What changed in this filing

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Item 1A. Risk Factors

2026-03-04 compared with 2025-03-05 · 46 added, 62 removed, 305 unchanged (26% of the section changed)

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Additional risks not presently known to us or that we currently deem immaterial may also materially affect our business.

Readers should carefully consider the risk factors included below as well as those matters referenced in this Report under “Forward-Looking Statements” and other information included and incorporated by reference into this Report.

Readers should carefully consider the risk factors included below as well as those matters referenced in this Annual Report under “Forward-Looking Statements” and other information included and incorporated by reference into this Annual Report.

Risks Relating to Our Business, Operations, and Strategy

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We are unable to predict in advance of drilling and testing whether any particular prospect will yield oil or natural gas in sufficient quantities to recover drilling or completion costs or to be economically viable.

This risk may be enhanced in our situation, due to the

fact that a significant percentage of our proved reserves is currently proved undeveloped reserves.

This risk may be enhanced in our situation, due to the fact that a significant percentage of our proved reserves is currently proved undeveloped reserves.

The use of seismic data and other technologies and the study of producing fields in the same area may not enable us to know conclusively prior to drilling whether oil or natural gas will be present or, if present, whether oil or natural gas will be present in commercial quantities.

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therefore, the risk associated with our success is greater than would be the case if a substantial majority of our properties were categorized as proved developed.

Because a substantial percentage of our proved properties are proved undeveloped (approximately 31%), we will require significant additional capital to develop such properties before they may become productive.

Because a substantial percentage of our proved properties are proved undeveloped (approximately 32%), we will require significant additional capital to develop these properties before they may become productive.

Further, because of the inherent uncertainties associated with drilling for oil and gas, some of these properties may never be developed to the extent that they result in commercial quantities of oil and natural gas.

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Hedging transactions may limit our potential gains .

To reduce our exposure to commodity price uncertainty and increase cash flow predictability, we have entered into crude oil and natural gas price hedging arrangements with respect to a significant portion of our expected production in order to economically hedge a portion of our forecasted oil and natural gas production.

Additionally, our credit facility requires us to hedge a significant portion of our production.

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Natural disasters, adverse weather conditions (particularly abnormally cold weather in the winter, and hurricanes and thunderstorms in the summer), floods, pandemics, acts of terrorism, and other catastrophic or geo-political events may cause damage or disruption to our operations and the global economy, or could result in market disruptions, any of which could have an adverse effect on our business, operating results, and financial condition.

The recent coronavirus outbreak impacted various businesses throughout the world, including an impact on the global demand for oil and natural gas, travel restrictions and the extended shutdown of certain businesses in impacted geographic regions.

If other pandemics occur, they could have a material adverse impact on our business operations, operating results and financial condition.

The loss of key members of management or failure to attract and retain other highly qualified personnel could affect the Company’s business results.

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Failure to ensure that we have the depth and breadth of management and personnel with the necessary skill sets and experience could impede our ability to achieve growth objectives and execute our operational strategy.

As we continue to expand, we will need to promote or hire additional staff, and, as a result of increased compensation and benefit packages in our industry, as well as inflationary pressures, it may be difficult to attract or retain such individuals without incurring significant additional costs.

As we continue to expand, we will need to promote or hire additional staff, and, as a result of increased compensation and benefit packages in our industry, as well as inflationary pressures, it may be difficult to attract or retain these individuals without incurring significant additional costs.

Risks Relating to the Oil and Natural Gas Industry

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Our oil and natural gas exploration and production activities are subject to numerous risks beyond our control, including the risk that drilling will not result in commercially viable oil or natural gas production.

Our decisions to purchase, explore, develop, or otherwise exploit prospects or properties will depend in part on the evaluation of data obtained through geophysical and geological analyses, production data, and engineering studies, the results of which may be inconclusive or subject to varying interpretations.

Please read “—Reserve estimates depend on many assumptions that may turn out to be inaccurate.” (below) for a discussion of the uncertainty involved in these processes.

results of which may be inconclusive or subject to varying interpretations.

Please read “—Reserve estimates depend on many assumptions that may turn out to be inaccurate.” (below) for a discussion of the uncertainties involved in these processes.

Our cost of drilling, completing, and operating wells is often uncertain before drilling commences.

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The excess, if any, of the net book value above the ceiling is required to be written off as an impairment expense.

During the years ended December 31, 2024, 2023, and 2022 we did not incur any write-downs.

During the year ended December 31, 2025, we recorded a non-cash write down of $108.8 million.

During the years ended 2024 and 2023 we did not incur any write-downs.

Under SEC full cost accounting rules, any write-off recorded may not be reversed even if higher oil and natural gas prices increase the ceiling applicable to future periods.

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In accordance with SEC requirements, we generally base the estimated discounted future net cash flows from our proved reserves on prices and costs calculated on the date of the estimate.

Discounted future net revenues are estimated using oil and natural gas spot prices based on the average price

during the preceding 12-month period determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, except for changes which are fixed and determinable by existing contracts.

Discounted future net revenues are estimated using oil and natural gas spot prices based on the average price during the preceding 12-month period determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, except for changes which are fixed and determinable by existing contracts.

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

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Additionally, competition for acquisitions may significantly increase the cost of available properties.

We compete for the personnel and equipment required to explore, develop, and operate properties.

We compete for the personnel and equipment required to explore, develop, and operate oil and gas properties.

Our competitors also may have established long-term strategic positions and relationships in areas in which we may seek to enter.

Consequently, our competitors may be able to address these competitive factors more effectively than we can.

If we are not successful in our competition for oil and

natural gas properties or in our marketing of production, then our financial condition and operation results would be adversely affected.

If we are not successful in our competition for oil and natural gas properties or in our marketing of production, then our financial condition and operation results would be adversely affected.

If our access to markets is restricted, it could negatively impact our production, our income, and our ability to retain our leases.

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Because wells drilled on a pad are not brought into production until all wells on the pad are drilled and completed and the drilling rig is moved from the location, multi-well pad drilling delays the commencement of production from a given pad, which may cause volatility in our operating results.

In addition, problems affecting one pad could adversely affect production from all wells on such pad.

As a result, multi-well pad drilling can cause delays in the scheduled commencement of production or interruptions in ongoing production.

In addition, problems affecting one pad could adversely affect production from all wells on the pad.

As a result, multi-well pad drilling can cause delays in the scheduled commencement of production or interruptions to ongoing production.

Extreme weather conditions, which could become more frequent or severe due to multiple factors, could adversely affect our ability to conduct drilling, completion, and production activities in the areas where we operate.

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If we are unable to obtain water to use in our operations from local sources, we may be unable to economically produce oil, natural gas and NGLs, which could have an adverse effect on our business, financial condition, and results of operations.

Waste water from our operations typically are disposed of via underground injection.

Waste water from our operations typically is disposed of via underground injection.

Some studies have linked earth tremors in certain areas to underground injection, which has led to greater public scrutiny of disposal wells.

Any new environmental initiatives or regulations that restrict injection of fluids, including, but not limited to, produced water, drilling fluids and other wastes associated with the exploration, development or production of oil and gas, or that limit the withdrawal, storage or use of surface water or ground water necessary for hydraulic fracturing of our wells, could increase our operating costs and cause delays, interruptions or cessation of our operations, the extent of which cannot be predicted, and all of which would have an adverse effect on our business, financial condition, results of operations, and cash flows.

Any new environmental initiatives or regulations that restrict injection of fluids, including, but not limited to, produced water, drilling fluids and other wastes associated with the exploration, development or production of oil and gas, or that limit the withdrawal, storage, or use of surface water, ground water, or produced water necessary for hydraulic fracturing of our wells, could increase our operating costs and cause delays, interruptions, or cessation of our operations, the extent of which cannot be predicted, and all of which would have an adverse effect on our business, financial condition, results of operations, and cash flows.

Risks Relating to Legal, Regulatory, Privacy, and Tax Matters

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or the imposition of injunctive relief.

Changes in environmental laws and regulations and the interpretation thereof occur from time to time, and any changes that result in more stringent or costly waste handling, storage, transport, disposal, or cleanup requirements could require us to make significant expenditures to maintain compliance and may otherwise have a material adverse effect on our results of operations, competitive position, and financial condition as well as the industry in

Under these environmental laws and regulations, we could be held strictly liable for the removal or remediation of previously released materials or property contamination regardless of whether we were responsible for the release or if our operations were standard in the industry at the time they were performed.

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The IRA contains hundreds of billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles, and supporting infrastructure and carbon capture and sequestration, among other provisions.

Moreover, federal regulators, state and local governments, and private parties have taken (or announced that they plan to take) actions that have or may have a significant influence on our operations.

International climate commitments made by political, industrial, and financial stakeholders may also impact commercial, regulatory, and consumer trends related to climate change.

The OBBBA rescinds or eliminates funding for multiple programs under the IRA aimed at reducing or monitoring GHG emissions and other air pollutants, such as the Greenhouse Gas Reduction Fund and methane monitoring initiatives.

While the OBBBA will potentially affect federal efforts to address climate change and emissions reductions, various federal agencies have, from time to time, adopted climate change considerations into their rulemaking and decision-making processes and have promulgated regulations that seek to restrict, monitor, or otherwise limit GHG emissions.

International climate commitments made by political, industrial, and financial and other stakeholders may also impact commercial, regulatory, and consumer trends related to climate change.

In response to findings that emissions of carbon dioxide, methane and other GHGs present an endangerment to public health and the environment, the EPA has adopted regulations pursuant to the CAA that, among other things, require PSD preconstruction and Title V operating permits for GHG emissions from certain large stationary sources, mandate monitoring and annual reporting of GHG emissions, and impose new standards for reducing methane emissions from oil and gas operations by limiting venting and flaring and implementing leak detection and repair programs.

The IRA also imposes the first-ever fee on GHG emissions through a WEC, which the EPA has finalized regulations to implement.

In May 2024, the EPA published a final rule expanding GHG emissions reporting obligations for certain oil and natural gas sector sources.

While the first Trump administration took a number of actions to revise federal regulation of methane from the oil and natural gas sector, these actions were subsequently reversed by both the Biden administration and Congress.

Moreover, in December 2023, the EPA published a final rule that established more stringent performance standards for new sources and first-time standards for existing sources under applicable agency regulations at 40 C.F.R.

Part 60 for methane and VOC emissions for the crude oil and natural gas sources.

The requirements imposed by this rule include enhanced leak detection and repair obligations, zero-emission requirements for certain processes and practices, “green well” completion standards, limitations on routine flaring, and a “Super Emitter Response Program” which triggers additional requirements following certain large emissions events.

Compliance with these rules and legislation will likely require enhanced record-keeping practices, the purchase of new equipment, such as optical gas imaging instruments to detect leaks, increased frequency of maintenance and repair activities to address emissions leakage and additional personnel time to support these activities or the engagement of third-party contractors to assist with and verify compliance.

While legal challenges to many of the above discussed regulations are ongoing and, either the current Trump administration or Congress may also pursue rulemakings or legislation, respectively, that could repeal, revise, or otherwise limit the enforcement of these regulations and certain of the IRA’s provisions, like the WEC, we cannot predict whether and when such action will be taken and the outcome and timeline for such actions may continue to be uncertain and subject to further legal challenges.

Internationally, the United Nations-sponsored “Paris Agreement” encourages member states to individually determine and submit non-binding emissions reduction targets.

The United States’ most recent goal was to reduce its economy-net GHG emissions by 61 to 66 percent from 2005 levels by 2035.

Federal policy towards GHG emissions, and regulation thereunder, has varied significantly between the past several Presidential administrations.

The current administration has expressed a policy preference of limiting or rescinding regulations concerning GHG emissions and, in February 2026, promulgated a final rule repealing the EPA’s 2009 “Endangerment Finding” and its motor vehicle GHG emission performance standards.

This rescission of the “Endangerment Finding” eliminates the basis for EPA’s authority under the CAA for most of its regulations concerning GHGs.

However, whether or how such policies and the EPA’s rescission of its “Endangerment Finding” will be implemented and if they will survive any potential legal challenges, or whether future administrations or Congress may pursue new GHG emissions regulation, cannot be predicted at this time.

At the international level, the United Nations-sponsored Paris Agreement encourages nations to limit their GHG emissions through nationally-determined, though non-binding, reduction goals.

Recent Conferences of the Parties have resulted in reaffirmations of the objectives of the Paris Agreement, calls for parties to eliminate certain fossil fuel subsidies and pursue reductions in non-carbon dioxide GHG emissions, agreements to transition away from fossil fuels in energy systems and increase renewable energy capacity, financial commitments to fund energy transition efforts in developing countries, and similar initiatives, though none legally binding.

However, in January 2025, President Trump initiated the United States’ withdrawal from the Paris Agreement and ordered the revocation of any related financial commitments.

The impacts of the United States’ withdrawal and other existing or future climate-related orders, pledges, agreements or any legislation or regulation promulgated in connection with the Paris Agreement, the Global Methane Pledge, or other international conventions cannot be predicted at this time.

However, in January 2025, the current administration ordered the revocation of any United States financial commitments on emission goals associated with international climate agreements.

Then, in January 2026, the United States finalized its withdrawal from the Paris Agreement.

The impacts of

the United States’ withdrawal and other existing or future climate-related orders, pledges, agreements or any legislation or regulation promulgated in connection with the Paris Agreement, the Global Methane Pledge, or other international conventions cannot be predicted at this time.

Further, state and local governments, financial institutions, and industry groups may elect to continue participating in international climate-related initiatives.

In addition, on March 6, 2024, the SEC adopted a rule requiring registrants to include certain climate-related disclosures, including Scope 1 and 2 GHG emissions, climate-related targets and goals, and certain climate-related

financial statement metrics, in registration statements and annual reports, though the implementation of this rules is currently paused pending the outcome of legal challenges against the rule.

Currently, the ultimate impact of these laws on our business is uncertain.

Separately, enhanced climate related disclosure requirements could lead to reputational or other harm with customers, regulators, investors, or other stakeholders and could also increase our litigation risks relating to statements alleged to have been made by us or others in our industry regarding climate change risks, or in connection with any future disclosures we may make regarding reported emissions, particularly given the inherent uncertainties and estimations with respect to calculating and reporting GHG emissions.

Additionally, the SEC has also from time to time applied additional scrutiny to existing climate-change related disclosures in public filings, increasing the potential for enforcement if the SEC were to allege an issuer’s existing climate disclosures misleading or deficient.

Increasingly, oil and natural gas companies are exposed to litigation risks associated with the threat of climate change.

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Financial institutions, including investment advisors and certain sovereign wealth, pension, and endowment funds, may elect in the future to shift some or all of their investments into non-oil and natural gas 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 in the future not to provide funding for oil and natural gas companies.

Institutional lenders may elect in the future not to provide funding for oil and natural gas companies.

Many of the largest U.S.

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From time to time, federal and state level legislation has been proposed that would, if enacted into law, make significant changes to tax laws, including to certain key federal and state income tax provisions currently applicable to oil and natural gas exploration and development companies.

Such legislative changes have included, but have not been limited to, (i) the elimination of the percentage depletion allowance for oil and natural gas properties, (ii) the elimination of current deductions for intangible drilling and development costs, (iii) an extension of the amortization period for certain geological and geophysical expenditures, (iv) the elimination of certain other tax deductions and relief previously available to oil and natural gas companies, and (v) an increase in the federal income tax rate applicable to corporations such as us.

It is unclear

whether these or similar changes will be enacted and, if enacted, how soon any such changes could take effect.

It is unclear whether any such changes will be enacted and, if enacted, how soon any such changes could take effect.

Additionally, states in which we operate or own assets may impose new or increased taxes or fees on oil and natural gas extraction.

The passage of any legislation as a result of these proposals and other changes in federal income tax laws or the imposition of new or increased taxes or fees on oil and natural gas extraction could adversely affect our operating results and cash flows.

The passage of any such legislation or other changes in federal income tax laws or the imposition of new or increased taxes or fees on oil and natural gas extraction could adversely affect our operating results and cash flows.

In addition, the IRA, which includes, among other things, a corporate alternative minimum tax (the "CAMT"), provides for an investment tax credit for qualified biomass property and introduces a one percent excise tax on corporate stock repurchases.

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The CAMT generally treats a corporation as an applicable corporation in any taxable year in which the "average annual adjusted financial statement income" of the corporation and certain of its subsidiaries and affiliates for a three-taxable-year period ending prior to such taxable year exceeds $1 billion.

Based on our current interpretation of the IRA and the CAMT and a number of operational, economic, accounting and regulatory assumptions, we do not anticipate the CAMT materially increasing our U.S.

Based on our current interpretation of the IRA and the CAMT and a number of operational,

economic, accounting and regulatory assumptions, we do not anticipate the CAMT materially increasing our U.S.

federal income tax liability in the near term.

The foregoing analysis is based upon our current interpretation of the provisions contained in the IRA and the CAMT.

In the future, the U.S.

Department of Treasury and the Internal Revenue Service are expected to release regulations and interpretive guidance relating to the CAMT, and any significant variance from our current interpretation could result in a change in the expected application of the CAMT to us and adversely affect our operating results and cash flows.

Department of the Treasury and the Internal Revenue Service have released proposed regulations and other interpretive guidance relating to the CAMT.

Any significant variance from our current interpretation could result in a change in the expected application of the CAMT to us and adversely affect our operating results and cash flows.

Also, we are subject to unclaimed or abandoned property (escheat) laws which require us to turn over to certain government authorities the property of others held by us that has been unclaimed for a specified period.

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We have significant indebtedness.

We have a Credit Facility in place with $600 million in commitments from borrowings and letters of credit under our Second Amended and Restated Credit Agreement dated August 31, 2022 with Truist Bank as Administrative Agent (the "Second Credit Agreement").

We have a Credit Facility in place with $585 million in commitments from borrowings and letters of credit under our Third Amended and Restated Credit Agreement dated June 18, 2025 with Bank of America, N.A.

as Administrative Agent (the "Credit Agreement").

As of December 31, 2025, $420 million was outstanding on our Credit Facility.

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Our plans for growth may include accessing the capital markets.

Recent reluctance to invest in the exploration and production sector based on market volatility, historically perceived underperformance, and ESG trends, among other

things, has raised concerns regarding capital availability for the sector.

Recent reluctance to invest in the exploration and production sector based on market volatility, historically perceived underperformance, and ESG trends, among other things, has raised concerns regarding capital availability for the sector.

If those markets are unavailable, or if we are unable to access alternative means of financing on acceptable terms, we may be unable to implement all of our development plans, make acquisitions, or otherwise carry out our business strategy, which would have a material adverse effect on our financial condition and results of operations, and impair our ability to service our indebtedness.

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We have undertaken, and plan to continue with, certain initiatives and actions (such as agreements with service providers to secure the costs and availability of services) to mitigate such inflationary pressures.

However, there can be no assurance that such efforts will offset, largely or at all, the impacts of any future inflationary pressures on our operating costs and capital expenditures and, in turn, our cash flows and results of operations.

However, there can be no assurance

that such efforts will offset, largely or at all, the impacts of any future inflationary pressures on our operating costs and capital expenditures and, in turn, our cash flows and results of operations.

Risks Relating to Technology and Cybersecurity

We rely on computer and telecommunications systems, and failures in our systems or cyber security attacks or breaches could result in information theft, data corruption, disruption in operations, and/or financial loss.

We rely on computer and telecommunications systems, and failures in our systems or cybersecurity attacks or breaches could result in information theft, data corruption, disruption in operations, and/or financial loss.

The oil and natural gas industry is highly dependent upon digital technologies to conduct day-to-day operations including certain exploration, development, and production activities.

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Although we utilize various procedures and controls to monitor and protect against these threats and mitigate our exposure to such threats, there can be no assurance that these procedures and controls will be sufficient in preventing security threats from materializing and causing us to suffer losses in the future.

In addition, weaknesses in the cyber security of our vendors, suppliers, and other business partners could facilitate an attack on our technologies, systems, and networks.

In addition, weaknesses in the cybersecurity of our vendors, suppliers, and other business partners could facilitate an attack on our technologies, systems, and networks.

Even so, any cyber incidents or interruptions to our computing and communications infrastructure or our information systems could lead to data corruption, communication interruption, unauthorized release, gathering, monitoring, misuse, or destruction of proprietary or other information, or otherwise significantly disrupt our business operations.

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Risks Relating to Our Common Stock

We have registered shares of our common stock for possible resale by certain of our stockholders, resulting in significant "market overhang" of our common stock.

In connection with the Stronghold Acquisition completed in 2022, Warburg Pincus & Company US, LLC and its affiliates hold approximately 28.9 million shares of our common stock.

This represents approximately 14% of our presently

outstanding shares of common stock and if the selling stockholders choose to sell all or a large number of their shares, from time to time, it likely would have a depressive effect on the market price of our common stock.

Further, the market's perception of future sales of common stock may adversely affect the price of our common stock.

The market price of our common stock may be volatile, which could cause the value of your investment to decline.

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Our future dividend policy is within the discretion of our Board of Directors and will depend upon various factors, including our business, financial condition, results of operations, capital requirements, and investment opportunities.

In addition, the terms of our Second Credit Agreement have restrictions on dividend payments to our equity holders, including our common stockholders.

In addition, the terms of our Credit Agreement have restrictions on dividend payments to our equity holders, including our common stockholders.

Our Board of Directors can, without stockholder approval, cause preferred stock to be issued on terms that could adversely affect common stockholders.

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Provisions under Nevada law could delay or prevent a change in control of our company, which could adversely affect the price of our common stock.

In addition to the ability of the Board of Directors to issue preferred stock, the existence of some provisions under Nevada law could delay or prevent a change in control of the Company, which could adversely affect the price of our

common stock.

Nevada law imposes some restrictions on mergers and other business combinations between us and any holder of 10% or more of our outstanding common stock.

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