4.Property, Plant and Equipment

Property, plant and equipment (“PP&E”) is stated at cost, less accumulated depreciation. Depreciation is calculated on a straight-line basis over the estimated useful service life of the asset.

PP&E consists of the following:

​

​

Accrued PP&E additions totaled $45.5 million and $26.4 million at June 30, 2023 and December 31, 2022, respectively.

Asset Exchanges

No asset exchanges were completed during the six months ended June 30, 2023.

During the six months ended June 30, 2022, we completed multiple nonmonetary transactions. The transactions included exchanges of wells, facilities, permits and other assets. The total net book value of the

divested assets and liabilities was $3.8 million. The acquired assets were recorded at a total fair value of $3.2 million, which resulted in a total pre-tax loss of $0.6 million.

Assets Held for Sale and Asset Impairment

During the three months ended June 30, 2023, management entered into a non-binding letter of intent with a third party to sell certain of our assets. These assets met the criteria for classification as assets held for sale and are included as such on the condensed consolidated balance sheet at June 30, 2023. No impairment was recorded on these assets when they were classified as held for sale as their fair value exceeds their carrying value. The assets are no longer being depreciated. During the three months ended June 30, 2023, we received a $1.8 million deposit related to the anticipated sale, which is included in “Accrued and Other Current Liabilities” on the condensed consolidated balance sheet at June 30, 2023. The sale is anticipated to close in the third quarter of 2023.

During the first quarter of 2022, management committed to a plan to sell certain of our assets located in the Midland Basin and determined that these assets met all the criteria for classification as assets held for sale. These assets were re-measured at their fair values less costs to sell, which resulted in the recognition of pre-tax impairment expense of $15.6 million during the first quarter of 2022. We estimated the fair value of the assets using indicative bids, which were representative of a Level 2 fair value measurement, and we ceased recording depreciation on the assets. During the third quarter of 2022, we closed the sale of these assets for proceeds of $7.4 million and recorded a gain of $0.1 million.

Abandoned Assets

No assets were abandoned during the six months ended June 30, 2023.

During the second quarter of 2022, management determined that two previously acquired saltwater disposal wells (“SWD wells”) were no longer economically beneficial to the operations of the Company due to required workover costs and determined that the SWD wells should be shut-in and taken out of service. Also during the second quarter of 2022, management removed the cost of a well that was under construction in Texas. The well had encountered technical difficulties during the drilling phase and progress on the well was stopped. Accordingly, the costs and the associated accumulated depreciation related to these wells were removed and are included in “Abandoned Well Costs” in the condensed consolidated statements of operations for the three and six months ended June 30, 2022.