at each meeting of stockholders where directors will be appointed, and take other actions to ensure that such persons are elected to the Board by the stockholders of the Company. Pursuant to the A&R Voting Agreement, if any Nominating Party’s nominated party ceases for any reason to serve on the Board, such nominated party will be provided the right to appoint another person to the Board, who shall be appointed to the Board pursuant to the power to fill vacancies given to the Board without a stockholder vote, by the Bylaws of the Company.
Because of Messrs. Weinzierl’s, King’s and Batchelor’s ownership of the Company, as discussed above, we are a “controlled company” under the rules of the Nasdaq Capital Market. Under these rules, a company of which more than 50% of the voting power is held by an individual, a group or another company is a “controlled company” and, as such, can elect to be exempt from certain corporate governance requirements, including requirements that:
As a “controlled company,” we may elect to rely on some or all of these exemptions, provided that we have to date not taken advantage of any of these exemptions and do not currently intend to take advantage of any of these exemptions moving forward. Notwithstanding that, should the interests of Messrs. Weinzierl, King and Batchelor differ from those of other stockholders, the other stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the Nasdaq Capital Market corporate governance standards. Even if we do not avail ourselves of these exemptions, our status as a controlled company could make our common stock less attractive to some investors or otherwise harm our stock price.
We depend to a significant degree upon the involvement of our management, specifically, our Chief Executive Officer, Ryan L. Smith. Our performance and success are dependent to a large extent on the efforts and continued employment of Mr. Smith. We do not believe that Mr. Smith could be quickly replaced with personnel of equal experience and capabilities, and his successor(s) may not be as effective. If Mr. Smith or any of our other key personnel resign or become unable to continue in their present roles and if they are not adequately replaced, our business operations could be adversely affected. The Company entered into an agreement with Mr. Smith on May 5, 2022. The term of Mr. Smith’s Employment Agreement commenced on May 5, 2022, and had an initial term expiring January 1, 2024, subject to automatic one-year renewals thereafter in the event neither party provides the other at least 60 days prior written notice of their intention not to renew the terms of the agreement. Because neither party provided the other notice of termination prior to January 1, 2024, the agreement renewed for an additional one year, and currently had a term through January 1, 2025 (subject to additional one year renewals thereafter).renewals. On August 14, 2024, effective July 1, 2024, the Company entered into a new amended and restated employment agreement with Mr. Smith, which amended and restated in its entirety the prior employment agreement between the Company and Mr. Smith dated May 5, 2022. That new agreement has an initial term expiring January 1, 2027, subject to automatic successive two-year renewals thereafter.
Our obligations under the Credit Agreement are secured by a first priority security interest in substantially all of our assets. Additionally, substantially all of our subsidiaries agreed to guarantee our obligations under the Credit Agreement. As such, our creditor may enforce its security interests over our assets and/or our subsidiaries which secure the repayment of such obligations, take control of our assets and operations, force us to seek bankruptcy protection, or force us to curtail or abandon our current business plans and operations. If that were to happen, any investment in the Company could become worthless. Our Credit Agreement expires JanuaryMay 5,31, 2026,2029, and there can be no assurance that we can renew or extend the Credit Agreement with the same terms or conditions.
Our stock is traded on The Nasdaq Capital Market under the symbol “USEG”. For the twelve-monthyear periodended endingDecember March 10,31, 2025, our common stock has traded as high as $6.40$3.79 per share and as low as $0.81$0.92 per share. We expect our common stock will continue to be subject to wide fluctuations as a result of a variety of factors, including factors beyond our control. These factors include:
If weour arecommon stock is delisted from The Nasdaq Capital Market, your ability to sell your shares of our common stock could also be limited by the penny stock restrictions, which could further limit the marketability of your shares.
On April 13, 2022, August 5, 2022, November 7, 2022, February 9, 2023, and May 18, 2023, the Company’s Board of Directors approved the declaration and payment of quarterly cash dividends of $0.0225 per share of common stock. Our Board of Directors, at its sole discretion, determines the amount of the quarterly dividends to be distributed to our shareholders, if any, based on consideration of a number of factors including, but not limited to, our results of operations, cash flow and capital requirements, economic conditions, tax considerations, borrowing capacity and other factors, including future acquisitions and divestitures. Consequently, our dividend levels may fluctuate. On August 9, 2023, the Board of Directors determined it appropriate to suspend dividend payments, with the associated future capital resources being allocated towards the Company’s share repurchase program andprogram, repayments of the outstanding balance on our credit facility.facility and other Company initiatives. The Board of Directors may or may not reinstate future dividend payments in the future, the amount and frequency of which will be determined at the sole discretion of the Board. To the extent that the dividend is not reinstated in the future, only appreciation of the price of our common stock, which may not occur, will provide a return to our stockholders. The determination to pay dividends on our common stock is at the discretion of our Board of Directors.
We have registered the resale of 19,905,736a significant number of shares of common stock pursuant to a Form S-3 Registration Statement,Statement whichand sharesa ofForm commonS-1 stockRegistration represent approximately 58.9% of our currently outstanding shares of common stock. Such shares of common stock may be resold in the public market immediately without restriction.Statement. The registered shares represent a significant number of shares of our common stock, and if sold in the market all at once or at about the same time, could significantly depress the market price of our common stock during the period the registration statement remains effective and could also affect our ability to raise equity capital in the future at a time and price that we deem reasonable or appropriate.
Risks Relating to our Purchase Agreement with Roth Principal Investments
The issuance and sale of our Common Stock to Roth Principal Investments may cause dilution to our other stockholders and the sale of the shares of Common Stock acquired by Roth Principal Investments, or the perception that such sales may occur, could cause the price of our Common Stock to fall.
On October 9, 2025, we entered into the purchase agreement with Roth Principal Investments, pursuant to which Roth Principal Investments has committed to purchase up to $25.0 million of Purchase Shares, upon the terms and subject to the conditions set forth in the purchase agreement. Upon the execution of the purchase agreement, we issued 223,141 Commitment Shares to Roth Principal Investments as consideration for its commitment to purchase our Purchase Shares at our direction under the purchase agreement. The remaining shares of our common stock that may be issued under the purchase agreement may be sold by us to Roth Principal Investments at our discretion from time to time over a 24-month period following the effective date of a Form S-1 Registration Statement which was declared effective on December 1, 2025, subject to certain conditions. The purchase price for the shares that we may sell to Roth Principal Investments under the purchase agreement will fluctuate based on the market price of our common stock. Depending on demand and market liquidity at the time, sales of such shares by Roth Principal Investments may cause the trading price of our common stock to fall.
We generally have the right to control the timing and amount of any future sales of our shares to Roth Principal Investments. Any sales of our common stock to Roth Principal Investments will depend upon market conditions and other factors to be determined by us. We may ultimately decide to sell to Roth Principal Investments all, some or none of the shares of our common stock that may be available for us to sell pursuant to the purchase agreement. If and when we sell shares to Roth Principal Investments, Roth Principal Investments may then resell all, some or none of those shares at any time or from time to time in its discretion. Therefore, our sales to Roth Principal Investments could result in substantial dilution to the interests of other holders of our common stock. Additionally, the sale of a substantial number of shares of our common stock to Roth Principal Investments, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.
It is not possible to predict the actual number of shares we will sell under the Purchase Agreement to Roth Principal Investments, or the actual gross proceeds resulting from those sales.
On October 9, 2025, we entered into the purchase agreement with Roth Principal Investments, pursuant to which Roth Principal Investments has committed to purchase up to $25,000,000 of shares of our common stock, subject to certain limitations and conditions set forth in the purchase agreement. The shares of our common stock that may be issued under the purchase agreement may be sold by us to Roth Principal Investments at our discretion from time to time during the Commitment Period.
We generally have the right to control the timing and amount of any sales of our shares of common stock to Roth Principal Investments under the purchase agreement. Sales of our common stock, if any, to Roth Principal Investments under the purchase agreement will depend upon market conditions and other factors to be determined by us.
Because the per share purchase price that Roth Principal Investments will pay for Purchase Shares in any Market Open Purchase or Intraday Purchase that we may elect to effect pursuant to the purchase agreement will be determined by reference to the VWAP during the applicable valuation periods. It is not possible for us to predict the number of shares of common stock that we will sell to Roth Principal Investments as Purchase Shares under the purchase agreement, the purchase price per share that Roth Principal Investments will pay for Purchase Shares purchased from us under the purchase agreement, or the aggregate gross proceeds that we will receive from those purchases by Roth Principal Investments under the purchase agreement.
Although the purchase agreement provides that we may sell up to $25,000,000 of our common stock to Roth Principal Investments, only 23,876,859 Purchase Shares (in addition to the 223,141 Commitment Shares, for which we have not and will not receive any cash consideration) have been registered under the Securities Act for resale by Roth Principal Investments. Depending on the market prices of our common stock on the Purchase Dates on which we elect to sell such Purchase Shares to Roth Principal Investments under the purchase agreement, we may need to register under the Securities Act additional shares of our common stock for resale by Roth Principal Investments in order for us to receive aggregate proceeds equal to Roth Principal Investments’ $25,000,000 maximum aggregate purchase commitment available to us under the purchase agreement.
Moreover, to the extent that the Exchange Cap remains applicable to issuances and sales of our common stock under the Purchase Agreement, if we elect to issue and sell to Roth Principal Investments more shares of common stock than the Exchange Cap (or 7,123,382 shares of common stock, 223,141 of which shares represent the Commitment Shares that we issued to Roth Principal Investments upon execution of the purchase agreement on October 9, 2025, for which we have not and will not receive any cash consideration) under the purchase agreement, which we have the right, but not the obligation, to do, we must first obtain stockholder approval to issue shares of common stock in excess of the Exchange Cap under the purchase agreement in accordance with applicable Nasdaq rules.
The Roth Principal Investments will pay less than the then-prevailing market price for our shares of Common Stock, which could cause the price of our Common Stock to decline.
The purchase price of our common stock to be sold to Roth Principal Investments under the Purchase Agreement is derived from the market price of our common stock on Nasdaq. Common stock to be sold to Roth Principal Investments pursuant to the Purchase Agreement will be purchased at a discounted price. The actual amount of proceeds we receive pursuant to each Purchase Notice (each, the “Purchase Amount”) is determined by multiplying the Purchase Amount requested by the applicable purchase price.
The Roth Principal Investments may sell the shares it receives immediately after receipt of such shares, and/or may sell such shares short prior to the purchase of such shares, which may be prior to final determination of the purchase price for such shares and could cause the price of our common stock to decrease. If the price of our common stock declines, then Roth Principal Investments may pay a lower purchase price for such shares.
We will owe the Roth Principal Investments additional consideration in the event it does not generate at least $450,000 in proceeds from the Roth Principal Investments’ resale of the Commitment Shares.
As consideration for Roth Principal Investments’ commitment to purchase shares of common stock our direction upon the terms and subject to the conditions set forth in the purchase agreement, we (i) paid to Roth Principal Investments a cash “structuring fee” of $25,000, prior to our execution of the purchase agreement, (ii) upon our execution of the purchase agreement, we issued 223,141 Commitment Shares to Roth Principal Investments, which Commitment Shares had a total aggregate value equal to 1.08% of Roth Principal Investments’ $25,000,000 total aggregate purchase commitment under the purchase agreement (each Commitment Share valued at $1.21 per share, representing the closing sale price of the common stock immediately prior to the execution of the purchase agreement, rounded to the nearest whole share), and (iii) agreed to pay to Roth Principal Investments the Cash Commitment Fee of $180,000, which was equal to 0.72% of Roth Principal Investments’ $25,000,000 total aggregate dollar amount purchase commitment under the purchase agreement. Under the terms of the purchase agreement, in certain circumstances set forth in the purchase agreement, we may be required to pay Roth Principal Investments up to $270,000 (or 1.08% of Roth Principal Investments’ $25,000,000 aggregate purchase commitment under the purchase agreement), in cash, as a “make-whole” payment to the extent the aggregate amount of cash proceeds, if any, received by Roth Principal Investments from the resale of the Commitment Shares, prior to certain times set forth in the purchase agreement, is less than $270,000, in exchange for Roth Principal Investments returning to us for cancelation all of the Commitment Shares we originally issued to Roth Principal Investments upon execution of the purchase agreement that were not previously resold by Roth Principal Investments prior to the times specified in the purchase agreement, if any. We will not make any such cash “make-whole” payment to Roth Principal Investments if, after the Commencement Date, the aggregate net proceeds received by Roth Principal Investments from their resale of all or any portion of the Commitment Shares equals or exceeds $270,000.
Anti-takeover provisions in our Certificate of Incorporation and our Amended and Restated Bylaws, as well as provisions of Delaware law, might discourage, delay or prevent an acquisition of the Company, a change in control of our company or changes in our management and, therefore, depress the trading price of our common stock.
Anti-takeover provisions may impede the acquisition of the Company.
Anti-takeover provisions in our Certificate of Incorporation and our Amended and Restated Bylaws, as well as provisions of Delaware law, might discourage, delay or prevent a change in control of our company or changes in our management and, therefore, depress the trading price of our common stock.
OurAdditionally, our Certificate of Incorporation and Amended and Restated Bylaws and Delaware lawalso contain provisions that may discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares of our common stock. These provisions may also prevent or delay attempts by our stockholders to replace or remove our management. Our corporate governance documents include provisions:
SEC rules could limit our ability to book proved undeveloped reserves (“PUDs”) in the future.
SEC rules require that, subject to limited exceptions, PUDs may only be booked if they relate to wells scheduled to be drilled within five years after the date of booking. This requirement has limited and may continue to limit our ability to book additional PUDs as we pursue our drilling program. Moreover, we may be required to write down our PUDs if we do not drill or plan on delaying those wells within the required five-year timeframe.
Management's Discussion & Analysis (MD&A)
New heading “Business Strategy”
Removed heading “Recent Developments”
Removed heading “Acquisition of Properties”
Removed heading “Divestiture of Properties”
Removed heading “Derivative Activities”
Removed heading “Underwritten Offering”
Removed heading “Related Party Share Repurchase”
Largest changes
For the year ended December 31,see in full comparison2024,2025, we funded our capital expenditures with cash on hand,cash flows from operating activities,proceeds from the divestitures of oil and gas producing properties and borrowings under our credit facility. In January 2025, we raised$12.1netmillionproceeds($10.5of $10.3 million after theRelatedrelatedPartypartyShareshare Repurchase– see Note 16 Subsequent Events)in an underwritten offering of 4,236,000 shares of our commonstock.stockIndiscussedfutureinquarters,greaterifdetailcashaboveflowsunderare"Itemnot1.sufficientBusiness—MaterialtoEvents—Underwrittenfund our capital expendituresOffering" andoperations,"—RelatedwePartymaySharesraise funds through additional equity offerings or from other sources of financing. We also may re-evaluate our capital spend program as economic conditions warrant. Additionally, we may enter into carrying cost and sharing arrangements with third parties for certain development programs. All of our sources of liquidity can be affected by the changes in economic conditions, rising interest rates, changes in debt and equity markets, force majeure events, fluctuations in commodity prices, operating costs, tax law changes, and volumes produced, all of which would affect us and our industry.Repurchase".
Impairment of oil and natural gas properties.see in full comparisonImpairmentCeiling test impairment of$11.9$3.6 million during the year ended December 31,20242025 wasdriven by ceiling test write-downs of oil and gas propertiesincurred as a result of a decrease in crude oil and natural gasprices, divestments and other reserves revisions since December 31, 2023prices. For the year ended December 31,2023,2024, the Company recorded ceiling testwrite-downsimpairment of its oil and natural gas properties of$26.7$11.9 million as a result of a decrease in crude oil and natural gasprices, divestmentsprices andotherthe reduction in reservesrevisionsfromsince December 31, 2022.divestitures.
“All of our sources of liquidity can be affected by the changes in economic conditions, rising interest rates, changes in debt and equity markets, force majeure events, fluctuations in commodity prices, operating costs, tax law changes, and volumes produced, all of which would affect us and our industry.”see in full comparison
“Exploratory wells in progress are excluded from the DD&A calculation until the outcome of the well is determined. Similarly, unproved property costs are initially excluded from the DD&A calculation. Unproved property costs not subject to the DD&A calculation consist primarily of leasehold and seismic costs related to unproved areas. Unproved property costs are transferred into the amortization base on an ongoing basis as the properties are evaluated and proved reserves are established or impairment is determined. …”see in full comparison
Depreciation, Depletion, Accretion and Amortization. DD&A was $3.6 million for the year ended December 31, 2025, compared to $8.3 million for the year ended December 31, 2024. Our depreciation, depletion, and amortization ("DD&A") includes depletion expense on our oil and gas properties, accretion expensesee in full comparisonfromon our asset retirement obligations, and depreciation expense on our fixed assets. Depletion expenses on our oil and gas properties are the primary driver of DD&A expense making up87%63% and89%78% of DD&A expense for the years ended December 31,20242025 and2023,2024, respectively. Our depletion rate for the year ended December 31,2024,2025, was$19.64$21.89 per BOE, compared to$17.99$19.64 per BOE for the year ended December 31,2023.2024. Our depletion ratecan fluctuatefluctuates because of the impact of divestitures, impairments on the full cost pool, but other factors such as acquisitions,changes in drilling and completion costs, impairments,revisions in asset retirement obligation cost estimates or timing,divestitures, changes in the mix of our production, theand underlying proved reserve volumesandcanestimatedalsocosts to drill and complete proved undeveloped reserves. DD&A was $8.3 million forimpact theyear ended December 31, 2024, compared to $11.2 million for the year ended December 31, 2023.rate.
“As described above under “Item 1. Business-Recent Events”, during 2024 we closed on a series of individual divestitures for a total of $14.0 million in net proceeds before transaction costs of $0.4 million. The net proceeds from these divestitures were used to repay the outstanding balance on our credit facility, bringing the balance as of December 31, 2024 to $0.0 million. We also used a portion of the proceeds from the divestitures for the development of our industrial gas properties acquired during 2024. …”see in full comparison
Full comparison: every changed paragraph (74)
Recent Developments
Acquisition of Properties
Wavetech
On June 26, 2024, we entered into and closed the transactions contemplated by, a purchase and sale agreement with Wavetech Helium (“Wavetech” and the “Purchase Agreement”). Pursuant to the Purchase Agreement, effective June 1, 2024, we acquired 82.5% of Wavetech's rights under a farmout agreement for approximately 144,000 net acres located across the Kevin Dome Structure in Toole County, Montana (“the Assigned Rights”). The Assigned Rights vest upon the drilling of two wells on the property. In consideration for the Assigned Rights, the Company paid Wavetech $2.0 million in cash and 2.6 million shares of restricted common stock, which were valued at $2.7 million on June 26, 2024. In addition, prior to the closing of the Purchase Agreement, the Company incurred $0.4 million of transaction costs related to the acquisition of the Assigned Rights. Additionally, we agreed to be responsible for 100% of capital costs, including costs related to project exploration, appraisal, development drilling and completion until $20 million has been incurred related to Wavetech's 17.5% interest. The Company accounted for the acquisition of the Assigned Rights as an asset acquisition. As of March 10, 2025, we had drilled one of the two wells required to vest the Assigned Rights, and we expect this to be completed in the first half of 2025.
Synergy
On January 7, 2025, we entered and simultaneously closed the transactions contemplated by, a purchase and sale agreement, with Synergy Offshore LLC (“Synergy”). Synergy is controlled by Mr. Duane H. King, a member of the Board of Directors of the Company, who serves as the Chief Executive Officer and Manager of Synergy, and John A. Weinzierl, the Company’s Chairman, who is an approximate sixty percent beneficial owner of Synergy.
We acquired approximately 24,000 net operated acres located across the Kevin Dome structure in Toole County, Montana, including all leases, wells, rights and interests in, under or derived from the acquired acreage subject to Synergy retaining an undivided twenty percent (20%) of Synergy’s right title and interest in the property.
Consideration for the transaction consisted of the following: (a) $2.0 million in cash, subject to customary adjustments; (b) 1,400,000 shares of the Company’s common stock; (c) a carried working interest whereby the Company agreed to cover and pay for 100% of Synergy’s costs attributable to the Synergy acreage, until the earlier of (i) 78 months from the closing date; or (ii) the date the total costs associated therewith total $20 million; (d) our agreement to pay Synergy 18% of the cash amounts we actually realize from any law or regulation from our sequestration of carbon oxides or similar substances derived directly from an agreed area of mutual interest including Synergy’s acreage; and (e) our agreement to pay Synergy 18% of the gain we may receive in connection with the sale of the future, first, gas processing plant located on Synergy’s acreage.
Divestiture of Properties
During the year ended December 31, 2024, the Company closed on a series of individual divestitures for a total of $14.0 million in net proceeds before transaction costs of $0.4 million. The Company was also relieved of associated asset retirement obligations of $5.4 million. The divestitures included primarily operated properties in Texas and Mid-Continent ("Mid-con") and encompassed 408 gross wells, with two prior dispositions, one relating to our South Texas properties and one relating to our East Texas properties, each discussed in greater detail below, accounting for the majority of the proceeds.
In South Texas, the Company divested its assets in Karnes County, Texas, for approximately $5.2 million in net cash proceeds after customary purchase price adjustments, effective April 1, 2024, with the transaction closing on July 31, 2024. These primarily operated properties, consisting of 8 gross wells, which averaged 155 barrels of oil equivalent per day (85% oil) during the first quarter of 2024, representing 13% of our total production over that period.
In East Texas, the Company sold the majority of its assets across Anderson, Chambers, Henderson, and Liberty Counties, Texas, for $6.8 million in net cash proceeds, effective November 1, 2024, with the transaction closing on December 31, 2024. This package, comprising 122 gross wells, averaged approximately 1.1 million cubic feet per day of natural gas and 168 barrels of oil per day (48% oil) for the quarter ending September 30, 2024.
In the Mid-con region, the Company divested all of its operated properties in the state of Kansas and Kay County, Oklahoma, for $1.2 million in net cash proceeds, effective November 1, 2024, with the transaction closing on October 31, 2024. This package comprised 21 gross wells.
Properties divested during 2024 represented 42% of the beginning of the year reserve volumes. The Company recognized a $5.0 million loss on the sale of its East Texas properties in the fourth quarter of 2024. The Company considered this a significant divestment that would significantly alter the relationship between capitalized costs and proved reserves as the divestiture represented 36% of our reserve volumes and 30% of our reserve value at the date of the divestiture.
The net proceeds from these divestitures were used to repay the outstanding balance on our credit facility, bringing the balance as of December 31, 2024 to $0.0 million. We also used part of the proceeds to fund the continued development of the Company's industrial gas project in Montana. These divestitures reflect the Company's strategic portfolio management, exiting non-core geographic regions to enhance liquidity, strengthen the balance sheet, and redirect capital toward high-growth opportunities.
Derivative Activities
On September 10, 2024, the Company settled all of its then outstanding commodity derivative contracts for 2024 and 2025 production receiving $1.8 million. As of December 31, 2024, the Company no longer has any commodity derivative contracts outstanding.
Underwritten Offering
On January 22, 2025, the Company entered into an underwriting agreement (the “Underwriting Agreement”) with Roth Capital Partners, LLC (the “Representative”), as representative of the several underwriters named in the Underwriting Agreement (the “Underwriters”), relating to an underwritten offering of 4,236,000 shares of common stock, par value $0.01 per share, of the Company (the “Common Stock”), at a price to the public of $2.65 per share (such offering, the “Offering”).
Under the terms of the Underwriting Agreement, the Company granted the Underwriters a 30-day option to purchase up to 635,400 additional shares of Common Stock (the “Option”), which was exercised in full on January 25, 2025.
The sale of 4,871,400 shares of Common Stock (including the full 635,400 Option) in connection with the Offering, closed on January 23, 2025. The Company intends to use the approximately $12.1 million of net proceeds from the Offering, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us, for the development of its recent acquisition in Montana, general corporate purposes, and working capital, or for other purposes that our board of directors, in their good faith, deems to be in the best interest of the Company. Additionally, management had the ability, pursuant to the terms of the Underwriting Agreement, to use up to the entire amount of proceeds from the Option exercise to purchase shares of Common Stock from Sage Road Capital, LLC (a current shareholder of the Company whose co-manager is Joshua L. Batchelor, a member of the Board of Directors of the Company) or its affiliates at a price up to the public offering price of the Offering, less underwriting discounts, which sale took place in January 2025, as discussed below.
Under the terms of the Underwriting Agreement, the Company and the Company’s directors and executive officers and their affiliates, also agreed not to sell or transfer any Common Stock without first obtaining the written consent of the Representative, subject to certain exceptions (including the Sage Road Purchase, discussed below), for 60 days after January 22, 2025, the date of the final prospectus supplement relating to the Offering.
Related Party Share Repurchase
On January 27, 2025, the Company entered into a Share Repurchase Agreement with Banner Oil & Gas, LLC (“Banner”), Woodford Petroleum, LLC (“Woodford”), and Sage Road Energy II, LP, (“Sage Road”, and together with Banner and Woodford, the “Selling Stockholders”). In his capacity as co-Managing Partner of Sage Road Capital, LLC, which indirectly controls and manages certain funds which own a majority interest in Banner, Woodford and Sage Road, Joshua L. Batchelor, a member of the Board of Directors of the Company, may be deemed to beneficially own the shares of Common Stock held by the Selling Stockholders.
Pursuant to the Share Repurchase Agreement, the Company, in a private transaction, outside of, and separate from the Company’s previously disclosed share repurchase program, on January 27, 2025, repurchased (a) 534,020 shares of Common Stock held by Banner, (b) 41,229 shares of Common Stock held by Woodford, and (c) 60,151 shares of Common Stock held by Sage Road, for an aggregate of $1,574,362 or $2.47775 per share, which is the price per share of the 4,871,400 shares of Common Stock which we sold in our underwritten public offering which closed on January 23, 2025, less underwriting discounts and commissions, and which represented an 8.2% premium to the closing sales price of the Company’s Common Stock on January 27, 2025.
The Share Repurchase Agreement contains customary representations, warranties and covenants of the parties. The share repurchase was approved by the disinterested members of the Board of Directors of the Company, as well as the Company’s Audit Committee, comprised solely of independent directors not affiliated with Mr. Batchelor or the Selling Stockholders.
Debt Repayment
During the year ended December 31, 2024, the Company repaid $7.0 million on its credit facility, bringing the outstanding balance as of December 31, 2024 to $0.0 million. The repayments were primarily funded by the net proceeds from divestitures discussed above.
In 2026 and beyond, we intend to seek additional opportunities in the oil, natural gas and industrial gas sectors, including but not limited to further acquisition of assets, participation with industry partners, and the acquisition of existing companies. We also plan to finalize the detailed engineering of our processing facility and related activities necessary to bring the plant online. These activities include but are not limited to acquiring surface acreage, negotiating rights of way and offtake agreements, designing power infrastructure, and raise capital to fully fund development.
Business Strategy
In 2025 and beyond, we intend to seek additional opportunities in the oil, natural gas and industrial gas sectors, including but not limited to further acquisition of assets, participation with industry partners in exploration and development projects, acquisition of existing companies, and the purchase of other industrial gas assets. We will continue to monetize legacy assets and redeploy capital into our core focus areas. During the first half of 2025 we intend to complete two wells and drill two additional new wells targeting a industrial gas zone. Share repurchases under our approved share repurchase program continued in 2024, and the Board of Directors has extended share repurchase program until June 30, 2026. These repurchases may resume so long as share prices remain attractive and repurchases remain in the best interests of both the Company and its stockholders.
Exploratory wells in progress are excluded from the DD&A calculation until the outcome of the well is determined. Similarly, unproved property costs are initially excluded from the DD&A calculation. Unproved property costs not subject to the DD&A calculation consist primarily of leasehold and seismic costs related to unproved areas. Unproved property costs are transferred into the amortization base on an ongoing basis as the properties are evaluated and proved reserves are established or impairment is determined. Unproved oil and natural gas properties are assessed quarterly for impairment to determine whether we are still actively pursuing the project and whether the project has been proven either to have economic quantities of reserves or that economic quantities of reserves do not exist.
Joint Interest Operations. Until the January 2022 acquisition, the majority of our properties were operated by other companies. Therefore, we relied to a large extent on the operator of the property to provide us with timely and accurate information about the operations of the properties. Revenue statements and joint interest billings from the operators serve as our primary source of information to record revenue, operating expenses and capital expenditures for our properties on a monthly basis. Many of our properties are subject to complex participation and operating agreements where our working interests and net revenue interests are subject to change upon the occurrence of certain events, such as the achievement of “payout.” These calculations may be subject to error and differences of interpretation which can cause uncertainties about the proper amount that should be recorded in our accounting records. When these issues arise, we make every effort to work with the operators to resolve the issues promptly.
Acquisitions. The Company accounts for acquisitions as business combinations if the acquired assets meet the definition of a business. If substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar assets, the acquisition is not considered a business and is accounted for as an asset acquisition. This determination of whether the gross assets acquired are concentrated in a group of similar assets is based on whether the risks associated with managing and creating outputs from the assets are similar.
Stock-Based Compensation. We measure the cost of employee services received in exchange for all equity awards granted, including stock options, based on the fair market value of the award as of the grant date. We recognize the cost of the equity awards over the period during which an employee is required to provide service in exchange for the award, usually the vesting period.
During the year ended December 31, 2025, we recorded a net loss of $14.4 million. The net loss is primarily due to a reduction in revenue of $13.3 million (discussed below), ceiling test impairment of $3.6 million of the Company's oil and gas properties, lower production volumes resulting from cumulative divestments, lower realized sales price for our production and increasing lease operating expense on a BOE basis. During the year ended December 31, 2024, we recorded a net loss of $25.6 million including an $11.9 million ceiling test impairment.
During the year ended December 31, 2024, we recorded a net loss of $25.8 million. The net loss is primarily due to a reduction in revenue of $11.7 million (discussed below), ceiling test write downs of $11.9 million of the Company's oil and gas properties as a result of divestments, lower crude oil and natural gas prices and other reserves revisions since December 31, 2023 and a loss on sale of our East Texas properties of $5.0 million. During the year ended December 31, 2023 we recorded a net loss of $32.4 million.
The decrease in our oil and gas revenue of $11.7$13.3 million for the year ended December 31, 2024,2025, as compared to the year ended December 31, 2023,2024, was due to decreases in both production quantities and commodity prices. The realized price received for our oil production decreased 2%20% and the realized price received for our natural gas production decreasedincreased 10%22% for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023.2024.
For the year ended December 31, 2024,2025, we produced 415,887164,752 BOE, or an average of 1,136451 BOE per day, as compared to 624,420415,887 BOE or 1,7111,136 BOE per day, during the comparable period in 2023.2024. Our oil production decreased 35%56% and our natural gas production decreased 31%67% compared to the prior year period. Production declines were primarily the result of property sales during 20242025 and the sale of substantially all of our non-operated properties in the fourth quarter of 2023. In addition, we experienced temporary weather-related events, such as severe storms, flooding and winter weather at certain of our property locations in Texas and Montana.2024. During the year ended December 31, 2024,2025, our BOE production mix was 68% oil and 32% natural gas and liquids, consistent with 62% oil and 38% natural gas and liquids, consistent with 63% oil and 37% natural gas and liquids induring the comparable period of 2023.2024.
For the year ended December 31, 2025, aggregate lease operating expenses decreased as a result of divestitures in 2025 and 2024. On a per BOE basis, lease operating expense increased $4.57 per BOE produced relative to 2024. The increase in lease operating expense on a per BOE basis is in part due to inflation and due to the fixed cost components of our lease operating expense becoming a larger portion of total costs as we have divested of lower cost properties and a result of natural production declines.
For the year ended December 31, 2024, lease operating expenses were $11.2 million or $26.83 per BOE, a decrease of $4.1 million when compared to the $15.3 million or $24.43 per BOE for the year ended December 31, 2023. The decrease in lease operating expense was due to the divesture of some lower cost properties during 2024 and the divestiture of substantially all of our non-operated properties in the fourth quarter of 2023. In addition, we had lower workover activity on our properties and improved operating efficiencies from integrating and optimizing our oil and natural gas assets acquired in 2022. The increase in lease operating expense on a per BOE basis is due to certain fixed cost components of our lease operating expense which remain for a period after divesting of a property.
Gathering, transportation, and treating costs decreased $352$146 thousand or 63%,71%, for the year ended December 31, 20242025 compared to 2023.2024. The decrease was attributable to the divestitures of operated properties in 20242025 and the sale of substantially all of our non-operating properties in the fourth quarter of 2023.2024.
Production taxes for our properties typically average 7% of revenue. Any change in the production taxes is attributable to revenue changes resulting from changes in production volumes and realized prices year to year.
For the year ended December 31, 2024, production taxes were $1.3 million, a decrease of $0.8 million, or 39%, compared to $2.1 million in the comparable period of 2023. This decrease was attributable to and consistent with the decrease in total revenues of 36%from oil and natural gas properties as discussed above. Production taxes for our properties average 6% of revenue.
Depreciation, Depletion, Accretion and Amortization. DD&A was $3.6 million for the year ended December 31, 2025, compared to $8.3 million for the year ended December 31, 2024. Our depreciation, depletion, and amortization ("DD&A") includes depletion expense on our oil and gas properties, accretion expense fromon our asset retirement obligations, and depreciation expense on our fixed assets. Depletion expenses on our oil and gas properties are the primary driver of DD&A expense making up 87%63% and 89%78% of DD&A expense for the years ended December 31, 20242025 and 2023,2024, respectively. Our depletion rate for the year ended December 31, 2024,2025, was $19.64$21.89 per BOE, compared to $17.99$19.64 per BOE for the year ended December 31, 2023.2024. Our depletion rate can fluctuatefluctuates because of the impact of divestitures, impairments on the full cost pool, but other factors such as acquisitions, changes in drilling and completion costs, impairments, revisions in asset retirement obligation cost estimates or timing, divestitures, changes in the mix of our production, theand underlying proved reserve volumes andcan estimatedalso costs to drill and complete proved undeveloped reserves. DD&A was $8.3 million forimpact the year ended December 31, 2024, compared to $11.2 million for the year ended December 31, 2023.rate.
Impairment of oil and natural gas properties. ImpairmentCeiling test impairment of $11.9$3.6 million during the year ended December 31, 20242025 was driven by ceiling test write-downs of oil and gas propertiesincurred as a result of a decrease in crude oil and natural gas prices, divestments and other reserves revisions since December 31, 2023prices. For the year ended December 31, 2023,2024, the Company recorded ceiling test write-downsimpairment of its oil and natural gas properties of $26.7$11.9 million as a result of a decrease in crude oil and natural gas prices, divestmentsprices and otherthe reduction in reserves revisionsfrom since December 31, 2022.divestitures.
Exploration expense. For the years ended December 31, 2025 and 2024, exploration expense consisted primarily of professional fees and other costs associated with evaluating potential acquisitions, including land title review, regulatory consultations and geological assessments. These costs do not qualify for capitalization under the full cost method and are therefore expensed as incurred. Exploration expense decreased by $139 thousand in 2025 compared to 2024, primarily due to a higher level of acquisition evaluation activity during 2024.
General and administrative expenses decreased by $3.3$132 millionthousand during the year ended December 31, 2024,2025, as compared to the prior year period. Compensation and benefits decreased $1.5$1.3 million due to decreased headcount related toas the divestmentCompany focused on the development of propertiesthe duringindustrial 2024.gas business. Stock-based compensation decreasedincreased $1.0$586 millionthousand primarily due to agrant reductionprices used in the value ofprior employee and director stock-based compensation awards that amortized during 2024,2025. Professional fees, insurance and other expenses decreasedincreased $0.8$557 million,thousand, primarily due to non-recurring accounting, audit, and recruitingprofessional fees recognizedassociated inwith 2023.outsourcing a portion of our accounting function.
Loss on sale of assets. During the year ended December 31, 2025, we recognized a $411 thousand related to the final settlement on our sale of our East Texas properties.
Loss on sale of assets. During the year ended December 31, 2024 we recognized a $5.0 million loss on the sale of our East Texas properties. The Company considered this a significant divestment that would significantly alter the relationship between capitalized costs and proved reserves as the divestiture represented 36% of our reserve volumes and 30% of our reserve value at the date of the divestiture.
Commodity derivative gain (loss), net is the result of changes in derivative fair values associated with fluctuations in forward price curves for the commodities underlying our outstanding derivative contracts and the monthly cash settlements of our derivative positions during the period. On September 10,During 2024, the Company settled all of its then outstanding commodity derivative contracts and received proceeds of $1.8 million. ForAs of and for the year ended December 31, 2024, we recognized gains on2025, the settlementCompany ofhad commodityno derivative contracts of $0.5 million.positions.
Interest expense, net, represents the interest related to our Credit Facility. The decrease in interest expense, net is primarily driven by a decrease in the outstanding principal balance on our credit facility as we have paid down the amount borrowed on the facility with proceeds from the divestments of properties. As of December 31, 2024,2025, we had borrowed $0.0$2.5 million on the credit facility as compared to $5.0 millionzero outstanding as of December 31, 2023. The average interest rate increased to 9.2% per annum for the year ended December 31, 2024, as compared to 8.9% per annum for the year ended December 31, 2023. The balance outstanding on the Credit Facility as of December 31, 2024 was $0.0 million.2024.
Income Tax Benefit (Expense). The Company generated losses for income tax purposes in 2025 and 2024, and any additional net deferred income tax assets were offset by a corresponding valuation allowance.
Income Tax Benefit (Expense). Income tax benefit decreased $0.9 million during the year ended December 31, 2024, as compared to December 31, 2023. This change is almost entirely related to a deferred tax benefit from the reduction of our net deferred tax liability. The change in our net deferred tax liability is primarily related to property and equipment deferred tax liabilities that decreased as a result of the $11.9 million in before tax ceiling test write-downs of our oil and gas properties recognized for the year ended December 31, 2024.
Based on the current commodity price environment and our current working capital, we believe we have sufficient liquidity and capital resources to execute our business plan while continuing to meet our current financial obligations. We continue to manage our commitments in order to maintain flexibility with regard to our activity level and capital expenditures.
During 2026, the Company expects to seek financing in the equity and credit markets to fund the construction of its gas processing plant, production gathering and related utility infrastructure. The estimated cost of this next development phase is approximately $35.0 million. The Company may sell equity under its existing Form S-3 registration statement, and/or sell equity under the purchase agreement with Roth Principal; however, no financing commitments have been secured to date, other than the purchase agreement. Such funding may not be available on favorable terms, or at all, and any equity funding raised may be dilutive to existing stockholders. If the Company is unable to obtain sufficient financing on acceptable terms, the timing or scope of this development phase may be delayed or modified.
We anticipate funding our day-to-day expenditures primarily with cash on hand, operating or investing cash inflows, and if necessary, borrowings under our credit facility or purchase agreement. If readily available sources of cash flow are insufficient to fund our capital needs, we may utilize equity and credit markets as a funding mechanism. In the event we sell equity, such sales may cause dilution to existing stockholders.
All of our sources of liquidity can be affected by the changes in economic conditions, rising interest rates, changes in debt and equity markets, force majeure events, fluctuations in commodity prices, operating costs, tax law changes, and volumes produced, all of which would affect us and our industry.
As described above under “Item 1. Business-Recent Events”, during 2024 we closed on a series of individual divestitures for a total of $14.0 million in net proceeds before transaction costs of $0.4 million. The net proceeds from these divestitures were used to repay the outstanding balance on our credit facility, bringing the balance as of December 31, 2024 to $0.0 million. We also used a portion of the proceeds from the divestitures for the development of our industrial gas properties acquired during 2024. As of December 31, 2024, the Company was in compliance with all financial covenants related to the credit facility.
Over the next year, we anticipate our industrial gas development to cost between $4.0 and $6.5 million on drilling and completing 2 – 4 industrial gas wells, acreage extension payments as well as site and preliminary design for our anticipated industrial gas processing plant and related infrastructure. The total costs depend primarily on the number of industrial gas wells drilled and the timing of construction on an industrial gas processing plant. In addition, depending on timing, regulatory requirements and weather, we plan to incur costs for plugging and abandonment of oil and natural gas wells of approximately $1.0 million. We view much of these capital activities as discretionary for which we can control both the timing and amount of the expenditures. Other activities, such as some repairs and maintenance may be required from time to time by regulatory bodies. We anticipate our expenditures will be funded primarily by cash on hand, operating cash flows, proceeds from divestitures of oil and gas properties, and if necessary, borrowings under our credit facility. In the event that readily available sources of cash flow are insufficient to fund our capital needs, we may utilize equity and credit markets as a funding mechanism. In the event we sell equity, such sales may cause dilution to existing stockholders.
What changed in the latest 10-Q
Risk Factors
Full comparison: every changed paragraph (1)
Risks Associated with theour Helium Sales Agreement
Management's Discussion & Analysis (MD&A)
New heading “Comparison of our Statements of Operations for the Six Months Ended June 30, 2026 and 2025”
Largest changes
“Comparison of our Statements of Operations for the Six Months Ended June 30, 2026 and 2025”see in full comparison
“Depreciation, Depletion and Amortization. Our depreciation, depletion, and amortization (“DD&A”) was $1.2 million and $2.2 million for the six months ended June 30, 2026 and 2025, respectively. Depletion expense on our oil and natural gas properties is the primary driver of DD&A expense. Our depletion rate was $11.38 per BOE and $14.67 per BOE for the six months ended June 30, 2026 and 2025, respectively. …”see in full comparison
“The decrease in our oil and natural gas revenue of $0.5 million for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, was primarily due to a decrease of 29% in production quantities offset primarily by increases in the oil sales price. For the six months ended June 30, 2026, we produced 68,037 BOE, or an average of 376 BOE per day, as compared to 95,824 BOE or an average of 529 BOE per day during the comparable period in 2025. …”see in full comparison
Thesee in full comparisondecreaseincrease in our oil and natural gas revenue of$0.6$0.1 million for the three months endedMarchJune31,30, 2026, as compared to the three months endedMarchJune31,30, 2025, was primarily due to adecrease41%ofincrease27%in oil sales prices offset by a reduction in productionquantities.volumes. For the three months endedMarchJune31,30, 2026, we produced34,29033,747 BOE, or an average of381371 BOE per day, as compared to47,00848,816 BOE or an average of522536 BOE per day during the comparable period in 2025. The decrease in our production quantities primarily relates to the divestitures of our properties in Wyoming and West Texas and the natural decline in production in remaining producing assets.During the three months ended March 31, 2026, our production was 64% oil and 36% natural gas and liquids compared to 64% oil and 36% natural gas and liquids produced during the three months ended March 31, 2025.
General and administrative expenses increased bysee in full comparison$0.7$0.4 million for the three months endedMarchJune31,30, 2026 as compared to the prior year period. The increase was primarily attributable tothe timing ofdiscretionarycompensation,employeewhichcompensationoccurredaccruedduringin thethreecurrentmonthsperiodendedbutMarchnot31,in2026.theProfessionalprior period, equity-based compensation issued to consultants, and higher investor relations expense, partially offset by lower feesdecreasedforprimarilyaccountingdueandtotaxaprofessionalreduction in acquisition-related costs relative to the activityservices in the three months endedMarchJune31,30, 2025.
“General and administrative expenses increased by $1.1 million for the six months ended June 30, 2026 as compared to the prior year period. The increase was primarily attributable to the timing of discretionary compensation, which occurred during the three months ended March 31, 2026. Professional fees decreased primarily due to a reduction in acquisition-related costs relative to the activity in the six months ended June 30, 2025.”see in full comparison
Full comparison: every changed paragraph (42)
Certain capitalized terms used below and otherwise defined below, have the meanings given to such terms in the footnotes to our unaudited Condensed Consolidated Financial Statements included above under “Part I - Financial Information” – “Item 1. Financial StatementsStatements.”.
Unless the context requires otherwise, references to the “Company,” “we,” “us,” “our,” “U.S.Big EnergySky Industrial Inc.”, and “U.S.Big EnergySky Corp.Industrial” refer specifically to U.S.Big EnergySky Corp.Industrial Inc. and its consolidated subsidiaries.
We file annual, quarterly, and current reports, proxy statements and other information with the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC like us at https://www.sec.gov (our filings can be found at https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000101594) and on the “Investors – SEC Filings” page of our website at https://usnrg.com.bigskyindustrialinc.com. Copies of documents filed by us with the SEC are also available from us without charge, upon oral or written request to our Secretary, who can be contacted at the address and telephone number set forth on the cover page of this Report.
U.S.Big EnergySky Corp.Industrial Inc. (collectively with its wholly-owned subsidiaries are referred to as the “Company”) is incorporated in the State of Delaware. The Company’s principal business activities are focused on the acquisition, exploration, and development of industrial gases, oil and natural gas properties in the United States.
During the first quarter of 2026, the Company reached a final investment decision (“FID”) for the construction of its processing facility at the Big Sky Carbon Hub ("Big Sky") in Montana and executed a fixed-scope engineering, procurement and construction agreement, initiating capital deployment for the project. The planned facility is designed with an initial inlet capacity ofup approximatelyto 8.0 MMCF/d, targeting approximately 1214.4 MMCF of annual helium production and 125,000 metric tons of refined CO₂ per year. The Company expects to commence gathering pipeline installation in spring 2026, with commissioning targeted for the third quarter of 2026 and initial gas processing and helium sales and carbon management operations anticipated in 2027.
In anticipation of reaching FID, during threethe six months ended MarchJune 31,30, 2026, the Company generated $17.2 million in proceeds from equity issuances. Additionally, on April 17, 2026, the Company entered into an amendment to its Credit Facility with FirstBank Southwest that among other things, (i) increased the borrowing base from $10.0 million to $20.0 million, (ii) revised the applicable margin on outstanding borrowings to a fixed 2.00% per annum, and (iii) suspended testing of financial covenants through the fiscal quarter ending March 31, 2027. The Credit Facility maturity date remains May 31, 2029.
On April 27, 2026, the Company executed a five-year helium sales agreement with an investment-grade global industrial gas company for the sale of contained helium to be produced at the Company’s Big Sky Carbon Hub in Montana. The Agreement provides for a 100% take-or-pay commitment by the Counterpartycounterparty for up to approximately 1.2 MMCF per month (14.4 MMCF annually) of helium production, with fixed pricing of $285 per MCFMCF, atwhich includes counterparty transport from the plant gate, subject to annual (consumer price index) CPI-based escalation beginning March 1, 2028, and includes a price redetermination mechanism in year three with a right of first refusal.
During the remainder of 2026 and beyond, we intend to pursue opportunities across the industrial gas sector, with a strategic emphasis on the next phase of development and monetization of our helium and carbon dioxide resources. While we willplan to continue to operate oil and gas assets, our primary focus is on maximizing value from associated industrial gases. Our activities may include the acquisition of assets, participation with industry partners in development projects, acquisition of existing companies, and the purchase or development of industrial gas-related assets. Planned operations include construction of processing facilities, negotiating operating arrangements, finalizing gathering and infrastructure designs, and pursuing the use of a portion of produced CO₂ in tertiary recovery operationoperations in our Montana oil operations Key elements of our business strategy include:operations.
Key elements of our business strategy include:
Comparison of our Statements of Operations for the Three Months Ended MarchJune 31,30, 2026 and 2025
For the three months ended MarchJune 31,30, 2026, we recorded a net loss of $3.2$2.3 million, which was primarily due to lower production resulting from divestitures in prior periods. In the following sections, we discuss our revenue, operating expenses, and other income (expense) for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025.
Revenue. Presented below is a comparison of our oil and natural gas sales, production quantities and average sales prices for the three months ended MarchJune 31,30, 2026 and 2025:
The decreaseincrease in our oil and natural gas revenue of $0.6$0.1 million for the three months ended MarchJune 31,30, 2026, as compared to the three months ended MarchJune 31,30, 2025, was primarily due to a decrease41% ofincrease 27%in oil sales prices offset by a reduction in production quantities.volumes. For the three months ended MarchJune 31,30, 2026, we produced 34,29033,747 BOE, or an average of 381371 BOE per day, as compared to 47,00848,816 BOE or an average of 522536 BOE per day during the comparable period in 2025. The decrease in our production quantities primarily relates to the divestitures of our properties in Wyoming and West Texas and the natural decline in production in remaining producing assets. During the three months ended March 31, 2026, our production was 64% oil and 36% natural gas and liquids compared to 64% oil and 36% natural gas and liquids produced during the three months ended March 31, 2025.
Oil and Natural Gas Production Costs. Presented below is a comparison of our oil and natural gas production costs for the three months ended MarchJune 31,30, 2026 and 2025:
For the three months ended MarchJune 31,30, 2026, lease operating expenses were $0.9$1.0 million or $26.54$29.48 per BOE. While lease operating expenses decreased by $0.7$0.5 million when compared to $1.6$1.5 million or $34.57$31.14 per BOE for the three months ended MarchJune 31,30, 2025, the cost on a BOE basis decreased as the mix of properties changed as a result of the divestment of our Wyoming and West Texas properties.
For the three months ended MarchJune 31,30, 2026, production taxes consistently remainremained between 6% and 8% of revenue. This decreaseincrease in production taxes was attributable to the decreaseincrease in revenue of 27%5% during the same period, as discussed above.
Depreciation, Depletion and Amortization. Our depreciation, depletion, and amortization (“DD&A”) was $0.6 million and $1.1 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Depletion expense on our oil and natural gas properties is the primary driver of DD&A expense. Our depletion rate was $10.94$11.83 per BOE and $13.35$10.94 per BOE for the three months ended MarchJune 31,30, 2026 and 2025, respectively. Our depletion rate can fluctuate modestly because of acquisitions, changes in drilling and completion costs, impairments, revisions in asset retirement obligation cost estimates or timing, divestitures, changes in the mix of our production, the underlying proved reserve volumes and estimated future development costs.
General and Administrative Expenses. Presented below is a comparison of our general and administrative expenses for the three months ended MarchJune 31,30, 2026 and 2025:
General and administrative expenses increased by $0.7$0.4 million for the three months ended MarchJune 31,30, 2026 as compared to the prior year period. The increase was primarily attributable to the timing of discretionary compensation,employee whichcompensation occurredaccrued duringin the threecurrent monthsperiod endedbut Marchnot 31,in 2026.the Professionalprior period, equity-based compensation issued to consultants, and higher investor relations expense, partially offset by lower fees decreasedfor primarilyaccounting dueand totax aprofessional reduction in acquisition-related costs relative to the activityservices in the three months ended MarchJune 31,30, 2025.
Other Income (Expense). Presented below is a comparison of our other income (expense) for the three months ended MarchJune 31,30, 2026 and 2025:
Interest expense primarily represents the interest and fees on our credit facility with FirstBank Southwest. Interest expense of $63 thousand dollars were capitalized as part of the industrial gas processing plant construction expenses during the three months ended June 30, 2026. As of December 31, 2025 and June 30, 2026, we had $2.5 million and $4.5 million, respectively outstanding on our credit facility.
Comparison of our Statements of Operations for the Six Months Ended June 30, 2026 and 2025
For the six months ended June 30, 2026, we recorded a net loss of $5.5 million, which was primarily due to lower production resulting from divestitures in prior periods. In the following sections, we discuss our revenue, operating expenses, and other income (expense) for the six months ended June 30, 2026 compared to the six months ended June 30, 2025.
Revenue. Presented below is a comparison of our oil and natural gas sales, production quantities and average sales prices for the six months ended June 30, 2026 and 2025:
The decrease in our oil and natural gas revenue of $0.5 million for the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, was primarily due to a decrease of 29% in production quantities offset primarily by increases in the oil sales price. For the six months ended June 30, 2026, we produced 68,037 BOE, or an average of 376 BOE per day, as compared to 95,824 BOE or an average of 529 BOE per day during the comparable period in 2025. The decrease in our production quantities primarily relates to the divestitures of our properties in Wyoming and West Texas and the natural decline in production in remaining producing assets.
Oil and Natural Gas Production Costs. Presented below is a comparison of our oil and natural gas production costs for the six months ended June 30, 2026 and 2025:
For the six months ended June 30, 2026, lease operating expenses were $1.9 million or $28.01 per BOE. Lease operating expenses decreased by $1.2 million when compared to $3.2 million or $32.82 per BOE for the six months ended June 30, 2025, the cost on a BOE basis decreased as the mix of properties changed as a result of the divestment of our Wyoming and West Texas properties.
For the six months ended June 30, 2026, production taxes consistently remain between 6% and 8% of revenue. This decrease in production taxes was attributable to the decrease in revenue of 11% discussed above.
Exploration expense increased $171 thousand, which was attributable to an increase in exploration activities for our industrial gas development, namely professional services supporting resource estimation and analysis and legal work.
Depreciation, Depletion and Amortization. Our depreciation, depletion, and amortization (“DD&A”) was $1.2 million and $2.2 million for the six months ended June 30, 2026 and 2025, respectively. Depletion expense on our oil and natural gas properties is the primary driver of DD&A expense. Our depletion rate was $11.38 per BOE and $14.67 per BOE for the six months ended June 30, 2026 and 2025, respectively. Our depletion rate can fluctuate modestly because of changes in drilling and completion costs, impairments, revisions in asset retirement obligation cost estimates or timing, divestitures, changes in the mix of our production, the underlying proved reserve volumes and estimated future development costs.
General and Administrative Expenses. Presented below is a comparison of our general and administrative expenses for the six months ended June 30, 2026 and 2025:
General and administrative expenses increased by $1.1 million for the six months ended June 30, 2026 as compared to the prior year period. The increase was primarily attributable to the timing of discretionary compensation, which occurred during the three months ended March 31, 2026. Professional fees decreased primarily due to a reduction in acquisition-related costs relative to the activity in the six months ended June 30, 2025.
Other Income (Expense). Presented below is a comparison of our other income (expense) for the six months ended June 30, 2026 and 2025:
Interest expense primarily represents the interest and fees on our credit facility with FirstBank Southwest. Interest expense of $63 thousand dollars were capitalized as part of the industrial gas processing plant construction expenses during the three months ended June 30, 2026. As of December 31, 2025 and MarchJune 31,30, 2026, we had $2.5 million and $4.5 million, respectively outstanding on our credit facility. For the threesix months ended MarchJune 31,30, 2026, interest expense included interest incurred on the outstanding loan and fees to maintain our credit facility. For the threesix months ended MarchJune 31,30, 2025, we had no amounts outstanding under the credit facility and our interest expense comprised of fees to maintain our credit facility.
Based on the current commodity price environment and our existing working capital, we believe we have sufficient liquidity and capital resources to execute our business plan and meet our current financial obligations. As of MarchJune 31,30, 2026, the Company was in compliance with all financial covenants under its credit facility. We continue to actively manage our capital commitments to maintain flexibility with respect to the timing and level of our development activities and capital expenditures.
For the remainder of 2026, the Company’s capital program is designed to advance the Big Sky project toward initial commercial operations targeted for the first quarter of 2027. We anticipate anthe aggregateremaining aggregate, near-term capital program to range between $28.0$20.0 million and $32.0$25.0 million, primarily related to the construction of our gas processing plant, production gathering system, and related infrastructure at our industrial gas development project. In addition, we may incur up to approximately $0.6$0.5 million for plugging and abandonment activities, depending on regulatory requirements, timing, and weather conditions. We expect these expenditures to be funded through a combination of cash on hand, operating cash flows, proceeds from the divestiture of oil and natural gas properties, borrowings under our credit facility, additional equity issuances, and potential project-specific financing, including equity and debt capital.
For the threesix months ended MarchJune 31,30, 2026, we funded our capital expenditures primarily through cash on hand andhand, proceeds from equity issuances.issuances, and draws on our credit facility. During the period, we generated approximately $17.2 million from equity sales andsales, issuances and had cash and cash equivalents of approximately $10.5$5.9 million, and $15.5 million available under our credit facility as of MarchJune 31,30, 2026.
We use cash primarily for the development of our industrial gas assets, including construction of processing and gathering infrastructure, as well as for operating expenses, general and administrative costs, and debt service obligations. During the threesix months ended MarchJune 31,30, 2026, we spent approximately $4.4$9.6 million on the acquisition and development of industrial gas properties and expect to continue allocating capital to the Big Sky project for the remainder of the year.
The following table summarizes our cash flows for the threesix months ended MarchJune 31,30, 2026 and 2025:
Operating Activities. Cash used in operating activities of $2.5$3.3 million for the threesix months ended MarchJune 31,30, 2026 was mainly due to a $3.2$5.5 million net loss and a reduction of working capital of $0.3$0.2 million andoffset $0.6by $1.2 million of depreciation, depletion, accretion. Cash used by operating activities of $4.5$6.1 million for the threesix months ended MarchJune 31,30, 2025, was mainly due to a net loss of $3.1$9.2 million,million and a reduction of payables of $2.6$3.8 million offset by $1.1$2.2 million of depreciation, depletion, accretion, and amortization.
Investing Activities. Cash used in investing activities for the threesix months ended MarchJune 31,30, 2026 was $4.4$10.1 million as compared to cash used in investing activities of $2.4$4.5 million for the comparable period in 2025. The primary use of cash in our investing activities for the threesix months ended MarchJune 31,30, 2026 was attributable to initial plant construction costs. For the threesix months ended MarchJune 31,30, 2025, the cash investment was primarily attributed to the Synergy acquisition discussed in Note 2 - Acquisitions and Divestitures.
Financing Activities. Cash provided by financing activities for the threesix months ended MarchJune 31,30, 2026 was $16.9$18.9 million as compared to $9.8$9.6 million for the comparable period in 2025. The primary drivers of this cash inflow were equity issuancessales of $17.2 million during the threesix months ended MarchJune 31,30, 2026, compared to $11.9 million in the prior period, which in the prior period were reduced by a related party share repurchase of $1.6 million.
BSIN insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-04-29 | Katla Energy Holdings Llc |
Other | 909,000 | $1.10 | $999.9K |
| 2026-04-29 | Katla Energy Holdings Llc |
Other | 909,000 | $1.10 | $999.9K |
| 2026-04-29 | Katla Energy Holdings Llc |
Other | 1,818,000 | $1.10 | $2.0M |
Well-known investors holding BSIN (13F)
None of the 59 investors we track reported a position in their latest 13F.