What changed in this filing

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Item 1A. Risk Factors

2022-03-10 compared with 2021-03-04 · 108 added, 70 removed, 349 unchanged (34% of the section changed)

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• the amount of exports from the U.S.;

and worldwide political and economic conditions;

and worldwide political and economic conditions, including armed conflict and related sanctions;

• the level of global and U.S.

inventories and reserves;

• weather conditions and seasonal trends;

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dollar to other currencies;

• inflation and ability to acquire critical material, equipment or services in a timely or cost effective manner;

• availability of capital or level of hedging across the energy industry in the U.S.

and internationally.

These factors and the volatility of the energy markets, which we expect will continue, make it extremely difficult to predict future oil, natural gas and NGL price movements with any certainty.

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For NGLs, prices exhibited similar volatility from January 2017 through December 2021.

A buildup in inventories, lower sustained global demand, or other unexpected factors could cause prices for U.S.

oil, natural gas and NGLs to further weaken, which could negatively affect our cash flows and results of operations.

For instance, crude oil prices have experienced downward pressure during the year ended 2020 as a result of decreasing demand from the growing impact of the coronavirus pandemic, among other factors.

Under such conditions, revenues may be negatively affected, and the amount of oil, natural gas and NGLs we can produce economically may be reduced, causing us to make substantial downward adjustments to our estimated proved reserves and having a material adverse effect on our financial condition and results of operations.

Drilling for and producing oil and natural gas are high risk activities with many uncertainties that could adversely affect our business, financial condition or results of operations.

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The estimated cost of drilling, completing and operating wells is uncertain before drilling commences.

Overruns in budgeted expenditures are common risks that can make a particular project uneconomical.

In addition, our drilling and producing operations may be curtailed, delayed or canceled as a result of various factors, including the following:

Overruns in budgeted expenditures are common risks that can make a

particular project uneconomical.

In addition, our drilling and producing operations may be curtailed, delayed or canceled as a result of various factors, including among others the following:

• reductions in oil, natural gas and NGL prices;

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• market and midstream limitations for oil, natural gas and NGLs;

• unexpected subsurface conditions;

• lack of hydrocarbon content;

• low pressure, depletion from existing wells, parent / child effect, or other conditions that may reduce ultimate recovery of reserves.

Certain of these risks can cause substantial losses, including personal injury or loss of life, damage to or destruction of property, natural resources and equipment, environmental contamination or loss of wells and regulatory fines or penalties.

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The availability of a ready market for our oil, natural gas and NGL production depends on a number of factors, including the demand for and supply of oil, natural gas and NGLs and the proximity of reserves to pipelines and terminal facilities.

Our ability to market our production depends, in

substantial part, on the availability and capacity of gathering systems, pipelines and treating facilities for oil, natural gas and NGLs as well as gathering systems, treating facilities and disposal wells for water produced alongside the hydrocarbons.

Our ability to market our production depends, in substantial part, on the availability and capacity of gathering systems, pipelines and treating facilities for oil, natural gas and NGLs as well as gathering systems, treating facilities and disposal wells for water produced alongside the hydrocarbons.

Our failure to obtain such services on acceptable terms in the future or to expand our midstream assets could have a material adverse effect on our business.

We may be required to shut in wells for a lack of a market or because access to natural gas pipelines, gathering system capacity, treating facilities or disposal wells may be limited or unavailable.

We may be required to shut in wells for a lack of a market or because access to natural gas pipelines,

gathering system capacity, treating facilities or disposal wells may be limited or unavailable.

We would be unable to realize revenue from any shut-in wells until production arrangements were made to deliver the production to market.

A financial downturn could negatively affect our business, results of operations, financial condition and liquidity.

Actual or anticipated declines in domestic or foreign economic growth rates, regional or worldwide increases in tariffs or other trade restrictions, turmoil affecting the U.S.

or global financial system and markets and a severe economic contraction either regionally or worldwide, resulting from current efforts to contain the COVID-19 coronavirus or other factors, could materially affect our business and financial condition and impact our ability to finance operations by worsening the actual or anticipated future drop in worldwide commodity demand, negatively impacting the price we receive for our oil and natural gas production.

Negative economic conditions could also adversely affect the collectability of our trade receivables or performance by our vendors and suppliers.

All of the foregoing may adversely affect our business, financial condition, results of operations, and cash flows.

Future drilling activities face substantial uncertainties.

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Our acreage must be drilled before lease expiration, generally within three to five years of the original date of the lease, in order to hold the acreage by production.

In a highly competitive market for acreage, failure to drill sufficient wells to hold acreage may result in a substantial lease renewal cost, or if renewal is not feasible or economically desirable, loss of our lease and prospective drilling opportunities.

In a highly competitive market for acreage, failure to drill sufficient wells to hold acreage may result in additional renewal cost, or if renewal is not feasible or economically desirable, loss of our lease and prospective drilling opportunities.

Leases on our oil and natural gas properties typically have a term of three to five years, after which they expire unless, prior to expiration, production is established within the spacing units covering the undeveloped acres, or the leases are renewed.

The cost to renew such leases may increase significantly, and we may not be able to renew such leases on commercially reasonable terms or at all.

Unless we increase our current drilling program, we could lose undeveloped acreage through lease expirations.

Unless we begin drilling, we could lose undeveloped acreage through lease expirations.

Our reserves and future production and, therefore, our future cash flow and income are highly dependent on successfully developing our undeveloped leasehold acreage and the loss of any leases could materially and adversely affect our ability to develop such acreage.

Our development operations require substantial capital.

We may be unable to obtain needed capital or financing on satisfactory terms, which could lead to a loss of properties and a decline in our oil, natural gas and NGL reserves, which would adversely affect our business, financial condition and results of operations.

Our development operations or ability to acquire oil and gas properties and reserves require substantial capital.

Outside our cash assets, we may be unable to obtain needed capital or financing on satisfactory terms, which could lead to a loss of properties and our ability to offset the natural decline in our oil, natural gas and NGL reserves, which would adversely affect our business, financial condition and results of operations.

The oil and natural gas industry is capital intensive.

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We make substantial capital expenditures in our business and operations for the acquisition, development and production of oil, natural gas and NGL reserves.

Historically, we have financed capital expenditures primarily with cash generated by operations, borrowings on our New Credit Facility as well as our Prior Credit Facility and proceeds from asset sales.

In particular, cash flow from operations was $36.2 million and $121.3 million for the years ended December 31, 2020 and 2019, respectively.

Historically, we have financed capital expenditures primarily with cash generated by operations, credit facility borrowings and proceeds from asset sales.

In particular, cash flow from operations were $110.3 million and $36.2 million for the years ended December 31, 2021 and 2020, respectively.

The capital markets that we have historically accessed have recently been and may continue to be constrained to such an extent that debt or equity capital raises are practically unfeasible.

If the debt and equity capital markets are not accessible or if our ability to draw on our New Credit Facility is compromised, we may be unable to implement our development plans or otherwise carry out our business strategy as expected.

If the debt and equity capital markets are not accessible, we may be unable to implement our development plans or otherwise carry out our business strategy as expected.

Our cash flow from operations and access to capital are subject to a number of variables, including:

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The full cost ceiling is evaluated at the end of each quarter using the SEC prices, adjusted for the impact of derivatives accounted for as cash flow hedges, if any.

The Company incurred full cost ceiling impairment charges of $218.4 million and $409.6 million for the years ended December 31, 2020 and December 31, 2019, respectively.

The Company did not recognize any full cost ceiling impairment charges for the year ended December 31, 2021.

The Company incurred full cost ceiling impairment charges of $218.4 million for the year ended December 31, 2020.

Cumulative full cost ceiling impairment from the Emergence Date through December 31, 2021 totaled $947.1 million.

If oil, natural gas and NGL prices decline further in the near term, and without other mitigating circumstances, we may experience addit ional losses of future net revenues, including losses attributable to quantities that cannot be economically produced at lower prices, which would likely cause us to record additional write-downs of capitalized costs of oil and natural gas properties and non-cash charges against future earnings.

If oil, natural gas and NGL prices decline further in the near term, and without other mitigating circumstances, we may experience additional losses of future net revenues, including losses attributable to quantities that cannot be economically produced at lower prices, which would likely cause us to record additional write-downs of capitalized costs of oil and natural gas properties and non-cash charges against future earnings.

The amount of such future write-downs and non-cash charges could be substantial.

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Additionally, we remain a nominal defendant in certain litigation matters discussed in Item 3.

“Legal Proceedings,” for the purposes of fulfilling indemnification obligations for legal expenses, including any settlement amounts, to certain former officers of the Company and the SandRidge Mississippian Trust

The defense of these actions has been and may continue to be both time consuming and expensive.

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Our failure to successfully defend or settle any litigation or legal proceedings could result in liability that, to the extent not covered by our insurance, could have a material effect on our business, financial condition and results of operations.

The agreements governing our New Credit Facility have restrictions and financial covenants, which could adversely affect our operations.

The agreements governing our New Credit Facility restrict our ability to, among other things, obtain additional financing, incurrence of liens, indebtedness, asset dispositions, fundamental changes, restricted payments and other customary covenants.

The New Credit Facility also requires us to comply with certain financial covenants and ratios.

See additional discussion of the New Credit Facility under “Indebtedness—Credit Facilities.” Persistent depressed oil or natural gas prices or further declines in such prices, without other mitigating circumstances, could prevent us from complying with the financial covenants under the New Credit Facility.

Our failure to comply with any of the restrictions and covenants under the New Credit Facility or other debt financings could result in a default under those instruments, which, if left uncured, could lead to an event of default.

Such an event of default could, among other things, result in all of our existing indebtedness becoming immediately due and payable.

Additionally, an event of default under one of our financing instruments could trigger cross-default provisions under our other financing instruments.

The application of the remedies under the financing instruments could have a material adverse effect on our financial position.

We may not have the financial resources in the future to make any mandatory principal prepayments under the New Credit Facility, which are required, for example, when the committed line of credit is exceeded, proceeds of asset sales in new oil and natural gas properties are not reinvested, or indebtedness that is not permitted by the terms of the New Credit Facility is incurred.

If any future indebtedness under our New Credit Facility were to be accelerated, our assets may not be sufficient to repay such indebtedness in full.

It is unclear how changes in the regulation of LIBOR or the discontinuation of LIBOR all together may affect our financing costs in the future.

Our New Credit Facility bears interest based on a pricing grid tied, in part, to the London Interbank Offered Rate (“LIBOR”).

On July 27, 2017, the United Kingdom’s Financial Conduct Authority (the "FCA"), which regulates LIBOR, announced that it does not intend to continue to persuade, or use its powers to compel, panel banks to submit rates for the calculation of LIBOR after 2021.

It is not possible to predict whether, and to what extent, panel banks will continue to provide LIBOR submissions to the administrator of LIBOR after this time, which may cause LIBOR to perform differently than it did in the past and have other consequences which cannot be predicted.

In addition, any other legal or regulatory changes made by the FCA, ICE Benchmark Administration Limited, the European Money Markets Institute (formerly Euribor-EBF), the European Commission or any other successor governance or oversight body, or future changes adopted by such body, in the method by which LIBOR is determined or the transition from LIBOR to a successor benchmark may result in, among other things, a sudden or prolonged increase or decrease in LIBOR, a delay in the publication of LIBOR, and changes in the rules or methodologies in LIBOR, which may discourage market participants from continuing to administer or to participate in LIBOR’s determination.

This could result in LIBOR no longer being determined and published.

If a published U.S.

dollar LIBOR rate is unavailable after 2021, the interest rate on our New Credit Facility will need to be determined using alternative methods, which may result in interest obligations which are more than or do not otherwise correlate over time with the payments that would have been made on any outstanding debt under the facility if U.S.

dollar LIBOR was available in its current form.

Further, the same costs and risks that may lead to the discontinuation or unavailability of U.S.

dollar LIBOR may make one or more alternative methods of calculating interest impossible or impracticable to determine.

As a result, any of these consequences may have an adverse effect on our financing costs.

Changes affecting the availability of the London Inter-bank Offered Rate (“LIBOR”) may have consequences for us that cannot yet be reasonably predicted.

The LIBOR benchmark has been the subject of national, international and other regulatory guidance and proposals to reform.

In July 2017, the United Kingdom Financial Conduct Authority (the authority that regulates LIBOR) announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021.

In March 2021, ICE Benchmark Administration, the administrator for LIBOR, ceased publishing United States Dollar LIBOR (“USD LIBOR”) for one week and two-month tenors after December 31, 2021, and confirmed its intention to cease all remaining USD LIBOR tenors after June 30, 2023.

Concurrently, the United Kingdom Financial Conduct Authority announced the cessation or loss of representativeness of the USD LIBOR tenors from those dates.

The Alternative Reference Rates Committee, a group of market participants convened by the United States Federal Reserve Board and the Federal Reserve Bank of New York, has recommended the Secured Overnight Financing Rate (“SOFR”), a rate calculated based on repurchase agreements backed by United States Treasury securities, as its recommended alternative benchmark rate to replace USD LIBOR.

At this time, it is not known whether or when SOFR or other alternative reference rates will attain market traction as replacements for LIBOR.

These reforms may cause LIBOR to perform differently than it has in the past, and LIBOR will cease to exist after June 30, 2023.

After the cessation of LIBOR, alternative benchmark rates will replace LIBOR and could affect our debt securities, debt payments and receipts.

At this time, it is not possible to predict the effect of any changes to LIBOR, any phase out of LIBOR or any establishment of alternative benchmark rates.

Any new benchmark rate will likely not replicate LIBOR exactly, which could impact our contracts that terminate after June 30, 2023.

There is uncertainty about how applicable law and the courts will address the replacement of LIBOR with alternative rates on variable rate retail loan contracts and other contracts that do not include alternative rate fallback provisions.

After June 30, 2023, the interest rates on our revolving credit facility and our term loan facility will be based on the Base Rate or an alternative benchmark rate (which may or may not be based on SOFR), which may result in higher interest rates.

In addition, any changes to benchmark rates may have an uncertain impact on our cost of funds and our access to the capital markets, which could impact our results of operations and cash flows.

Uncertainty as to the nature of such potential changes may also adversely affect the trading market for our securities.

The present value of future net cash flows from our proved reserves calculated in accordance with SEC guidelines are not the same as the current market value of our estimated oil, natural gas and NGL reserves.

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

During 2020, we did not drill any wells.

Production of oil, natural gas and NGLs could be materially and adversely affected by natural disasters or severe weather.

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The capital markets could be volatile, and such volatility could adversely affect our ability to obtain capital, cause us to incur additional financing expense or affect the value of certain assets.

During and following the 2008 global financial crisis, financial and capital markets were volatile due to multiple factors, including significant losses in the financial services sector and uncertain and rapidly changing access to capital and other economic conditions both in the U.S.

and globally.

In some cases, financial markets produced downward pressure on stock prices and credit capacity for certain issuers without regard to those issuers’ underlying financial and/or operating strength.

Volatility in the capital markets can significantly increase the cost of raising money in the debt and equity capital markets.

Future market volatility, generally, and persistent weakness in commodity prices may adversely affect our ability to access capital and credit markets or to obtain funds at low interest rates or on other advantageous terms.

Generally, future market volatility and risk of persistent weakness in commodity prices may adversely affect our ability to access capital and credit markets or to obtain funds at low interest rates or on other advantageous terms.

These factors may adversely affect our business, results of operations or liquidity.

These factors may also adversely affect the value of certain of our assets and ability to draw on our New Credit Facility.

Adverse credit and capital market conditions may require us to reduce the carrying value of assets associated with any derivative contracts to account for non-performance by, or increased credit risk from, counterparties to those contracts.

If financial institutions that extended credit commitments to us are adversely affected by volatile conditions of the U.S.

and international capital markets, they may become unable to fund borrowings under their credit commitments to us, which could have a material adverse effect on our financial condition and ability to borrow additional funds, if needed, for working capital, capital expenditures and other corporate purposes.

and international capital markets, they may become unable to fund borrowings under their credit commitments to us, which could have a material adverse effect on our financial condition and ability to borrow funds, if needed, for working capital, capital expenditures and other corporate purposes.

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

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A significant portion of our operations are located in the Mid-Continent region, making us vulnerable to risks associated with operating in a limited number of major geographic areas.

As of December 31, 2020, approximately 90.5% of our proved reserves and approximately 89.2% of our annual production was located in the Mid-Continent.

Substantially all of our production and reserves were located in the Mid-Continent region.

We divested all of our North Park Basin assets in February 2021, making substantially all of our future proved reserves and production located in the Mid-Continent.

This concentration could disproportionately expose us to operational and regulatory risk in this area.

This relative lack of diversification in location of our key operations could expose us to adverse developments in the Mid-Continent or the oil and natural gas markets, including, for example, transportation or treatment capacity constraints, curtailment of production due to weather, electrical outages, treatment plant closures for scheduled maintenance, changes in the regulatory environment or other factors.

This relative

lack of diversification in location of our key operations could expose us to adverse developments in the Mid-Continent or the oil and natural gas markets, including, for example, transportation or treatment capacity constraints, curtailment of production due to weather, electrical outages, treatment plant closures for scheduled maintenance, changes in the regulatory environment or other factors.

These factors could have a significantly greater impact on our financial condition, results of operations and cash flows than if our properties were more diversified.

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If we are not able to lease those locations on acceptable terms, we will have made substantial expenditures to acquire and analyze 2-D and 3-D seismic data without having an opportunity to benefit from those expenditures.

Inflation may adversely affect us by increasing costs beyond what we can recover through price increases and limit our ability to enter into future traditional debt financing.

Inflation can adversely affect us by increasing costs of critical materials, equipment, labor, and other services.

In addition, inflation is often accompanied by higher interest rates.

Continued inflationary pressures could impact our profitability.

Inflation may also affect our ability to enter into future traditional debt financing, as high inflation may result in an increase in cost.

As we outsource functions, we become more dependent on the entities performing those functions.

Disruptions or delays at our third-party service providers could adversely impact our operations.

As part of our long-term profitable growth strategy, we are continually looking for opportunities to provide essential business services in a more cost-effective manner.

In some cases, this requires the outsourcing of functions or parts of functions that can be performed more effectively by external service providers.

For example, we currently outsource a significant portion of our accounting functions to third-party service providers.

While we believe we conduct appropriate diligence before entering into agreements with any outsourcing entity, the failure of one or more of such entities to meet our performance standards and expectations, including with respect to providing services on a timely basis or providing services at the prices we expect, may have an adverse effect on our results of operations or financial condition.

For example, our outsourcing entities and other third-party service providers may experience difficulties, disruptions, delays, or failures in their ability to deliver services to us as a result of the COVID-19 pandemic.

We could face increased costs or disruption associated with finding replacement vendors or hiring new employees in order to return these services in-house, which may have a significant impact on the cost of operations.

Any failures of these vendors to properly deliver their services could similarly have a material effect on our business.

We may outsource other functions in the future, which would increase our reliance on third parties.

We are subject to complex federal, state, local and other laws and regulations that could adversely affect the cost, manner or feasibility of conducting our operations or expose us to significant liabilities.

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Under the EPAct 2005 and implementing regulations, the FERC prohibits market manipulation in connection with the purchase or sale of natural gas.

The CFTC has similar authority under the Commodity Exchange Act and regulations it has promulgated thereunder with respect to certain segments of the physical and futures energy commodities market including oil and natural gas.

and natural gas.

The FTC also prohibits manipulative or fraudulent conduct in the wholesale petroleum market with respect to sales of commodities, including crude oil, condensate and natural gas liquids.

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The FERC has also imposed requirements related to reporting of natural gas sales volumes that may impact the formation of prices indices.

Additional rules and legislation

pertaining to these and other matters may be considered or adopted from time to time.

Additional rules and legislation pertaining to these and other matters may be considered or adopted from time to time.

Our failure to comply with these or other laws and regulations administered by these agencies could subject us to criminal and civil penalties, as described in Item 1.

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The agency proposed a rulemaking in June 2017 to stay the requirements for a period of two years 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.

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.

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.

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 will continue to require oil and gas operators to expend material sums.

In addition, in November 2016, the BLM issued final rules to reduce methane emissions from venting, flaring, and leaks during oil and gas operations on public lands that are substantially similar to the EPA Quad Oa requirements.

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Further, in September 2018, the BLM published a final rule to revise or rescind certain provisions of the 2016 rule.

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.

While, as a result of these developments, future implementation of the EPA and BLM methane rules is uncertain, given the long-term trend towards increasing regulation, future federal GHG regulations of the oil and gas industry remain a possibility.

Moreover, several states where we operate or have operated, including Colorado, have already adopted further rules regarding LDAR programs and methane emissions.

Compliance with these rules could require us to purchase pollution control equipment, optical gas imaging equipment for LDAR inspections, and to hire additional personnel to assist with inspection and reporting requirements.

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, there are a number of state and regional efforts that 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.

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Finally, to the extent increasing concentrations of GHGs in the Earth’s atmosphere may produce climate changes that could have significant physical effects, such as increased frequency and severity of storms, droughts, floods and other climatic events, such events could have a material adverse effect on our assets and operations, and potentially subject us to greater regulation.

Carbon capture technology and sequestration is not currently deployed on a wide-spread basis, and regulations are not developed.

Carbon capture and sequestration of the CO2 is an emerging technology.

While the technology to capture CO2 from refining is available, it is not in wide-spread use.

Sequestering the CO2 after it is captured in underground formations is a new technology and the regulations and legal framework is evolving.

Today the technical, legal and regulatory framework for injecting CO2 may change dramatically over time and may adversely impact our business model.

Our failure to maintain an adequate system of internal control over financial reporting, could adversely affect our ability to accurately report our results.

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In addition, our hedging arrangements may expose us to the risk of financial loss in certain circumstances, including instances in which the contract counterparties fail to perform under the contracts.

Further, to date, we have not designated and do not currently plan to designate any of our derivative contracts as hedges for accounting purposes and, as a result, record all derivative contracts on our balance sheet at fair value with changes in fair value recognized in current period earnings.

recognized in current period earnings.

Accordingly, our earnings may fluctuate significantly as a result of changes in the fair value of our derivative contracts.

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There are some exceptions to these requirements for entities that use swaps to hedge or mitigate commercial risk.

However, although we may qualify for exceptions, our derivatives counterparties may be subject to new capital, margin and

business conduct requirements imposed as a result of the Dodd-Frank Act, which may increase our transaction costs or make it more difficult for us to enter into hedging transactions on favorable terms.

The full impact of the Dodd-Frank Act and related regulatory requirements upon our business will not be known until the regulations are implemented and the market for derivatives contracts has adjusted.

However, although we may qualify for exceptions, our derivatives counterparties may be subject to new capital, margin and business conduct requirements imposed as a result of the Dodd-Frank Act, which may increase our transaction costs or make it more difficult for us to enter into hedging transactions on favorable terms.

The Dodd-Frank Act and any new regulations could significantly increase the cost of derivative contracts, materially alter the terms of derivative contracts, reduce the availability of derivatives to protect against risks we encounter and reduce our ability to monetize or restructure derivative contracts.

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We undertake ongoing improvements to our systems, connected devices and information-sharing products in order to minimize vulnerabilities, in accordance with industry and regulatory standards;

however, because the techniques used to obtain unauthorized access change frequently and can be difficult to detect, anticipating, identifying or preventing these intrusions or mitigating them if and when they occur is challenging and makes us more vulnerable to cyber-attacks than other companies not similarly situated.

however, because the techniques used to obtain unauthorized access change frequently and can be difficult to detect,

anticipating, identifying or preventing these intrusions or mitigating them if and when they occur is challenging and makes us more vulnerable to cyber-attacks than other companies not similarly situated.

If our security measures are circumvented, proprietary information may be misappropriated, our operations may be disrupted, and our computers or those of our customers or other third parties may be damaged.

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Terrorist activities, anti-terrorist efforts or other armed conflict involving the United States or its interests abroad may adversely affect the United States and global economies and could prevent us from meeting our financial and other obligations.

If events of this nature occur and persist, the attendant political instability and societal disruption could reduce overall demand for oil and natural gas, potentially putting downward pressure on prevailing oil and natural gas prices and causing a reduction in

our revenues.

Oil and natural gas production facilities, transportation systems and storage facilities could be direct targets of terrorist attacks, and/or operations could be adversely impacted if infrastructure integral to our operations is destroyed by such attacks.

Costs for insurance and other security may increase as a result of these threats, and some insurance coverage may become more difficult to obtain, if available at all.

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

Fuel conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to oil and natural gas, technological advances in fuel economy and energy generation devices could reduce demand for oil and natural gas.

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

Risks Relating to COVID-19

The COVID-19 pandemic has adversely affected our business, and the ultimate effect on our operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted.

The COVID-19 pandemic could adversely affected our business, and the ultimate effect on our operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted.

The COVID-19 pandemic has adversely affected the global economy, disrupted global supply chains and created significant volatility in the financial markets.

In addition, the pandemic has resulted in travel restrictions, business closures and the institution of quarantining and other restrictions on movement in many communities.

As a result, there has been a significant reduction in demand for and prices of crude oil, natural gas and NGL.

As a result, there was a significant reduction in demand for and prices of crude oil, natural gas and NGL.

If the reduced demand for and prices of crude oil, natural gas and NGL continue for a prolonged period, our operations, financial condition, cash flows, level of expenditures and the quantity of estimated proved reserves that may be attributed to our properties may be materially and adversely affected.

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The extent to which the COVID-19 pandemic adversely affects our business, results of operations, and financial condition will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic.

Risks Relating to our Net Operating Loss Carryforwards ("NOLs")

Price Fluctuations, Global Supply Chain Disruptions and Inflation may Adversely Impact our Results of Operations.

With the global economic uncertainty surrounding the COVID-19 pandemic and its severity and duration and supply chain disruptions, we may continue to incur significant prices increases in the future which would likely have an adverse effect on our operating margins.

The disruptions to the global economy in 2020 and into 2021 have impeded global supply chains, resulting in longer lead times and also increased costs.

We have taken steps to minimize the impact of these increased costs by working closely with our suppliers.

Despite the actions we have undertaken to minimize the impacts from disruptions to the global economy, there can be no assurances that unforeseen future events in the global supply chain, and inflationary pressures, will not have a material adverse effect on our business, financial condition and results of operations.

Labor shortages and increased turnover or increases in employee and employee-related costs could have adverse effects on our profitability.

While we have historically experienced some level of ordinary course turnover of employees, the COVID-19 pandemic and resulting actions and impacts have exacerbated labor shortages and increased turnover.

A number of factors have had and may continue to have adverse effects on the labor force available to us, including reduced employment pools, federal unemployment subsidies, including unemployment benefits offered in response to the COVID-19 pandemic, and other government regulations, which include laws and regulations related to workers’ health and safety, wage and hour practices.

Labor shortages and increased turnover rates within our team members have led to and could in the future lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees and could negatively affect our ability to efficiently operate our production facilities or otherwise operate at full capacity.

An overall or prolonged labor shortage, lack of skilled labor, increased turnover or labor inflation could have a material adverse impact on our operations, results of operations, liquidity or cash flows.

Risks Relating to our NOLs

Our ability to use our NOLs may be limited.

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If we are limited in our ability to use our NOLs in future years in which we have taxable income, we will pay more taxes than if we were able to utilize our NOLs fully.

On July 1, 2020, our Board of Directors approved, and the Company adopted, a Tax Benefits Preservation Plan in order to protect shareholder value against a possible limitation on the Company’s ability to use its tax NOLs and certain other tax benefits to reduce potential future U.S.

On July 1, 2020, our Board of Directors approved, and the Company adopted, as amended on March 16, 2021 a Tax Benefits Preservation Plan in order to protect shareholder value against a possible limitation on the Company’s ability to use its tax NOLs and certain other tax benefits to reduce potential future U.S.

federal income tax obligations.

The Tax Benefits Preservation Plan is designed to reduce the likelihood of an “ownership change” in order to protect our NOLs by deterring any person or group from acquiring beneficial ownership of 4.9% or more of the Company’s securities.

The Tax Benefits Preservation Plan was approved at the 2021 annual meeting of stockholders on May 25, 2021.

The Tax Benefits Preservation Plan is designed to reduce the likelihood of an “ownership change” as defined under Section 382 of the IRC in order to protect our NOLs by deterring any person or group from acquiring beneficial ownership of 4.9% or more of the Company’s securities.

However, there is no assurance that the Tax Benefits Preservation Plan will prevent all transfers that could result in such an “ownership change.”

7 unchanged sentences

We have adopted a Tax Benefits Preservation Plan, which may discourage a corporate takeover.

On July 1, 2020, our Board of Directors adopted a Tax Benefits Preservation Plan and declared a dividend distribution of one right for each outstanding share of our common stock to stockholders of record at the close of business on July 13, 2020.

On July 1, 2020, our Board of Directors adopted a Tax Benefits Preservation Plan as amended on March 16, 2021 and declared a dividend distribution of one right for each outstanding share of our common stock to stockholders of record at the close of business on July 13, 2020.

The Tax Benefits Preservation Plan was approved at the 2021 annual meeting of stockholders on May 25, 2021.

Each share of our common stock issued thereafter will also include one right.

Each right entitles its holder, under certain circumstances, to purchase from us one one-thousandth of a share of our Series A Junior Participating Preferred Stock at an exercise price of $5.00 per right, subject to adjustment.

Each right entitles

its holder, under certain circumstances, to purchase from us one one-thousandth of a share of our Series A Junior Participating Preferred Stock at an exercise price of $5.00 per right, subject to adjustment.

The Board adopted the Tax Benefits Preservation Plan in an effort to protect stockholder value by attempting to protect against a possible limitation on our ability to use our NOLs.

17 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors