−Removed: We are an oil and natural gas company, organized in 2006 as a Delaware corporation, with a principal focus on exploration and production activities in the U.S.
+Added: We are an independent oil and natural gas company, organized in 2006, with a principal focus on acquisition, development and production activities in the U.S.
Mid-Continent and North Park Basin of Colorado.
+Added: Prior to February 5, 2021, we held assets in the North Park Basin of Colorado, which have been sold in their entirety.
As of December 31, 2020, we had an interest in 1,442 gross (837.0 net) producing wells, approximately 967 of which we operate, and approximately 666,000 gross (470,000 net) total acres under lease.
As of December 31, 2020, we had no rigs drilling.
−Removed: Total estimated proved reserves as of December 31, 2019, were 89.9 MMBoe, of which approximately 69% were proved developed.
−Removed: Our principal executive offices are located at 123 Robert S.
−Removed: Kerr Avenue, Oklahoma City, Oklahoma 73102 and our telephone number is (405) 429-5500.
+Added: Total estimated proved reserves as of December 31, 2020, were 36.9 MMBoe, of which 100% were proved developed.
+Added: Our principal executive offices are located at 1 E.
+Added: Sheridan Ave, Suite 500, Oklahoma City, Oklahoma 73104 and our telephone number is (405) 429-5500.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports are made available free of charge on our website at www.sandridgeenergy.com as soon as reasonably practicable after we file such material with, or furnish it to, the SEC.
5 unchanged sentences
Our Business Strategy
−Removed: Our business strategy in 2020 will be focused on maximizing free cash flow through the strategic rationalization of corporate and field-level costs, limiting our drilling capital to locations that we believe will provide high rates of return in the present commodity price environment and that allow for near-term payouts.
−Removed: We will continue our pursuit of acquisitions and business combinations that are accretive to earnings and cash flow per share, and which provide high margin properties with attractive returns at current commodity prices.
−Removed: The execution of this strategy will be coupled with the continued exercise of financial discipline and prudent capital allocation.
−Removed: We intend to spend between $25.0 million and $30.0 million in our 2020 capital budget plan in contemplation of continued depressed commodity prices, and will be prepared to expand our capital program if commodity prices increase sufficiently.
+Added: Our business strategy in 2021 will be focused on optimizing the cash return on our assets through a continued focus on cost and capital discipline, limiting our development capital expenditures to locations that we believe will provide high rates of return in the present commodity price environment and that allow for near-term payouts.
+Added: We will continue our pursuit of acquisitions and business combinations that are accretive to economic value and debt-adjusted cash flow per share, and which provide high margin properties with attractive returns at current commodity prices.
+Added: We will continue to exercise financial discipline and prudent capital allocation, and we will seek to use our net operating loss carry forwards to minimize income taxes and maximize cash flow.
PRIMARY BUSINESS OPERATIONS
−Removed: Our primary operations are the exploration, development and production of oil and natural gas.
−Removed: The following table presents information concerning our exploration and production activities by geographic area of operation as of December 31, 2019.
−Removed: Estimated Net
+Added: Our primary operations are the development and acquisition of hydrocarbon resources.
+Added: The following table presents information concerning our operations by geographic area as of December 31, 2020.
Capital Expenditures (In millions) (4)
1 unchanged sentence
North Park Basin 3.5 1.8 5.3 97,657 89,666 1.5
−Removed: Other — — — 4,628 1,456 3.3
Total 36.9 20.9 10.1 665,719 469,697 $ 8.3
____________________
+Added: (1) Estimated proved reserves were determined using SEC prices, and do not reflect actual prices received or current market prices.
+Added: All prices are held constant throughout the lives of the properties.
+Added: The index prices and the equivalent weighted average wellhead prices used in the reserve reports are shown in the table below.
(2) Average daily net production for the month of December 2020.
−Removed: (2) Estimated net proved reserves as of December 31, 2019 divided by average daily net production for the month of December 2019, annualized.
+Added: (3) Estimated proved reserves as of December 31, 2020 divided by average daily net production for the month of December 2020, annualized.
(4) Capital expenditures for the year ended December 31, 2020, on an accrual basis and including acquisitions.
Mid-Continent
−Removed: We held interests in approximately 579,000 gross (400,000 net) leasehold acres located primarily in Oklahoma and Kansas at December 31, 2019.
+Added: We held interests in approximately 568,000 gross (380,000 net) leasehold acres located in Oklahoma and Kansas at December 31, 2020.
Associated proved reserves at December 31, 2020 totaled 33.4 MMBoe, 100.0% of which were proved developed reserves.
Our interests in the Mid-Continent as of December 31, 2020 included 1,394 gross (789.0 net) producing wells with an average working interest of 57%.
−Removed: We had no rigs operating in the Mid-Continent as of December 31, 2019.
−Removed: At December 31, 2019, our Mid-Continent properties included an inventory of 15 operated proved undeveloped wells.
−Removed: Additionally, we estimate there are approximately 100 undeveloped probable horizontal locations.
−Removed: During 2019, we completed a total of 12 horizontal producing wells in this area, which consisted primarily of SRLs.
−Removed: The Meramec and Osage formations are the primary targets in the NW STACK in Garfield, Major, Dewey, and Woodward Counties.
−Removed: These formations are Mississippian in age, lying above the Woodford Shale and below Chester formations.
+Added: The interests are largely aggregated across the Mississippian Lime, Meramec and Osage formations.
+Added: The Mississippian Lime formation is an expansive carbonate hydrocarbon system located on the Anadarko Shelf in northern Oklahoma and southern Kansas.
+Added: The top of this formation is encountered between approximately 4,000 and 7,000 feet and stratigraphically between various formations of Pennsylvanian age and the Devonian-aged Woodford Shale formation.
+Added: The Mississippian formation is approximately 350 to 650 feet in gross thickness across our lease position and has targeted porosity zone(s) ranging between 20 and 150 feet in thickness.
+Added: The Meramec and Osage Formations are Mississippian in age, lying above the Woodford Shale and below Chester formations.
The Meramec is composed of interbedded shales, sands, and carbonates while the Osage is composed of low porosity, fractured limestone and chert.
2 unchanged sentences
The Woodford Shale is the primary hydrocarbon source for both the Meramec and Osage.
−Removed: Similar to the STACK, there is an over-pressured area and normally pressured area in the NW STACK.
−Removed: We completed 12 wells in the Meramec formation during 2019 and no Osage wells.
−Removed: Of our total Mid-Continent acreage at December 31, 2019, approximately 99,000 gross (56,000 net) acres are associated with the NW STACK play area.
−Removed: In the third quarter of 2017, we entered into a $200.0 million drilling participation agreement with a Counterparty to jointly develop new horizontal wells on a wellbore only basis within certain dedicated sections of our undeveloped leasehold acreage within the Meramec formation in the NW STACK.
−Removed: Under this agreement, the Counterparty paid 90% of the net drilling and completion costs, up to $100.0 million in the first tranche, in exchange for an initial 80% net working interest in each new well, subject to certain reversionary hurdles.
−Removed: As a result, we received a 20% net working interest after funding 10% of the drilling and completion costs related to the subject wells.
−Removed: The last well under this agreement was completed in the second quarter of 2019.
−Removed: See "Operational Activities" included in Item 7 of this report for further discussion of the drilling participation agreement.
−Removed: Mississippian Lime Formation.
−Removed: The Mississippian Lime formation is an expansive carbonate hydrocarbon system located on the Anadarko Shelf in northern Oklahoma and southern Kansas, and is a target for exploration and development within the Mid-Continent.
−Removed: The top of this formation is encountered between approximately 4,000 and 7,000 feet and stratigraphically between various formations of Pennsylvanian age and the Devonian-aged Woodford Shale formation.
−Removed: The Mississippian formation is approximately 350 to 650 feet in gross thickness across our lease position and has targeted porosity
−Removed: zone(s) ranging between 20 and 150 feet in thickness.
−Removed: At December 31, 2019, we had approximately 480,000 gross (344,000 net) acres under lease and 1,211 gross (776.7 net) producing wells in the Mississippian formation.
−Removed: We did not complete any wells in the Mississippian Lime formation in 2019.
+Added: During 2020, we did not have any drilling activity in the Mid-Continent.
North Park Basin
+Added: Prior to February 5, 2021, we held assets in the North Park Basin, which have been sold in their entirety.
Our North Park Basin properties consisted of approximately 98,000 gross (90,000 net) acres, and 48 gross and net producing wells with a working interest of 100%, at December 31, 2020.
Associated proved reserves at December 31, 2020 totaled approximately 3.5 MMBoe, of which 100% were proved developed reserves.
−Removed: The North Park Basin acreage is located in north central Colorado, and similar to the DJ Basin next to Colorado’s Front Range, has multiple potential pay targets in addition to the Niobrara Shale play, where our activity is currently focused.
+Added: The North Park Basin acreage is located in north central Colorado, and similar to the DJ Basin next to Colorado’s Front Range, has multiple potential pay targets in addition to the Niobrara Shale play, where our activity was focused.
Although untested, zones shallower and deeper than the Niobrara have indications of potentially commercial hydrocarbons.
The Niobrara Shale is characterized by stacked pay benches at depths of 5,500 to 9,000 feet with overall reservoir thickness over 450 feet.
−Removed: Based on our delineation drilling on acreage inside and outside federal units, we are developing a proved area where we have 55 operated proved undeveloped wells.
−Removed: Across our entire acreage position, we estimate there are approximately 900 undeveloped probable horizontal lateral locations.
−Removed: We had no rigs operating in the North Park Basin as of December 31, 2019.
−Removed: We completed a total of 16 horizontal producing wells, including 12 XRLs and four SRLs, in this area during 2019.
+Added: During 2020, we did not have any drilling activity in North Park Basin.
Proved Reserves
8 unchanged sentences
To establish reasonable certainty with respect to our estimated proved reserves, the independent and internal reserve engineers employed technologies that have been demonstrated to yield results with consistency and repeatability.
−Removed: Reserves attributable to producing wells with limited production history and for undeveloped locations were estimated using volumetric estimates or performance from analogous wells in the surrounding area.
−Removed: These wells were considered to be analogous based on production performance from the same formation and completions using similar techniques.
The technologies and economic data used to estimate our proved reserves include, but are not limited to, well logs, geological maps, seismic data, well test data, production data, historical price and cost information and property ownership interests.
7 unchanged sentences
• the judgment of the personnel preparing the estimates.
−Removed: SandRidge’s Senior Vice President—Reserves, Technology and Business Development is the technical professional primarily responsible for overseeing the preparation of our reserves estimates.
−Removed: He has a Bachelor of Science degree in Petroleum Engineering with over 30 years of practical industry experience, including over 30 years of estimating and evaluating
−Removed: reserve information.
−Removed: He has also been a certified professional engineer in the state of Oklahoma since 2007 and a member of the Society of Petroleum Engineers since 1980.
−Removed: SandRidge’s reserve engineers monitor well performance and make reserve estimate adjustments as necessary to ensure the most current information is reflected.
−Removed: The information used to prepare reserve estimates includes production histories as well as other geologic, economic, ownership and engineering data.
−Removed: The Corporate Reserves department currently has a total of three full-time employees, comprised of two degreed engineers and one engineering and business analyst with a four-year degree in mathematics.
+Added: Along with SandRidge’s reserve engineers the Vice President of Engineering and Reservoir serves as the primary technical professional providing oversight of our reserve estimate.
+Added: The reserve engineers monitor well performance and make reserve estimate adjustments as necessary to ensure the most current information is reflected.
We encourage ongoing professional education for our engineers and analysts on new technologies and industry advancements as well as refresher training on basic skill sets.
−Removed: In order to ensure the reliability of reserves estimates, the Corporate Reserves department follows comprehensive SEC-compliant internal controls and policies to determine, estimate and report proved reserves including:
+Added: In order to ensure the reliability of reserves estimates, SandRidge has a comprehensive SEC-compliant internal controls framework and set of policies to determine, estimate and report proved reserves including:
• confirming that we include reserves estimates for all properties owned and that they are based upon proper working and net revenue interests;
• ensuring the information provided by other departments within the Company such as Accounting is accurate;
−Removed: • communicating, collaborating, and analyzing with technical personnel in our business units;
+Added: • communicating, collaborating, and analyzing with technical personnel;
• comparing and reconciling the internally generated reserves estimates to those prepared by third parties;
1 unchanged sentence
• ensuring compensation for the reserve engineers is not tied to the amount of reserves recorded.
−Removed: Each quarter, the Senior Vice President—Reserves, Technology and Business Development presents the status of the Company’s reserves to senior executives, and subsequently obtains approval of significant changes from key executives.
−Removed: Additionally, the five year PUD development plan is reviewed and approved annually by the Company’s Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, and the Senior Vice President - Reserves, Technology and Business Development.
−Removed: The Corporate Reserves department works closely with independent petroleum consultants at each fiscal year end to ensure the integrity, accuracy and timeliness of annual independent reserves estimates.
+Added: Key reserve information is reviewed and approved at least annually by the Company’s Chief Executive Officer and Chief Financial Officer.
+Added: SandRidge’s reserve engineers and the Vice President of Engineering and Reservoir works closely with independent petroleum consultants at each fiscal year end to ensure the integrity, accuracy and timeliness of annual independent reserves estimates.
These independently developed reserves estimates are presented to the Audit Committee.
1 unchanged sentence
The percentage of total proved reserves prepared by each of the independent petroleum consultants is shown in the table below.
−Removed: 2019 2018 2017
Cawley, Gillespie & Associates, Inc.
2 unchanged sentences
17.9 % 43.0 %
−Removed: Netherland, Sewell & Associates, Inc.
−Removed: — % — % 3.8 %
Total 91.5 % 93.2 %
17 unchanged sentences
• Bachelor of Science Degree in Petroleum Engineering and MBA in Finance.
−Removed: Netherland, Sewell & Associates, Inc.
−Removed: • practicing consultant in petroleum engineering since 2013 and over 14 years of prior industry experience;
−Removed: • licensed professional engineers in the state of Texas;
−Removed: • Bachelor of Science Degree in Chemical Engineering
Reporting of Natural Gas Liquids
4 unchanged sentences
The extraction of NGLs in the processing of natural gas reduces the volume of natural gas available for sale.
+Added: The amount of NGLs extracted from produced gas can vary with individual component prices and we have limited direct control over the extent to which NGLs are extracted from our natural gas, particularly light-end components such as ethane.
All production information related to natural gas is reported net of the effect of any reduction in natural gas volumes resulting from the processing and extraction of NGLs.
2 unchanged sentences
The reserve reports were based on our drilling schedule at the time year-end reserve estimates were prepared.
−Removed: Our year-end 2019 PUD development plan established that 100% of our current proved undeveloped reserves will be developed within five years from when they were originally recorded.
See “Critical Accounting Policies and Estimates” in Item 7 of this report for further discussion of uncertainties inherent to the reserves estimates.
−Removed: 2019 2018 2017
Estimated Proved Reserves (1)
25 unchanged sentences
December 31, 2019 $ 55.69 $ 2.58 $ 50.63 $ 12.45 $ 1.16
−Removed: December 31, 2017 $ 51.34 $ 2.98 $ 48.47 $ 20.28 $ 1.90
____________________
−Removed: (a) Index prices are based on average West Texas Intermediate (“WTI”) Cushing spot prices for oil and average Henry Hub spot market prices for natural gas.
+Added: (a) Index prices are based on average WTI Cushing spot prices for oil and average Henry Hub spot market prices for natural gas.
(b) Average adjusted volume-weighted wellhead product prices reflect adjustments for transportation, quality, gravity, and regional price differentials.
6 unchanged sentences
The following table provides a reconciliation of our Standardized Measure to PV-10:
−Removed: 2019 2018 2017
(In millions)
4 unchanged sentences
Proved reserves in the Mid-Continent, primarily the Mississippian formation, decreased from 61.4 MMBoe at December 31, 2019 to 33.4 MMBoe at December 31, 2020.
−Removed: This reserve reduction is due primarily to downward revisions of 26.1 MMBoe associated with the decrease in year-end SEC commodity pricing consisting of (i) 17.8 MMBoe from downgrading PUDs, and (ii) 8.3 MMBoe from remaining proved reserves, 11.3 MMBoe negative revisions associated with increased commodity price differentials, and 2019 production totaling 10.4 MMBoe.
−Removed: Additional reserve decreases amounting to 5.2 MMBoe were the result of wells being shut-in during 2019, largely due to economic conditions, sales, and other revisions to prior estimates.
−Removed: Partially offsetting these reductions were a 3.6 MMBoe increase associated with changes to lease operating costs, extensions, and other reserve parameters.
+Added: This reserve reduction is due to downward revisions of 21.3 MMBoe associated with the decrease in year-end SEC commodity pricing (5.5 MMBoe from removing PUDs, and 15.8 MMBoe from remaining proved reserves), 2020 production totaling 7.8 MMBoe, and well shut-ins, sales and other revisions amounting to 8.4 MMBboe.
+Added: The COVID-19 Pandemic and resulting 2020 commodity price contraction necessitated numerous operational and other cost saving initiatives.
+Added: These cost saving initiatives, while value additive, sometimes resulted in changes to artificial lift, or other well performance factors that reduce forward looking projections relative to previous estimates on a subset of wells.
+Added: Partially offsetting these reductions was an 8.4 MMBoe increase associated with a reduction in expenses and other commercial improvements and acquisitions of 1.1 MMBoe of proved reserves.
Proved Reserves - North Park Basin.
+Added: Prior to February 5, 2021, we held assets in the North Park Basin, which have been sold in their entirety.
Our North Park Basin proved reserves in the Niobrara decreased from 28.5 MMBoe at December 31, 2019 to 3.5 MMBoe at December 31, 2020.
−Removed: This reserve reduction is due primarily to downward revisions of 24.8 MMBoe associated with the decrease in year-end SEC commodity pricing consisting of (i) 21.9 MMBoe from downgrading PUDs, and (ii) 2.9 MMBoe from remaining proved reserves, 3.7 MMBoe associated with changes to lease operating costs, 3.1 MMBoe negative revisions to prior estimates stemming from changes in well performance, 2019 production totaling 1.5 MMBoe, and other reductions amounting to 1.4 MMBoe.
−Removed: Partially offsetting these reductions are a 12.6 MMBoe increase associated with converting undeveloped well locations from SRLs to planned XRLs as well as reduced future estimated development capital on these undeveloped locations, and 1.0 MMBoe associated with extensions and commodity price differentials.
+Added: This reserve reduction is due primarily to downward revisions of 23.7 MMBoe associated with the decrease in year-end SEC commodity pricing (22.3 MMBoe from removing PUDs and 1.4 MMBoe from remaining proved reserves), 2020 production totaling 0.9 MMBoe and 0.6 MMBoe of negative revisions to prior estimates stemming from changes in well performance.
+Added: Offsetting these reductions was a 0.2 MMBoe increase associated with a reduction in expenses and other commercial improvements.
Our Niobrara proved developed reserves are attributed to 48 horizontal producing wells.
1 unchanged sentence
In the North Park Basin, production performance and reservoir data gathered from Niobrara producing wells confirm consistency in reservoir properties such as porosity, thickness and stratigraphic conformity.
−Removed: Using the performance of the proved developed producing wells, proved undeveloped reserves were recorded for 20 sections of the 35 section proved development area predominantly at a well density of up to eight wells per section.
−Removed: Performance from recent spacing tests provide preliminary indications that a spacing density of up to 16 wells per section may be viable.
Proved Undeveloped Reserves.
1 unchanged sentence
Year Ended December 31,
−Removed: 2019 2018 2017
Reserves converted from proved undeveloped to proved developed (MMBoe) — 3.7
Drilling and infrastructure capital expended to convert proved undeveloped reserves to proved developed reserves (in millions) $ — $ 95.3
−Removed: $ 95.3 $ 63.2 $ 21.0
−Removed: Total estimated proved undeveloped reserves were 27.8 MMBoe at December 31, 2019, which is a decrease of 40.1 MMBoe from the prior year.
−Removed: This decrease is primarily due to 39.8 MMBoe associated with removing PUDs due to the decrease in year-end SEC commodity pricing consisting of 17.8 MMBoe of Midcon PUD reserves and 21.9 MMBoe of North Park Basin PUD reserves.
−Removed: Additional decreases included 1.1 MMBoe associated with a minor type curve revision on the remaining 55 North Park PUDs to account for recent PDP performance, 3.7 MMBoe of 2019 PUD conversions, and 8.1 MMBoe related to revisions in estimates for operating expenses, differentials, and other reserve parameters.
−Removed: These were partially offset by a 12.6 MMBoe increase associated with converting undeveloped well locations from SRLs to planned XRLs as well as reduced future estimated development capital.
−Removed: Total estimated proved undeveloped reserves were 67.9 MMBoe at December 31, 2018, which is an increase of 14.1 MMBoe from the prior year.
−Removed: This increase is primarily due to 18.0 MMBoe from extensions and discoveries which consisted largely of 8.5 MMBoe in the North Park Basin from increased well density and successful development drilling in the Niobrara shale, and 9.5 MMBoe in the Mid-Continent from horizontal drilling in our NW STACK play.
−Removed: These extensions were offset by 4.2 MMBoe of PUD conversions.
−Removed: Total estimated proved undeveloped reserves as of December 31, 2017 were 53.8 MMBoe, an increase of 10.6 MMBoe from the prior year.
−Removed: Reserves added from extensions and discoveries totaled 14.7 MMBoe, which consisted of 10.1 MMBoe in North Park from horizontal wells drilled in the Niobrara Shale, and 4.6 MMBoe in the Mid-Continent from horizontal drilling in our NW STACK play.
−Removed: These extensions were offset by 137 MBoe of proved undeveloped reserves at December 31, 2016 that were converted to proved developed reserves during 2017, and net downward revisions of 4.0 MMBoe primarily due to removing PUDs attributable to expiring Mid-Continent undeveloped acreage outside of our NW STACK play that was not scheduled to be developed prior to lease expiry.
−Removed: Approximately 1.0 MMBoe of proved undeveloped reserves were booked and converted during the year 2017.
−Removed: For additional information regarding changes in proved reserves during each of the three years ended December 31, 2019, 2018 and 2017 see “Note 22—Supplemental Information on Oil and Natural Gas Producing Activities” to the consolidated financial statements in Item 8 of this report.
−Removed: Significant Fields
+Added: There were no proved underdeveloped reserves at December 31, 2020, which was a decrease of 27.8 MMBoe from the prior year.
+Added: This decrease was primarily due to the Company not having had any plans to drill any new wells in the then current commodity price environment.
+Added: Total estimated proved undeveloped reserves was 27.8 MMBoe at December 31, 2019, which was a decrease of 40.1 MMBoe from the prior year.
+Added: This decrease was primarily due to 39.7 MMBoe associated with removing PUDs due to the decrease in year-end SEC commodity pricing consisting of 17.8 MMBoe of Mid-Continent PUD reserves and 21.9 MMBoe of North Park Basin PUD reserves.
+Added: For additional information regarding changes in proved reserves during each of the two years ended December 31, 2020 and 2019 see “Note 21—Supplemental Information on Oil and Natural Gas Producing Activities” to the accompanying consolidated financial statements in Item 8 of this report.
+Added: Significant Area
Oil, natural gas and NGL production for fields containing more than 15% of our total proved reserves at each year end are presented in the table below.
−Removed: The Mississippian Lime Horizontal field and the Niobrara field each contained more than 15% of total proved reserves at December 31, 2019, 2018 and 2017.
+Added: The Mid-Continent area contained more than 15% of total proved reserves for both years ended December 31, 2020 and 2019.
NGL (MBbls) Natural Gas
Year Ended December 31, 2020
−Removed: Mississippian Lime Horizontal 1,312 2,535 28,447 8,588
−Removed: Niobrara 1,531 2 — 1,533
−Removed: Year Ended December 31, 2018
−Removed: Mississippian Lime Horizontal 1,558 2,477 31,663 9,312
−Removed: Niobrara 1,034 — — 1,034
+Added: Mid-Continent 1,144 2,694 23,552 7,764
Year Ended December 31, 2019
−Removed: Mississippian Lime Horizontal 2,382 2,995 38,834 11,849
−Removed: Niobrara 673 — — 673
−Removed: Mississippian Lime Horizontal Field.
−Removed: The Mississippian Lime Horizontal Field is located on the Anadarko Shelf in northern Oklahoma and Kansas and produces from the Mississippian formation.
−Removed: Our interests in the Mississippian Lime Horizontal Field as of December 31, 2019 included 1,211 gross (776.7 net) producing wells and a 64% average working interest in the producing area.
−Removed: Niobrara Field.
−Removed: The Niobrara field is located in Colorado and produces from the Niobrara Shale.
−Removed: Currently only oil is marketed while evaluation and appraisal of midstream options for gas processing and marketing is ongoing, including engineering design work, pipeline route surveying, and permitting.
−Removed: Our interests in the Niobrara Field as of December 31, 2019, included 53 gross and net producing wells with a 100% average working interest in the producing area.
+Added: Mid-Continent 1,988 2,908 33,164 10,423
+Added: Mid-Continent.
+Added: The mid-continent interest are largely aggregated across the Mississippian Lime, Meramec and Osage formations.
+Added: Our interests in the Mid-Continent area as of December 31, 2020 included 1,394 gross (789.0 net) producing wells and a 57% average working interest in the producing area.
Production and Price History
1 unchanged sentence
Year Ended December 31,
−Removed: 2019 2018 2017
Production data (in thousands)
19 unchanged sentences
Gross wells are the total number of producing wells in which we have a working interest and net wells are the sum of the fractional working interests owned in gross wells.
+Added: Prior to February 5, 2021, we held assets in the North Park Basin, which have been sold in their entirety.
Oil Natural Gas Total
7 unchanged sentences
Productive wells are those that produce commercial quantities of hydrocarbons, regardless of whether they produce a reasonable rate of return.
−Removed: As of December 31, 2019, we had no operated wells drilling, completing or awaiting completion.
−Removed: 2019 2018 2017
−Removed: Gross Net Gross Net Gross Net
+Added: During the year ended December 31, 2020, there were no wells drilled or completed.
Completed Wells
Productive 28 20.6
−Removed: Dry — — — — — —
Total 28 20.6
Productive — —
−Removed: Dry — — — — — —
Total 28 20.6
−Removed: 28 20.6 29 15.5 23 17.4
−Removed: Total 28 20.6 29 15.5 23 17.4
−Removed: We had no third-party rigs operating on our Mid-Continent or North Park Basin acreage at December 31, 2019.
+Added: We had no third-party rigs operating on our Mid-Continent or North Park Basin acreage at December 31, 2020 or any wells awaiting completion.
Developed and Undeveloped Acreage
The following table presents information regarding our developed and undeveloped acreage at December 31, 2020.
+Added: Prior to February 5, 2021, we held assets in the North Park Basin, which have been sold in their entirety.
Developed Acreage Undeveloped Acreage
2 unchanged sentences
North Park Basin 18,676 18,443 78,981 71,223
−Removed: Other 1,440 389 3,188 1,067
Total 511,641 364,541 154,078 105,156
+Added: Approximately 0.94% of our gross total acreage in the Mid-Continent and 44.55% in North Park Basin is on federal lands.
Many of the leases included in the undeveloped acreage above will expire at the end of their respective primary terms.
−Removed: To prevent expiration, we may exercise our contractual rights to pay delay rentals to extend the terms of leases we value, or establish production from the leasehold acreage prior to expiration, which will keep the lease from expiring until production has ceased.
+Added: To prevent expiration, we may exercise our contractual rights to extend the terms of leases we value, or establish production from the leasehold acreage prior to expiration, which will keep the lease from expiring until production has ceased.
As of December 31, 2020, the gross and net acres subject to leases in the undeveloped acreage above are set to expire as follows:
10 unchanged sentences
The acreage due to expire during the twelve months ending December 31, 2021, includes approximately 2,717 gross (1,271 net) acres in the Mid-Continent and 1,564 gross (1,367 net) acres in the North Park Basin.
+Added: Prior to February 5, 2021, we held assets in the North Park Basin, which have been sold in their entirety.
Marketing and Customers
We sell our oil, natural gas and NGLs to a variety of customers, including utilities, oil and natural gas companies and trading and energy marketing companies.
−Removed: We had three customers that individually accounted for more than 10% of our total revenue during the 2019 period.
−Removed: See “Note 1—Summary of Significant Accounting Policies” to the consolidated financial statements in Item 8 of this report for additional information on our major customers.
+Added: We had three customers that each individually accounted for more than 10% of our total revenue during the 2020 period.
+Added: See “Note 1—Summary of Significant Accounting Policies” to the accompanying consolidated financial statements in Item 8 of this report for additional information on our major customers.
The number of readily available purchasers in the areas where we sell our production makes it unlikely that the loss of a single customer would materially affect our sales.
6 unchanged sentences
Our oil and natural gas properties are subject to customary royalty and other interests, liens for current taxes and other burdens, which we believe does not materially interfere with the use of, or affect the carrying value of the properties.
−Removed: We compete with major oil and natural gas companies and independent oil and natural gas companies for leases, equipment, personnel and markets for the sale of oil, natural gas and NGLs.
−Removed: We believe our leasehold acreage position, geographic concentration of operations and technical and operational capabilities enable us to compete effectively with other exploration and production operations.
+Added: We compete with other oil and natural gas companies for leases, equipment, personnel and markets for the sale of oil, natural gas and NGLs.
+Added: We believe our leasehold acreage position, geographic concentration of operations and technical and operational capabilities enable us to compete with other exploration and production operations.
However, the oil and natural gas industry is intensely competitive.
2 unchanged sentences
Oil, natural gas and NGLs compete with other forms of energy available to customers, including alternate forms of energy such as electricity, coal and fuel oils.
−Removed: Changes in the availability or price of oil, natural gas and NGLs or other forms of energy, as well as business conditions, conservation, legislation, regulations and the ability to convert to alternate fuels and other forms of energy may affect the demand for oil, natural gas and NGLs.
+Added: Changes in the availability or price of oil, natural gas and NGLs or other forms of
+Added: energy, as well as business conditions, conservation, legislation, regulations and the ability to convert to alternate fuels and other forms of energy may affect the demand for oil, natural gas and NGLs.
SEASONAL NATURE OF BUSINESS
1 unchanged sentence
Certain natural gas purchasers utilize natural gas storage facilities and acquire some of their anticipated winter requirements during the summer, which can lessen seasonal demand fluctuations.
−Removed: Seasonal weather conditions and lease stipulations can limit our drilling and producing activities and other oil and natural gas operations
−Removed: in a portion of our operating areas.
+Added: Seasonal weather conditions and lease stipulations can limit our drilling and producing activities and other oil and natural gas operations in a portion of our operating areas.
These seasonal anomalies can pose challenges for meeting our well drilling objectives, delay the installation of production facilities, and increase competition for equipment, supplies and personnel during certain times of the year, which could lead to shortages and increase costs or delay operations.
ENVIRONMENTAL REGULATIONS
−Removed: Our oil and natural gas exploration, development and production operations are subject to stringent and complex federal, state, tribal, regional and local laws and regulations governing worker safety and health, the discharge and disposal of substances into the environment, and the protection of the environment and natural resources.
+Added: Our oil and natural gas development operations are subject to stringent and complex federal, state, tribal, regional and local laws and regulations governing, among other factors, worker safety and health, the discharge and disposal of substances into the environment, and the protection of the environment and natural resources.
Numerous governmental entities, including the EPA and analogous state and local agencies, (and, under certain laws, private individuals) have the power to enforce compliance with these laws and regulations and any permits issued under them.
4 unchanged sentences
(iv) require investigatory and remedial actions to mitigate pollution conditions arising from the Company’s operations or attributable to former operations;
−Removed: (v) impose safety and health restrictions designed to protect employees from exposure to hazardous or dangerous substances;
+Added: (v) impose safety and health restrictions designed to protect employees and others from exposure to hazardous or dangerous substances;
and (vi) impose obligations to reclaim and abandon well sites and pits.
2 unchanged sentences
Any changes in or more stringent enforcement of these laws and regulations that result in delays or restrictions in permitting or development of projects or more stringent or costly construction, drilling, water management or completion activities or waste handling, storage, transport, remediation, or disposal emission or discharge requirements could have a material adverse effect on the Company.
−Removed: We may be unable to pass on increased compliance costs to our customers.
+Added: For example, on January 20, 2021, the Biden Administration placed a 60-day moratorium on new oil and gas leasing and drilling permits on federal land, and on January 27, 2021, the Department of Interior acting pursuant to an Executive Order from President Biden suspended the federal oil and gas leasing program indefinitely.
+Added: These actions could have a material adverse effect on the Company and our industry.
+Added: Prior to the North Park Basin sale, approximately 7.34% of our gross total acreage was on federal lands and post sale approximately 0.94% of our gross total acreage was on federal lands.
+Added: Further, we may be unable to pass on increased environmental compliance costs to our customers.
Moreover, accidental releases, including spills, may occur in the course of our operations, and there can be no assurance that we will not incur significant costs and liabilities as a result of such releases or spills, including any third-party claims for damage to property and natural resources or personal injury.
6 unchanged sentences
These properties and the substances or wastes disposed or released on them may be subject to the Comprehensive Environmental Response, Compensation, and Liability Act, as amended (“CERCLA”), the federal Resource Conservation and Recovery Act, (“RCRA”), and analogous state laws.
−Removed: Under these laws, we could be required to remove or remediate previously disposed substances or wastes (including substances or wastes disposed of or released by prior owners or operators or third parties whose waste was commingled with ours), to investigate and clean up contaminated property, to perform corrective actions to prevent future contamination, or to pay some or all of the costs of any such action.
−Removed: CERCLA, also known as the Superfund law, and comparable state laws may impose strict, joint and several liability without regard to fault or legality of conduct on certain classes of persons who are considered to be responsible for the release
−Removed: of a “hazardous substance” into the environment.
+Added: Under these laws, we could be required to investigate, monitor, remove or remediate previously disposed substances or wastes (including substances or wastes disposed of or released by prior owners or operators or third parties whose waste was commingled with ours), to investigate and clean up contaminated property, to perform corrective actions to prevent future contamination, or to pay some or all of the costs of any such action.
+Added: CERCLA, also known as the Superfund law, and comparable state laws may impose strict, joint and several liability without regard to fault or legality of conduct on certain classes of persons who are considered to be responsible for the release of a “hazardous substance” into the environment.
These persons include current and prior owners or operators of the site where the release of a hazardous substance occurred as well as entities that disposed or arranged for the disposal of the hazardous substances released at the site.
−Removed: Under CERCLA, these “responsible persons” may be liable for the costs of cleaning up sites where the hazardous substances have been released into the environment, for damages to natural resources resulting from the release and for the costs of certain environmental and health studies.
+Added: Under CERCLA, these “potentially responsible parties” may be liable for the costs of cleaning up sites where the hazardous substances have been released into the environment, for damages to natural resources resulting from the release and for the costs of certain environmental and health studies.
Additionally, landowners and other third parties may file claims for personal injury and natural resource and property damage allegedly caused by the release of hazardous substances into the environment.
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Any change in the exclusion for such wastes could potentially result in an increase in costs to manage and dispose of wastes which could have a material adverse effect on our results of operations and financial position.
−Removed: In addition, in the course of our operations, we generate petroleum hydrocarbon wastes and ordinary industrial wastes that are subject to regulation under RCRA if they have hazardous characteristics.
Air Emissions
1 unchanged sentence
These laws and regulations may require us to obtain pre-approval for the construction or modification of certain projects or facilities expected to produce or significantly increase air emissions, obtain and strictly comply with air permit requirements or utilize specific equipment or technologies to control emissions.
+Added: For example, in June 2016, the EPA finalized rules regarding criteria for aggregating multiple small surface sites into a single source for air-quality permitting purposes applicable to the oil and natural gas industry.
+Added: This rule could cause small facilities to be aggregated for permitting purposes, resulting in treatment as a major source, and thereby triggering more stringent air permitting requirements.
The need to acquire such permits has the potential to delay or limit the development of our oil and natural gas projects.
Over the next several years, we may be required to incur certain capital expenditures for air pollution control equipment or other air emissions-related issues.
−Removed: For example, in October 2015, the EPA issued a final rule under the CAA, lowering the National Ambient Air Quality Standard for ground-level ozone to 70 parts per billion under both the primary and secondary standards to provide requisite protection of public health and welfare.
+Added: For example, in October 2015, the EPA issued a final rule under the CAA, lowering the National Ambient Air Quality Standards for ground-level ozone to 70 parts per billion under both the primary and secondary standards to provide requisite protection of public health and welfare.
The EPA was required to make attainment and non-attainment designations for specific geographic locations under the revised standards by October 1, 2017, but missed the deadline.
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In November 2018, the EPA issued final rules implementing the non-attainment area designations.
−Removed: While the EPA has determined that all counties in which we operate are in attainment with the new ozone standard, these determinations may be revised in the future.
−Removed: With the EPA lowering the ground-level ozone standard, certain states may be required to implement more stringent regulations, which could apply to our operations and result in the need to install new emissions controls, longer permitting timelines and significant increases in our capital or operating expenditures.
−Removed: In addition, in June 2016, the EPA finalized rules regarding criteria for aggregating multiple small surface sites into a single source for air-quality permitting purposes applicable to the oil and natural gas industry.
−Removed: This rule could cause small facilities to be aggregated for permitting purposes, resulting in treatment as a major source, and thereby triggering more stringent air permitting requirements.
−Removed: On August 28, 2019, the EPA proposed amendments that would remove all sources in the transmission and storage segment of the oil and natural gas industry from these rules;
−Removed: however, the rules still apply to the extraction sector.
−Removed: Compliance with these and other air pollution control and permitting requirements has the potential to delay the development of oil and natural gas projects and increase our costs of development and production, which costs could be significant.
+Added: While the EPA has determined
+Added: that all counties in which we operate are in attainment with the new ozone standard, these determinations may be revised in the future.
+Added: On December 31, 2020, EPA published its decision to retain the 2015 ozone standards;
+Added: however, the Biden Administration has announced that it intends to review this rule under President Biden’s Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis .
+Added: Further reductions in the ozone National Ambient Air Quality Standards could affect our operations and result in the need to install new emissions controls, longer permitting timelines and significant increases in our capital or operating expenditures.
+Added: Compliance with these and any future air pollution control and permitting requirements has the potential to delay the development of oil and natural gas projects and increase our costs of development and production, which costs could be significant.
Water Discharges
−Removed: The federal Water Pollution Control Act, also known as the Clean Water Act (the “CWA”), and analogous state laws and implementing regulations, impose restrictions and strict controls regarding the discharge of pollutants into waters of the United States.
+Added: The Federal Water Pollution Control Act of 1972, as amended, also known as the Clean Water Act (the “CWA”), and analogous state laws and implementing regulations, impose restrictions and strict controls regarding the discharge of pollutants into waters of the United States.
Pursuant to these laws and regulations, the discharge of pollutants into regulated waters is prohibited unless it is permitted by the EPA, the Army Corps of Engineers (“Corps”) or an analogous state or tribal agency.
−Removed: We do not presently
−Removed: discharge pollutants associated with the exploration, development and production of oil and natural gas into federal or state waters.
+Added: We do not presently discharge pollutants associated with the exploration, development and production of oil and natural gas into federal or state waters.
The CWA and analogous state laws and regulations also impose restrictions and controls regarding the discharge of sediment via storm water run-off from a wide variety of construction activities.
Such activities are generally prohibited from discharging sediment unless permitted by the EPA or an analogous state agency.
−Removed: The EPA issued a final rule in September 2015 that attempts to clarify the federal jurisdictional reach over waters of the United States (“WOTUS”).
−Removed: The EPA and the Corps then proposed a rulemaking in June 2017 to repeal the June 2015 WOTUS rule and also announced their intent to issue a new rule redefining the CWA’s jurisdiction.
+Added: The scope of EPA’s and the Corps’ regulatory authority under Section 404 of the CWA has been the subject of extensive litigation and frequently changing regulations.
+Added: The EPA issued a final rule in September 2015 that attempted to clarify the federal jurisdictional reach over waters of the United States (“WOTUS”) under Section 404 of the CWA.
+Added: The EPA and the Corps then proposed a rulemaking in June 2017 to repeal the June 2015 WOTUS rule and also announced their intent to issue a new rule redefining the term WOTUS as used in the CWA.
The EPA and the Corps issued a final rule in January 2018 staying implementation of the 2015 WOTUS rule for two years.
−Removed: Subsequently, on December 11, 2018, the EPA and the Corps proposed a new rule defining the CWA’s jurisdiction.
−Removed: On October 22, 2019, EPA and the Corps published a final rule repealing the 2015 WOTUS rule and recodifying the regulatory language that existed prior to that rule.
−Removed: This action, which became effective on December 23, 2019, resolved a nationwide patchwork of jurisdictional applicability that had developed due to litigation and court rulings regarding the WOTUS rules.
−Removed: The 2019 final rule has been challenged in federal court, however, and the scope of the CWA’s jurisdiction may remain fluid until all litigation is concluded.
−Removed: To the extent the litigation over the new rule is successful, it may yet result in an expansion of the scope of the CWA’s jurisdiction, and we could face increased costs and delays with respect to obtaining permits for dredge and fill activities in wetland areas in connection with any expansion activities.
+Added: On October 22, 2019, EPA and the Corps published a final rule repealing the 2015 WOTUS rule, and EPA and the Corps promulgated the Navigable Waters Protection Rule on April 21, 2020, which provides a revised definition of WOTUS and became effective on June 22, 2020.
+Added: These regulations have been challenged in federal court, however, and the scope of the CWA’s jurisdiction may remain fluid until all litigation is concluded.
+Added: Further regulatory changes are likely, as the Biden Administration has announced that it intends to review the Navigable Waters Protection Rule under President Biden’s Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis .
+Added: The pending litigation and future regulations concerning the definition of WOTUS may result in an expansion of the scope of the CWA’s jurisdiction, and we could face increased costs and delays with respect to obtaining permits for dredge and fill activities in wetland areas or other WOTUS in connection with our operations.
Also, in June 2016, the EPA issued a final rule implementing wastewater pretreatment standards that prohibit onshore unconventional oil and natural gas extraction facilities from sending wastewater to publicly-owned treatment works.
13 unchanged sentences
State regulations require a permit from the applicable regulatory agencies to operate underground injection wells.
−Removed: Although the Company monitors the injection process of its wells, any leakage from the subsurface portions of the injection wells could cause degradation of fresh groundwater resources, potentially resulting in suspension of our UIC permit, issuance of fines and penalties from governmental agencies, incurrence of expenditures for remediation of the affected resource and imposition of liability by third-parties claiming damages for alternative water supplies, property damages and personal injuries.
+Added: Although the Company monitors the injection process of its wells, any leakage from the subsurface portions of the injection wells could cause degradation of fresh groundwater resources, potentially resulting in suspension of our UIC permit, issuance of fines and penalties from governmental agencies, incurrence of expenditures for remediation of the affected resource and imposition of liability by third-parties claiming damages for alternative water supplies, property damages and personal
Some states have considered laws mandating flowback and produced water recycling.
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As a result of these measures, the OCC from time to time has developed and implemented plans calling for wells within areas of interest where seismic incidents have occurred to restrict or suspend disposal well operations in an attempt to mitigate the occurrence of such incidents.
−Removed: For example, in February
−Removed: 2016, the OCC issued a plan to reduce disposal well volume in the Arbuckle formation by 40 percent, covering approximately 5,281 square miles and 245 disposal wells injecting wastewater into the Arbuckle formation.
+Added: For example, in February 2016, the OCC issued a plan to reduce disposal well volume in the Arbuckle formation by 40 percent, covering approximately 5,281 square miles and 245 disposal wells injecting wastewater into the Arbuckle formation.
In the plan, the OCC identified 76 SandRidge-operated disposals wells, prescribed a four stage volume reduction schedule and set April 30, 2016 as the final date for compliance with the tiered volume reduction plan.
4 unchanged sentences
These and similar future protocols that may be adopted in response to future seismicity concerns may reduce the productivity of our operations in relevant areas.
−Removed: Additionally, the Governor of Kansas has established a task force composed of various administrative agencies to study and develop an action plan for addressing seismic activity in the state.
+Added: Additionally, the Governor of Kansas has established the State Task Force on Induced Seismicity, composed of various administrative agencies, to study and develop an action plan for addressing seismic activity in the state.
The task force issued a recommended Seismic Action Plan calling for enhanced seismic monitoring and the development of a seismic response plan, and in November 2014, the Governor of Kansas announced a plan to enhance seismic monitoring in the state.
3 unchanged sentences
In August 2016, the Kansas Corporation Commission issued an order that put a 16,000 barrels per day limit on additional Arbuckle disposal wells not previously identified in the Order.
−Removed: While no additional regulatory actions were taken in Kansas with respect to induced seismicity concerns since 2017, permit applications for new saltwater disposal well facilities have faced increased local opposition.
+Added: While no additional regulatory actions have been taken in Kansas with respect to induced seismicity concerns since 2017, permit applications for new saltwater disposal well facilities have faced increased local opposition.
Evaluation of seismic incidents and whether or to what extent those events are induced by the injection of saltwater into disposal wells continues to evolve, as governmental authorities consider new and/or past seismic incidents in areas where salt water disposal activities occur or are proposed to be performed.
2 unchanged sentences
Climate Change
−Removed: The EPA previously has published its findings that emissions of CO 2 , methane and certain other “greenhouse gases” ("GHGs") present an endangerment to public health and the environment because emissions of such gases are, according to the EPA, contributing to warming of the earth’s atmosphere and other climatic changes.
−Removed: Based on its findings, the EPA has adopted and implemented regulations under existing provisions of the CAA that, among other things, establish Prevention of Significant Deterioration (“PSD”) construction and Title V operating permit reviews for GHG emissions from certain large stationary sources that already are potential major sources of certain principal, or criteria, pollutant emission.
−Removed: Facilities required to obtain PSD permits for their GHG emissions also will be required to meet “best available control technology” standards that typically are established by the states.
−Removed: This rule could adversely affect our operations and restrict or delay its ability to obtain air permits for new or modified facilities that exceed GHG emission thresholds.
+Added: In December 2009, the EPA published its findings that emissions of CO 2 , methane and certain other “greenhouse gases” ("GHGs") present an endangerment to public health and the environment because emissions of such gases are, according to the EPA, contributing to warming of the earth’s atmosphere and other climatic changes.
+Added: Based on its findings, the EPA has
+Added: adopted and implemented regulations under existing provisions of the CAA that, among other things, establish Prevention of Significant Deterioration (“PSD”) construction and Title V operating permit requirements for GHG emissions from certain large stationary sources that already are major sources of criteria pollutants under the CAA.
+Added: Facilities required to obtain PSD permits for their GHG emissions also will be required to meet “best available control technology” standards that typically are GHG emissions could adversely affect our operations and restrict or delay our ability to obtain air permits for new or modified facilities that exceed GHG emission thresholds.
In addition, the EPA has adopted rules requiring the reporting of GHG emissions from oil and natural gas production and processing facilities on an annual basis, as well as reporting GHG emissions from gathering and boosting systems, oil well completions and workovers using hydraulic fracturing.
−Removed: More recently, in June 2016, the EPA finalized rules to reduce methane emissions from new, modified or reconstructed sources in the oil and natural gas sector, including implementation of a leak detection and repair (“LDAR”) program to minimize methane emissions, under the CAA’s New Source Performance Standards, Subpart OOOOa (“Quad Oa”).
−Removed: In June 2017, the EPA proposed a two-year stay of the rules and in October 2018 the EPA proposed revisions to Quad Oa, such as changes to the frequency for monitoring fugitive emissions at well sites and changes to requirements that a professional engineer certify when meeting certain Quad Oa requirements is technically infeasible.
−Removed: Regardless of the stay and potential regulatory revisions, it is possible that these rules will continue to require oil and gas operators to expend material sums.
+Added: In June 2016, the EPA finalized rules to reduce methane emissions from new, modified or reconstructed sources in the oil and natural gas sector, including implementation of a leak detection and repair (“LDAR”) program to minimize methane emissions, under the CAA’s New Source Performance Standards in 40 C.F.R.
+Added: Part 60, Subpart OOOOa (“Quad Oa”).
+Added: On April 18, 2017, the EPA announced its intention to reconsider certain aspects of those regulations, and in June 2017, the EPA proposed a two-year stay of certain requirements of the Quad Oa regulations.
+Added: In October 2018, the EPA proposed revisions to Quad Oa, such as changes to the frequency for monitoring fugitive emissions at well sites and changes to requirements that a professional engineer certify that meeting certain Quad Oa requirements is technically infeasible.
+Added: The EPA proposed further revisions to Quad Oa on September 24, 2019, including rescinding the methane requirements in Quad Oa that apply to sources in the production and processing segments of the industry.
+Added: In September 2020, the EPA finalized amendments to Quad Oa that rescind requirements for the transmission and storage segment of the oil and natural gas industry and rescind methane-specific limits that apply to the industry’s production and processing segments, among other things.
+Added: The Biden Administration has announced that it intends to review the September 2020 rules under President Biden’s Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis , which review may result in the reinstatement of the now-rescinded standards or promulgation of more stringent standards.
+Added: Regardless of the September 2020 amendments to Quad Oa, it is possible that these rules and future revisions thereto will continue to require oil and gas operators to expend material sums.
In addition, in November 2016, the U.S.
−Removed: Department of the Interior Bureau of Land Management (“BLM”) issued final rules to reduce methane emissions from venting, flaring, and leaks during oil and natural gas operations on public lands that are substantially similar to the EPA Quad Oa requirements.
−Removed: However, in December 2017, the BLM published a final rule to temporarily suspend or delay certain
−Removed: requirements contained in the November 2016 final rule until January 17, 2019, including those requirements relating to venting, flaring and leakage from oil and gas production activities.
−Removed: Further, in September 2018, the BLM published a final rule revising or rescinding certain provisions of the 2016 rule, however, the 2018 rule is currently being challenged in federal court.
−Removed: As a result of these developments, future implementation of the EPA and the BLM methane rules remains uncertain, but given the long-term trend towards increasing regulation, future federal GHG regulations for the oil and gas industry remain a possibility.
−Removed: Moreover, several states where we operate, including Colorado, have already adopted rules requiring operators of both new and existing sources to develop and implement a LDAR program and to install devices on certain equipment to capture 95 percent of methane emissions.
+Added: Department of the Interior Bureau of Land Management (“BLM”) issued final rules to reduce methane emissions from venting, flaring, and leaks during oil and natural gas operations on federal lands that are substantially similar to the EPA Quad Oa requirements.
+Added: However, in December 2017, the BLM published a final rule to temporarily suspend or delay certain requirements contained in the November 2016 final rule until January 17, 2019, including those requirements relating to venting, flaring and leakage from oil and gas production activities.
+Added: Further, in September 2018, the BLM published a final rule revising or rescinding certain provisions of the 2016 rule, which became effective on November 27, 2018.
+Added: Both the 2016 and the 2018 rule were challenged in federal court.
+Added: On July 21, 2020, a Wyoming federal court vacated almost all of the 2016 rule, including all provisions relating to the loss of gas through venting, flaring, and leaks, and on July 15, 2020, a California federal court vacated the 2018 rule.
+Added: As a result of these decisions, the 1979 regulations concerning venting, flaring and lost production on federal land have been reinstated.
+Added: The Biden Administration is likely to impose new regulations on GHG emissions from oil and natural gas production operations on federal land, given the long-term trend towards increasing regulation in this area.
+Added: Moreover, several states where we operated as of December 31, 2020, including Colorado, have already adopted rules requiring operators of both new and existing sources to develop and implement a LDAR program and to install devices on certain equipment to capture 95 percent of methane emissions.
Compliance with these rules could require us to purchase pollution control equipment and optical gas imaging equipment for LDAR inspections, and to hire additional personnel to assist with inspection and reporting requirements.
2 unchanged sentences
However, the Paris Agreement does not impose any binding obligations on the United States.
−Removed: Moreover, in June 2017, President Trump announced that the United States would withdraw from the Paris Agreement, but may enter into a future international agreement related to GHGs.
−Removed: In August 2017, the U.S.
−Removed: State Department officially informed the United Nations of the intent of the United States to withdraw from the Paris Agreement.
−Removed: The United States formally initiated withdrawal proceedings on November 4, 2019.
−Removed: The withdrawal cannot be effective before November 4, 2020;
−Removed: thus, whether the United States may reenter the Paris Agreement or a separately negotiated agreement is unclear at this time.
+Added: In June 2017, President Trump announced that the United States would withdraw from the Paris Agreement, which became effective November 4, 2020.
+Added: President Joe Biden announced that the United States will rejoin the Paris Agreement as of January 20, 2021.
Further, several states and local governments remain committed to the principles of the Paris Agreement in their effectuation of policy and regulations.
1 unchanged sentence
The adoption and implementation of any laws or regulations imposing reporting obligations on, or limiting emissions of GHG from, our equipment and operations could require additional expenditures to reduce emissions of GHGs associated with its operations or could adversely affect demand for the oil and natural gas we produce, and thus possibly have a material adverse effect on our revenues, as well as having the potential effect of lowering the value of our reserves.
−Removed: Recently, activists concerned about the potential effects of climate change have directed their attention at sources of funding for fossil-fuel energy companies, which has resulted in certain financial institutions, funds and other sources of capital restricting or eliminating their investment in oil and natural gas activities.
−Removed: Ultimately, this could make it more difficult to secure funding for exploration and production activities.
+Added: Recently, activists concerned about the potential effects of climate change have directed their attention at sources of funding for fossil-fuel energy companies, which has resulted in certain financial institutions, funds and other sources of capital
+Added: restricting or eliminating their investment in oil and natural gas activities.
+Added: Ultimately, this could make it more difficult to secure funding for exploration and production activities or increase the costs of such funding.
Notwithstanding potential risks related to climate change, the International Energy Agency estimates that global energy demand will continue to rise and will not peak until after 2040 and that oil and gas will continue to represent a substantial percentage of global energy use over that time.
2 unchanged sentences
The federal Endangered Species Act (the “ESA”) restricts activities that may affect endangered or threatened species or their habitats without first obtaining an incidental take permit and implementing mitigation measures.
−Removed: Similar protections are offered to migratory birds under the federal Migratory Bird Treaty Act.
+Added: Similar protections are offered to migratory birds under the federal Migratory Bird Treaty Act and to bald and golden eagles under the Bald and Golden Eagle Protection Act.
While compliance with the ESA has not had an adverse effect on our exploration, development and production operations in areas where threatened or endangered species or their habitat are known to exist, it may require us to incur increased costs to implement mitigation or protective measures and also may delay, restrict or preclude drilling activities in those areas or during certain seasons, such as breeding and nesting seasons.
1 unchanged sentence
Although the U.S.
−Removed: Fish and Wildlife Service (“USFWS”) declined to list the sage grouse under the ESA in 2015 and subsequently developed a conservation plan to protect existing habit, some environmental groups have continued to raise concerns about sufficient protections for the sage grouse population.
−Removed: Under the plan, the USFWS committed to review the status of the species every five years to evaluate conservation actions, with the plan to be next reviewed and revised if necessary in 2020.
+Added: Fish and Wildlife Service (“USFWS”) declined to list the sage grouse under the ESA in 2015 and subsequently developed a conservation plan to protect existing habitat, some environmental groups have continued to raise concerns about sufficient protections for the sage grouse population.
+Added: Under the plan, the USFWS committed to review the status of the species every five years to evaluate conservation actions, although USFWS has not yet completed the five-year review that was due to be completed in 2020.
In addition, the U.S.
2 unchanged sentences
District Court for the District of Idaho issued a preliminary injunction blocking implementation of the new rules in Idaho, Wyoming, Colorado, Utah, Nevada, Oregon, and part of California.
−Removed: While the BLM can still issue new permits in these areas, it must follow the restrictions included in the 2015 management plans.
−Removed: It is also possible that the ongoing litigation could result in the sage grouse being re-listed under the ESA in the future.
−Removed: If endangered or otherwise protected species are located in areas where we wish to conduct seismic surveys, development activities or abandonment operations, the work could be prohibited or delayed or expensive
−Removed: mitigation may be required.
−Removed: For example, certain of our operations in Colorado are in proximity to sage grouse habitat and we are prohibited from performing operations in those areas during certain hours from March to mid-July of each year.
+Added: In January 2021, the DOI issued Records of Decision for six Supplemental Environmental Impact Statements for management of sage grouse habitat on public lands in seven states to address the court’s decision;
+Added: however, the Biden Administration has announced that it intends to review these acts under President Biden’s Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis .
+Added: It is also possible that this review could result in the sage grouse being re-listed under the ESA in the future.
+Added: If endangered or otherwise protected species are located in areas where we wish to conduct seismic surveys, development activities or abandonment operations, the work could be prohibited or delayed or expensive mitigation may be required.
Further, in February 2016, the USFWS published a final policy which alters how it identifies critical habitats for endangered and threatened species.
−Removed: In August 2019, the USFWS issued three final rules revising its ESA regulations, consisting of changes to the procedures and criteria for listing or delisting species and designating critical habitat, removal of the automatic take prohibition for species listed as threatened, and regulations for protection of threatened species, (ii) criteria for listing and delisting of species and designation of critical habitat, and new procedures and time frames for required consultations by other federal agencies.
+Added: In August 2019, the USFWS issued three final rules revising its ESA regulations, consisting of changes to the procedures and criteria for listing or delisting species and designating critical habitat, removal of the automatic take prohibition for species listed as threatened, and regulations for protection of threatened species, and new procedures and time frames for required consultations by other federal agencies.
+Added: The USFWS also issued a final rule in December 2020 defining the term “habitat” for purposes of making critical habitat designations under the ESA.
In general, these rules were designed to alleviate some of the burdens of the ESA and streamline its implementation, but the prospect of new species listings and critical habitat designations remains.
−Removed: A critical habitat designation could result in further material restrictions to federal and private land use and could delay or prohibit land access or development.
−Removed: Moreover, a settlement approved by the U.S.
−Removed: District Court for the District of Columbia in 2011 required the USFWS to consider listing numerous species as endangered under the ESA by the end of its 2017 fiscal year;
−Removed: however, the agency has not yet completed this process.
+Added: The Biden Administration has announced that it intends to review these rules under President Biden’s Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis .
The designation of previously unprotected species as threatened or endangered in areas where we operate could cause us to incur increased costs arising from species protection measures or could result in limitations on our exploration and production activities that could have an adverse impact on our ability to develop and produce our reserves.
−Removed: We are an active participant on various agency and industry committees that are developing or addressing various USFWS and other federal and state agency programs to minimize potential impacts to business activity relating to the protection of any endangered or threatened species.
+Added: A critical habitat designation could result in further material restrictions to federal and private land use and could delay or prohibit land access or development.
Employee Health and Safety
Our operations are subject to a number of federal and state laws and regulations, including the federal Occupational Safety and Health Act (“OSHA”), and comparable state statutes, whose purpose is to protect the health and safety of workers.
−Removed: In addition, the OSHA Hazard Communication Standard requires us to maintain information concerning hazardous materials used or produced in our operations and to provide this information to employees.
−Removed: Pursuant to the Federal Emergency Planning and Community Right-to-Know Act, facilities that store threshold amounts of chemicals that are subject to OSHA’s Hazard Communication Standard above certain threshold quantities must submit information regarding those chemicals by March 1 of each year to state and local authorities in order to facilitate emergency planning and response.
+Added: In addition, the OSHA Hazard Communication Standard requires us to maintain information concerning hazardous materials used or produced in our operations and to provide this information to employees and various entities.
+Added: Pursuant to the Federal
+Added: Emergency Planning and Community Right-to-Know Act, facilities that store threshold amounts of chemicals that are subject to OSHA’s Hazard Communication Standard must submit information regarding those chemicals by March 1 of each year to state and local authorities in order to facilitate emergency planning and response.
That information is generally available to employees, state and local governmental authorities, and the public.
We do not believe that compliance with applicable laws and regulations relating to worker health and safety will have a material adverse effect on our business and results of operations.
−Removed: State Regulation
+Added: State and Other Regulation
The states in which we operate, along with some municipalities and Native American tribal areas, regulate some or all of the following activities:
8 unchanged sentences
For example, the EPA published permitting guidance in February 2014 addressing the use of diesel fuel in fracturing operations;
−Removed: issued CAA final regulations in
−Removed: 2012 and additional CAA regulations in June 2016 governing performance standards for the oil and natural gas industry;
+Added: issued the Quad Oa regulations for the oil and natural gas industry under the CAA, as described above;
and in June 2016 issued final effluent limitations guidelines under the CWA that waste water from shale natural gas extraction operations must meet before discharging to a publicly-owned treatment plant.
8 unchanged sentences
The BLM issued a final rule repealing the 2015 hydraulic fracturing rule in December 2017.
−Removed: Congress has from time to time considered legislation to provide for federal regulation of hydraulic fracturing and to require disclosure of the chemicals used in the hydraulic fracturing process but, at this time, federal legislation related to hydraulic fracturing appears unlikely.
−Removed: At the state level, some states, including Oklahoma and Colorado, have adopted, and other states are considering adopting, legal requirements that could impose more stringent permitting, disclosure, operational or well construction requirements on hydraulic fracturing activities, or that prohibit hydraulic fracturing altogether.
−Removed: Local government may also seek to adopt ordinances within their jurisdictions regulating the time, place and manner of drilling activities in general or hydraulic fracturing activities in particular.
+Added: The Biden Administration has announced that it intends to review the repeal of the 2015 hydraulic fracturing rule under President Biden’s Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis .
+Added: Congress has from time to time considered legislation to provide for federal regulation of hydraulic fracturing and to require disclosure of the chemicals used in the hydraulic fracturing process but, at this time, federal legislation related to hydraulic fracturing appears uncertain.
+Added: At the state level, some states, including Oklahoma, Kansas and Colorado, have adopted, and other states are considering adopting, legal requirements that could impose more stringent permitting, disclosure, operational or well construction requirements on hydraulic fracturing activities, or that prohibit hydraulic fracturing altogether.
+Added: Local governments may also seek to adopt ordinances within their jurisdictions regulating the time, place and manner of drilling activities in general or hydraulic fracturing activities in particular.
If new laws or regulations that significantly restrict hydraulic fracturing are adopted at the local, state or federal level, our fracturing activities could become subject to additional permit and financial assurance requirements, more stringent construction requirements, increased reporting or plugging and abandoning requirements or operational restrictions, and associated permitting delays and potential increases in costs.
11 unchanged sentences
Since the report did not find a direct link between hydraulic fracturing itself and contamination of groundwater resources, this years-long study report does not appear to provide any basis for further regulation of hydraulic fracturing at the federal level.
−Removed: We diligently review best practices and industry standards, serve on industry association committees and comply with all regulatory requirements in the protection of potable water sources.
+Added: We diligently review best practices and industry standards and comply with all regulatory requirements in the protection of potable water sources.
Protective practices include, but are not limited to, setting multiple strings of protection pipe across the potable water sources and cementing these pipes from setting depth to surface, continuously monitoring the hydraulic fracturing process in real time and disposing of all non-commercially produced fluids in certified disposal wells at depths below the potable water sources.
−Removed: There have not been any incidents, citations or suits related to our hydraulic fracturing activities involving environmental concerns.
+Added: There have not been any incidents, citations or suits related to our hydraulic fracturing activities involving material environmental concerns.
OTHER REGULATION OF THE OIL AND NATURAL GAS INDUSTRY
7 unchanged sentences
Drilling and Production
−Removed: Our operations are subject to various types of regulation at federal, state, local and Native American tribal levels.
−Removed: These types of regulation include requiring permits for the drilling of wells, drilling bonds and reports concerning operations.
−Removed: Most states, and some counties, municipalities and Native American tribal areas where we operate also regulate one or more of the following activities:
+Added: Our operations are subject to various types of regulation at federal, state, local and Native American tribal levels that include requiring permits for the drilling of wells, drilling bonds and reports concerning operations.
+Added: Most states, and some counties, municipalities and Native American tribal areas where we operate regulate one or more of the following activities:
• the location of wells;
8 unchanged sentences
Some states allow forced pooling or integration of tracts to facilitate exploration while other states rely on voluntary pooling of lands and leases.
−Removed: In some instances, forced pooling or unitization may be implemented by third parties and may reduce our interest in the unitized properties.
+Added: In some instances, forced pooling or unitization may be implemented by third parties
+Added: and may reduce our interest in the unitized properties.
In addition, state conservation laws establish maximum rates of production from oil and natural gas wells, generally prohibit the venting or flaring of natural gas and impose requirements regarding the ratability of production.
1 unchanged sentence
Moreover, each state generally imposes a production or severance tax with respect to the production and sale of oil, natural gas, and NGLs within its jurisdiction.
−Removed: State agencies in Colorado, Kansas, Oklahoma and Texas impose financial assurance requirements on operators.
+Added: State agencies in Colorado, Kansas and Oklahoma impose financial assurance requirements on operators.
The Corps and many other state and local authorities also have regulations for plugging and abandonment, decommissioning and site restoration.
7 unchanged sentences
Various federal laws enacted since 1978 have resulted in the removal of all price and non-price controls for sales of domestic natural gas sold in first sales, which include all of our sales of our own production.
−Removed: Under the Energy Policy Act of 2005 (the “EPAct 2005”), FERC has substantial enforcement authority to prohibit the manipulation of natural gas markets and enforce its rules and orders, including the ability to assess substantial civil penalties of up to $1,269,500 per day for each violation and disgorgement of profits associated with any violation.
+Added: Under the Energy Policy Act of 2005 (the “EPAct 2005”), FERC has substantial enforcement authority to prohibit the manipulation of natural gas markets and enforce its rules and orders, including the ability to assess substantial civil penalties in excess of one million dollars per day for each violation and disgorgement of profits associated with any violation.
While our systems have not been regulated by FERC as a natural gas company under the NGA, we are required to report aggregate volumes of natural gas purchased or sold at wholesale to the extent such transactions utilize, contribute to, or may contribute to the formation of price indices.
−Removed: In addition, Congress
−Removed: may enact legislation or FERC may adopt regulations that may subject certain of our otherwise non-FERC jurisdictional facilities to further regulation.
+Added: In addition, Congress may enact legislation or FERC may adopt regulations that may subject certain of our otherwise non-FERC jurisdictional facilities to further regulation.
Failure to comply with those regulations in the future could subject us to civil penalty liability.
1 unchanged sentence
With regard to physical purchases and sales of natural gas and other energy commodities, and any related hedging activities that we undertake, we are thus required to observe anti-market manipulation laws and related regulations enforced by FERC and/or the CFTC.
−Removed: The CFTC also holds substantial enforcement authority, including the ability to assess civil penalties of up to $1,212,866 per day per violation.
+Added: The CFTC also holds substantial enforcement authority, including the ability to assess civil penalties in excess of one million dollars per day per violation.
FERC also regulates interstate natural gas transportation rates and service conditions and establishes the terms under which we may use interstate natural gas pipeline capacity, which affects the marketing of natural gas that we produce, as well as the revenues we receive for sales of our natural gas and release of our natural gas pipeline capacity.
8 unchanged sentences
Although its policy is still in flux, in the past FERC has reclassified certain jurisdictional transmission facilities as non-jurisdictional gathering facilities, which has the tendency to increase our cost of transporting gas to point-of-sale locations.
−Removed: Oil Price Controls and Transportation Rates
+Added: Oil and NGL Sales and Transportation Rates
Sales prices of oil and NGLs are not currently regulated and are made at market prices.
Our sales of these commodities are, however, subject to laws and to regulations issued by the Federal Trade Commission (the “FTC”) prohibiting manipulative or fraudulent conduct in the wholesale petroleum market.
−Removed: The FTC holds substantial enforcement authority under these regulations, including the ability to assess civil penalties of up to $1,231,690 per day per violation.
+Added: The FTC holds substantial enforcement authority under these regulations, including the ability to assess civil penalties in excess of one million dollars per day per violation.
Our sales of these commodities, and any related hedging activities, are also subject to CFTC oversight as discussed above.
5 unchanged sentences
We are not able at this time to predict the effects of these regulations or FERC proceedings, if any, on the transportation costs associated with crude oil production from our crude oil producing operations.
−Removed: As of December 31, 2019, the Company had 270 full-time employees, including 43 geologists, geophysicists, petroleum engineers, technicians, land and regulatory professionals.
−Removed: Of our 270 employees, 130 were located at the Company’s headquarters in Oklahoma City, Oklahoma at December 31, 2019, and the remaining employees worked in our various field offices and drilling sites.
+Added: As of March 1, 2021, we had 103 full-time employees, including 87 field employees and 16 corporate employees.
+Added: As of December 31, 2020, we had 114 full-time employees, including 98 field employees and 16 corporate employees.
+Added: At December 31, 2019, we had 270 full-time employees, including 140 field employees and 130 corporate employees.
+Added: Health, Safety and Environment
+Added: Our people are a key driver to our success in Health, Safety and Environment ("HSE").
+Added: Our HSE policy includes a commitment to provide safe and healthy working conditions for the prevention of work-related injury and ill health and is appropriate for the purpose, size and context of the organization.
+Added: As part of our HSE policy, we aim to identify and correct any work practices that pose an HSE risk to our employees.
+Added: The Company is devoted to creating a sustainable environment and implementing process improvements for both health and safety and the environment.
+Added: We evaluate our processes to ensure our protection schemes and work practices minimize these risks.
+Added: Furthermore, we periodically evaluate our HSE objectives to ensure they remain aligned with our HSE goals and annually create a strategy focused on risk reduction to get us closer to zero incidents.
+Added: During 2020, our experience and continuing focus on workplace safety have enabled us to preserve business continuity without sacrificing our commitment to keeping our colleagues and workplace visitors safe during the COVID-19 pandemic.
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.