Vital Energy, Inc. Unaudited Pro Forma Condensed Combined Financial Information

Tall City Acquisition: As previously disclosed in its Current Report on Form 8-K filed on November 6, 2023 with the United States Securities and Exchange Commission (the “SEC”), on November 6, 2023, Vital Energy completed the acquisition of certain oil and natural gas properties located in the Delaware Basin from Tall City Property Holdings III LLC and Tall City Operations III LLC.

▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇: As previously disclosed in its Current Report on Form 8-K filed on November 6, 2023 with the SEC, on November 5, 2023, Vital Energy completed the acquisition of approximately 93% of the working interests in certain oil and natural gas properties located in Midland and Delaware basins from ▇▇▇▇▇ Energy LP, ▇▇▇▇▇ Resources LLC and ▇▇▇▇▇▇ ▇▇▇▇▇ Partners LLC.

Maple Acquisition: As previously disclosed in its Current Report on Form 8-K filed on November 6, 2023 with the SEC, on October 31, 2023, Vital Energy completed the acquisition of certain oil and natural gas properties from Maple Energy Holdings, LLC .

Forge Acquisition: As previously disclosed in its Current Report on Form 8-K filed on June 30, 2023 with the SEC, on June 30, 2023, Vital Energy and Northern Oil and Gas, Inc. (“NOG”) completed the acquisition of the assets of Forge Energy II Delaware, LLC. Vital Energy acquired an undivided 70% interest in Forge’s oil and natural gas properties located in the Delaware Basin in Ward, ▇▇▇▇▇▇ and Pecos Counties, and NOG acquired the remaining undivided 30% interest.

Driftwood Acquisition: As previously disclosed in its Current Report on Form 8-K filed on April 3, 2023 with the SEC, on April 3, 2023, Vital Energy completed the acquisition of interests in oil and natural gas leases and related property located in the Midland Basin from Driftwood Energy Operating, LLC.

The audited consolidated financial statements and accompanying notes of Vital Energy contained in Vital Energy’s Annual Report on Form 10-K for the year ended December 31, 2023;

The unaudited condensed financial statements and accompanying notes contained in Vital Energy’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2024;

The audited consolidated financial statements and related notes of Point as of December 31, 2023 and 2022 and for the years then ended, which are included elsewhere in this filing;

The unaudited condensed financial statements and related notes of Point as of June 30, 2024, and for the six month periods ended June 30, 2024 and 2023, which are included elsewhere in this filing; and

The unaudited pro forma condensed combined financial information of Vital Energy for the year ended December 31, 2023, which are incorporated by reference from Exhibit 99.2 to Vital Energy’s Annual Report on Form 10-K for the year ended December 31, 2023.

Assets

Current assets:

Cash and cash equivalents

Cash

Accounts receivable, net

Accounts receivable

Accounts receivable - related party

Derivatives

Other current assets

Other assets

Total current assets

Property and equipment:

Oil and natural gas properties, full cost method:

Evaluated properties

Unevaluated properties not being depleted

Less: accumulated depletion and impairment

Oil and natural gas properties, net

Midstream and other fixed assets, net

Oil and natural gas properties, at cost, using the full cost method of accounting proved property

Other property and equipment

Less accumulated depletion and depreciation

Property and equipment, net

Derivatives

Non-current derivative assets

Operating lease right-of-use assets

Right of use assets

Deferred income taxes

Linefill inventory

Other noncurrent assets, net

Total assets

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable and accrued liabilities

Accounts payable

Accrued capital expenditures

Accrued expenses

Undistributed revenue and royalties

Royalty payable

Derivatives

Current derivative liabilities

Operating lease liabilities

Current operating lease liabilities

Other current liabilities

Line-of-credit - net

Total current liabilities

Long-term debt, net

Derivatives

Asset retirement obligations

Operating lease liabilities

Non-current derivative liabilities

Derivative financial instrument

Non-current operating lease liabilities

Deferred Income

Other noncurrent liabilities

Total liabilities

Commitments and contingencies

Stockholders’ equity:

Common stock

Additional paid-in capital

Accumulated deficit

Members’ equity

Total stockholders’ equity

Total liabilities and stockholders’ equity

Revenues:

Oil sales

NGL sales

Natural gas sales

Oil and natural gas sales

Salt water disposal sales

Realized loss on derivatives

Unrealized loss on derivatives

Other operating revenues

Total revenues

Costs and expenses:

Lease operating expenses

Workover costs

Production and ad valorem taxes

Oil transportation and marketing expenses

Gas gathering, processing, and transportation expenses

Costs of purchased oil

General and administrative

Depletion, depreciation and amortization

Depletion and depreciation expense

Accretion expense

Other operating expenses, net

Total costs and expenses

Gain on disposal of assets, net

Operating income (loss)

Non-operating income (expense):

Loss on derivatives, net

Interest expense

Loss on extinguishment of debt, net

Other income, net

Right of use asset lease expense—operating leases

Total non-operating income (expense), net:

Income (loss) before income taxes

Income tax benefit (expense)

Net income (loss)

Preferred stock dividends

Income (loss) available to common shareholders

Net income (loss) per common share:

Basic

Diluted

Weighted-average common shares outstanding:

Basic

Diluted

Revenues:

Oil sales

NGL sales

Natural gas sales

Oil and natural gas sales, net

Salt water disposal sales

Realized loss on derivatives

Unrealized gain on derivatives

Sales of purchased oil

Water disposal fees and pipeline income

Other operating revenues

Total revenues

Costs and expenses:

Lease operating expenses

Workover expenses

Production and ad valorem taxes

Oil transportation and marketing expenses

Gas gathering, processing and transportation expenses

Costs of purchased oil

General and administrative

Organizational restructuring expenses

Depletion, depreciation and amortization

Depletion and depreciation expense

Accretion expense

Other operating expenses, net

Total costs and expenses

Gain on disposal of assets, net

Operating income

Non-operating income (expense):

Gain (loss) on derivatives, net

Interest expense

Loss on extinguishment of debt, net

Other income, net

Right of use asset lease expense—operating leases

Total non-operating income (expense), net

Income before income taxes

Income tax benefit (expense)

Net income

Preferred stock dividends

Net income available to common stockholders

Net income per common share:

Basic

Diluted

Weighted-average common shares outstanding:

Basic

Diluted

Vital Energy’s historical statement of operations for the year ended December 31, 2023, as shown in the table above, includes the effects of pro forma adjustments for the 2023 Acquisitions as presented in Exhibit 99.2 to Vital Energy’s Annual Report on Form 10-K for the year ended December 31, 2023, and incorporated by reference into these unaudited pro forma condensed combined financial statements.

Basis of Presentation

Consideration and Purchase Price Allocation

Consideration:

Cash consideration

Closing adjustments

Total cash consideration

Direct transaction costs

Total consideration

Relative fair value of assets acquired:

Oil and natural gas properties, full cost method:

Evaluated properties

Unevaluated properties

Other assets

Operating right-of-use assets

Amount attributable to assets acquired

Fair value of liabilities assumed:

Suspended revenues

Asset retirement obligations

Other liabilities

Operating lease liabilities

Amount attributable to liabilities assumed

Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet and Unaudited Pro Forma Condensed Combined Statements of Operations

Adjustment to remove assets and liabilities not acquired as part of the Point Acquisition as well as associated historical book equity.

Adjustment to conform Point’s historical presentation of the assets and liabilities acquired as part of the Point Acquisition to the presentation by Vital Energy.

Adjustment to eliminate the historical book value and accumulated depreciation, depletion and amortization of Point’s oil and natural gas properties as of June 30, 2024.

Zero net impact to cash as a result of the Point Acquisition. Borrowings under the senior secured credit facility of $830.9 million were used to fund consideration paid to the seller of $815.2 million and direct transaction costs of $15.7 million.

Adjustment to reflect the fair value of other assets and liabilities assumed in the Point Acquisition.

Adjustment to reflect the fair value of the oil and natural gas properties acquired in the Point Acquisition.

Adjustment to reflect the fair value of the right of use operating leases acquired in the Point Acquisition.

Adjustment to record the fair value of line fill inventory acquired in the Point Acquisition.

Adjustment to record new borrowings under the Company’s senior secured credit facility related to the cash consideration used in the Point Acquisition.

Adjustment to reflect the fair value of the asset retirement obligations assumed with the Point Acquisition.

Adjustments to conform Point’s historical presentation of these line items to the presentation by Vital Energy.

Adjustment to remove the historical amount of Point’s depletion and depreciation expense.

Adjustment to remove historical accretion expense of Point associated with asset retirement obligations and recalculate accretion expense based upon estimated fair value.

Adjustment to remove Point’s historical interest expense.

Adjustments necessary to remove the historical revenues, gains, expenses and losses associated with the 20% undivided interest acquired by NOG in the oil and natural gas properties of Point.

Represents depreciation, depletion, and amortization expense resulting from the change in basis of property and equipment acquired as a result of the Point Acquisition. The depletion adjustment was calculated using the unit-of-production method under the full cost method of accounting using estimated proved reserves and production volumes attributable to the acquired assets.

Adjustment to reflect the estimated interest expense in the periods presented with respect to the incremental borrowings on the Company’s senior secured credit facility necessary to finance the Point Acquisition. The interest rate utilized as of June 30, 2024, was 7.694% for incremental borrowings. A one-eighth percent increase or decrease in the interest rate would have changed interest expense by $0.5 million and $1.0 million for the six months ended June 30, 2024 and year ended December 31, 2023, respectively.

The adjustment pertains to estimated income tax considerations associated with the Point Acquisition. This entity was previously held within a flow-through structure, making it exempt from federal income taxes. Income tax expense for the Point Acquisition are recorded at an effective tax rate of 21.5%.

The following table provides a reconciliation between basic and diluted net income for the six months ended June 30, 2024 and year ended December 31, 2023 (in thousands, except per share amounts):

Net income (loss)

Less: Preferred dividends

Net income (loss) available to common shareholders

Weighted-average common shares outstanding:

Basic

Dilutive non-vested restricted stock

Dilutive non-vested performance awards

Dilutive preferred stock

Diluted

Net income (loss) per share:

Basic

Diluted

Estimated proved developed reserves:

Oil (MBbl)

Natural gas (MMcf)

Natural gas liquids (MBbl)

Total equivalent reserves (Mboe)²

Estimated proved undeveloped reserves:

Oil (MBbl)

Natural gas (MMcf)

Natural gas liquids (MBbl)

Total equivalent reserves (Mboe)²

Estimated proved reserves:

Oil (MBbl)

Natural gas (MMcf)

Natural gas liquids (MBbl)

Total equivalent reserves (Mboe)²

Adjustment necessary to remove the historical reserves associated with the 20% undivided interest acquired by NOG in the oil and natural gas properties of Point.

BOE is calculated using a conversion rate of six Mcf per one Bbl.

Oil and natural gas producing activities:

Future cash inflows

Future production costs

Future development costs

Future income tax expense