What changed in this filing

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Item 1A. Risk Factors

2021-04-26 compared with 2020-05-06 · 279 added, 290 removed, 308 unchanged (65% of the section changed)

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produce economically.

Natural gas prices, based on the twelve-month average of the first of the month Henry Hub index price, were $2.577 per MMBTU in 2019 compared to $3.10 per MMBTU in 2018, and have ranged from $1.725 to $2.050 per MMBTU for the

first three months of 2020.

Oil prices, based on the NYMEX monthly average price, were $55.69 per barrel in 2019 compared to $65.56 per barrel in 2018, and first of the Month NYMEX oil prices have averaged $52.46 per barrel for the first three

months of 2020.

The price of oil has fallen approximately $43.00 a barrel based on WTI from December 31, 2019 to May 1, 2020, due in part to failed OPEC negotiations as well as concerns about the

COVID-19 pandemic, which has significantly decreased worldwide demand for oil.

Any substantial or

extended decline in future natural gas or crude oil prices would have a material adverse effect on our future business, financial condition, results of operations, cash flows, liquidity or ability to finance planned capital expenditures and

Furthermore, substantial, extended decreases in natural gas and crude oil prices may cause us to delay or postpone a significant portion of our exploration, development and exploitation projects or may render such projects uneconomic,

which may result in significant downward adjustments to our estimated proved reserves and could negatively impact our ability to borrow and cost of capital and our ability to access capital markets, increase our costs under our revolving credit

facility, and limit our ability to execute aspects of our business plans.

Prices for natural gas and oil are subject to wide fluctuations

in response to relatively minor changes in the supply of and demand for natural gas and oil, market uncertainty and a variety of additional factors that are beyond our control.

Natural gas prices, based on the twelve-month average first-of-the-month Henry Hub index price, were $1.985

per MMBTU in 2020 as compared to $2.577 per MMBTU in 2019, and have ranged from $2.385 to $2.645 per MMBTU for the first three months of 2021.

Average monthly spot crude oil prices for West Texas Intermediate (WTI), as reported by the U.S.

Information Administration, were $39.23 per barrel in 2020 as compared to $56.98 per barrel in 2019, and have averaged $57.79 per barrel for the first three months of 2021.

The average WTI oil price has rebounded $45.78 a barrel from its low monthly

average price of $16.55 per barrel in April, 2020, occurring as a result of the economic slow-down caused by the COVID-19 pandemic, to its most recent monthly average price of $62.33 per barrel in March, 2021.

Any substantial or extended decline in future natural gas or crude oil prices would have a material adverse effect on our future

business, financial condition, results of operations, cash flows, liquidity or ability to finance planned capital expenditures and commitments.

Furthermore, substantial, extended decreases in natural gas and crude oil prices may cause us to delay or

postpone a significant portion of our exploration, development and exploitation projects or may render such projects uneconomic, which may result in significant downward adjustments to our estimated proved reserves and could negatively impact our

ability to borrow and cost of capital and our ability to access capital markets, increase our costs under our revolving credit facility, and limit our ability to execute aspects of our business plans.

Prices for natural gas and oil are subject to wide fluctuations in response to relatively minor changes in the supply of and demand for

natural gas and oil, market uncertainty and a variety of additional factors that are beyond our control.

These factors include:

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inventory storage levels;

the nature and extent of domestic and foreign governmental regulations and taxation, including environmental and

climate change regulation;

the nature and extent of domestic and foreign governmental regulations and taxation, including environmental

and climate change regulation;

the price, availability and acceptance of alternative fuels;

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If the prices of oil and natural gas decline further, our operations, financial condition and level of expenditures for the development of our oil and natural gas reserves may be materially and adversely affected.

In addition, lower oil and natural gas prices may reduce the amount of oil and natural gas that we can produce economically.

This may result

in our having to make substantial downward adjustments to our estimated proved reserves.

If this occurs or if our production estimates change or our exploration or development activities are curtailed, full cost accounting rules may require us to

write down, as a noncash charge to earnings, the carrying value of our oil and natural gas properties.

Reductions in our reserves could also negatively impact the borrowing base under our revolving credit facility, which could further limit our

liquidity and ability to conduct additional exploration and development activities.

Concerns over general economic, business or industry conditions

may have a material adverse effect on our results of operations, liquidity and financial condition.

Concerns over global economic

conditions, energy costs, geopolitical issues, inflation, the availability and cost of credit, the European, Asian and the United States financial markets have in the past contributed, and may in the future contribute, to economic uncertainty and

diminished expectations for the global economy.

In addition, continued hostilities in the Middle East, the occurrence or threat of terrorist attacks in the United States or other countries and global or national health concerns could adversely

affect the global economy.

These factors, combined with volatility in commodity prices, business and consumer confidence and unemployment rates, may precipitate an economic slowdown.

Concerns about global economic growth may have an adverse impact

on global financial markets and commodity prices.

If the economic climate in the United States or abroad deteriorates, worldwide demand for petroleum products could diminish, which could impact the price at which we can sell our production, affect

the ability of our vendors, suppliers and customers to continue operations and ultimately adversely impact our results of operations, liquidity and financial condition.

These factors and the volatile nature of the energy markets make it impossible

to predict with any certainty the future prices of natural gas and oil.

If natural gas and oil prices decline significantly for a sustained period of time, the lower prices may adversely affect our ability to make planned expenditures, raise

additional capital or meet our financial obligations.

Financial difficulties encountered by our oil and natural gas purchasers, third-party

operators or other third parties could decrease cash flow from operations and adversely affect our exploration and development activities.

We derive essentially all of our revenues from the sale of our oil, natural gas and NGLs to unaffiliated third-party purchasers, independent

marketing companies and midstream companies.

Any delays in payments from such purchasers caused by their financial difficulties, including those resulting from the impacts of COVID-19 and its impact on the

global economy, will have an immediate negative effect on our results of operations and cash flows.

Additionally, liquidity and cash flow

problems encountered by our working interest co-owners or the third-party operators of our non-operated properties may prevent or delay the drilling of a well or the

development of a project.

Our working interest co-owners may be unwilling or unable to pay their share of the costs of projects as they become due.

In the case of a working interest owner, we could be required

to pay the working interest owners share of the project costs.

The shut-in of our wells could negatively impact our

production, liquidity, and, ultimately, our operations, results, and performance.

Our production depends, in part, upon our wells

that are capable of commercial production not being shut-in (i.e., suspended from production).

The lack of availability of capacity on third-party systems and facilities or the

shut-in of an oil fields production could result in the shut-in of our wells.

In response to recent commodity prices our efforts to reduce costs include reducing

operating costs.

The Company elected to shut-in marginal wells and will continue to review field operations to minimize costs and identify wells for short term shut-ins

through May and June.

In addition, lower oil and natural gas prices may reduce the amount of oil and natural gas

that we can produce economically.

This may result in our having to make substantial downward adjustments to our estimated proved reserves.

If this occurs or if our production estimates change or our exploration or development activities are

curtailed, full cost accounting rules may require us to write down, as a noncash charge to earnings, the carrying value of our oil and natural gas properties.

Reductions in our reserves could also negatively impact the borrowing base under our

revolving credit facility, which could further limit our liquidity and ability to conduct additional exploration and development activities.

Concerns over general economic, business or industry conditions may have a material adverse effect on our results of operations, liquidity and financial

Concerns over global economic conditions, energy costs, geopolitical issues, inflation, the availability and cost of

credit, the European, Asian and the United States financial markets have in the past contributed, and may in the future contribute, to economic uncertainty and diminished expectations for the global economy.

In addition, continued hostilities in the

Middle East, the occurrence or threat of terrorist attacks in the United States or other countries and global or national health concerns could adversely affect the global economy.

These factors, combined with volatility in commodity prices,

business and consumer confidence and unemployment rates, may precipitate an economic slowdown.

Concerns about global economic growth may have an adverse impact on global financial markets and commodity prices.

If the economic climate in the United

States or abroad deteriorates, worldwide demand for petroleum products could diminish, which could impact the price at which we can sell our production, affect the ability of our vendors, suppliers and customers to continue operations and ultimately

adversely impact our results of operations, liquidity and financial condition.

These factors and the volatile nature of the energy markets make it impossible to predict with any certainty the future prices of natural gas and oil.

If natural gas and

oil prices decline significantly for a sustained period of time, the lower prices may adversely affect our ability to make planned expenditures, raise additional capital or meet our financial obligations.

Financial difficulties encountered by our oil and natural gas purchasers, third-party operators or other third parties could decrease cash flow from

operations and adversely affect our exploration and development activities.

We derive essentially all of our revenues from the

sale of our oil, natural gas and NGLs to unaffiliated third-party purchasers, independent marketing companies and midstream companies.

Any delays in payments from such purchasers caused by their financial difficulties, including those resulting from

the impacts of COVID-19 and its impact on the global economy, will have an immediate negative effect on our results of operations and cash flows.

Additionally, liquidity and cash flow problems encountered by our working interest co-owners or the

third-party operators of our non-operated properties may prevent or delay the drilling of a well or the development of a project.

Our working interest co-owners may be

unwilling or unable to pay their share of the costs of projects as they become due.

In the case of a working interest owner, we could be required to pay the working interest owners share of the project costs.

The shut-in of our wells could negatively impact our production, liquidity, and, ultimately, our operations,

results, and performance.

Our production depends, in part, upon our wells that are capable of commercial production not being shut-in (i.e., suspended from production).

The lack of availability of capacity on third-party systems and facilities or the shut-in of an oil fields production could

result in the shut-in of our wells.

In response to recent commodity prices our efforts to reduce costs include reducing operating costs.

The Company elected to shut-in

marginal wells and will continue to review field operations to minimize costs and identify wells for short term shut-ins through May and June.

The producing wells in which we have an interest occasionally experience reduced or terminated production.

curtailments can result from mechanical failures, contract terms, pipeline and processing plant interruptions, market conditions, operator priorities, and weather conditions.

These curtailments can last from a few days to many months, any of which

could have an adverse effect on our results of operations.

If we experience low oil production volumes due to the shut-in of our wells or other mechanical failures or interruptions, it would impact our ability to generate cash flows from operations and we could experience a reduction in our available liquidity.

A decrease in

our liquidity could adversely affect our ability to meet our anticipated working capital, debt service, and other liquidity needs.

The Company may

be adversely affected by the recent COVID-19 outbreak.

The spread of COVID-19 has caused severe disruptions in the worldwide economy, including the global demand for oil and natural gas, which has disrupted our business and operations.

Moreover, since the beginning of January 2020,

the COVID-19 outbreak has caused significant disruption in the financial markets both globally and in the United States.

The continued spread of COVID-19 has resulted in

a significant decrease in business and may cause our oil and natural gas purchasers to be unable to meet existing payment or other obligations to us, particularly in the event of a spread of COVID-19 in our

market areas.

The continued spread of COVID-19 could also negatively impact the availability of our key personnel necessary to conduct our business.

Such a spread could also negatively impact the business and

operations of third party service providers who perform critical services for our business.

If COVID-19 continues to spread or the response to contain COVID-19 is

unsuccessful, we could experience a material adverse effect on our business, financial condition, and results of operations.

Drilling natural gas

and oil wells is a high-risk activity.

These curtailments can result from

mechanical failures, contract terms, pipeline and processing plant interruptions, market conditions, operator priorities, and weather conditions.

These curtailments can last from a few days to many months, any of which could have an adverse effect

on our results of operations.

If we experience low oil production volumes due to the shut-in of

our wells or other mechanical failures or interruptions, it would impact our ability to generate cash flows from operations and we could experience a reduction in our available liquidity.

A decrease in our liquidity could adversely affect our

ability to meet our anticipated working capital, debt service, and other liquidity needs.

Drilling natural gas and oil wells is a high-risk

Our growth is materially dependent upon the success of our drilling program.

natural gas and oil involves numerous risks, including the risk that no commercially productive natural gas or oil reservoirs will be encountered.

The cost of drilling, completing and operating wells is substantial and uncertain, and drilling

operations may be curtailed, delayed or cancelled as a result of a variety of factors beyond our control, including:

Drilling for natural gas and oil involves

numerous risks, including the risk that no commercially productive natural gas or oil reservoirs will be encountered.

The cost of drilling, completing and operating wells is substantial and uncertain, and drilling operations may be curtailed,

delayed or cancelled as a result of a variety of factors beyond our control, including:

decreases in natural gas and oil prices;

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the approval of the prospects by other participants after additional data has been compiled;

economic and industry conditions at the time of drilling, including prevailing and anticipated prices for natural

gas and oil and the availability of drilling rigs and crews;

economic and industry conditions at the time of drilling, including prevailing and anticipated prices for

natural gas and oil and the availability of drilling rigs and crews;

our financial resources and results;

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to integrate the properties into our operations profitably.

We have substantial capital requirements, and we may not be able to obtain needed financing on

satisfactory terms, if at all.

We rely upon access to our revolving credit facility as a source of liquidity for any capital

requirements not satisfied by cash flow from operations or other sources.

We have substantial capital requirements, and we may not be able to obtain needed

financing on satisfactory terms, if at all.

We rely upon access to our revolving credit facility as a source of liquidity for any

capital requirements not satisfied by cash flow from operations or other sources.

Future challenges in the global financial system, including the capital markets, may adversely affect our business and our financial condition.

Our ability to access the

capital markets may be restricted at a time when we desire, or need, to raise capital, which could have an impact on our flexibility to react to changing economic and business conditions.

Adverse economic and market conditions could adversely affect

the collectability of our trade receivables and cause our commodity hedging counterparties to be unable to perform their obligations or to seek bankruptcy protection.

Future challenges in the economy could also lead to reduced demand for natural gas

which could have a negative impact on our revenues.

Our debt agreements also require compliance with covenants to maintain specified

financial ratios.

If the price that we receive for our natural gas and oil production further deteriorates from current levels or continues for an extended period, it could lead to further reduced revenues, cash flow and earnings, which in turn

could lead to a default under those ratios.

Our ability to access

the capital markets may be restricted at a time when we desire, or need, to raise capital, which could have an impact on our flexibility to react to changing economic and business conditions.

Adverse economic and market conditions could adversely

affect the collectability of our trade receivables and cause our commodity hedging counterparties to be unable to perform their obligations or to seek bankruptcy protection.

Future challenges in the economy could also lead to reduced demand for

natural gas which could have a negative impact on our revenues.

Our debt agreements also require compliance with covenants to maintain

specified financial ratios.

turn could lead to a default under those ratios.

Because the calculations of the financial ratios are made as of certain dates, the financial ratios can fluctuate significantly from period to period.

A prolonged period of decreased natural gas and oil

prices or a further decline could further increase the risk of our inability to comply with covenants to maintain specified financial ratios.

In order to provide a margin of comfort with regard to these financial covenants, we may seek to reduce our

capital expenditure plan, sell non-strategic assets or opportunistically modify or increase our derivative instruments to the extent permitted under our debt agreements.

In addition, we may seek to refinance

or restructure all or a portion of our indebtedness.

A prolonged period of decreased natural gas and

oil prices or a further decline could further increase the risk of our inability to comply with covenants to maintain specified financial ratios.

In order to provide a margin of comfort with regard to these financial covenants, we may seek to reduce

our capital expenditure plan, sell non-strategic assets or opportunistically modify or increase our derivative instruments to the extent permitted under our debt agreements.

In addition, we may seek to

refinance or restructure all or a portion of our indebtedness.

We cannot assure you that we will be able to successfully execute any of these strategies, and such strategies may be unavailable on favorable terms or not at all.

The borrowing base under our revolving credit facility may be reduced in light of recent commodity price declines, which could limit us in the future.

The borrowing base under our revolving credit facility is currently $72 million, and lender commitments under our revolving

credit facility are $300 million.

The borrowing base under our revolving credit facility may be reduced in light of recent commodity

price declines, which could limit us in the future.

The borrowing base under our revolving credit facility is currently

$40 million, and lender commitments under our revolving credit facility are $300 million.

The borrowing base is redetermined semi-annually under the terms of the revolving credit facility.

In addition, either we or the lenders may request an interim redetermination twice a year or in conjunction

with certain acquisitions or sales of oil and gas properties.

Our borrowing base may decrease as a result of lower natural gas or oil prices, operating difficulties, declines in reserves, lending requirements or regulations, the issuance of new

indebtedness or for other reasons set forth in our revolving credit agreement.

In the event of a decrease in our borrowing base due to declines in commodity prices or otherwise, our ability to borrow under our revolving credit facility may be

limited and we could be required to repay any indebtedness in excess of the redetermined borrowing base.

In addition, we may be unable to access the equity or debt capital markets to meet our obligations, including any such debt repayment

Strategic determinations, including the allocation of capital and other resources to strategic opportunities, are challenging, and our

failure to appropriately allocate capital and resources among our strategic opportunities may adversely affect our financial condition and reduce our growth rate.

In addition, either we or the lenders may request

an interim redetermination twice a year or in conjunction with certain acquisitions or sales of oil and gas properties.

Our borrowing base may decrease as a result of lower natural gas or oil prices, operating difficulties, declines in reserves,

lending requirements or regulations, the issuance of new indebtedness or for other reasons set forth in our revolving credit agreement.

In the event of a decrease in our borrowing base due to declines in commodity prices or otherwise, our ability to

borrow under our revolving credit facility may be limited and we could be required to repay any indebtedness in excess of the redetermined borrowing base.

In addition, we may be unable to access the equity or debt capital markets to meet our

obligations, including any such debt repayment obligations.

Strategic determinations, including the allocation of capital and other resources to

strategic opportunities, are challenging, and our failure to appropriately allocate capital and resources among our strategic opportunities may adversely affect our financial condition and reduce our growth rate.

Our future growth prospects are dependent upon our ability to identify optimal strategies for our business.

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Moreover, economic or other circumstances may change from those contemplated by our 2021 plan, and our failure to recognize or respond to those changes may limit our ability to achieve our objectives.

Negative public perception regarding us and/or our industry could have an adverse effect on our

Negative public perception regarding us and/or our industry resulting from, among other things, concerns raised by

advocacy groups about hydraulic fracturing, oil spills, greenhouse gas or methane emissions and explosions of natural gas transmission lines, may lead to increased regulatory scrutiny, which may, in turn, lead to new state and federal safety and

environmental laws, regulations, guidelines and enforcement interpretations.

Negative public perception regarding us and/or our industry could have an adverse effect on our operations.

Negative public perception regarding us and/or our industry resulting from, among other things, concerns raised by advocacy groups about

hydraulic fracturing, oil spills, greenhouse gas or methane emissions and explosions of natural gas transmission lines, may lead to increased regulatory scrutiny, which may, in turn, lead to new state and federal safety and environmental laws,

regulations, guidelines and enforcement interpretations.

These actions may cause operational delays or restrictions, increased operating costs, additional regulatory burdens and increased risk of litigation.

governmental authorities exercise considerable discretion in the timing and scope of permit issuance and the public may engage in the permitting process, including through intervention in the courts.

Negative public perception could cause the

permits we need to conduct our operations to be withheld, delayed, or burdened by requirements that restrict our ability to profitably conduct our business.

We face a variety of hazards and risks that could cause substantial financial losses.

Our business involves a variety of operating risks, including:

Moreover, governmental authorities

exercise considerable discretion in the timing and scope of permit issuance and the public may engage in the permitting process, including through intervention in the courts.

Negative public perception could cause the permits we need to conduct our

operations to be withheld, delayed, or burdened by requirements that restrict our ability to profitably conduct our business.

We face a variety of

hazards and risks that could cause substantial financial losses.

Our business involves a variety of operating risks,

blowouts, cratering and explosions;

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However, customers and contractors who provide contractual indemnification protection may not in all cases maintain adequate insurance to support their indemnification obligations.

insurance or indemnification arrangements may not adequately protect us

against liability or loss from all the hazards of our operations.

The occurrence of a significant event that we have not fully insured or indemnified against or the failure of a customer to meet

its indemnification obligations to us could materially and adversely affect our results of operations and financial condition.

Furthermore, we may not be able to maintain adequate insurance in the future at rates we consider reasonable.

From time to time, a small number of our contractors have requested contractual provisions that require us to respond to third-party claims.

insurance or indemnification arrangements may not adequately protect us against liability or loss from all the hazards of our operations.

The occurrence of a significant event that we have not fully insured or indemnified against or the failure of a

customer to meet its indemnification obligations to us could materially and adversely affect our results of operations and financial condition.

Furthermore, we may not be able to maintain adequate insurance in the future at rates we consider

From time to time, a small number of our contractors have requested contractual provisions that require us to respond to

third-party claims.

In some of these instances we have accepted the risk with the understanding that it would be covered under our current coverage.

We evaluate these risk-transferring negotiations cautiously, and we feel that we have adequately mitigated this risk

through existing coverage or acquiring supplemental coverage when appropriate.

Laws and regulations regarding hydraulic fracturing, as well as

governmental reviews of such activities, could result in increased costs and additional operating restrictions, delays or cancellations and have a material adverse effect on the Companys production.

We evaluate these risk-transferring negotiations cautiously, and we feel that we have adequately

mitigated this risk through existing coverage or acquiring supplemental coverage when appropriate.

Laws and regulations regarding hydraulic

fracturing, as well as governmental reviews of such activities, could result in increased costs and additional operating restrictions, delays or cancellations and have a material adverse effect on the Companys production.

Hydraulic fracturing is a common practice that is used to stimulate production of hydrocarbons from tight formations.

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similar legislation in other states in which it does operate could significantly increase the Companys operating costs and have a significant adverse effect on the Companys ability to conduct operations.

States could elect to prohibit

hydraulic fracturing or high volume hydraulic fracturing altogether, following the approach taken by the states of Vermont, Maryland and New York.

Also, local land use restrictions, such as city ordinances, may be adopted to restrict or prohibit

drilling in general or hydraulic fracturing in particular.

In Texas, legislation was adopted providing that the regulation of oil and gas operations in Texas is under the exclusive jurisdiction of the state and thus preempts local regulation of

those operations.

Nonetheless, municipalities and political subdivisions in Texas continue to have the right to enact commercially reasonable regulations for surface activities.

In the event federal, state or local restrictions or bans pertaining to hydraulic fracturing

are adopted in areas where the Company is currently conducting operations, or in the future plans to conduct operations, the Company may incur additional costs to comply with such requirements, experience restrictions, delays or cancellations in the

pursuit of exploration, development or production activities, and perhaps be limited or precluded in the drilling of wells or in the volume that the Company is ultimately able to produce from its reserves;

one or more of which developments could

have a material adverse effect on the Company.

The Companys operations are subject to stringent environmental, oil and gas-related and occupational safety and health laws and regulations that could cause it to delay, curtail or cease its operations or expose it to material costs and liabilities.

The Companys operations are subject to stringent federal, state and local laws and regulations governing, among other things, the

drilling of wells, rates of production, the size and shape of drilling and spacing units or proration units, the transportation and sale of oil, NGL and gas, and the discharging of materials into the environment and environmental protection.

example, state laws regulate the size and shape of drilling and spacing units or proration units governing the pooling of oil and gas properties.

Some states allow forced pooling or integration of tracts to facilitate development, while other states

rely on voluntary pooling of lands and leases.

States could elect to

prohibit hydraulic fracturing or high volume hydraulic fracturing altogether, following the

approach taken by the states of Vermont, Maryland and New York.

Also, local land use restrictions, such as city ordinances, may be adopted to restrict or prohibit drilling in general or hydraulic fracturing in particular.

In Texas, legislation was

adopted providing that the regulation of oil and gas operations in Texas is under the exclusive jurisdiction of the state and thus preempts local regulation of those operations.

Nonetheless, municipalities and political subdivisions in Texas

continue to have the right to enact commercially reasonable regulations for surface activities.

In the event federal, state

or local restrictions or bans pertaining to hydraulic fracturing are adopted in areas where the Company is currently conducting operations, or in the future plans to conduct operations, the Company may incur additional costs to comply with such

requirements, experience restrictions, delays or cancellations in the pursuit of exploration, development or production activities, and perhaps be limited or precluded in the drilling of wells or in the volume that the Company is ultimately able to

produce from its reserves;

one or more of which developments could have a material adverse effect on the Company.

The Companys operations are

subject to stringent environmental, oil and gas-related and occupational safety and health laws and regulations that could cause it to delay, curtail or cease its operations or expose it to material costs and

The Companys operations are subject to stringent federal, state and local laws and regulations governing, among

other things, the drilling of wells, rates of production, the size and shape of drilling and spacing units or proration units, the transportation and sale of oil, NGL and gas, and the discharging of materials into the environment and environmental

For example, state laws regulate the size and shape of drilling and spacing units or proration units governing the pooling of oil and gas properties.

Some states allow forced pooling or integration of tracts to facilitate development,

while other states rely on voluntary pooling of lands and leases.

In some instances, forced pooling or unitization may be implemented by third parties and may reduce the Companys interest in the unitized properties.

In addition, state conservation laws

(i) establish maximum rates of production from oil and gas wells, (ii) generally prohibit the venting or flaring of gas and (iii) impose requirements regarding production rates.

These laws and regulations may limit the amount of oil

and gas the Company can produce from the Companys wells or limit the number of wells or the locations that the Company can drill.

In addition, state

conservation laws (i) establish maximum rates of production from oil and gas wells, (ii) generally prohibit the venting or flaring of gas and (iii) impose requirements regarding production rates.

These laws and regulations may limit

the amount of oil and gas the Company can produce from the Companys wells or limit the number of wells or the locations that the Company can drill.

In connection with its operations, the Company must obtain and maintain numerous environmental and oil and

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installation of new emission controls on some of the Companys equipment, any one or more of which developments could have a material adverse effect on the Companys business, financial condition and results of operations.

Additionally, the Companys operations are subject to a number of federal and state

laws and regulations, including the federal OSHA and comparable state statutes, whose purpose is to protect the health and safety of employees.

Among other things, the OSHA hazard communication standard, the EPA community right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act and comparable state statutes require that information be maintained

Additionally, the Companys operations are subject to a number of federal and state laws and regulations, including the federal OSHA and

comparable state statutes, whose purpose is to protect the health and safety of employees.

Among other things, the OSHA hazard communication standard, the EPA community

right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act and comparable state statutes require that information be maintained

concerning hazardous materials used or produced in the Companys operations and that this information be provided to employees, state and local government authorities and citizens.

There can be no assurance that existing or future regulations will not result in a delay, curtailment or cessation of production or processing

activities, result in a material increase in the costs of production, development, exploration or processing operations or materially and adversely affect the Companys future operations and financial condition.

Noncompliance with these laws

and regulations may subject the Company to sanctions, including administrative, civil or criminal penalties, remedial cleanups or corrective actions, delays in permitting or performance of projects, natural resource damages and other liabilities.

There can be no assurance that existing or future regulations will not result in a delay,

curtailment or cessation of production or processing activities, result in a material increase in the costs of production, development, exploration or processing operations or materially and adversely affect the Companys future operations and

financial condition.

Noncompliance with these laws and regulations may subject the Company to sanctions, including administrative, civil or criminal penalties, remedial cleanups or corrective actions, delays in permitting or performance of projects,

natural resource damages and other liabilities.

Such laws and regulations may also affect the costs of acquisitions.

In addition, these laws and regulations are subject to amendment or replacement in the future with more stringent legal requirements.

Further, any delay, reduction or curtailment

of the Companys development and producing operations due to these laws and regulations could result in the loss of acreage through lease expiration.

In addition, these laws and regulations are subject to amendment or replacement in the future with more stringent legal

requirements.

Further, any delay, reduction or curtailment of the Companys development and producing operations due to these laws and regulations could result in the loss of acreage through lease expiration.

The nature of the Companys assets and production operations may impact the environment or cause environmental contamination, which could result in

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and the owners or operators of properties adjacent to the Companys operations and facilities where the Companys petroleum hydrocarbons, hazardous substances or wastes are taken for reclamation or disposal, may also have the right to

pursue legal actions to enforce compliance as well as seek damages for noncompliance with environmental laws and regulations or for

personal injury or damage to property or natural resources.

Such properties and the substances disposed or released on or under them may be subject to CERCLA, RCRA and analogous state laws, which

could require the Company to remove previously disposed substances, wastes and petroleum hydrocarbons, remediate contaminated property or perform remedial plugging or pit closure operations to prevent future contamination, the costs of which could

have a material adverse effect on the Companys business, financial condition and results of operations.

The Company may not be able

to recover some or any of these costs from sources of contractual indemnity or insurance, as pollution and similar environmental risks generally are not insurable or fully insurable, either because such insurance is not available or because of the

high premium costs and deductibles associated with obtaining such insurance.

The Companys operations are subject to a number of risks arising

out of concerns regarding the threat of climate change, including regulatory, political, litigation and financial risks, that could result in increased operating costs and costs of compliance, limit the areas in which oil and gas production may

occur, reduce demand for the oil and gas the Company produces, and expose the Company to the risk of increased activism and decreased funding for the industry, while the potential physical effects of climate change could disrupt the Companys

production and cause it to incur significant costs in preparing for or responding to those effects.

The threat of climate change

continues to attract considerable attention in the United States and in foreign countries.

Numerous initiatives have been proposed and are expected to continue to be proposed at the international, national, regional and state levels of government to

monitor and limit existing sources of GHG emissions as well as to restrict or eliminate emissions from new sources.

As a result, the Companys operations are subject to a series of regulatory, political, litigation and financial risks

associated with the production and processing of fossil fuels and emission of GHGs.

In the United States, no comprehensive climate change

legislation has been implemented at the federal level.

pursue legal actions to enforce compliance as well as seek damages for noncompliance with environmental laws and regulations or for personal injury or damage to property or natural resources.

Such properties and the substances disposed or released

on or under them may be subject to CERCLA, RCRA and analogous state laws, which could require the Company to remove previously disposed substances, wastes and petroleum hydrocarbons, remediate contaminated property or perform remedial plugging or

pit closure operations to prevent future contamination, the costs of which could have a material adverse effect on the Companys business, financial condition and results of operations.

The Company may not be able to recover some or any of these costs from sources of contractual indemnity or insurance, as pollution and similar

environmental risks generally are not insurable or fully insurable, either because such insurance is not available or because of the high premium costs and deductibles associated with obtaining such insurance.

The Companys operations are subject to a number of risks arising out of concerns regarding the threat of climate change, including regulatory,

political, litigation and financial risks, that could result in increased operating costs and costs of compliance, limit the areas in which oil and gas production may occur, reduce demand for the oil and gas the Company produces, and expose the

Company to the risk of increased activism and decreased funding for the industry, while the potential physical effects of climate change could disrupt the Companys production and cause it to incur significant costs in preparing for or

responding to those effects.

The threat of climate change continues to attract considerable attention in the United

States and in foreign countries.

Numerous initiatives have been proposed and are expected to continue to be proposed at the international, national, regional and state levels of government to monitor and limit existing sources of GHG emissions as

well as to restrict or eliminate emissions from new sources.

As a result, the Companys operations are subject to a series of regulatory, political, litigation and financial risks associated with the production and processing of fossil fuels

and emission of GHGs.

In the United States, no comprehensive climate change legislation has been implemented at the federal level.

However, following the U.S.

Supreme Court finding that GHG emissions constitute a pollutant under the CAA, the EPA has adopted regulations that, among other things, (i) establish

construction and operating permit reviews for GHG emissions from certain large stationary sources, (ii) require the monitoring and annual reporting of GHG emissions from certain petroleum and gas system sources in the United States,

(iii) implement CAA emission standards directing the reduction of methane from certain new, modified, or reconstructed facilities in the oil and gas sector, and (iv) together with the DOT, implement GHG emissions limits on vehicles

manufactured for operation in the United States.

Additionally, various states, groups of states, and other countries have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as

GHG cap and trade programs, carbon taxes, reporting and tracking programs, and restriction of emissions.

At the international level, there is a non-binding agreement, the United Nations sponsored Paris

Agreement, for nations to limit their GHG emissions through individually-determined reduction goals every five years after 2020, although the United States has announced its withdrawal from such agreement, effective November 4, 2020.

Supreme Court finding that GHG emissions constitute a pollutant under the CAA, the EPA has adopted regulations that, among other things, (i) establish construction and operating permit reviews for GHG emissions from

certain large stationary sources, (ii) require the monitoring and annual reporting of GHG emissions from certain petroleum and gas system sources in the United States, (iii) implement CAA emission standards directing the reduction of

methane from certain new, modified, or reconstructed facilities in the oil and gas sector, and (iv) together with the DOT, implement GHG emissions limits on vehicles manufactured for operation in the United States.

Additionally, various states,

groups of states, and other countries have adopted or are considering adopting legislation, regulations or other regulatory initiatives that are focused on such areas as GHG cap and trade programs, carbon taxes, reporting and tracking programs, and

restriction of emissions.

At the international level, there is a non-binding agreement, the United Nations sponsored Paris Agreement, for nations to limit their GHG emissions through

individually-determined reduction goals every five years after 2020, although the United States has announced its withdrawal from such agreement, effective November 4, 2020.

Governmental, scientific, and public concern over the threat of climate change arising from GHG emissions has resulted in increasing political

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Litigation risks are also increasing, as a number of cities, local governments or other persons have sought to bring suit against oil and gas exploration and production companies in state or federal court, alleging, among other things,

that such companies created public nuisances by producing fuels that contributed to global warming

effects, such as rising sea levels, and therefore are responsible for roadway and infrastructure damages, or alleging that the companies have been aware of the adverse effects of climate change

for some time but defrauded their investors by failing to adequately disclose those impacts.

There are also financial risks for fossil

fuel producers as stockholders or bondholders currently invested in fossil-fuel energy companies concerned about the threat of climate change may elect in the future to shift some or all of their investments into

non-fossil fuel energy related sectors.

Institutional lenders who provide financing to fossil-fuel energy companies also have become more attentive to sustainable lending practices and some of them may elect

not to provide funding for fossil fuel energy companies.

Additionally, investing and lending practices of various investment firms and institutional lenders have been the subject of intensive lobbying efforts in recent years, oftentimes public in

nature, by environmental activists, proponents of the Paris Agreement, and foreign citizenry concerned about the threat of climate change not to provide funding for fossil fuel producers.

For example, there have been efforts in recent years to

influence the investment community, including investment advisors and certain sovereign wealth, pension and endowment funds, to divest of fossil fuel equities and lenders to limit funding to companies engaged in the extraction of fossil fuel

Limitation of investments in and financings for fossil fuel energy companies could result in the restriction, delay or cancellation of drilling programs or development or production activities.

The adoption and implementation of new or more stringent international, federal or state regulations or other regulatory initiatives that

impose more stringent standards for GHG emissions from the oil and gas sector or otherwise restrict the areas in which this sector may produce oil and gas or generate GHG emissions could result in increased compliance and consumption costs, and

thereby reduce demand for the oil and gas the Company produces.

Additionally, political, litigation and financial risks could result in the restriction or cancellation of production activities, incurring liability for infrastructure damages as a

result of climate changes, or impairing the Companys ability to continue to operate in an economic manner.

Finally, if increasing concentrations of GHGs in the Earths atmosphere were to result in significant physical effects, such as

increased frequency and severity of storms, floods, droughts and other extreme climatic events, then such effects could have a material adverse effect on the Companys exploration and production operations.

In addition, companies in the oil and gas industry have been the target of activist efforts from both individuals and non-governmental organizations, including instituting litigation and supporting political or regulatory efforts to, among other things, limit or ban hydraulic fracturing, restrict or ban certain operating practices,

including the disposal of waste materials, such as hydraulic fracturing fluids and produced water, deny or delay drilling permits, prohibit the venting or flaring of gas, reduce access of the oil and gas industry to federal and state government

lands, and delay or cancel oil and gas developmental or expansion projects.

The Company may need to incur significant costs associated with responding to these initiatives, and complying with any resulting additional legal or regulatory requirements

could have a material adverse effect on the Companys business, financial condition, cash flows and results of operations.

regulations pertaining to protection of threatened and endangered species or to critical habitat, wetlands and natural resources could delay, restrict or prohibit the Companys operations and cause it to incur substantial costs that may have a

material adverse effect on the Companys development and production of reserves.

The federal ESA and comparable state laws

were established to protect endangered and threatened species.

Under the ESA, if a species is listed as threatened or endangered, restrictions may be imposed on activities adversely affecting that species habitat.

Similar protections are

offered to migratory birds under the Federal Migratory Bird Treaty Act.

Oil and gas operations in the Companys operating areas may be adversely affected by seasonal or permanent restrictions imposed on drilling activities by the U.S.

Wildlife Services (the FWS) that are designed to protect various wildlife, which may materially restrict the Companys access to federal or private land use.

Permanent restrictions imposed to protect endangered and threatened

species could prohibit drilling in certain areas, impact suppliers of critical materials or services, or require the implementation

of expensive mitigation measures.

Additionally, federal statutes, including the CWA, the OPA and CERCLA, as well as comparable state laws, prohibit certain actions that adversely affect critical

habitat, wetlands and natural resources.

If harm to species or damages to wetlands, habitat or natural resources occur or may occur, government entities or, at times, private parties may act to prevent oil and gas exploration or development

activities or seek damages for harm to species, habitat or natural resources resulting from drilling, construction or releases of petroleum hydrocarbons, wastes, hazardous substances or other regulated materials, and, in some cases, may seek

criminal penalties.

Moreover, as a result of one or more settlements entered into by the FWS, the agency is required to make

determinations on the potential listing of numerous species as endangered or threatened under the ESA.

The designation of previously unprotected species as threatened or endangered in areas where the Company conducts operations could cause the

Company to incur increased costs arising from species protection measures or could result in delays, restrictions or prohibitions on its development and production activities that could have a material adverse effect on the Companys ability to

develop and produce reserves.

that such companies created public nuisances by producing fuels that contributed to global warming effects, such as rising sea levels, and therefore are responsible for roadway and infrastructure damages, or alleging that the companies have been

aware of the adverse effects of climate change for some time but defrauded their investors by failing to adequately disclose those impacts.

There are also financial risks for fossil fuel producers as stockholders or bondholders currently invested in fossil-fuel energy companies

concerned about the threat of climate change may elect in the future to shift some or all of their investments into non-fossil fuel energy related sectors.

Institutional lenders who provide financing to

fossil-fuel energy companies also have become more attentive to sustainable lending practices and some of them may elect not to provide funding for fossil fuel energy companies.

Additionally, investing and lending practices of various investment

firms and institutional lenders have been the subject of intensive lobbying efforts in recent years, oftentimes public in nature, by environmental activists, proponents of the Paris Agreement, and foreign citizenry concerned about the threat of

climate change not to provide funding for fossil fuel producers.

For example, there have been efforts in recent years to influence the investment community, including investment advisors and certain sovereign wealth, pension and endowment funds, to

divest of fossil fuel equities and lenders to limit funding to companies engaged in the extraction of fossil fuel reserves.

Limitation of investments in and financings for fossil fuel energy companies could result in the restriction, delay or

cancellation of drilling programs or development or production activities.

The adoption and implementation of new or more stringent

international, federal or state regulations or other regulatory initiatives that impose more stringent standards for GHG emissions from the oil and gas sector or otherwise restrict the areas in which this sector may produce oil and gas or generate

GHG emissions could result in increased compliance and consumption costs, and thereby reduce demand for the oil and gas the Company produces.

Additionally, political, litigation and financial risks could result in the restriction or cancellation of

production activities, incurring liability for infrastructure damages as a result of climate changes, or impairing the Companys ability to continue to operate in an economic manner.

Finally, if increasing concentrations of GHGs in the

Earths atmosphere were to result in significant physical effects, such as increased frequency and severity of storms, floods, droughts and other extreme climatic events, then such effects could have a material adverse effect on the

Companys exploration and production operations.

In addition, companies in the oil and gas industry have been the target of activist efforts

from both individuals and non-governmental organizations, including instituting litigation and supporting political or regulatory efforts to, among other things, limit or ban hydraulic fracturing, restrict or

ban certain operating practices, including the disposal of waste materials, such as hydraulic fracturing fluids and produced water, deny or delay drilling permits, prohibit the venting or flaring of gas, reduce access of the oil and gas industry to

federal and state government lands, and delay or cancel oil and gas developmental or expansion projects.

The Company may need to incur significant costs associated with responding to these initiatives, and complying with any resulting additional

legal or regulatory requirements could have a material adverse effect on the Companys business, financial condition, cash flows and results of operations.

Laws and regulations pertaining to protection of threatened and endangered species or to critical habitat, wetlands and natural resources could delay,

restrict or prohibit the Companys operations and cause it to incur substantial costs that may have a material adverse effect on the Companys development and production of reserves.

The federal ESA and comparable state laws were established to protect endangered and threatened species.

Under the ESA, if a species is listed

as threatened or endangered, restrictions may be imposed on activities adversely affecting that species habitat.

Similar protections are offered to migratory birds under the Federal Migratory Bird Treaty Act.

Oil and gas operations in the

Companys operating areas may be adversely affected by seasonal or permanent restrictions imposed on drilling activities by the U.S.

Fish and Wildlife Services (the FWS) that are designed to protect various wildlife, which may

materially restrict the Companys access to federal or private land use.

Permanent restrictions imposed to protect endangered and threatened species could prohibit drilling in certain areas, impact suppliers of critical materials or services,

or require the implementation of expensive mitigation measures.

Additionally, federal statutes, including the CWA, the OPA and CERCLA, as well as comparable state laws, prohibit certain actions that adversely affect critical habitat, wetlands and

natural resources.

If harm to species or damages to wetlands, habitat or natural resources occur or may occur, government entities or, at times, private parties may act to prevent oil and gas exploration or development activities or seek damages for

harm to species, habitat or natural resources resulting from drilling, construction or releases of petroleum hydrocarbons, wastes, hazardous substances or other regulated materials, and, in some cases, may seek criminal penalties.

Moreover, as a result of one or more settlements entered into by the FWS, the agency is required to make determinations on the potential

listing of numerous species as endangered or threatened under the ESA.

The designation of previously unprotected species as threatened or endangered in areas where the Company conducts operations could cause the Company to incur increased costs

arising from species protection measures or could result in delays, restrictions or prohibitions on its development and production activities that could have a material adverse effect on the Companys ability to develop and produce reserves.

We have limited control over the activities on properties we do not operate.

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Our failure to obtain these services on acceptable terms could materially harm our business.

Competition in our industry is intense, and many of our competitors have substantially greater financial and technological resources than we do, which

could adversely affect our competitive position.

Competition in the natural gas and oil industry is intense.

Major and independent

natural gas and oil companies actively bid for desirable natural gas and oil properties, as well as for the equipment and labor required to operate and develop these properties.

Our competitive position is affected by price, contract terms and

quality of service, including pipeline connection times, distribution efficiencies and reliable delivery record.

Many of our competitors have financial and technological resources and exploration and development budgets that are substantially

greater than ours.

These companies may be able to pay more for exploratory projects and productive natural gas and oil properties and may be able to define, evaluate, bid for and purchase a greater

number of properties and prospects than our financial or human resources permit.

In addition, these companies may be able to expend greater resources on the existing and changing technologies

that we believe are and will be increasingly important to attaining success in the industry.

We may have hedging arrangements that expose us to

risk of financial loss and limit the benefit to us of increases in prices for natural gas and oil.

From time to time, when we

believe that market conditions are favorable, we use certain derivative financial instruments to manage price risks associated with our production in all of our regions.

Competition in our industry is intense, and many of our competitors have substantially greater

financial and technological resources than we do, which could adversely affect our competitive position.

Competition in the

natural gas and oil industry is intense.

Major and independent natural gas and oil companies actively bid for desirable natural gas and oil properties, as well as for the equipment and labor required to operate and develop these properties.

competitive position is affected by price, contract terms and quality of service, including pipeline connection times, distribution efficiencies and reliable delivery record.

Many of our competitors have financial and technological resources and

exploration and development budgets that are substantially greater than ours.

These companies may be able to pay more for exploratory projects and productive natural gas and oil properties and may be able to define, evaluate, bid for and purchase a

greater number of properties and prospects than our financial or human resources permit.

In addition, these companies may be able to expend greater resources on the existing and changing technologies that we believe are and will be increasingly

important to attaining success in the industry.

We may have hedging arrangements that expose us to risk of financial loss and limit the benefit to

us of increases in prices for natural gas and oil.

From time to time, when we believe that market conditions are favorable, we use

certain derivative financial instruments to manage price risks associated with our production in all of our regions.

These hedging arrangements limit the benefit to us of increases in prices.

While there are many different types of derivatives available, we generally utilize put options and swap agreements to attempt to manage price risk more effectively.

The put options used to establish floor prices for a fixed volume of production during a certain time period.

They provide for payments from

the counterparties if the index price falls below the floor.

The swap agreements call for payments to, or receipts from, counterparties based on whether the index price for the period is greater or less than the fixed price established for that

period when the swap is put in place.

While there are many different types of derivatives

available, we generally utilize put options and swap agreements to attempt to manage price risk more effectively.

The put options used to

establish floor prices for a fixed volume of production during a certain time period.

They provide for payments from the counterparties if the index price falls below the floor.

The swap agreements call for payments to, or receipts from,

counterparties based on whether the index price for the period is greater or less than the fixed price established for that period when the swap is put in place.

These arrangements limit the benefit to us of increases in prices.

In addition, these arrangements expose us to risks of financial loss in a variety of circumstances, including when:

In addition, these

arrangements expose us to risks of financial loss in a variety of circumstances, including when:

a counterparty is unable to satisfy its obligations

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Many laws and regulations require permits for the operation of various facilities, and these permits are subject to revocation, modification and renewal.

Governmental authorities have the power to enforce

compliance with their regulations, and violations could subject us to fines, injunctions or both.

These laws and regulations have increased the costs of planning, designing, drilling, installing

and operating natural gas and oil facilities.

Governmental authorities have the power to enforce compliance with their regulations, and violations could subject us to fines, injunctions or both.

These laws and regulations have increased the costs of planning, designing, drilling, installing and

operating natural gas and oil facilities.

In addition, we may be liable for environmental damages caused by previous owners of property we purchase or lease.

Risks of substantial costs and liabilities related to environmental compliance issues

are inherent in natural gas and oil operations.

Risks of substantial costs and liabilities related to environmental compliance issues are

inherent in natural gas and oil operations.

It is possible that other developments, such as stricter environmental laws and regulations, and claims for damages to property or persons resulting from natural gas and oil production, would result in

1 unchanged sentence

A failure of technology systems, data breach or cyberattack could materially affect our

Our information technology systems may be vulnerable to security breaches, including those

involving cyberattacks using viruses, worms or other destructive software, process breakdowns, phishing or other malicious activities, or any combination of the foregoing.

Such breaches could result in unauthorized access to information, including

customer, employee, or other confidential data.

We do not carry insurance against these risks, although we do invest in security technology, perform penetration tests, and design our business processes to attempt to mitigate the risk of such

Our information technology systems may be vulnerable to security breaches, including

those involving cyberattacks using viruses, worms or other destructive software, process breakdowns, phishing or other malicious activities, or any combination of the foregoing.

Such breaches could result in unauthorized access to information,

including customer, employee, or other confidential data.

We do not carry insurance against these risks, although we do invest in security technology, perform penetration tests, and design our business processes to attempt to mitigate the risk of

such breaches.

However, there can be no assurance that security breaches will not occur.

Moreover, the development and maintenance of these measures requires continuous monitoring as technologies change and security measures evolve.

We have experienced,

and expect to continue to experience, cyber security threats and incidents, none of which has been material to us to date.

However, a successful breach or attack could have a material negative impact on our operations or business reputation and

subject us to consequences such as litigation and direct costs associated with incident response.

Information technology solution

failures, network disruptions, breaches of data security and cyberattacks could disrupt our operations by causing delays, impeding processing of transactions and reporting financial results, resulting in the unintentional disclosure of customer,

employee or our information, or damage to our reputation.

experienced, and expect to continue to experience, cyber security threats and incidents, none of which has been material to us to date.

However, a successful breach or attack could have a material negative impact on our operations or business

reputation and subject us to consequences such as litigation and direct costs associated with incident response.

Information technology

solution failures, network disruptions, breaches of data security and cyberattacks could disrupt our operations by causing delays, impeding processing of transactions and reporting financial results, resulting in the unintentional disclosure of

customer, employee or our information, or damage to our reputation.

A system failure, data security breach or cyberattack could have a material adverse effect on our financial condition, results of operations or cash flows.

In the past, we have experienced

data security breaches resulting from unauthorized access to our e-mail systems, which to date have not had a material impact on our business;

however, there is no assurance that such impacts will not be

material in the future.

In the past, we have

experienced data security breaches resulting from unauthorized access to our e-mail systems, which to date have not had a material impact on our business;

however, there is no assurance that such impacts will

not be material in the future.

UNRESOLVED STAFF COMMENTS.

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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