Name: Phoenix Energy One, LLC Segments Disclosure
Creator: Phoenix Energy One, LLC
License: https://creativecommons.org/publicdomain/mark/1.0/

Note 18. Segments

Segment operating profit is used as a performance metric by the CODM in determining how to allocate resources and assess performance as this measure provides insight into the segments’ operations and overall success of a segment for a given period. Segment operating profit is calculated as total segment revenue less operating costs attributable to the segment, which includes allocated corporate costs that are overhead in nature and not directly associated with the segments, such as certain general and administrative expenses, executive or shared-function payroll costs and certain limited marketing activities. Corporate costs are allocated to the segments based on usage and headcount, as appropriate. Segment operating profit excludes other income and expense, such as interest expense, interest income, gain (loss) on derivatives, loss on debt extinguishments, even though these amounts are allocated to the segments and provided to the CODM. Transactions between segments are accounted for on an accrual basis and are eliminated upon consolidation. Interest expense is allocated to the segments based on the carrying value of the oil and gas properties owned by the respective segment at the balance sheet date, and interest income and gain (loss) on derivatives are allocated using the same basis as corporate costs.

The following table summarizes segment operating profit and reconciliation to net income (loss) for the periods presented:


	Year Ended December 31,
(in thousands)	2025			2024			2023
Segment operating profit
Operating	$	165,031		$	44,145		$	(5,500	)
Mineral and Non-operating		27,038			43,499			49,018
Securities		123,738			86,781			28,961
Eliminations		(140,232	)		(102,030	)		(40,492	)
Total segment operating profit		175,575			72,395			31,987
Interest income		1,653			705			66
Interest expense		(161,214	)		(90,210	)		(47,882	)
Gain (loss) on derivatives		52,846			(5,986	)		(32	)
Loss on debt extinguishments		(2,752	)		(1,697	)		(328	)
Net income (loss)	$	66,108			(24,793	)		(16,189	)

The following tables present financial information by segment as of December 31, 2025 and 2024, and for the years ended December 31, 2025, 2024, and 2023.


	Year Ended December 31,
(in thousands)	2025			2024			2023
Significant expenses
Operating
Cost of sales	$	131,385		$	33,847		$	507
Depreciation, depletion, and amortization		140,174			35,370			35
Purchased crude oil expenses		111,254			—			—
Selling, general, and administrative		2,107			6,215			2,786
Payroll and payroll-related		11,794			8,550			3,157
Other segment item(a)		—			—			240
Mineral and Non-operating
Cost of sales	$	24,172		$	30,236		$	19,265
Depreciation, depletion, and amortization		37,739			50,607			34,193
Selling, general, and administrative		18,308			14,362			6,813
Payroll and payroll-related		14,546			13,303			6,399
Other segment items(b)		3,421			1,128			1,214
Securities
Advertising and marketing	$	1,971		$	679		$	3,656
Selling, general, and administrative		5,634			8,590			4,715
Payroll and payroll-related		9,451			6,081			3,177
Interest expense
Operating	$	63,199		$	26,428		$	7,194
Mineral and Non-operating		98,015			63,782			40,688
Securities		140,232			102,030			40,492
Eliminations		(140,232	)		(102,030	)		(40,492	)
Total interest expense, net	$	161,214		$	90,210		$	47,882
Capital expenditures
Operating	$	624,104		$	252,074		$	47,376
Mineral and Non-operating		260,370			352,358			231,285
Eliminations		(40,976	)		(166,729	)		—
Total capital expenditures	$	843,498		$	437,703		$	278,661

(a)

Other segment items include advertising and marketing expense.

(b)

Other segment item includes advertising and marketing expense, loss on sale of assets, and impairment expense.


	December 31,
(in thousands)	2025			2024
Assets
Operating	$	892,224		$	332,721
Mineral and Non-operating		1,342,251			898,300
Securities		5,384			6,918
Eliminations		(433,090	)		(208,869	)
Total assets	$	1,806,769		$	1,029,070

The following tables summarize the Company’s oil and natural properties by proved and unproved properties, location and by segment (before accumulated depletion):


	December 31, 2025
(in thousands)	Operating		Mineral and Non-operating		Securities		Eliminations		Consolidated Total
Oil and natural gas properties, proved
Williston Basin	$	993,215	$	245,463	$	—	$	—	$	1,238,678
Powder River Basin		—		52,623		—		—		52,623
Denver-Julesburg		—		47,060		—		—		47,060
Permian Basin		—		20,429		—		—		20,429
Marcellus		—		1,306		—		—		1,306
Uinta Basin		—		42,247		—		—		42,247
Other		—		1,691		—		—		1,691
Total proved properties	$	993,215	$	410,819	$	—	$	—	$	1,404,034
Oil and natural gas properties, unproved
Williston Basin	$	7,433	$	386,492	$	—	$	—	$	393,925
Powder River Basin		—		36,084		—		—		36,084
Denver-Julesburg		—		34,857		—		—		34,857
Permian Basin		—		6,679		—		—		6,679
Uinta Basin		—		43,768		—		—		43,768
Other		—		2,071		—		—		2,071
Total unproved properties	$	7,433	$	509,951	$	—	$	—	$	517,384


	December 31, 2024
(in thousands)	Operating		Mineral and Non-operating		Securities		Eliminations		Consolidated Total
Oil and natural gas properties, proved
Williston Basin	$	351,864	$	184,740	$	—	$	—	$	536,604
Powder River Basin		—		47,780		—		—		47,780
Denver-Julesburg		—		45,193		—		—		45,193
Permian Basin		—		20,050		—		—		20,050
Marcellus		—		1,306		—		—		1,306
Uinta Basin		—		34,731		—		—		34,731
Other		—		1,702		—		—		1,702
Total proved properties	$	351,864	$	335,502	$	—	$	—	$	687,366
Oil and natural gas properties, unproved
Williston Basin	$	7,300	$	209,437	$	—	$	—	$	216,737
Powder River Basin		—		29,853		—		—		29,853
Denver-Julesburg		—		35,619		—		—		35,619
Permian Basin		—		6,752		—		—		6,752
Uinta Basin		—		28,045		—		—		28,045
Other		—		1,849		—		—		1,849
Total unproved properties	$	7,300	$	311,555	$	—	$	—	$	318,855

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About Segments Disclosures

Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.

Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.

Phoenix Energy One, LLC Segments Disclosure

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