3 unchanged sentences
Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also impair our business operations.
−Removed: Except with respect to the risk factors set forth below, there have been no material changes to the risk factors disclosed in Part I, Item 1A in the Company’s Annual Report on Form 10-K:
−Removed: Risks Related to the Southern California Pipeline Incident
−Removed: Significant uncertainties exist regarding the extent and timing of costs and liabilities relating to the Incident, and potential changes in the regulatory and operating environment in which we operate resulting from the Incident may increase the risks to which we are exposed.
−Removed: The duration of such uncertainties may exist for a significant period and such risks may have a material adverse impact on our business, results of operations and financial condition and the implementation of our strategic agenda.
−Removed: Furthermore, the risks associated with the Incident may heighten the consequences of other risks to which we are exposed, including with respect to access to financing and financial assurance.
−Removed: We may be subject to significant clean-up requirements as a result of the Incident and it is not currently possible to estimate the cost of such requirements.
−Removed: Remediation operations relating to the Incident are ongoing, and the extent, timing and cost of such operations, including any potential long-term environmental impact of the Incident and related remediation operations, is difficult to project.
−Removed: However, the costs of such remediation operations arising from the Incident may be material and could impact our business, our results of operations and could put pressure on our liquidity position going forward.
−Removed: We are subject to significant litigation and enforcement risk as a result of the Incident.
−Removed: Under the OPA 90, the Company’s pipeline was designated by the United States Coast Guard as the source of the oil discharge and therefore the Company is financially responsible for remediation and for certain costs and economic damages as provided for in OPA 90.
−Removed: The Company is currently processing covered claims under OPA 90 as expeditiously as possible.
−Removed: At this time, it is not possible to estimate the total number of future claims or the full extent of compensable damages arising from the Incident.
−Removed: In addition, we and certain of our subsidiaries have been named as defendants in approximately 14 lawsuits (including approximately 13 putative class actions) pending in the United States District Court for the Central District of California.
−Removed: The Company expects that the 13 putative class actions will be consolidated into a single consolidated action.
−Removed: As of October 31, 2021, there have been no responsive pleadings filed, discovery schedules ordered, or trial dates set.
−Removed: Additional actions are likely to be brought.
−Removed: Resolution of these cases may take considerable time, and it is not possible at this time to estimate our potential liability resulting from these actions.
−Removed: Federal, state and municipal authorities may also to take enforcement action against us as a result of the Incident.
−Removed: To date, the U.S.
−Removed: Coast Guard, the U.S.
−Removed: Bureau of Ocean Energy Management, the U.S.
−Removed: Department of Justice, the U.S.
−Removed: Department of Transportation Pipeline and Hazardous Materials Safety Administration, the U.S.
−Removed: Department of the Interior Bureau of Safety and Environmental Enforcement, the California Department of Justice, the Orange County District Attorney and the California Department of Fish & Wildlife are conducting investigations or examinations of the Incident.
−Removed: Other federal agencies may or have commenced investigations and proceedings, and federal agencies such as the U.S.
−Removed: Environmental Protection Agency are expected to initiate enforcement actions seeking penalties and other relief under the Clean Water Act and other statutes.
−Removed: The outcomes of these investigations and the nature of any remedies pursued will depend on the discretion of the relevant authorities and may result in regulatory or other enforcement actions, as well as civil and criminal liability.
−Removed: Our potential liabilities resulting from pending and future claims, lawsuits and enforcement actions relating to the Incident, together with the potential cost of implementing remedies sought in the various proceedings, cannot be fully estimated at this time but they may have a material adverse impact on our business, results of operations and financial condition and the implementation of our strategic agenda.
−Removed: For further information, please see Note 14, “Commitments and Contingencies — Litigation and Environmental” of the Notes to Unaudited Condensed Consolidated Financial Statements and Item 1.
−Removed: “Legal Proceedings” included in this quarterly report.
−Removed: We may be subject to increased regulatory scrutiny as a result of the Incident.
−Removed: The Incident may result in more stringent regulation of oil and gas activities in federal waters off California and elsewhere, particularly relating to environmental and health and safety protection controls, oversight of oil and gas operations and required financial assurance.
−Removed: Regulatory or legislative action may impact the industry as a whole and could be directed specifically towards operators similarly situated to us.
−Removed: New regulations and legislation, as well as evolving practices, may increase the cost of compliance, require changes to our operations and strategic plans and impact our ability to capitalize on our assets.
−Removed: The Incident may impact our ability to access financing on acceptable terms and may materially impact our liquidity.
−Removed: The reputational consequences of the Incident, ongoing concerns surrounding costs arising from the Incident, ongoing contingencies related to the Incident and the impact of the Incident on our liquidity and financial performance, could increase our financing costs and limit our access to financing on acceptable terms.
−Removed: Our ability to engage in trading activities may also be impacted due to counterparty concerns about our financial and business risk profile following the Incident.
−Removed: Such counterparties may require that we provide collateral or other forms of financial security for their obligations.
−Removed: Certain counterparties for our non-trading businesses may also require that we provide collateral for certain contractual obligations.
−Removed: In addition we may be unable to access liquidity under our Revolving Credit Facility in the event there are pending or threatened legal, arbitration or administrative proceedings which, if determined adversely, might reasonably be expected to have a material adverse effect on our ability to meet the payment obligations under our Revolving Credit Facility.
−Removed: Extended constraints on our ability to obtain financing and to engage in trading activities on acceptable terms (or at all) may put pressure on our liquidity.
−Removed: In addition, this could occur at a time when cash flows from our business operations may be constrained.
−Removed: In order to address severe liquidity constraints we could be required to further reduce capital expenditures, sell strategic assets or obtain financing on terms that could have a significant adverse effect on stockholder returns and the implementation of our strategic plans.
−Removed: We may not have adequate insurance to compensate us, and our insurers may not pay particular claims.
−Removed: We currently maintain insurance that covers against certain of the losses and expenses associated with the Incident.
−Removed: However, we cannot guarantee that our insurance policies will cover all losses that we incur in connection with the Incident, or that disputes over insurance claims will not arise with our insurance carriers.
−Removed: Additionally, the insurers may not pay particular claims or may take an extended period of time to do so.
−Removed: In addition, our insurance policies are subject to limitations and exclusions, which may increase our costs or lower our revenues, thereby possibly having a material adverse effect on our business, results of operations and financial condition.
−Removed: Finally, we cannot guarantee that we will be able to renew our insurance policies on the same or commercially reasonable terms, or at all, in the future.
−Removed: The shut-in of the pipeline could negatively impact our production, liquidity, and, ultimately, our operations, results, and performance
−Removed: Our production depends, in part, upon our assets that are capable of commercial production not being shut-in (i.e., suspended from production).
−Removed: In response to the Incident, we have shut-in the pipeline impacted by the Incident and the Beta field, which has decreased our overall production volumes.
−Removed: This decrease in production will impact our ability to generate cash flows from operations, and we will experience a reduction in our available liquidity, which may adversely affect our ability to meet our anticipated working capital, debt service, and other liquidity needs.
−Removed: The Incident has created significant risk to our reputation and has diverted, and will continue to divert, the attention of our management team.
−Removed: The Incident has damaged our reputation, which may have a long-term impact on us.
−Removed: Adverse public, political and industry sentiment towards us, and oil and gas activities generally, could damage or impair our existing commercial relationships with counterparties, partners and governmental agencies and could impair our access to new investment opportunities, operatorships or other essential commercial arrangements with potential partners and governmental agencies.
−Removed: In addition, responding to the Incident may place a significant burden on our cash flow, which could also impede our ability to invest in new opportunities and deliver long-term growth.
−Removed: In addition, our response to the Incident has required significant management focus.
−Removed: Key management and operating personnel are, and will need to continue, devoting substantial attention to respond to the Incident and to address the associated consequences for us, leaving them less time to devote to executing our strategic plans.
−Removed: In addition, we rely on recruiting and retaining high quality employees to execute our strategic plans and to operate our business.
−Removed: The Incident response has placed significant demands on our employees, and the reputational damage suffered by us as a result of the Incident and any consequent adverse impact on our business could affect employee recruitment and retention.
+Added: There have been no material changes to the risk factors since those disclosed in our 2021 Form 10-K.
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