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What changed in Crescent Energy Co's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Crescent Energy Co's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+430 added−409 removedSource: 10-K (2025-02-26) vs 10-K (2024-03-04)

Top changes in Crescent Energy Co's 2024 10-K

430 paragraphs added · 409 removed · 318 edited across 6 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

158 edited+26 added−61 removed315 unchanged
Biggest changeSales of substantial amounts of our Class A Common Stock (including shares issued in connection with an acquisition), or the perception that such sales could occur, may adversely affect prevailing market prices of our Class A Common Stock. 60 Table of Contents If securities or industry analysts do not continue to publish research or reports about our business, if they adversely change their recommendations regarding our Class A Common Stock or if our operating results do not meet their expectations, the trading price of our Class A Common Stock could decline.
Biggest changeIf securities or industry analysts do not continue to publish research or reports about our business, if they adversely change their recommendations regarding our Class A Common Stock or if our operating results do not meet their expectations, the trading price of our Class A Common Stock could decline. 58 Table of Contents The trading market for our Class A Common Stock will be influenced by the research and reports that industry or securities analysts publish about us or our business.
Our access to transportation options can also be affected by U.S. federal and state regulation of oil and natural gas production and transportation, general economic conditions and changes in supply and demand.
Our access to transportation options can also be affected by U.S. federal and state regulation of oil and natural gas production and transportation, general economic conditions and changes in supply and demand.
We may conduct operations on oil and natural gas leases in areas where certain species that are listed as threatened or endangered are known to exist and where other species, such as the dunes sagebrush lizard, lesser prairie chicken, and greater sage grouse, that potentially could be listed as threatened or endangered under the ESA may exist.
We may conduct operations on oil and natural gas leases in areas where certain species that are listed as threatened or endangered are known to exist, such as the dunes sagebrush lizard, lesser prairie chicken, and greater sage grouse, and where other species that potentially could be listed as threatened or endangered under the ESA may exist.
We believe that this provision, which is intended to provide that certain business opportunities are not subject to the “corporate opportunity” doctrine, is appropriate, as the Preferred Stockholder and its affiliates invest in a wide array of companies, including companies with businesses similar to us.
We believe that this provision, which is intended to provide that certain business opportunities are not subject to the “corporate opportunity” doctrine, is appropriate, as the Preferred Stockholder and its affiliates invest in a wide array of companies, including companies with businesses similar to us.
These costs and liabilities could arise under a wide range of federal, state and local environmental laws and regulations, including, for example, the following federal laws and their state counterparts, as amended from time to time: • the CAA, which restricts the emission of air pollutants from many sources, imposes various pre-construction, monitoring and reporting requirements and is relied upon by the EPA as authority for adopting climate change regulatory initiatives relating to GHG emissions; • the CWA, which regulates discharges of pollutants from facilities to state and federal waters and establish the extent to which waterways are subject to federal jurisdiction and rulemaking as protected waters of the United States; • the OPA, which imposes liabilities for removal costs and damages arising from an oil spill into waters of the United States; • the SDWA, which protects the quality of the nations’ public drinking water through adoption of drinking water standards and control over the subsurface injection of fluids into belowground formations; • the RCRA, which imposes requirements for the generation, treatment, storage, transport disposal and cleanup of non-hazardous and hazardous wastes; • the CERCLA, which imposes liability without regard for fault on generators, transporters and arrangers of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur, as well as on present and certain past owners and operators of sites were hazardous substance releases have occurred or are threatening to occur; • the Emergency Planning and Community Right-to-Know Act, which requires facilities to implement a safety hazard communication program and disseminate information to employees, local emergency planning committees and response departments about toxic chemical uses and inventories; and • the ESA, which restricts activities that may affect federally identified endangered and threatened species or their habitats through the implementation of operating limitations or restrictions or a temporary, seasonal or permanent ban on operations in affected areas.
These costs and liabilities could arise under a wide range of federal, state and local environmental laws and regulations, including, for example, the following federal laws and their state counterparts, as amended from time to time: • the CAA, which restricts the emission of air pollutants from many sources, imposes various pre-construction, monitoring and reporting requirements and is relied upon by the EPA as authority for adopting climate change regulatory initiatives relating to GHG emissions; • the CWA, which regulates discharges of pollutants from facilities to state and federal waters and establish the extent to which waterways are subject to federal jurisdiction and rulemaking as protected waters of the United States; • the OPA, which imposes liabilities for removal costs and damages arising from an oil spill into waters of the United States; • the SDWA, which protects the quality of the nations’ public drinking water through adoption of drinking water standards and control over the subsurface injection of fluids into belowground formations; • the RCRA, which imposes requirements for the generation, treatment, storage, transport disposal and cleanup of non-hazardous and hazardous wastes; • the CERCLA, which imposes liability without regard for fault on generators, transporters and arrangers of hazardous substances at sites where hazardous substance releases have occurred or are threatening to occur, as well as on present and certain past owners and operators of sites were hazardous substance releases have occurred or are threatening to occur; • the Emergency Planning and Community Right-to-Know Act, which requires facilities to implement a safety hazard communication program and disseminate information to employees, local emergency planning committees and response departments about toxic chemical uses and inventories; and 51 Table of Contents • the ESA, which restricts activities that may affect federally identified endangered and threatened species or their habitats through the implementation of operating limitations or restrictions or a temporary, seasonal or permanent ban on operations in affected areas.
On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (“IRA 2022”) into law pursuant to the budget reconciliation process. The IRA 2022 contains hundreds of billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles and supporting infrastructure and carbon capture and sequestration, amongst other provisions.
On August 16, 2022, former President Biden signed the Inflation Reduction Act of 2022 (“IRA 2022”) into law pursuant to the budget reconciliation process. The IRA 2022 contains hundreds of billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles and supporting infrastructure and carbon capture and sequestration, amongst other provisions.
Moreover, climate change may also result in various physical risks, such as the increased frequency or intensity of extreme weather events (including storms, wildfires, and other natural disasters) or changes in meteorological and hydrological patterns, that could adversely impact our operations, as well as those of our operators and their supply chains.
Climate change may also result in various physical risks, such as the increased frequency or intensity of extreme weather events (including storms, wildfires, and other natural disasters) or changes in meteorological and hydrological patterns, that could adversely impact our operations, as well as those of our operators and their supply chains.
Moreover, while we may create and publish voluntary disclosures regarding sustainability-related matters from time to time, many of the statements in those voluntary disclosures are based on hypothetical expectations and assumptions that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith.
Moreover, while we may create and publish voluntary disclosures regarding sustainability-related matters from time to time, many of the statements in those voluntary disclosures are based on expectations and assumptions and hypothetical scenarios that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith.
Also, despite these aspirational goals and any other actions taken, we may receive pressure from investors, lenders, or other groups to adopt more aggressive climate or other sustainability-related goals, but we cannot guarantee that we will be able to implement such goals because of potential costs or technical or operational obstacles.
Also, despite these aspirational goals and any other actions taken, we may receive pressure from investors, lenders, or other groups to adopt more aggressive climate or other sustainability-related goals, but we cannot guarantee that we will be able to pursue or implement such goals because of potential costs or technical or operational obstacles.
Increasing attention to climate change, societal expectations on companies to address climate change, investor and societal expectations regarding voluntary sustainability disclosures, and consumer demand for alternative forms of energy may result in increased costs, reduced demand for our products, reduced profits, increased investigations and litigation, and negative impacts on our stock price and access to capital markets.
Increased attention to climate change, societal expectations on companies to address climate change, investor and societal expectations regarding voluntary sustainability disclosures, and consumer demand for alternative forms of energy may result in increased costs, reduced demand for our products, reduced profits, increased investigations and litigation, and negative impacts on our stock price and access to capital markets.
However, we cannot guarantee that there will be sufficient offsets available for purchase given the increased demand from numerous businesses implementing net zero goals, or that offsets we do purchase will successfully achieve the emissions reductions they represent.
However, we cannot guarantee that there will be sufficient offsets available for purchase given the demand from numerous businesses implementing net zero goals, or that offsets we do purchase will successfully achieve the emissions reductions they represent.
Moreover, there can be no assurance that such procedures and controls will be sufficient to prevent security breaches from occurring, particularly given the unpredictability of the timing, nature, and scope of IT breaches, attacks, disruptions and other incidents.
Moreover, there can be no assurance that such procedures and controls will be sufficient to prevent security breaches from occurring, particularly given the unpredictability of the timing, nature, and scope of breaches, attacks, disruptions and other incidents.
Our Certificate of Incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our Certificate of Incorporation or our Bylaws, or (iv) any action asserting a claim against us that is governed by the internal affairs doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein.
Our Certificate of Incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will, to the fullest extent permitted by applicable law, be the sole and exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty owed 60 Table of Contents by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our Certificate of Incorporation or our Bylaws, or (iv) any action asserting a claim against us that is governed by the internal affairs doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein.
Upon the written notice to the Manager at least 180 days prior to the expiration of the initial term or any automatic renewal term, we may, without cause, decline to renew the Management Agreement upon the affirmative determination of at least two-thirds of its independent directors reasonably and in good faith, that (1) there has been unsatisfactory long-term performance by the Manager that is materially detrimental to us and our subsidiaries taken as a whole or (2) the fees payable to the Manager, in the aggregate, are materially unfair and excessive compared to those that would be charged by a comparable asset manager managing assets comparable to our assets, subject to Manager’s right to renegotiate the fees.
Upon the written notice to the Manager at least 180 days prior to the expiration of the initial term or any automatic renewal term, we may, without cause, 41 Table of Contents decline to renew the Management Agreement upon the affirmative determination of at least two-thirds of its independent directors reasonably and in good faith, that (1) there has been unsatisfactory long-term performance by the Manager that is materially detrimental to us and our subsidiaries taken as a whole or (2) the fees payable to the Manager, in the aggregate, are materially unfair and excessive compared to those that would be charged by a comparable asset manager managing assets comparable to our assets, subject to Manager’s right to renegotiate the fees.
Furthermore, public statements with respect to sustainability matters, such as emissions reduction goals, other environmental targets, or other commitments addressing certain social issues, are becoming increasingly subject to heightened scrutiny from public and governmental authorities related to the risk of potential “greenwashing,” i.e., misleading information or false claims overstating potential benefits.
Furthermore, certain public statements with respect to sustainability matters, such as emissions reduction goals, other environmental targets, or other commitments addressing certain social issues, are becoming increasingly subject to heightened scrutiny from public and governmental authorities, as well as other parties, related to the risk of potential “greenwashing,” i.e., misleading information or false claims overstating potential benefits.
The success of any completed acquisition, including the Western Eagle Ford Acquisitions, will depend on our ability to integrate effectively the acquired business, asset or property into our existing operations. The process of integrating acquired businesses, assets and properties may involve unforeseen difficulties and may require a disproportionate amount of our managerial and financial resources.
The success of any completed acquisition, including the Western Eagle Ford Acquisitions and the SilverBow Merger, will depend on our ability to integrate effectively the acquired business, asset or property into our existing operations. The process of integrating acquired businesses, assets and properties may involve unforeseen difficulties and may require a disproportionate amount of our managerial and financial resources.
Additionally, the Biden Administration has taken action to broaden enforcement under the ESA, including expanding the definition of “critical habitat.” The designation of previously unprotected species in areas where we operate as threatened or endangered, a recategorization of a species from threatened to endangered, or an expansion of areas designated as “critical habitat” could cause us to incur increased costs arising from species protection measures or could result in limitations on our exploration, development and production activities that could have an adverse impact on our ability to develop and produce our reserves.
Additionally, the Biden Administration took action to broaden enforcement under the ESA, including expanding the definition of “critical habitat.” The designation of previously unprotected species in areas where we operate as threatened or endangered, a recategorization of a species from threatened to endangered, or an expansion of areas designated as “critical habitat” could cause us to incur increased costs arising from species protection measures or could result in limitations on our exploration, development and production activities that could have an adverse impact on our ability to develop and produce our reserves.
To the extent that we need funds and OpCo or its subsidiaries are restricted from making such distributions or payments under applicable law or regulation or under the terms of any current or future indebtedness agreements, or are otherwise unable to provide such funds, our liquidity and financial condition could be materially adversely affected.
To the extent that we need funds and OpCo or our operating subsidiaries are restricted from making such distributions or payments under applicable law or regulation or under the terms of any current or future indebtedness agreements, or are otherwise unable to provide such funds, our liquidity and financial condition could be materially adversely affected.
Litigation risks are also increasing, as a number of parties have sought to bring suit against oil and natural gas companies in state or federal court, alleging, among other things, that such companies created public nuisances by producing fuels that contributed climate change or alleging that companies have been aware of the adverse effects of climate change for some time but defrauded their investors or customers by failing to adequately disclose those impacts.
Business and Properties.” Litigation risks are also increasing, as a number of parties have sought to bring suit against oil and natural gas companies in state or federal court, alleging, among other things, that such companies created public nuisances by producing fuels that contributed climate change or alleging that companies have been aware of the adverse effects of climate change for some time but defrauded their investors or customers by failing to adequately disclose those impacts.
The cost of oilfield services typically fluctuates based on demand for those services, and the increase in commodity prices and supply constraints due to the conflicts in Ukraine and the Middle East, elevated interest rates and associated policies of the Federal Reserve or otherwise has increased the cost of oilfield services.
The cost of oilfield services typically fluctuates based on demand for those services, and the increase in commodity prices and supply constraints due to potential tariffs, the conflicts in Ukraine and the Middle East, elevated interest rates and associated policies of the Federal Reserve or otherwise has increased the cost of oilfield services.
The cost of our drilling, completion and well operations may increase and/or our results of operations and cash flows from such operations may be impacted, as a result of a variety of factors, including: • unexpected drilling conditions; • title problems; • pressure or irregularities in formations; 41 Table of Contents • equipment failures or accidents; • adverse weather conditions, such as winter storms, fires, flooding and hurricanes, and changes in weather patterns; • compliance with, or changes in, environmental laws and regulations, including the IRA 2022, relating to air emissions, hydraulic fracturing and disposal of produced water, drilling fluids and other wastes, laws and regulations imposing conditions and restrictions on D&C operations and other laws and regulations, such as tax laws and regulations; • the availability and timely issuance of required governmental permits and licenses; and • the availability of, costs associated with and terms of contractual arrangements for properties, including mineral licenses and leases, pipelines, rail cars, crude oil hauling trucks and qualified drivers and related facilities and equipment to gather, process, compress, transport and market oil, natural gas, NGLs and related commodities.
The cost of our drilling, completion and well operations may increase and/or our results of operations and cash flows from such operations may be impacted, as a result of a variety of factors, including: • unexpected drilling conditions; • title problems; • pressure or irregularities in formations; • equipment failures or accidents; • adverse weather conditions, such as winter storms, fires, flooding and hurricanes, and changes in weather patterns; • compliance with, or changes in, environmental laws and regulations, including the IRA 2022 or as a result of the new Trump Administration, relating to air emissions, hydraulic fracturing and disposal of produced water, drilling fluids and other wastes, laws and regulations imposing conditions and restrictions on D&C operations and other laws and regulations, such as tax laws and regulations; • the availability and timely issuance of required governmental permits and licenses; and • the availability of, costs associated with and terms of contractual arrangements for properties, including mineral licenses and leases, pipelines, rail cars, crude oil hauling trucks and qualified drivers and related facilities and equipment to gather, process, compress, transport and market oil, natural gas, NGLs and related commodities.
Business and Properties—Legislative and regulatory environment.” 50 Table of Contents The classification of some of our gathering facilities, transportation pipelines, and purchase and sale transactions as FERC-jurisdictional or non-jurisdictional may be subject to change based on future determinations by FERC, the courts or Congress, in which case, our operating costs could increase and we could be subject to enforcement actions under the EP Act of 2005.
Business and Properties—Legislative and regulatory environment.” The classification of some of our gathering facilities, transportation pipelines, and purchase and sale transactions as FERC-jurisdictional or non-jurisdictional may be subject to change based on future determinations by FERC, the courts or Congress, in which case, our operating costs could increase and we could be subject to enforcement actions under the EP Act of 2005.
We have consolidated our business over time through acquisitions, including through the Merger Transactions, the Uinta Transaction, and the Western Eagle Ford Acquisitions and there are risks associated with integration of all of these assets, operations and our ability to manage those risks.
We have consolidated our business over time through acquisitions, including the Uinta Transaction, the Western Eagle Ford Acquisitions and the SilverBow Merger and there are risks associated with integration of all of these assets, operations and our ability to manage those risks.
This legislation has not passed. 56 Table of Contents Hydraulic fracturing (other than that using diesel) is currently generally exempt from regulation under the SDWA’s UIC program and is typically regulated by state oil and natural gas commissions or similar agencies. However, several federal agencies have asserted regulatory authority or pursued investigations over certain aspects of the process.
This legislation has not passed. Hydraulic fracturing (other than that using diesel) is currently generally exempt from regulation under the SDWA’s UIC program and is typically regulated by state oil and natural gas commissions or similar agencies. However, several federal agencies have asserted regulatory authority or pursued investigations over certain aspects of the process.
We are not the operator on all of our acreage or drilling locations, and, therefore, we will not be able to control the timing of exploration or development efforts, associated costs, or the rate of production of any non-operated assets and could be liable for certain financial obligations of the operators or any of our contractors to the extent such operator or contractor is unable to satisfy such obligations.
We are not the operator on all of our acreage or drilling locations, and, therefore, we will not be able to control the timing of exploration or development efforts, associated costs, or the rate of production of any non-operated assets and could be liable 45 Table of Contents for certain financial obligations of the operators or any of our contractors to the extent such operator or contractor is unable to satisfy such obligations.
PHMSA is continuing to work on developing additional regulations related to safety oversight of gas gathering pipelines, and additional future regulatory action expanding PHMSA’s jurisdiction and imposing stricter integrity management requirements is possible.
Notwithstanding this, PHMSA is continuing to work on developing additional regulations related to safety oversight of gas gathering pipelines, and additional future regulatory action expanding PHMSA’s jurisdiction and imposing stricter integrity management requirements is possible.
As such, a corporate fiduciary may generally not pursue a business opportunity which the corporation is financially able to undertake and which, by its nature, falls into the line of the corporation’s business and is of practical advantage to it, or in which the corporation has an actual or expectant interest, unless the opportunity is disclosed to the corporation and the corporation determines that it is not going to pursue such opportunity.
As such, a corporate fiduciary may generally not pursue a business opportunity which the corporation is financially able to undertake and which, by its nature, falls into the line of the corporation’s business and is of practical advantage to it, or in which the corporation has an actual or expectant interest, unless the opportunity is disclosed to the corporation and the corporation 61 Table of Contents determines that it is not going to pursue such opportunity.
To the extent cash flow from 39 Table of Contents operations is reduced and external sources of capital become limited, unavailable or on terms deemed unacceptable by us, our ability to make the necessary capital investment to maintain or expand our asset base of oil and natural gas reserves or to return capital to our investors would be impaired.
To the extent cash flow from operations is reduced and external sources of capital become limited, unavailable or on terms deemed unacceptable by us, our ability to make the necessary capital investment to maintain or expand our asset base of oil and natural gas reserves or to return capital to our investors would be impaired.
Increasing attention to climate change and environmental conservation, for example, may result in demand shifts for oil and natural gas products and additional governmental investigations and private litigation against us or our operators.
Increased attention to climate change and environmental conservation, for example, may result in demand shifts for oil and natural gas products and additional governmental investigations and private litigation against us or our operators.
Pursuant to our Management Agreement with the Manager, the Manager provides us with its executive management team a nd provides certain other management services. However, in each case such resources are not fully dedicated to our assets and operations, and the allocation of such resources is generally within the Manager’s discretion. See "Part III., Item 13.
Pursuant to our Management Agreement, the Manager provides us with our senior management team a nd provides certain other management services. However, in each case such resources are not fully dedicated to our assets and operations, and the allocation of such resources is generally within the Manager’s discretion. See "Part III., Item 13.
Our operations are dependent on third-party service providers. We contract with third-party service providers to support our operations. These contracted services are generally provided pursuant to master services agreements entered into between the third-party service providers and our operating subsidiaries.
We contract with third-party service providers to support our operations. These contracted services are generally provided pursuant to master services agreements entered into between the third-party service providers and our operating subsidiaries.
Our cash flow from operations and access to capital are subject to a number of variables, including: • the amount of oil and natural gas we produce from existing wells; • the prices at which we sell our production; • take-away capacity; • the estimated quantities of our oil and natural gas reserves; and 40 Table of Contents • our ability to acquire, locate and produce new reserves.
Our cash flow from operations and access to capital are subject to a number of variables, including: • the amount of oil and natural gas we produce from existing wells; • the prices at which we sell our production; • take-away capacity; • the estimated quantities of our oil and natural gas reserves; and • our ability to acquire, locate and produce new reserves.
Our ability to grow will depend on a number of factors, including: • the results of our drilling program; • hydrocarbon prices; • our ability to develop existing prospects; • our ability to continue to retain and attract skilled personnel; • our ability to maintain or enter into new relationships with project partners and independent contracts; and • our access to capital.
Our ability to grow will depend on a number of factors, including: • the results of our drilling program; • hydrocarbon prices; 40 Table of Contents • our ability to develop existing prospects; • our ability to continue to retain and attract skilled personnel; • our ability to maintain or enter into new relationships with project partners and independent contracts; and • our access to capital.
As a result, stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of our Class A Common Stock. Effective internal controls are necessary for us to provide reliable financial reports, prevent fraud and operate successfully as a public company.
As a result, stockholders could lose confidence in our financial reporting, which would harm our business and the trading price of our Class A Common Stock. 57 Table of Contents Effective internal controls are necessary for us to provide reliable financial reports, prevent fraud and operate successfully as a public company.
Cyber security attacks in particular are becoming more sophisticated and include, but are not limited to, installation of malicious software, attempts to gain unauthorized access to data and systems, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information and 65 Table of Contents corruption of data.
Cyber security attacks in particular are becoming more sophisticated and include, but are not limited to, installation of malicious software, attempts to gain unauthorized access to data and systems, and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information and corruption of data.
We may be unable to dispose of non-strategic assets on attractive terms and may be required to retain liabilities for certain matters. 66 Table of Contents We regularly review our asset base to assess the market value versus holding value of existing assets with a view to optimizing returns on deployed capital.
We may be unable to dispose of non-strategic assets on attractive terms and may be required to retain liabilities for certain matters. We regularly review our asset base to assess the market value versus holding value of existing assets with a view to optimizing returns on deployed capital.
The mandatory clearing requirement currently applies only to certain interest rate swaps and credit default swaps, but the CFTC could act to impose mandatory clearing requirements for other types of swap transactions. Dodd-Frank also imposes recordkeeping and reporting obligations on counterparties to swap transactions and other regulatory compliance obligations.
The mandatory clearing requirement currently applies only to certain interest rate swaps and credit default swaps, but the CFTC could act to impose mandatory clearing requirements 50 Table of Contents for other types of swap transactions. Dodd-Frank also imposes recordkeeping and reporting obligations on counterparties to swap transactions and other regulatory compliance obligations.
Production from wellbores may be affected by nearby fracturing activities by offset operators or us, resulting in reserve revisions. 38 Table of Contents As a result, estimated quantities of proved reserves and projections of future production rates and the timing of development expenditures may prove to be inaccurate.
Production from wellbores may be affected by nearby fracturing activities by offset operators or us, resulting in reserve revisions. As a result, estimated quantities of proved reserves and projections of future production rates and the timing of development expenditures may prove to be inaccurate.
If its drilling results are less than anticipated, the return on investment for a 46 Table of Contents particular project may not be as attractive as anticipated, and we could incur material write-downs of unevaluated properties and the value of undeveloped acreage could decline in the future.
If its drilling results are less than anticipated, the return on investment for a particular project may not be as attractive as anticipated, and we could incur material write-downs of unevaluated properties and the value of undeveloped acreage could decline in the future.
In addition, we may be unable to make attractive acquisitions or successfully integrate acquired businesses, assets or properties, and any inability to do so may disrupt our business and hinder our ability to grow. We intend to pursue a strategy focused on both reinvestment and future acquisitions, which is designed to obtain the optimal risk adjusted returns through commodity cycles.
In addition, we may be unable to make attractive acquisitions or successfully integrate acquired businesses, assets or properties, and any inability to do so may disrupt our business and hinder our ability to grow. 36 Table of Contents We intend to pursue a strategy focused on both reinvestment and future acquisitions, which is designed to obtain the optimal risk adjusted returns through commodity cycles.
Borrowings under the Revolving Credit Facility bear interest at either a U.S. dollar alternative base rate (based on the prime rate, the federal funds effective rate or an adjusted SOFR(as defined below)), plus an applicable margin or SOFR, plus an applicable margin, at the 59 Table of Contents election of the borrowers.
Borrowings under the Revolving Credit Facility bear interest at either a U.S. dollar alternative base rate (based on the prime rate, the federal funds effective rate or an adjusted SOFR(as defined below)), plus an applicable margin or SOFR, plus an applicable margin, at the election of the borrowers.
In addition to sales pursuant to such registration by selling stockholders, certain of our significant stockholders, including such selling stockholders, have distributed shares of our securities that they hold to their investors who themselves may then sell into the public market. Any sales of such securities may depress the price of our shares.
In addition to sales pursuant to such registration by selling stockholders, certain of our significant stockholders, including certain of Independence's former owners, have distributed shares of our securities that they hold to their investors who themselves may then sell into the public market. Any sales of such securities may depress the price of our shares.
Productive zones frequently contain water that must be removed in order for the oil and natural gas to produce, and our ability to remove and dispose of sufficient quantities of water from the various zones will determine whether we can produce oil and natural gas in commercial quantities.
Productive zones frequently contain water that must be removed in order for the oil and natural gas to produce, and our ability to remove and dispose of sufficient quantities of water from the various zones will determine whether we can produce oil and 47 Table of Contents natural gas in commercial quantities.
Additionally, operational risks affecting the 42 Table of Contents Manager, and our ability to work collaboratively with the Manager, including with respect to the allocation of corporate opportunities and other conflicts of interest, may impact our business and have a material effect on our business, financial results and prospects.
Additionally, operational risks affecting the Manager, and our ability to work collaboratively with the Manager, including with respect to the allocation of corporate opportunities and other conflicts of interest, may impact our business and have a material effect on our business, financial results and prospects.
FERC’s policies and practices across the range of its natural gas and liquids regulatory activities, including, for example, its policies on open access transportation, natural gas quality, ratemaking, capacity release and market center promotion, may indirectly affect the intrastate natural gas and liquids markets.
FERC’s policies and practices across the range of its natural gas and liquids regulatory activities, including, for example, its policies on open access transportation, natural gas quality, ratemaking, capacity release and market center promotion, may indirectly affect the intrastate natural gas and liquids 48 Table of Contents markets.
Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established single approach to identifying, measuring and reporting on many sustainability-related matters.
Such expectations and assumptions or hypothetical scenarios are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established approach to identifying, measuring and reporting on many sustainability-related matters.
For example, California, through CARB, has implemented a cap and trade program for GHG emissions that sets a statewide maximum limit on covered GHG emissions, and this cap declines annually to reach 40% below 1990 levels by 2030. Covered entities must either reduce their GHG emissions or purchase allowances to 54 Table of Contents account for such emissions.
For example, California, through CARB, has implemented a cap and trade program for GHG emissions that sets a statewide maximum limit on covered GHG emissions, and this cap declines annually to reach 40% below 1990 levels by 2030. Covered entities must either reduce their GHG emissions or purchase allowances to account for such emissions.
The impact of the changing demand for oil and natural gas may have a material and adverse effect on our business, financial condition, results of operations and cash flows. Our operations are subject to a series of risks arising from climate change. Climate change continues to attract considerable public and scientific attention.
The impact of any changing demand for oil and natural gas may have a material and adverse effect on our business, financial condition, results of operations and cash flows. Our operations are subject to a series of risks arising from climate change. 52 Table of Contents Climate change continues to attract considerable public and scientific attention.
In addition, resolution of one or more such proceedings could result in liability, loss of contractual or other rights, penalties or sanctions, as well as judgments, consent decrees or orders requiring a change in our business practices.
In addition, resolution of one or more such proceedings could result in 63 Table of Contents liability, loss of contractual or other rights, penalties or sanctions, as well as judgments, consent decrees or orders requiring a change in our business practices.
Risks related to our governance structure 62 Table of Contents We are a “controlled company” within the meaning of NYSE rules and, as a result, qualify for and rely on exemptions from certain corporate governance requirements.
Risks related to our governance structure We are a “controlled company” within the meaning of NYSE rules and, as a result, qualify for and rely on exemptions from certain corporate governance requirements.
Under the Domenici-Barton Energy Policy Act of 2005 ("EPAct 2005"), FERC has civil penalty authority under the NGA and the NGPA to impose penalties for current violations of up to $1,544,521 per day (adjusted annually for inflation) for each violation and disgorgement of profits associated with any violation.
Under the Domenici-Barton Energy Policy Act of 2005 ("EPAct 2005"), FERC has civil penalty authority under the NGA and the NGPA to impose penalties for current violations of up to $1,584,648 per day (adjusted annually for inflation) for each violation and disgorgement of profits associated with any violation.
We may also announce participation in, or certification under, various third-party sustainability or climate-related frameworks in an attempt to improve our sustainability profile, but such participation or certification may be costly and may not achieve the desired results. Additionally, while we may announce various voluntary climate or sustainability-related targets, such targets are aspirational.
We may also announce participation in, or certification under, various third-party sustainability or climate-related frameworks in an attempt to improve our sustainability 55 Table of Contents profile, but such participation or certification may be costly and may not achieve the desired results. Additionally, while we may announce various voluntary climate or sustainability-related targets, such targets are aspirational.
Changes to applicable tax laws and regulations or exposure to additional income tax liabilities could adversely affect our business, results of operations, financial condition and cash flows. 64 Table of Contents We are subject to various complex evolving U.S. federal, state and local tax laws.
Changes to applicable tax laws and regulations or exposure to additional tax liabilities could adversely affect our business, results of operations, financial condition and cash flows. We are subject to various complex evolving U.S. federal, state and local tax laws.
In January 2024, the Colorado Energy and Carbon Management Commission released draft rules that, if finalized as proposed, would require regulators to consider cumulative impacts of oil and gas operations in permitting decisions and increase scrutiny on the project’s proximity to other industrial sites, residential and school areas, “disproportionately impacted communities,” and “cumulatively impacted communities.” The draft rules would also set GHG emissions intensity targets for oil and gas operators and require regulators to consider such targets in their cumulative impacts analysis, as well as the potential to restrict operations during the summer in Ozone Nonattainment Areas.
In October 2024, the Colorado Energy and Carbon Management Commission finalized rules that require regulators to consider cumulative impacts of oil and gas operations in permitting decisions and increase scrutiny on the project’s proximity to other industrial sites, residential and school areas, “disproportionately impacted communities,” and “cumulatively impacted communities.” The rules also set GHG emissions intensity targets for oil and gas operators and require regulators to consider such targets in their cumulative impacts analysis, as well as the potential to restrict operations during the summer in Ozone Nonattainment Areas.
The reserve data included in our reserve reports assumes that substantial capital expenditures will be made to develop non-producing reserves. The calculation of our estimated net proved reserves as of December 31, 2023 assumes that we will spend $1.8 billion to develop our estimated PUDs.
The reserve data included in our reserve reports assumes that substantial capital expenditures will be made to develop non-producing reserves. The calculation of our estimated net proved reserves as of December 31, 2024 assumes that we will spend $2.8 billion to develop our estimated PUDs.
Although the United States had withdrawn from the agreement, President Biden has signed executive orders recommitting the United States to the agreement and, in April 2021, announced a target of reducing the United States’ emissions by 50-52% below 2005 levels by 2030.
Although the United States withdrew from the agreement, President Biden signed executive orders recommitting the United States to the agreement and, in April 2021, announced a target of reducing the United States’ emissions by 50-52% below 2005 levels by 2030.
While oil, natural gas and NGL prices have returned to pre-pandemic levels, global oil, natural gas and NGL demand may negatively affect the amount of cash available for capital expenditures and debt repayment, our ability to borrow money or raise additional capital and, as a result, could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.
Global oil, natural gas and NGL demand may negatively affect the amount of cash available for capital expenditures and debt repayment, our ability to borrow money or raise additional capital and, as a result, could have a material adverse effect on our business, prospects, financial condition, results of operations and cash flows.
The development of our estimated PUD reserves may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our estimated PUD reserves may not be ultimately developed or produced. Recovery of PUDs requires significant capital expenditures and successful drilling operations. At December 31, 2023, approximately 112.2 MMBoe of our total estimated proved reserves were undeveloped.
The development of our estimated PUD reserves may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our estimated PUD reserves may not be ultimately developed or produced. Recovery of PUDs requires significant capital expenditures and successful drilling operations. At December 31, 2024, approximately 182.6 MMBoe of our total estimated proved reserves were undeveloped.
Additionally, as of December 31, 2023, certain of our conventional assets in Wyoming had limited cushion between their carrying value and estimated undiscounted cash flows. As a result, a further decline of future commodity prices or a decrease in estimates of oil and natural gas reserves for these assets would likely result in an impairment charge.
Additionally, as of December 31, 2024, certain of our non-operated assets had limited cushion between their carrying value and estimated undiscounted cash flows. As a result, a further decline of future commodity prices or a decrease in estimates of oil and natural gas reserves for these assets would likely result in an impairment charge.
Any of 52 Table of Contents these consequences could have a material and adverse effect on our consolidated financial condition, results of operations or cash flows.
Any of these consequences could have a material and adverse effect on our consolidated financial condition, results of operations or cash flows.
As a result, a substantial or extended decline in commodity prices, such as what occurred in early 2020, may materially and adversely affect our future business, financial condition, results of operations, liquidity and ability to meet our financial commitments or cause us to delay our planned capital expenditures.
As a result, a substantial or extended decline in commodity prices may materially and adversely affect our future business, financial condition, results of operations, liquidity and ability to meet our financial commitments or cause us to delay our planned capital expenditures.
We cannot predict any future trends in the rate of inflation and a significant increase in inflation, to the extent we are unable to recover higher costs through higher oil and natural gas prices and revenues, would negatively impact our business, financial condition and results of operations. Our development projects require substantial capital expenditures.
We cannot predict any future trends in the rate of inflation and a significant increase in inflation, to the extent we are unable to recover higher costs through higher oil and natural gas prices and revenues, would negatively impact our business, financial condition and results of operations.
Business and Properties—Legislative and regulatory environment." We are subject to complex federal, state, local and other laws and regulations that could materially and adversely affect the cost, manner or feasibility of conducting our operations. Our oil and natural gas operations are subject to complex and stringent laws and regulations.
We are subject to complex federal, state, local and other laws and regulations that could materially and adversely affect the cost, manner or feasibility of conducting our operations. Our oil and natural gas operations are subject to complex and stringent laws and regulations.
Shortages or the high cost of equipment, supplies or personnel could delay or adversely affect our development and exploitation operations, which could have a material and adverse effect on our business, financial condition or results of operations.
Shortages or the high cost of equipment, supplies or personnel could delay or adversely affect our development and exploitation operations, which could have a material and adverse effect on our business, financial condition or results of operations. Our development projects require substantial capital expenditures.
These sanctions and actions by Russia in response thereto may cause disruptions in international supply chains, financial activities and operations, the full costs, burdens, and limitations of which are currently unknown and may become significant.
These sanctions, including the threat of potential sanctions, and actions by countries in response thereto may cause disruptions in international supply chains, financial activities and operations, the full costs, burdens, and limitations of which are currently unknown and may become significant.
For more information, see "Items 1 and 2. Business and Properties—Legislative and regulatory environment—Air emissions." 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, and restriction of GHG emissions.
Business and Properties—Legislative and regulatory environment—Air emissions." 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, and restriction of GHG emissions.
If additional capital is required, we may not be able to obtain debt and/or equity financing on terms favorable to us, or at all due to elevated interest rates and associated policies of the Federal Reserve or otherwise, which could result in a curtailment of our operations relating to development of our prospects, which in turn could lead to a decline in our reserves, production and cash flows, and could adversely affect our business, results of operation, financial conditions and ability to make payments on our outstanding indebtedness.
If additional capital is required, we may not be able to obtain debt and/or equity financing on terms favorable to us, or at all which could result in a curtailment of our operations relating to development of our prospects, which in turn could lead to a decline in our reserves, production and cash flows, and could adversely affect our business, results of operation, financial conditions and ability to make payments on our outstanding indebtedness.
Low oil, natural gas and NGL prices resulting from reduced demand caused by the conflicts in Ukraine, Israel and the Gaza Strip, accelerated substitution of renewable forms of energy for oil and gas, actions of OPEC and other factors materially affected our revenues, particularly before the effects of commodity derivatives, operating results and cash flows in 2023 and 2022.
Low oil, natural gas and NGL prices resulting from reduced demand, which may be caused by the conflicts in Ukraine and Israel, substitution of renewable forms of energy for oil and gas, actions of OPEC and other factors materially affected our revenues, particularly before the effects of commodity derivatives, operating results and cash flows.
LNG exports; • prevailing prices, and expectations regarding future prices, on local price indexes in the areas in which we operate; • the proximity, capacity, cost and availability of gathering and transportation facilities; • localized and global supply and demand fundamentals and transportation availability; • the cost of exploring for, developing, producing and transporting reserves; • the spot price of LNG on world markets; • weather conditions and natural disasters; • technological advances affecting energy consumption; • the price and availability of alternative fuels, including the potential acceleration of the development of alternative fuels as a result of the IRA 2022 or otherwise; • speculative trading in oil and natural gas derivative contracts; • increased end-user conservation; • political and economic conditions, such as the conflicts in Ukraine and the Middle East, in or affecting other producing regions or countries, including the Middle East, Africa, South America and Russia; • political and economic conditions in or affecting major LNG consumption regions or countries, particularly Asia and Europe; • political and economic conditions relating to the 2024 U.S. presidential election, including potential controversy and a potential change in presidential administration; • actions of OPEC, including the ability and willingness of the members of OPEC and other exporting nations to agree to and maintain oil price and production controls, including the anticipated increases in supply from Russia and OPEC, particularly Saudi Arabia; • U.S. trade policies and their effect on U.S. oil and natural gas exports; • expectations about future commodity prices; • the possibility of terrorist or cyberattacks and the consequences of any such attacks; and • U.S. federal, state and local governmental regulation and taxes.
LNG exports; • prevailing prices, and expectations regarding future prices, on local price indexes in the areas in which we operate; • the proximity, capacity, cost and availability of gathering and transportation facilities; • localized and global supply and demand fundamentals and transportation availability; • the cost of exploring for, developing, producing and transporting reserves; • the spot price of LNG on world markets; • weather conditions and natural disasters; • technological advances affecting energy consumption, including those related to new and emerging technologies; • the price and availability of alternative fuels, including the potential acceleration of the development of alternative fuels; • speculative trading in oil and natural gas derivative contracts; • increased end-user conservation; • political and economic conditions, such as the conflicts in Ukraine and the Middle East, in or affecting other producing regions or countries, including the Middle East, Africa, South America and Russia; • political and economic conditions in or affecting major LNG consumption regions or countries, particularly Asia and Europe; • actions of OPEC, including the ability and willingness of the members of OPEC and other exporting nations to agree to and maintain oil price and production controls, including the anticipated increases in supply from Russia and OPEC, particularly Saudi Arabia; • U.S. trade policies, including potential tariffs and their effect on U.S. oil and natural gas exports; • expectations about future commodity prices; and • the possibility of terrorist or cyberattacks and the consequences of any such attacks.
Furthermore, we filed registration statements with the SEC on Form S-8 providing for the registration of 3,672,404 shares of our Class A Common Stock issued or reserved for issuance under the Equity Incentive Plan.
Furthermore, we filed registration statements with the SEC on Form S-8 providing for the registration of 6,520,410 shares of our Class A Common Stock issued or reserved for issuance under the Equity Incentive Plan.
Moreover, because we have no independent means of generating revenue, our ability to make tax payments and payments under the Management Agreement is dependent on the ability of OpCo to make distributions to us in an amount sufficient to cover our tax obligations and obligations under the Management Agreement.
Because we have no independent means of generating revenue, our ability to make tax payments and payments under the Management Agreement is dependent on the ability of OpCo to make distributions to us in an amount sufficient to cover such obligations. This ability, in turn, depends on the ability of our operating subsidiaries to make distributions to OpCo.
Fuel conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to oil and natural gas, technological advances in fuel economy and energy generation devices, and passage of incentives or funding for renewable energy projects such as those contained in IRA 2022 could reduce demand for oil and natural gas.
Fuel conservation measures, alternative fuel requirements, elevated consumer demand for alternatives to oil and natural gas, technological advances in fuel economy and energy generation devices, and incentives or funding for renewable energy projects included in governmental regulations, such as those contained in the IRA 2022, could reduce demand for oil and natural gas.
Unfavorable ESG ratings and recent activism directed at shifting funding away from companies with energy-related assets could lead to increased negative investor sentiment toward us and our industry and to the diversion of investment to other industries, which could have a negative impact on our access to and costs of capital.
While such ratings do not impact all investors’ investment or voting decisions, unfavorable ESG ratings and any recent activism directed at shifting funding away from companies with energy-related assets could lead to increased negative investor sentiment toward us and our industry and to the diversion of investment to other industries, which could have a negative impact on our access to and costs of capital.
We cannot necessarily observe structural and environmental problems, such as pipe corrosion or groundwater contamination, when a review is performed. We may be unable to obtain contractual indemnities from the seller for liabilities created prior to our purchase of the property.
In the course of due diligence, we may not review every well, pipeline or associated facility. We cannot necessarily observe structural and environmental problems, such as pipe corrosion or groundwater contamination, when a review is performed. We may be unable to obtain contractual indemnities from the seller for liabilities created prior to our purchase of the property.
Intrastate oil pipeline transportation rates are subject to regulation by state regulatory commissions. The basis for intrastate oil pipeline regulation, and the degree of regulatory oversight and scrutiny given to intrastate oil pipeline rates, varies from state to state.
The basis for intrastate oil pipeline regulation, and the degree of regulatory oversight and scrutiny given to intrastate oil pipeline rates, varies from state to state.
We also cannot predict how such disclosures may be considered by financial institutions and investors when making investments decisions, and it is possible that we could face increased costs or restrictions on our access to capital.
If the final rules are implemented as currently written, we also cannot predict how such disclosures may be considered by financial institutions and investors when making investments decisions, and it is possible that we could face increased costs or restrictions on our access to capital.
The unavailability or high cost of equipment, supplies, personnel and oilfield services, due to commodity price volatility or supply constraints as a result of the conflicts in Ukraine and the Middle East, elevated, interest rates and associated policies of the Federal Reserve or otherwise could adversely affect our ability to execute development and exploitation plans on a timely basis and within budget, and consequently could materially and adversely affect our anticipated cash flow.
The unavailability or high cost of equipment, supplies, personnel and oilfield services, due to, among other things, potential tariffs, commodity price volatility or supply constraints as a result of the conflicts in Ukraine and the Middle East, elevated, interest rates and associated policies of the Federal Reserve or otherwise could adversely affect our ability to execute development and exploitation plans on a timely basis and within budget, and consequently could materially and adversely affect our anticipated cash flow. 38 Table of Contents We utilize third-party services to maximize the efficiency of our operation.
To the extent species are listed or critical habitats are designated under the ESA or similar laws, or previously unprotected species are designated as threatened or endangered in areas where our properties are located, operations on those properties could incur increased costs arising from species protection measures and face delays or limitations with respect to production activities thereon. 57 Table of Contents Increased attention to sustainability-related matters and conservation measures may adversely impact our business.
To the extent species are listed or critical habitats are designated under the ESA or similar laws, or previously unprotected species are designated as threatened or endangered in areas where our properties are located, operations on those properties could incur increased costs arising from species protection measures and face delays or limitations with respect to production activities thereon.
Accordingly, in the future we may make acquisitions of businesses, assets or properties that we expect to complement or expand our current assets. For example, Crescent Energy Company was created through the Merger Transactions in December 2021, and in March 2022, we acquired certain exploration and production assets in the state of Utah pursuant to the Uinta Transaction.
Accordingly, in the future we may make acquisitions of businesses, assets or properties that we expect to complement or expand our current assets. For example, in March 2022, we acquired certain exploration and production assets in the state of Utah pursuant to the Uinta Transaction.
The ability of OpCo, its subsidiaries and other entities in which it directly or indirectly holds an equity interest to make such distributions will be subject to, among other things, (i) the applicable provisions of Delaware law (or other applicable jurisdiction) that may limit the amount of funds available for distribution and (ii) restrictions in relevant debt instruments issued by OpCo or its subsidiaries and other entities in which it directly or indirectly holds an equity interest.
The ability of OpCo, our operating subsidiaries and other entities in which OpCo directly or indirectly holds an equity interest to make such distributions will be subject to, among other things, (i) the applicable provisions of Delaware law (or other applicable jurisdiction) that may limit the amount of funds available for distribution and (ii) restrictions in relevant debt instruments of OpCo or its subsidiaries and other entities in which OpCo directly or indirectly holds an equity interest, including any restrictions on the payment of distributions required under the Revolving Credit Facility.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe assess third-party cybersecurity controls through a cybersecurity questionnaire and include security and privacy addendums to our contracts where applicable. We have a supply chain risk management program for the identification and remediation of our critical IT vendors.
Biggest changeWe assess third-party cybersecurity controls through a variety of methods including review of available Trust and Assurance reports and include security and privacy addendums to our contracts where applicable. As part of our existing cybersecurity risk management program, we identify and as necessary, remediate, risks related to our critical IT vendors.
We recognize the importance of developing, implementing, and maintaining effective cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data. We maintain a cyber risk management program to identify, assess, manage, mitigate, and respond to cybersecurity threats.
We recognize the importance of developing, implementing, and maintaining effective cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our data. We maintain a cybersecurity risk management program to identify, assess, manage, mitigate, and respond to cybersecurity threats.
Item 1C. Cybersecurity Risk management and strategy Our business is dependent upon our computer systems, devices and networks (including both operational and information technology) to collect, process and store the data necessary to conduct almost all aspects of our business, including the operation of our oil and natural gas assets and the recording and reporting of commercial and financial information.
Cybersecurity Risk management and strategy Our business is dependent upon our and our operators’ computer systems, devices and networks (including both operational and information technology) to collect, process and store the data necessary to conduct almost all aspects of our business, including the operation of our oil and natural gas assets and the recording and reporting of commercial and financial information.
We also leverage information from industry groups for benchmarking and awareness of best practices. We have integrated our cybersecurity risk management program into our broader enterprise risk management framework.
We also leverage information from industry groups, including ONE-ISAC, for benchmarking and awareness of cybersecurity best practices. We have integrated our cybersecurity risk management program into our broader enterprise risk management framework.
As of the date of this report, though our service providers may have experienced certain cybersecurity incidents, we are not aware of any previous cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including our business, financial condition, results of operations or cash flows. See "Part I., Item 1A.
As of the date of this report, though our service providers may have experienced certain cybersecurity incidents, we are not aware of any cybersecurity threats that have materially affected or are reasonably likely to materially affect the Company, including our business, financial condition, results of operations or cash flows.
Assessments of cybersecurity risks are communicated, not less than quarterly, with management by our corporate risk management committee, which holds responsibility for prioritizing the remediation of cybersecurity risk, evaluating the effectiveness of compensating controls, and evaluating the effectiveness of our control environment.
Assessments of cybersecurity risks are communicated, not less than quarterly, to management by our technology risk management committee, which holds responsibility for prioritizing the remediation of cybersecurity risk, evaluating the effectiveness of compensating controls, and consulting with Internal Audit on their evaluations of the effectiveness of our control environment.
We maintain an information security policy that applies to all employees and is intended to define best practices and safe behaviors for cybersecurity protection. We also use enterprise-wide tools and services to promote endpoint cybersecurity, data protection, password and login procedures, training and testing.
We maintain an information security policy based upon the National Institute of Standards and Technology ("NIST") Cybersecurity Framework ("CSF") that applies to all employees and is intended to define best practices and safe behaviors for cybersecurity protection. We also use enterprise-wide tools and services to promote secure practices, including, endpoint detection and response, data backups, training and testing.
Risk Factors" for additional information about the risks to our business associated with a breach or compromise to our IT systems. Board of Directors' oversight and management's role The Audit Committee of the Board of Directors oversees our cybersecurity risk exposures and the steps taken by management to monitor and mitigate cybersecurity risks.
Board of Directors' oversight and management's role The Audit Committee of the Board of Directors oversees our cybersecurity risk exposures and the steps taken by management to monitor and mitigate cybersecurity risks.
Management briefs the Audit Committee on the effectiveness of our cybersecurity risk management program, typically on a quarterly basis. In addition, cybersecurity risks are reviewed by our Board of Directors, at least annually, as part of our corporate risk mapping exercise.
In addition, cybersecurity risks are reviewed by our Board of Directors, at least annually, as part of our corporate risk mapping exercise.
Risks from cybersecurity threats We face risks from cybersecurity threats that could have a material adverse effect on our business, financial condition, results of operations, cash flows, or reputation.
Risks from cybersecurity threats We face risks from cybersecurity threats that could have a material and adverse effect on our business.
We have engaged a third-party cybersecurity vendor that reports directly to our corporate risk management committee, which is comprised of senior and management-level finance, accounting, legal and IT 67 Table of Contents employees. This third-party vendor performs an annual assessment of our cybersecurity risk management program against the NIST CSF.
The Cybersecurity team reports directly to our technology risk management committee, which is comprised of senior and management-level operations, finance, accounting, legal, HR, IT, and OT employees. We aim to perform, an annual assessment of our cybersecurity risk management program against the NIST CSF.
We aim to train our employees at least quarterly on cybersecurity practices, including security awareness training and simulated phishing exercises.
We aim to provide training to our employees at least quarterly on 64 Table of Contents cybersecurity practices through our security awareness training platform and endeavor to conduct simulated phishing exercises on a monthly cadence.
Removed
The underlying controls of the cyber risk management program are based on the National Institute of Standards and Technology ("NIST") Cybersecurity Framework ("CSF") and the International Organization Standardization ("ISO") 27001 Information Security Management System Requirements.
Added
The underlying practices and controls of the cyber risk management program are based on the NIST CSF. We have several deployed teams with distinct roles and responsibilities across our Information Technology, Operational Technology, and Cybersecurity divisions. Our Cybersecurity team comprises in-house personnel with specialized expertise, supported by external managed security services providers, consultants, and retainer services.
Added
However, we recognize that cybersecurity threats are continually evolving, and there remains a risk that a cybersecurity incident could potentially negatively impact the Company. Despite the implementation of our cybersecurity processes, we cannot guarantee that a significant cybersecurity attack will not occur.
Added
While we devote resources to our security measures to protect our systems and information, these measures cannot provide absolute security. See "Part I., Item 1A. Risk Factors" for additional information about the risks to our business associated with a breach or compromise to our IT systems.
Added
The technology risk management committee is led by senior members of our finance, accounting, human resources, IT, operations and legal teams, who have a combined average experience of 23.5 years. The technology risk management committee reports to Management, who in turn briefs the Audit Committee on the effectiveness of our cybersecurity risk management program on a quarterly basis.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeRepurchases may be of our Class A Common Stock or of OpCo Units (with the cancellation of a corresponding number of shares of our Class B Common Stock).
Biggest changeRepurchases may be of our Class A Common Stock or of OpCo Units (with the cancellation of a corresponding number of shares of our Class B Common Stock). We have approximately $119.5 million of repurchase authorization under such program remaining as of December 31, 2024.
Such repurchase may be made by Crescent or by OpCo, as applicable, and may be made from time to time in the open market, in a privately negotiated transaction, through purchases made in accordance with the Rule 10b5-1 of the Exchange Act or by such other means as will comply with applicable state and federal securities laws.
Such repurchases may be made by Crescent or by OpCo, as applicable, and may be made from time to time in the open market, in a privately negotiated transaction, through purchases made in accordance with the Rule 10b5-1 of the Exchange Act or by such other means as will comply with applicable state and federal securities laws.
The timing of any repurchases under the share repurchase program will depend on market conditions, contractual limitations and other considerations. The program may be extended, modified, suspended or discontinued at any time, and does not obligate us to repurchase any dollar amount or number of shares.
The timing of any repurchases under the share repurchase program will depend on market conditions, contractual limitations and other considerations. The program may be extended, modified, suspended or discontinued at any time, and does not obligate us to repurchase any dollar amount or number of securities.
Added
The IRA 2022 provides for, among other things, the imposition of a 1% non-deductible U.S. federal excise tax on the fair market value of any stock repurchased by a publicly traded domestic corporation during any taxable year, with the fair market 65 Table of Contents value of such repurchased stock reduced by the fair market value of certain stock issued by such corporation during such taxable year (such excise tax, the “Stock Buyback Tax”).
Added
In the past, there have been proposals to increase the amount of the Stock Buyback Tax from 1% to 4%; however, it is unclear whether such a change in the amount of the excise tax will be enacted and, if enacted, how soon any such change could take effect.
Added
The Stock Buyback Tax first applied to our stock repurchase program in the year ended December 31, 2023, and will continue to apply in subsequent taxable years.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod Total number of shares purchased (1) Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the plans or programs. 10/1/2023 - 10/31/2023 — — — — 11/1/2023 - 11/30/2023 — — — — 12/1/2023 - 12/31/2023 — — — — Recent Sales of Unregistered Equity Securities We had no sales of unregistered equity securities during the period covered by this Annual Report that were not previously reported in a Current Report on Form 8-K or Quarterly Report on Form 10-Q.
Biggest change(in thousands) 10/1/2024 - 10/31/2024 45,618 $10.99 45,618 $119,454 11/1/2024 - 11/30/2024 — — — — 12/1/2024 - 12/31/2024 — — — — Recent Sales of Unregistered Equity Securities We had no sales of unregistered equity securities during the period covered by this Annual Report that were not previously reported in a Current Report on Form 8-K or Quarterly Report on Form 10-Q.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table sets forth information with respect to our repurchases of shares of Class A common stock during the quarter ended December 31, 2023.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table sets forth information with respect to our repurchases of shares of Class A common stock during the quarter ended December 31, 2024.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our Class A Common Stock is listed and traded on the NYSE under the ticker symbol "CRGY." As of February 29, 2024, we had 171 Class A common stock shareholders of record and two Class B common stock shareholders of record.
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Our Class A Common Stock is listed and traded on the NYSE under the ticker symbol "CRGY." As of January 31, 2025, we had 217 Class A common stock shareholders of record and two Class B common stock shareholders of record.
Added
Period Total number of shares purchased Average price paid per share Total number of shares purchased as part of publicly announced plans or programs Approximate dollar value of shares that may yet be purchased under the plans or programs.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeTransaction and nonrecurring expenses of $34.1 million for the year ended December 31, 2022 were primarily related to (i) legal, consulting, transition service agreement costs, related restructuring of acquired derivative contracts and other fees incurred for the Uinta Transaction and Merger Transactions, (ii) severance costs subsequent to the Merger Transactions, (iii) merger integration costs and (iv) acquisition and debt transaction related costs. 78 Table of Contents Year Ended December 31, 2023 2022 $ Change % Change (in thousands) Net cash provided by operating activities $ 935,769 $ 1,012,372 $ (76,603) (8) % Changes in operating assets and liabilities (72,380) 8,258 Restructuring of acquired derivative contracts — 51,994 Certain redeemable noncontrolling interest distributions made by OpCo related to Manager Compensation (30,563) (39,070) Tax-related redeemable noncontrolling interest contributions (distributions) made by OpCo (753) (18,160) Transaction and nonrecurring expenses 22,632 34,051 Other adjustments and operating activities 33,815 9,487 Development of oil and natural gas properties (578,316) (624,880) Levered Free Cash Flow (non-GAAP) $ 310,204 $ 434,052 $ (123,848) (29) % Adjusted EBITDAX decreased by $144.5 million or 12% in 2023, compared to 2022, driven primarily by lower realized prices, partially offset by additional production and Adjusted EBITDAX generated by the Western Eagle Ford Acquisitions and the Uinta Transaction.
Biggest changeTransaction and nonrecurring expenses of $22.6 million for the year ended December 31, 2023 were primarily related to the Western Eagle Ford Acquisitions and system integration expenses. 77 Table of Contents Year Ended December 31, 2024 2023 $ Change % Change (in thousands, except percentages) Net cash provided by operating activities $ 1,223,086 $ 935,769 $ 287,317 31 % Changes in operating assets and liabilities 49,695 (72,380) Certain redeemable noncontrolling interest distributions made by OpCo (1) (19,963) (30,563) Tax-related redeemable noncontrolling interest contributions (distributions) made by OpCo (458) (753) Transaction and nonrecurring expenses (2) 82,484 22,632 Loss from extinguishment of debt, excluding non-cash write-off of deferred financing costs, discounts, premiums and SilverBow Merger transaction related costs (14,817) — Other adjustments and operating activities 55,339 33,815 Development of oil and natural gas properties (745,198) (578,316) Levered Free Cash Flow (non-GAAP) $ 630,168 $ 310,204 $ 319,964 103 % (1) In our calculation of Adjusted EBITDAX and Levered Free Cash Flow, we reflect Manager Compensation as if 100% of OpCo were owned and managed by the Company, to reflect consistent earnings and liquidity measures not impacted by the amount of OpCo's ownership under management.
Due to the flexible nature of our capital program and the fact that majority of our acreage is held by production, we could choose to defer a portion or all of these planned capital expenditures depending on a variety of factors, including, but not limited to, the success of our drilling activities, prevailing and anticipated prices for oil, gas and NGLs and resulting well economics, the availability of necessary equipment, infrastructure and capital, the receipt and timing of required regulatory permits and approvals, seasonal conditions, drilling and acquisition costs and the level of participation by other interest owners.
Due to the flexible nature of our capital program and the fact that the majority of our acreage is held by production, we could choose to defer a portion or all of these planned capital expenditures depending on a variety of factors, including, but not limited to, the success of our drilling activities, prevailing and anticipated prices for oil, gas and NGLs and resulting well economics, the availability of necessary equipment, infrastructure and capital, the receipt and timing of required regulatory permits and approvals, seasonal conditions, drilling and acquisition costs and the level of participation by other interest owners.
The Senior Notes are guaranteed on a senior unsecured basis by each of our existing and future subsidiaries that will guarantee the Revolving Credit Facility.
The Senior Notes are guaranteed on a senior unsecured basis by each of our existing and future subsidiaries that will guarantee our Revolving Credit Facility.
The Senior Notes and the guarantees are effectively subordinated to all of our secured indebtedness (including all borrowings and other obligations under the Revolving Credit Facility) to the extent of the value of the collateral securing such indebtedness, and structurally subordinated in right of payment to all existing and future indebtedness and other liabilities (including trade payables) of any future subsidiaries that do not guarantee the Senior Notes.
The Senior Notes and the guarantees are effectively subordinated to all of our secured indebtedness (including all borrowings and other obligations under our Revolving Credit Facility) to the extent of the value of the collateral securing such indebtedness and structurally subordinated in right of payment to all existing and future indebtedness and other liabilities (including trade payables) of any future subsidiaries that do not guarantee the Senior Notes.
The Senior Notes are not listed, and we do not intend to list the Senior Notes in the future, on any securities exchange, and currently there is no public market for the Senior Notes. Revolving Credit Facility In connection with the issuance of the 2026 Notes in May 2021, Crescent Finance entered into the Revolving Credit Facility.
The Senior Notes are not listed, and we do not intend to list the notes in the future, on any securities exchange, and currently there is no public market for the notes. Revolving Credit Facility In connection with the issuance of the 2026 Notes in May 2021, Crescent Finance entered into the Revolving Credit Facility.
(2) Excludes variable rate debt interest payments and commitment fees related to the Company's Revolving Credit Facility. (3) Amounts represent estimated discounted costs for future dismantlement and abandonment of our oil and natural gas properties. See "Notes to Combined and Consolidated Financial Statements— NOTE 9 - Asset Retirement Obligation " in "Part II., Item 8.
(2) Excludes variable rate debt interest payments and commitment fees related to the Company's Revolving Credit Facility. (3) Amounts represent estimated discounted costs for future dismantlement and abandonment of our oil and natural gas properties. See "Notes to Consolidated Financial Statements— NOTE 9 - Asset Retirement Obligation " in "Part II., Item 8.
Although we consider our tax accruals adequate, material changes in these accruals may occur in the future, based on the impact of tax audits, changes in legislation and resolution of pending or future tax matters. Refer to "Notes to Combined and Consolidated Financial Statements— NOTE 11 – Income Taxes " in "Part II., Item 8.
Although we consider our tax accruals adequate, material changes in these accruals may occur in the future, based on the impact of tax audits, changes in legislation and resolution of pending or future tax matters. Refer to "Notes to Consolidated Financial Statements— NOTE 11 – Income Taxes " in "Part II., Item 8.
The indentures governing the Senior Notes contain covenants that, among other things, limit the ability of our restricted subsidiaries to: (i) incur or guarantee additional indebtedness or issue certain types of preferred stock; (ii) pay dividends or distributions in respect of its equity or redeem, repurchase or retire its equity or subordinated indebtedness; (iii) transfer or sell assets; (iv) make investments; (v) create certain liens; (vi) enter into agreements that restrict dividends or other payments from any non-Guarantor restricted subsidiary to it; (vii) consolidate, merge or transfer all or substantially all of its assets; (viii) engage in transactions with affiliates; and (ix) create unrestricted subsidiaries.
The indentures governing the Senior Notes contains covenants that, among other things, limit the ability of the our restricted subsidiaries to: (i) incur or guarantee additional indebtedness or issue certain types of preferred stock; (ii) pay dividends or distributions in respect of its equity or redeem, repurchase or retire its equity or subordinated indebtedness; (iii) transfer or sell assets; (iv) make investments; (v) create certain liens; (vi) enter into agreements that restrict dividends or other payments from any non-Guarantor restricted subsidiary to it; (vii) consolidate, merge or transfer all or substantially all of its assets; (viii) engage in transactions with affiliates; and (ix) create unrestricted subsidiaries.
Our computations of Levered Free Cash Flow may not be comparable to other similarly titled measures of other companies. Adjusted EBITDAX and Levered Free Cash Flow should be read in conjunction with the information contained in our combined and consolidated financial statements prepared in accordance with GAAP.
Our computations of Levered Free Cash Flow may not be comparable to other similarly titled measures of other companies. Adjusted EBITDAX and Levered Free Cash Flow should be read in conjunction with the information contained in our consolidated financial statements prepared in accordance with GAAP.
We are members of the Oil & Gas Methane Partnership 2.0 Initiative, or OGMP 2.0, and received Gold Standard pathway ratings in 2022 and 2023 for our credible plan to more accurately measure our methane emissions.
We are members of the Oil & Gas Methane Partnership 2.0 Initiative, or OGMP 2.0, and received Gold Standard pathway ratings in 2022, 2023 and 2024 for our credible plan to more accurately measure our methane emissions.
See "Notes to Combined and Consolidated Financial Statements— NOTE 2 – Summary of Significant Accounting Policies " in "Part II., Item 8. Financial Statements and Supplementary Data" of this Annual Report for further discussion of the accounting policies applicable to the successful efforts method of accounting.
See "Notes to Consolidated Financial Statements— NOTE 2 – Summary of Significant Accounting Policies " in "Part II., Item 8. Financial Statements and Supplementary Data" of this Annual Report for further discussion of the accounting policies applicable to the successful efforts method of accounting.
The following discussion and analysis should be read in conjunction with the Combined and Consolidated Financial Statements and related Notes included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report and also with "Part I., Item 1A. Risk Factors" of this Annual Report.
The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and related Notes included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report and also with "Part I., Item 1A. Risk Factors" of this Annual Report.
Financial Statements and Supplementary Data" of this Annual Report for more information. New and revised accounting standards See “Notes to Combined and Consolidated Financial Statements— NOTE 2 – Summary of Significant Accounting Policies ” in Part II., Item 8. Financial Statements and Supplementary Data" of this Annual Report.
Financial Statements and Supplementary Data" of this Annual Report for more information. New and revised accounting standards See “Notes to Consolidated Financial Statements— NOTE 2 – Summary of Significant Accounting Policies ” in Part II., Item 8. Financial Statements and Supplementary Data" of this Annual Report.
During the years ended December 31, 2023 and 2022, we determined that there were triggering events requiring an evaluation of whether the carrying value of our oil and natural gas properties was recoverable.
During the years ended December 31, 2024, 2023, and 2022, we determined that there were triggering events requiring an evaluation of whether the carrying value of our oil and natural gas properties was recoverable.
Our effective tax rate is lower than the U.S. federal statutory income tax rate of 21% primarily due to effects of removing income and losses related to our noncontrolling interests and redeemable noncontrolling interests.
Our effective tax rate is typically lower than the U.S. federal statutory income tax rate of 21% primarily due to effects of removing income and losses related to our noncontrolling interests and redeemable noncontrolling interests.
Accordingly, reserve estimates often differ from the quantities of crude oil and natural gas that are ultimately recovered. We cannot predict the amounts or timing of future reserve revisions. When determining the December 31, 2023 proved reserves for each property, the benchmark prices issued by the SEC were adjusted using price differentials that account for property-specific quality and location differences.
Accordingly, reserve estimates often differ from the quantities of crude oil and natural gas that are ultimately recovered. We cannot predict the amounts or timing of future reserve revisions. When determining the December 31, 2024 proved reserves for each property, the benchmark prices issued by the SEC were adjusted using price differentials that account for property-specific quality and location differences.
We believe that being a responsible operator will produce better outcome, creating a net benefit for society and the environment, while delivering attractive returns for our investors. We view exceptional sustainability performance as an opportunity to differentiate Crescent from its peers, mitigate risks and strengthen operational performance as well as benefit our stakeholders and the communities in which we operate.
We believe that being a responsible operator will produce better outcomes, creating a net benefit for society and the environment, while delivering attractive returns for our investors. We view exceptional sustainability performance as an opportunity to differentiate Crescent from its peers, mitigate risks and strengthen operational performance as well as benefit our stakeholders and the communities in which we operate.
Acquisitions, divestitures and related reorganization Acquisitions and related reorganization In October 2023, we consummated the unrelated acquisition contemplated by the Purchase and Sale Agreement, dated as of August 22, 2023, between our subsidiary and an unaffiliated third party, pursuant to which we agreed to acquire certain incremental working interests in oil and natural gas properties (the "October Western Eagle Ford Acquisition," and together with the July Western Eagle Ford Acquisition, the "Western Eagle Ford Acquisitions") in certain of our existing Western Eagle Ford assets from the seller for aggregate cash consideration of approximately $235.1 million, including certain customary purchase price adjustments.
In October 2023, we consummated the unrelated acquisition contemplated by the Purchase and Sale Agreement, dated as of August 22, 2023, between our subsidiary and an unaffiliated third party, pursuant to which we agreed to acquire certain incremental working interests in oil and natural gas properties (the "October Western Eagle Ford Acquisition," and together with the July Western Eagle Ford Acquisition, the "Western Eagle Ford Acquisitions") in certain of our existing Western Eagle Ford assets from the seller for aggregate cash consideration of approximately $235.1 million, including certain customary purchase price adjustments.
We did not receive any proceeds or incur any material expenses associated with the Class A Conversions. September 2023 Underwritten Public Offering In September 2023, we conducted an underwritten public offering of 12.7 million shares of Class A Common Stock at a price to the public of $12.25 per share (not including underwriter discounts and commissions).
We did not receive any proceeds or incur any material expenses associated with the 2023 Class A Redemption. September 2023 Underwritten Public Offering In September 2023, we conducted an underwritten public offering of 12.7 million shares of Class A Common Stock at a price to the public of $12.25 per share (not including underwriter discounts and commissions).
Such repurchase may be made by Crescent or by OpCo, as applicable, and may be made from time to time in the open market, in a privately negotiated transaction, through purchases made in accordance with the Rule 10b5-1 of the Exchange Act or by such other means as will comply with applicable state and federal securities laws.
Such repurchases may be made by Crescent or by OpCo, as applicable, and may be made from time to time in the open market, in a privately negotiated transaction, through purchases made in accordance with the Rule 10b5-1 of the Exchange Act or by such other means as will comply with applicable state and federal securities laws.
Compensation cost for these awards is presented within General and administrative expense on our combined and consolidated statements of operations.
Compensation cost for these awards is presented within General and administrative expense on our consolidated statements of operations.
Financial Statements and Supplementary Data" of this Annual Report for additional discussion of our asset retirement obligations. (4) Amounts include payments which will become due under long-term agreements to purchase goods and services used in the normal course of business to secure transportation of our oil and natural gas production to market, as well as, pipeline, processing and storage capacity.
Financial Statements and Supplementary Data" of this Annual Report for additional discussion of our asset retirement obligations. 83 Table of Contents (4) Amounts include payments which will become due under long-term agreements to purchase goods and services used in the normal course of business to secure transportation of our oil and natural gas production to market, as well as, pipeline, processing and storage capacity.
If the future average crude oil prices are below the average prices used to determine proved reserves at December 31, 2023, it could have an adverse effect on our estimates of proved reserve volumes and the value of our business.
If the future average crude oil prices are below the average prices used to determine proved reserves at December 31, 2024, it could have an adverse effect on our estimates of proved reserve volumes and the value of our business.
In addition, the expected future cash flows to be generated by producing properties used for testing impairment, also in part, rely on estimates of quantities of net reserves. Depreciation, depletion and amortization DD&A of oil and natural gas producing properties is determined on a field-by-field basis using the units-of-production method.
In addition, the expected future cash flows to be generated by producing properties used for testing impairment, also in part, rely on estimates of quantities of net reserves. 85 Table of Contents Depreciation, depletion and amortization DD&A of oil and natural gas producing properties is determined on a field-by-field basis using the units-of-production method.
We exclude the items listed above from net income (loss) in arriving at Adjusted EBITDAX because these amounts can vary substantially within our industry depending upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired.
We exclude the items listed above from net income (loss) in arriving at Adjusted EBITDAX because these amounts can vary substantially within our industry depending 87 Table of Contents upon accounting methods and book values of assets, capital structures and the method by which the assets were acquired.
In July 2023 we issued an additional $300.0 million aggregate principal amount of the July 2028 Notes at 98.000% of par, in September 2023 we issued an additional $150.0 million aggregate principal amount of the September 2028 Notes at 101.125% of par, and in December 2023 we issued an additional $150.0 million aggregate principal amount of the December 2028 Notes at 102.125% of par.
In July 2023, we issued an additional $300.0 million, aggregate principal amount of 2028 Notes at 98.000% of par. In September 2023, we issued an additional $150.0 million aggregate principal amount of 2028 Notes at 101.125% of par. In December 2023, we issued an additional $150.0 million aggregate principal amount of 2028 Notes at 102.125% of par.
Properties acquired in business combinations When sufficient market data is not available, we determine the fair values of proved and unproved oil and natural gas properties acquired in transactions accounted for as business combinations by preparing estimates of cash flows from the production of crude oil, natural gas and NGL reserves.
Properties acquired in business combinations When sufficient market data is not available, we determine the fair values of proved and unproved oil and natural gas properties acquired in transactions accounted for as business combinations by preparing estimates of cash flows from the production of 86 Table of Contents crude oil, natural gas and NGL reserves.
Our active derivative program allows us to protect margins and corporate returns through commodity cycles. For information regarding risks related to our derivative program, see "Part I., Item 1A. Risk Factors".
Our active derivative program allows us to protect margins and corporate returns through commodity cycles. For information regarding risks related to our derivative program, see "Part I., Item 1A.
The following information updates the discussion of our financial condition provided in our previous filings, and analyzes the changes in the results of operations between the years ended December 31, 2023 and 2022.
The following information updates the discussion of our financial condition provided in our previous filings, and analyzes the changes in the results of operations between the years ended December 31, 2024 and 2023.
Risk Factors." Estimates of proved reserves are key components of our most significant financial estimates including the computation of depreciation, depletion and amortization ("DD&A") and impairment of proved oil and natural gas properties. 84 Table of Contents Oil and natural gas properties Oil and natural gas producing activities are accounted for under the successful efforts method of accounting.
Risk Factors." Estimates of proved reserves are key components of our most significant financial estimates including the computation of depreciation, depletion and amortization ("DD&A") and impairment of proved oil and natural gas properties. Oil and natural gas properties Oil and natural gas producing activities are accounted for under the successful efforts method of accounting.
The following table illustrates our production revenue mix for each of the periods presented: Year Ended December 31, 2023 2022 2021 Oil 76 % 66 % 62 % Natural gas 16 % 25 % 25 % NGLs 8 % 9 % 13 % In addition, revenue from our midstream assets is supported by commercial agreements that have established minimum volume commitments.
The following table illustrates our production revenue mix for each of the periods presented: Year Ended December 31, 2024 2023 2022 Oil 76 % 76 % 66 % Natural gas 13 % 16 % 25 % NGLs 11 % 8 % 9 % In addition, revenue from our midstream assets is supported by commercial agreements that have established minimum volume commitments.
The additional crude oil blending expense is more than offset by additional oil blending revenue included as part of our Midstream and other revenue. Depreciation, depletion and amortization.
The additional crude oil blending expense was more than offset by additional oil blending revenue included as part of our Midstream and other revenue. Depreciation, depletion and amortization.
Approximately 27.6 million of those shares of Class A Common Stock were distributed to certain of its legacy investors in privately-managed funds and accounts. The remaining 3.0 million shares of Class A Common Stock were sold at a price per share of $10.90, pursuant to Rule 144, through a broker-dealer.
Approximately 27.6 million of those shares of Class A Common Stock were subsequently distributed to certain of its legacy investors in privately-managed funds and accounts. The remaining 3.0 million shares of Class A Common Stock were subsequently sold by affiliates of KKR at a price per share of $10.90, pursuant to Rule 144, through a broker-dealer.
We received net proceeds of $145.7 million from the Equity Issuance, after deducting underwriting fees and expenses. 2023 Senior Notes Offerings On February 1, 2023, we issued $400.0 million aggregate principal amount of 9.250% senior notes due 2028 (the "Original 2028 Notes") at par.
We received net proceeds of $145.7 million from the Equity Issuance (the "2023 Equity Issuance," and together with the 2024 Equity Issuance, the "Equity Issuances"), after deducting underwriting fees and expenses. 2023 Senior Notes Offerings On February 1, 2023, we issued $400.0 million aggregate principal amount of 9.250% senior notes due 2028 (the "Original 2028 Notes") at par.
Refer to our 2022 Annual Report filed March 7, 2023 for discussion and analysis of the changes in results of operations between the years ended December 31, 2022 and 2021. The following discussion contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance.
Refer to our 2023 Annual Report filed March 4, 2024 for discussion and analysis of the changes in results of operations between the years ended December 31, 2023 and 2022. The following discussion contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance.
During the years ended December 31, 2023, 2022, and 2021, we recognized DD&A expense of $675.8 million, $532.9 million, and $312.8 million, respectively. While revisions of previous reserve estimates have not historically been significant to the depreciation and depletion rates, any reduction in proved reserves, could result in an acceleration of future DD&A expense.
During the years ended December 31, 2024, 2023, and 2022, we recognized DD&A expense of $949.5 million, $675.8 million, and $532.9 million, respectively. While revisions of previous reserve estimates have not historically been significant to the depreciation and depletion rates, any reduction in proved reserves, could result in an acceleration of future DD&A expense.
During the years ended December 31, 2023 and 2022, we evaluated our Oil and natural gas properties, Goodwill and Investments in equity affiliates and determined that certain amounts were impaired.
During the years ended December 31, 2024 and 2023, we evaluated our Oil and natural gas properties and Investments in equity affiliates and determined that certain amounts were impaired.
A further decline of future commodity prices or a decrease in estimates 85 Table of Contents of oil and natural gas reserves for these assets would likely result in an impairment charge.
A further decline of future commodity prices or a decrease in estimates of oil and natural gas reserves for these assets would likely result in an impairment charge.
Risk Factors—Risks related to the oil and natural gas industry and our operations—Continuing or worsening inflationary issues and associated changes in monetary policy have resulted in and may result in additional increases to the cost of our goods, services and personnel, which in turn cause our capital expenditures and operating costs to rise." In August 2022, the IRA 2022 was signed into law.
Risk Factors—"Risks related to the oil and natural gas industry—Continuing or worsening inflationary issues and associated changes in monetary policy have resulted in and may result in additional increases to the cost of our goods, services and personnel, which in turn cause our capital expenditures and operating costs to rise." In August 2022, the Inflation Reduction Act of 2022 (“IRA 2022”) was signed into law.
We believe Adjusted EBITDAX is a useful performance measure because it allows for an effective evaluation of our operating performance when compared against our peers, without regard to our financing methods, corporate form or capital structure.
Adjusted EBITDAX is not a measure of performance as determined by GAAP. We believe Adjusted EBITDAX is a useful performance measure because it allows for an effective evaluation of our operating performance when compared against our peers, without regard to our financing methods, corporate form or capital structure.
How we evaluate our operations We use a variety of financial and operational metrics to assess the performance of our oil, natural gas and NGL operations, including: • Production volumes sold; • Commodity prices and differentials; • Operating expenses; • Adjusted EBITDAX (non-GAAP); and • Levered Free Cash Flow (non-GAAP) 72 Table of Contents Development program and capital budget Our development program is designed to prioritize the generation of attractive risk-adjusted returns and meaningful free cash flow and is inherently flexible, with the ability to modify our capital program as necessary to react to the current market environment.
How we evaluate our operations We use a variety of financial and operational metrics to assess the performance of our oil, natural gas and NGL operations, including: 71 Table of Contents • Production volumes sold; • Commodity prices and differentials; • Operating expenses; • Adjusted EBITDAX (non-GAAP); and • Levered Free Cash Flow (non-GAAP) Development program and capital budget Our development program, which consists of expenditures for drilling, completion and recompletion activities, is designed to prioritize the generation of attractive risk-adjusted returns and meaningful free cash flow and is inherently flexible, with the ability to modify our capital program as necessary to react to the current market environment.
Cash expenditures for drilling, completion and recompletion activities are presented as " development of oil and natural gas properties" in investing activities on our combined and consolidated statements of cash flows. We expect to fund our 2024 capital program, excluding acquisitions through cash flow from operations.
Cash expenditures for drilling, completion 82 Table of Contents and recompletion activities are presented as " Development of oil and natural gas properties" in investing activities on our consolidated statements of cash flows. We expect to fund our 2025 capital program, excluding acquisitions through cash flow from operations.
These midstream revenues comprise the majority of our midstream and other revenue. Midstream and other revenue accounts for 4% or less of our total revenues for each of the years ended December 31, 2023, 2022 and 2021.
These midstream revenues comprise the majority of our midstream and other revenue. Midstream and other revenue accounts for 5% or less of our total revenues for each of the years ended December 31, 2024, 2023 and 2022.
Financial Statements and Supplementary Data" of this Annual Report Dividends Our future dividends depend on our level of earnings, financial requirements and other factors and will be subject to approval by our Board of Directors, applicable law and the terms of our existing debt documents, including the indentures governing the Senior Notes.
Dividends Our future dividends depend on our level of earnings, financial requirements and other factors and will be subject to approval by our Board of Directors, applicable law and the terms of our existing debt documents, including the indentures governing the Senior Notes.
On March 4, 2024, the Board of Directors approved a quarterly cash dividend of $0.12 per share, or $0.48 per share on an annualized basis, to be paid to shareholders of our Class A Common Stock with respect to the fourth quarter of 2023.
On February 26, 2025, the Board of Directors approved a quarterly cash dividend of $0.12 per share, or $0.48 per share on an annualized basis, to be paid to shareholders of our Class A Common Stock with respect to the fourth quarter of 2024.
We paid cash dividends of $0.53 per share of our Class A Common Stock to shareholders during the year ended December 31, 2023.
We paid cash dividends of $0.48 per share of our Class A Common Stock to shareholders during the year ended December 31, 2024.
These four issuances of the 2028 Notes are treated as a single series of securities under the indenture governing the Original 2028 Notes, will vote together as a single class, and have substantially identical terms, other than the issue date and the issue price.
All issuances of the 2033 Notes are treated as a single series of securities under the indenture governing the 2033 Notes, will vote together as a single class, and have substantially identical terms, other than the issue date and the issue price.
Our Class A Common Stock trades on the NYSE under the symbol “CRGY.” Geopolitical developments and economic environment During the last several years, prices of crude oil, natural gas and NGLs have experienced periodic downturns and sustained volatility, impacted by the COVID-19 pandemic and recovery, Russia’s invasion of Ukraine and the related sanctions imposed on Russia, Hamas' attack against Israel and the ensuing conflict in the Middle East, supply chain constraints and rising interest rates and costs of capital.
Our Class A Common Stock trades on the NYSE under the symbol “CRGY.” Geopolitical developments and economic environment During the last several years, prices of crude oil, natural gas and NGLs have experienced periodic downturns and sustained volatility, impacted by the COVID-19 pandemic and recovery, Russia’s invasion of Ukraine and the related sanctions imposed on Russia, Hamas' attack against Israel and the ensuing conflict and escalation of tensions in the Middle East (including with Lebanon and Yemen), supply chain constraints, elevated interest rates and costs of capital and political and regulatory uncertainties, including any proposed tariffs.
As of December 31, 2023, (i) unrecognized compensation cost related to unvested equity-classified profits interest awards was $63.1 million, and (ii) we carried $5.8 million in Other long term liabilities on the consolidated balance sheet and had unrecognized compensation of $3.8 million related to unvested liability-classified profits interest awards.
As of December 31, 2024, (i) unrecognized compensation cost related to unvested equity-classified profits interest awards was $2.3 million, and (ii) we carried $4.5 million in Other long term liabilities on the consolidated balance sheet and had unrecognized compensation of $2.9 million related to unvested liability-classified profits interest awards.
Levered Free Cash Flow is not a measure of liquidity as determined by GAAP. Levered Free Cash Flow is a supplemental non-GAAP liquidity measure that is used by our management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies.
Levered Free Cash Flow does not take into account amounts incurred on acquisitions. Levered Free Cash Flow is not a measure of liquidity as determined by GAAP. Levered Free Cash Flow is a supplemental non-GAAP liquidity measure that is used by our management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies.
We may also redeem up to 40% of the aggregate principal amount of the 2028 Notes before February 15, 2025 with an amount of cash not greater than the net proceeds that we raise in certain equity offerings at a redemption price equal to 109.250% of the principal amount of the 2028 Notes being redeemed, plus accrued and unpaid interest, if any, to, but excluding the redemption date.
We may also redeem up to 40% of the aggregate principal amount of the 2032 Notes before April 1, 2027 with an amount of cash not greater than the net proceeds that we raise in certain equity offerings at a redemption price equal to 107.625% of the principal amount of the 2032 Notes being redeemed, plus accrued and unpaid interest, if any, to, but excluding the redemption date.
The U.S. inflation rate began increasing in 2021, peaked in the middle of 2022 and began to gradually decline in the second half of 2022 and into 2023.
The U.S. inflation rate began increasing in 2021, peaked in the middle of 2022 and began to gradually decline in the second half of 2022 and into 2023 and has remained relatively stable through 2024.
The Senior Notes are our senior unsecured obligations and the Senior Notes and the related guarantees rank equally in right of payment with the borrowings under the Revolving Credit Facility and any of our other future senior indebtedness and senior to any of our future subordinated indebtedness.
After the completion of the Tender Offer and Redemption, the 2028 Notes, the 2032 Notes and 2033 Notes (collectively, the "Senior Notes") are our senior unsecured obligations and the Senior Notes and the related guarantees rank equally in right of payment with the borrowings under our Revolving Credit Facility and any of our other future senior indebtedness and senior to any of our future subordinated indebtedness.
Following an assessment of our oil and natural gas properties, during the years ended December 31, 2023 and 2022, we recorded impairment expense of $149.6 million and $65.2 million, respectively. We did not incur any impairment expense during the year ended December 31, 2021.
Following an assessment of our oil and natural gas properties, during the years ended December 31, 2024, 2023, and 2022, we recorded impairment expense of $161.5 million, $149.6 million and $65.2 million, respectively.
For additional information, see "Notes to Combined and Consolidated Financial Statements— NOTE 13 – Equity-Based Compensation Awards " in "Part II., Item 8.
For additional information, see "Notes to Consolidated Financial Statements— NOTE 13 – Equity-Based Compensation Awards " in "Part II., Item 8. Financial Statements and Supplementary Data" of this Annual Report.
The 2026 Notes bear interest at an annual rate of 7.250%, which is payable on May 1 and November 1 of each year and mature on May 1, 2026. 80 Table of Contents We may, at our option, redeem all or a portion of the 2026 Notes at any time on or after May 1, 2023 at certain redemption prices.
The 2032 Notes bear interest at an annual rate of 7.625%, which is payable on April 1 and October 1 of each year, and mature on April 1, 2032. We may, at our option, redeem all or a portion of the 2032 Notes at any time on or after April 1, 2027 at certain redemption prices.
Our domestic direct and indirect subsidiaries are required to be guarantors under the Revolving Credit Facility, subject to certain exceptions. 81 Table of Contents The Revolving Credit Facility contains certain covenants that restrict the payment of cash dividends, certain borrowings, sales of assets, loans to others, investments, merger activity, commodity swap agreements, liens and other transactions without the adherence to certain financial covenants or the prior consent of our lenders.
The Revolving Credit Facility contains certain covenants that restrict the payment of cash dividends, certain borrowings, sales of assets, loans to others, investments, merger activity, commodity swap agreements, liens and other transactions without the adherence to certain financial covenants or the prior consent of our lenders.
These inflationary pressures have resulted in and may result in additional increases to the costs of our oilfield goods, services and personnel, which in turn cause our capital expenditures and operating costs to rise. Sustained levels of high inflation have likewise caused the U.S.
Inflationary pressures have resulted in and may result in additional increases to the costs of our oilfield goods, services and personnel, which in turn cause our capital expenditures and operating costs to rise. Sustained levels of high inflation have likewise caused the U.S. Federal Reserve and other central banks to increase interest rates in 2022, continuing through 2023. The U.S.
In recent years, commodity prices have been subject to significant fluctuations, impacted by the COVID-19 pandemic and recovery, Russia’s invasion of Ukraine and the associated sanctions imposed on Russia, the Israel-Hamas conflict, actions taken by OPEC, inflation and increased U.S. 73 Table of Contents drilling activity.
In recent years, commodity prices have been subject to significant fluctuations, either as a result of the COVID-19 pandemic and recovery, Russia’s invasion of Ukraine and the associated sanctions imposed on Russia, the Israel-Hamas conflict and the broader conflict in the Middle East, actions taken by OPEC, sustained elevated inflation and increased U.S. drilling activity or otherwise.
We routinely assess potential uncertain tax positions and, if required, establish accruals for such amounts. The accruals for deferred tax assets and liabilities, including deferred state income tax assets and liabilities, are subject to significant judgment and are reviewed and adjusted routinely based on changes in facts and circumstances.
The accruals for deferred tax assets and liabilities, including deferred state income tax assets and liabilities, are subject to significant judgment and are reviewed and adjusted routinely based on changes in facts and circumstances.
The following table presents the percentages of our production that was economically hedged through the use of derivative contracts: Year Ended December 31, 2023 2022 2021 Oil 65 % 64 % 81 % Natural gas 57 % 66 % 83 % NGLs 16 % 46 % 67 % The following table sets forth the average NYMEX oil and natural gas prices and our average realized prices for the periods presented: Year Ended December 31, 2023 2022 2021 Oil (Bbl): Average NYMEX $ 77.62 $ 94.23 $ 68.04 Realized price (excluding derivative settlements) 72.09 90.06 66.71 Realized price (including derivative settlements) (1) 65.04 71.98 53.07 Natural Gas (Mcf): Average NYMEX $ 2.74 $ 6.64 $ 3.91 Realized price (excluding derivative settlements) 2.84 5.97 3.96 Realized price (including derivative settlements) 2.83 3.42 3.06 NGLs (Bbl): Realized price (excluding derivative settlements) $ 22.76 $ 37.72 $ 30.42 Realized price (including derivative settlements) 24.95 29.70 19.15 (1) For the years ended December 31, 2023 and 2022, the realized price excludes $61.5 million and $49.9 million impact from the settlement of acquired derivative contracts, respectively.
The following table presents the percentages of our production that was economically hedged through the use of derivative contracts: Year Ended December 31, 2024 2023 2022 Oil 67 % 65 % 64 % Natural gas 51 % 57 % 66 % NGLs 6 % 16 % 46 % The following table sets forth the average NYMEX oil and natural gas prices and our average realized prices for the periods presented: Year Ended December 31, 2024 2023 2022 Oil (Bbl): Average NYMEX $ 75.72 $ 77.62 $ 94.23 Realized price (excluding derivative settlements) 71.14 72.09 90.06 Realized price (including derivative settlements) (1) 67.38 65.04 71.98 Natural Gas (Mcf): Average NYMEX $ 2.27 $ 2.74 $ 6.64 Realized price (excluding derivative settlements) 1.91 2.84 5.97 Realized price (including derivative settlements) (1) 2.33 2.83 3.42 NGLs (Bbl): Realized price (excluding derivative settlements) $ 24.10 $ 22.76 $ 37.72 Realized price (including derivative settlements) (1) 24.05 24.95 29.70 (1) The realized price presented above does not include $60.8 million received from the settlement of acquired oil, gas and NGL derivative contracts for the year ended December 31, 2024.
Production volumes sold The following table presents historical sales volumes for our properties: Year Ended December 31, 2023 2022 2021 Oil (MBbls) 24,287 21,865 13,237 Natural gas (MMcf) 130,629 128,470 89,455 NGLs (MBbls) 8,475 7,110 6,099 Total (MBoe) 54,533 50,387 34,245 Daily average (MBoe/d) 149 138 94 Total sales volume increased 4,146 MBoe during the year ended December 31, 2023 compared to 2022.
Production volumes sold The following table presents historical sales volumes for our properties: Year Ended December 31, 2024 2023 2022 Oil (MBbls) 29,945 24,287 21,865 Natural gas (MMcf) 183,227 130,629 128,470 NGLs (MBbls) 13,154 8,475 7,110 Total (MBoe) 73,637 54,533 50,387 Daily average (MBoe/d) 201 149 138 Total sales volume increased 19,104 MBoe during the year ended December 31, 2024 compared to 2023.
If an event of default occurs and we are unable to cure such default, the lenders will be able to accelerate maturity and exercise other rights and remedies. We expect to remain in compliance with these covenants for the foreseeable future.
If an event of default occurs and we are unable to cure such event of default, the lenders will be able to accelerate maturity and exercise other rights and remedies.
As of December 31, 2023, the carrying value of certain of our conventional assets in Wyoming in proved oil and natural gas properties was $214.5 million. At the current forward commodity price curve, these assets have limited cushion between their carrying value and estimated undiscounted cash flows.
Certain of our non-operated assets in proved oil and natural gas properties, which have a carrying value of $264.8 million, have limited cushion between their carrying value and estimated undiscounted cash flows at the current forward commodity price curve as of December 31, 2024.
Both issuances of the 2026 Notes are treated as a single series and vote together as a single class, and have identical terms and conditions, other than the issue date, the issue price and the first interest payment.
All issuances of the 2028 Notes are treated as a single series of securities under the indenture governing the 2028 Notes, will vote together as a single class, and have substantially identical terms, other than the issue date, the issue price, and the first interest payment date.
The Biden Administration has proposed increasing the amount of the excise tax from 1% to 4%; however, it is unclear whether such a change in the amount of the excise tax will be enacted and, if enacted, how soon any such change could take effect.
In the past, there have been proposals to increase the amount of the Stock Buyback Tax from 1% to 4%; however, it is unclear whether such a change in the amount of the excise tax will be enacted and, if enacted, how soon any such change could take effect.
Cash flows The following table summarizes our cash flows for the periods indicated: Year Ended December 31, (in thousands) 2023 2022 Net cash provided by operating activities $ 935,769 $ 1,012,372 Net cash used in investing activities (1,398,800) (1,124,344) Net cash (used in) provided by financing activities 456,456 (7,841) Net cash provided by operating activities .
Cash flows The following table summarizes our cash flows for the periods indicated: Year Ended December 31, (in thousands) 2024 2023 Net cash provided by operating activities $ 1,223,086 $ 935,769 Net cash used in investing activities (1,198,299) (1,398,800) Net cash (used in) provided by financing activities 207,392 456,456 Net cash provided by operating activities .
In addition, prior to February 15, 2025, we may redeem some or all of the 2028 Notes at a price equal to 100% of the principal amount thereof, plus a “make-whole” premium, plus accrued and unpaid interest, if any, to, but excluding the redemption date.
In addition, prior to April 1, 2027, we may redeem some or all of the 2032 Notes at a price equal to 100% of the principal amount thereof, plus a “make-whole” premium, plus accrued and unpaid interest, if any, to, but excluding the redemption date. 2028 Notes In February 2023, we issued $400.0 million aggregate principal amount of 9.250% senior notes due 2028 (the "2028 Notes") at par.
We have recognized deferred tax assets and liabilities for temporary differences, operating losses and tax credit carryforwards. We routinely assess the realizability of our deferred tax assets and reduce such assets by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized.
We routinely assess the realizability of our deferred tax assets and reduce such assets by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized. We routinely assess potential uncertain tax positions and, if required, establish accruals for such amounts.
In addition, the IRA 2022 imposes a federal fee on the emission of greenhouse gases through a methane emissions charge, including onshore petroleum and natural gas production. The methane emissions charge is expected to be collected in 2025 based on calendar year 2024 emissions and the fee is based on certain thresholds established in the IRA 2022.
In addition, the IRA 2022 imposes a federal fee on the emission of greenhouse gases through a methane emissions charge, including onshore petroleum and natural gas production.
The borrowing base will be automatically reduced upon (a) the issuance of certain permitted junior lien debt and other permitted additional debt, (b) the sale or other disposition of borrowing base properties if the aggregate net present value, discounted at 9% per annum (“PV-9”) of such properties sold or disposed of is in excess of 5.0% of the borrowing base then in effect and (c) early termination or set-off of swap agreements (x) the administrative agent relied on in determining the borrowing base or (y) if the value of such swap agreements so terminated is in excess of 5.0% of the borrowing base then in effect.
The borrowing base will be automatically reduced upon (a) the issuance of certain permitted junior lien debt and other permitted additional debt, (b) the sale or other disposition of borrowing base properties if the aggregate net present value, discounted at 9% per annum (“PV-9”) of such properties sold or disposed of is in excess of 5.0% of the borrowing base then in effect and (c) early termination or set-off of swap agreements (x) the administrative agent relied on in determining the borrowing base or (y) if the value of such swap agreements so terminated is in excess of 5.0% of the borrowing base then in effect. 81 Table of Contents The obligations under the Revolving Credit Facility remain secured by first priority liens on substantially all of our and the guarantors’ tangible and intangible assets, including without limitation, oil and natural gas properties and associated assets and equity interests owned by us and such guarantors.
The 2028 Notes interest is payable on February 15 and August 15 of each year and mature on February 15, 2028. We may, at our option, redeem all or a portion of the 2028 Notes at any time on or after February 15, 2025 at certain redemption prices.
The 2033 Notes bear interest at an annual rate of 7.375%, which is payable on January 15 and July 15 of each year, and mature on January 15, 2033. We may, at our option, redeem all or a portion of the 2033 Notes at any time on or after July 15, 2027 at certain redemption prices.
Capital expenditures Our acquisition and development expenditures consist of acquisitions of proved and unproved property, expenditures associated with the development of our oil and natural gas properties and other asset additions.
The borrowing base was maintained at $2.6 billion and the elected commitment amount was maintained at $2.0 billion. Capital expenditures Our acquisition and development expenditures consist of acquisitions of proved and unproved property, expenditures associated with the development of our oil and natural gas properties and other asset additions.
Our cash expenditures related to the Development of oil and natural gas properties decreased by $11.4 million, and we had $64.3 million lower proceeds from the sale of oil and natural gas properties. Net cash provided by financing activities .
Our cash expenditures related to the Development of oil and natural gas properties on the consolidated statements of cash flows increased by $104.3 million, and we had $25.8 million higher proceeds from the sale of oil and natural gas properties. Net cash provided by financing activities .
Oil revenue decreased $218.1 million, or 11%, in 2023 compared to 2022. This decrease was driven by lower realized oil prices that resulted in a decrease of $436.2 million (a decline of 20% per Bbl) and partially offset by a $218.1 million increase from higher sales volumes (7 MBbl/d, or 12%).
Oil revenue increased $379.5 million, or 22%, in 2024 compared to 2023. This increase was driven by a $407.9 million increase from higher sales volumes (15 MBbl/d, or 22%), partially offset by lower realized oil prices that resulted in a decrease of $28.4 million (a decline of 1% per Bbl).
Other operating costs include exploration expense and gain on sale of assets. Other operating costs increased by $10.5 million compared to 2022, primary driven by a $4.6 million lower gain on sale of assets recognized in 2023, and $5.9 million in higher exploration expenses. Interest expense.
Other operating costs include exploration expense and gain on sale of assets. Other operating costs decreased by $22.2 million compared to 2023, primary driven by a $29.4 million higher gain on sale of assets recognized in 2024, partially offset by $7.3 million in higher exploration expenses. Interest expense.
We define Levered Free Cash Flow as Adjusted EBITDAX less interest expense, excluding non-cash deferred financing cost amortization, current income tax benefit (expense), tax-related redeemable noncontrolling interest distributions made by OpCo and development of oil and natural gas properties. Levered Free Cash Flow does not take into account amounts incurred on acquisitions.
We define Levered Free Cash Flow as Adjusted EBITDAX less interest expense, excluding non-cash amortization of deferred financing costs, discounts, and premiums, loss from extinguishment of debt, excluding non-cash write-off of deferred financing costs, discounts, and premiums and SilverBow Merger transaction related costs, current income tax benefit (expense), tax-related redeemable noncontrolling interest distributions made by OpCo and development of oil and natural gas properties.
Crude oil, natural gas and NGL reserves One of the most significant estimates the Company makes is the estimate of proved crude oil, natural gas and NGL reserves. Reserve engineering is a subjective process of estimating volumes of economically recoverable oil and natural gas that cannot be measured in an exact manner.
Reserve engineering is a subjective process of estimating volumes of economically recoverable oil and natural gas that cannot be measured in an exact manner. Our crude oil and natural gas reserves are based on a combination of proved reserves and risk-weighted probable reserves and require significant judgment.
In connection with each redetermination of the borrowing base, we must maintain mortgages on at least 85% of the PV-9 of the oil and gas properties that constitute borrowing base properties.
In connection with each redetermination of the borrowing base, we must maintain mortgages on at least 85% of the PV-9 of the oil and gas properties that constitute borrowing base properties. Our domestic direct and indirect subsidiaries are required to be guarantors under the Revolving Credit Facility, subject to certain exceptions.
Federal Reserve and other central banks to increase interest rates, and to the extent elevated inflation remains, we may experience further cost increases for our operations, including oilfield services, labor costs and equipment if our drilling activity increases. Higher oil and natural gas prices may cause the costs of materials and services to continue to rise.
Although the financial health of the oil and gas industry has shown improvement as compared to prior periods, to the extent elevated inflation remains, we may experience further cost increases for our operations, including oilfield services, labor costs and equipment. Higher oil and natural gas prices may cause the costs of materials and services to continue to rise.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeAs of December 31, 2023, our derivative portfolio had an aggregate notional value of approximately $1.7 billion, and the fair market value of our commodity derivative contracts was a net asset of $20.3 million. We determine the fair value of our oil and natural gas commodity derivatives using valuation techniques that utilize market quotes and pricing analysis.
Biggest changeWe determine the fair value of our oil and natural gas commodity derivatives using valuation techniques that utilize market quotes and pricing analysis. Inputs include publicly available prices and forward price curves generated from a compilation of data gathered from third parties.
Amounts not offset on the consolidated balance sheets represent positions that do not meet all of the conditions to be netted on such balance sheet, such as the legally enforceable right of offset or the execution of a master netting arrangement. See "Notes to Combined and Consolidated Financial Statements, NOTE 5 – Derivatives " in "Part II., Item 8.
Amounts not offset on the consolidated balance sheets represent positions that do not meet all of the conditions to be netted on such balance sheet, such as the legally enforceable right of offset or the execution of a master netting arrangement. See "Notes to Consolidated Financial Statements, NOTE 5 – Derivatives " in "Part II., Item 8.
A key tenet of our focused risk management effort is an active economic hedge strategy to mitigate near-term price volatility while maintaining long-term exposure to underlying commodity prices. Our hedging program allows us to preserve capital, protect margins and corporate returns through commodity cycles and return capital to investors.
A key tenet of our focused risk management effort is an active economic hedge strategy to mitigate near-term price volatility while maintaining long-term exposure to underlying commodity prices. Our hedging program allows us to reserve capital and protect margins and corporate returns through commodity cycles and return capital to investors.
For the years ended December 31, 2023, 2022 and 2021, we had certain major customers that exceeded 10% of total revenues. See "Part I., Items 1 and 2.
For the years ended December 31, 2024, 2023 and 2022, we had certain major customers that exceeded 10% of total revenues. See "Part I., Items 1 and 2.
The prices we receive for our production depend on many factors outside of our control, such as the strength of the global economy and global supply and demand for the commodities we produce. 87 Table of Contents To reduce the impact of fluctuations in oil, natural gas and NGLs prices on our cash flows, we regularly enter into commodity derivative contracts with respect to certain of our oil, natural gas and NGL production through various transactions that limit the risks of fluctuations of future prices.
To reduce the impact of fluctuations in oil, natural gas and NGLs prices on our cash flows, we regularly enter into commodity derivative contracts with respect to certain of our oil, natural gas and NGL production through various transactions that limit the risks of fluctuations of future prices.
Derivative assets and liabilities are classified on the consolidated balance sheets as risk management assets and liabilities. We use derivative instruments and enter into swap contracts which are governed by International Swaps and Derivatives Association (“ISDA”) master agreements.
We use derivative instruments and enter into swap contracts which are governed by International Swaps and Derivatives Association (“ISDA”) master agreements.
If prices increased by 10%, our derivative position would change by approximately $130.4 million. If prices decreased by 10%, our derivative position would change by approximately $124.7 million. The hypothetical change in fair value could be a gain or a loss depending on whether commodity prices decrease or increase.
If prices decreased by 10%, our derivative position would change by approximately $192.5 million. The hypothetical change in fair value could be a gain or a loss depending on whether commodity prices decrease or increase. Derivative assets and liabilities are classified on the consolidated balance sheets as risk management assets and liabilities.
Inputs include publicly available prices and forward price curves generated from a compilation of data gathered from third parties. Based upon our open commodity derivative positions at December 31, 2023, a hypothetical 10% increase or decrease in the NYMEX WTI, Brent price, Henry Hub Index price, NGL prices and basis prices would change our net commodity derivative position.
Based upon our open commodity derivative positions at December 31, 2024, a hypothetical 10% increase or decrease in the NYMEX WTI, Brent price, Henry Hub Index price, NGL prices and basis prices would change our net commodity derivative position. If prices increased by 10%, our derivative position would change by approximately $224.1 million.
The creditworthiness of our counterparties is subject to periodic review. Interest rate risk At December 31, 2023, we had $23.5 million of variable rate debt outstanding.
The creditworthiness of our counterparties is subject to periodic review. Interest rate risk Although we had no variable rate debt outstanding at December 31, 2024, we are subject to the risk of changes in interest rates under our Revolving Credit Facility.
These economic hedging activities are intended to limit our near-term exposure to product price volatility and to maintain stable cash flows, a strong balance sheet and attractive corporate returns.
These economic hedging activities are intended to limit our near-term exposure to product price volatility and to maintain stable cash flows, a strong balance sheet and attractive corporate returns. 88 Table of Contents As of December 31, 2024, our derivative portfolio had an aggregate notional value of approximately $3.1 billion, and the fair market value of our commodity derivative contracts was a net asset of $19.5 million.
Removed
Assuming no change in the amount outstanding, the impact on interest expense of each 1% (or 100 basis point) increase or decrease in the average interest rate would result in an approximately $0.2 million increase or decrease in interest expense per year on our variable rate debt outstanding at December 31, 2023. 88 Table of Contents
Added
The prices we receive for our production depend on many factors outside of our control, such as the strength of the global economy and global supply and demand for the commodities we produce.
Added
Borrowings under the Revolving Credit Facility bear interest at either a U.S. dollar alternative base rate (based on the prime rate, the federal funds effective rate or an adjusted SOFR (as defined below)), plus an applicable margin or SOFR, plus an applicable margin, at the election of the borrowers.
Added
We manage our interest rate exposure by maintaining a combination of fixed and variable rate debt and monitoring the effect of market changes in interest rates. 89 Table of Contents

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