2 unchanged sentences
In that case, we might not be able to make distributions on our common units, the trading price of our common units could decline, and holders of our units could lose all or part of their investment.
−Removed: The COVID-19 pandemic and the effect on our financial condition, results of operations, and cash distributions to unitholders will depend on future developments, which are highly uncertain and cannot be predicted.
−Removed: The COVID-19 pandemic has adversely affected the global economy, disrupted global supply chains and created significant volatility in the financial markets.
−Removed: In addition, the pandemic has resulted in travel restrictions, business closures and the institution of quarantining and other restrictions on movement in many communities.
−Removed: With widespread availability of vaccines, the U.S.
−Removed: Centers for Disease Control and Prevention has revised its guidance, travel restrictions have started to lift, and businesses have reopened.
−Removed: However, the COVID-19 pandemic continues to evolve and the extent to which our operating and financial results will continue to be affected will depend on various factors beyond our control, such as the duration, severity, and sustained geographic resurgence of the virus;
−Removed: the emergence of new variants;
−Removed: and the success of actions to contain the virus and its variants, or treat its impact.
−Removed: The impact of the COVID-19 pandemic has negatively affected the oil and natural gas business environment, primarily by causing a reduction in commercial activity and travel worldwide thereby lowering energy demand.
−Removed: This, in turn, resulted in
−Removed: periods of significantly lower market prices for oil, natural gas, and natural gas liquids.
−Removed: While we use derivative instruments to partially mitigate the impact of commodity price volatility, our revenues and operating results depend significantly upon the prevailing prices for oil and natural gas.
−Removed: Commodity prices improved in late 2020 and fully recovered in 2021, causing many of our operators to resume their drilling and completion activity on our acreage.
−Removed: However, the current business environment remains uncertain and a reversal of these improvements may materially and adversely affect our financial condition, results of operations, and cash distributions to unitholders.
−Removed: The price environment in 2020 resulting from the COVID-19 pandemic, including the sharp decline in oil prices that began in March 2020, caused us to determine that certain depletable units consisting of mature oil producing properties were impaired as of March 31, 2020.
−Removed: Therefore, we recognized impairment of oil and natural gas properties of $51.0 million in the first quarter of 2020.
−Removed: Additionally, the borrowing base under the Credit Facility (as defined below) takes into consideration the estimated loan value of our oil and natural gas properties.
−Removed: Effective November 3, 2020, the borrowing base redetermination reduced the borrowing base from $430.0 million to $400.0 million.
−Removed: The April and October 2021 borrowing base redeterminations reaffirmed the borrowing base at $400.0 million.
−Removed: The next borrowing base redetermination is scheduled for April 2022.
−Removed: In a prolonged period of low commodity prices, we may be required to impair additional properties and the borrowing base under our Credit Facility could be further reduced.
−Removed: We enter into derivative instruments to partially mitigate the impact of commodity price volatility on our cash generated from operations.
−Removed: Any declines in production or production forecasts in light of the COVID-19 pandemic could limit our ability to hedge future volumes.
−Removed: To protect the health and well-being of our workforce in the wake of COVID-19, we have maintained remote work arrangements for all employees.
−Removed: To the extent circumstances require us to maintain remote work arrangements indefinitely, our operational efficiency could be adversely affected, which could in turn adversely affect our financial condition and results of operations.
−Removed: The extent to which the COVID-19 pandemic adversely affects our business, results of operations, and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic.
Cash Distributions
27 unchanged sentences
• trading in oil and natural gas derivative contracts;
−Removed: • the level of consumer product demand;
+Added: • the level of consumer product demand, including as a result of global pandemics similar to COVID-19;
• weather conditions and natural disasters;
3 unchanged sentences
military operations in the Middle East;
+Added: • global geopolitical conflict, including the ongoing war in Ukraine and the relationships between the United States and other countries, such as China and Russia;
• the proximity, cost, availability, and capacity of oil and natural gas pipelines and other transportation facilities;
4 unchanged sentences
Year Ended December 31, 2022
−Removed: During the Five Years Prior to 2021 As of December 31,
+Added: During the Five Years Prior to 2022
+Added: As of December 31,
+Added: High Low High 2
2022 2021 2020
3 unchanged sentences
9.85 3.46 23.86 1.33 3.52 3.82 2.36
−Removed: 2 High price for Henry Hub was due to temporary supply and demand imbalances caused by the February 2021 winter storm.
−Removed: 3 High prices for WTI and Henry Hub were in 2018.
+Added: 2 High prices for WTI and Henry Hub were in 2022 and 2021, respectively.
3 Low prices for WTI and Henry Hub were in 2020.
15 unchanged sentences
The changes in the price of oil have been caused by many factors, including periods of increasing U.S.
−Removed: oil production from unconventional (shale) reserves, periods of investment restraint from U.S.
+Added: oil production
+Added: from unconventional (shale) reserves, periods of investment restraint from U.S.
oil and natural gas producers, actions taken by members of the Organization of the Petroleum Exporting Countries and its broader partners ("OPEC+"), and recent fluctuations in demand as a result of the COVID-19 pandemic.
1 unchanged sentence
In addition, sustained low prices for oil may negatively impact the value of our estimated proved reserves and the amount that we are allowed to borrow under our Credit Facility and reduce the amounts of cash we would otherwise have available to pay expenses, fund capital expenditures, make distributions to our unitholders, and service our indebtedness.
−Removed: See "—Covid-19— The COVID-19 pandemic has adversely affected our business, and the ultimate effect on our financial condition, results of
−Removed: operations, and cash distributions to unitholders will depend on future developments, which are highly uncertain and cannot be predicted.”
Approximately 56% of our 2022 oil and natural gas revenues were derived from natural gas and natural gas liquids sales.
8 unchanged sentences
In addition, sustained low prices for natural gas may negatively impact the value of our estimated proved reserves and the amount that we are allowed to borrow under our Credit Facility and reduce the amounts of cash we would otherwise have available to pay expenses, make distributions to our unitholders, and service our indebtedness.
−Removed: See "—Covid-19— The COVID-19 pandemic has adversely affected our business, and the ultimate effect on our financial condition, results of operations, and cash distributions to unitholders will depend on future developments, which are highly uncertain and cannot be predicted.”
−Removed: Our failure to successfully identify, complete, and integrate acquisitions could adversely affect our growth, results of operations, and cash distributions to unitholders.
−Removed: We depend partly on acquisitions to grow our reserves, production, and cash generated from operations.
−Removed: Our decision to acquire a property will depend in part on the evaluation of data obtained from production reports and engineering studies, geophysical and geological analyses and seismic data, and other information, the results of which are often inconclusive and subject to various interpretations.
−Removed: The successful acquisition of properties requires an assessment of several factors, including:
−Removed: • recoverable reserves;
−Removed: • future oil and natural gas prices and their applicable differentials;
−Removed: • development plans;
−Removed: • operating costs;
−Removed: • potential environmental and other liabilities.
−Removed: The accuracy of these assessments is inherently uncertain and we may not be able to identify attractive acquisition opportunities.
−Removed: In connection with these assessments, we perform a review of the subject properties that we believe to be generally consistent with industry practices.
−Removed: Our review will not reveal all existing or potential problems nor will it permit us to become sufficiently familiar with the properties to assess fully their deficiencies and capabilities.
−Removed: Inspections may not always be performed on every well, if applicable, and environmental problems, such as groundwater contamination, are not necessarily observable even when an inspection is undertaken.
−Removed: Even when problems are identified, the seller may be unwilling or unable to provide effective contractual protection against all or part of the problems.
−Removed: Even if we do identify attractive acquisition opportunities, we may not be able to complete the acquisition or do so on commercially acceptable terms.
−Removed: There is intense competition for acquisition opportunities in our industry.
−Removed: Competition for acquisitions may increase the cost of, or cause us to refrain from, completing acquisitions.
−Removed: Our ability to complete acquisitions is dependent upon, among other things, our ability to obtain financing.
−Removed: In addition, compliance with regulatory requirements may impose substantial additional obligations on our operators, causing them to expend additional time and resources in compliance activities, and potentially increase our operators’ exposure to penalties or fines for non-compliance with additional legal requirements.
−Removed: Further, the process of integrating acquired assets may involve unforeseen difficulties and may require a disproportionate amount of our managerial and financial resources.
−Removed: No assurance can be given that we will be able to identify suitable acquisition opportunities, negotiate acceptable terms, obtain financing for acquisitions on acceptable terms, or successfully acquire identified targets.
−Removed: Our failure to achieve consolidation savings, to integrate the acquired businesses and assets into our existing operations successfully, or to minimize
−Removed: any unforeseen operational difficulties could have a material adverse effect on our financial condition, results of operations, and cash distributions to unitholders.
−Removed: The inability to effectively manage the integration of acquisitions could reduce our focus on subsequent acquisitions and current operations, which, in turn, could negatively impact our growth, results of operations, and cash distributions to unitholders.
−Removed: Any acquisitions of additional mineral and royalty interests that we complete will be subject to substantial risks.
−Removed: Even if we do make acquisitions that we believe will increase our cash generated from operations, these acquisitions may nevertheless result in a decrease in our cash distributions per unit.
−Removed: Any acquisition involves potential risks, including, among other things:
−Removed: • the validity of our assumptions about estimated proved reserves, future production, prices, revenues, capital expenditures, operating expenses, and costs;
−Removed: • a decrease in our liquidity by using a significant portion of our cash generated from operations or borrowing capacity to finance acquisitions;
−Removed: • a significant increase in our interest expense or financial leverage if we incur debt to finance acquisitions;
−Removed: • the assumption of unknown liabilities, losses, or costs for which we are not indemnified or for which any indemnity we receive is inadequate;
−Removed: • mistaken assumptions about the overall cost of equity or debt;
−Removed: • our ability to obtain satisfactory title to the assets we acquire;
−Removed: • an inability to hire, train, or retain qualified personnel to manage and operate our growing business and assets;
−Removed: • the occurrence of other significant changes, such as impairment of oil and natural gas properties, goodwill or other intangible assets, asset devaluation, or restructuring charges.
−Removed: Access to Capital and Financing
−Removed: Acquisitions, funding our non-operated working interests, and our operators’ development activities of our leases will require substantial capital, and we and our operators may be unable to obtain needed capital or financing on satisfactory terms or at all.
−Removed: The oil and natural gas industry is capital intensive.
−Removed: We have made and may make in the future substantial capital expenditures in connection with the acquisition of mineral and royalty interests and, to a lesser extent, participation in our non-operated working interests.
−Removed: To date, we have financed capital expenditures primarily with funding from cash generated by operations, limited borrowings under our Credit Facility, executed farmout agreements, and the issuance of equity securities.
−Removed: In the future, we may restrict distributions to fund acquisitions and participation in our working interests but eventually we may need capital in excess of the amounts we retain in our business or borrow under our Credit Facility.
−Removed: We cannot assure you that we will be able to access external capital on terms favorable to us or at all.
−Removed: If we are unable to fund our capital requirements, we may be unable to complete acquisitions, take advantage of business opportunities, or respond to competitive pressures, any of which could have a material adverse effect on our results of operation and cash distributions to unitholders.
−Removed: Most of our operators are also dependent on the availability of external debt and equity financing sources to maintain their drilling programs.
−Removed: If those financing sources are not available to the operators on favorable terms or at all, then we expect the development of our properties to be adversely affected.
−Removed: If the development of our properties is adversely affected, then revenues from our mineral and royalty interests and non-operated working interests may decline.
−Removed: Our Credit Facility has substantial restrictions and financial covenants that may restrict our business and financing activities and our ability to pay distributions.
−Removed: Our Credit Facility limits the amounts we can borrow to a borrowing base amount, as determined by the lenders at their sole discretion based on their valuation of our proved reserves and their internal criteria.
−Removed: The borrowing base is redetermined at least semi-annually, and the available borrowing amount could be decreased as a result of such redeterminations.
−Removed: Decreases in the available borrowing amount could result from declines in oil and natural gas prices, operating difficulties or increased costs, decreases in reserves, lending requirements, or regulations or certain other circumstances.
−Removed: As of December 31, 2021, we had outstanding borrowings of $89.0 million and the aggregate maximum credit amounts of the lenders were $1.0 billion.
−Removed: Our borrowing base determined by the lenders under our Credit Facility in October 2021 is $400.0 million and the next semi-annual redetermination is scheduled for April 2022.
−Removed: A future decrease in our borrowing base could be substantial and could be to a
−Removed: level below our then-outstanding borrowings.
−Removed: Outstanding borrowings in excess of the borrowing base are required to be repaid in five equal monthly payments, or we are required to pledge other oil and natural gas properties as additional collateral, within 30 days following notice from the administrative agent of the new or adjusted borrowing base.
−Removed: If we do not have sufficient funds on hand for repayment, we may be required to seek a waiver or amendment from our lenders, refinance our Credit Facility, or sell assets, debt, or equity.
−Removed: We may not be able to obtain such financing or complete such transactions on terms acceptable to us or at all.
−Removed: Failure to make the required repayment could result in a default under our Credit Facility, which could materially adversely affect our business, financial condition, results of operations, and distributions to our unitholders.
−Removed: The operating and financial restrictions and covenants in our Credit Facility restrict, and any future financing agreements likely will restrict, our ability to finance future operations or capital needs, engage in, expand, or pursue our business activities, or pay distributions.
−Removed: Our Credit Facility restricts, and any future Credit Facility likely will restrict, our ability to:
−Removed: • incur indebtedness;
−Removed: • grant liens;
−Removed: • make certain acquisitions and investments;
−Removed: • enter into hedging arrangements;
−Removed: • enter into transactions with our affiliates;
−Removed: • make distributions to our unitholders;
−Removed: • enter into a merger, consolidation, or sale of assets.
−Removed: Our Credit Facility restricts our ability to make distributions to unitholders or to repurchase units unless after giving effect to such distribution or repurchase, there is no event of default under our Credit Facility and our outstanding borrowings are not in excess of our borrowing base.
−Removed: While we currently are not restricted by our Credit Facility from declaring a distribution, we may be restricted from paying a distribution in the future.
−Removed: We also are required to comply with certain financial covenants and ratios under the Credit Facility.
−Removed: Our ability to comply with these restrictions and covenants in the future is uncertain and will be affected by the levels of cash flow from our operations and events or circumstances beyond our control, such as reduced oil and natural gas prices.
−Removed: If we violate any of the restrictions, covenants, ratios, or tests in our Credit Facility, a significant portion of our indebtedness may become immediately due and payable, our ability to make distributions will be inhibited, and our lenders’ commitment to make further loans to us may terminate.
−Removed: We might not have, or be able to obtain, sufficient funds to make these accelerated payments.
−Removed: In addition, our obligations under our Credit Facility are secured by substantially all of our assets, and if we are unable to repay our indebtedness under our Credit Facility, the lenders can seek to foreclose on our assets.
−Removed: On March 5, 2021, the U.K.
−Removed: Financial Conduct Authority announced that it intends to stop persuading or compelling banks
−Removed: to submit LIBOR rates after December 31, 2021 for the 1-week and 2-month U.S.
−Removed: dollar settings and after June 30, 2023 for the
−Removed: remaining U.S.
−Removed: dollar settings.
−Removed: Our Credit Facility includes provisions to determine a replacement rate for LIBOR if necessary
−Removed: during its term, based on the secured overnight financing rate published by the Federal Reserve Bank of New York (“SOFR”).
−Removed: We currently do not expect the transition from LIBOR to have a material impact on us.
−Removed: Please read “Part II, Item 7.
−Removed: Management’s Discussion and Analysis of Financial Condition and Results of Operations—Credit Facility” for a description of the interest rate on outstanding borrowings under our Credit Facility.
−Removed: We expect to distribute a substantial majority of the cash we generate from operations each quarter, which could limit our ability to grow and make acquisitions.
−Removed: We expect to distribute a substantial majority of the cash we generate from operations each quarter.
−Removed: As a result, we will have limited cash generated from operations to reinvest in our business or to fund acquisitions, and we will rely primarily upon external financing sources, including commercial bank borrowings and the issuance of debt and equity securities, to fund our acquisitions and growth capital expenditures.
−Removed: If we are unable to finance growth externally, our distribution policy will significantly impair our ability to grow.
−Removed: If we issue additional units in connection with any acquisitions or growth capital expenditures, the payment of distributions on those additional units may increase the risk that we will be unable to maintain or increase our per unit distribution level.
−Removed: Other than limitations restricting our ability to issue units ranking senior or on parity with our Series B cumulative convertible preferred units, there are no limitations in our partnership agreement on our ability to issue additional units, including units ranking senior to the common units with respect to distributions.
−Removed: The incurrence of additional commercial borrowings or other debt to finance our growth would result in increased interest expense and required principal repayments, which, in turn, may
−Removed: reduce the cash that we have available to distribute to our unitholders.
−Removed: Please read Part II, Item 5.
−Removed: “Market for Registrant’s Common Equity, Related Unitholder Matters, and Issuer Purchases of Equity Securities — Cash Distribution Policy.”
Unless we replace the oil and natural gas produced from our properties, our cash generated from operations and our ability to make distributions to our common unitholders could be adversely affected.
23 unchanged sentences
The amount of oil that can be produced and sold is subject to curtailment in certain circumstances, such as pipeline interruptions due to scheduled and unscheduled maintenance, excessive pressure, physical damage, or lack of available capacity on these systems, tanker truck availability, and extreme weather conditions.
−Removed: Also, the shipment of our or our operators’ oil and natural
−Removed: gas on third-party pipelines may be curtailed or delayed if it does not meet the quality specifications of the pipeline owners.
+Added: Also, the shipment of our or our operators’ oil and natural gas on third-party pipelines may be curtailed or delayed if it does not meet the quality specifications of the pipeline owners.
The curtailments arising from these and similar circumstances may last from a few days to several months.
57 unchanged sentences
If we repossessed any of our properties, we would seek a replacement operator.
−Removed: However, we might not be able to find a replacement operator and, if we did, we might not be able to
−Removed: enter into a new lease on favorable terms within a reasonable period of time.
+Added: However, we might not be able to find a replacement operator and, if we did, we might not be able to enter into a new lease on favorable terms within a reasonable period of time.
In addition, the outgoing operator could be subject to bankruptcy proceedings, in which case our right to enforce or terminate the lease for any defaults, including non-payment, may be substantially delayed or otherwise impaired.
+Added: Access to Capital and Financing
+Added: Our Credit Facility has substantial restrictions and financial covenants that may restrict our business and financing activities and our ability to pay distributions.
+Added: Our Credit Facility limits the amounts we can borrow to a borrowing base amount, as determined by the lenders at their sole discretion based on their valuation of our proved reserves and their internal criteria.
+Added: The borrowing base is redetermined at least semi-annually, and the available borrowing amount could be decreased as a result of such redeterminations.
+Added: Decreases in the available borrowing amount could result from declines in oil and natural gas prices, operating difficulties or increased costs, decreases in reserves, lending requirements, or regulations or certain other circumstances.
+Added: As of December 31, 2022, we had outstanding borrowings of $10.0 million and the aggregate maximum credit amounts of the lenders were $1.0 billion.
+Added: Our borrowing base determined by the lenders under our Credit Facility in October 2022 was $550.0 million with outstanding commitments of $375.0 million and the next semi-annual redetermination is scheduled for April 2023.
+Added: A future decrease in our borrowing base could be substantial and could be to a level below our then-outstanding borrowings.
+Added: Outstanding borrowings in excess of the borrowing base are required to be repaid in five equal monthly payments, or we are required to pledge other oil and natural gas properties as additional collateral, within 30 days following notice from the administrative agent of the new or adjusted borrowing base.
+Added: If we do not have sufficient funds on hand for repayment, we may be required to seek a waiver or amendment from our lenders, refinance our Credit Facility, or sell assets, debt, or equity.
+Added: We may not be able to obtain such financing or complete such transactions on terms acceptable to us or at all.
+Added: Failure to make the required repayment could result in a default under our Credit Facility, which could materially adversely affect our business, financial condition, results of operations, and distributions to our unitholders.
+Added: The operating and financial restrictions and covenants in our Credit Facility restrict, and any future financing agreements likely will restrict, our ability to finance future operations or capital needs, engage in, expand, or pursue our business activities, or pay distributions.
+Added: Our Credit Facility restricts, and any future Credit Facility likely will restrict, our ability to:
+Added: • incur indebtedness;
+Added: • grant liens;
+Added: • make certain acquisitions and investments;
+Added: • enter into hedging arrangements;
+Added: • enter into transactions with our affiliates;
+Added: • make distributions to our unitholders;
+Added: • enter into a merger, consolidation, or sale of assets.
+Added: Our Credit Facility restricts our ability to make distributions to unitholders or to repurchase units unless after giving effect to such distribution or repurchase, there is no event of default under our Credit Facility and our outstanding borrowings are not in excess of our borrowing base.
+Added: While we currently are not restricted by our Credit Facility from declaring a distribution, we may be restricted from paying a distribution in the future.
+Added: We also are required to comply with certain financial covenants and ratios under the Credit Facility.
+Added: Our ability to comply with these restrictions and covenants in the future is uncertain and will be affected by the levels of cash flow from our operations and events or circumstances beyond our control, such as reduced oil and natural gas prices.
+Added: If we violate any of the restrictions, covenants, ratios, or tests in our Credit Facility, a significant portion of our indebtedness may become immediately due and payable, our ability to make distributions will be inhibited, and our lenders’ commitment to make further loans to us may terminate.
+Added: We might not have, or be able to obtain, sufficient funds to make these accelerated payments.
+Added: In addition, our obligations under our Credit Facility are secured by substantially all of our assets, and if we are unable to repay our indebtedness under our Credit Facility, the lenders can seek to foreclose on our assets.
+Added: We expect to distribute a substantial majority of the cash we generate from operations each quarter, which could limit our ability to grow and make acquisitions.
+Added: We expect to distribute a substantial majority of the cash we generate from operations each quarter.
+Added: As a result, we will have limited cash generated from operations to reinvest in our business or to fund acquisitions, and we will rely primarily upon external financing sources, including commercial bank borrowings and the issuance of debt and equity securities, to fund our acquisitions and growth capital expenditures.
+Added: If we are unable to finance growth externally, our distribution policy will significantly impair our ability to grow.
+Added: If we issue additional units in connection with any acquisitions or growth capital expenditures, the payment of distributions on those additional units may increase the risk that we will be unable to maintain or increase our per unit distribution level.
+Added: Other than limitations restricting our ability to issue units ranking senior or on parity with our Series B cumulative convertible preferred units, there are no limitations in our partnership agreement on our ability to issue additional units, including units ranking senior to the common units with respect to distributions.
+Added: The incurrence of additional commercial borrowings or other debt to finance our growth would result in increased interest expense and required principal repayments, which, in turn, may reduce the cash that we have available to distribute to our unitholders.
+Added: Please read Part II, Item 5.
+Added: “Market for Registrant’s Common Equity, Related Unitholder Matters, and Issuer Purchases of Equity Securities — Cash Distribution Policy.”
+Added: Our operators’ development activities on our leases, funding our non-operated working interests, and acquisitions will require substantial capital, and we and our operators may be unable to obtain needed capital or financing on satisfactory terms or at all.
+Added: The oil and natural gas industry is capital intensive.
+Added: Most of our operators are dependent on the availability of external debt and equity financing sources to maintain their drilling programs.
+Added: If those financing sources are not available to the operators on favorable terms or at all, then we expect the development of our properties to be adversely affected.
+Added: If the development of our properties is adversely affected, then revenues from our mineral and royalty interests and non-operated working interests may decline.
+Added: In the past, we have made substantial capital expenditures in connection with the acquisition of mineral and royalty interests and, to a lesser extent, participation in our non-operated working interests.
+Added: To date, we have financed capital expenditures primarily with funding from cash generated by operations, limited borrowings under our Credit Facility, executed farmout agreements, and the issuance of equity securities.
+Added: While we are currently focused on organic growth of our existing assets and have farmed out most of our non-operated working interests, it is possible that we may need access to capital for those activities in the future.
+Added: In those cases, we may restrict distributions to fund acquisitions and participation in our working interests but eventually we may need capital in excess of the amounts we retain in our business or borrow under our Credit Facility.
+Added: We cannot assure you that we will be able to access external capital on terms favorable to us or at all.
+Added: If we are unable to fund our capital requirements, we may be unable to complete acquisitions, take advantage of business opportunities, or respond to competitive pressures, any of which could have a material adverse effect on our results of operation and cash distributions to unitholders.
+Added: Any acquisitions of additional mineral and royalty interests will be subject to substantial risks.
+Added: Our principal growth strategy focuses on adding reserves on our existing properties.
+Added: From time to time, however, we may acquire mineral and royalty interests.
+Added: If we do make acquisitions that we believe will increase our cash generated from operations, these acquisitions may nevertheless result in a decrease in our cash distributions per unit.
+Added: Any acquisition involves potential risks, including, among other things:
+Added: • the validity of our assumptions about estimated proved reserves, future production, prices, revenues, capital expenditures, operating expenses, and costs;
+Added: • a decrease in our liquidity by using a significant portion of our cash generated from operations or borrowing capacity to finance acquisitions;
+Added: • a significant increase in our interest expense or financial leverage if we incur debt to finance acquisitions;
+Added: • the assumption of unknown liabilities, losses, or costs for which we are not indemnified or for which any indemnity we receive is inadequate;
+Added: • mistaken assumptions about the overall cost of equity or debt;
+Added: • our ability to obtain satisfactory title to the assets we acquire;
+Added: • an inability to hire, train, or retain qualified personnel to manage and operate our growing business and assets;
+Added: • the occurrence of other significant changes, such as impairment of oil and natural gas properties, goodwill or other intangible assets, asset devaluation, or restructuring charges.
Environmental, Legal and Regulatory Risks
18 unchanged sentences
• the removal of related production equipment.
−Removed: Additionally, federal and state regulatory authorities may expand or alter applicable pipeline-safety laws and regulations, compliance with which may require increased capital costs for third-party oil and natural gas transporters.
+Added: Additionally, federal and state regulatory authorities may expand or alter applicable pipeline-safety laws and regulations.
+Added: Compliance with such regulations may require increased capital costs for third-party oil and natural gas transporters.
These transporters may attempt to pass on such costs to our operators, which in turn could affect profitability on the properties in which we own mineral and royalty interests.
1 unchanged sentence
To the extent the operators of our properties are shippers on interstate pipelines, they must comply with the tariffs of those pipelines and with federal policies related to the use of interstate capacity.
−Removed: Our operators may be required to make significant expenditures to comply with the governmental laws and regulations described above.
+Added: Our operators may be required to make significant expenditures to comply with the governmental laws and regulations described above and may be subject to potential fines and penalties if they are found to have violated these laws and
We believe the trend of more expansive and stricter environmental legislation and regulations will continue.
Please read Part I, Items 1 and 2.
−Removed: “Business and Properties — Environmental Matters” for a description of the laws and
−Removed: regulations that affect our operators and that may affect us.
+Added: “Business and Properties — Environmental Matters” for a description of the laws and regulations that affect our operators and that may affect us.
These and other potential regulations could increase the operating costs of our operators and delay production, which could reduce the amount of cash distributions to our unitholders.
11 unchanged sentences
The process involves the injection of water, sand, and chemicals under pressure into formations to fracture the surrounding rock and stimulate production.
−Removed: The federal SDWA regulates the underground injection of substances through the Underground Injection Control (“UIC”) program.
−Removed: Hydraulic fracturing is generally exempt from regulation under the UIC program, and the hydraulic-fracturing process is typically regulated by state oil and natural gas commissions.
−Removed: However, the EPA has published effluent limit guidelines prohibiting the discharge of wastewater from hydraulic fracturing operations to publicly owned wastewater treatment plants.
−Removed: Additionally, in December 2016, the EPA released its final report on the potential impacts of hydraulic fracturing on drinking water resources.
−Removed: The final report concluded that “water cycle” activities associated with hydraulic fracturing may impact drinking water resources under certain limited circumstances.
−Removed: The EPA has not proposed to take any action in response to the report’s findings.
−Removed: Several states where we own interests in oil and natural gas producing properties, including Colorado, North Dakota, Louisiana, Oklahoma, and Texas, have adopted regulations that could restrict or prohibit hydraulic fracturing in certain circumstances or require the disclosure of the composition of hydraulic-fracturing fluids.
−Removed: For example, in Texas, the RRC published a final rule in October 2014 governing permitting or re-permitting of disposal wells that require, among other things, the submission of information on seismic events occurring within a specified radius of the disposal well location, as well as logs, geologic cross sections, and structure maps relating to the disposal area in question.
−Removed: If the permittee or an applicant of a disposal well permit fails to demonstrate that the injected fluids are confined to the disposal zone or if scientific data indicates such a disposal well is likely to be or determined to be contributing to seismic activity, then the RRC may deny, modify, suspend, or terminate the permit application or existing operating permit for that well.
−Removed: In September 2021, the RRC issued a notice to operators in the Midland area to reduce saltwater disposal well actions and provide certain data to the Commission.
−Removed: Oklahoma, similarly, has imposed strict limits on the operation of disposal wells in areas with increased instances of induced seismic events.
−Removed: These existing or any new legal requirements establishing seismic permitting requirements or similar restrictions on the construction or operation of disposal wells for the injection of produced water likely will result in added costs to comply and affect our operators’ rate of production, which in turn could have a material adverse effect on our results of operations and financial position.
−Removed: In addition to state laws, local land use restrictions, such as city ordinances, may restrict or prohibit the performance of well drilling in general or hydraulic fracturing in particular.
−Removed: For example, in April 2019, Colorado adopted legislation that requires the COGCC to prioritize public health and environmental concerns in its decisions and delegates considerable new authority to local governments to regulate surface impacts.
−Removed: In keeping with this legislation, the COGCC in November 2020 adopted revisions to several regulations to increase protections for public health, safety, welfare, wildlife, and environmental matters.
−Removed: These revisions established more stringent setbacks (2,000 feet instead of 500 feet) on new oil and gas development and elimination of routine flaring and venting of natural gas at new or existing wells across the state, each subject to only limited exceptions.Some local communities have adopted additional restrictions for oil and gas activities, such as requiring greater setbacks.
−Removed: We cannot predict what additional state or local requirements may be imposed in the future on oil and gas operations in the states in which we own interests.
−Removed: In the event state, local, or municipal legal restrictions are adopted in areas where our operators conduct operations, our operators may incur substantial costs to comply with these requirements, which may be significant in nature, experience delays, or curtailment in the pursuit of exploration, development, or production activities and perhaps even be precluded from the drilling of wells.
+Added: Numerous federal and state laws and regulations affect our operators' ability to conduct hydraulic fracturing.
+Added: Please read Part I, Items 1 and 2.
+Added: "Business and properties — Environmental Matters — Hydraulic Fracturing" for a description of the laws and regulations that affect our operators and that may affect us.
There has been increasing public controversy regarding hydraulic fracturing with regard to increased risks of induced seismicity, the use of fracturing fluids, impacts on drinking water supplies, use of water, and the potential for impacts to surface water, groundwater, and the environment generally.
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Legislative changes could cause operators to incur substantial compliance costs.
−Removed: At this time, it is not possible to estimate the impact on our business of newly enacted or potential federal or state legislation governing hydraulic fracturing.
+Added: At this time, it is not possible to estimate the impact on our business of newly enacted or potential
+Added: federal or state legislation governing hydraulic fracturing.
Operating hazards and uninsured risks may result in substantial losses to us or our operators, and any losses could adversely affect our results of operations and cash distributions to unitholders.
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To the extent that societal pressures or political or other factors are involved, it is possible that such liability could be imposed without regard to our causation or contribution to the asserted damage, or other mitigating factors.
+Added: Please read Part I, Items 1 and 2.
+Added: “Business and Properties — Environmental Matters” for an additional description of some of the many ESG-related developments that may affect us, our operators, and/or the oil and gas sector more generally.
Additionally, we may receive pressure from investors, lenders, or other groups to adopt more aggressive climate or other ESG-related goals, but we cannot guarantee that we will be able to implement such goals because of potential costs or technical or operational obstacles.
−Removed: In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters.
−Removed: Such ratings are used by some investors to inform their investment and voting decisions.
+Added: In March 2022, the U.S.
+Added: Securities and Exchange Commission (“SEC”) released a proposed rule that would establish a framework for the reporting of climate risks, targets, and metrics.
+Added: A final rule is expected to be released early 2023, but we cannot predict what any such final rule may require.
+Added: As proposed, the SEC climate rule would impose burdensome and potentially costly emissions and other data gathering and reporting requirements on our operations, including, but not limited to, those related to risks to our operators arising from the physical impacts of climate change (i.e., flooding, water stress, extreme temperatures).
+Added: To the extent the rule imposes additional reporting obligations, we could face increased costs.
+Added: Separately, the SEC has announced that it is scrutinizing existing climate-change related disclosures in public filings, increasing the potential for enforcement if the SEC were to allege an issuer’s climate disclosures are misleading or deficient.
+Added: Relatedly, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to ESG matters.
+Added: Such ratings are used by some investors to inform
+Added: their investment and voting decisions.
Unfavorable ESG ratings may lead to increased negative investor sentiment toward us or our customers and to the diversion of investment or other industries which could have a negative impact on our unit price and/or our access to and costs of capital.
+Added: Additionally, institutional lenders may decide not to provide funding for fossil fuel energy companies or the corresponding infrastructure projects based on climate change related concerns, which could affect our access to capital for potential growth projects.
Moreover, to the extent ESG matters negatively impact our reputation, we may not be able to compete as effectively or recruit or retain employees, which may adversely affect our operations.
+Added: Finally, public statements with respect to ESG matters, such as emissions reduction goals, other environmental targets, or other commitments addressing certain social issues, are becoming increasingly subject to heightened scrutiny from public and governmental authorities related to the risk of potential “greenwashing,” i.e., misleading information or false claims overstating potential ESG benefits.
+Added: For example, in March 2021, the SEC established the Climate and ESG Task Force in the Division of Enforcement to identify and address potential ESG-related misconduct, including greenwashing.
+Added: Certain non-governmental organizations and other private actors have also filed lawsuits under various securities and consumer protection laws alleging that certain ESG-statements, goals, or standards were misleading, false, or otherwise deceptive.
+Added: Moreover, the Federal Trade Commission in August 2022 indicated its intent to issue revised “Green Guides” which will likely address greenwashing risks arising from ESG-related matters.
+Added: As a result, we may face increased litigation risks from private parties and governmental authorities related to our ESG efforts.
+Added: In addition, any alleged claims of greenwashing against us or others in our industry may lead to further negative sentiment and diversion of investments.
+Added: Additionally, we could face increasing costs as we attempt to comply with and navigate further regulatory focus and scrutiny.
We rely on a few key individuals whose absence or loss could adversely affect our business.
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The amount of distributions we make, if any, and the decision to make any distribution at all will be determined by the Board.
−Removed: If we make distributions, our Series B cumulative convertible preferred unitholders have priority with respect to rights to share in those distributions over our common unitholders for so long as our Series B cumulative convertible preferred units are outstanding.
+Added: If we make distributions, our Series B cumulative convertible preferred unitholders have priority with respect to rights to share in those distributions over our common unitholders for so long as our Series B cumulative convertible preferred
+Added: units are outstanding.
Please read Part II, Item 5.
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In place of default fiduciary duties, our partnership agreement imposes a contractual standard requiring our general partner and its directors and executive officers to act in good faith, meaning they cannot cause the general partner to take an action that they subjectively believe is adverse to our interests.
−Removed: Such contractual standards allow our general partner and its directors and executive officers to manage and operate our business with greater flexibility and to subject the
−Removed: actions and determinations of our general partner and its directors and executive officers to lesser legal or judicial scrutiny than would be the case if state law fiduciary standards were applicable.
+Added: Such contractual standards allow our general partner and its directors and executive officers to manage and operate our business with greater flexibility and to subject the actions and determinations of our general partner and its directors and executive officers to lesser legal or judicial scrutiny than would be the case if state law fiduciary standards were applicable.
Our partnership agreement restricts the situations in which remedies may be available to our unitholders for actions taken that might constitute breaches of duty under applicable Delaware law and breaches of the contractual obligations in our partnership agreement.
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• borrowings and repayment of current and future indebtedness;
+Added: • redemption of all or a portion of the Series B cumulative convertible preferred units;
• issuance of additional units;
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Under certain circumstances, unitholders may have to repay amounts wrongfully returned or distributed to them.
−Removed: Under Section 17-607 of the Delaware Act, we may not make a distribution to our unitholders if the distribution would cause our liabilities to exceed the fair value of our assets.
+Added: Under Section 17-607 of the Delaware Act, we may not make a distribution to our unitholders if the distribution would cause our
+Added: liabilities to exceed the fair value of our assets.
Delaware law provides that for a period of three years from the date of the impermissible distribution, limited partners who received the distribution and who knew at the time of the distribution that it violated Delaware law will be liable to the limited partnership for the distribution amount.
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Because we are a publicly traded partnership, the NYSE does not require us to have a majority of independent directors on our general partner’s board of directors or to establish a compensation committee or a nominating and corporate governance committee.
−Removed: In addition, because we are a publicly traded partnership, the NYSE does not require us to obtain unitholder
−Removed: approval prior to certain unit issuances.
+Added: In addition, because we are a publicly traded partnership, the NYSE does not require us to obtain unitholder approval prior to certain unit issuances.
Accordingly, unitholders will not have the same protections afforded to stockholders of certain corporations that are subject to all of the NYSE’s corporate governance requirements.
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federal income tax treatment of publicly traded partnerships, including us, or an investment in our common units may be modified by administrative, legislative, or judicial changes or differing interpretations at any time.
−Removed: From time to time, members of Congress propose and consider substantive changes to the existing U.S.
+Added: time to time, members of Congress propose and consider substantive changes to the existing U.S.
federal income tax laws that would affect publicly traded partnerships, including proposals that would eliminate our ability to qualify for partnership tax treatment.
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federal income tax purposes.
−Removed: We are unable to predict whether any of these changes or other proposals
−Removed: will ultimately be enacted or adopted.
+Added: We are unable to predict whether any of these changes or other proposals will ultimately be enacted or adopted.
Any such changes could negatively impact the value of an investment in our common units.
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federal income tax laws could increase costs or eliminate or postpone certain tax deductions that currently are available to us or our services providers with respect to oil and gas development.
−Removed: Any such changes could have an adverse effect on the Company’s financial position, results of operations, and cash flows.
+Added: Any such changes could have an adverse effect on our financial position, results of operations, and cash flows.
If the IRS were to contest the U.S.
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Pursuant to the Bipartisan Budget Act of 2015, for tax years beginning after December 31, 2017, if the IRS makes an audit adjustment to our income tax return, it (and some states) may assess and collect any taxes (including any applicable penalties and interest) resulting from such audit adjustment directly from us.
−Removed: To the extent possible under the new rules, our general partner may elect to either pay the taxes (including any applicable penalties and interest) directly to the IRS or, if we are eligible, issue a revised information statement to each common unitholder and former common unitholder with respect to an audited and adjusted return.
−Removed: Although our general partner may elect to have our common unitholders and former common unitholders take such audit adjustment into account and pay any resulting taxes (including applicable penalties or interest) in accordance with their interests in us during the tax year under audit, there can be no assurance that such election will be practical, permissible, or effective in all circumstances.
+Added: To the extent possible under these rules, our general partner may elect to either pay the taxes (including any applicable penalties and interest) directly to the IRS or, if we are eligible, issue a revised information statement to each common unitholder and former common unitholder with respect to an audited and adjusted return.
+Added: Although our general partner may elect to have our common unitholders and former common unitholders take such audit adjustment into account and pay any resulting taxes (including applicable penalties or interest) in accordance with
+Added: their interests in us during the tax year under audit, there can be no assurance that such election will be practical, permissible, or effective in all circumstances.
As a result, our current common unitholders may bear some or all of the tax liability resulting from such audit adjustment, even if such common unitholders did not own common units in us during the tax year under audit.
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In general, we are entitled to a deduction for interest paid or accrued on indebtedness properly allocable to our trade or business during our taxable year.
−Removed: However, under the Tax Cuts and Jobs Act, for taxable years beginning after December 31, 2017, our deduction for “business interest” is limited to the sum of our business interest income and 30% of our “adjusted taxable income.” For the purposes of this limitation, our adjusted taxable income is computed without regard to any business interest expense or business interest income, and in the case of taxable years beginning before January 1, 2022, any deduction allowable for depreciation, amortization, or depletion to the extent such depreciation, amortization, or depletion is not capitalized into cost of goods sold with respect to inventory.
+Added: However, our deduction for “business interest” is limited to the sum of our business interest income and 30% of our “adjusted taxable income.” For the purposes of this limitation, our adjusted taxable income is computed without regard to any business interest expense or business interest income.
If our “business interest” is subject to limitation under these rules, our unitholders will be limited in their ability to deduct their share of any interest expense that has been allocated to them.
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common unitholders will be subject to U.S.
−Removed: taxes and withholding with respect to their income and gain from owning our common units.
+Added: taxes and withholding with respect to their income and gain from
+Added: owning our common units.
common unitholders are generally taxed and subject to income tax filing requirements by the United States on income effectively connected with a U.S.
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As a result, distributions to a non-U.S.
−Removed: common unitholder will be subject to withholding at the highest
−Removed: applicable effective tax rate and a non-U.S.
+Added: common unitholder will be subject to withholding at the highest applicable effective tax rate and a non-U.S.
common unitholder who sells or otherwise disposes of a common unit will also be subject to U.S.
federal income tax on the gain realized from the sale or disposition of that common unit.
+Added: In addition to the withholding tax imposed on distributions of effectively connected income, distributions to a non-U.S.
+Added: common unitholder will also be subject to a 10% withholding tax on the amount of any distribution in excess of our cumulative net income.
+Added: As we do not compute our cumulative net income for such purposes due to the complexity of the calculation and lack of clarity in how it would apply to us, we intend to treat all of our distributions as being in excess of our cumulative net income for such purposes and subject to such 10% withholding tax.
+Added: Accordingly, distributions to a non-U.S.
+Added: common unitholder will be subject to a combined withholding tax rate equal to the sum of the highest applicable effective tax rate and 10%.
Moreover, the transferee of an interest in a partnership that is engaged in a U.S.
trade or business is generally required to withhold 10% of the "amount realized" by the transferor unless the transferor certifies that it is not a foreign person.
−Removed: While the determination of a partner's "amount realized" generally includes any decrease of a partner’s share of the partnership’s liabilities, the Treasury regulations provide that the "amount realized" on a transfer of an interest in a publicly traded partnership, such as our units, will generally be the amount of gross proceeds paid to the broker effecting the applicable transfer on behalf of the transferor, and thus will be determined without regard to any decrease in that partner's share of publicly traded partnership's liabilities.
−Removed: The Treasury regulations and other guidance from the IRS provide that withholding on a transfer of an interest in a publicly traded partnership will not be imposed on a transfer that occurs prior to January 1, 2023.
−Removed: Thereafter, the obligation to withhold on a transfer of interests in a publicly traded partnership that is effected through a broker is imposed on the transferor’s broker.
+Added: While the determination of a partner's "amount realized" generally includes any decrease of a partner’s share of the partnership’s liabilities, the Treasury Regulations provide that the "amount realized" on a transfer of an interest in a publicly traded partnership, such as our common units, will generally be the amount of gross proceeds paid to the broker effecting the applicable transfer on behalf of the transferor, and thus will be determined without regard to any decrease in that partner's share of a publicly traded partnership's liabilities.
+Added: For a transfer of an interest in a publicly traded partnership that is effected through a broker on or after January 1, 2023, the obligation to withhold is imposed on the transferor’s broker.
Current and future prospective non-U.S.
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federal income tax consequences of loaning a partnership interest, a common unitholder whose common units are the subject of a securities loan may be considered to have disposed of the loaned common units.
−Removed: In that case, the common unitholder may no longer be treated for tax purposes as a partner with respect to those common units during the period of the loan to the short seller and the common unitholder may recognize gain or loss from this disposition.
+Added: In that case, the common unitholder may no longer be treated for tax purposes as a partner with respect to those common units during the period of the loan to the short seller and the common unitholder may recognize gain or loss from this
Moreover, during the period of the loan, any of our income, gain, loss, or deduction with respect to those common units may not be reportable by the common unitholder and any cash distributions received by the common unitholder as to those common units could be fully taxable as ordinary income.
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In addition to U.S.
−Removed: federal income taxes, you likely will be subject to other taxes, including state and local taxes, unincorporated business taxes and estate, inheritance, or intangible taxes that are imposed by the various jurisdictions in which
−Removed: we conduct business or own property now or in the future, even if you do not live in any of those jurisdictions.
+Added: federal income taxes, you likely will be subject to other taxes, including state and local taxes, unincorporated business taxes and estate, inheritance, or intangible taxes that are imposed by the various jurisdictions in which we conduct business or own property now or in the future, even if you do not live in any of those jurisdictions.
We own assets and conduct business in several states, many of which impose a personal income tax and also impose income taxes on corporations and other entities.
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We cannot be certain that our efforts to develop and maintain our internal controls will be successful, that we will be able to maintain adequate controls over our financial processes and reporting in the future, or that we will be able to comply with our obligations under Section 404 of the Sarbanes-Oxley Act.
−Removed: For example, Section 404 requires us, among other things, to annually review and report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal controls over financial reporting.
+Added: For example, Section 404 requires us, among
+Added: other things, to annually review and report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal controls over financial reporting.
Any failure to develop or maintain effective internal controls, or difficulties encountered in implementing or improving our internal controls, could harm our operating results or cause us to fail to meet our reporting obligations.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.