MTDR

• The company uses costless collars, three-way collars, and swaps to manage oil, natural gas, and NGL price risk, and occasionally buys calls to offset collar losses in rising markets.
• Costless collars provide downside protection via a purchased put financed by a sold call; three-way collars add upside participation through a purchased call, also financed by a sold call.
• Swap contracts exchange a floating price for a fixed price over a specified period to provide downside protection.
• At June 30, 2026, open positions included costless collars for oil and natural gas, oil call contracts, and natural gas swaps and basis differential swaps; no NGL contracts were open.
• All derivatives are recorded at fair value using comparable trade data and counterparty credit standing.

On July 22, 2025, the New Mexico Environment Department (“NMED”) issued a Notice of Violation to San Mateo alleging possible violations related to excess air emissions from San Mateo’s Black River cryogenic natural gas processing plant in Eddy County, New Mexico. San Mateo and the NMED are in settlement discussions with respect to this matter, and San Mateo expects that the settlement amount will be greater than $300,000 and less than $1,000,000. Accordingly, the Company does not have an expectation of material loss. We are party to several legal proceedings encountered in the ordinary course of business. While the ultimate outcome and impact on us cannot be predicted with certainty, in the opinion of management, it is remote that these legal proceedings will have a material adverse impact on our financial condition, results of operations or cash flows. Except as set forth above, during the three months ended June 30, 2026, there were no material changes regarding the legal proceedings we have disclosed in “Item 3. Legal Proceedings” in the Annual Report.

• Failure to close either the Paloma or Ridge Runner acquisition could materially harm financial condition, operations, and cash flows.
• Closing is uncertain and subject to conditions beyond the company's control, with termination rights that could prevent completion.
• Management time and resources committed to the deals may cause missed opportunities even if the acquisitions fail to close.
• Integration difficulties could prevent realizing expected revenue, cash flows, cost savings, and operating synergies.
• Unknown liabilities and unforeseen expenses or regulatory conditions may arise from the acquisitions.