Apa Corp
Risk Factors synthesis.

Enhanced focus on ESG matters could have an adverse effect on the Company's operations. Enhanced focus on ESG matters related to, among other things, concerns raised by advocacy groups about climate change, hydraulic fracturing, waste disposal, oil spills, and explosions of natural gas transmission pipelines may lead to increased regulatory review, which may, in turn, lead to new state and federal safety and environmental laws, regulations, guidelines, and enforcement interpretations. These actions may cause operational delays or restrictions, increased operating costs, additional regulatory burdens, increased risk of litigation, and adverse impacts on the Company's access to capital. Moreover, governmental authorities exercise considerable discretion in the timing and scope of permit issuance and regulatory approvals. Negative public perception could cause the permits or regulatory approvals the Company requires to be withheld, delayed, or burdened by requirements that restrict the Company's ability to profitably conduct its business. The Company's estimates used in various scenario planning analyses could differ materially from actual results and could expose the Company to new or additional risks. Given the dynamic nature of the Company's business, the Company generally performs annual scenario analyses with five-year time horizons. When analyzing longer-term scenarios, the Company relies on external analysis for demand scenarios, carbon pricing, and comparison-pricing scenarios, which are then compared to the Company's internally prepared base-case pricing analysis averaged out to the year 2040. Given the numerous estimates that are required to run these scenarios, the Company's estimates could differ materially from actual results. The Company publicly discloses these metrics and its related assumptions and analysis in its annual sustainability report. By electing to disclose these metrics, the Company may face increased scrutiny related to its ESG initiatives. Any harm to the Company's reputation resulting from publicly disclosing such these metrics, expanding disclosures related to such metrics, or failing to achieve such metrics or abiding by such disclosures could adversely affect the Company's business, financial performance, and growth. The guidance upon which the Company's consumptive water use reporting was modified and could be revised in the future, resulting in the over or underreporting of the Company's consumptive water use. In 2022, the Company modified the way it reports its water data compared to previous years and restated its data from prior years. Previously, the Company included produced water usage in its consumptive use calculations, which led to an over-reporting of consumptive water use. Based on re-evaluation of water reporting definitions and guidance, the Company determined that produced water (non-potable water released from deep underground formations and brought to the surface during oil and gas exploration and production) should not be classified as consumed in the same sense as fresh water. The Company's revised reporting now reflects only fresh water and non-potable water from surface water or shallow groundwater that are consumed in oil and gas operations. The treatment and disposal of produced water is becoming more highly regulated and restricted and could expose the Company to additional costs or limit certain operations. The treatment and disposal of produced water is becoming more highly regulated and restricted. Regulators in some states, such as the Railroad Commission of Texas, have taken actions to limit disposal well activities (including orders to temporarily shut down or to curtail water injection) and to require the monitoring of seismic activity. While the Company remains focused on reusing or recycling water over disposal of water, the Company's costs for obtaining and disposing of water could increase significantly if reusing and recycling water becomes impractical. Further, compliance with reporting and environmental regulations governing the withdrawal, storage, use, and discharge of water and restrictions related to disposal wells may increase the Company's operating costs or capital expenses or cause the Company to limit production, which could materially and adversely affect its business, results of operations, and financial conditions.

RISKS RELATED TO INTERNATIONAL OPERATIONS International operations have uncertain political, economic, and other risks. The Company's operations outside the U.S. are based primarily in Egypt and the U.K., with significant exploration and appraisal activities offshore Suriname. On a barrel equivalent basis, approximately 46 percent of the Company's 2023 production was outside the U.S., and approximately 30 percent of the Company's estimated proved oil and gas reserves as of December 31, 2023, were located outside the U.S. As a result, a significant portion of the Company's production and resources are subject to the increased political and economic risks and other factors associated with international operations, including, but not limited to strikes and civil unrest; war, acts of terrorism, expropriation and resource nationalization, forced renegotiation or modification of existing contracts, including through prospective or retroactive changes in the laws and regulations applicable to such contracts; import and export regulations; taxation policies and investment restrictions; price controls; 27 exchange controls, currency fluctuations, devaluations, or other activities that limit or disrupt markets and restrict payments or the movement of funds; constrained oil or natural gas markets dependent on demand in a single or limited geographical area; laws and policies of the U.S. affecting foreign trade, including trade sanctions; the possibility of being subject to exclusive jurisdiction of foreign courts in connection with legal disputes relating to licenses to operate and concession rights in countries where the Company currently operates; the possible inability to subject foreign persons, especially foreign oil ministries and national oil companies, to the jurisdiction of courts in the U.S.; and difficulties in enforcing the Company's rights against a governmental agency because of the doctrine of sovereign immunity and foreign sovereignty over international operations. Foreign countries have occasionally asserted rights to oil and gas properties through border disputes. If a country claims superior rights to oil and gas leases or concessions granted to the Company by another country, the Company's interests could decrease in value or be lost. Even the Company's smaller international assets may affect its overall business and results of operations by distracting management's attention from its more significant assets. Certain regions of the world in which the Company operates have a history of political and economic instability. This instability could result in new governments or the adoption of new policies that might result in a substantially more hostile attitude toward foreign investments such as the Company's. In an extreme case, such a change could result in termination of contract rights and expropriation of the Company's assets. This could adversely affect the Company's interests and its future profitability. The impact that future terrorist attacks or regional hostilities, as have occurred in countries and regions in which the Company operates, may have on the oil and gas industry in general and on the Company's operations in particular is not known at this time. Uncertainty surrounding military strikes or a sustained military campaign may affect operations in unpredictable ways, including disruptions of fuel supplies and markets, particularly oil, and the possibility that infrastructure facilities, including pipelines, production facilities, processing plants, and refineries, could be direct targets or indirect casualties of an act of terror or war. The Company may be required to incur significant costs in the future to safeguard its assets against terrorist activities. A further deterioration of conditions in Egypt or changes in the economic and political environment in Egypt could have an adverse impact on the Company's business. Further deterioration in the political, economic, and social conditions or other relevant policies of the Egyptian government, such as changes in laws or regulations, export restrictions, expropriation of the Company's assets or resource nationalization, and/or forced renegotiation or modification of the Company's existing contracts with Egyptian General Petroleum Corporation (EGPC), or threats or acts of terrorism could materially and adversely affect the Company's business and operations. Additionally, deteriorating economic conditions in Egypt have led to a shortage of foreign currency, including U.S. dollars, resulting in a decline in the timeliness of payments from EGPC. A continuation or worsening of the currency shortage in Egypt or further deterioration of economic conditions there could lead to additional payment delays, deferrals of payment, or non-payment in the future. The Company's operations in Egypt, excluding the impacts of a one-third noncontrolling interest, contributed 27 percent of the Company's 2023 production and accounted for 15 percent of the Company's year-end estimated proved reserves and 29 percent of the Company's estimated discounted future net cash flows. If conditions continue to deteriorate in Egypt, then it could materially and adversely affect the Company's business, financial condition, and results of operations.

The Company may fail to fully identify potential problems related to acquired reserves or to properly estimate those reserves. Although the Company performs a review of properties that it acquires, which the Company believes is consistent with industry practices, such reviews are inherently incomplete. It generally is not feasible to review in-depth every individual property involved in each acquisition. Ordinarily, the Company will focus its review efforts on the higher-value properties and will sample the remainder. However, even a detailed review of records and properties may not necessarily reveal existing or potential problems, nor will it permit the Company as a buyer to become sufficiently familiar with the properties to assess fully and accurately their deficiencies and potential. Inspections may not always be performed on every well, and environmental problems, such as groundwater contamination, are not necessarily observable even when an inspection is undertaken. Even when problems are identified, the Company often assumes certain environmental and other risks and liabilities in connection with acquired properties. There are numerous uncertainties inherent in estimating quantities of proved oil and gas reserves and future production rates and costs with respect to acquired properties, and actual results may vary substantially from those assumed in the estimates. In addition, there can be no assurance that acquisitions will not have an adverse effect upon the Company's operating results, particularly during the periods in which the operations of acquired businesses are being integrated into the Company's ongoing operations.

Crude oil, natural gas, and NGL reserves are estimates, and actual recoveries may vary significantly. There are numerous uncertainties inherent in estimating crude oil, natural gas, and NGL reserves and their value. Reservoir engineering is a subjective process of estimating underground accumulations of crude oil, natural gas, and NGLs that cannot be measured in an exact manner. Because of the high degree of judgment involved, the accuracy of any reserve estimate is inherently imprecise and a function of the quality of available data and the engineering and geological interpretation. The Company's reserves estimates are based on 12-month average prices, except where contractual arrangements exist; therefore, reserves quantities will change when actual prices increase or decrease. In addition, results of drilling, testing, and production may substantially change the reserve estimates for a given reservoir over time. The estimates of the Company's proved reserves and estimated future net revenues also depend on a number of factors and assumptions that may vary considerably from actual results, including historical production from the area compared with production from other areas, the effects of regulations by governmental agencies, including changes to severance and excise taxes, future operating costs and capital expenditures, and workover and remediation costs. For these reasons, estimates of the economically recoverable quantities of crude oil, natural gas, and NGLs attributable to any particular group of properties, classifications of those reserves, and estimates of the future net cash flows expected from them prepared by different engineers or by the same engineers but at different times may vary substantially. Accordingly, reserves estimates may be subject to upward or downward adjustment, and actual production, revenue, and expenditures with respect to the Company's reserves likely will vary, possibly materially, from estimates. Additionally, because some of the Company's reserves estimates are calculated using volumetric analysis, those estimates are less reliable than the estimates based on a lengthy production history. Volumetric analysis involves estimating the volume of a reservoir based on the net feet of pay of the structure and an estimation of the area covered by the structure. In addition, realization or recognition of proved undeveloped reserves will depend on the Company's development schedule and plans. A change in future development plans for proved undeveloped reserves could cause the discontinuation of the classification of these reserves as proved. 22 Certain of the Company's undeveloped leasehold acreage is subject to leases that will expire over the next several years unless production is established on units containing the acreage. A sizeable portion of the Company's acreage is currently undeveloped. Unless production in paying quantities is established on units containing certain of these leases during their terms, the leases will expire. If the leases expire, the Company will lose its right to develop the related properties. The Company's drilling plans for these areas are subject to change based upon various factors, including drilling results, commodity prices, the availability and cost of capital, drilling and production costs, availability of drilling services and equipment, gathering system and pipeline transportation constraints, and regulatory approvals.

The Company's ability to declare and pay dividends is subject to limitations. The payment of future dividends on the Company's capital stock is subject to the discretion of the Company's board of directors, which considers, among other factors, the Company's operating results, overall financial condition, credit-risk considerations, and capital requirements, as well as general business and market conditions. The board of directors is not required to declare dividends on APA's common stock and may decide not to declare dividends. Any indentures and other financing agreements that the Company enters into in the future may limit its ability to pay cash dividends on its capital stock, including APA common stock. In addition, under Delaware law, dividends on capital stock may only be paid from "surplus," which is the amount by which the fair value of the Company's total assets exceeds the sum of its total liabilities, including contingent liabilities, and the amount of its capital; if there is no surplus, cash dividends on capital stock may only be paid from the Company's net profits for the then-current and/or the preceding fiscal year. Further, even if the Company is permitted under its contractual obligations and Delaware law to pay cash dividends on common stock, the Company may not have sufficient cash to pay dividends in cash on its common stock. Actions by advocacy groups to advance climate change and energy transition initiatives, unfavorable ESG ratings, and funding limitation initiatives may lead to negative investor and public sentiment toward the Company and to the diversion of capital from companies in the oil and gas industry, which could negatively impact the Company's access to and costs of capital or the market for the Company's securities. Organizations that provide information to investors on corporate governance and related matters have developed ratings for evaluating companies on their approach to ESG matters. Such ratings are used by some investors to inform and advise their investment and voting decisions. Unfavorable ESG ratings may lead to negative investor and public sentiment toward the Company, which may cause the market for the Company's securities to be negatively impacted. In addition, a number of advocacy groups, both domestically and internationally, have campaigned for governmental and private action to influence change in the business strategies in oil and gas companies, including through the investment and voting practices of investment advisers, public pension funds, universities, and other members of the investing community. These activities include increasing attention and demands for action related to climate change and energy transition matters, such as promoting the use of substitutes to fossil fuel products and encouraging the divestment of investments in the oil and gas industry, as well as pressuring lenders and other financial services companies to limit or curtail activities with oil and gas companies. If investors or financial institutions shift funding away from companies in the oil and gas industry, the Company's access to and costs of capital or the market for the Company's securities may be negatively impacted.

The Company faces strong industry competition that may have a significant negative impact on the Company's results of operations. Strong competition exists in all sectors of the oil and gas E&P industry. The Company competes with major integrated and other independent oil and gas companies for acquisitions of oil and gas leases, properties, and reserves, equipment and labor required to explore, develop, and operate those properties, and marketing of crude oil, natural gas, and NGL production. Crude oil, natural gas, and NGL prices impact the costs of properties available for acquisition and the number of companies with the financial resources to pursue acquisition opportunities. Many of the Company's competitors have financial and other resources substantially larger than the Company possesses and have established strategic, long-term positions and maintain strong governmental relationships in countries in which the Company may seek new entry. As a consequence, the Company 25 may be at a competitive disadvantage in bidding for drilling rights. In addition, many of the Company's larger competitors may have a competitive advantage when responding to factors that affect demand for oil and gas production, such as fluctuating worldwide commodity prices and levels of production, the cost and availability of alternative fuels, and the application of government regulations. The Company also competes in attracting and retaining personnel, including geologists, geophysicists, engineers, and other specialists. These competitive pressures may have a significant negative impact on the Company's results of operations. The Company's ability to utilize net operating losses and other tax attributes to reduce future taxable income may be limited if the Company experiences an ownership change. As described in Note 10-Income Taxes of the Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K, the Company has substantial net operating loss carryforwards (NOLs) and other tax attributes available to potentially offset future taxable income. If the Company were to experience an "ownership change" under Section 382 of the Internal Revenue Code of 1986, as amended, which is generally defined as a greater than 50 percentage point change, by value, in the Company's equity ownership by five-percent shareholders over a three-year period, the Company's ability to utilize its pre-change NOLs and other pre-change tax attributes to potentially offset its post-change income or taxes may be limited. Such a limitation could materially adversely affect the Company's operating results or cash flows by effectively increasing its future tax obligations.

RISKS RELATED TO THE HOLDING COMPANY REORGANIZATION APA is dependent on the operations and funds of its subsidiaries, including Apache. As a result of the Holding Company Reorganization, APA became the successor issuer to, and parent holding company of, Apache. APA has no business operations of its own, and its only significant assets are the outstanding equity interests of its subsidiaries, including Apache. As a result, APA relies on cash flows from its subsidiaries, including Apache, to pay dividends with respect to APA's common stock and to meet its financial obligations, including to service any debt obligations that the Company may incur from time to time. Legal and contractual restrictions in agreements governing future indebtedness of Apache, as well as Apache's financial condition and future operating requirements, may limit Apache's ability to distribute cash to the Company. If Apache is limited in its ability to distribute cash to the Company, or if Apache's earnings or other available assets of are not sufficient to pay distributions or make loans to the Company in the amounts or at the times necessary for it to pay dividends with respect to its common stock and/or to meet its financial obligations, then the Company's business, financial condition, cash flows, results of operations, and reputation may be materially adversely affected.

Changes to existing regulations related to emissions and the impact of any changes in climate could adversely impact the Company's business. Certain countries where the Company operates, including the U.K., either tax or assess some form of greenhouse gas (GHG) related fees on the Company's operations. Exposure has not been material to date, although a change in existing regulations could adversely affect the Company's cash flows and results of operations. Additionally, there has been discussion in other countries where the Company operates, including the U.S., regarding legislation or regulation of GHGs, including to monitor and limit existing emissions of GHGs and to restrict or eliminate future emissions. Moreover, in January 2021, the President issued an executive order that commits to substantial action on climate change, calling for, among other things, the elimination of subsidies provided to the fossil fuel industry and increased emphasis on climate-related risk across governmental agencies and economic sectors. Additionally, various states and groups of states have adopted or are considering adopting legislation, regulations, or other regulatory initiatives that are focused on such areas as GHG cap-and-trade programs, carbon taxes, reporting and tracking programs, restriction of emissions, electric vehicle mandates, and combustion engine phaseouts. Any such legislation or regulatory programs could also increase the cost of consuming, and thereby reduce demand for, oil, natural gas, and NGLs. Additionally, political, litigation, and financial risks related to climate change may result in curtailed refinery activity, increased regulation, or other adverse direct and indirect effects on the Company's business, financial condition, and results of operations. For example, there is a risk that financial institutions will be required to adopt policies that have the effect of reducing the funding provided to the fossil fuel sector. Recently, the Federal Reserve announced that it has joined the Network for Greening the Financial System, a consortium of financial regulators focused on addressing climate-related risks in the financial sector. Any such legislation, regulations, or other regulatory initiatives, if enacted, or additional or increased taxes, assessments, or GHG-related fees on the Company's operations could lead to increased operating expenses or cause the Company to make significant capital investments for infrastructure modifications.

The Company has previously not realized, and may in the future not realize, an adequate return on wells that it drills. Drilling for oil and gas involves numerous risks, including the risk that the Company will not encounter commercially productive oil or gas reservoirs. The wells the Company drills or participates in may not be productive, and the Company may not recover all or any portion of its investment in those wells. Management has previously determined, and may in the future determine, that future or further drilling or development activities will not, or are unlikely to, occur for a well or reservoir based 19 on drilling results, current or future estimated commodity prices or demand for oil, natural gas, and NGLs, or other information, including drilling results in, or information related to, adjacent or nearby geographic areas or similar geologies or reservoirs. The seismic data and other technologies that the Company uses do not allow it to know conclusively prior to drilling a well that crude or natural gas is present or may be produced economically. The costs of drilling, completing, and operating wells are often uncertain, and drilling operations may be curtailed, delayed, or canceled as a result of a variety of factors, including, but not limited to, unexpected drilling conditions; pressure or irregularities in formations; equipment failures or accidents; fires, explosions, blowouts, and surface cratering; marine risks, such as capsizing, collisions, and hurricanes; other adverse weather conditions; and increases in the cost of or shortages or delays in the availability of drilling rigs, equipment, and labor. Future drilling activities may not be successful, and, if unsuccessful, such failure could have an adverse effect on the Company's future results of operations and financial condition. While all drilling, whether developmental or exploratory, involves these risks, exploratory drilling involves greater risks of dry holes or failure to find commercial quantities of hydrocarbons. Exploration costs and dry hole expenses incurred by the Company during the reporting period are further discussed in this Annual Report on Form 10-K and reflected in the consolidated financial statements included herein.

RISKS RELATED TO OPERATIONS AND DEVELOPMENT PROJECTS The Company's operations involve a high degree of operational risk, particularly risk of personal injury, damage to or loss of equipment, and environmental accidents. The Company's operations are subject to hazards and risks inherent in the drilling, production, and transportation of crude oil, natural gas, and NGLs, including well blowouts, explosions, fires, and cratering; pipeline or other facility ruptures and spills; formations with abnormal pressures; equipment malfunctions; hurricanes, major storms, and cyclones, which could affect the Company's operations in areas such as on and offshore the Gulf Coast, North Sea, and Suriname, and other natural and anthropogenic disasters and weather conditions; and surface spillage and surface or ground water contamination from petroleum constituents, saltwater, or hydraulic fracturing chemical additives. Failure or loss of equipment, as the result of equipment malfunctions, cyberattacks, or natural disasters, such as hurricanes, could result in property damages, personal injury, environmental pollution, and other damages for which the Company could be liable. Litigation arising from a catastrophic occurrence, such as a well blowout, explosion, fire at a location where the Company's equipment and services are used, or ground water contamination from chemical additives used in hydraulic fracturing may result in substantial claims for damages. Ineffective containment of a drilling well blowout or pipeline rupture or surface spillage and surface or ground water contamination from petroleum constituents or hydraulic fracturing could result in extensive environmental pollution and substantial remediation expenses. If a significant amount of the Company's production is interrupted, containment efforts prove to be ineffective, or litigation arises as the result of a catastrophic occurrence, the Company's cash flows and, in turn, its results of operations could be materially and adversely affected.

RISKS RELATED TO RESERVES AND LEASEHOLD ACREAGE Discoveries or acquisitions of additional reserves are needed to avoid a material decline in reserves and production. The production rate from oil and natural gas properties generally declines as reserves are depleted, while related per-unit production costs generally increase as a result of decreasing reservoir pressures and other factors. Therefore, unless the Company adds reserves through exploration and development activities, identifies additional behind-pipe zones, secondary recovery reserves, or tertiary recovery reserves through engineering studies, or acquires additional properties containing proved reserves, the Company's estimated proved reserves will decline materially as reserves are produced. Future oil and gas production is, therefore, highly dependent upon the Company's level of success in acquiring or finding additional reserves on an economic basis. Furthermore, as oil or natural gas prices increase, the Company's cost for additional reserves could also increase.

ITEM 1A.RISK FACTORS The Company's business activities and the value of its securities are subject to significant hazards and risks, including those described below. If any of such events should occur, the Company's business, financial condition, liquidity, and/or results of operations could be materially harmed, and holders and purchasers of APA's securities could lose part or all of their investments. Additional risks and uncertainties not presently known to the Company or that the Company currently considers immaterial may also adversely affect the Company.

RISKS RELATED TO PRICING, DEMAND, AND PRODUCTION FOR CRUDE OIL, NATURAL GAS, AND NGLs Crude oil, natural gas, and NGL prices and their volatility could adversely affect the Company's operating results and the price of APA's common stock. The Company's revenues, operating results, future rate of growth, and carrying value of its oil and gas properties depend highly upon the prices it receives for its sales of crude oil, natural gas, and NGL products. Historically, the markets for these commodities have been volatile and are likely to continue to be volatile in the future. For example, the NYMEX daily settlement price for the prompt month oil contract in 2023 ranged from a high of $93.67 per barrel to a low of $66.61 per barrel, and the NYMEX daily settlement price for the prompt month natural gas contract in 2023 ranged from a high of $3.78 per MMBtu to a low of $1.74 per MMBtu. The market prices for crude oil, natural gas, and NGLs depend on factors beyond the Company's control. These factors include demand, which fluctuates with changes in market and economic conditions, and other factors, including: •worldwide and domestic supplies and/or inventories of crude oil, natural gas, and NGLs and the availability of related pipeline, transportation, import/export, and refining capacity and infrastructure; •actions taken by foreign oil and gas producing nations, including the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC members that participate in OPEC initiatives (OPEC+); •political conditions and events in oil and gas producing regions, including instabilities, changes in governments, or armed conflicts, such as the Russian war in Ukraine and the armed conflict in Israel and Gaza; •the price, competitiveness, decision to use, and availability of alternative fuels and energy sources, including coal, biofuels, and renewables; •increased competitiveness of, and demand for, alternative energy sources; •technological advances affecting energy supply and energy consumption, including those that alter fuel choices; •the availability of pipeline capacity and infrastructure; •the availability of crude oil transportation and refining capacity; •weather conditions; •the impact of political pressure and the influence of environmental groups, investors, and other stakeholders on decisions and policies related to the oil and gas industry, including with respect to environmental, social, and governance matters; •domestic and foreign governmental regulations and taxes, including changes or initiatives to address the impacts of global climate change, hydraulic fracturing, methane emissions, flaring, or water disposal; and

RISKS RELATED TO CAPITAL MARKETS A downgrade in the Company's credit rating could negatively impact its cost of and ability to access capital. The Company receives debt ratings from the major credit rating agencies in the U.S. Factors that may impact the Company's credit ratings include its debt levels, planned asset purchases or sales, and near-term and long-term production growth opportunities. Liquidity, asset quality, cost structure, product mix, commodity pricing levels, and other factors are also considered by the rating agencies. A ratings downgrade could adversely impact the Company's ability to access debt markets in the future and increase the cost of future debt. During 2023, Moody's upgraded the Company's rating to Baa3/Stable, and Standard and Poor's affirmed the Company's rating as BB+/Positive. Past ratings downgrades have required, and any future downgrades may require, the Company to post letters of credit or other forms of collateral for certain obligations. Market conditions may restrict the Company's ability to obtain funds for future development and working capital needs, which may limit its financial flexibility. The financial markets are subject to fluctuation and are vulnerable to unpredictable swings. The Company has a significant development project inventory and an extensive exploration portfolio, which will require substantial future investment. The Company and/or its partners may need to seek financing to fund these or other future activities. The Company's future access to capital, as well as that of its partners and contractors, could be limited if the debt or equity markets are constrained. This could significantly delay development of the Company's property interests. The Company's syndicated revolving credit facilities currently mature in April 2027. There is no assurance of the terms upon which potential lenders under future agreements will make loans or other extensions of credit available to the Company or its subsidiaries or the composition of such lenders.

RISKS RELATED TO GOVERNMENTAL REGULATION AND POLITICAL RISKS The Company may incur significant costs related to environmental matters. As an owner or lessee and operator of oil and gas properties, the Company is subject to various federal, state, local, and foreign laws and regulations relating to the discharge of materials into and protection of the environment. These laws and regulations may, among other things, impose liability on the lessee under an oil and gas lease for the cost of pollution cleanup and other remediation activities resulting from operations, subject the lessee to liability for pollution and other damages, limit or constrain operations in affected areas, require significant capital expenditures to comply with increasingly strict environmental laws and regulations, and require suspension or cessation of operations in affected areas. The Company's efforts to limit its exposure to such liability and cost may prove inadequate and result in significant adverse effects to the Company's results of operations and cash flows.

RISKS RELATED TO CLIMATE CHANGE The impacts of energy transition could adversely affect the Company's business, operating results, and financial condition. In recent years, increasing attention has been given to corporate activities related to climate change and energy transition. This focus, together with shifting preferences and attitudes with respect to the generation and consumption of energy, the use of hydrocarbons, and the use of products manufactured with, or powered by, hydrocarbons, may result in increased availability of, and demand for, energy sources other than oil and natural gas, including wind, solar, and hydroelectric power, and the development of, and increased demand from consumers and industries for, lower-emission products and services, including electric vehicles and renewable residential and commercial power supplies, as well as more energy-efficient products and services. These developments could adversely impact the demand for products powered by or manufactured with hydrocarbons and the demand for, and in turn the prices the Company receives for, its crude oil, natural gas, and NGL products, which could materially and adversely affect the Company's business and financial performance.