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A discussion of such risks and uncertainties may be found under the heading Risk Factors in our 2023 Annual Report.
−Removed: Except as set forth below, there were no material changes to those risk factors during the three months ended June 30, 2024.
−Removed: Increases in prices for commodities used in our oil and natural gas operations may negatively affect our financial results.
−Removed: Operating and capital costs in the oil and natural gas industry are heavily influenced by commodity prices, including the prices we pay for electricity, natural gas and steel-based materials.
−Removed: For example, we use natural gas in our operations to generate steam for use in steamfloods.
−Removed: Following the closing of the Aera Merger on July 1, 2024, we expect that our consumption of natural gas will increase significantly and could exceed the amount of natural gas we produce.
−Removed: We also use electricity generated by our Elk Hills power plant to power our oil and gas operations in the Elk Hills field.
−Removed: If we are unable to generate sufficient natural gas or electricity for use in our operations, we may need to purchase these commodities from third parties.
−Removed: Increases in the volumes or prices of commodities used in our operations could cause increases in our operating expenses.
−Removed: We attempt to manage our exposure to price increases of certain commodities used in our operations, including natural gas, by entering into hedges or longer-term contracts with fixed price arrangements.
−Removed: However, these measures do not fully protect us from the effects of commodity price increases and we may not be able to enter into similar arrangements in the future on acceptable terms or at all.
+Added: Except as set forth below, there were no material changes to those risk factors during the three months ended September 30, 2024.
+Added: We may face increased local restrictions on oil and gas exploration and production operations or even be prohibited from operating in certain areas as a result of recently enacted California legislation .
+Added: On September 25, 2024, Assembly Bill 3233 (AB 3233) was enacted which authorizes local governments to limit methods for, or even prohibit, oil and gas operations or development within their jurisdiction, including with respect to existing operations.
+Added: Prior to the passage of this law, certain local governments within California had previously taken steps to limit oil and gas operations that were struck down by California courts.
+Added: Monterey County previously sought to ban only new production and prohibit the use of wastewater injection as a production method.
+Added: The City and County of Los Angeles previously sought to both ban new wells and phaseout existing wells over a certain period of time.
+Added: Although both those local measures were struck down in court, following the adoption of AB 3233, certain legal arguments used to challenge these local actions are no longer valid and it is possible that these or other local governments in places where we operate may pass similar regulations.
+Added: For the three months ended September 30, 2024, approximately 12% of our gross production is located in Los Angeles County and approximately 3% is in Monterey County.
+Added: It is difficult to predict how local governments in California may choose to exercise their new authority under AB 3233.
+Added: While there may be future legal challenges to AB 3233 and any local ordinances enacted thereunder, we cannot predict whether or not such challenges will be successful.
+Added: Notwithstanding any potential claims for regulatory takings we may have in the event local jurisdictions seek to prohibit any of our existing operations, to the extent that the local governments in the areas where we operate in California enact new restrictions or prohibitions with respect to oil and gas exploration and production activities, we could face increased operating costs, loss of revenues, and other material and adverse impacts to our business and results of operations.
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