What changed in this filing

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Item 1A. Risk Factors

2024-03-07 compared with 2023-03-15 · 41 added, 64 removed, 423 unchanged (20% of the section changed)

20 unchanged sentences

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

◦ Our business could be affected by macroeconomic risks

◦ Capital market volatility could adversely affect our ability to obtain capital, cause us to incur additional financing expense or affect the value of certain assets

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◦ Our derivative activities could result in financial losses and are subject to new derivatives legislation and regulation, which could adversely affect our ability to hedge risks associated with our business

◦ Cyber-attacks or other failures in telecommunications or IT systems could result in information theft, data corruption and significant disruption of our business operations

◦ Cybersecurity incidents or other failures in telecommunications or IT systems could result in information theft, data corruption and significant disruption of our business operations

◦ Repercussions from terrorist activities or armed conflict could harm our business

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

◦ Events outside of our control, including an epidemic or outbreak of an infectious disease, such as COVID-19, may materially adversely affect our business

◦ Events outside of our control, including an epidemic or outbreak of an infectious disease, may materially adversely affect our business

• Risks Relating to our NOLs

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For oil, from January 2019 through December 2023, the NYMEX West Texas Intermediate ("WTI") settled price fluctuated between a high of $123.64 per Bbl and a low of $(36.98) per Bbl.

For natural gas, from January 2018 through December 2022, the month-end NYMEX Henry Hub settled price fluctuated between a high of $24.74 per Mcf and a low of $1.38 per Mcf.

For natural gas, from January 2019 through December 2023, the NYMEX Henry Hub spot prices fluctuated between a high of $24.77 per Mcf and a low of $1.38 per Mcf.

In addition, the market price of natural gas is generally higher in the winter months than during other months of the year due to increased demand for natural gas for heating purposes during the winter season.

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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 a variety of factors including COVID-19, could materially affect our business and financial condition and impact our ability to finance operations or acquisitions 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.

or global financial system and markets and a severe economic contraction either regionally or worldwide, resulting from a variety of factors could materially affect our business and financial condition and impact our ability to finance operations or acquisitions 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.

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If we are unable to establish production in paying quantities on or renew such leases, those leases will expire, and we will lose our right to participate in the development of the subject leases, which may adversely affect our results of operations.

As of December 31, 2022, we hold approximately 365,000 total net acres (including developed and undeveloped net acres), of which 27,011 net aces is undeveloped.

As of December 31, 2023, we hold 364,201 total net acres (including developed and undeveloped net acres), of which 26,070 net aces is undeveloped.

Of our undeveloped acreage, less than 5% are subject to expiration at the end of their primary terms.

2 unchanged sentences

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

Outside of our cash assets, we may be unable to obtain needed capital or financing on satisfactory terms, which could lead to a loss in 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.

Outside of our cash assets, if we need to obtain additional capital, we may be unable to obtain needed capital or financing on satisfactory terms, which would lead to a loss in 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.

Our future oil, natural gas and NGL reserves and production, and therefore our cash flow and income, are highly dependent on our success in efficiently developing and exploiting our current estimated proved reserves and finding or acquiring additional economically recoverable reserves.

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, credit facility borrowings and proceeds from asset sales.

Our future oil, natural gas and NGL reserves and production are naturally depleting resources, which in turn impacts our cash flow and income.

Our ability to offset these declines may be highly dependent on our success in efficiently developing our undeveloped assets, and finding or acquiring additional economically recoverable reserves.

We have historically utilized substantial capital expenditures in our business and operations for the acquisition, development and production of oil, natural gas and NGL reserves, and have financed capital expenditures primarily from cash generated by operations, credit facility borrowings and proceeds from asset sales.

In particular, cash flow from operations were $115.6 million and $164.7 million for the years ended December 31, 2023 and 2022, 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, we may be unable to implement our development plans or otherwise carry out our business strategy as expected.

We are not actively trying to raise debt or equity capital at this time, with current projected activity for the year financed by cash flow from operations or cash held on the balance sheet.

However, a change in economic conditions or the need to access additional capital may be necessary in the future, and if the debt and 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:

14 unchanged sentences

Cumulative full cost ceiling impairment from the Emergence Date through December 31, 2023 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 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.

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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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.

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

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.

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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 a variety of factors including COVID-19.

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 our cost of operations.

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In order to conduct our operations in compliance with these laws and regulations, we must obtain and maintain numerous permits, approvals and certificates from various federal, state and local governmental authorities.

We may incur substantial costs in order to maintain compliance with these laws and regulations.

We may incur substantial costs in order to maintain compliance with these laws and regulations and permits issued pursuant thereto.

As a result of recent incidents involving the release of oil and natural gas and fluids as a result of drilling activities in the United States, there have been a variety of regulatory initiatives at the federal and state levels to restrict oil and natural gas drilling operations in certain locations.

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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.

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.

“Business— Other Regulation of the Oil and Natural Gas Industry.”

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Under certain environmental laws and regulations, we could be subject to strict, and/or joint and several liability for the investigation, removal or remediation of previously released materials or property contamination, regardless of whether we were responsible for the release or contamination or whether the operations were in compliance with all applicable laws at the time those actions were taken.

Private parties, including the owners of properties upon which our wells are drilled or facilities where our petroleum hydrocarbons or wastes are taken for reclamation or disposal may also have the right to pursue legal actions to enforce compliance, to seek damages for contamination, for personal injury, natural resources damage or property damage.

Changes in environmental laws and regulations occur frequently, and any changes 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 require significant expenditures by us to attain and maintain compliance and may otherwise have a material adverse effect on our results of operations, competitive position or financial condition.

Private parties, including the owners of properties upon which our wells are drilled or facilities where our petroleum hydrocarbons or wastes are taken for separation, storage, reclamation or disposal may also have the right to pursue legal actions to enforce compliance or to seek damages for contamination, personal injury, natural resources damage or property damage.

Changes in environmental and occupational health and safety laws and regulations occur frequently, and any changes 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, disposal, emission or discharge requirements could require significant expenditures by us to attain and maintain compliance and may otherwise have a material adverse effect on our results of operations, competitive position or financial condition.

Federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays and adversely affect our production.

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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.

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.

However, on December 8, 2017, the BLM published a final rule to temporarily suspend or delay certain requirements contained in the November 2016 final rule until January 17, 2019, including those requirements relating to venting, flaring and leakage from oil and gas production activities.

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.

On November 28, 2022, BLM announced a new proposed rule regulating emissions of methane in connection with the production of oil and gas on federal and Tribal lands.

If finalized, the proposed rule would require various technology upgrades, impose limits related to flaring, and require LDAR plans.

The final rule is expected to be announced later this year.

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.

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.

On an international level, the United States was one of almost 200 nations that agreed in December 2015 to the Paris Agreement.

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

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.

The adoption and implementation of any laws or regulations imposing reporting obligations on, or limiting emissions of GHGs from, our equipment and our operations could require us to incur additional costs to monitor, report and potentially reduce emissions of GHGs associated with our operations or could adversely affect demand for the oil and natural gas that 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 development and production activities.

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.

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.

On November 8, 2022, EPA issued a supplemental notice of proposed rulemaking that would impose standards for certain sources that were not addressed in the November 2021 proposal, revise the previously proposed emissions standards, and establish a “super emitter response program” allowing local regulatory agencies and EPA-certified third parties to issue notices to owners and operators of regulated facilities when they detect a so-called “super-emitting event.” Additionally, as discussed above in the description of our business, various regulatory bodies have announced or are considering new rules and regulations impacting our operations and our business, including the EPA’s final rule under the CAA to reduce methane emissions from the oil and natural gas industry, EPA and BLM methane emissions limitations, cap and trade programs launched by states and regions in which we operate, and, to the extent applicable, the Paris Agreement.

See “Business—Environmental, Health, and Safety Regulations” in Item 1 of this report for information about climate change laws and regulations restricting emissions of GHGs that could impact our operations and business.

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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At this time, the impact of such regulations is not clear.

Cyber-attacks or other failures in telecommunications or IT systems could result in information theft, data corruption and significant disruption of our business operations.

Cybersecurity incidents or other failures in telecommunications or IT systems could result in information theft, data corruption and significant disruption of our business operations.

In recent years, we have increasingly relied on information technology systems and networks in connection with our business activities, including certain of our acquisition, development and production activities.

3 unchanged sentences

We have experienced, and expect to continue to confront, attempts from hackers and other third parties to gain unauthorized access to our information technology systems and networks.

Although prior cyber-attacks have not had a material adverse impact on our operations or financial performance, there can be no assurance that we will be successful in preventing cyber-attacks or successfully mitigating their effect.

Any cyber-attack could have a material adverse effect on our reputation, competitive position, business, financial condition and results of operations.

Cyber-attacks or security breaches also could result in litigation and legal risks, including regulatory actions by state, federal, and non-US governmental authorities, as well as significant additional expense to implement further data protection measures.

In addition to the risks presented to our systems and networks, cyber-attacks affecting oil and natural gas distribution systems maintained by third parties, or the networks and infrastructure on which they rely, could delay or prevent delivery of our production to markets.

A cyber-attack of this nature would be outside our control, but could have a material, adverse effect on our business, financial condition and results of operations.

Although prior cybersecurity incidents have not had a material adverse impact on our operations or financial performance, there can be no assurance that we will be successful in preventing cybersecurity incidents or successfully mitigating their effect.

Any cybersecurity incident could have a material adverse effect on our reputation, competitive position, business, financial condition and results of operations.

Cybersecurity incidents or security breaches also could result in litigation and legal risks, including regulatory actions by state, federal, and non-US governmental authorities, as well as significant additional expense to implement further data protection measures.

In addition to the risks presented to our systems and networks, cybersecurity incidents affecting oil and natural gas distribution systems maintained by third parties, or the networks and infrastructure on which they rely, could delay or prevent delivery of our production to markets.

A cybersecurity incident of this nature would be outside our control, but could have a material, adverse effect on our business, financial condition and results of operations.

We have programs, processes and technologies in place to attempt to prevent, detect, contain, respond to and mitigate security-related threats and potential incidents, as well as internal accounting controls to prevent unauthorized or fraudulent payments by ensuring that transactions are executed only with management authorization.

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.

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.

Compromises of our security may result in an interruption of operations, violation of applicable privacy and other laws, significant legal and financial exposure, damage to our reputation, and a loss of investor confidence in our security measures.

Additional impacts from cyber-attacks could include remediation costs, such as liability for stolen assets or information, repairs of system damage, and incentives to our business partners;

Additional impacts from cybersecurity incidents could include remediation costs, such as liability for stolen assets or information, repairs of system damage, and incentives to our business partners;

increased cybersecurity protection costs, which may include the costs of making organizational changes, deploying additional personnel and security technologies, training employees, and engaging third-party experts and consultants;

10 unchanged sentences

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.

Events outside of our control, including an epidemic or outbreak of an infectious disease, such as COVID-19, may materially adversely affect our business.

Events outside of our control, including an epidemic or outbreak of an infectious disease, may materially adversely affect our business.

We face risks related to epidemics, outbreaks or other public health events that are outside of our control, and could significantly disrupt our operations and adversely affect our financial condition.

The global or national outbreak of an illness or other communicable disease, or any other public health crisis, such as COVID-19, may cause disruptions to our business and operational plans, which may include (i) shortages of employees, (ii) unavailability of contractors or subcontractors, (iii) interruption of supplies from third parties upon which we rely, (iv) recommendations of, or restrictions imposed by government and health authorities, including quarantines, to address an outbreak and (v) restrictions that we and our contractors, subcontractors and our customers impose, including facility shutdowns, to ensure the safety of employees.

The effects of COVID-19 and other infectious diseases and concerns regarding their global spread could negatively impact the domestic and international demand for crude oil, natural gas and NGL, which could contribute to price volatility, impact the price we receive for crude oil, natural gas and NGL and materially and adversely affect the demand for and marketability of our production.

The potential impact from COVID-19, both now and in the future, is difficult to predict, and the extent to which it may negatively affect our operating results or the duration of any potential business disruption is uncertain.

The global or national outbreak of an illness or other communicable disease, or any other public health crisis may cause disruptions to our business and operational plans, which may include (i) shortages of employees, (ii) unavailability of contractors or subcontractors, (iii) interruption of supplies from third parties upon which we rely, (iv) recommendations of, or restrictions imposed by government and health authorities, including quarantines, to address an outbreak and (v) restrictions that we and our contractors, subcontractors and our customers impose, including facility shutdowns, to ensure the safety of employees.

The effects of infectious diseases and concerns regarding their global spread could negatively impact the domestic and international demand for crude oil, natural gas and NGL, which could contribute to price volatility, impact the price we receive for crude oil, natural gas and NGL and materially and adversely affect the demand for and marketability of our production.

The potential impact from infectious diseases is difficult to predict, and the extent to which it may negatively affect our operating results or the duration of any potential business disruption is uncertain.

Risks Relating to Our NOLs

2 unchanged sentences

As of December 31, 2023, we had U.S.

federal NOLs of $1.6 billion, net of NOLs expected to expire unused due to the 2016 IRC Section 382 limitation, approximately half of which will expire between 2025 and 2037, if not limited by additional triggering events prior to such time.

federal NOLs of $1.6 billion, net of NOLs expected to expire unused due to the 2016 IRC Section 382 limitation, of which approximately $0.7 billion will expire between 2025 and 2037, if not limited by additional triggering events prior to such time.

Under the provisions of the Internal Revenue Code of 1986, as amended (“IRC”), changes in our ownership, in certain circumstances, will limit the amount of U.S.

3 unchanged sentences

Calculations pursuant to Section 382 of the IRC can be very complicated and no assurance can be given that upon further analysis, our ability to take advantage of our NOLs may be limited to a greater extent than we currently anticipate.

may experience ownership changes in the future as a result of subsequent shifts in our stock ownership that we cannot predict or control that could result in further limitations being placed on our ability to utilize our federal NOLs.

We may experience ownership changes in the future as a result of subsequent shifts in our stock ownership that we cannot predict or control that could result in further limitations being placed on our ability to utilize our federal NOLs.

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.

2 unchanged sentences

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

On June 14, 2023, our Board of Directors approved an amendment to the Tax Benefits Preservation Plan to extend the expiration time of the Tax Benefits Preservation Plan from July 1, 2023 to July 1, 2026.

The Company will submit this amendment to the Company’s stockholders for approval at our 2024 Annual Meeting.

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.

2 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 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.

The Company will submit this amendment to the Company’s stockholders for approval at our 2024 Annual Meeting.

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.

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.

The Company's Board of Directors (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.

We may utilize these NOLs in certain circumstances to offset future United States taxable income and reduce our United States federal income tax liability.

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These provisions may also discourage, delay or prevent a third party from acquiring a large portion of our securities, or initiating a tender offer, even if our stockholders might receive a premium for their shares in the acquisition over the then current market price.

Unresolved Staff Comments

Information regarding the Company’s properties is included in Item 1.

Legal Proceedings

See "Note 12 — Commitments and Contingencies” to the accompanying consolidated financial statements in Item 8 of this report.

Mine Safety Disclosures

Not applicable.

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