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Item 1A. Risk Factors

2026-02-20 compared with 2025-02-21 · 57 added, 108 removed, 316 unchanged (34% of the section changed)

You should carefully consider the following risk factors in addition to the other information included in this Annual Report.

Each of these risk factors could adversely affect our business, operating results and financial condition, as well as the value of an investment in our securities.

Each of these risk factors could adversely affect our business, operating results, financial condition, and reputation, as well as the value of an investment in our securities.

These risk factors do not identify all risks that we face;

our operations could also be affected by factors, events or uncertainties that are not presently known to us or that we do not currently consider to present significant risks to our operations.

Summary of Risk Factors

Risks Related to Our Manufacturing and Operations

• Margins for the products we produce are cyclical and volatile due to changes in market conditions, which are largely dependent on factors beyond our control, and directly affect our earnings, financial condition and cash flows.

• The prices at which we buy our feedstocks are dependent on market conditions that are beyond our control, and changes in supply and demand for the feedstocks we process directly impact the results of our business.

• Changes to government policies relating to renewable feedstocks and renewable fuels that adversely affect programs like the renewable fuels standards program, low-carbon fuels standards and tax credits for processing certain renewable feedstocks impact our financial condition and results of operations.

• Our operations are subject to planned and unplanned downtime, business interruptions, and operational hazards, any of which could adversely impact our ability to operate and could adversely impact our financial condition, results of operations and cash flows.

• We are subject to interruptions of supply and offtake, as well as increased costs, as a result of our reliance on third-party transportation of crude oil or other feedstocks, NGL, refined petroleum and renewable fuels products.

• Our investments in joint ventures decrease our ability to manage risk.

• Public health crises, epidemics and pandemics have had and could in the future have a material adverse effect on our business.

Any future widespread health crises could materially and adversely impact our business.

Competition Risks

• Refining, midstream and marketing competitors that produce their own feedstocks, have more extensive retail outlets, or have greater financial resources may have a competitive advantage.

• Our Midstream segment competes for natural gas supplies with other companies that provide midstream gathering and processing, transportation, fractionation and terminaling services, and a failure to grow or maintain throughput levels may negatively impact the results of operations of our business.

• Volatility in market demand for our petrochemical and plastics products and midstream transportation services and the risk of overbuild in these industries may negatively impact the results of operations of our businesses.

Strategic Performance and Future Growth Risks

• Large capital-intensive projects can take many years to complete, and the political and regulatory environments or market conditions could change significantly between the project approval date and the project startup date, negatively impacting expected project returns.

• Plans we or our joint ventures may have to expand or construct assets or develop new technologies, and plans for our future performance are subject to risks associated with societal and political pressures and other forms of opposition to the future development, transportation and use of petroleum-based and renewables-based fuels.

Such risks could adversely impact our business and results of operations.

• Political and economic developments could affect our operations and materially reduce our profitability and cash flows.

• We may not be able to effectively identify, whether through acquisition, investment or development, lower-carbon opportunities on favorable terms, or at all, and failure to do so could limit our growth, our ability to participate in the energy transition, and our ability to meet our environmental goals and targets.

• Our business could be negatively impacted as a result of shareholder activism.

Legal, Regulatory, and Environmental, Climate and Weather Risks

• We are subject to a variety of legal proceedings and other claims arising out of our operations which may adversely impact our business and financial condition.

• Climate change and severe weather may adversely affect our and our joint ventures’ facilities and ongoing operations.

• There are certain environmental hazards and risks inherent in our operations that could adversely affect those operations and our financial results.

• We expect to continue to incur substantial capital expenditures and operating costs to comply with existing and future environmental laws and regulations.

• Factors associated with climate change legislation or regulation could result in increased operating costs, reduce demand for the refined petroleum products we produce and could otherwise have a material impact on our business.

• Increased regulation of the fossil fuel industry, particularly with respect to hydraulic fracturing, could result in reductions or delays in the production of crude oil and natural gas, which could adversely impact our results of operations.

• Compliance with the EPA’s Renewable Fuel Standard (RFS) could adversely affect our financial results.

• Societal, technological, political and scientific developments around emissions and fuel efficiency may decrease demand for petroleum-based fuels.

• Continuing political and social concerns about climate change and other Environmental, Social and Governance (ESG) matters may result in changes to our business and significant expenditures, including litigation-related expenses.

• Increased concerns regarding plastic waste in the environment, consumers selectively reducing their consumption of plastic products due to recycling concerns, or new or more restrictive regulations and rules related to plastic waste could reduce demand for CPChem’s plastic products and could negatively impact our equity interest.

Cybersecurity and Data Privacy Risks

• Cybersecurity incidents and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.

• Increasing regulatory focus on privacy and cybersecurity issues and expanding laws could expose us to increased liability, subject us to lawsuits, investigations and other liabilities and restrictions on our operations that could significantly and adversely affect our business.

Indebtedness, Capital Markets and Financial Risks

• Uncertainty and illiquidity in credit and capital markets can impair our ability to obtain credit and financing on acceptable terms and can adversely affect the financial strength of our business partners.

• Negative sentiment towards fossil fuels and increased attention to environmental and social matters, including climate change, could adversely affect our business, the market price for our securities and our access to and cost of capital.

• Our published GHG emissions intensity reduction goals and other E&S targets we may set in the future could negatively impact our business.

• We do not fully insure against all potential losses, including those from extreme weather events or natural disasters, and, therefore, our business, financial condition, results of operations and cash flows could be adversely affected by unexpected or underinsured liabilities and increased costs.

• Deterioration in our credit profile could increase our costs of borrowing money, limit our access to the capital markets and commercial credit, and could trigger co-venturer rights under joint venture arrangements.

• The level of returns on pension and postretirement plan assets and the actuarial assumptions used for valuation purposes could affect our earnings and cash flows in future periods.

• We may incur losses as a result of our forward contracts and derivative transactions.

• We are subject to continuing contingent liabilities of ConocoPhillips following the separation.

ConocoPhillips has indemnified us for certain matters, but may not be able to satisfy its obligations to us in the future.

Some of the factors, events and contingencies discussed below may have occurred in the past, but the disclosures below are not representations as to whether or not the factors, events or contingencies have occurred in the past and instead reflect our beliefs and opinions as to the factors, events or contingencies that could materially and adversely affect us in the future.

Risks Related to Our Manufacturing and Operations

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• the impacts of the members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC member producing nations that may agree to set production levels;

• geopolitical risks, such as the ongoing global impact of conflicts in the Middle East and Eastern Europe;

• geopolitical risks, such as the ongoing global impact of conflicts in the Middle East, Eastern Europe and South America;

• technological advances affecting energy consumption and supply;

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Lower margins have in the past, and may in the future, lead us to reduce the amount of refined products we produce, which may reduce our results of operations and cash flows.

Significant reductions in margins could require us to impair the carrying value of our assets (such as properties, plants and equipment, inventories or goodwill) and may adversely affect our ability to fund our capital priorities, including share repurchases and dividends.

Significant reductions in margins could require us to impair the carrying value of our assets (such as properties, plants and equipment, inventories, equity investments or goodwill) and may adversely affect our ability to fund our capital priorities, including share repurchases and dividends.

The prices at which we buy our feedstocks are dependent on market conditions that are beyond our control, and changes in supply and demand for the feedstocks we process directly impact the results of our business.

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The prices for crude oil, other feedstocks and refined products can fluctuate based on global, regional and local market conditions, as well as by type and class of products, which can reduce margins and have a significant impact on our refining, wholesale marketing and retail operations, revenues, operating income and cash flows.

The ability of the members of OPEC to agree on and to set crude oil price and production controls and changes in trade flows from events such as the war in Eastern Europe have also had, and are likely to continue to have, a significant impact on the market prices of crude oil and certain of our products.

The ability of the members of OPEC to agree on and to set crude oil price and production controls and changes in trade flows from events such as the conflicts in Eastern Europe and South America have also had, and are likely to continue to have, a significant impact on the market prices of crude oil and certain of our products.

In addition, sustained periods of low commodity prices can result in upstream producers significantly curtailing their oil and gas drilling operations, which could substantially delay the production and delivery of volumes of crude oil, natural gas and NGL and negatively impact the results of our Midstream, Refining, and M&S segments.

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The regulatory framework regarding renewable feedstocks and fuels is constantly evolving.

Changes to laws, regulations, policies or standards regarding renewable fuels or the feedstocks used to produce our renewable fuels, elimination or reduction of incentives, as well as the cost of conforming with such updated laws, regulations, policies or standards could negatively impact the results of operations of our Renewable Fuels segment.

Changes to laws, regulations, policies or standards regarding renewable fuels or the feedstocks used to produce our renewable fuels, elimination or

reduction of incentives, as well as the cost of conforming with such updated laws, regulations, policies or standards could negatively impact the results of operations of our Renewable Fuels segment.

For example, our Renewable Fuels segment processes renewable feedstocks such as used cooking oil, vegetable oils, and other low-carbon intensity waste oils and byproducts to produce renewable fuels.

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In order to maintain or increase throughput levels on our natural gas gathering and transportation pipeline systems and NGL pipelines and the asset utilization rates at our natural gas processing plants, we must continually obtain new supplies.

The level of successful drilling activity and prices of, and demand for, natural gas and crude oil, as well as producers’ desire and ability to obtain necessary permits are some of the factors that may affect new supplies of natural gas and NGL.

If we are not able to obtain new supplies of natural gas to replace the natural decline in volumes from existing wells or because of competition, throughput on our pipelines and the utilization rates of our treating and processing facilities would decline.

If we are not able to obtain new supplies of natural gas and NGLs to replace the natural decline in volumes from existing wells or because of competition, throughput on our pipelines and the utilization rates of our treating and processing facilities would decline.

This could have a material adverse effect on our business, results of operations, financial position and cash flows, and our ability to make cash distributions.

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Any future widespread health crises could materially and adversely impact our business.

Our global operations expose us to risks associated with public health crises and outbreaks of epidemics, pandemics, or contagious diseases, such as the COVID-19 pandemic.

Our global operations expose us to risks associated with public health crises and outbreaks of epidemics, pandemics, or contagious diseases.

Even if a virus or other illness does not spread significantly, the perceived risk of infection or health risk may result in reduced demand for our products and materially affect our business.

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Refining, midstream and marketing competitors that produce their own feedstocks, have more extensive retail outlets, or have greater financial resources may have a competitive advantage.

The refining and marketing industry is highly competitive with respect to both feedstock supply and refined petroleum product markets.

Our industry is highly competitive with respect to both feedstock supply and refined petroleum product markets.

We compete with many companies for available supplies of crude oil and other feedstocks and for outlets for our refined products.

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Some of our competitors, however, obtain a portion of their feedstocks from their own production and some have more extensive retail outlets than we have.

Competitors that have their own production or extensive retail outlets (and greater brand-name recognition) are at times able to offset losses from refining operations with profits from producing or retailing operations, and may be better positioned to withstand periods of depressed refining margins or feedstock shortages.

Competitors that have their own production or extensive retail outlets, including those with greater brand-name recognition, are at times able to offset losses from refining operations with profits from producing or retailing operations, and may be better positioned to withstand periods of depressed refining margins or feedstock shortages.

Some of our competitors also have materially greater financial and other resources than we have.

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This could have a material adverse effect on our business, results of operations, financial position and cash flows.

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Large capital-intensive projects can take many years to complete, and the political and regulatory environments or market conditions could change significantly between the project approval date and the project startup date, negatively impacting expected project returns.

Our basis for approving large-scale capital-intensive projects, such as the recent conversion of our San Francisco Refinery into the Rodeo Complex, is the expectation that it will deliver an acceptable rate of return on the capital invested.

We base these forecasted project economics on our best estimate of future market conditions including the regulatory and operating environment.

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The timing and impacts of SBx 1-2 and any other similarly focused legislation or actions are subject to considerable uncertainty due to a number of factors, including technological and economic feasibility, legal challenges, and potential changes in law, regulation, or policy, and it is not currently possible to predict the ultimate effects of these matters and developments, but they may be significant.

For example, adverse effects on the financial performance of our operations in the state of California or the useful lives of the assets related to such operations may result in the recognition of material asset impairment charges and asset retirement obligations.

Furthermore, the U.S.

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The effect of any such OFAC sanctions could disrupt transactions with or operations involving entities affiliated with sanctioned countries, and could limit our ability to obtain optimum crude slates and other feedstocks and effectively distribute refined products.

We may face other regulatory changes in the U.S.

including, but not limited to, the enactment of tax law changes that adversely affect our industry, tariffs on imported material, components and feedstocks and retaliatory tariffs imposed by other countries on U.S.

We may face other regulatory changes in the United States including, but not limited to, the enactment of tax law changes that adversely affect our industry, tariffs on imported material, components and feedstocks and retaliatory tariffs imposed by other countries on U.S.

made goods, new emissions standards, restrictive flaring regulations, and more stringent requirements for environmental impact studies and reviews.

Hostilities in the Middle East, Eastern Europe or elsewhere or the occurrence or threat of future terrorist attacks could adversely affect the economies of the U.S.

and other countries.

Hostilities in the Middle East, Eastern Europe and South America or elsewhere or the occurrence or threat of future terrorist attacks could adversely affect the economies of the United States and other countries.

Other political and economic risks include global health crises;

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Publicly traded companies are increasingly subject to campaigns by activist shareholders advocating corporate actions such as operational, governance or management changes, or sales of assets or entire segments.

The Company has been and may again be subject to shareholder activism and the corporate actions advocated by the shareholder activist that may not align with the Company’s current business strategies and the best interests of all of the Company’s shareholders.

The actions of activist shareholders may cause fluctuations in our stock price based on temporary or speculative market perceptions or other factors that do not necessarily reflect the underlying fundamentals or prospects of our business.

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To the extent these expenditures, as with all costs, are not ultimately reflected in the prices of our products and services, our business, financial condition, results of operations and cash flows in future periods could be materially adversely affected.

Factors associated with climate change legislation or regulation could result in increased operating costs, reduce demand for the refined petroleum products we produce and could otherwise have a material impact on our business.

Factors associated with climate change legislation or regulation could result in increased operating costs, reduced demand for the refined petroleum products we produce and could otherwise have a material impact on our business.

Currently, multiple legislative and regulatory measures to address GHG and other emissions are in various phases of consideration, promulgation, implementation or reversal.

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International climate change-related efforts, such as the 2015 United Nations Conference on Climate Change, which led to the creation of the Paris Agreement, and the 2023 United Nations Climate Change Conference, may impact the regulatory framework of states whose policies directly influence our present and future operations.

In January 2025, President Trump signed an executive order directing the United States to withdraw from the Paris Agreement, and it is expected that President Trump and the Republican-led Congress will diverge from the previous administration’s positions and GHG commitments.

In January 2026, President Trump issued a memorandum directing the United States to withdraw from various international organizations and treaties related to climate change, and the administration has generally been pursuing a de-regulatory posture on environmental matters.

However, future emission reduction targets and other provisions of legislative or regulatory initiatives and policies enacted in the future by the United States could be brought by future administrations or, in the absence of federal action, states may become more active and focused on taking legislative or regulatory actions aimed at climate change and minimizing GHG emissions.

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Compliance with the cap and trade program is demonstrated through a market-based credit system.

Additionally, on August 25, 2022, the CARB adopted regulations that effectively ban the in-state sales of new cars containing internal combustion engines beginning in 2035.

Also, on December 15, 2022, CARB adopted its “2022 Scoping Plan for Achieving Carbon Neutrality,” which purports to provide a road map for California to achieve carbon neutrality (which it defines as removing as many carbon emissions from the atmosphere as it emits) by year 2045.

Additionally, in 2022, the CARB adopted regulations that effectively ban the in-state sales of new cars containing internal combustion engines beginning in 2035.

Also, in 2022, CARB adopted its “2022 Scoping Plan for Achieving Carbon Neutrality,” which purports to provide a road map for California to achieve carbon neutrality (which it defines as removing as many carbon emissions from the atmosphere as it emits) by year 2045.

Other states are proposing, or have already promulgated, low carbon fuel standards or similar initiatives to reduce emissions from the transportation sector.

If we are unable to pass the costs of compliance on to our customers, sufficient credits are unavailable for purchase, we have to pay a significantly higher price for credits, or if we are otherwise unable to meet our compliance obligation, our financial condition and results of operations could be adversely affected.

Additionally, certain states have recently passed legislation seeking to recover financial damages allegedly associated with climate change from fossil fuel companies like the Vermont Climate Superfund Act passed by the Vermont Legislature in May 2024.

The future of the U.S.’s climate change strategy and the impact to our industry and operations due to further GHG regulation is unknown at this time.

Federal, regional and state climate change and air emissions goals and regulatory programs are complex, subject to change and impose considerable uncertainty due to a number of factors including technological feasibility, legal challenges and potential changes in federal policy.

Additionally, certain states have recently passed, or are considering, legislation seeking to recover financial damages allegedly associated with climate change from fossil fuel companies like the Vermont Climate Superfund Act passed in 2024.

The future of the U.S.

climate change strategy and the impact to our industry and operations due to further GHG regulation is unknown at this time.

Increasing concerns about climate change and carbon intensity have resulted in heightened societal awareness and a number of international and national measures to limit GHG emissions.

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Societal attitudes toward these products and their relationship to the environment may significantly affect our effectiveness in marketing our products.

Government efforts to steer the public toward non-petroleum-based fuel dependent modes of transportation may foster a negative perception toward petroleum products or increase costs of our products, thus affecting the public’s attitude toward our major products.

Efforts by governments or other private interests to steer the public toward non-petroleum-based fuel dependent modes of transportation may foster a negative perception toward petroleum products or increase costs of our products, thus affecting the public’s attitude toward our major products.

Advanced technology and increased use of vehicles that do not use petroleum-based transportation fuels or that are powered by hybrid engines would reduce demand for the motor fuel we produce.

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These developments could potentially have a material adverse effect on our business, financial condition, results of operations and cash flows.

Continuing political and social concerns about climate change and other Environmental, Social and Governance (ESG) matters may result in changes to our business and significant expenditures, including litigation-related expenses.

Continuing political and social concerns about climate change and other environmental and social (E&S) matters may result in changes to our business and significant expenditures, including litigation-related expenses.

Increasing attention to global climate change has resulted in increased investor attention and an increased risk of public and private litigation, which could increase our costs or otherwise adversely affect our business.

Additionally, cities, counties, and other governmental entities in several states in the U.S.

began filing lawsuits against energy companies in 2017, including Phillips 66, seeking damages allegedly associated with climate change, and the plaintiffs are seeking unspecified damages and abatement under various tort theories.

Additionally, cities, counties, and other governmental entities in several states in the United States began filing lawsuits against energy companies in 2017, including Phillips 66, seeking damages allegedly associated with climate change, and the plaintiffs are seeking unspecified damages and abatement under various tort theories.

Similar lawsuits may be filed in other jurisdictions.

While we believe these lawsuits are an inappropriate vehicle to address the challenges associated with climate change and will vigorously defend against them, the ultimate outcome and impact to us of any such litigation cannot be predicted with certainty, and we could incur substantial legal costs associated with defending these and similar lawsuits in the future.

Additionally, governments and private parties are also increasingly filing lawsuits or initiating regulatory action based on allegations that certain public statements regarding climate change and other ESG-related matters and practices by companies are false or misleading “greenwashing” that violate deceptive trade practices and consumer protection statutes.

companies are false or misleading “greenwashing” that violate deceptive trade practices and consumer protection statutes.

Such claims are included in lawsuits filed against energy companies, including Phillips 66.

Such lawsuits present a high degree of uncertainty regarding the extent to which energy companies face an increased risk of liability stemming from climate change or ESG disclosures and practices.

Such lawsuits present a high degree of uncertainty regarding the extent to which energy companies face an increased risk of liability stemming from climate change or E&S disclosures and practices.

Efforts have also been made by governments and private parties to shut down energy assets by challenging operating permits, the validity of easements or the compliance with easement conditions.

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Policy measures to address this concern are being discussed or implemented by governments at all levels.

In addition, a host of single-use plastic bans and taxes have been passed by countries around the world and counties and municipalities throughout the U.S.

In addition, a host of single-use plastic bans and taxes have been passed by countries around the world and counties and municipalities throughout the United States.

Increased regulation of, or prohibition on, the use of certain plastic products could reduce demand for certain products CPChem produces, which could negatively impact its financial condition, results of operations and cash flows, thereby negatively impacting our equity earnings by reducing the cash distributions that we receive from CPChem.

Cybersecurity and Data Privacy Risks

Cybersecurity incidents and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.

Our information technology and infrastructure, or information technology and infrastructure of our third-party service providers (e.g., cloud-based service providers), may be vulnerable to attacks by malicious actors or breached due to human error, malfeasance or other disruptions, including ransomware and other malware, phishing and social engineering schemes, deepfakes, malicious software, data privacy incidents, insiders or others with authorized access, attempts to gain unauthorized access to our data and systems, and other cybersecurity incidents.

Cybersecurity incidents and other disruptions could compromise our information and systems resulting in disruption of operations, financial loss and reputational harm.

Our information technology and infrastructure, including systems operated by third-party service providers (e.g., cloud-based service providers), may be vulnerable to attacks by malicious actors or breached due to human error, malfeasance or other disruptions, including ransomware and other malware, phishing and social engineering schemes, deepfakes, malicious software, data privacy incidents, insiders or others with authorized access, attempts to gain unauthorized access to our data and systems, and other cybersecurity incidents.

Any such incidents could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen.

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and (ix) damage to our competitiveness, stock price, and long-term shareholder value.

Generative artificial intelligence has contributed to an increase in the prevalence of such attacks and threats, expanding our potential exposure to disruptions.

Any of the foregoing can be exacerbated by a delay or failure to detect a cybersecurity incident or the full extent of such incident.

Further, we have exposure to cybersecurity incidents and the negative impacts of such incidents related to our critical data and proprietary information housed on third-party IT systems, including cloud-based systems.

Generative artificial intelligence has also contributed to an increase in the prevalence of such attacks and threats, expanding potential exposure to disruptions.

Any of the foregoing could be exacerbated by a delay or failure to detect a cybersecurity incident or the full extent of such incident.

We also have exposure to cybersecurity incidents and the negative impacts of such incidents related to our critical data and proprietary information housed on third-party IT systems, including cloud-based systems.

Additionally, authorized third-party IT systems or software can be compromised and used to gain access or introduce malware to our IT systems that can materially impact our business.

Although we devote significant resources to prevent cybersecurity incidents and protect our system and data, we have experienced actual and attempted cybersecurity incidents, and while we do not believe that any of these incidents has had a material effect on our business, operations or financial condition, it is possible that a future incident may have such an effect.

Although we devote significant resources to prevent cybersecurity incidents and protect our system and data, we have experienced actual and attempted cybersecurity incidents.

While we do not believe that any of these incidents has had a material effect on our business, operations or financial condition, it is possible that a future incident may have such an effect.

A cybersecurity incident may also result in legal claims or proceedings against us by our shareholders, employees, customers, vendors, and governmental authorities (U.S.

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Our infrastructure protection technologies and disaster recovery plans may not be able to prevent a technology systems breach or systems failure, which could have a material adverse effect on our financial position or results of operations.

Furthermore, the continuing and evolving threat of cyberattacks has resulted in increased regulatory focus on prevention.

To the extent we face increased regulatory requirements, we may be required to expend significant additional resources to meet such requirements.

Increasing regulatory focus on privacy and cybersecurity issues and expanding laws could expose us to increased liability, subject us to lawsuits, investigations and other liabilities and restrictions on our operations that could significantly and adversely affect our business.

Along with our own data and information collected in the normal course of our business, we and our partners collect and retain certain data that is subject to specific laws and regulations.

Furthermore, the continuing and evolving threat of cyberattacks has resulted in increased regulatory focus on prevention, and, to the extent we face increased regulatory requirements, we may be required to expend significant additional resources to meet such requirements.

Increasing regulatory focus on privacy and cybersecurity issues and expanding laws and regulations could expose us to increased liability, subject us to lawsuits, investigations and other liabilities and restrictions on our operations that could significantly and adversely affect our business.

Along with our own data and information collected in the normal course of our business, we and our suppliers and service providers collect and retain certain data that is subject to specific laws and regulations.

The transfer and use of this data, both domestically and across international borders, is becoming increasingly complex.

This data is subject to governmental regulation at the federal, state, international, national, provincial and local levels in many areas of our business, including data privacy and security laws such as the European Union (EU) and United Kingdom (UK) versions of the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA).

The GDPR applies to the transfer and processing of personal data of those who live in the EU or UK, respectively.

As interpretation and enforcement of the GDPR evolves, it creates a range of new compliance obligations, which could cause us to incur additional costs.

Failure to comply could result in significant penalties that may materially adversely affect our business, reputation, results of operations and cash flows.

The CCPA, which came into effect on January 1, 2020, gives California residents specific rights in relation to their personal information, requires that companies take certain actions, including notifications for security incidents and may apply to activities regarding personal information that is collected by us, directly or indirectly, from California residents.

As interpretation and enforcement of the CCPA evolves, it creates a range of new compliance obligations, with the possibility for significant financial penalties for noncompliance that may materially adversely affect our business, reputation, results of operations and cash flows.

Comprehensive privacy laws with some similarities to the CCPA have been proposed or passed at the U.S.

federal and state levels, such as the Colorado Privacy Act.

Additionally, the Federal Trade Commission and many state attorneys general are interpreting federal and state consumer protection laws to impose standards for the online collection, use, dissemination and security of data as well as requiring disclosures about these practices.

Existing and potential future data privacy laws pose increasingly complex compliance challenges and potentially elevate our costs.

Any failure by us to comply with these laws and regulations, including as a result of a security or privacy breach, could result in significant penalties and liabilities for us.

Additionally, if we acquire a company that has violated or is not in compliance with applicable data protection laws, we may incur significant liabilities and penalties as a result.

The regulatory landscape governing cybersecurity continues to evolve, and federal, state and international authorities are increasing their oversight of cybersecurity practices, incident reporting and the protection of critical energy infrastructure.

Requirements related to operational technology, supply chain security, data governance and timely disclosure of cyber incidents are becoming more prescriptive, and additional rulemaking may further expand our compliance obligations.

As cyber threats targeting the energy sector grow in frequency and sophistication, we are required to devote additional resources to maintain and enhance our cybersecurity programs and controls.

Failure to comply with applicable cybersecurity laws and regulations, or to effectively identify, prevent or respond to a cyber event, could result in operational disruptions, increased costs, regulatory enforcement actions or adverse effects on our business.

Indebtedness, Capital Markets and Financial Risks

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Accordingly, we may not be able to obtain the full amount of the funds available under our liquidity facilities to satisfy our cash requirements, and our failure to do so could have a material adverse effect on our operations and financial position.

Negative sentiment towards fossil fuels and increased attention to environmental and social matters, including climate change, could adversely affect our business, the market price for our securities and our access to and cost of capital.

Negative sentiment towards fossil fuels, increased attention to E&S matters, including climate change, and our efforts to report on these matters could adversely affect our business, the market price for our securities and our access to and cost of capital.

There have been efforts in recent years aimed at the investment community, including investment advisors, sovereign wealth funds, public pension funds, universities, and other groups, to promote the divestment of fossil fuel companies, as well as to pressure lenders, insurers, and other financial services companies to limit or curtail activities with fossil fuel companies.

If these or similar efforts are continued, the market price of our securities, our ability to access capital markets or insure our operations, and our cost of capital may be negatively impacted.

Members of the investment community are also increasing their focus on environmental and social (E&S) matters, including practices related to GHG emissions, climate change, business resilience, diversity and inclusion, environmental justice and other E&S matters.

Members of the investment community are also increasing their focus on E&S matters, including practices related to GHG emissions, climate change, business resilience, diversity and inclusion, environmental justice and other E&S matters.

As a result, we may face increasing pressure regarding our E&S disclosures and practices.

Additionally, members of the investment community may screen companies such as ours for E&S performance before investing in our stock or participating in our financing activities.

If we are unable to meet the E&S standards set by these investors, we may lose investors, our stock price may be negatively impacted, our access to capital markets and lenders may be curtailed, and our reputation may be negatively affected.

If we are unable to meet the evolving E&S standards set by these investors, including in light of their varied and sometimes conflicting views regarding E&S matters, we may lose investors, our stock price may be negatively impacted, our access to capital markets and lenders may be curtailed, and our reputation may be negatively affected.

Further, an increasing number of regulators and lawmakers have pursued contrary views, enforcement actions, or investigations, including those that aim to limit the consideration of E&S factors in investment decisions, which may expose us to additional legal, financial, or reputational risks.

Our efforts to accurately report on E&S-related issues expose us to operational, reputational, financial, legal, and other risks.

Standards for tracking and reporting on E&S-related matters, including climate-related matters, have not been harmonized and continue to evolve.

Processes and controls for reporting on E&S matters are subject to evolving and disparate standards of identification, measurement, and reporting on such metrics, including any climate change and E&S-related public company disclosure requirements adopted by the SEC or government agencies of other jurisdictions, and such standards may change over time, which could result in significant revisions to our current E&S practices and disclosures.

Processes and controls for reporting on E&S matters are subject to evolving and disparate regulations and standards of identification, measurement, and reporting on such metrics, including any climate change and E&S-related public company disclosure requirements adopted by the SEC or government agencies of other jurisdictions, and such standards remain uncertain and may change over time, which exposes us to unpredictable reporting obligations or business requirements and could result in significant revisions to our current E&S practices and disclosures.

Our published GHG emissions intensity reduction goals and other E&S targets we may set in the future could negatively impact our business.

We have announced targets to reduce our Scope 1 and Scope 2 GHG emissions intensity from our operations by 30% and Scope 3 GHG emissions intensity of our energy products by 15% by 2030, and a target to reduce our Scope 1 and Scope 2 GHG emissions intensity by 50% by 2050, in each case as compared to baseline 2019 levels.

Our ability to achieve these goals depends on many factors, many of which are beyond our control, such as advancements that enable broad commercial deployment and use of lower-carbon technologies;

Our ability to achieve or maintain these goals depends on many factors, many of which are beyond our control, such as advancements that enable broad commercial deployment and use of lower-carbon technologies;

global policies that fund and incentivize the development of a lower-carbon energy system;

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Further, the standards for tracking and reporting on GHG emissions have not been harmonized and continue to evolve.

Our selection of disclosure frameworks that seek to align with various reporting standards may change from time to time and may result in a lack of comparative data from period to period.

Our selection of disclosure frameworks that seek to align with various reporting standards may change from time to time and may result in a lack of comparable data from period to period.

In addition, our processes and controls may not always align with evolving voluntary standards for identifying, measuring, and reporting GHG emissions, our interpretation of reporting standards may differ from those of others, and such standards may change over time, any of which could result in significant revisions to our goals or reported progress in achieving such goals.

The pursuit of these targets, and any other climate-related or E&S goals we may announce, may increase our costs, require us to purchase emissions credits or offsets, or limit or negatively impact our business plans.

Further, our pursuit of, or any failure or perceived failure to achieve such goals and targets within the timelines that we announce, or at all, could cause reputational harm, negatively impact our stock price and access to and cost of capital, and expose us to enforcement or litigation, among other negative impacts.

The pursuit of these targets, and any other climate-related or E&S goals we may announce, or any failure or perceived failure to achieve such goals and targets, could cause increased costs, cause reputational harm, negatively impact our stock price and access to and cost of capital funding, and expose us to enforcement or litigation, among other negative impacts, resulting from evolving standards for measuring, reporting, and disclosing climate-related and other E&S information.

We do not fully insure against all potential losses, including those from extreme weather events or natural disasters, and, therefore, our business, financial condition, results of operations and cash flows could be adversely affected by unexpected or underinsured liabilities and increased costs.

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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