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New words:
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accrual, actively, arise, assert, assessing, assumption, attempt, augmented, aware, back, bargain, barrel, baseline, Bbl, Bison, breach, bring, capitalized, collective, commenced, commercial, complex, concurrently, consecutive, constant, contingency, Conversely, correlate, created, cubic, deadline, deficiency, delivering, discovery, downtime, drill, effort, ending, environment, epidemic, event, exercised, expire, extreme, Fargo, fee, feet, immateriality, improved, indenture, individually, intrinsic, invasion, issue, life, line, liquid, Mcf, meaningfully, midpoint, MMcf, month, National, occurred, occurrence, occurring, October, offering, online, operator, originally, outlet, overtly, pandemic, power, pressure, procedural, producer, prolonged, proportionate, qualifying, question, range, recessionary, reconciled, recovery, recurrence, redeemed, replacement, restraining, resulted, retention, roll, schedule, semiannually, settling, shortfall, spot, strength, subjective, sum, tempered, thereof, thousand, threatened, trustee, unable, uncertain, undiscounted, unfavorable, unpredictable, upward, utilized, worsening
Financial report summary
?Risks
- Declines in crude oil, natural gas, and NGL prices will adversely affect our business, financial condition or results of operations, and our ability to meet our capital expenditure obligations or targets and financial commitments.
- Our derivative activities could result in financial losses or could reduce our income.
- The agreements covering our debt have restrictive covenants that could limit our ability to finance our operations, fund capital needs, respond to changing conditions, and engage in other business activities that may be in our best interests.
- Borrowings under the Credit Facility are limited by our borrowing base, which is subject to periodic redetermination.
- Our estimated proved reserves and our ultimate number of prospective well development locations are based on many assumptions that may turn out to be inaccurate. Any significant inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.
- If commodity prices decrease to a level such that our future undiscounted cash flows from our properties are less than their carrying value for a significant period of time, we may be required to take write-downs of the carrying values of our properties.
- We intend to pursue the further development of our properties through horizontal drilling and completion, which can be more operationally challenging and costly relative to vertical drilling operations.
- Several of our recent acquisitions represent an expansion outside of the DJ Basin, and we may encounter new obstacles operating in different geographic regions.
- We may be unable to make attractive acquisitions, and any inability to do so may disrupt our business.
- We may not realize anticipated benefits from mergers and acquisitions.
- We face increasing risk associated with the long-term trend toward increased activism against oil and gas exploration and development activities in the states in which we operate, particularly in Colorado.
- SB 181’s requirement, which applies to our Colorado operations, that we own or control more than 45% of the working or mineral interest in order to statutorily pool our applicable interest may make it much more difficult for us to develop such interests, which could have a material adverse effect on our business, financial condition, and results of operations.
- Terrorist attacks and armed conflict could have a material adverse effect on our business, financial condition, or results of operations.
- We have limited control over activities on properties in which we own an interest but we do not operate, which could reduce our production and revenues.
- The development of our proved undeveloped reserves may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our undeveloped reserves may not be ultimately developed or produced.
- Certain of our undeveloped leasehold acreage is subject to leases that will expire over the next several years unless production is established on units containing the acreage.
- We are subject to health, safety, and environmental laws and regulations that may expose us to significant costs and liabilities.
- Evolving legislation or regulatory initiatives, including those related to hydraulic fracturing, could result in increased costs and additional operating restrictions or delays.
- Transition risks related to climate change, including negative shift in investor sentiment with respect to the oil and gas industry, could have material and adverse effects on us.
- Increasing scrutiny and changing stakeholder expectations in respect of ESG and sustainability practices may have an adverse effect on our business, financial condition, and results of operations and damage our reputation.
- We are exposed to credit risks of our hedging counterparties, third parties participating in our wells, and our customers.
- Current or proposed financial legislation and rulemaking could have an adverse effect on our ability to use derivative instruments to reduce the effect of commodity price, interest rate, and other risks associated with our business.
- We may be involved in legal cases that may result in substantial liabilities.
- We are subject to federal, state, and local taxes and may become subject to new taxes, and certain federal income tax deductions and state income tax deductions and exemptions currently available with respect to oil and gas exploration and development may be eliminated or reduced as a result of future legislation.
- Unanticipated changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our financial condition and results of operations.
- Certain past transactions triggered a limitation on the utilization of our historic U.S. NOLs and the NOLs acquired in such transactions.
- Continuing or worsening inflationary pressures and associated changes in monetary policy may result in increases to the cost of our goods, services, and personnel, which in turn could cause our capital expenditures and operating costs to rise.
- We are subject to cyber security risks. A cyber incident could occur and result in information theft, data corruption, operational disruption, or financial loss.
- We have experienced recent volatility in the market price and trading volume of our common stock and may continue to do so in the future.
- Our ability to pay dividends to our stockholders is restricted by applicable laws and regulations and requirements under certain of our debt agreements, including the Credit Facility and the indentures governing our senior notes.
- Our certificate of incorporation and bylaws, as well as Delaware law, contain provisions that could discourage acquisition bids or merger proposals, even if such acquisition or merger may be in our stockholders’ best interests.
- The Crestone Peak Stockholder is a significant holder of our common stock and may have some ability to influence our management and affairs.
- Our certificate of incorporation designates the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or other employees.
Management Discussion
- In November 2020, the SEC issued Final Rule 33-10890, Management’s Discussion and Analysis, Selected Financial Data and Supplementary Financial Information, which modernizes and simplifies certain disclosure requirements of Regulation S-K. One of the updates to Item 303 of Regulation S-K allows registrants to compare the results of the most recently completed quarter to the results of either the immediately preceding quarter or the corresponding quarter of the preceding year. We adopted presenting the results of operations with this approach effective January 1, 2024, as we believe that comparing current quarter results to those of the immediately preceding quarter is more useful in identifying current business trends and provides a more meaningful comparison. Accordingly, we have compared the results for the three months ended March 31, 2024, and December 31, 2023, below. Additionally, in the first filing after the adoption of this rule change, we are required to disclose a comparison of the results for the current quarter and the corresponding quarter of the preceding fiscal year. Accordingly, the comparison between the results for the three months ended March 31, 2024 and March 31, 2023 is also presented below.