What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-03-10 compared with 2021-03-04 · 94 added, 153 removed, 430 unchanged (36% of the section changed)

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.

Mid-Continent.

Prior to February 5, 2021, we held assets in the North Park Basin of Colorado, which have been sold in their entirety.

6 unchanged sentences

Any materials that we have filed with the SEC may be accessed via the SEC’s website address at www.sec.gov.

Reorganization Under Chapter 11 and Emergence from Bankruptcy

On May 16, 2016, the Debtors filed Bankruptcy Petitions for reorganization under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court.

The Bankruptcy Court confirmed the reorganization plan, and the Debtors’ subsequently emerged from bankruptcy on October 4, 2016.

Pursuant to the reorganization plan, all of the Predecessor Company's common stock and other equity and debt securities were cancelled and on October 4, 2016, the Successor Company issued an aggregate of 18.9 million shares of common stock at $.001 par value and commenced trading on the New York Stock Exchange.

Our Business Strategy

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.

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.

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.

The Company’s primary strategic focus is to grow the cash value and generation capability of our asset base in a safe, responsible and efficient manner, and will seek to use our net operating loss carry forwards to minimize income taxes and maximize cash flow.

We will continue to exercise financial discipline and prudent capital allocation to projects we believe provide a high rate of return in the current commodity price environment, and will remain vigilant and maintain optionality for opportunistic, value-accretive acquisitions and business combinations.

PRIMARY BUSINESS OPERATIONS

A comparative discussion of our 2020 to 2019 operating results can be found in Item 1 “Business” included in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 4, 2021.

Our primary operations are the development and acquisition of hydrocarbon resources.

The following table presents information concerning our operations by geographic area as of December 31, 2020.

The following table presents information concerning our operations as of December 31, 2021.

Capital Expenditures (In millions) (4)

Geographic Area

Mid-Continent 71.3 18.5 10.6 551,000 368,000 $ 14.4

North Park Basin 3.5 1.8 5.3 97,657 89,666 1.5

Total 36.9 20.9 10.1 665,719 469,697 $ 8.3

____________________

1 unchanged sentence

All prices are held constant throughout the lives of the properties.

The index prices and the equivalent weighted average wellhead prices used in the reserve reports are shown in the table below.

The index prices and the equivalent weighted average wellhead prices used in the reserve reports are shown on page 11 below.

(2) Average daily net production for the month of December 2021.

14 unchanged sentences

The Woodford Shale is the primary hydrocarbon source for both the Meramec and Osage.

During 2020, we did not have any drilling activity in the Mid-Continent.

During 2021, we did not have any drilling activity.

North Park Basin

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.

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.

During 2020, we did not have any drilling activity in North Park Basin.

On February 5, 2021, we sold all of our oil and natural gas properties and related assets of the North Park Basin ("NPB") in Colorado for a purchase price of $47 million in cash.

Net proceeds were $39.7 million in cash as a result of customary effective date adjustments and a $0.8 million post-close adjustment made during the second half of the year.

The sale resulted in a $18.9 million gain after the post-close adjustment.

Proved Reserves

17 unchanged sentences

• the judgment of the personnel preparing the estimates.

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.

The reserve engineers monitor well performance and make reserve estimate adjustments as necessary to ensure the most current information is reflected.

The Reservoir Engineering Supervisor serves as the primary technical professional providing oversight of our reserve estimate.

The reserve engineers and third party engineering consultants 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.

1 unchanged sentence

• 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;

• ensuring the information provided by other departments within the Company such as Accounting is accurate and complete;

• communicating, collaborating, and analyzing with technical personnel;

3 unchanged sentences

Key reserve information is reviewed and approved at least annually by the Company’s Chief Executive Officer and Chief Financial Officer.

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.

SandRidge’s reserve engineers and the Reservoir Engineering Supervisor 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.

In addition to reviewing the independently developed reserve reports, the audit committee also periodically meets with the independent petroleum consultants that prepare estimates of proved reserves.

The percentage of total proved reserves prepared by each of the independent petroleum consultants is shown in the table below.

The percentage of total proved reserves prepared by each of the independent petroleum consultants is shown in the

Cawley, Gillespie & Associates, Inc.

3 unchanged sentences

Total 96.2 % 91.5 %

(1) Subsequent to the sale of NPB properties, Ryder Scott no longer provides engineering services on reserves.

The remaining 3.8% and 8.5% of estimated proved reserves as of December 31, 2021 and 2020, respectively, were based on internally prepared estimates, primarily for the Mid-Continent area.

Copies of the reports issued by our independent reserve consultants with respect to our oil, natural gas and NGL reserves as of December 31, 2020 are filed with this report as Exhibits 99.1 and 99.2.

The geographic location of our estimated proved reserves prepared by each of the independent reserve consultants as of December 31, 2020 is presented below.

Geographic Locations—by Area by State

Cawley, Gillespie & Associates, Inc.

Mid-Continent—KS, OK

Ryder Scott Company, L.P.

North Park Basin—CO, Mid-Continent—OK

The qualifications of the technical personnel at each of these firms primarily responsible for overseeing the firm’s preparation of the Company’s reserves estimates included in this report are set forth below.

A copy of the report issued by our independent reserve consultant with respect to our oil, natural gas and NGL reserves as of December 31, 2021 is filed with this report as Exhibit 99.1.

Cawley, Gillespie & Associates prepared reserves for our Mid-Continent properties located in Kansas and Oklahoma as of December 31, 2021.

The qualifications of the technical personnel at Cawley, Gillespie & Associates, Inc.

primarily responsible for overseeing the firm’s preparation of the Company’s reserves estimates included in this report are set forth below.

These qualifications meet or exceed the Society of Petroleum Engineers’ standard requirements to be a professionally qualified Reserve Estimator and Auditor.

3 unchanged sentences

• Bachelor of Science Degree in Petroleum Engineering.

Ryder Scott Company, L.P.:

• more than 30 years of practical experience in the estimation and evaluation of petroleum reserves;

• a registered professional engineer in the states of Alaska, Colorado, Texas and Wyoming;

• Bachelor of Science Degree in Petroleum Engineering and MBA in Finance.

Reporting of Natural Gas Liquids

7 unchanged sentences

Reserve Quantities, PV-10 and Standardized Measure

The following estimates of proved oil, natural gas and NGL reserves are based on reserve reports as of December 31, 2020 and 2019, over 90% of which were prepared by independent reserve engineers.

The following estimates of proved oil, natural gas and NGL reserves are based on reserve reports as of December 31, 2021 and 2020 approximately 96% and over 90%, respectively, of which were prepared by independent reserve engineers.

The reserve reports were based on our drilling schedule at the time year-end reserve estimates were prepared.

19 unchanged sentences

All prices are held constant throughout the lives of the properties.

For 2021, the estimated proved reserves include Mid-Continent only.

For 2020, the estimated proved reserves include Mid-Continent and NPB.

The index prices and the equivalent weighted average wellhead prices used in the reserve reports are shown in the table below:

Index prices (a) Weighted average

wellhead prices (b)

wellhead prices (b) (c)

(per Bbl) Natural gas

5 unchanged sentences

(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.

These are SEC prices calculated by using trailing 12 month average from the first trading day close of each calendar month.

(b) Average adjusted volume-weighted wellhead product prices reflect adjustments for transportation, quality, gravity, regional price differentials and excludes any impact of derivatives.

For 2020, the estimated proved reserves include Mid-Continent and NPB.

(2) Standardized Measure differs from PV-10 as standardized measure includes the effect of future income taxes.

At December 31, 2020 and 2019, the difference between the standardized measure and PV-10 was insignificant due to an excess of tax basis in oil and natural gas properties over projected undiscounted future cash flows from our proved reserves.

At December 31, 2021 and 2020 there was no difference between the standardized measure and PV-10 due to an excess of tax basis in oil and natural gas properties over projected undiscounted future cash flows from our proved reserves.

(3) PV-10 is a non-GAAP financial measure.

8 unchanged sentences

Proved Reserves - Mid-Continent .

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.

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.

The COVID-19 Pandemic and resulting 2020 commodity price contraction necessitated numerous operational and other cost saving initiatives.

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.

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 increased from 33.4 MMBoe at December 31, 2020 to 71.3 MMBoe at December 31, 2021, primarily as a result of positive revisions of 27.3 MMBoe associated with the increase in year-end SEC commodity prices for oil and natural gas, 13.6 MMBoe associated with reduction in expenses and other commercial improvements, 3.7 MMBoe related to a well reactivation program, and purchases of 1.4 MMBoe of proved reserves.

The Company also recorded 2021 production totaling 6.7 MMBoe and a decrease of 1.4 MMBoe attributable to well shut-ins, sales and other revisions.

Proved Reserves - North Park Basin.

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.

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.

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.

Reservoir characteristics of the Niobrara in the North Park Basin are similar to those of the Niobrara in the DJ Basin, consisting of multiple stratigraphic benches.

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.

Proved reserves in the North Park Basin decreased from 3.5 MMBoe at December 31, 2020 to 0 MMBoe at December 31, 2021, as the result of the sale of 3.4 MMBoe of proved reserves and 2021 production totaling 0.1 MMBoe.

Proved Undeveloped Reserves.

The following table summarizes activity associated with proved undeveloped reserves during the periods presented:

Year Ended December 31,

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

There were no proved underdeveloped reserves at December 31, 2020, which was a decrease of 27.8 MMBoe from the prior year.

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.

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.

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.

There were no proved undeveloped reserves at December 31, 2021 and 2020.

For additional information regarding changes in proved reserves during each of the two years ended December 31, 2021 and 2020 see “Note 21—Supplemental Information on Oil and Natural Gas Producing Activities” to the accompanying consolidated financial statements in Item 8 of this report.

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.

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

Mid-Continent 1,144 2,694 23,552 7,764

Year Ended December 31, 2019

Mid-Continent 1,988 2,908 33,164 10,423

Mid-Continent.

The mid-continent interest are largely aggregated across the Mississippian Lime, Meramec and Osage formations.

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

The following table includes information regarding our net oil, natural gas and NGL production and certain price and cost information for each of the periods indicated.

For the years ended December 31, 2021 and 2020, NPB had 67 MBoe and 940 MBoe of oil production, respectively.

Year Ended December 31,

17 unchanged sentences

The following table presents the number of productive wells in which we owned a working interest at December 31, 2021.

We operate substantially all of our wells.

Productive wells consist of producing wells and wells capable of producing, including oil wells awaiting connection to production facilities and natural gas wells awaiting pipeline connections to commence deliveries.

We operate substantially all of our net wells.

Productive wells consist of wells that are currently producing hydrocarbons.

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.

2 unchanged sentences

Gross Net Gross Net Gross Net

Geographic Area

Mid-Continent 1,121 615 321 202 1,442 817

North Park Basin 48 48 — — 48 48

Total 1,108 639 334 198 1,442 837

Drilling Activity

The following table presents information with respect to wells completed during the periods indicated.

This information is not necessarily indicative of future performance, and should not be interpreted to present any correlation between the number of productive wells drilled and quantities or economic value of reserves found.

Productive wells are those that produce commercial quantities of hydrocarbons, regardless of whether they produce a reasonable rate of return.

During the year ended December 31, 2020, there were no wells drilled or completed.

Completed Wells

Productive 28 20.6

Total 28 20.6

Productive — —

Total 28 20.6

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.

During the years ended December 31, 2021 and 2020, there were no operated wells drilled.

There were no third-party rigs drilling on our operated acreage at December 31, 2021 or any wells awaiting completion.

Developed and Undeveloped Acreage

3 unchanged sentences

Gross Net Gross Net

Geographic Area

Mid-Continent 465,449 338,684 85,583 29,802

North Park Basin 18,676 18,443 78,981 71,223

Total 511,641 364,541 154,078 105,156

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.

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.

Less than 10% of the leases included in the undeveloped acreage above will expire at the end of their respective primary terms.

To prevent expiration, we may exercise our contractual rights to extend the terms of leases we value or may

establish production from the leasehold acreage prior to expiration, which would keep the lease from expiring until production has ceased.

As of December 31, 2021, the gross and net acres subject to leases in the undeveloped acreage above are set to expire as follows:

9 unchanged sentences

(1) Leases remaining in effect until development efforts or production on the particular lease has ceased.

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.

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.

We had three customers that each individually accounted for more than 10% of our total revenue during the 2020 period.

We sell our oil, natural gas and NGLs to a variety of customers, including oil and natural gas companies and trading and energy marketing companies.

We had two customers that each individually accounted for more than 10% of our total revenue during the 2021 period.

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.

The number of available purchasers and markets in the areas where we sell our production reduces the risk that loss of a single downstream customer would materially affect our sales.

We do not have any material commitments to deliver fixed and determinable quantities of oil and natural gas in the future under existing sales contracts or sales agreements.

6 unchanged sentences

We compete with other oil and natural gas companies for leases, equipment, personnel and markets for the sale of oil, natural gas and NGLs.

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.

We believe our leasehold acreage position, geographic concentration of operations and technical and operational capabilities enable us to compete with other development 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.

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.

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.

SEASONAL NATURE OF BUSINESS

16 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.

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.

These actions could have a material adverse effect on the Company and our industry.

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.

Further, we may be unable to pass on increased environmental compliance costs to our customers.

3 unchanged sentences

Hazardous Substances and Wastes

We currently own, lease, or operate, and in the past have owned, leased, or operated, properties that have been used in the exploration and production of oil and natural gas.

We currently own, lease, or operate, and in the past have owned, leased, or operated, sold or transferred properties that have been used in the exploration and production of oil and natural gas.

We believe we have utilized operating and disposal practices that were standard in the industry at the applicable time, but hazardous substances, hydrocarbons, and wastes may have been disposed or released on, from or under the properties owned, leased, or operated by us or on or under other locations where these substances and wastes have been taken for treatment or disposal.

22 unchanged sentences

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.

Subsequently, in November 2017, the EPA published a list of areas that are in compliance with the new ozone standards and separately in December 2017 issued responses to state recommendation for designating non-attainment areas.

In November 2017, the EPA published a list of areas that are in compliance with the new ozone standards and separately in December 2017 issued responses to state recommendation for designating non-attainment areas.

In November 2018, the EPA issued final rules implementing the non-attainment area designations.

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.

On December 31, 2020, EPA published its decision to retain the 2015 ozone standards;

While the EPA has determined that all counties in which we operate are in attainment with the 2015 ozone standard, these determinations may be revised in the future.

On December 31, 2020, EPA published its decision to

retain the 2015 ozone standards;

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.

EPA has announced that it intends to issue a proposed rule reconsidering its decision to retain the 2015 ozone standard by fall 2022 and a final rule by the end of 2023.

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.

9 unchanged sentences

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.

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.

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.

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 .

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.

These regulations have been challenged in federal court, and on August 30, 2021 the U.S.

District Court for the District of Arizona vacated and remanded the Navigable Waters Protection Rule.

On December 7, 2021, EPA and the Corps issued a proposed rule to revise the definition of WOTUS, which is expected to be finalized in late 2022 or early 2023.

The 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.

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.

Other states have undertaken studies, in some cases such as New Mexico in conjunction with the EPA, to assess the feasibility of recycling produced water on a large scale.

Other states have undertaken

studies, in some cases such as New Mexico in conjunction with the EPA, to assess the feasibility of recycling produced water on a large scale.

If such laws are adopted in areas where we conduct operations, our operating costs may increase significantly.

Furthermore, in response to recent seismic events near underground disposal wells used for the disposal by injection of produced water resulting from oil and natural gas activities, federal and some state agencies are investigating whether such wells have caused increased seismic activity, and some states have restricted, suspended or shut down the use of such disposal wells.

Furthermore, in response to past seismic events near underground disposal wells used for the disposal by injection of produced water resulting from oil and natural gas activities, federal and some state agencies are investigating whether such wells have caused increased seismic activity, and some states have restricted, suspended or shut down the use of such disposal wells.

For example, in Oklahoma, the Oklahoma Corporation Commission (“OCC”) has implemented a variety of measures including adopting the National Academy of Science’s “traffic light system,” pursuant to which the agency reviews new disposal well applications for proximity to faults, seismicity in the area and other factors in determining whether such wells should be permitted, permitted only with special restrictions, or not permitted.

21 unchanged sentences

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.

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 requirements for GHG emissions from certain large stationary sources that already are major sources of criteria pollutants under the CAA.

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 requirements for GHG emissions from certain large stationary sources that already are major sources of criteria pollutants under the CAA.

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.

6 unchanged sentences

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.

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.

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.

The Biden Administration 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.

On June 30, 2021, Congress issued a joint resolution pursuant to the Congressional Review Act disapproving the September 2020 rule, and on November 15, 2021, EPA issued a proposed rule to revise the Quad Oa regulations that, if finalized, would require methane emissions reductions and implementation of a fugitive emissions monitoring and repair program.

EPA has also announced its intention to issue a supplemental proposal in 2022 that may expand on or modify the 2021 proposal in response to public input.

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.

6 unchanged sentences

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.

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.

Moreover, several states where we operated as of December 31, 2021, 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.

We have the necessary equipment (pollution control equipment and optical gas imaging equipment for LDAR inspections) and personnel trained to assist with inspection and reporting requirements to maintain compliance with these rules.

In addition, a number of state and regional efforts are aimed at tracking and/or reducing GHG emissions by means of cap and trade programs that typically require major sources of GHG emissions to acquire and surrender emission allowances in return for emitting those GHGs.

1 unchanged sentence

However, the Paris Agreement does not impose any binding obligations on the United States.

In June 2017, President Trump announced that the United States would withdraw from the Paris Agreement, which became effective November 4, 2020.

President Joe Biden announced that the United States will rejoin the Paris Agreement as of January 20, 2021.

In June 2017, the United States announced it would withdraw from the Paris Agreement, which became effective November 4, 2020.

The United States has rejoined the Paris Agreement as of February 19, 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.

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.

Ultimately, this could make it more difficult to secure funding for exploration and production activities or increase the costs of such funding.

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.

4 unchanged sentences

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.

In addition, certain of our federal and state leases may contain stipulations that require us to take measures to safeguard certain species, including the sage grouse, and their habitats known to be located within the area of the lease.

Although the U.S.

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.

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.

Department of Interior (“DOI”) proposed in December 2018 revisions to the existing sage grouse conservation plan that, amongst other things, was intended to give the DOI and individual states flexibility to allow for increased activity in grouse habitat management areas encompassing parts of Colorado, Idaho, Nevada, Northern California, Oregon, Utah and Wyoming.

Several conservation groups challenged the rules, and on October 16, 2019, the U.S.

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.

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;

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 .

It is also possible that this review could result in the sage grouse being re-listed under the ESA in the future.

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.

In addition, certain of our federal and state leases may contain stipulations that require us to take measures to safeguard certain species.

Further, in February 2016, the USFWS published a final policy which alters how it identifies critical habitats for endangered and threatened species.

3 unchanged sentences

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 .

On October 27, 2021, the USFWS issued a proposal to rescind the December 2020 ruling, and the USFWS may finalize the rescission of the rule in 2022.

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.

3 unchanged sentences

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.

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 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.

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 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.

3 unchanged sentences

the drilling for, and the production and gathering of, oil and natural gas, including requirements relating to drilling permits, the location, spacing and density of wells, unitization and pooling of interests, the method of drilling, casing and equipping of wells, the protection of fresh water sources, the orderly development of common sources of supply of oil and natural gas, the operation of wells, allowable rates of production, the use of fresh water in oil and natural gas operations, saltwater injection and disposal operations, the plugging and abandonment of wells and the restoration of surface properties, the prevention of waste of oil and natural gas resources, the protection of the correlative rights of oil and natural gas owners and, where necessary to avoid unfair, unjust or discriminatory service, the fees, terms and conditions for the gathering of natural gas.

These regulations may affect the number and location of our wells and the amounts of oil and natural gas that may be produced from our wells, and increase the costs of our operations.

These regulations may affect the number and location of our wells and the amounts of oil and natural gas that

may be produced from our wells, and increase the costs of our operations.

Moreover, obtaining or renewing permits and other approvals for operating on Native American lands can take substantial amounts of time, and could result in increased costs or delays to our operations.

16 unchanged sentences

The BLM issued a final rule repealing the 2015 hydraulic fracturing rule in December 2017.

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 .

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.

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.

At the state level, some states, including Oklahoma and Kansas, 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.

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.

13 unchanged sentences

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.

There have not been any incidents, citations or suits related to our hydraulic fracturing activities involving material environmental concerns.

depths below the potable water sources.

We are not aware of any incidents, citations or suits related to our hydraulic fracturing activities involving material environmental concerns.

OTHER REGULATION OF THE OIL AND NATURAL GAS INDUSTRY

19 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.

In some instances, forced pooling or unitization may be implemented by third parties

and may reduce our interest in the unitized properties.

In some instances, forced pooling or unitization may be implemented by third parties 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.

6 unchanged sentences

The interstate transportation and sale for resale of oil and natural gas is subject to federal regulation, including regulation of the terms, conditions and rates for interstate transportation, storage and various other matters, primarily by the Federal Energy Regulatory Commission (“FERC”).

Federal and state regulations govern the price and terms for access to oil and natural gas pipeline transportation.

Federal and state regulations govern the price and terms for access to oil and natural gas pipeline

transportation.

The FERC’s regulations for interstate oil and natural gas transmission in some circumstances may also affect the intrastate transportation of oil and natural gas.

29 unchanged sentences

Every five years, the FERC must examine the relationship between the annual change in the applicable index and the actual cost changes experienced in the oil pipeline industry.

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.

As of March 1, 2021, we had 103 full-time employees, including 87 field employees and 16 corporate employees.

As of December 31, 2020, we had 114 full-time employees, including 98 field employees and 16 corporate employees.

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.

As of March 3, 2022 and December 31, 2021, we had 101 full-time employees, including 85 field employees and 16 corporate employees.

At December 31, 2020, we had 114 full-time employees, including 98 field employees and 16 corporate employees.

5 unchanged sentences

We evaluate our processes to ensure our protection schemes and work practices minimize these risks.

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.

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.

Furthermore, we routinely evaluate our HSE processes, systems, equipment and other factors to ensure they remain aligned with our focus on risk reduction, and get us closer to zero incidents.

During 2021, our experience and continuing focus on workplace safety has 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.

What changed 10-K

Item 1. Business