Executive Summary

Q2 2025 delivered record oil and total sales volumes (14,511 Bo/d; 21,295 Boe/d), Adjusted EBITDA of $51.5M, and a company-record $24.8M Adjusted Free Cash Flow, driven by PDP/Lime Rock outperformance and disciplined capex ($16.8M) despite an 11% QoQ decline in realized pricing per Boe .
EPS materially beat Street (S&P Global) on cost control and hedge gains: Diluted EPS $0.10 vs consensus $0.03; revenue was roughly in line/marginally below; Adjusted EBITDA modestly above consensus* .
Guidance tightened: FY25 capex midpoint reduced from $154M (initial) to $97M, LOE 2H midpoint lowered to $11.50/Boe; Q3 2025 sales guidance set at 19.2–21.2K Boe/d (66% oil) .
Strategic focus: maximize FCF and accelerate deleveraging; credit facility extended to June 2029 with $585M borrowing base, enhancing liquidity amid volatile prices .

What Went Well and What Went Wrong

What Went Well
- Record volumes and cash generation: “oil sales set a new Company record… and record Adjusted Free Cash Flow of $24.8 million” (CEO) .
- Operating cost execution: LOE $10.45/Boe, 9% below guidance low end; all-in cash operating costs $21.51/Boe, down QoQ .
- Balance sheet actions: $12M debt repaid; liquidity $137.0M at quarter-end; credit facility extended to 2029 and margin reduced .
What Went Wrong
- Pricing headwinds: realized price per Boe fell 11% QoQ and 23% YoY; realized oil price fell 11% QoQ and 22% YoY, pressuring revenue .
- Leverage uptick: LTM leverage ratio increased to 2.05x from 1.90x in Q1 (reflecting acquisition timing/price environment), above 2024 lows .
- Interest expense rose QoQ to $11.8M (+24%) partly on higher average borrowings before repayments, trimming net margin .

Metric	Q2 2024	Q1 2025	Q2 2025
Revenues ($USD)	$99.1M	$79.1M	$82.6M
Diluted EPS ($)	$0.11	$0.05	$0.10
Adjusted EBITDA ($USD)	$66.4M	$46.4M	$51.5M
Adjusted Free Cash Flow ($USD)	$21.4M	$5.8M	$24.8M
Average Daily Sales (Boe/d)	19,786	18,392	21,295
Oil Mix (%)	69%	66%	68%
Realized Price ($/Boe)	$55.06	$47.78	$42.63
LOE ($/Boe)	$10.72	$11.89	$10.45
Leverage Ratio (LTM) (x)	1.59x	1.90x	2.05x

Product mix and KPI detail

KPI	Q2 2024	Q1 2025	Q2 2025
Oil (Bo/d)	13,623	12,074	14,511
NGLs (Bbl/d)	3,346	3,326	3,663
Gas (Mcf/d)	16,905	17,947	18,723
All-in cash operating costs ($/Boe)	$22.09	$24.33	$21.51
Adjusted EBITDA Margin (%)	67%	59%	62%

Metric	Period	Previous Guidance	Current Guidance	Change
Capital Spending ($USD)	FY 2025	$154M midpoint (initial, Mar-2025)	$97M midpoint (range $87–$107M)	Lowered
Capital Spending ($USD)	2H 2025	$48M midpoint (updated May-2025)	$48M midpoint reaffirmed	Maintained
LOE ($/Boe)	2H 2025	$12.00 midpoint (May-2025)	$11.50 midpoint (range $11.00–$12.00)	Lowered
Sales Volumes	Q3 2025	20.5–22.5K Boe/d (Mar-2025 PF outlook)	19.2–21.2K Boe/d; oil 66%	Lowered
Sales Volumes	FY 2025	20.0–22.0K Boe/d; oil 66% (Mar-2025)	Mgmt reaffirms ~20K Boe/d midpoint in slides	Maintained trend

Topic	Previous Mentions (Q4 2024 and Q1 2025)	Current Period (Q2 2025)	Trend
Cost discipline (LOE, all-in cash costs)	FY24 all-in cash costs down 2% YoY; LOE midpoint at $10.89/Boe	LOE $10.45/Boe; LOE guidance cut for 2H	Improving
Capital allocation and FCF	FY25 plan funded by ops; debt paydown priority	Capex slashed; record AFCF; focus on deleveraging	More defensive
Hedging/commodity management	FY25 ~2.4MM bbl oil hedged; gas collars/swaps	Bal 2025 ~1.3MM bbl oil floors avg $64.87; 2026 ~2.3MM bbl floors $65.44	Stable/extended
Lime Rock acquisition integration	Closed Mar-31; >40 locations; <$40/bbl breakeven	First full quarter benefits; production/FCF uplift	Accretive
Balance sheet/liquidity	YE24 liquidity $217M; leverage 1.66x	Liquidity $137M; leverage 2.05x; facility extended to 2029	Mixed: lower liquidity but extended facility

Note: The Q2 2025 earnings call transcript was not available in our document set; themes drawn from the press release and earnings slides .

“We reduced our second quarter capex by 48% over the previous quarter… Our lease operating expense of $10.45 per Boe… is why we reduced our LOE/Boe guidance by $0.50 for the last half of the year… we generated a record of $24.8 million in Adjusted Free Cash Flow for the quarter despite an 11% reduction in realized pricing per Boe as compared to Q1” — Paul D. McKinney, CEO .
“This quarter underscores… the ability to swiftly adapt to changing market conditions while delivering consistent shareholder value, even in low-price environments… we are prioritizing debt reduction” — Paul D. McKinney .

The Q2 2025 earnings call transcript was not available in our sources. The company held its call on Aug 7, 2025 and provided updated slides covering performance and guidance .

Metric	S&P Global Consensus	Actual	Result
EPS (Primary, $)	0.03*	0.10	Bold beat
Revenue ($USD)	$82.9M*	$82.6M	In line to slight miss
EBITDA ($USD)	$49.7M*	$51.5M Adjusted EBITDA	Beat (definition note)

Values retrieved from S&P Global*. Note: EBITDA consensus is based on S&P Global; company reports Adjusted EBITDA — definition differences may exist.

Drivers of the beat/miss:

EPS/EBITDA beat: stronger volumes, lower LOE/all-in cash costs, and unrealized hedge gains (+$14.0M) versus Q1 supported margins .
Revenue modestly below consensus: realized price per Boe declined 11% QoQ and 23% YoY, partly offset by volume gains .

Execution trumps price: volume records and cost reductions sustained EBITDA/FCF despite lower realized prices; this underpins deleveraging and supports equity rerating potential in firmer price tapes .
Guidance now optimized for FCF and debt paydown: FY25 capex midpoint cut to $97M and LOE lowered; near-term catalysts include Q3 volumes delivery and continued debt reduction .
Hedging buffers downside: sizable oil floors and extended tenor provide cash flow stability into 2026 .
Watch leverage trajectory: LTM leverage moved to 2.05x; management targets further repayments; extended facility maturity (2029) reduces refinancing risk .
Operational inventory intact: Lime Rock adds >40 San Andres locations with <$40/bbl breakevens; strong vertical and horizontal performance supports medium-term growth at low capital intensity .