SEC Filing | Matador Resources Company

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mtdr-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

________________________________________________________

FORM 10-Q

_________________________________________________________


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-35410

_________________________________________________________

Matador Resources Company

(Exact name of registrant as specified in its charter)

_________________________________________________________


Texas			27-4662601
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

5400 LBJ Freeway, Suite 1500 Dallas, Texas			75240
(Address of principal executive offices)			(Zip Code)

(972) 371-5200

(Registrant’s telephone number, including area code)

_________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

MTDR

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of July 26, 2022, there were 118,118,082 shares of the registrant’s common stock, par value $0.01 per share, outstanding.

Table of Contents

MATADOR RESOURCES COMPANY

FORM 10-Q

FOR THE QUARTER ENDED JUNE 30, 2022

TABLE OF CONTENTS


			Page
PART I — FINANCIAL INFORMATION			3
Item 1. Financial Statements — Unaudited			3
Condensed Consolidated Balance Sheets at June 30 , 2022 and December 31, 2021			3
Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30 , 2022 and 2021			4
Condensed Consolidated Statements of Changes in Shareholders’ Equity for the Three and Six Months Ended June 30 , 2022 and 2021			5
Condensed Consolidated Statements of Cash Flows for the Six Months Ended Ju ne 30 , 2022 and 2021			7
Notes to Condensed Consolidated Financial Statements			8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			23
Item 3. Quantitative and Qualitative Disclosures About Market Risk			42
Item 4. Controls and Procedures			43
PART II — OTHER INFORMATION			44
Item 1. Legal Proceedings			44
Item 1A. Risk Factors			44
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			44
Item 6. Exhibits			45
SIGNATURES			46

Table of Contents

Part I — FINANCIAL INFORMATION

Item 1. Financial Statements — Unaudited

Matador Resources Company and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS — UNAUDITED

(In thousands, except par value and share data)


	June 30, 2022		December 31, 2021
ASSETS
Current assets
Cash	$	230,394	$	48,135

Restricted cash	51,889		38,785
Accounts receivable
Oil and natural gas revenues	328,758		164,242
Joint interest billings	102,646		48,366
Other	26,965		28,808
Derivative instruments	3,861		1,971


Lease and well equipment inventory	13,179		12,188
Prepaid expenses and other current assets	43,235		28,810
Total current assets	800,927		371,305
Property and equipment, at cost
Oil and natural gas properties, full-cost method
Evaluated	6,352,486		6,007,325
Unproved and unevaluated	971,185		964,714
Midstream properties	1,011,017		900,979
Other property and equipment	30,871		30,123
Less accumulated depletion, depreciation and amortization	(4,261,984)		(4,046,456)
Net property and equipment	4,103,575		3,856,685
Other assets


Other long-term assets	59,374		34,163

Total assets	$	4,963,876	$	4,262,153
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	39,526	$	26,256
Accrued liabilities	226,306		253,283
Royalties payable	150,898		94,359

Amounts due to affiliates	15,476		27,324
Derivative instruments	63,338		16,849
Advances from joint interest owners	18,931		18,074



Income taxes payable	38,170		—
Other current liabilities	56,494		28,692
Total current liabilities	609,139		464,837
Long-term liabilities
Borrowings under Credit Agreement	—		100,000
Borrowings under San Mateo Credit Facility	420,000		385,000
Senior unsecured notes payable	900,261		1,042,580
Asset retirement obligations	38,392		41,689


Deferred income taxes	235,534		77,938

Other long-term liabilities	18,499		22,721
Total long-term liabilities	1,612,686		1,669,928
Commitments and contingencies (Note 9)
Shareholders’ equity

Common stock - $0.01 par value, 160,000,000 shares authorized; 118,201,399 and 117,861,923 shares issued; and 118,130,068 and 117,850,233 shares outstanding, respectively	1,182		1,179
Additional paid-in capital	2,090,564		2,077,592
Retained earnings (accumulated deficit)	439,780		(171,318)
Treasury stock, at cost, 71,331 and 11,945 shares, respectively	(2,356)		(243)
Total Matador Resources Company shareholders’ equity	2,529,170		1,907,210
Non-controlling interest in subsidiaries	212,881		220,178
Total shareholders’ equity	2,742,051		2,127,388
Total liabilities and shareholders’ equity	$	4,963,876	$	4,262,153

The accompanying notes are an integral part of these financial statements.

Table of Contents

Matador Resources Company and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS — UNAUDITED

(In thousands, except per share data)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenues
Oil and natural gas revenues	$	892,769	$	412,074	$	1,519,284	$	728,307
Third-party midstream services revenues	21,886		19,850		39,192		35,288
Sales of purchased natural gas	60,008		10,918		79,347		15,428

Realized loss on derivatives	(61,163)		(42,611)		(83,602)		(68,524)
Unrealized gain (loss) on derivatives	30,430		(42,804)		(44,599)		(86,227)
Total revenues	943,930		357,427		1,509,622		624,272
Expenses
Production taxes, transportation and processing	85,658		43,843		145,477		78,017
Lease operating	39,857		28,752		73,812		54,691
Plant and other midstream services operating	22,014		13,746		41,475		27,409
Purchased natural gas	56,440		9,628		73,461		12,483
Depletion, depreciation and amortization	120,024		91,444		215,877		166,307
Accretion of asset retirement obligations	517		511		1,060		1,011

General and administrative	24,431		24,397		54,164		46,585
Total expenses	348,941		212,321		605,326		386,503
Operating income	594,989		145,106		904,296		237,769
Other income (expense)
Net loss on asset sales and impairment	—		—		(198)		—
Interest expense	(18,492)		(17,940)		(34,744)		(37,590)

Other (expense) income	(4,342)		14		(4,486)		(661)
Total other expense	(22,834)		(17,926)		(39,428)		(38,251)
Income before income taxes	572,155		127,180		864,868		199,518
Income tax provision
Current	36,261		—		51,670		—
Deferred	99,699		5,349		152,818		8,189
Total income tax provision	135,960		5,349		204,488		8,189
Net income	436,195		121,831		660,380		191,329
Net income attributable to non-controlling interest in subsidiaries	(20,477)		(15,926)		(37,538)		(24,779)
Net income attributable to Matador Resources Company shareholders	$	415,718	$	105,905	$	622,842	$	166,550
Earnings per common share
Basic	$	3.52	$	0.91	$	5.28	$	1.43
Diluted	$	3.47	$	0.89	$	5.20	$	1.40
Weighted average common shares outstanding
Basic	118,103		116,801		118,027		116,804
Diluted	119,903		118,993		119,857		118,617

The accompanying notes are an integral part of these financial statements.

Table of Contents

Matador Resources Company and Subsidiaries

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY — UNAUDITED

(In thousands)

For the Three and Six Months Ended June 30, 2022


												Total shareholders’ equity attributable to Matador Resources Company


														Non-controlling interest in subsidiaries		Total shareholders’ equity
	Common Stock			Additional paid-in capital	Retained earnings (accumulated deficit)		Treasury Stock
	Shares	Amount							Shares	Amount
Balance at January 1, 2022	117,862	$	1,179		$	2,077,592	$	(171,318)	12	$	(243)	$	1,907,210	$	220,178	$	2,127,388
Dividends declared ($0.05 per share)	—	—			—		(5,866)		—	—		(5,866)		—		(5,866)
Issuance of common stock pursuant to employee stock compensation plan	205	2			(11,536)		—		—	—		(11,534)		—		(11,534)




Stock-based compensation expense related to equity-based awards including amounts capitalized	—	—			4,344		—		—	—		4,344		—		4,344
Stock options exercised, net of options forfeited in net share settlements	24	—			(585)		—		—	—		(585)		—		(585)



Restricted stock forfeited	—	—			—		—		12	(66)		(66)		—		(66)


Contribution related to formation of San Mateo, net of tax of $4.8 million (see Note 6)	—	—			17,973		—		—	—		17,973		—		17,973


Distributions to non-controlling interest owners of less-than-wholly-owned subsidiaries	—	—			—		—		—	—		—		(18,375)		(18,375)

Current period net income	—	—			—		207,124		—	—		207,124		17,061		224,185
Balance at March 31, 2022	118,091	$	1,181		$	2,087,788	$	29,940	24	$	(309)	$	2,118,600	$	218,864	$	2,337,464
Dividends declared ($0.05 per share)	—	—			—		(5,878)		—	—		(5,878)		—		(5,878)
Issuance of common stock pursuant to employee stock compensation plan	10	—			—		—		—	—		—		—		—



Issuance of common stock pursuant to directors’ and advisors’ compensation plan	25	—			—		—		—	—		—		—		—
Stock-based compensation expense related to equity-based awards including amounts capitalized	—	—			5,383		—		—	—		5,383		—		5,383
Stock options exercised, net of options forfeited in net share settlements	75	1			(2,607)		—		—	—		(2,606)		—		(2,606)



Restricted stock forfeited	—	—			—		—		47	(2,047)		(2,047)		—		(2,047)




Distributions to non-controlling interest owners of less-than-wholly-owned subsidiaries	—	—			—		—		—	—		—		(26,460)		(26,460)


Current period net income	—	—			—		415,718		—	—		415,718		20,477		436,195
Balance at June 30, 2022	118,201	$	1,182		$	2,090,564	$	439,780	71	$	(2,356)	$	2,529,170	$	212,881	$	2,742,051

The accompanying notes are an integral part of these financial statements.

Table of Contents

Matador Resources Company and Subsidiaries

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY — UNAUDITED

(In thousands)

For the Three and Six Months Ended June 30, 2021


												Total shareholders’ equity attributable to Matador Resources Company


														Non-controlling interest in subsidiaries		Total shareholders’ equity
	Common Stock			Additional paid-in capital	Accumulated deficit		Treasury Stock
	Shares	Amount							Shares	Amount
Balance at January 1, 2021	116,847	$	1,169		$	2,027,069	$	(741,705)	2	$	(3)	$	1,286,530	$	226,495	$	1,513,025
Dividends declared ($0.025 per share)	—	—			—		(2,913)		—	—		(2,913)		—		(2,913)
Issuance of common stock pursuant to employee stock compensation plan	3	—			—		—		—	—		—		—		—



Issuance of common stock pursuant to directors’ and advisors’ compensation plan	9	—			—		—		—	—		—		—		—
Stock-based compensation expense related to equity-based awards including amounts capitalized	—	—			1,477		—		—	—		1,477		—		1,477
Stock options exercised, net of options forfeited in net share settlements	13	—			—		—		—	—		—		—		—



Restricted stock forfeited	—	—			(219)		—		90	(1,501)		(1,720)		—		(1,720)


Contribution related to formation of San Mateo (see Note 6)	—	—			15,376		—		—	—		15,376		—		15,376


Distributions to non-controlling interest owners of less-than-wholly-owned subsidiaries	—	—			—		—		—	—		—		(14,210)		(14,210)
Current period net income	—	—			—		60,645		—	—		60,645		8,853		69,498
Balance at March 31, 2021	116,872	$	1,169		$	2,043,703	$	(683,973)	92	$	(1,504)	$	1,359,395	$	221,138	$	1,580,533
Dividends declared ($0.025 per share)	—	—			—		(2,913)		—	—		(2,913)		—		(2,913)
Issuance of common stock pursuant to employee stock compensation plan	138	1			(1)		—		—	—		—		—		—



Issuance of common stock pursuant to directors’ and advisors’ compensation plan	73	1			(1)		—		—	—		—		—		—
Stock-based compensation expense related to equity-based awards including amounts capitalized	—	—			2,289		—		—	—		2,289		—		2,289
Stock options exercised, net of options forfeited in net share settlements	40	—			—		—		—	—		—		—		—



Restricted stock forfeited	—	—			(425)		—		38	(739)		(1,164)		—		(1,164)


Contribution related to formation of San Mateo (see Note 6)	—	—			16,250		—		—	—		16,250		—		16,250

Distributions to non-controlling interest owners of less-than-wholly-owned subsidiaries	—	—			—		—		—	—		—		(14,700)		(14,700)
Current period net income	—	—			—		105,905		—	—		105,905		15,926		121,831
Balance at June 30, 2021	117,123	$	1,171		$	2,061,815	$	(580,981)	130	$	(2,243)	$	1,479,762	$	222,364	$	1,702,126

The accompanying notes are an integral part of these financial statements.

Table of Contents

Matador Resources Company and Subsidiaries

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS — UNAUDITED

(In thousands)


	Six Months Ended June 30,
	2022		2021
Operating activities
Net income	$	660,380	$	191,329
Adjustments to reconcile net income to net cash provided by operating activities
Unrealized loss on derivatives	44,599		86,227
Depletion, depreciation and amortization	215,877		166,307
Accretion of asset retirement obligations	1,060		1,011

Stock-based compensation expense	7,077		2,650

Deferred income tax provision	152,818		8,189
Amortization of debt issuance cost and other debt-related costs	1,206		1,655
Net loss on asset sales and impairment	198		—

Changes in operating assets and liabilities
Accounts receivable	(211,023)		(78,900)
Lease and well equipment inventory	(829)		(437)
Prepaid expenses and other current assets	(14,717)		(4,483)
Other long-term assets	227		91
Accounts payable, accrued liabilities and other current liabilities	30,492		34,345
Royalties payable	56,539		16,207
Advances from joint interest owners	857		2,017


Income taxes payable	38,170		—
Other long-term liabilities	(7,675)		1,387
Net cash provided by operating activities	975,256		427,595
Investing activities
Drilling, completion and equipping capital expenditures	(389,893)		(210,725)
Acquisition of oil and natural gas properties	(73,114)		(15,356)
Midstream capital expenditures	(28,310)		(25,092)
Acquisition of midstream assets	(75,816)		—
Expenditures for other property and equipment	(283)		(245)
Proceeds from sale of assets	46,412		296






Net cash used in investing activities	(521,004)		(251,122)
Financing activities
Purchase of senior unsecured notes	(142,404)		—
Repayments of borrowings under Credit Agreement	(300,000)		(240,000)
Borrowings under Credit Agreement	200,000		40,000
Repayments of borrowings under San Mateo Credit Facility	(70,000)		(34,000)
Borrowings under San Mateo Credit Facility	105,000		52,500
Cost to amend credit facilities	(506)		(830)






Dividends paid	(11,744)		(5,826)
Contributions related to formation of San Mateo	22,750		31,626

Distributions to non-controlling interest owners of less-than-wholly-owned subsidiaries	(44,835)		(28,910)
Taxes paid related to net share settlement of stock-based compensation	(16,852)		(2,884)

Other	(298)		(324)
Net cash used in financing activities	(258,889)		(188,648)
Increase (decrease) in cash and restricted cash	195,363		(12,175)
Cash and restricted cash at beginning of period	86,920		91,383
Cash and restricted cash at end of period	$	282,283	$	79,208

Supplemental disclosures of cash flow information (Note 10)

The accompanying notes are an integral part of these financial statements.

Table of Contents

Matador Resources Company and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

UNAUDITED

NOTE 1 — NATURE OF OPERATIONS

Matador Resources Company, a Texas corporation (“Matador” and, collectively with its subsidiaries, the “Company”), is an independent energy company engaged in the exploration, development, production and acquisition of oil and natural gas resources in the United States, with an emphasis on oil and natural gas shale and other unconventional plays. The Company’s current operations are focused primarily on the oil and liquids-rich portion of the Wolfcamp and Bone Spring plays in the Delaware Basin in Southeast New Mexico and West Texas. The Company also operates in the Eagle Ford shale play in South Texas and the Haynesville shale and Cotton Valley plays in Northwest Louisiana. Additionally, the Company conducts midstream operations in support of the Company’s exploration, development and production operations and provides natural gas processing, oil transportation services, oil, natural gas and produced water gathering services and produced water disposal services to third parties.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Interim Financial Statements, Basis of Presentation, Consolidation and Significant Estimates

The interim unaudited condensed consolidated financial statements of the Company have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) but do not include all of the information and footnotes required by generally accepted accounting principles in the United States of America (“U.S. GAAP”) for complete financial statements and should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 28, 2022 (the “Annual Report”). The Company consolidates certain subsidiaries and joint ventures that are less than wholly-owned and are not involved in oil and natural gas exploration, including its midstream joint venture, San Mateo Midstream, LLC (collectively with its subsidiaries, “San Mateo”), and the net income and equity attributable to the non-controlling interest in these subsidiaries have been reported separately as required by Accounting Standards Codification, Consolidation (Topic 810). The Company proportionately consolidates certain joint ventures that are less than wholly-owned and are involved in oil and natural gas exploration. All intercompany accounts and transactions have been eliminated in consolidation. In management’s opinion, these interim unaudited condensed consolidated financial statements include all normal, recurring adjustments that are necessary for a fair presentation of the Company’s interim unaudited condensed consolidated financial statements as of June 30, 2022. Amounts as of December 31, 2021 are derived from the Company’s audited consolidated financial statements included in the Annual Report.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates and assumptions may also affect disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company’s interim unaudited condensed consolidated financial statements are based on a number of significant estimates, including oil and natural gas revenues, accrued assets and liabilities, stock-based compensation, valuation of derivative instruments, deferred tax assets and liabilities and oil and natural gas reserves. The estimates of oil and natural gas reserves quantities and future net cash flows are the basis for the calculations of depletion and impairment of oil and natural gas properties, as well as estimates of asset retirement obligations and certain tax accruals. While the Company believes its estimates are reasonable, changes in facts and assumptions or the discovery of new information may result in revised estimates. Actual results could differ from these estimates.

Table of Contents

Matador Resources Company and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

UNAUDITED — CONTINUED

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — Continued

Revenues

The following table summarizes the Company’s total revenues and revenues from contracts with customers on a disaggregated basis for the three and six months ended June 30, 2022 and 2021 (in thousands).


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenues from contracts with customers	$	974,663	$	442,842	$	1,637,823	$	779,023

Realized loss on derivatives	(61,163)		(42,611)		(83,602)		(68,524)
Unrealized gain (loss) on derivatives	30,430		(42,804)		(44,599)		(86,227)
Total revenues	$	943,930	$	357,427	$	1,509,622	$	624,272


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Oil revenues	$	650,233	$	315,114	$	1,110,355	$	528,393
Natural gas revenues	242,536		96,960		408,929		199,914
Third-party midstream services revenues	21,886		19,850		39,192		35,288
Sales of purchased natural gas	60,008		10,918		79,347		15,428
Total revenues from contracts with customers	$	974,663	$	442,842	$	1,637,823	$	779,023

Property and Equipment

The Company uses the full-cost method of accounting for its investments in oil and natural gas properties. Under this method, the Company is required to perform a ceiling test each quarter that determines a limit, or ceiling, on the capitalized costs of oil and natural gas properties based primarily on the after-tax estimated future net cash flows from oil and natural gas properties using a 10% discount rate and the arithmetic average of first-day-of-the-month oil and natural gas prices for the prior 12-month period. For both the three and six months ended June 30, 2022, the cost center ceiling was higher than the capitalized costs of oil and natural gas properties, and, as a result, no impairment charge was necessary.

The Company capitalized approximately $10.4 million and $9.2 million of its general and administrative costs and approximately $0.8 million and $1.9 million of its interest expense for the three months ended June 30, 2022 and 2021, respectively. The Company capitalized approximately $23.6 million and $18.7 million of its general and administrative costs and approximately $4.4 million and $2.5 million of its interest expense for the six months ended June 30, 2022 and 2021, respectively.

Earnings Per Common Share

The Company reports basic earnings attributable to Matador shareholders per common share, which excludes the effect of potentially dilutive securities, and diluted earnings attributable to Matador shareholders per common share, which includes the effect of all potentially dilutive securities unless their impact is anti-dilutive.

Table of Contents

Matador Resources Company and Subsidiaries

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS —

UNAUDITED — CONTINUED

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — Continued

The following table sets forth the computation of diluted weighted average common shares outstanding for the three and six months ended June 30, 2022 and 2021 (in thousands).


	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Weighted average common shares outstanding
Basic	118,103	116,801	118,027	116,804
Dilutive effect of options and restricted stock units	1,800	2,192	1,830	1,813
Diluted weighted average common shares outstanding	119,903	118,993	119,857	118,617

A total of 0.5 million and 1.5 million options to purchase shares of Matador’s common stock were excluded from the diluted weighted average common shares outstanding for the three and six months ended June 30, 2021, respectively, because their effects were anti-dilutive.

NOTE 3 — ASSET RETIREMENT OBLIGATIONS

The following table summarizes the changes in the Company’s asset retirement obligations for the six months ended June 30, 2022 (in thousands).


Beginning asset retirement obligations	$	41,959
Liabilities incurred during period	1,291
Liabilities settled during period	(1,168)

Divestitures during period	(4,302)
Accretion expense	1,060
Ending asset retirement obligations	38,840
Less: current asset retirement obligations(1)	(448)
Long-term asset retirement obligations	$	38,392

_______________

(1)Included in accrued liabilities in the Company’s interim unaudited condensed consolidated balance sheet at June 30, 2022.

NOTE 4 — DEBT

At June 30, 2022, the Company had (i) $906.0 million of outstanding senior notes due 2026 (the “Notes”), (ii) no borrowings outstanding under its reserves-based revolving credit facility (the “Credit Agreement”) and (iii) approximately $45.6 million in outstanding letters of credit issued pursuant to the Credit Agreement. During the first quarter of 2022, the $7.5 million unsecured U.S. Small Business Administration loan was forgiven under the terms of the loan agreement and recorded as a gain on the extinguishment of debt within “Other expense” on the unaudited condensed consolidated statement of operations. During the second quarter of 2022, the Company repaid the remaining $50.0<