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New words:
advisory, BCEI, Condor, CPP, CPPIB, Crestone, director, fact, freestanding, half, LP, mentioned, newly, partnership, Peak, pubic, Raptor, Subtopic, true
Removed:
automatically, Badger, central, charge, close, connecting, consist, constituted, contingency, convertible, direction, effort, experienced, extended, failure, gather, highly, offering, party, priority, probabilistic, purported, rata, recently, regulation, repaid, responded, rolling, secure, security, support, system, trade, unrestricted
Financial report summary
?Risks
- Oil and natural gas prices are volatile. An extended or further decline in commodity prices may adversely affect our business, financial condition or results of operations and our ability to meet our capital expenditure obligations and financial commitments.
- The prices we receive for our production may be affected by local and regional factors.
- 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 will be required to take write-downs of the carrying values of our properties.
- Reserve estimates depend on many assumptions that may turn out to be inaccurate. Any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.
- There is a limited amount of production data from horizontal wells completed in the DJ Basin. As a result, reserve estimates associated with horizontal wells in this area are subject to greater uncertainty than estimates associated with reserves attributable to vertical wells in the same area.
- Unless we replace our reserves with new reserves and develop those reserves, our reserves and production will decline, which would adversely affect our future cash flows and results of operations.
- A substantial portion of our reserves are located in urban areas, which could increase our costs of development and delay production.
- SEC rules could limit our ability to book additional PUDs in the future.
- Our identified drilling locations are scheduled over many years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling. In addition, we may not be able to raise the substantial amount of capital that would be necessary to drill such locations.
- Our drilling and production programs may not be able to obtain access on commercially reasonable terms or otherwise to truck transportation, pipelines, gas gathering, transmission, storage and processing facilities to market our oil and gas production, and our initiatives to expand our access to midstream and operational infrastructure may be unsuccessful.
- Part of our strategy involves drilling using the latest available horizontal drilling and completion techniques, which involve risks and uncertainties in their application.
- Our development and exploratory drilling efforts and our well operations may not be profitable or achieve our targeted returns.
- The development of our estimated proved undeveloped reserves may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our estimated proved undeveloped reserves may not be ultimately developed or produced.
- We may incur substantial losses and be subject to substantial liability claims as a result of our operations. Additionally, we may not be insured for, or our insurance may be inadequate to protect us against, these risks.
- Our use of 2-D and 3-D seismic data is subject to interpretation and may not accurately identify the presence of oil and natural gas, which could adversely affect the results of our drilling operations.
- Our operations are substantially dependent on the availability of water. Restrictions on our ability to obtain water may have an adverse effect on our financial condition, results of operations and cash flows.
- Properties that we decide to drill may not yield oil, natural gas or NGL in commercially viable quantities.
- The unavailability or high cost of additional drilling rigs, equipment, supplies, personnel and oilfield services could adversely affect our ability to execute our exploration and development plans within our budget and on a timely basis.
- Our undeveloped acreage must be drilled before lease expiration to hold the acreage by production. In highly competitive markets for acreage, failure to drill sufficient wells to hold acreage could result in a substantial lease renewal cost or, if renewal is not feasible, loss of our lease and prospective drilling opportunities.
- Substantially all of our producing properties are located in the DJ Basin of Colorado, making us vulnerable to risks associated with operating in one major geographic area. Specifically, as the DJ Basin is an area of high industry activity, we may be unable to hire, train or retain qualified personnel needed to manage and operate our assets.
- Changes in the legal and regulatory environment governing the oil and natural gas industry, particularly changes specific to the DJ Basin of Colorado, could have a material adverse effect on our business
- The enactment of Senate Bill 19-181 “Protect Public Welfare Oil and Gas Operations” increased the regulatory authority of local governments in Colorado over the surface impacts of oil and gas development, which could have a material adverse effect on our business.
- We are subject to stringent environmental and health and safety laws and regulations that could expose us to significant costs and liabilities.
- Should we fail to comply with all applicable regulatory agency administered statutes, rules, regulations and orders, we could be subject to substantial penalties and fines.
- We may be involved in legal proceedings that could result in substantial liabilities.
- Federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays in the completion of oil and natural gas wells and adversely affect our production.
- Restrictions on drilling activities intended to protect certain species of wildlife and natural resources may adversely affect our ability to conduct drilling activities areas where we operate.
- Regulation of greenhouse gases and climate change could have a negative impact on our business.
- The enactment of derivatives legislation and associated regulations 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.
- Declining general economic, business or industry conditions may have a material adverse effect on our results of operations, liquidity and financial condition.
- We may be unable to access the equity or debt capital markets, including the market for senior unsecured notes, to meet our obligations.
- Restrictions in our existing and future debt agreements could limit our growth and our ability to engage in certain activities.
- The borrowing base under our RBL Credit Facility may be reduced in connection with declines in commodity prices, which could hinder or prevent us from meeting our future capital needs.
- We have restated prior financial statements, which may lead to additional risks and uncertainties, including increased possibility of legal proceedings and loss of investor confidence.
- If we fail to meet the requirements for continued listing on the NASDAQ Global Select Market, our common stock could be delisted, which would decrease the liquidity of our common stock and our ability to raise additional capital.
- Our amended and restated certificate of incorporation and bylaws, as well as Delaware law, contain provisions that could discourage acquisition bids or merger proposals, which may adversely affect the market price of our common stock.
- When conditions are right and certain requirement have been met, we intend to begin paying dividends on our common stock. Our debt arrangements place certain restrictions on our ability to do so. Consequently, it is possible that the only opportunity to achieve a return on an investment in our common stock will be if the price of our common stock appreciates.
- Future sales of our common stock could reduce our stock price, and any additional capital raised by us through the sale of equity or convertible securities may dilute the ownership in us by current shareholders.
- The market price of our securities is subject to volatility.
- If securities or industry analysts do not publish research or reports about our business, if they adversely change their recommendations regarding our common stock or if our operating results do not meet their expectations, our stock price could decline.
- 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, employees or agents.
- Recent changes in United States federal income tax law may have an adverse effect on our cash flows, results of operations or financial condition overall.
- Certain United States federal income tax deductions currently available with respect to natural gas and oil exploration and development may be eliminated as a result of future legislation.
- Our ability to use our NOL carryforwards and other tax attributes may be limited.
- We may not be able to keep pace with technological developments in our industry.
- Our business could be negatively affected by security threats, including cybersecurity threats, destructive forms of protest and opposition by activists and other disruptions.
- Loss of our information and computer systems could adversely affect our business.
- We are susceptible to the potential difficulties associated with rapid growth and expansion and have a limited operating history.
- Properties we acquire may not produce as projected, and we may be unable to determine reserve potential, identify liabilities associated with the properties that we acquire or obtain protection from sellers against such liabilities.
- We may be unable to make accretive acquisitions or successfully integrate acquired businesses or assets, and any inability to do so may disrupt our business and hinder our ability to grow.
- We may be subject to risks in connection with divestitures
- Our cash flow from operations and access to capital are subject to a number of variables, including:
- Our derivative activities could result in financial losses or could reduce our earnings.
- Approximately 46% of our net leasehold acreage is undeveloped, and that acreage may not ultimately be developed or become commercially productive, which could cause us to lose rights under our leases as well as have a material adverse effect on our oil and natural gas reserves and future production and, therefore, our future cash flow and income.
- We are required to pay fees to our service providers based on minimum volumes under long-term contracts regardless of actual volume throughput.
- If we are unable to meet our commitments under the Elevation Gathering Agreements, we may incur additional costs.
- We participate in oil and gas leases with third parties who may not be able to fulfill their commitments to our projects.
- We own non-operating interests in properties developed and operated by third parties, and as a result, we are unable to control the operation and profitability of such properties.
- We depend upon several significant purchasers for the sale of most of our oil and natural gas production. The loss of one or more of these purchasers could, among other factors, limit our access to suitable markets for the oil, natural gas and NGL we produce.
- The inability of one or more of our purchasers to meet their obligations may adversely affect our financial results.
- We may incur losses as a result of title defects in the properties in which we invest.
- Competition in the oil and natural gas industry and from alternative energy sources is intense, making it more difficult for us to acquire properties and market oil or natural gas.
- Climate change legislation or regulations restricting emissions of GHG could result in increased operating costs and reduced demand for the oil, natural gas and NGL that we produce.
Management Discussion
- Oil sales revenues. Crude oil sales revenues decreased by $338.9 million to $382.5 million for the year ended December 31, 2020 as compared to crude oil sales of $721.4 million for the year ended December 31, 2019. A decrease in sales volumes between these periods contributed to a $135.2 million negative impact, and a decrease in crude oil prices contributed a $203.7 million negative impact. Additionally, for the year ended December 31, 2020 crude oil revenue decreased by approximately $12.3 million as compared to a crude oil revenue decrease of approximately $24.7 million for the year ended December 31, 2019 due to a contract term impacting the amount of consideration that can be included in the transaction price which reduced oil sales revenue pursuant to ASC 606.