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Item 1A. Risk Factors

2026-03-04 compared with 2025-03-05 · 170 added, 190 removed, 724 unchanged (33% of the section changed)

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We could also face additional risks and uncertainties not currently known to us or that we currently deem to be immaterial.

If any of these risks actually occurs, it could materially harm our business, financial condition or results of operations and the trading price of our shares could decline.

If any of these risks actually occurs, it could materially harm our business, financial condition or results of operations and the trading price of

our stock could decline.

Investors should carefully consider each of the following risk factors and all of the other information set forth in this Annual Report.

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Recent regulatory restrictions on use of produced water and a moratorium on new produced water disposal wells in certain areas of the Permian Basin to stem rising seismic activity and earthquakes could increase our operating costs and adversely impact our business, results of operations and financial condition.

We may be subject to regulation that restricts our ability to discharge water produced as part of our oil, natural gas and NGL production operations.

Productive zones frequently contain water that must be removed for the oil, natural gas and NGLs to produce, and our ability to remove and dispose of sufficient quantities of water from the various zones will determine whether we can produce oil, natural gas and NGLs in commercial quantities.

The produced water must be transported from the leasehold and/or injected into disposal wells.

The availability of transportation and disposal wells with sufficient capacity to receive all of the water produced from our wells may affect our ability to produce our wells.

Also, the cost to transport and dispose of that water, including the cost of complying with regulations concerning water disposal, may reduce our profitability.

We have entered into a 15-year agreement with a third party to transport certain committed volumes of produced water from our operations in New Mexico beginning in the second half of 2026;

however if this agreement were to be terminated, or our counterparty otherwise fails to transport the produced water, it could force us to shut in wells or reduce drilling activities.

We may also have to shut in wells, reduce drilling activities, or upgrade facilities for water handling or treatment if any of the following occur:

(i) water produced from our projects fails to meet the quality requirements set by relevant regulatory agencies, (ii) our wells produce water in excess of the allowed volumetric permit limits, (iii) the disposal wells fail to comply with applicable regulatory requirements, or (iv) we are unable to secure access to disposal wells with sufficient capacity to handle all of the produced water.

The costs to dispose of this produced water may increase if any of the following occur:

• we cannot obtain future permits from applicable regulatory agencies;

• water of lesser quality or requiring additional treatment is produced;

• our wells produce excess water;

• the counterpart to our water agreement cannot transport our produced water;

• new laws and regulations require water to be disposed in a different manner; or

• costs to transport the produced water to the disposal wells increase.

In recent years, the NMOCD and the RRC have each imposed stricter requirements for oil and gas wastewater injection activities in response to seismic activity in the Permian Basin, including the imposition of additional analysis, reporting, injection rate reduction or curtailment, and notification requirements on operators depending on the number and intensity of seismic events and, in certain areas, suspended issuance of new SWD well permits, as well as suspended or limited existing disposal well permits.

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These concerns and actions may cause operational delays or restrictions, increased operating costs, additional regulatory burdens, increased risk of litigation, and adverse impacts on the Company’s access to capital.

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

Negative public perception could cause the permits the Company requires to conduct our operations to be withheld, delayed, or burdened by requirements that restrict the Company’s ability to profitably conduct our business.

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Historically, one of the key drivers in the unconventional resource industry has been growth in production and reserves.

With historical volatility in oil and natural gas prices and the potential for rising interest rates will increase the cost of borrowing, capital efficiency and free cash flow from earnings have become the key drivers for energy companies, particularly shale producers.

With historical volatility in oil and natural gas prices and the potential for rising interest rates which may increase the cost of borrowing, capital efficiency and free cash flow from earnings have become the key drivers for energy companies, particularly shale producers.

Such shifts in focus sometimes require changes in planning and resource management, which may not occur instantaneously.

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Lower commodity prices will reduce our cash flows and borrowing ability.

We may be unable to obtain needed capital or financing on satisfactory terms, which could lead to a decline in the present value of our reserves and our ability to develop future reserves.

We may be unable to obtain needed capital or financing on satisfactory terms, which could lead to a decline in the present value of our reserves and our ability to develop

future reserves.

Lower commodity prices may also reduce the amount of oil, natural gas and NGLs that we can produce economically.

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If market or other economic conditions deteriorate or if oil, natural gas and NGL prices decline, we may incur impairment losses, which may have a material adverse effect on our results of operations.

During the year ended December 31, 2024, the Company recognized impairment losses on proved properties relating to certain properties in Texas outside of the Company's acreage in the Champions field and certain properties in New Mexico outside of the Company's acreage in the Red Lake field.

The impairments were primarily driven by a reduction in reserve volume due to lower well performance assessments based on historical trends.

The affected areas included nine operated producing wells.

Our exploration, development and midstream projects require substantial capital expenditures.

During the year ended December 31, 2025, the Company recognized an impairment loss on proved properties of $1.2 million related to certain properties in New Mexico outside of the Company's acreage in the Red Lake field.

The impairment was primarily driven by a reduction in well results and lower commodity prices.

Our exploration and development projects require substantial capital expenditures.

We may be unable to obtain required capital or financing on satisfactory terms, which could lead to a decline in our reserves.

The oil and natural gas industry is capital intensive.

We make and expect to continue to make substantial capital expenditures for the exploration, exploitation, development and acquisition of oil and natural gas reserves and the construction of midstream gathering, compression and pipeline facilities.

We make and expect to continue to make substantial capital expenditures for the exploration, exploitation, development and acquisition of oil and natural gas reserves.

We expect to fund our growth primarily through cash flow from operations, availability under our Credit Facility, and subsequent equity or debt offerings when appropriate.

The actual amount and timing of our future capital expenditures may differ materially from our estimates as a result of, among other things, oil, natural gas and NGL prices, actual drilling results, the availability of drilling rigs and other services and equipment, construction delays in our midstream project, cost of materials, regulatory, technological and competitive developments, and worldwide and regional economic conditions.

The actual amount and timing of our future capital expenditures may differ materially from our estimates as a result of, among other things, oil, natural gas and NGL prices, actual drilling results, the availability of drilling rigs and other services and equipment, cost of materials, regulatory, technological and competitive developments, and worldwide and regional economic conditions.

A reduction in commodity prices from current levels may result in a decrease in our actual capital expenditures, which would negatively impact our ability to grow production.

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• increase in the cost of, shortages or delays in the availability of, electricity, supplies, materials, drilling or workover rigs, equipment and services.

The construction of our planned New Mexico natural gas gathering, compression and pipeline projects are subject to a number of development risks, which could cause cost overruns and delays or prevent completion of one or more of our midstream development projects.

Key factors that may affect the timing of, and our ability to complete, our midstream development projects include, but are not limited to:

• the issuance and/or continued availability of necessary permits, licenses and approvals from governmental agencies and third parties as are required to construct, own and operate the facilities, including right-of-way agreements;

• the availability of sufficient financing;

• our ability to maintain an engineering, procurement and construction (“EPC”) services agreement with an EPC contractor for each phase of the construction on favorable terms, and to maintain good relationships with these contractors, and the ability of those EPC contractors to perform their obligations under EPC agreements and to maintain their creditworthiness;

• site development difficulties, including change orders, cost overruns, and construction delays;

• competition for EPC contractors with other gas gathering, compression and pipeline service companies;

• increases in the cost of materials due to inflation, taxes, tariffs, or other economic conditions or government or third party actions;

• continued commercial arrangements for gathering, processing and treating our natural gas until our pipeline in-service date under our new gas purchase agreement;

• local and general economic conditions;

• catastrophes, such as explosions, fires and product spills;

• resistance in the local community to the development of midstream infrastructure assets, including the pipeline;

• contract labor disputes;

• weather conditions.

Delays in the construction of the gathering, compression and natural gas pipeline beyond the estimated development periods, as well as cost overruns, could increase the cost of completion beyond the amounts currently estimated in our capital budget, which could require us to obtain additional sources of financing to complete the construction (which could cause further delays) and could delay the development of our New Mexico oil and gas properties.

Properties we acquire may not produce as projected, and we may be unable to determine reserve potential, identify liabilities associated with the properties that we acquire, or obtain protection from sellers against such liabilities.

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In the course of our due diligence, we may not review every well, pipeline or associated facility.

We cannot necessarily observe structural and environmental problems, such as pipe corrosion or groundwater contamination, when a review is performed.

We cannot necessarily observe structural and environmental problems, such as pipe corrosion or subsurface or groundwater contamination, when a review is performed.

We may be unable to obtain contractual indemnities from the seller for liabilities created prior to our purchase of the property.

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

For example, our estimated proved reserves as of December 31, 2024, were calculated under SEC rules using the unweighted arithmetic average first-day-of-the-month prices for the prior 12 months of $76.32 per Bbl for oil and NGL volumes and $2.13

per MMBtu for natural gas volumes.

For example, our estimated proved reserves as of December 31, 2025, were calculated under SEC rules using the unweighted arithmetic average of the first-day-of-the-month prices for the prior 12 months of $65.34 per Bbl for oil and NGL volumes and $3.39 per MMBtu for natural gas volumes, prior to adjustment for quality, energy content, GP&T costs and market differentials.

Using lower prices in estimating proved reserves would likely result in a reduction in proved reserve volumes due to economic limits.

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Ultimately, the success of these drilling and completion techniques can only be evaluated over time as more wells are drilled and production profiles are established over a sufficient time period.

If our drilling results are less than anticipated or we are unable to execute our drilling program because of capital constraints, lease expirations, access to gathering systems, and/or commodity prices decline, the return on our investment in these areas may not be as attractive as we anticipate.

If our drilling results are less than anticipated or we

are unable to execute our drilling program because of capital constraints, lease expirations, access to gathering systems, and/or commodity prices decline, the return on our investment in these areas may not be as attractive as we anticipate.

Further, as a result of any of these developments we could incur material write-downs of our oil and natural gas properties and the value of our undeveloped acreage could decline in the future.

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Specifically, as the Permian Basin is an area of high industry activity, we may be unable to hire, train, or retain qualified personnel needed to manage and operate our assets.

There is also limited availability of qualified third-parties to perform certain services required for operations, regulatory and environmental compliance.

At December 31, 2025, the majority of our total estimated proved reserves were attributable to properties located in the Northwest Shelf within the Permian Basin of West Texas and Southeastern New Mexico, an area in which industry activity has increased rapidly.

As a result of this concent ration, a number of our properties could experience any of the same conditions at the same time and, when compared to other companies that have a more diversified portfolio of properties, we may be disproportionately exposed to the impact of regional supply and demand factors, delays or interruptions of production from wells in this area caused by governmental regulation, processing or transportation capacity constraints or disruptions, market limitations, water shortages or other drought or extreme weather related conditions or interruption of the processing or transportation of oil, natural gas or NGLs.

As a result of this concent ration, a number of our properties could experience any of the same conditions at the same time and, when compared to other companies that have a more diversified portfolio of properties, we may be disproportionately exposed to the impact of regional supply and demand factors, delays or interruptions of production from wells in this area caused by governmental regulation, processing or transportation capacity constraints or disruptions, electric power limitations, market limitations, water shortages or other drought or extreme weather related conditions or interruption of the processing or transportation of oil, natural gas or NGLs.

For example, bottlenecks in processing and transportation that have occurred in some recent periods in the Permian Basin may negatively affect our results of operations, and these adverse effects may be disproportionately severe to us compared to our more geographically diverse competitors.

Specifically, demand for qualified personnel in this area, and the cost to attract and retain such personnel, may increase substantially in the future.

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Access to such facilities is, in many respects, beyond our control.

If these facilities are unavailable to us on commercially reasonable terms or otherwise (either temporarily or long-term), we could be forced to shut in some production or delay or discontinue drilling plans and commercial production following a discovery of hydrocarbons, as was the case in July and August 2023 and in July 2024 when our producing wells in the Red Lake field in New Mexico were shut in due to unexpected maintenance issues with our third party processor.

We rely on facilities developed and owned by third parties in order to store, process, transmit, and sell our oil and natural gas production, and even once our planned gathering, compression and pipeline projects are completed, we still expect to rely on third-party facilities.

Until our planned pipeline is constructed to connect with our new midstream counterparty's facilities, we are operating under a month-to-month arrangement with our current midstream counterparty, which could be terminated at any time.

If these facilities are unavailable to us on commercially reasonable terms or otherwise (either temporarily or long-term), we could be forced to shut in some production or delay or discontinue drilling plans and commercial production following a discovery of hydrocarbons, as was the case in certain months of 2025, 2024 and 2023 when our producing wells in the Red Lake field in New Mexico were shut in due to unexpected maintenance issues with our third party processors.

We rely on facilities developed and owned by third parties in order to store, process, transmit, and sell our oil and natural gas production.

Our plans to develop and sell our oil and natural gas reserves, the expected results of our drilling program and our cash flow and results of operations could be materially and adversely affected by the inability or unwillingness of third parties to provide sufficient facilities and services to us on commercially reasonable terms or otherwise.

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In addition, in areas where exploration and production activities are increasing, as has been the case in recent years in the Permian Basin, we are subject to increasing competition for drilling rigs, oilfield equipment, services, supplies and qualified personnel, which may lead to periodic shortages or delays.

The curtailments arising from these and similar circumstances may last from a few days to several months, and in many cases, we may be provided only limited, if any, notice as to when these circumstances will arise and their duration.

The curtailments arising from these and similar circumstances may last from a

few days to several months, and in many cases, we may be provided only limited, if any, notice as to when these circumstances will arise and their duration.

While we have undertaken initiatives to expand our access to midstream and operational infrastructure, these initiatives may be delayed or unsuccessful.

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The prices we receive for our production may be affected by local and regional factors.

The prices we receive for our production will be determined to a significant extent by factors affecting the local and regional supply of and demand for oil and natural gas, including the adequacy of the pipeline and processing infrastructure in the region to process and transport our production and that of other producers.

Those factors result in basis differentials between the published indices generally used to establish the price received for regional oil and natural gas production and the actual price we receive for our production, which may be lower than index prices.

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We could be held liable for joint activity obligations of other working interest owners, such as nonpayment of costs and liabilities arising from the actions of other working interest owners.

In addition, declines in oil, natural gas and NGL prices may increase the likelihood that some of these working interest owners, particularly those that are smaller and less established, are not able to fulfill their joint activity obligations.

In addition, declines in oil, natural gas and NGL prices may increase the likelihood that some of these

working interest owners, particularly those that are smaller and less established, are not able to fulfill their joint activity obligations.

A partner may be unable or unwilling to pay its share of project costs, may be unable to access debt or equity financing, and, in some cases, may declare bankruptcy.

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As a participant in these operations, we may not be able to maximize the value associated with these properties in the manner we believe appropriate, or at all.

For example, we cannot control the success of drilling and development activities on properties operated by third parties, which depend on a number of factors under the control of a third-party operator, including such operator’s determinations with respect to, among other things, the nature and timing of drilling and operational activities, the timing and amount of capital expenditures and the selection of suitable technology.

In addition, the third-party operator’s operational expertise and financial resources and its ability to gain the approval of other participants in drilling wells will impact the timing and potential success of drilling and development activities in a manner that we are unable to control.

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We cannot assure you that we will continue to have ready access to suitable markets for our future oil and natural gas production.

Any termination or sustained disruption in the gathering, processing and transportation of our oil, natural gas and NGL production by our purchasers on their systems and in their facilities would materially and adversely affect our financial condition and results of operations.

We have exposure to credit risk through receivables from purchasers of our oil, natural gas and NGL production.

One purchaser accounted for 70% of our revenues and another purchaser accounted for more than 10% of our revenues for the year ended December 31, 2024.

One purchaser accounted for 60% of our revenues and another purchaser accounted for 30% of our revenues for the year ended December 31, 2025.

Due to the recent acquisition of Stakeholder by Targa and upon commencement of the A&R Gas Purchase Agreement, substantially all of our natural gas and NGLs will be sold to a single purchaser.

This concentration of purchasers may impact our overall credit risk in that these purchasers may be similarly affected by changes in economic conditions or commodity price fluctuations.

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Losses and liabilities arising from uninsured and under insured events could materially and adversely affect our business, financial condition or results of operations.

Our activities are subject to all of the operating risks associated with drilling for, producing, gathering and compressing oil and natural gas, including the risk of fire, explosions, blowouts, surface cratering or other cratering, uncontrollable flows of natural gas, oil, well fluids and formation water, pipe or pipeline failures, processing or transportation capacity constraints or disruptions, damages to pipelines, compressor stations and related equipment, abnormally pressured formations, casing collapses, reservoir damage and environmental hazards such as oil, produced water or chemical spills, natural gas leaks, ruptures or discharges of toxic gases.

Our exploration and production activities are subject to all of the operating risks associated with drilling for and producing, gathering and compressing oil and natural gas, including the risk of fire, explosions, blowouts, surface cratering or other cratering, uncontrollable flows of natural gas, oil, well fluids and formation water, pipe or pipeline failures, processing or transportation capacity constraints or disruptions, damages to pipelines, compressor stations and related equipment, abnormally pressured formations, casing collapses, reservoir or environmental damage and environmental hazards such as oil, produced water or chemical spills, natural gas leaks, ruptures or discharges of toxic gases or hazardous substances.

Any of these risks could adversely affect our ability to conduct operations or result in substantial loss to us as a result of claims for:

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• natural resources damages;

• employee/employer liabilities and risks, including wrongful termination, discrimination, labor organizing, retaliation claims, and general human resource related matters;

• employee/employer liabilities and risks;

• damage to and destruction of property, natural resources and equipment;

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We may be unable to make accretive acquisitions or successfully integrate acquired businesses or assets, and any inability to do so may disrupt our business and hinder our ability to grow.

In the future we may make acquisitions of oil and natural gas properties or businesses that complement or expand our current business.

We have made, and in the future we may continue to make, acquisitions of oil and natural gas properties or businesses that complement or expand our current business.

The successful acquisition of oil and natural gas properties requires an assessment of several factors, including:

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Our review will not reveal all existing or potential problems nor will it permit us to become sufficiently familiar with the properties to assess fully their deficiencies and capabilities.

Reviews may not always be performed on every well or facility, and environmental problems, such as subsurface or groundwater contamination, are not necessarily observable even when a review is performed.

Reviews may not always be performed on every well or facility, and environmental problems, such as pipe corrosion or subsurface or groundwater

contamination, are not necessarily observable even when a review is performed.

Even when problems are identified, the seller may be unwilling or unable to provide effective contractual protection against all or part of the problems.

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Our failure to achieve consolidation savings, to integrate the acquired businesses and assets into our existing operations successfully or to minimize any unforeseen operational difficulties could have a material adverse effect on our financial condition and results of operations.

In addition, our Credit Facility imposes certain limitations on our ability to enter into mergers or combination transactions as well as limits our ability to incur certain indebtedness, which could indirectly limit our ability to engage in acquisitions.

In addition, our Credit Facility and Senior Notes impose certain limitations on our ability to enter into mergers or combination transactions as well as limit our ability to incur certain indebtedness, which could indirectly limit our ability to engage in acquisitions.

We may incur losses as a result of title defects in the properties in which we invest.

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We may need to access funding through capital market transactions.

Due to our relative smaller public float and low market capitalization, ESG, and climate change policies and restrictions, it may be difficult and expensive for us to raise additional funds.

Due to our relative smaller public float and low market capitalization, it may be difficult and expensive for us to raise additional funds.

We may need to raise funds through the issuance of shares of our common stock or securities linked to our common stock.

Our ability to raise these funds may be dependent on a number of factors, including the risk factors further described herein and the low trading volume and volatile trading price of our shares of common stock.

Our ability to raise these funds may be dependent on a number of factors, including the risk factors further described herein and

the low trading volume and volatile trading price of our shares of common stock.

The stocks of small cap companies tend to be highly volatile.

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The terms of any funding we are able to obtain may not be favorable to us and may be highly dilutive to our stockholders.

We may be unable to access capital due to unfavorable market conditions or other market factors outside of our control such as ESG and/or climate change policies and restrictions.

We may be unable to access capital due to unfavorable market conditions or other market factors outside of our control .

There can be no assurance that we will be able to raise additional capital when needed.

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Our Credit Facility and our Senior Notes have substantial restrictions and financial covenants that may restrict our business and financing activities and our ability to declare dividends.

The operating and financial restrictions and covenants in our Credit Facility and our Senior Notes restrict, and any future financing agreements likely will restrict, our ability to finance future operations or capital needs, engage, expand or pursue our

business activities or pay dividends.

Our Credit Facility and our Senior Notes restrict, and any future financing agreements likely will restrict, our ability to, among other things:

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• redeem or repurchase shares from our stockholders;

• pay dividends to our stockholders unless certain tests under the Credit Facility and Senior Notes are satisfied;

• pay dividends to our stockholders;

• make certain payments of junior indebtedness;

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A failure to comply with the provisions of our Credit Facility could result in a default or an event of default that could enable our lenders to declare the outstanding principal of that debt, together with accrued and unpaid interest, to be immediately due and payable.

Further, our ability to pay dividends to our stockholders will be restricted and our lenders’ commitment to make further loans to us may terminate.

Further, our ability to pay dividends to our stockholders or execute stock buybacks will be restricted and our lenders’ commitment to make further loans to us may terminate.

We might not have, or be able to obtain, sufficient funds to make these accelerated payments, and our common stockholders could experience a partial or total loss of their investment.

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• a high level of debt would increase our vulnerability to general adverse economic and industry conditions;

• the covenants contained in our Credit Facility and Senior Notes limit our ability to borrow additional funds, dispose of assets, pay dividends and make certain investments;

• the covenants contained in our Credit Facility and Senior Notes limit our ability to borrow additional funds, dispose of assets, pay dividends, execute stock buybacks and make certain investments;

• a high level of debt could impair our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate purposes, or other purposes.

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Our Credit Facility limits the amounts we can borrow up to a borrowing base amount, which the lenders, in their sole discretion, determine in accordance with the terms of the agreement.

The borrowing base depends on, among other things, projected revenues from, and asset values of, the proved oil and natural gas properties securing our loan.

The borrowing base depends on, among other things,

projected revenues from, and asset values of, the proved oil and natural gas properties securing our loan.

The value of our proved reserves is dependent upon, among other things, the prevailing and expected market prices of the underlying commodities in our estimated reserves.

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Any such sale could have a material adverse effect on our business and financial results.

In the future, we may not be able to access adequate funding under our Credit Facility as a result of a decrease in borrowing base due to the issuance of new indebtedness, the outcome of a subsequent borrowing base redetermination or an unwillingness or inability on the part of lending counterparties to meet their funding obligations and the inability of other lenders to provide

additional funding to cover the defaulting lender’s portion.

Declines in commodity prices could result in a redetermination and reduction of the borrowing base in the future and, in such a case, we could be required to repay any indebtedness in excess of the reduced borrowing base.

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Any drilling activities we are able to conduct on these potential locations may not be successful or result in our ability to add additional proved reserves to our overall proved reserves or may result in a downward revision of our estimated proved reserves, which could have a material adverse effect on our future business and results of operations.

Increases in interest rates could adversely affect our business.

Our business and operating results can be harmed by factors such as the availability, terms and cost of capital, increases in interest rates or a reduction in credit rating.

These changes could cause our cost of doing business to increase, limit our ability to pursue acquisition opportunities, reduce cash flow used for drilling, and place us at a competitive disadvantage.

Potential disruptions and volatility in the global financial markets may lead to a contraction in credit availability impacting our ability to

finance our operations.

We require continued access to capital.

A significant reduction in cash flows from operations or the availability of credit could materially and adversely affect our ability to achieve our planned growth and operating results.

Our derivative activities could result in financial losses or could reduce our earnings.

Commodity derivatives

We enter or may enter into commodity derivative contracts for a portion of our production, primarily consisting of swaps, put options and call options.

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If the creditworthiness of our counterparties deteriorates and results in their nonperformance, we could incur a significant loss with respect to our commodity derivative contracts.

Our construction of new gathering, compression and pipeline assets may not be completed on schedule, at the budgeted cost or at all, may not operate as designed or at the expected levels, may not result in revenue increases and may be subject to regulatory, environmental, political, legal and economic risks, all of which could adversely affect our financial condition, cash flows and results of operations.

The construction of the new midstream infrastructure assets involves numerous regulatory, environmental, political and legal requirements as well as legal uncertainties beyond our control and may require the expenditure of significant amounts of capital and resources.

Financing may not be available on economically acceptable terms or at all.

If we undertake these projects, we may not be able to complete them on schedule, at the budgeted cost or at all, or they may not operate as designed or at the expected levels.

In addition, we may construct facilities to capture anticipated future production growth in an area in which such growth does not materialize, which could adversely affect our financial condition and results of operations.

In addition, construction of new midstream infrastructure assets may require us to obtain new rights-of-way prior to constructing the New Mexico pipeline and/or related facilities.

We may be unable to timely obtain such rights-of-way to connect new natural gas supplies to our existing gathering pipelines or capitalize on other attractive expansion opportunities.

Additionally, it may become more expensive for us to obtain new rights-of-way or to expand or renew existing rights-of-way.

If the cost of renewing or obtaining new rights-of-way increases, our results of operations could be adversely affected.

The regulatory approval process for the construction of new midstream assets is challenging.

Certain of our internal growth projects require regulatory approval from federal, tribal, state and/or local authorities prior to construction, including the construction of certain of our planned midstream facilities.

The approval process for natural gas pipeline projects has become increasingly challenging, due in part to state and local concerns related to exploration and production, transmission, and gathering activities in production areas and negative public perception regarding the oil and gas industry.

Such authorization may not be granted or, if granted, such authorization may include burdensome or expensive conditions.

In addition, any significant delays in the regulatory approval process for our midstream facilities could increase the costs and negatively impact the targeted in-service date for the facilities, which in turn could adversely impact our business, results of operations and financial condition.

We may face opposition to the development or operation of our midstream facilities from various groups.

We may face opposition to the development or operation of our midstream facilities from environmental groups, landowners, local and national groups, activists and other advocates.

Such opposition could take many forms, including organized protests, attempts to block, vandalize or sabotage our development or operations, intervention in regulatory or administrative proceedings involving our assets directly or indirectly, lawsuits, legislation or other actions designed to prevent, disrupt or delay the development or operation of our assets and business.

For example, constructing our pipelines will involve securing consent from individual landowners to access their property;

one or more landowners may restrict our access, which could lead to an interruption or delay in the construction of our facilities.

In addition, acts of sabotage or eco-terrorism could cause significant damage or injury to people, property or the environment or lead to extended interruptions of our operations.

Any such event that delays or interrupts the revenues generated, or expected to be generated, by our operations, or which causes significant delays or causes us to make significant expenditures not covered by insurance, and, accordingly, could adversely affect our financial condition and the market price of our securities.

The midstream infrastructure buildout projects we complete may not perform as anticipated.

Even if we complete the planned midstream infrastructure buildout projects that we believe will be strategic , such projects may nevertheless adversely impact our business, results of operations and financial condition due to the following factors, among others:

• mistaken assumptions about capacity, revenues, synergies, costs (including operating and administrative, capital, debt and equity costs), inflation, growth potential, assumed liabilities and other factors;

• the failure to receive cash flows from a growth project due to delays in the commencement of operations for any reason;

• unforeseen operational issues or the realization of liabilities that were not known to us at the time the growth project was completed;

• the failure to successfully integrate growth projects into our operations and/or the loss of key employees;

• the impact of regulatory, environmental, political and legal uncertainties, extreme weather or force majeure events, that are beyond our control.

In particular, we may construct facilities to capture anticipated future growth in production and/or demand in a region in which such growth does not materialize.

As a result, new facilities may not be able to generate enough throughput to accomplish our development plan for our New Mexico assets, which could adversely affect our business, financial condition, results of operations and ability to make distributions.

If we complete future growth projects, our capitalization and results of operations may change significantly, and our investors may not have the opportunity to evaluate the economic, financial and other relevant information that we will consider in determining the application of these funds and other resources.

If any growth projects we ultimately complete are not accretive, our business, results of operations and financial condition may be negatively impacted.

We do not own all of the land on which our pipelines and facilities are located or planned, which could result in disruptions to our operations.

Because we do not own all of the land on which our pipelines and facilities have been or are planned to be constructed, we are subject to the possibility of more onerous terms or increased costs to retain necessary land use if we do not have valid rights-of-way or if such rights-of-way lapse or terminate.

We obtain or expect to obtain the rights to construct and operate our pipeline on land owned by third parties and governmental agencies for a specific period of time.

Our loss of these rights, through our inability to renew right-of-way contracts or otherwise, could have a material adverse effect on our business, financial condition and results of operations.

If third-party pipelines, other midstream facilities or purchasers of our products interconnected to our gathering or pipeline systems become partially or fully unavailable, or if the volumes we gather, process or transport do not meet the natural gas and NGL quality requirements of such pipelines or facilities, our business, results of operations and financial condition could be adversely impacted.

Our natural gas gathering and pipelines will connect to other pipelines or facilities owned and operated by unaffiliated third parties.

The continuing operation of such third-party pipelines, processing and treatment plants, facilities of purchasers of our products and other midstream facilities is not within our control.

These pipelines and facilities may become unavailable because of testing, turnarounds, line repair, or maintenance, failure to meet product specifications, reduced operating pressure, lack of operating capacity, regulatory requirements, curtailments of receipt or deliveries due to insufficient capacity or because of damage from natural disasters or other operational hazards.

If any of these pipelines or other midstream facilities become unable to receive, transport or process natural gas, or if the volumes we gather do not meet the natural gas quality requirements (such as hydrocarbon dew point, temperature and foreign content including water, sulfur, carbon dioxide and hydrogen sulfide) of such pipelines or facilities, our business, results of operations and financial condition could be adversely affected.

Interest rate derivatives

Our use of interest rate derivative instruments may limit our ability to benefit from decreases in interest rates and could adversely affect our financial condition and results of operations.

We are exposed to fluctuations in interest rates on our variable-rate indebtedness, including borrowings under our Credit Facility.

To manage a portion of this exposure, we have entered into, and may continue to enter into, interest rate derivative instruments, such as interest rate swaps.

While these instruments are intended to mitigate the impact of rising interest rates, they also expose us to certain risks.

If interest rates decline below the fixed or floor rates established by our derivative instruments, we will be obligated to make cash payments to our derivative counterparties, which could increase our interest expense and reduce cash flows available for capital expenditures, debt repayment, dividends, stock buybacks or other corporate purposes.

As a result, our derivative positions may cause us to incur higher interest costs than we would have otherwise incurred in a declining interest rate environment.

Our derivative instruments also expose us to counterparty credit risk.

If one or more of our counterparties fails to perform under its contractual obligations, we could suffer financial losses and may be required to replace the derivative instruments at prevailing market rates, which may be less favorable.

Although we seek to limit this risk by entering into derivative transactions with financial institutions that we believe are creditworthy, we cannot be assured that such counterparties will not default on their obligations.

The fair value of our interest rate derivatives may fluctuate significantly as a result of changes in interest rates and market conditions.

These fluctuations may result in non-cash gains or losses recognized in earnings and could increase volatility in our reported results of operations.

Our joint ventures may not perform as expected, and conducting a portion of our operations through joint ventures in which we do not have 100% ownership interest exposes us to risks and uncertainties, many of which are outside of our control.

In January 2023, we formed a joint venture, RPC Power, in which we initially held a 35% interest and increased our equity ownership to 50% in May 2024.

We have entered into and may also enter into in the future additional joint ventures or other equity investments in the future in which we may not have 100% ownership interest.

Currently we have a 50% interest in our joint venture, RPC Power LLC ("RPC Power").

We may not realize any of the anticipated benefits of our joint ventures or other equity investments.

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Joint venture partners, controlling equity holders, management or other persons or entities who control them may have economic or business interests, strategies or goals that are inconsistent with ours.

Business decisions or other actions or omissions of the joint venture partners, controlling equity holders, management or other persons or entities who control them may adversely affect the value of our investment, result in litigation or regulatory action against us and otherwise damage our reputation.

Business or operational decisions or other actions or omissions of the joint venture partners, controlling equity holders, management or other persons or entities who control them may adversely affect the value of our investment, result in litigation or regulatory action against us and otherwise damage our reputation.

Any such circumstance could materially adversely affect our results of operations, financial condition, cash flows and/or prospects.

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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 are often inconclusive or subject to varying interpretations.

Any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.” In addition, our cost of drilling, completing, and operating wells is often uncertain before drilling commences.

Any material inaccuracies in reserve estimates or

underlying assumptions will materially affect the quantities and present value of our reserves.” In addition, our cost of drilling, completing, and operating wells is often uncertain before drilling commences.

Further, many factors may curtail, delay, or cancel our scheduled drilling projects, including the following:

• delays and increased costs imposed by or resulting from compliance with environmental and other regulatory requirements including limitations on or resulting from wastewater discharge and disposal, subsurface injections, greenhouse gas emissions, and hydraulic fracturing;

• delays and increased costs imposed by or resulting from compliance with environmental and other regulatory requirements including limitations on or resulting from wastewater discharge and disposal, subsurface injections, permitting and control of greenhouse gas and other air emissions, and hydraulic fracturing;

• pressure or irregularities in geological formations;

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• lack of available capacity or disruptions in operation of interconnecting transmission pipelines and processing facilities;

• adverse weather conditions, such as tornadoes, droughts, ice storms, and extreme freeze events;

• lack of available treatment or disposal options for oil and natural gas waste, including produced water;

• environmental hazards, such as oil and natural gas leaks, oil spills, pipeline and tank ruptures, encountering naturally occurring radioactive materials, and unauthorized discharges of brine, well stimulation and completion fluids, toxic gases or other pollutants into the air, surface and subsurface environment;

• adverse weather conditions, such as floods, tornadoes, droughts, ice storms, and extreme freeze events;

• lack of available treatment, recycling or disposal options for oil and natural gas waste, including produced water;

• environmental hazards, such as oil and produced water and natural gas leaks, oil spills, pipeline and tank ruptures, encountering naturally occurring radioactive materials, and unauthorized discharges of brine, well stimulation and completion fluids, toxic gases or other pollutants into the air, surface and subsurface environment;

• issues or challenges related to permitting under and compliance with environmental and other governmental regulations;

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• limitations in the market for oil, natural gas, and NGLs.

Conservation measures and technological advances could reduce demand for oil, natural gas and NGLs.

Energy conservation measures and technological advances could reduce demand for oil, natural gas and NGLs.

Our industry is characterized by rapid and significant technological advancements and introductions of new products and services using new technologies.

Fuel and other energy conservation measures, alternative fuel requirements, prioritization of advancements in renewable energy production, increasing consumer demand for alternatives to oil, natural gas and NGLs, and technological advances in fuel economy and energy generation devices could reduce demand for oil, natural gas and NGLs.

Fuel and other energy conservation measures, alternative fuel requirements, prioritization of advancements in renewable energy production, increasing consumer demand for low-carbon alternatives to oil, natural gas and NGLs, and technological advances in fuel economy and energy generation devices could reduce demand for oil, natural gas and NGLs.

As competitors and others use or develop new technologies or technologies comparable to ours in the future, we may lose market share or be placed at a competitive disadvantage.

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Limits on our ability to effectively use, implement or adapt to new technologies may have a material adverse effect on our business, financial condition and results of operations.

Similarly, the impact of the changing demand for oil and natural gas services and products may have a material adverse effect on our business, financial condition, results of operations and cash flows.

Similarly, the impact of the changing demand for oil and natural gas services and products or of market or policy preferences for sources of low-carbon alternative energy generation may have a material adverse effect on our business, financial condition, results of operations and cash flows.

Limitation or restrictions on our ability to obtain water or dispose of flowback and produced water may have an adverse effect on our operating results.

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Our access to water to be used in these processes may be adversely affected due to reasons such as periods of extended drought, private, third-party competition for water in localized areas or the implementation of local or state governmental programs to monitor or restrict the use of water subject to their jurisdiction for hydraulic fracturing to assure adequate local water supplies.

In addition, treatment and disposal of flowback and produced water is becoming more highly regulated and restricted, including, in some areas, due to seismic activity associated with saltwater disposal wells.

Thus, our costs for obtaining and disposing of water could increase significantly.

In addition, recycling or treatment and disposal of flowback and produced water is becoming more highly regulated and restricted, including, in some areas, due to seismic activity associated with saltwater disposal wells.

Thus, our costs for obtaining water for drilling and hydraulic fracturing and for recycling or treating and disposing of water could increase significantly.

Our inability to locate or contractually acquire and sustain the receipt of sufficient amounts of water could adversely impact our exploration and production operations and have a corresponding adverse effect on our business, results of operations and financial condition.

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Concerns about global economic growth have had a significant adverse impact on global financial markets and commodity prices and are expected to continue having a material adverse effect for the foreseeable future.

For example, it is uncertain how conflicts in the Middle East, including the war in Gaza, and the war in Ukraine and resulting sanctions against Russia will affect oil and natural gas prices in the coming months.

For example, it is uncertain how conflicts in the Middle East, conflicts in Venezuela, and the war in Ukraine and resulting sanctions against Russia will affect oil and natural gas prices in the coming months.

If the economic climate in the United States or abroad continues to deteriorate, demand for petroleum products could diminish, which could further impact the price at which our operators can sell oil, natural gas, and NGLs, affect the ability of our vendors, suppliers and customers to continue operations, and ultimately adversely impact our results of operations, liquidity and financial condition to a greater extent than it has already.

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in recent years.

Although inflation moderated somewhat in 2024, inflationary pressures have resulted in and may in the future result in additional increases to the costs of goods, services and personnel, which in turn could cause our capital expenditures and operating costs to rise.

Inflationary pressures have resulted in and may in the future result in additional increases to the costs of goods, services and personnel, which in turn could cause our capital expenditures and operating costs to rise.

During inflationary periods, interest rates have historically increased.

Increased interest rates could have the effects of raising the cost of capital and depressing economic growth, either of which (or the combination thereof) could hurt the financial and operating results of our business.

In 2024, while rates were slightly decreased, they remained elevated as the U.S.

In 2025, inflation remained elevated as the U.S.

Federal Reserve and other central banks continued to navigate inflationary concerns.

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As others use or develop new technologies, we may be placed at a competitive disadvantage or may be forced by competitive pressures to implement those new technologies at substantial costs.

In addition, other oil and natural gas companies may have greater financial, technical and personnel resources that allow them to enjoy technological advantages and that may in the future allow them to implement new technologies before we can.

In addition, other oil and natural gas companies may have greater financial, technical and personnel resources that allow them

to enjoy technological advantages and that may in the future allow them to implement new technologies before we can.

We may not be able to respond to these competitive pressures or implement new technologies on a timely basis or at an acceptable cost.

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These constraints and the resulting shortages or high costs could delay or temporarily halt our operations and materially increase our operation and capital costs, which could have a material adverse effect on our business, financial condition and results of operations.

Our business could be negatively affected by security threats, including cybersecurity threats, and other disruptions.

Our business could be negatively affected by security threats and disruptions, including electronic, cybersecurity or physical threats, and other disruptions.

The oil and natural gas industry has become increasingly dependent on digital technologies to conduct day-to-day operations.

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and threats from terrorist acts.

The potential for such security threats has subjected our operations to increased risks that could have a material adverse effect on our business.

In particular, our implementation of various procedures and controls to monitor and mitigate security threats and to increase security for our information, facilities and infrastructure may result in increased capital and operating costs.

The potential for such security threats has subjected our operations to increased risks that could have a material adverse effect on our business, including but not limited to human error, power outages, computer and telecommunication failures, natural disasters, fraud or malice, social engineering or phishing attacks,

viruses or malware, and other cyberattacks, such as denial-of-service or ransomware attacks.

A significant cyberattack or other cyber incident (whether involving our systems, those of a critical third-party, or both) could disrupt our operations and result in downtime, loss of revenue, harm to the Company’s reputation, or the loss, theft, corruption, or unauthorized release of critical data of us or those with whom we do business, as well as result in higher costs to correct and remedy the effects of such incidents, including potential extortion payments associated with ransomware or ransom demands.

Our implementation of various procedures and controls to monitor and mitigate security threats and to increase security for our information, facilities and infrastructure may result in increased capital and operating costs.

Moreover, there can be no assurance that such procedures and controls will be sufficient to prevent security breaches from occurring.

If any of these security breaches were to occur, they could lead to losses of sensitive information, critical infrastructure or capabilities essential to our operations and could have a material adverse effect on our reputation, financial position, results of operations or cash flows.

Cybersecurity attacks in particular are becoming more sophisticated and include, but are not limited to, malicious software, attempts to gain unauthorized access to data and systems, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information, and corruption of data.

Cybersecurity attacks, particularly amidst the increased adoption of artificial intelligence technologies, are becoming more sophisticated and include, but are not limited to, malicious software, attempts to gain unauthorized access to data and systems, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information, and corruption of data.

These events could lead to financial losses from remedial actions, loss of business or potential liability.

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We are subject to stringent federal, tribal, state and local laws and regulations related to environmental and occupational health and safety issues that could adversely affect the cost, manner or feasibility of conducting our operations or expose us to significant liabilities.

Our operations are subject to stringent federal, tribal, state and local laws and regulations governing occupational safety and health aspects of our operations, the discharge of materials into the environment and environmental and human health and safety protection.

Numerous governmental authorities, such as the EPA, the U.S.

Fish and Wildlife Service, and analogous state agencies, such as the New Mexico Environment Department and the Texas Commission on Environmental Quality, and state oil and natural gas commissions, such as the New Mexico Oil Conservation Division and the Railroad Commission of Texas, have the power to enforce compliance with these laws and regulations and the permits issued under them.

As discussed in “Items 1 and 2 Business and Properties – Regulation of the Oil and Natural Gas Industry,” our operations are subject to stringent federal, tribal, state and local laws and regulations governing occupational safety and health aspects of our operations, the discharge of materials into the environment and environmental and human health and safety protection.

Numerous governmental authorities, such as the U.S.

Occupational Safety and Health Administration, the EPA, the U.S.

Fish and Wildlife Service, and analogous state agencies, such as the New Mexico Environment Department and the Texas Commission on Environmental Quality, and state oil and natural gas commissions, such as the New Mexico Oil Conservation Commission, The New Mexico Oil Conservation Division, the New Mexico State Land Office, and the Railroad Commission of Texas, have the power to enforce compliance with these laws and regulations and the permits issued under them.

Such enforcement actions often involve taking difficult and costly compliance measures or corrective actions.

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There is inherent risk of incurring significant environmental costs and liabilities in the performance of our operations due to our handling of petroleum hydrocarbons and other hazardous substances and wastes, as a result of air emissions and wastewater discharges related to our operations, and because of historical operations and waste disposal practices at our leased and owned properties, as well as locations where waste from our operations is transported offsite for disposal.

Spills or other releases of regulated substances, including such spills and releases that occur in the future, could expose us to material losses, expenditures and liabilities under applicable environmental and health and safety laws and regulations.

Spills or other releases of regulated substances, including such spills and releases that occur in the future, could expose us to material losses, expenditures

and liabilities under applicable environmental and health and safety laws and regulations.

Under certain of such laws and regulations, we could be subject to strict, joint and several liability for the removal or remediation of previously released materials or property contamination, regardless of whether we were responsible for the release or contamination and even if our operations met previous standards in the industry at the time they were conducted.

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We are subject to complex laws that can affect the cost, manner or feasibility of doing business.

Exploration, development, production and sale of oil and natural gas are subject to extensive federal, state, local and international regulation.

Exploration, development, production and sale of oil and natural gas are subject to extensive federal, tribal, state, local and international regulation.

We may be required to make large expenditures to comply with governmental regulations.

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• the rates of production;

• the plugging and abandoning of wells and decommissioning and removal of equipment;

• the plugging and abandoning of wells, decommissioning and removal of equipment and surface and subsurface restoration and remediation;

• unitization and pooling of properties;

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It is not possible to predict these costs with certainty since they will be a function of regulatory requirements at the time of decommissioning, removal, plugging, abandonment, and reclamation.

We may, in the future, determine it prudent or be required by applicable laws or regulations to establish and fund one or more decommissioning, removal, plugging, abandonment, and reclamation reserve funds to provide for payment of future decommissioning, removal, plugging, abandonment, and reclamation costs, which could decrease funds available to service debt obligations.

Prior to such time, though, we are required by the states in which we operate to post financial assurance in order to provide for abandonment, restoration and remediation of wells, and the amount of that financial assurance varies in the states in which we operate.

Further, public concern over potential environmental impacts, such as groundwater contamination, from “orphan wells”—wells abandoned by an operator presumably no longer in existence that were not properly decommissioned and plugged—has recently been expressed and, in some cases, spurred calls for increasing the required amounts of financial assurance to more accurately reflect the current, actual costs of plugging and abandonment.

For example, in October 2025, the NMOCC conducted a hearing to consider proposed rules that, if adopted, would substantially increase bonding requirements and introduce higher, per well bonding requirements if a certain percentage of an operator's wells are considered marginal.

Whereas a maximum of $250,000 in financial assurance could previously be posted to cover all of an operator's wells, additional finanical assurance in the amount of $150,000 per well would be required for wells considered to be "low producing" or "inactive," or, for example, if 20 percent of an operator’s wells are considered marginal or inactive, the $150,000 per well financial assurance requirement applies to all of the operators wells, not just the low producing and inactive well.

In addition, New Mexico proposed adding change-in-operator requirements relating to the demonstration of financial wherewithal for taking on inactive well and plugging and abandonment obligations.

In addition to required financial assurance, we may, in the future, determine it prudent or be required by applicable laws or regulations to establish and fund one or more decommissioning, removal, plugging, abandonment, and reclamation reserve funds to provide for payment of future decommissioning, removal, plugging, abandonment, and reclamation costs, which could decrease funds available for capital expenditures, debt repayment, dividends, stock buybacks, or other corporate purposes.

In addition, such reserves, if established, may not be sufficient to satisfy such future decommissioning, removal, plugging, abandonment, and reclamation costs and we will be responsible for the payment of the balance of such costs.

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Should we fail to comply with all applicable regulatory agency administered statutes, rules, regulations and orders, we could be subject to substantial penalties and fines.

Under the Energy Policy Act of 2005, FERC has substantial enforcement authority to prohibit the manipulation of natural gas markets and enforce its rules and orders, including civil penalty authority under the NGA to impose penalties for current violations of up to $1.0 million per day for each violation.

Under the EP Act of 2005, FERC has substantial enforcement authority to prohibit the manipulation of natural gas markets and enforce its rules and orders, including civil penalty authority under the NGA to impose penalties for current violations of up to $1.0 million per day for each violation.

FERC may also impose administrative and criminal remedies and disgorgement of profits associated with any violation.

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Additional rules and regulations pertaining to those and other matters may be considered or adopted by FERC from time to time.

Additionally, our planned midstream project could subject us to regulation by FERC or New Mexico state regulators.

Additionally, the Federal Trade Commission (the “FTC”) has regulations intended to prohibit market manipulation in the petroleum industry with authority to fine violators of the regulations civil penalties of up to $1.0 million per day, and the CFTC, prohibits market manipulation in the markets regulated by the CFTC, including similar anti-manipulation authority with respect to oil swaps and futures contracts as that granted to the CFTC with respect to oil purchases and sales.

The CFTC rules subject violators to a civil penalty of up to the greater of $1.0 million or triple the monetary gain to the person for each violation.

Failure to comply with those regulations in the future could subject us to civil penalty liability, as described in “Business—Regulation of the Oil and Gas Industry.”

A change in the jurisdictional characterization of our natural gas assets or planned midstream project by federal, tribal, state or local regulatory agencies or a change in policy by those agencies may result in increased regulation of our natural gas assets, which may cause our revenues to decline and operating expenses to increase.

Failure to comply with those regulations in the future could subject us to civil penalty liability, as described in “Business—Regulation of the Oil and Natural Gas Industry.”

A change in the jurisdictional characterization of our natural gas assets by federal, tribal, state or local regulatory agencies or a change in policy by those agencies may result in increased regulation of our natural gas assets, which may cause our revenues to decline and operating expenses to increase.

Section 1(b) of the NGA exempts natural gas gathering facilities from the jurisdiction of FERC.

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The distinction between FERC-regulated transmission services and gathering services not subject to the jurisdiction of FERC, however, has been the subject of substantial litigation, and FERC determines whether facilities are gathering facilities on a case-by-case basis, so the classification and regulation of our gathering facilities is subject to change based on future determinations by FERC, the courts or Congress.

If FERC were to consider the status of an individual facility, including the new midstream project we plan to construct, and determine that the facility or services provided by it are not exempt from FERC regulation under the NGA and that the facility provides interstate service, the rates for, and terms and conditions of, services provided by such facility would be subject to regulation by FERC under the NGA or the NGPA and/or state regulations.

If FERC were to consider the status of an individual facility and determine that the facility or services provided by it are not exempt from FERC regulation under the NGA and that the facility provides interstate service, the rates for, and terms and conditions of, services provided by such facility would be subject to regulation by FERC under the NGA or the NGPA and/or state regulations.

Such regulation could decrease revenue and increase operating costs.

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FERC regulation may indirectly impact gathering services not directly subject to FERC regulation.

FERC’s policies and practices across the range of its natural gas regulatory activities, including, for example, its policies on interstate open access

transportation, ratemaking, capacity release, and market center promotion may indirectly affect intrastate markets.

FERC’s policies and practices across the range of its natural gas regulatory activities, including, for example, its policies on interstate open access transportation, ratemaking, capacity release, and market center promotion may indirectly affect intrastate markets.

In recent years, FERC has pursued procompetitive policies in its regulation of interstate natural gas pipelines.

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Our gathering operations could also be subject to safety and operational regulations relating to the design, construction, testing, operation, replacement and maintenance of gathering facilities.

We may incur significant costs and liabilities as a result of pipeline integrity management program testing and any related pipeline repair or preventative or remedial measures.

The Department of Transportation has adopted regulations requiring pipeline operators to develop integrity management programs for pipelines located where a leak or rupture could do the most harm in HCAs.

The regulations require operators to:

• perform ongoing assessments of pipeline integrity;

• identify and characterize applicable threats to pipeline segments that could impact an HCA;

• improve data collection, integration and analysis;

• repair and remediate the pipeline as necessary;

• implement preventive and mitigating actions.

The Pipeline Safety, Regulatory Certainty and Job Creation Act of 2011 (the “2011 Pipeline Safety Act”), among other things, increased the maximum civil penalty for pipeline safety violations and directed the Secretary of Transportation to promulgate rules or standards relating to expanded integrity management requirements, automatic or remote-controlled valve use, excess flow valve use, leak detection system installation and testing to confirm the material strength of pipe operating above 30% of specified minimum yield strength in HCAs.

Consistent with the 2011 Pipeline Safety Act, the Pipelines and Hazardous Materials Safety Administration (“PHMSA”), finalized rules consistent with the signed act that increased the maximum administrative civil penalties for violations of the pipeline safety laws and regulations to $200,000 per violation per day, with a maximum of $2,000,000 for a related series of violations.

As of December 2023, those maximum civil penalties were increased to $266,015 and $2,660,135, respectively, to account for inflation and have remained at those rates.

Should our operations fail to comply with DOT or comparable state regulations, we could be subject to substantial penalties and fines.

We may be involved in legal proceedings that could result in substantial liabilities.

We may, from time to time, be a claimant or defendant to various legal proceedings, disputes and claims arising in the course of our business, including those that arise from interpretation of federal and state laws and regulations affecting the natural gas and crude oil industry, personal injury claims, title disputes, royalty disputes, contract claims, contamination claims relating to oil and natural gas exploration and development and environmental claims, including claims involving assets previously sold to third parties and no longer part of our current operations.

We may, from time to time, be a claimant or defendant to various legal proceedings, disputes and claims arising in the course of our business, including those that arise from interpretation of federal and state laws and regulations affecting the natural gas and crude oil industry, personal injury claims, title disputes, royalty disputes, contract claims, contested permit proceedings, contamination claims relating to oil and natural gas exploration and development and environmental claims, including claims involving assets previously sold to third parties and no longer part of our current operations.

Such legal proceedings are inherently uncertain and their results cannot be predicted.

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Hydraulic fracturing is typically regulated by state oil and natural gas commissions.

However, several federal and local agencies have also adopted, or are considering adopting, regulations that

could further restrict or prohibit hydraulic fracturing in certain circumstances, impose more stringent operating standards and/or require the disclosure of the composition of hydraulic fracturing fluids.

However, several federal and local agencies have also adopted, or are considering adopting, regulations that could further restrict or prohibit hydraulic fracturing in certain circumstances, impose more stringent operating standards and/or require the disclosure of the composition of hydraulic fracturing fluids.

See “Items 1 and 2 Business and Properties – Regulation of the Oil and Natural Gas Industry”.

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Climate change continues to attract considerable public and scientific attention.

As a result, numerous proposals have been made and are likely to continue to be made at the international, national, regional, and state levels of government to monitor and limit emissions of GHGs and, in August 2022, Congress passed the IRA, which includes requirements to impose fees beginning in 2025 on certain significant sources of methane emissions from oil and natural gas operations.

While no comprehensive climate change legislation has been implemented at the federal level, the EPA, the BLM, and states or groupings of states have pursued legal initiatives in recent years that seek to reduce GHG emissions through efforts that include consideration of cap-and-trade programs, carbon taxes, GHG reporting and tracking programs and regulations that directly limit GHG emissions from certain sources.

As a result, numerous proposals have been made and are likely to continue to be made at the international, national, regional, and state levels of government to monitor and limit emissions of GHG.

While no comprehensive climate change legislation has been implemented at the federal level, the EPA, the BLM, and states or groupings of states have pursued legal initiatives in recent years that seek to reduce GHG emissions through efforts that include consideration of cap-and-trade programs, carbon taxes, GHG reporting, permitting, and tracking programs and regulations that directly limit GHG emissions from certain sources.

See “Items 1 and 2 Business and Properties – Regulation of the Oil and Natural Gas Industry”.

While changes in U.S.

presidential administrations could increase or lessen the relative impacts of climate policies and regulations on the oil and natural gas industry, the adoption and implementation of any international, federal or state legislation or regulations that require additional reporting of GHGs or otherwise restrict or impose taxes, fees or limits on emissions of GHGs could result in increased compliance costs or additional operating restrictions, and could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

presidential administrations and the policy priorities they implement could increase or lessen the relative impacts of climate policies and regulations on the oil and natural gas industry, the adoption and implementation of any international, federal or state legislation or regulations that require additional reporting of GHGs or otherwise restrict or impose taxes, fees or limits on emissions of GHGs could result in increased compliance costs or additional operating restrictions, and could have a material adverse effect on our business, financial condition, results of operations, and cash flows.

In addition, spurred by increasing concerns regarding climate change, the oil and natural gas industry faces growing demand for corporate transparency and a demonstrated commitment to sustainability goals.

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While reporting on ESG metrics remains voluntary, access to capital and investors is likely to favor companies with robust ESG programs in place.

Finally, increasing concentrations of GHG in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, floods, extreme temperatures and other climatic events.

Finally, increasing concentrations of GHGs in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, droughts, floods, extreme temperatures and other climatic events.

If any such climatic events were to occur, they could have an adverse effect on our financial condition and results of operations and the financial condition and operations of our customers.

Increases in interest rates could adversely affect our business.

Our business and operating results can be harmed by factors such as the availability, terms and cost of capital, increases in interest rates or a reduction in credit rating.

Potential disruptions and volatility in the global financial markets may lead to a contraction in credit availability impacting our ability to finance our operations.

We require continued access to capital.

A significant reduction in cash flows from operations or the availability of credit could materially and adversely affect our ability to achieve our planned growth and operating results.

Restrictions on drilling or other operational activities intended to protect certain species of wildlife or to conserve natural resources may adversely affect our ability to conduct drilling activities in areas where we operate.

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We typically enter into agreements with our customers governing the use and operation of our systems, which usually include certain indemnification provisions for losses resulting from operations.

Such agreements may require each party to indemnify the other against certain claims regardless of the negligence or other fault of the indemnified party;

Such agreements may require each party to

indemnify the other against certain claims regardless of the negligence or other fault of the indemnified party;

however, many states place limitations on contractual indemnity agreements, particularly agreements that indemnify a party against the consequences of its own negligence.

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corporate income tax rate, limiting interest deductions and certain deductions for executive compensation, permitting immediate expensing of certain capital expenditures, and revising the rules governing net operating losses.

The TCJA remains unclear in some respects and continues to be subject to potential amendments and technical

The United States Treasury Department and the IRS have issued significant guidance since the TCJA was enacted, interpreting the TCJA and clarifying some of the uncertainties, and are continuing to issue new guidance.

There are still significant aspects of the TCJA for which further guidance is expected, and both the timing and contents of any such future guidance are uncertain.

On July 4, 2025, new tax legislation known as the OBBBA was signed into law.

The legislation, among other things, makes permanent, extends or modifies certain provisions under TCJA, including permanent extension of immediate expensing of certain capital expenditures and the limitation on interest deductions.

Further, changes to the U.S.

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If the effective tax rate were to increase as a result of the future legislation, our business could be adversely affected.

Changes to regulatory agencies could pose risks related to our business operations and financial outlook.

On January 20, 2025, President Donald J.

Trump issued Executive Order No.

14158 entitled “Establishing and Implementing the President’s “Department of Government Efficiency” or “DOGE” which is tasked with making changes to eliminate regulations, cut expenditures, and restructure federal agencies, some of which could impact public companies and companies in our industry.

Through DOGE or similar recently-issued Executive Orders and initiatives, it is possible the Trump administration could institute significant changes to certain regulatory agencies.

These changes could result in a significant reduction in staff and/or federal funding, which may cause backlogs or other interruptions to regulatory reviews and approvals causing a delay to our operations and/or special projects.

As such, these changes to regulatory agencies could negatively impact our business operations and financial outlook.

Risks Related to Our Common Stock

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• our failure to meet revenue, reserves or earnings estimates by research analysts or other investors;

• sales of our common stock by the Company or other stockholders, or the perception that such sales may occur;

• sales or purchases of our common stock by the Company or other stockholders, or the perception that such sales or purchases may occur;

• the public reaction to our press releases, other public announcements, and filings with the SEC;

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diversion of management attention and resources, which could significantly harm our business, financial condition, results of operations and reputation.

Future sales or the possibility of future sales of a substantial amount of our common stock may depress the price of shares of our common stock.

Future sales or the availability for sale of substantial amounts of our common stock in the public market, or the perception that such sales could occur, could adversely affect the prevailing market price of our common stock and could impair our ability to raise capital through future sales of equity securities.

Future sales or repurchases of our common stock may depress the price of shares of our common stock.

Future sales or repurchases or the availability for sale or repurchase of substantial amounts of our common stock in the public market, or the perception that such sales or repurchases could occur, could adversely affect the prevailing market price of our common stock and could impair our ability to raise capital through future sales of equity securities.

On May 10, 2024, we filed with the SEC a “shelf” registration statement on Form S-3 that became effective on May 29, 2024.

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Sales of substantial amounts of our common stock (including shares of our common stock issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices for our common stock.

Purchases of shares of our common stock pursuant to our stock repurchase plan may affect the value of our common stock, and there can be no assurance that our stock repurchase plan will enhance stockholder value.

Pursuant to our publicly announced stock repurchase plan, we are authorized to repurchase up to $100 million of our common stock over a period of 24 months, including through open market purchases, through block trades, in privately negotiated transactions, or by other means, including through the use of trading plans, each in accordance with applicable securities laws and other restrictions.

The timing, amount, and manner of any purchase will be determined at the Company’s discretion, subject to management’s assessment of the intrinsic value of the common stock, the market price of the common stock, general market and economic conditions, available liquidity, compliance with the Company’s debt and other agreements, applicable legal requirements, and other considerations.

This activity could impact the market price of our common stock at that time.

Additionally, repurchases under our stock repurchase program will diminish our cash reserves, which could impact our ability to pursue possible strategic opportunities and acquisitions.

There can be no assurance that any share repurchases will enhance stockholder value because the market price of our common stock could decline.

Although our stock repurchase program is intended to enhance long-term stockholder value, short-term share price fluctuations could reduce the program’s effectiveness.

If we fail to continue to meet the requirements for continued listing on the NYSE American stock exchange, our common stock could be delisted from trading, which would decrease the liquidity of our common stock and ability to raise additional capital.

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If one or more equity research analysts ceases coverage of us or fails to publish reports on us regularly, demand for our common stock could decrease, which in turn could cause our stock price or trading volume to decline.

We may not generate sufficient cash to support any dividend to our common stockholders.

The amount of any dividend will depend on the amount of cash we generate from operations, which will fluctuate from quarter to quarter based on, among other things:

We may not generate sufficient cash to support any dividend or stock buybacks for our common stockholders.

The amount of any dividend or stock buybacks will depend, among other factors, on the amount of cash we generate from operations, which will fluctuate from quarter to quarter based on, among other things:

• the volumes of crude oil, natural gas and NGLs that we produce;

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• adverse weather conditions.

In addition, the actual amount of cash we will have available for dividends will depend on other factors, some of which are beyond our control, including:

In addition, the actual amount of cash we will have available for dividends or stock buybacks will depend on other factors, some of which are beyond our control, including:

• our debt service requirements and other liabilities;

• our ability to borrow under our debt agreements to fund our capital expenditures and operating expenditures and to pay dividends;

• our ability to borrow under our debt agreements to fund our capital expenditures and operating expenditures and to pay dividends or execute stock buybacks;

• fluctuations in our working capital needs;

• restrictions on dividends contained in any of our debt agreements;

• restrictions on dividends or stock buybacks contained in any of our debt agreements;

• the cost of acquisitions, if any;

• other business risks affecting our cash levels.

Our quarterly cash dividends, if any, may vary significantly both quarterly and annually.

Investors who are looking for an investment that will pay regular and predictable quarterly dividends should not invest in our common stock.

Our business performance may be more volatile, and our cash flow may be less stable, than other business models that pay dividends.

The amount of our quarterly dividends will generally depend on the performance of our business, which has a limited operating history.

The Board may modify or revoke our dividend policy at any time at its discretion.

We are not required to pay any dividends on our common stock at all.

Accordingly, the Board may change our dividend policy at any time at its discretion and could elect not to pay dividends on our common stock for one or more quarters.

Any modification or revocation of our cash dividend policy could substantially reduce or eliminate the amounts of dividends to our common stockholders.

The amount of dividends we make, if any, and the decision to make any dividend at all will be determined by our Board, whose interests may differ from those of our common stockholders.

The amount of cash we have available for dividends to our common stockholders depends primarily on our cash flow and not solely on our profitability, which may prevent us from paying dividends, even during periods in which we record net income.

The amount of cash we have available for dividends depends primarily upon our cash flow and not solely on our profitability, which will be affected by non-cash items.

As a result, we may pay cash dividends during periods when we record a net loss for financial accounting purposes and, conversely, we might fail to pay cash dividends on our common stock during periods when we record net income for financial accounting purposes.

Delaware law imposes restrictions on our ability to pay cash dividends on our common stock.

Our quarterly cash dividends and stock buybacks, if any, may vary significantly both quarterly and annually.

Investors who are looking for an investment that will pay regular and predictable quarterly dividends or rely on stock buybacks should not invest in our common stock.

Our business performance may be more volatile, and our cash flow may be less stable, than other business models that pay dividends or execute stock buybacks.

The amount of our quarterly dividends or stock buybacks will generally depend on the performance of our business, which has a limited operating history.

The Board may modify or revoke our dividend policy or stock buyback program at any time at its discretion.

We are not required to pay any dividends or buy back our common stock.

Accordingly, the Board may change our dividend policy or stock buyback program at any time at its discretion and could elect not to pay dividends on or execute stock buybacks of our common stock for one or more quarters.

Any modification or revocation of our cash dividend or stock buyback policies could substantially reduce or eliminate the amounts of dividends received by our common stockholders or stock repurchases by us.

The amount of dividends or stock repurchases we make, if any, and the decision to make any dividend or repurchase stock at all will be determined by our Board, whose interests may differ from those of our common stockholders.

The amount of cash we have available for dividends or stock buybacks of our common stockholders depends primarily on our cash flow and not solely on our profitability, which may prevent us from paying dividends or executing stock buybacks, even during periods in which we record net income.

The amount of cash we have available for dividends or stock buybacks depends primarily upon our cash flow and not solely on our profitability, which will be affected by non-cash items.

As a result, we may pay cash dividends or execute stock buybacks during periods when we record a net loss for financial accounting purposes and, conversely, we might fail to pay cash dividends or execute stock buybacks on our common stock during periods when we record net income for financial accounting purposes.

Delaware law and other laws impose restrictions on our ability to pay cash dividends on or execute buybacks of our common stock.

Our common stockholders do not have a right to dividends on such shares unless declared or set aside for payment by our Board.

Under Delaware law, cash dividends on capital stock may only be paid from “surplus” or, if there is no “surplus,” from the corporation’s net profits for the then-current or the preceding fiscal year.

Unless we operate profitably, our ability to pay dividends on our common stock would require the availability of adequate “surplus,” which is defined as the excess, if any, of net assets (total assets less total liabilities) over capital.

Our business may not generate sufficient surplus or net profits from operations to enable us to pay dividends on our common stock.

Similarly, Delaware law prohibits stock repurchases that would impair the capital of the Company.

Unless we operate profitably, our ability to pay dividends on our common stock or execute stock buybacks would require the availability of adequate “surplus,” which is defined as the excess, if any, of net assets (total assets less total liabilities) over capital.

Our business may not generate sufficient surplus or net profits from operations to enable us to pay dividends on our common stock or execute stock buybacks.

Additionally, in the case of stock buybacks, we may be limited in our ability to repurchase shares of our common stock by various governmental laws, rules and regulations which prevent us from purchasing our common stock during periods when we are in possession of material non-public information.

We may issue preferred stock whose terms could adversely affect the voting power or value of our common stock.

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Based on the market value of our common stock held by our non-affiliates as of June 30, 2024, we determined that we no longer qualified as a “smaller reporting company” effective December 31, 2024, and, as a result, will be unable to take advantage of certain exemptions and relief from various reporting requirements that are applicable to smaller reporting companies.

We will be required to comply with larger company disclosure obligations beginning with our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025.

We were required to comply with larger company disclosure obligations beginning with our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2025.

The loss of smaller reporting company status and compliance with such larger company disclosure obligations may increase our legal and financial compliance costs.

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We do not maintain key-man life insurance with respect to any management personnel.

Our success will be dependent on our ability to continue to retain and utilize skilled technical personnel.

Our success will be dependent on our ability to continue to retain

and utilize skilled technical personnel.

The loss of the services of our senior management or technical personnel could have a material adverse effect on our business, financial condition, and results of operations.

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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