What changed in this filing

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Item 1A. Risk Factors

2022-11-18 compared with 2021-11-19 · 119 added, 123 removed, 163 unchanged (60% of the section changed)

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The availability and cost of credit sources may be cyclical and these capital sources may not remain available to the Company.

Turmoil in credit markets, due to the ongoing COVID-19 pandemic or otherwise, may make it difficult for the Company to obtain financing on acceptable terms or at all for working capital, capital expenditures and other investments, or to refinance existing debt.

Turmoil in credit markets may make it difficult for the Company to obtain financing on acceptable terms or at all for working capital, capital expenditures and other investments, or to refinance existing debt.

These difficulties could adversely affect the Company's growth strategies, operations and financial performance.

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The 1974 indenture defines consolidated assets as total assets less a number of items, including current and accrued liabilities.

Depending on their magnitude, factors that reduce the Company’s operating income and/or total assets, including impairments (i.e., write-downs) of the Company’s oil and natural gas properties, or that increase current and accrued liabilities, like short-term borrowings and "out of the money" derivative financial instruments, could contribute to the Company’s inability to meet the interest coverage test or debt-to-assets ratio.

Depending on their magnitude, factors that reduce the Company’s operating income and/or total assets, including impairments (i.e., write-downs) of the Company’s natural gas properties, or that increase current and accrued liabilities, like short-term borrowings and "out of the money" derivative financial instruments, could contribute to the Company’s inability to meet the interest coverage test or debt-to-assets ratio.

In addition, the Company's short-term bank loans and commercial paper are in the form of floating rate debt or debt that may have rates fixed for very short periods of time, resulting in exposure to interest rate fluctuations in the absence of interest rate hedging transactions.

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nationally determined contribution to achieve a fifty to fifty-two percent reduction from 2005 levels in economy-wide net greenhouse gas pollution by 2030.

In addition to the recent federal reentry into the Paris

Agreement, state and local governments, non-governmental organizations, and financial institutions have made, and will likely continue to make, more aggressive efforts to reduce emissions and advance the objectives of the Paris Agreement.

Recent executive orders from the new federal administration, in addition to federal, state and local legislative and regulatory initiatives proposed or adopted in an attempt to limit the effects of climate change, including greenhouse gas emissions, could have significant impacts on the energy industry including government-imposed limitations, prohibitions or moratoriums on the use and/or production of gas and oil, establishment of a carbon tax and/or methane fee, lack of support for system modernization, as well as accelerated depreciation of assets and/or stranded assets.

For example, the U.S.

Congress has from time to time considered bills that would establish a cap-and-trade program, methane fee or carbon tax to reduce emissions of greenhouse gases.

A number of states have adopted energy strategies or plans with goals that include the reduction of greenhouse gas emissions.

For example, Pennsylvania has a methane reduction framework for the oil and gas industry which has resulted in permitting changes with the stated goal of reducing methane emissions from well sites, compressor stations and pipelines.

With respect to its operations in California, the Company currently complies with California cap-and-trade guidelines, which increases the Company’s cost of environmental compliance in its Exploration and Production segment operation.

In addition to the federal reentry into the Paris

Agreement, state and local governments, non-governmental organizations, investment firms, and financial institutions have made, and will likely continue to make, more aggressive efforts to reduce emissions and advance the objectives of the Paris Agreement.

Executive orders from the federal administration, in addition to federal, state and local legislative and regulatory initiatives proposed or adopted in an attempt to limit the effects of climate change, including greenhouse gas emissions, could have significant impacts on the energy industry including government-imposed limitations, prohibitions or moratoriums on the use and/or production of gas, establishment of a carbon tax and/or methane fee, lack of support for system modernization, as well as accelerated depreciation of assets and/or stranded assets.

Federal and state legislatures have from time to time considered bills that would establish a cap-and-trade program, methane fee or carbon tax to incent the reduction of greenhouse gas emissions.

For example, in August 2022, the federal Inflation Reduction Act was signed into law, which includes a methane charge that is expected to be applicable to the reported annual methane emissions of certain oil and gas facilities, above specified methane intensity thresholds, starting in calendar year 2024.

In addition, the New York State legislature, in early 2021, proposed a bill known as the Climate and Community Investment Act, which proposed an escalating fee starting at $55 per short ton of carbon dioxide equivalent on any carbon-based fuels sold, used or brought into the state.

That bill did not pass, but similar legislation may be proposed in the future.

If the Company becomes subject to new or revised cap-and-trade programs, methane charges, fees for carbon-based fuels or other similar costs or charges, the Company may experience additional costs and incremental operating expenses, which would impact our future earnings and cash flows.

A number of states have also adopted energy strategies or plans with goals that include the reduction of greenhouse gas emissions.

For example, Pennsylvania has a methane reduction framework for the natural gas industry which has resulted in permitting changes with the stated goal of reducing methane emissions from well sites, compressor stations and pipelines.

In addition, the NYPSC initiated a proceeding to consider climate-related financial disclosures at the utility operating level, and in 2019, the New York State legislature passed the CLCPA, which created emission reduction and electric generation mandates, and could ultimately impact the Utility segment’s customer base and business.

The New York State legislature, in early 2021, proposed a bill known as the Climate and Community Investment Act, which proposed an escalating fee starting at $55 per short ton of carbon dioxide equivalent on any carbon-based fuels sold, used or brought into the state.

That bill did not pass, but it, or something similar to it, may be proposed in the future.

Legislation or regulation that aims to reduce greenhouse gas emissions could also include greenhouse gas emissions limits and reporting requirements, carbon taxes and/or similar fees on carbon dioxide, methane or equivalent emissions, restrictive permitting, increased efficiency standards requiring system remediation and/or changes in operating practices, and incentives or mandates to conserve energy or use renewable energy sources.

Additionally, the trend toward increased conservation, change in consumer behaviors, competition from renewable energy sources, and technological advances to address climate change may reduce the demand for natural gas.

For further discussion of the risks associated with environmental regulation to address climate change, refer to Item 7, MD&A under the heading “Environmental Matters” and subheading “Environmental Regulation.”

Pursuant to the CLCPA, New York's Climate Action Council issued for comment a draft scoping plan that includes recommendations to decommission substantial portions of the natural gas system and curtail use of natural gas and natural gas appliances.

Legislation or regulation that aims to reduce greenhouse gas emissions could also include natural gas bans, greenhouse gas emissions limits and reporting requirements, carbon taxes and/or similar fees on carbon dioxide, methane or equivalent emissions, restrictive permitting, increased efficiency standards requiring system remediation and/or changes in operating practices, and incentives or mandates to conserve energy or use renewable energy sources.

NYDEC finalized its Part 203 Oil and Gas Sector Rule in March 2022, which significantly increases leak detection and repair inspections, recordkeeping, reporting, and notification requirements for multiple sources along city gates, transmission pipelines, compressor stations, storage facilities, and gathering lines.

Additionally, the trend toward increased energy conservation, change in consumer behaviors, competition from renewable energy sources, and technological advances to address climate change may reduce the demand for natural gas.

For further discussion of the risks associated with environmental regulation to address climate change, refer to Item 7, MD&A under the heading “Environmental Matters.”

Further, recent trends directed toward a low-carbon economy could shift funding away from, or limit or restrict certain sources of funding for, companies focused on fossil fuel-related development or carbon-intensive investments.

To the extent financial markets view climate change and greenhouse gas emissions as a financial risk, the Company’s cost of and access to capital could be negatively impacted.

Organized opposition to the oil and gas industry could have an adverse effect on Company operations.

Organized opposition to the oil and gas industry, including exploration and production activity and pipeline expansion and replacement projects, may continue to increase as a result of, among other things, safety incidents involving gas facilities, and concerns raised by politicians, financial institutions and advocacy groups about greenhouse gas emissions, hydraulic fracturing, or fossil fuels generally.

This opposition may lead to increased regulatory and legislative initiatives that could place limitations, prohibitions or moratoriums on the use of gas and oil, impose costs tied to carbon emissions, provide cost advantages to alternative energy sources, or impose mandates that increase operational costs associated with new natural gas infrastructure and technology.

Organized opposition to the natural gas industry could have an adverse effect on Company operations.

Organized opposition to the natural gas industry, including exploration and production activity, pipeline expansion and replacement projects, and the extension and continued operation of natural gas distribution systems, may continue to increase as a result of, among other things, safety incidents involving natural gas facilities, and concerns raised by politicians, financial institutions and advocacy groups about greenhouse gas

emissions, hydraulic fracturing, or fossil fuels generally.

This opposition may lead to increased regulatory and legislative initiatives that could place limitations, prohibitions or moratoriums on the use of natural gas, impose costs tied to carbon emissions, provide cost advantages to alternative energy sources, or impose mandates that increase operational costs associated with new natural gas infrastructure and technology.

There are also increasing litigation risks associated with climate change concerns and related disclosures.

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Delays or changes in plans or costs with respect to Company projects, including regulatory delays or denials with respect to necessary approvals, permits or orders, could delay or prevent anticipated project completion and may result in asset write-offs and reduced earnings.

Construction of planned distribution and transmission pipeline and storage facilities, as well as the expansion of existing facilities, is subject to various regulatory, environmental, political, legal, economic and other development risks, including the ability to obtain necessary approvals and permits from regulatory agencies on a timely basis and on acceptable terms, or at all.

Construction of planned distribution, gathering, and transmission pipeline and storage facilities, as well as the expansion and replacement of existing facilities, and the development of new natural gas wells, is subject to various regulatory, environmental, political, legal, economic and other development risks, including the ability to obtain necessary approvals and permits from regulatory agencies on a timely basis and on acceptable terms, or at all.

Existing or potential third-party opposition, such as opposition from landowner and environmental groups, which are beyond our control, could materially affect the anticipated construction of a project.

In addition, third parties could impede the Gathering segment’s acquisition, expansion or renewal of rights-of-way or land rights on a timely basis and on acceptable terms.

Any delay in project construction may prevent a planned project from going into service when anticipated, which could cause a delay in the receipt of revenues from those facilities, result in asset write-offs and materially impact operating results or anticipated results.

Additionally, delays in pipeline construction projects could impede the Exploration and Production segment's ability to transport its production to premium markets, or to fulfill obligations to sell at contracted delivery points.

In addition, third parties could impede the Company’s acquisition, expansion or renewal of rights-of-way or land rights on a timely basis and on acceptable terms.

Any delay in project development or construction may prevent a planned project from going into service when anticipated, which could cause a delay in the receipt of revenues from those facilities, result in asset write-offs and materially impact operating results or anticipated results.

Additionally, delays in pipeline construction projects or gathering facility completion could impede the Exploration and Production segment's ability to transport its production to premium markets, or to fulfill obligations to sell at contracted delivery points.

FINANCIAL RISKS

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In order to meet its financial needs, the Company relies exclusively on repayments of principal and interest on intercompany loans made by the Company to its operating subsidiaries and income from dividends.

Such operating subsidiaries may not generate sufficient net income to pay upstream dividends or generate sufficient cash flow to make payments of principal or interest on such intercompany loans.

Such operating subsidiaries may not generate sufficient net income to pay dividends to the Company or generate sufficient cash flow to make payments of principal or interest on such intercompany loans.

The Company may be adversely affected by economic conditions and their impact on our suppliers and customers.

Periods of slowed economic activity generally result in decreased energy consumption, particularly by industrial and large commercial companies.

As a consequence, national or regional recessions or other downturns in economic activity, including the effects of the COVID-19 pandemic, could adversely affect the Company’s revenues and cash flows or restrict its future growth.

Additionally, supply chain disruptions resulting from the COVID-19 pandemic, and the associated costs and inflation related thereto, could have an impact on the Company's operations.

The Company is monitoring and responding to the impacts of the COVID-19 pandemic across its businesses.

To date, the COVID-19 pandemic has not had a material impact on the Company.

However, the Company cannot predict the extent or duration of the outbreak or whether this evolving situation will have a material impact on the Company’s workforce, supply chain, operations or financial results, including potential regulatory responses to the financial impacts associated with the COVID-19 pandemic on the Company and its customers.

As a consequence, national or regional recessions or other downturns in economic activity could adversely affect the Company’s revenues and cash flows or restrict its future growth.

Additionally, supply chain disruptions, and the associated costs and inflation related thereto, could have an impact on the Company's operations.

Economic conditions in the Company’s utility service territories, along with legislative and regulatory prohibitions and/or limitations on terminations of service, also impact its collections of accounts receivable.

Customers of the Company’s Utility segment may have particular trouble paying their bills during periods of declining economic activity or high commodity prices, potentially resulting in increased bad debt expense and reduced earnings.

The PaPUC has directed utilities to track extraordinary, nonrecurring incremental COVID-19 related expenses, and has authorized the creation of a utility regulatory asset but only for incremental COVID-19 related expenses incurred above those embedded in rates resulting from directives contained in certain PaPUC orders, therefore it is unclear at this time to what extent the PaPUC will, and whether the NYPSC will at all, allow rate recovery for COVID-19 pandemic related expenses.

Customers of the Company’s Utility segment may have particular trouble paying their bills during periods of declining economic activity, high inflation, or high commodity prices, potentially resulting in increased bad debt expense and reduced earnings.

Similarly, if reductions were to occur in funding of the federal Low Income Home Energy Assistance Program, bad debt expense could increase and earnings could decrease.

In addition, oil and gas exploration and production companies that are customers of the Company’s Pipeline and Storage segment may decide not to renew contracts for the same transportation capacity, for example during periods of reduced production.

Any of these events could have a material adverse effect on the Company’s results of operations, financial condition and cash flows.

In addition, oil and natural gas exploration and production companies that are customers of the Company’s Pipeline and Storage segment may decide not to renew contracts for the same transportation capacity.

Certain customers of the Company's Exploration and Production segment can represent a concentrated risk during times of high commodity prices and high hedge losses.

Any of these events

or circumstances could have or contribute to a material adverse effect on the Company’s results of operations, financial condition and cash flows.

Changes in interest rates may affect the Company’s financing and its regulated businesses’ rates of return.

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If interest rates are higher than assumed rates, the Company’s ability to earn its authorized rate of return may be adversely impacted.

Loans to the Company under its credit facility may be base rate loans or LIBOR loans.

LIBOR is the subject of national, international and other regulatory guidance and proposals for reform.

For example, the U.K.’s Financial Conduct Authority, which regulates LIBOR, has announced that it intends to phase out LIBOR as a benchmark.

The Federal Reserve Bank of New York publishes a Secured Overnight Funding Rate (“SOFR”), which the Alternative Reference Rates Committee recommended as an alternative reference rate to U.S.

Dollar LIBOR.

It is not possible to predict what effect the phase out of LIBOR, or a change to SOFR or other alternative rates may have on financial markets for LIBOR-linked financial instruments.

The Company’s current committed credit facilities provide a mechanism for determining an alternative benchmark rate of interest to U.S.

Dollar LIBOR.

One of those facilities, the Company’s 364-Day Credit Agreement, matures at the end of calendar year 2022, and the Company’s uncommitted lines of credit are reviewed on an annual basis.

The phase out of LIBOR, or a change to SOFR or other alternative rates, whether in connection with borrowings under the current committed credit facilities, or borrowings under replacement facilities or lines of credit, could expose the Company’s future borrowings to less favorable rates.

If the phase out of LIBOR, or a change to SOFR or other alternative rates, results in increased alternative interest rates or if the Company's lenders have increased costs due to such phase out or changes, then the Company's debt that uses benchmark rates could be affected and, in turn, the Company's cash flows and interest expense could be adversely impacted.

Fluctuations in oil and gas prices could adversely affect revenues, cash flows and profitability.

Financial results in the Company’s Exploration and Production segment are materially dependent on prices received for its oil and gas production.

Both short-term and long-term price trends affect the economics of exploring for, developing, producing, gathering and processing oil and gas.

Oil and gas prices can be volatile and can be affected by:

weather conditions, natural disasters, the level of consumer product demand, national and worldwide economic conditions, economic disruptions caused by terrorist activities, acts of war or major accidents, political conditions in foreign countries, the price and availability of alternative fuels, the proximity to, and availability of, sufficient capacity on transportation facilities, regional and global levels of supply and demand, energy conservation measures, and government regulations.

The Company sells the oil and gas that it produces at a combination of current market prices, indexed prices or through fixed-price contracts.

Loans to the Company under its committed credit facilities may be alternate base rate loans or term SOFR loans.

SOFR is a reference rate (the Secured Overnight Financing Rate) published by the Federal Reserve Bank of New York.

SOFR is one available replacement for LIBOR (the London Interbank Offered Rate), which the U.K.’s Financial Conduct Authority is phasing out as a benchmark.

The change from LIBOR to SOFR could expose the Company’s borrowings to less favorable rates.

If the change to SOFR results in increased interest rates or if the Company's lenders have increased costs due to the change, then the Company's debt that uses benchmark rates could be affected and, in turn, the Company's cash flows and interest expense could be adversely impacted.

Fluctuations in natural gas prices could adversely affect revenues, cash flows and profitability.

Financial results in the Company’s Exploration and Production segment are materially dependent on prices received for its natural gas production.

Both short-term and long-term price trends affect the economics of exploring for, developing, producing, and gathering natural gas.

Natural gas prices can be volatile and can be affected by various factors, including weather conditions, natural disasters, the level of consumer product demand, national and worldwide economic conditions, economic disruptions caused by terrorist activities, acts of war or major accidents, political conditions in foreign countries, the price and availability of alternative fuels, the proximity to, and availability of, sufficient capacity on transportation and liquefaction facilities, regional and global levels of supply and demand, energy conservation measures, and government regulations.

The Company sells the natural gas that it produces at a combination of current market prices, indexed prices or through fixed-price contracts.

The Company hedges a significant portion of future sales that are based on indexed prices utilizing the physical sale counter-party and/or the financial markets.

The prices the Company receives depend upon factors beyond the Company’s control, including the factors affecting price mentioned above.

The Company believes that any prolonged reduction in oil and gas prices could restrict its ability to continue the level of exploration and production activity the Company otherwise would pursue, which could have a material adverse effect on its revenues, cash flows and results of operations.

In the Company’s Pipeline and Storage segment, significant changes in the price differential between equivalent quantities of gas at different geographic locations could adversely impact the Company.

For example, if the price of gas at a particular receipt point on the Company’s pipeline system increases relative to the price of gas at other locations, then the volume of gas received by the Company at the relatively more expensive receipt point may decrease, or the price the Company charges to transport that gas may decrease.

Changes in price differentials can cause shippers to seek alternative lower priced gas supplies and, consequently, alternative transportation routes.

The Company believes that any prolonged reduction in natural gas prices could restrict its ability to continue the level of exploration and production activity the Company otherwise would pursue, which could have a material adverse effect on its future revenues, cash flows and results of operations.

In the Company’s Pipeline and Storage segment, significant changes in the price differential between equivalent quantities of natural gas at different geographic locations could adversely impact the Company.

For example, if the price of natural gas at a particular receipt point on the Company’s pipeline system increases relative to the price of natural gas at other locations, then the volume of natural gas received by the Company at the relatively more expensive receipt point may decrease, or the Company may need to discount the approved tariff rate for that transportation path in the future in order to maintain the existing volumes on its system.

Changes in price differentials can cause shippers to seek alternative lower priced natural gas supplies and, consequently, alternative transportation routes.

In some cases, shippers may decide not to renew transportation contracts due to changes in price differentials.

While much of the impact of lower volumes under existing contracts would be offset by the straight fixed-variable rate design, this rate design does not protect Supply Corporation or Empire where shippers do not contract for expiring capacity at the same quantity and rate.

contract renewals were to decrease, revenues and earnings in this segment may decrease.

If contract renewals were to decrease, revenues and earnings in this segment may decrease.

Significant changes in the price differential between futures contracts for gas having different delivery dates could also adversely impact the Company.

For example, if the prices of gas futures contracts for winter deliveries to locations served by the Pipeline and Storage segment decline relative to the prices of such contracts for summer deliveries (as a result, for instance, of increased production of gas within the segment’s geographic area or other factors), then demand for the Company’s gas storage services driven by that price differential could decrease.

These changes could adversely affect revenues, cash flows and results of operations.

For example, if the prices of natural gas futures contracts for winter deliveries to locations served by the Pipeline and Storage segment decline relative to the prices of such contracts for summer deliveries (as a result, for instance, of increased production of gas within the segment’s geographic area or other

factors), then demand for the Company’s natural gas storage services driven by that price differential could decrease.

These changes could adversely affect future revenues, cash flows and results of operations.

In the Company’s Utility segment, during periods when natural gas prices are significantly higher than historical levels, customers may have trouble paying the resulting higher bills, which could increase bad debt expenses and ultimately reduce earnings.

Additionally, increases in the cost of purchased gas affect cash flows and can therefore impact the amount or availability of the Company’s capital resources.

The Company has significant transactions involving price hedging of its oil and gas production as well as its fixed price sale commitments.

To protect itself to some extent against unusual price volatility and to lock in fixed pricing on oil and gas production for certain periods of time, the Company’s Exploration and Production segment regularly enters into commodity price derivatives contracts (hedging arrangements) with respect to a portion of its expected production.

These contracts may extend over multiple years, covering a substantial majority of the Company’s expected energy production over the course of the fiscal year, and lesser percentages of subsequent years' expected production.

The Company has significant transactions involving price hedging of its natural gas production as well as its fixed price sale commitments.

To protect itself to some extent against price volatility and to lock in fixed pricing on natural gas production for certain periods of time, the Company’s Exploration and Production segment regularly enters into commodity price derivatives contracts (hedging arrangements) with respect to a portion of its expected production.

These contracts may extend over multiple years, covering a substantial majority of the Company’s expected energy production over the course of the current fiscal year, and lesser percentages of subsequent years' expected production.

These contracts reduce exposure to subsequent price drops but can also limit the Company’s ability to benefit from increases in commodity prices.

The nature of these hedging contracts could lead to potential liquidity impacts in scenarios of significant increases in natural gas or crude oil prices if the Company has hedged its current production at prices below the current market price.

Hedging collateral deposits represent the cash held in Company funded margin accounts to serve as collateral for hedging positions used in the Company’s Exploration and Production segment.

The nature of these hedging contracts could lead to potential liquidity impacts in scenarios of significantly increased natural gas prices if the Company has hedged its current production at prices below the current market price.

Hedging collateral deposits represent the cash, letters of credit, or other eligible instruments held in Company funded margin accounts to serve as collateral for hedging positions used in the Company’s Exploration and Production segment.

A significant increase in natural gas prices may cause the Company’s outstanding derivative instrument contracts to be in a liability position creating margin calls on the Company’s hedging arrangements, which could require the Company to temporarily post significant amounts of cash collateral with our hedge counterparties.

That collateral could be in excess of the Company’s available short-term liquidity under its committed credit facility and other uncommitted sources of capital, leading to potential default under certain of its hedging arrangements.

That interest-bearing cash collateral is returned to us in whole or in part upon a reduction in forward market prices, depending on the amount of such reduction, or in whole upon settlement of the related derivative contract.

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These parties might not be able to perform their obligations under the hedge arrangements.

In the Exploration and Production segment, commodity derivatives contracts must be confined to the price hedging of existing and forecast production.

In the Exploration and Production segment, under the Company’s hedging guidelines, commodity derivatives contracts must be confined to the price hedging of existing and forecast production.

The Company maintains a system of internal controls to monitor compliance with its policy.

However, unauthorized speculative trades, if they were to occur, could expose the Company to substantial losses to cover positions in its derivatives contracts.

In addition, in the event the Company’s actual production of oil and gas falls short of hedged forecast production, the Company may incur substantial losses to cover its hedges.

In addition, in the event the Company’s actual production of natural gas falls short of hedged forecast production, the Company may incur substantial losses to cover its hedges.

The Dodd-Frank Act increased federal oversight and regulation of the over-the-counter derivatives markets and certain entities that participate in those markets.

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You should not place undue reliance on reserve information because such information represents estimates.

This Form 10-K contains estimates of the Company’s proved oil and gas reserves and the future net cash flows from those reserves, which the Company’s petroleum engineers prepared and independent petroleum engineers audited.

Petroleum engineers consider many factors and make assumptions in estimating oil and gas

reserves and future net cash flows.

This Form 10-K contains estimates of the Company’s proved natural gas reserves and the future net cash flows from those reserves, which the Company’s petroleum engineers prepared and independent petroleum engineers audited.

Petroleum engineers consider many factors and make assumptions in estimating natural gas reserves and future net cash flows.

These factors include:

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the assumed effect of governmental regulation;

and assumptions concerning oil and gas prices, production and development costs, severance and excise taxes, and capital expenditures.

Lower oil and gas prices generally cause estimates of proved reserves to be lower.

and assumptions

concerning natural gas prices, production and development costs, severance and excise taxes, and capital expenditures.

Changes in natural gas prices impact the quantity of economic natural gas reserves.

Estimates of reserves and expected future cash flows prepared by different engineers, or by the same engineers at different times, may differ substantially.

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Accordingly, the accuracy of the Company’s reserve estimates is a function of the quality of available data and of engineering and geological interpretation and judgment.

If conditions remain constant, then the Company is reasonably certain that its reserve estimates represent economically recoverable oil and gas reserves and future net cash flows.

If conditions remain constant, then the Company is reasonably certain that its reserve estimates represent economically recoverable natural gas reserves and future net cash flows.

If conditions change in the future, then subsequent reserve estimates may be revised accordingly.

You should not assume that the present value of future net cash flows from the Company’s proved reserves is the current market value of the Company’s estimated oil and gas reserves.

In accordance with SEC requirements, the Company bases the estimated discounted future net cash flows from its proved reserves on a 12-month average of historical prices for oil and gas (based on first day of the month prices and adjusted for hedging) and on costs as of the date of the estimate, which are all discounted at the SEC mandated discount rate.

You should not assume that the present value of future net cash flows from the Company’s proved reserves is the current market value of the Company’s estimated natural gas reserves.

In accordance with SEC requirements, the Company bases the estimated discounted future net cash flows from its proved reserves on a 12-month average of historical prices for natural gas (based on first day of the month prices and adjusted for hedging) and on costs as of the date of the estimate, which are all discounted at the SEC mandated discount rate.

Actual future prices and costs may differ materially from those used in the net present value estimate.

Any significant price changes will have a material effect on the present value of the Company’s reserves.

Petroleum engineering is a subjective process of estimating underground accumulations of gas and other hydrocarbons that cannot be measured in an exact manner.

The process of estimating oil and gas reserves is complex.

Petroleum engineering is a subjective process of estimating underground accumulations of natural gas and other hydrocarbons that cannot be measured in an exact manner.

The process of estimating natural gas reserves is complex.

The process involves significant assumptions in the evaluation of available geological, geophysical, engineering and economic data for each reservoir.

Future economic and operating conditions are uncertain, and changes in those conditions could cause a revision to the Company’s reserve estimates in the future.

Estimates of economically recoverable oil and gas reserves and of future net cash flows depend upon a number of variable factors and assumptions, including historical production from the area compared with production from other comparable producing areas, and the assumed effects of regulations by governmental agencies.

Estimates of economically recoverable natural gas reserves and of future net cash flows depend upon a number of variable factors and assumptions, including historical production from the area compared with production from other comparable producing areas, and the assumed effects of regulations by governmental agencies.

Because all reserve estimates are to some degree subjective, each of the following items may differ materially from those assumed in estimating reserves:

the quantities of oil and gas that are ultimately recovered, the timing of the recovery of oil and gas reserves, the production and operating costs to be incurred, the amount and timing of future development and abandonment expenditures, and the price received for the production.

the quantities of natural gas that are ultimately recovered, the timing of the recovery of natural gas reserves, the production and operating costs to be incurred, the amount and timing of future development and abandonment expenditures, and the price received for the production.

Financial accounting requirements regarding exploration and production activities may affect the Company's profitability.

The Company accounts for its exploration and production activities under the full cost method of accounting.

Each quarter, the Company must perform a "ceiling test" calculation, comparing the level of its unamortized investment in oil and gas properties to the present value of the future net revenue projected to be recovered from those properties according to methods prescribed by the SEC.

In determining present value, the Company uses a 12-month historical average price for oil and gas (based on first day of the month prices and adjusted for hedging) as well as the SEC mandated discount rate.

Each quarter, the Company must perform a "ceiling test" calculation, comparing the level of its unamortized investment in oil and natural gas properties to the present value of the future net revenue projected to be recovered from those properties according to methods prescribed by the SEC.

In determining present value, the Company uses a 12-month historical average price for oil and natural gas (based on first day of the month prices and adjusted for hedging) as well as the SEC mandated discount rate.

If, at the end of any quarter, the amount of the unamortized investment exceeds the net present value of the projected future cash flows, such investment may be considered to be "impaired," and the full cost authoritative accounting and reporting guidance require that the investment must be written down to the calculated net present value.

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As a result, an impairment can impact the Company's ability to maintain compliance with the debt to capitalization covenant set forth in its credit facilities.

For the fiscal year ended September 30, 2020 and the quarter ended

December 31, 2020, the Company recognized non-cash, pre-tax impairment charges on its oil and natural gas properties of $449.4 million and $76.2 million, respectively.

For example, for the fiscal year ended September 30, 2020 and the quarter ended December 31, 2020, the Company recognized non-cash, pre-tax impairment charges on its oil and natural gas properties of $449.4 million and $76.2 million, respectively.

OPERATIONAL RISKS

The COVID-19 global pandemic could have a material adverse effect on the Company’s business, results of operations, cash flows and financial condition.

The actual or perceived effects of a widespread public health concern or pandemic, such as COVID-19 or variants thereof, could negatively affect our business and results of operations.

While to date the Company has not experienced any material negative effects as a result of the COVID-19 pandemic, the situation continues to evolve and could result in material negative effects on our business and results of operations.

The Company and its Pandemic Response Team are closely monitoring and responding to the impacts of the pandemic on the Company’s workforce, customers, contractors, suppliers, business continuity, and liquidity.

Significant changes in legislation or regulatory policy to address the COVID-19 pandemic could adversely impact the Company.

Although it is not possible to predict the ultimate impact of the COVID-19 pandemic, including on the Company’s business, results of operations, cash flows or financial positions, such impacts that may be material include, but are not limited to:

(i) a significant reduction in near-term demand for natural gas and/or oil;

(ii) increased late or uncollectible customer payments;

(iii) the inability for the Company’s contractors or suppliers to fulfill their contractual obligations;

(iv) significant changes in the Company’s human capital management approach, increased cybersecurity threats associated with work-from-home arrangements, the potential impact of vaccine mandates, and increased purchases of personal protective equipment as the Company assesses and implements its return-to-work plan;

(v) difficulties in obtaining financing on acceptable terms or at all for working capital, capital expenditures and other investments, or to refinance maturing debt;

and (vi) impacts on natural gas and oil pricing and the potential impairment of the recorded value of certain assets as a result of reduced projected cash flows.

To the extent the duration of any of these conditions extends for a longer period of time, the adverse impact will generally be more severe.

The nature of the Company’s operations presents inherent risks of loss that could adversely affect its results of operations, financial condition and cash flows.

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Such litigation or proceedings could result in substantial monetary judgments, fines or penalties against the Company or be resolved on unfavorable terms, the result of which could have a material adverse effect on the Company’s results of operations, financial condition and cash flows.

Third party attempts to breach the Company’s network security could disrupt the Company’s operations and adversely affect its financial results.

The Company’s information technology and operational technology systems are subject to attempts by others to gain unauthorized access, or to otherwise introduce malicious software.

These attempts might be the result of industrial or other espionage, or actions by hackers seeking to harm the Company, its services or customers.

Our businesses depend on natural gas gathering, storage, and transmission facilities, which, if unavailable, could adversely affect the Company’s results of operations, financial condition, and cash flows.

Our businesses depend on natural gas gathering, storage, and transmission facilities, including third-party midstream facilities that are not within our control.

Our Exploration and Production and Utility segments have entered into long-term agreements with midstream providers for natural gas gathering, storage, and/or transportation services.

The disruption or unavailability of the midstream facilities required to provide these services, due to maintenance, mechanical failures, accidents, weather, regulatory requirements and/or other operational hazards, could negatively impact our ability to market and/or deliver our products, especially if such disruption were to last for an extended period of time.

In addition, any substantial disruptions to the services provided by our midstream providers could cause us to curtail a significant amount of our production or could impair our ability to deliver natural gas to our utility customers and could have a material adverse effect on the Company’s results of operations, financial condition, and cash flows.

Furthermore, as substantially all of our production is transported from the well pad to interconnections with various FERC-regulated pipelines though our affiliated gathering facilities, such a production curtailment could result in significantly reduced throughput on those facilities, adversely affecting revenues and cash flows of our Gathering business.

The disruption of the Company's information technology and operational technology systems, including third party attempts to breach the Company’s network security, could adversely affect the Company's financial results.

The Company relies on information technology and operational technology systems to process, transmit, and store information, to manage and support a variety of business processes and activities, and to comply with regulatory, legal, and tax requirements.

The Company's information technology and operational technology systems, some of which are dependent on services provided by third parties, may be vulnerable to damage, interruption, or shutdown due to any number of causes outside of our control such as catastrophic events, natural disasters, fires, power outages, systems failures, telecommunications failures, and employee error or malfeasance.

In addition, the Company's information technology and operational technology systems are subject to attempts by others to gain unauthorized access, or to otherwise introduce malicious software.

attempts might be the result of industrial or other espionage, or actions by hackers seeking to harm the Company, its services or customers.

These more sophisticated cyber-related attacks, as well as cybersecurity failures resulting from human error, pose a risk to the security of the Company’s systems and networks and the confidentiality, availability and integrity of the Company’s and its customers’ data.

That data may be considered sensitive, confidential, or personal information that is subject to privacy and security laws, regulations and directives.

While the Company employs reasonable and appropriate controls to protect data and the Company’s systems, the Company may be vulnerable to material security breaches, lost or corrupted data, programming errors and employee errors and/or malfeasance that could lead to the unauthorized access, use, disclosure, modification or destruction of the sensitive, confidential or personal information.

While the Company employs reasonable and appropriate controls to maintain and protect its information technology and operational technology systems, the Company may be vulnerable to material disruptions, material security breaches, lost or corrupted data, programming errors and employee errors and/or malfeasance that could lead to interruptions to the Company's business operations or the unauthorized access, use, disclosure, modification or destruction of sensitive, confidential or personal information.

Attempts to breach the Company’s network security may result in disruption of the Company’s business operations and services, delays in production, theft of sensitive and valuable data, damage to our physical systems, and reputational harm.

Significant expenditures may be required to remedy breaches, including restoration of customer service and enhancement of information technology and operational technology systems.

The Company seeks to prevent, detect and investigate these security incidents, but in some cases the Company might be unaware of an incident or its magnitude and effects.

Significant expenditures may be required to remedy system disruptions or breaches, including restoration of customer service and enhancement of information technology and operational technology systems.

The Company seeks to prevent, detect and investigate security incidents, but in some cases the Company might be unaware of an incident or its magnitude and effects.

In addition to existing risks, the adoption of new technologies may also increase the Company’s exposure to data breaches or the Company’s ability to detect and remediate effects of a breach.

The Company has experienced attempts to breach its network security and has received notifications from third-party service providers who have experienced data breaches where Company data was potentially impacted.

The Company has experienced attempts to breach its network security and has received notifications from third-party service providers who have experienced disruptions to services or data breaches where Company data was potentially impacted.

Although the scope of such incidents is sometimes unknown, they could prove to be material to the Company.

Even though insurance coverage is in place for cyber-related risks, if such a breach were to occur, the Company’s operations, earnings and financial condition could be adversely affected to the extent not fully covered by such insurance.

The amount and timing of actual future oil and gas production and the cost of drilling are difficult to predict and may vary significantly from reserves and production estimates, which may reduce the Company’s earnings.

There are many risks in developing oil and gas, including numerous uncertainties inherent in estimating quantities of proved oil and gas reserves and in projecting future rates of production and timing of development expenditures.

The future success of the Company’s Exploration and Production and Gathering segments depends on its ability to develop additional oil and gas reserves that are economically recoverable, and its failure to do so may reduce the Company’s earnings.

Even though insurance coverage is in place for cyber-related risks, if a material disruption or breach were to occur, the Company’s operations, earnings, cash flows and financial condition could be adversely affected to the extent not fully covered by such insurance.

The amount and timing of actual future natural gas production and the cost of drilling are difficult to predict and may vary significantly from reserves and production estimates, which may reduce the Company’s earnings.

There are many risks in developing natural gas, including numerous uncertainties inherent in estimating quantities of proved natural gas reserves and in projecting future rates of production and timing of development expenditures.

The future success of the Company’s Exploration and Production and Gathering segments depends on its ability to develop additional natural gas reserves that are economically recoverable, and its failure to do so may reduce the Company’s earnings.

The total and timing of actual future production may vary significantly from reserves and production estimates.

The Company’s drilling of development wells can involve significant risks, including those related to timing, success rates, and cost overruns, and these risks can be affected by lease and rig availability, geology, and other factors.

Drilling for oil and gas can be unprofitable, not only from non-productive wells, but from productive wells that do not produce sufficient revenues to return a profit.

Also, title problems, weather conditions, governmental requirements, including completion of environmental impact analyses and compliance with other environmental laws and regulations, and shortages or delays in the delivery of equipment and services can delay drilling operations or result in their cancellation.

Drilling for natural gas can be unprofitable, not only from non-productive wells, but from productive wells that do not produce sufficient revenues to return a profit.

Also, title problems, competition and cost to acquire mineral rights, weather conditions, governmental requirements, including completion of environmental impact analyses and compliance with other environmental laws and regulations, and shortages or delays in the delivery of equipment and services can delay drilling operations or result in their cancellation.

The cost of drilling, completing, and operating wells is significant and often uncertain, and new wells may not be productive or the Company may not recover all or any portion of its investment.

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Climate change could create acute and/or chronic physical risks to the Company’s operations, which may adversely affect financial results.

Acute physical risks include more frequent and severe weather events, which may result in adverse physical effects on portions of the country’s gas infrastructure, and could disrupt the Company’s supply chain and ultimately its operations.

Disruption of production activities, as well as transportation and distribution systems, could result in reduced operational efficiency, and customer service interruption.

Acute physical risks include more frequent and severe weather events, which may result in adverse physical effects on portions of U.S.

natural gas infrastructure, and could disrupt the Company’s supply chain and ultimately its operations.

Disruption of production activities, as well as natural gas transportation and distribution systems, could result in reduced operational efficiency, and customer service interruption.

Severe weather events could also cause physical damage to facilities, all of which could lead to reduced revenues, increased insurance premiums or increased operational costs.

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Chronic physical risks include long-term shifts in climate patterns resulting in new storm patterns or chronic increased temperatures, which could cause demand for gas to increase or decrease as a result of warmer weather and less degree days, and adversely impact the Company's future financial results.

Disputes with collective bargaining units representing the Company’s workforce, and work stoppage (e.g.

strike or lockout), could adversely affect the Company’s operations as well as its financial results.

Approximately half of the Company’s active workforce is represented by collective bargaining units in New York and Pennsylvania.

These labor agreements are negotiated periodically, and therefore, the Company is subject to the risk that such agreements may not be able to be renewed on reasonably satisfactory terms, on anticipated timelines, or at all.

In connection with the negotiation of such collective bargaining agreements, or in future matters involving collective bargaining units representing the Company’s workforce, the Company could experience, among other things, strikes, work stoppages, slowdowns or lockouts, which could cause a disruption of the Company's operations and have a material adverse effect on the Company's results of operations and financial condition.

REGULATORY RISKS

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The Company is subject to the jurisdiction of the FERC with respect to Supply Corporation, Empire and some transactions performed by other Company subsidiaries.

The FERC, among other things, approves the rates that Supply Corporation and Empire may charge to their gas transportation and/or storage customers.

The FERC, among other things, approves the rates

that Supply Corporation and Empire may charge to their gas transportation and/or storage customers.

Those approved rates also impact the returns that Supply Corporation and Empire may earn on the assets that are dedicated to those operations.

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If Supply Corporation or Empire is required in a rate proceeding to adjust the rates it charges its gas transportation and/or storage customers, or if either Supply Corporation or Empire is unable to obtain approval for rate increases, particularly when necessary to cover increased costs, Supply Corporation's or Empire's earnings may decrease.

In addition, the FERC exercises jurisdiction over the construction and operation of interstate gas transmission facilities and also possesses significant penalty authority with respect to violations of the laws and regulations it administers.

In addition, the FERC exercises jurisdiction over the construction and operation of interstate natural gas transmission and storage facilities and also possesses significant penalty authority with respect to violations of the laws and regulations it administers.

The operations of Distribution Corporation are subject to the jurisdiction of the NYPSC, the PaPUC and, with respect to certain transactions, the FERC.

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Costs of compliance and liabilities could negatively affect the Company’s results of operations, financial condition and cash flows.

In addition, compliance with environmental laws, regulations or permit conditions could require unexpected capital expenditures at the Company’s facilities, temporarily shut down the Company’s facilities or delay or cause the cancellation of expansion projects or oil and gas drilling activities.

Because the costs of such compliance are significant, additional regulation could negatively affect the Company’s business.

Increased regulation of exploration and production activities, including hydraulic fracturing, could adversely impact the Company.

Due to the Marcellus and Utica Shale gas plays in the northeast United States, together with the fiscal difficulties faced by state agencies in Pennsylvania, various state legislative and regulatory initiatives regarding the exploration and production business have been proposed or adopted.

These initiatives include potential new or updated statutes and regulations governing the drilling, casing, cementing, testing, abandonment and monitoring of wells, the protection of water supplies and restrictions on water use and water rights, hydraulic fracturing operations, surface owners’ rights and damage compensation, the spacing of wells, use and disposal of potentially hazardous materials, and environmental and safety issues regarding gas pipelines.

New permitting fees and/or severance taxes for oil and gas production are also possible.

Various state legislative and regulatory initiatives regarding the exploration and production business have been proposed or adopted in the northeast United States affecting the Marcellus and Utica Shale gas plays.

These initiatives include potential new or updated statutes and regulations governing the drilling, casing, cementing, testing, monitoring and abandonment of wells, the protection of water supplies and restrictions on water use and water rights, hydraulic fracturing operations, surface owners’ rights and damage compensation, the spacing of wells, use and disposal of potentially hazardous materials, and environmental and safety issues regarding gas pipelines.

New permitting fees and/or severance taxes for natural gas production are also possible.

Additionally, legislative initiatives in the U.S.

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The Company could be adversely affected by the delayed recovery or disallowance of purchased gas costs incurred by the Utility segment.

Tariff rate schedules in each of the Utility segment’s service territories contain purchased gas adjustment clauses which permit Distribution Corporation to file with state regulators for rate adjustments to recover

increases in the cost of purchased gas.

Assuming those rate adjustments are granted, increases in the cost of purchased gas have no direct impact on profit margins.

Distribution Corporation is required to file an accounting reconciliation with the regulators in each of the Utility segment’s service territories regarding the costs of purchased gas.

Extreme weather events, variations in seasonal weather, and other events disrupting supply and/or demand could cause the Company to experience unforeseeable and unprecedented increases in the costs of purchased gas.

Any prudently incurred gas costs could be subject to deferred recovery if regulators determine such costs are detrimental to customers in the short-term.

Furthermore, there is a risk of disallowance of full recovery of these costs if regulators determine that Distribution Corporation was imprudent in making its gas purchases.

Any material delayed recovery or disallowance of purchased gas costs could have a material adverse effect on cash flow and earnings.

Tariff rate schedules in each of the Utility segment’s service territories contain purchased natural gas adjustment clauses which permit Distribution Corporation to file with state regulators for rate adjustments to recover increases in the cost of purchased natural gas.

Assuming those rate adjustments are granted, increases in the cost of purchased natural gas have no direct impact on profit margins.

Distribution Corporation is required to file an accounting reconciliation with the regulators in each of the Utility segment’s service territories regarding the costs of purchased natural gas.

Any prudently incurred natural gas costs could be subject to deferred recovery if regulators determine such costs are detrimental to customers in the short-term.

Furthermore, there is a risk of disallowance of full recovery of these costs if regulators determine that Distribution Corporation was imprudent in making its natural gas purchases.

Any material delayed recovery or disallowance of purchased natural gas costs could have a material adverse effect on cash flow and earnings.

GENERAL RISKS

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Campaigns by shareholders to effect changes at publicly traded companies are sometimes led by investors seeking to increase short-term shareholder value through actions such as financial restructuring, increased debt, special dividends, stock repurchases or sales of assets or the entire company.

Additionally, activist shareholders may submit proposals to promote an environmental, social or governance position.

Additionally, activist shareholders may submit proposals to promote an environmental, social, and/or governance position.

Responding to proxy contests and other actions by activist shareholders can be costly and time-consuming, disrupting the Company’s operations and diverting the attention of the Company’s Board of Directors and senior management from the pursuit of business strategies.

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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.

What changed 10-K

Item 1A. Risk Factors