Refer to Note 11—Commitments and Contingencies under Part I, Item 1 of this Quarterly Report for more information regarding our legal proceedings. Environmental. Due to the nature of the oil and gas industry, we are exposed to environmental risks. We have various policies and procedures to minimize and mitigate the risks from environmental contamination and we conduct periodic reviews to identify changes in our environmental risk profile. Liabilities are recorded when environmental damages resulting from events are probable and the costs can be reasonably estimated. Item 103 of Regulation S-K promulgated under the Exchange Act requires disclosure regarding certain proceedings arising under federal, state or local environmental laws when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions that the Company reasonably believes will exceed a specified threshold. Pursuant to such item, we have elected to use a $1 million threshold for purposes of determining whether disclosure of any such proceedings is required. We believe proceedings under this threshold are not material to our business and financial condition. In connection with the merger with Earthstone Energy, Inc. (“Earthstone”), we assumed a liability related to potential environmental defects that were identified through diligence reviews associated with Earthstone’s previous acquisition of Novo Oil & Gas Legacy Holdings, LLC, Novo Intermediate, LLC and Novo Oil & Gas Holdings, LLC (collectively “Novo”). We have received a Tolling Agreement for Novo’s alleged violations but have not yet received a Notice of Violation (“NOV”). At this time, these violations are expected to result in a penalty that will be finalized upon issuance of the NOV; while the Company cannot predict the ultimate outcome of this matter, the potential for penalties or settlement costs could exceed $1 million. The Company does not believe that this matter will have a material adverse effect on its business, financial position, results of operations, or cash flows. We are not aware of any other material environmental claims existing as of June 30, 2026, over our threshold which have not been provided for or would otherwise have a material impact on our financial statements; however, there can be no assurance that current regulatory requirements will not change or that unknown potential past non-compliance with environmental laws or other environmental liabilities will not be discovered on our properties.