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

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Paragraph-level year-over-year comparison of SM 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.

+347 added−324 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-22)

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

347 paragraphs added · 324 removed · 266 edited across 7 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

92 edited+34 added−10 removed143 unchanged
Biggest changeMoreover, the imposition of new environmental initiatives and regulations could include restrictions on our ability to conduct certain operations such as hydraulic fracturing or disposal of wastes, including, but not limited to, produced water, drilling fluids, and other wastes associated with the exploration, development, or production of oil, gas, and NGLs. 26 Compliance with environmental regulations, surface use agreements, and permit requirements governing the withdrawal, storage, and use of surface water or groundwater necessary for hydraulic fracturing of wells may increase our operating costs and cause delays, interruptions, or termination of our operations, the extent of which cannot be predicted, all of which could have an adverse effect on our operations and financial condition.
Biggest changeCompliance with environmental regulations, oil and gas leases, surface use agreements, and permit requirements governing the withdrawal, storage, and use of surface water and disposal or recycling of produced water or groundwater necessary for hydraulic fracturing of wells may increase our operating costs and cause delays, interruptions, or termination of our operations, the extent of which cannot be predicted, all of which could have an adverse effect on our operations and financial condition.
Future cash flows and the availability of financing are subject to a number of factors, such as the level of production from existing wells, prices received for oil, gas, and NGL sales, our success in locating, developing, and acquiring new reserves, and the orderly functioning of credit and capital markets.
Future cash flows and the availability of financing are subject to a number of factors, such as the level of production from existing wells, prices received for oil, gas, and NGL sales, our success in locating, acquiring, and developing new reserves, and the orderly functioning of credit and capital markets.
These factors include, in addition to the other risk factors set forth herein, the following: • changes in oil, gas, or NGL prices; • changes in the outlook for regional, national, or global commodity supply and demand; • variations in drilling, recompletion, and operating activity; • inflation; • changes in financial estimates by securities analysts; • changes in market valuations of comparable companies; • additions or departures of key personnel; • increased volatility due to the impacts of algorithmic trading practices; • future sales of our common stock; • negative public perception and investor sentiment regarding our business and the oil and gas industry as a whole; • changes in the national and global economic outlook, including potential impacts from trade agreements; and • international trade relationships, potentially including the effects of trade restrictions or tariffs affecting the raw materials we utilize and the commodities we produce in our business.
These factors include, in addition to the other risk factors set forth herein, the following: • changes in oil, gas, or NGL prices; • changes in the outlook for regional, national, or global commodity supply and demand; • variations in drilling, recompletion, and operating activity; • inflation; • changes in financial estimates by securities analysts; • changes in market valuations of comparable companies; • additions or departures of key personnel; • increased volatility due to the impacts of algorithmic trading practices; • future sales of our common stock; • negative public perception and investor sentiment regarding our business and the oil and gas industry as a whole; • changes in the national and global economic outlook, including potential impacts from trade agreements or tariffs; and • international trade relationships, potentially including the effects of trade restrictions or tariffs affecting the raw materials we utilize and the commodities we produce in our business.
In the event we encounter delays in drilling and completing our wells or otherwise due to construction, interruptions of operations, or delays in connecting new volumes to gathering systems or pipelines for an extended period of time, or if we further limit our capital expenditures due to future commodity price declines or for other reasons, the requirements to pay for quantities not delivered could have a material impact on our results of operations, financial position, and liquidity.
In the event we encounter delays in drilling and completing our wells or otherwise due to construction, interruptions of operations, or delays in connecting new volumes to rail systems, gathering systems, or pipelines for an extended period of time, or if we further limit our capital expenditures due to future commodity price declines or for other reasons, the requirements to pay for quantities not delivered could have a material impact on our results of operations, financial position, and liquidity.
In the event that state, local, or municipal legal restrictions are adopted in areas where we are currently conducting, or in the future plan to conduct, operations, we may incur additional costs to comply with such requirements that may be significant in nature, experience delays or curtailment in the pursuit of exploration, development, or production activities, and could even be prohibited from drilling and/or completing certain wells.
In the event that tribal, state, local, or municipal legal restrictions are adopted in areas where we are currently conducting, or in the future plan to conduct, operations, we may incur additional costs to comply with such requirements that may be significant in nature, experience delays or curtailment in the pursuit of exploration, development, or production activities, and could even be prohibited from drilling and/or completing certain wells.
Deliberate attacks on, or security 34 breaches in our systems, infrastructure, the systems and infrastructure of third-parties, or cloud-based applications could lead to disclosure of confidential information, a corruption or loss of our proprietary data, delays in production or exploration activities, difficulty in completing or settling transactions, challenges in maintaining our books and records, environmental damage, communication or other operational disruptions, and liability to third parties.
Deliberate attacks on, or security breaches in our systems, infrastructure, the systems and infrastructure of third-parties, or cloud-based applications could lead to disclosure of confidential information, a corruption or loss of our proprietary data, delays in production or exploration activities, difficulty in completing or settling transactions, challenges in maintaining our books and records, environmental damage, communication or other operational disruptions, and liability to third parties.
Under existing or future environmental laws and regulations, we could incur significant liability, including joint and several, strict liability under federal, state, and local environmental laws for emissions and for discharges of oil, gas, and NGLs or other pollutants into the air, soil, surface water, or groundwater as described in Government Regulations in Part I, Items 1 and 2 of this report.
Under existing or future environmental laws and regulations, we could incur significant liability, including joint and several, strict liability under federal, state, tribal, and local environmental laws for emissions and for discharges of oil, gas, and NGLs or other pollutants into the air, soil, surface water, or groundwater as described in Government Regulations in Part I, Items 1 and 2 of this report.
Delays in obtaining regulatory approvals and drilling permits, including delays that jeopardize our ability to realize the potential benefits from leased properties within the applicable lease periods, the failure to obtain a drilling permit for a well, or the receipt of a permit with unreasonable conditions or costs could have a material adverse effect on our ability to explore or develop our properties.
Delays in obtaining regulatory approvals and drilling permits, including delays that jeopardize our ability 27 to realize the potential benefits from leased properties within the applicable lease periods, the failure to obtain a drilling permit for a well, or the receipt of a permit with unreasonable conditions or costs could have a material adverse effect on our ability to explore or develop our properties.
Oil and gas operations are subject to many risks, including human error and accidents, that could cause personal injury, death, property damage, well blowouts, craterings, explosions, uncontrollable flows of oil, gas and NGLs, or well fluids, releases or spills of completion fluids, spills or releases from facilities and equipment used to deliver or store these materials, spills or releases of brine or other produced or flowback water, subsurface conditions that prevent us from stimulating the planned number of completion stages, accessing the entirety of the wellbore with our tools during completion, or removing materials from the wellbore to allow production to begin, fires, adverse weather such as hurricanes or tornadoes, freezing conditions, wildfires, floods, droughts, formations with abnormal pressures, pipeline ruptures or spills, pollution, seismic events, releases of toxic gas such as hydrogen sulfide, and other environmental risks and hazards.
Oil and gas operations are subject to many risks, including human error and accidents, that could cause personal injury, death, property damage, well blowouts, craterings, explosions, uncontrollable flows of oil, gas and NGLs, or well fluids, releases or spills of completion fluids, spills or releases from facilities and equipment used to deliver or store these materials, spills or releases of brine or other produced or flowback water, subsurface conditions that prevent us from stimulating the planned number of completion stages, accessing the entirety of the wellbore with our tools during completion, or removing materials from the wellbore to allow production to begin, fires, adverse weather such as hurricanes or tornadoes, freezing conditions, wildfires, floods, droughts, formations with abnormal pressures, pipeline ruptures or spills, train derailments, pollution, seismic events, releases of toxic gas such as hydrogen sulfide, and other environmental risks and hazards.
The use of AI can lead to unintended consequences, including the unauthorized use or disclosure of confidential and proprietary information, or generating content that appears correct but is factually inaccurate, misleading, or otherwise flawed, which could harm our reputation and business and expose us to risks related to inaccuracies or errors in the output of such technologies.
The use of AI can lead to unintended consequences, including the unauthorized use or disclosure of confidential and proprietary information, or generating content that appears correct but is factually inaccurate, misleading, biased, or otherwise flawed, which could harm our reputation and business and expose us to risks related to inaccuracies or errors in the output of such technologies.
Our operations have been in the past, and may continue to be, adversely affected by the impact of extreme weather conditions. Additionally, lease stipulations designed to protect various wildlife or plant species may adversely impact our operations. In certain areas, drilling and other oil and gas activities can only be conducted during limited times of the year.
Our operations have been in the past, and may continue to be, adversely affected by the impact of seasonal and extreme weather conditions. Additionally, lease stipulations designed to protect various wildlife or plant species may adversely impact our operations. In certain areas, drilling and other oil and gas activities can only be conducted during limited times of the year.
Our ability to sell oil, gas, and NGLs, and/or receive market prices for our production, may be adversely affected by constraints on gathering systems, processing facilities, pipelines, and other transportation systems owned or operated by third-parties or by other interruptions beyond our control, which could obstruct, limit, or eliminate our access to oil, gas, and NGL markets.
Our ability to sell oil, gas, and NGLs, and/or receive market prices for our production, may be adversely affected by constraints on gathering systems, processing facilities, pipelines, rail systems, and other transportation systems owned or operated by third-parties or by other interruptions beyond our control, which could obstruct, limit, or eliminate our access to oil, gas, and NGL markets.
In addition, commodity derivative contracts may limit the prices we receive for our oil, gas, and NGL sales if oil, gas, or NGL prices rise substantially over the price established by the commodity derivative contract. Please refer to Note 7 – Derivative Financial Instruments in Part II, Item 8 of this report for additional detail regarding our commodity derivative contracts.
In addition, commodity derivative contracts may limit the prices we receive for our oil, gas, and NGL sales if oil, gas, or NGL prices rise substantially over the price established by the commodity derivative contract. Refer to Note 7 – Derivative Financial Instruments in Part II, Item 8 of this report for additional detail regarding our commodity derivative contracts.
Any significant variance could materially affect the estimated quantities of and present value related to proved reserves disclosed by us, and the actual quantities and present value may be significantly less than what we have previously estimated. Our properties may also be susceptible to hydrocarbon drainage from production on adjacent properties, which we may not control.
Any significant variance could materially affect the estimated quantities of, and present value related to proved reserves disclosed by us, and the actual quantities and present value may be significantly less than we have previously estimated. Our properties may also be susceptible to hydrocarbon drainage from production on adjacent properties, which we may not control.
We will continue to be subject to uncertainty associated with new regulatory suspensions, revisions or rescissions and inconsistent state and federal regulatory mandates that could adversely affect our production. Federal and state regulatory initiatives relating to air quality and greenhouse gas emissions could result in increased costs and additional operating restrictions or delays.
We will continue to be subject to uncertainty associated with new regulatory suspensions, revisions or rescissions and inconsistent state and federal regulatory mandates that could adversely affect our production. 32 Federal and state regulatory initiatives relating to air quality and greenhouse gas emissions could result in increased costs and additional operating restrictions or delays.
Hydraulic fracturing is a common practice in the oil and gas industry used to stimulate the production of oil, gas, and NGLs from dense subsurface rock formations. We routinely apply hydraulic fracturing techniques to many of our oil and gas properties, including our unconventional resource plays within our Midland Basin and South Texas assets.
Hydraulic fracturing is a common practice in the oil and gas industry used to stimulate the production of oil, gas, and NGLs from dense subsurface rock formations. We routinely apply hydraulic fracturing techniques to many of our oil and gas properties, including our unconventional resource plays within our Midland Basin, South Texas, and Uinta Basin assets.
The United States Congress has from time to time considered adopting legislation to reduce emissions of GHGs, and the majority of states have already taken measures to reduce emissions of GHGs through various measures, including, primarily through the planned development of GHG emission inventories, participation in and/or regional GHG “cap and trade” programs, and/or transition 25 to clean energy.
The United States Congress has from time to time considered adopting legislation to reduce emissions of GHGs, and the majority of states have already taken measures to reduce emissions of GHGs through various measures, including, primarily through the planned development of GHG emission inventories, participation in and/or regional GHG “cap and trade” programs, and/or transition to clean energy.
As a result, we may not be successful in acquiring and developing profitable properties. In addition, other companies may have a greater ability to continue drilling activities during periods of low oil or gas prices and to absorb the burden of current and future governmental regulations and taxation.
As a result, we may not be successful in acquiring and developing profitable properties. In addition, other companies may have a greater 25 ability to continue drilling activities during periods of low oil or gas prices and to absorb the burden of current and future governmental regulations and taxation.
Our ability to borrow under our Credit Agreement is subject to compliance with certain financial and non-financial covenants, as outlined in the Credit Agreement. Please refer to Note 5 – Long-Term Debt in Part II, Item 8 of this report for additional discussion.
Our ability to borrow under our Credit Agreement is subject to compliance with certain financial and non-financial covenants, as outlined in the Credit Agreement. Refer to Note 5 – Long-Term Debt in Part II, Item 8 of this report for additional discussion.
If any of these types of events occur, we could sustain substantial losses. 30 In response to increased seismic activity in the Permian Basin in Texas, the Railroad Commission of Texas (“RRC”) has developed a seismic review process for injection wells near qualifying seismic activity.
If any of these types of events occur, we could sustain substantial losses. In response to increased seismic activity in the Permian Basin in Texas, the Railroad Commission of Texas (“RRC”) has developed a seismic review process for injection wells near qualifying seismic activity.
Our success in drilling and completing new wells and the success of other activities integral to our operations will depend, in part, on our ability to attract and retain experienced geologists, engineers, landmen, and other professionals. Competition for many of these professionals can be intense.
Our success in drilling and 24 completing new wells and the success of other activities integral to our operations will depend, in part, on our ability to attract and retain experienced geologists, engineers, landmen, and other professionals. Competition for many of these professionals can be intense.
The marketability of our oil, gas, and NGL production depends in part on the availability, proximity, and capacity of gathering systems, processing facilities, pipelines, and other transportation systems, which are generally owned or operated by third parties.
The marketability of our oil, gas, and NGL production depends in part on the availability, proximity, and capacity of gathering systems, processing facilities, pipelines, rail systems, and other transportation systems, which are generally owned or operated by third parties.
There is inherent risk of incurring significant environmental costs and liabilities in our operations due to our current and past generation, handling, and disposal of materials, including produced water, solid and hazardous wastes, and petroleum hydrocarbons.
There is an inherent risk of incurring significant environmental costs and liabilities in our operations due to our current and past generation, handling, and disposal of materials, including produced water, solid and hazardous wastes, and petroleum hydrocarbons.
Legislative and regulatory initiatives and litigation related to global warming and climate change could have an adverse effect on our operations and the demand for oil, gas, and NGLs, and could result in significant litigation and related expenses.
Legislative and regulatory initiatives and litigation related to global warming and climate change could have an adverse effect on our operations and the demand for oil, gas, and NGLs, and could result in significant litigation, capital, and related expenses.
Please refer to the Environmental section in Part II, Item 7 of this report for additional information about the regulation of air emissions, particularly methane emissions from the oil and gas sector.
Refer to the Environmental section in Part II, Item 7 of this report for additional information about the regulation of air emissions, particularly methane emissions from the oil and gas sector.
Future periods of sustained low commodity prices could occur and could cause third-party service providers to consolidate or declare bankruptcy, which could limit our options for engaging such providers.
Future periods of sustained 26 low commodity prices could occur and could cause third-party service providers to consolidate or declare bankruptcy, which could limit our options for engaging such providers.
Please refer to Concentration of Credit Risk and Major Customers in Note 1 – Summary of Significant Accounting Policies, in Part II, Item 8 of this report for further discussion of our concentration of credit risk and major customers.
Refer to Concentration of Credit Risk and Major Customers in Note 1 – Summary of Significant Accounting Policies, in Part II, Item 8 of this report for further discussion of our concentration of credit risk and major customers.
We did not experience any material cybersecurity incidents during 2023, however there can be no assurance that the measures we have taken to address information technology (“IT”) and cybersecurity risks will prove effective in the future. We are incorporating artificial intelligence technologies into our processes and these technologies may present business, compliance, and reputational risks.
We did not experience any material cybersecurity incidents during 2024, however there can be no assurance that the measures we have taken to address information technology (“IT”) and cybersecurity risks will prove effective in the future. We are incorporating artificial intelligence technologies into our processes and these technologies may present business, compliance, and reputational risks.
Weakness in economic conditions, continued inflation, or uncertainty in financial markets may have material adverse impacts on our business that we cannot predict.
Weakness in economic conditions, inflation, or uncertainty in financial markets may have material adverse impacts on our business that we cannot predict.
Any such delay, suspension, or termination could have a material adverse effect on our operations. Our operations are also subject to complex and constantly changing environmental laws and regulations adopted by federal, state, and local governmental authorities in jurisdictions where we are engaged in exploration or production operations.
Any such delay, suspension, or termination could have a material adverse effect on our operations. 31 Our operations are also subject to complex and constantly changing environmental laws and regulations adopted by federal, state, tribal, and local governmental authorities in jurisdictions where we are engaged in exploration or production operations.
The amounts of our indebtedness could have important consequences for our operations, including: • making it more difficult for us to obtain additional financing in the future for our operations and potential acquisitions, working capital requirements, capital expenditures, debt service, or other general corporate requirements; • requiring us to dedicate a substantial portion of our cash flows from operations to the repayment of our debt and the service of interest costs associated with our debt, rather than to capital investments; 32 • limiting our operating flexibility due to financial and other restrictive covenants, including restrictions on incurring additional debt, making acquisitions, and paying dividends; • placing us at a competitive disadvantage compared to our competitors with less debt; and • making us more vulnerable in the event of adverse economic or industry conditions or a downturn in our business.
The amounts of our indebtedness could have important consequences for our operations, including: • making it more difficult for us to obtain additional financing in the future for our operations and potential acquisitions, working capital requirements, capital expenditures, debt service, or other general corporate requirements; • requiring us to dedicate a substantial portion of our cash flows from operations to the repayment of our debt and the service of interest costs associated with our debt, rather than to capital investments; • limiting our operating flexibility due to financial and other restrictive covenants, including restrictions on incurring additional debt, making acquisitions, and paying dividends or repurchasing shares of common stock; • placing us at a competitive disadvantage compared to our competitors with less debt; and • making us more vulnerable in the event of adverse economic or industry conditions or a downturn in our business.
Historically, the United States and global economies and financial systems have experienced turmoil and upheaval characterized by extreme volatility in prices of equity and debt securities, periods of diminished liquidity and credit availability, inability to access capital markets, the bankruptcy, failure, collapse, or sale of financial institutions, inflation, and heightened levels of intervention by the United States federal government and other governments.
Historically, the United States and global economies and financial systems have experienced turmoil and upheaval characterized by extreme volatility in prices of equity and debt securities, periods of diminished liquidity and credit availability, inability to access capital markets, the bankruptcy, failure, collapse, or sale of financial institutions, inflation, tariffs or trade restrictions, and heightened levels of intervention by the United States federal government and other governments.
The hydraulic fracturing process on which we and others in our industry depend to complete wells that will produce commercial quantities of oil, gas, and NGLs requires the use and disposal of significant quantities of water.
The hydraulic fracturing process on which we and others in our industry depend to complete wells that will produce commercial quantities of oil, gas, and NGLs require the use and disposal of significant quantities of water.
Federal and state regulation of oil, gas, and NGL production and transportation, tax and energy policies, changes in supply and demand, pipeline pressures, damage to or destruction of pipelines or processing facilities, infrastructure or capacity constraints, and general economic conditions could adversely affect our ability to produce, gather, process, transport, or market oil, gas, and NGLs.
Federal, state, and tribal regulation of oil, gas, and NGL production and transportation, tax and energy policies, changes in supply and demand, pipeline pressures, damage to or destruction of pipelines or processing facilities, infrastructure or capacity constraints, train derailments, and general economic conditions could adversely affect our ability to produce, gather, process, transport, or market oil, gas, and NGLs.
Our GHG emissions in 2023 did not exceed the thresholds set forth by the IRA, however, there is no assurance that we will be able to meet our goals or that we will not exceed the thresholds set forth by the IRA in the future.
Our GHG emissions in 2024 did not exceed the thresholds set forth by the IRA; however, there is no assurance that we will be able to meet our goals or that we will not exceed the thresholds set forth by the IRA in the future.
In the Permian Basin in Texas, where we have significant operations, there have been, and could be in the future, constraints in gas takeaway capacity which has historically led to increased gas flaring. We are subject to laws established by state and other regulatory agencies that restrict the duration and amount of natural gas that can be legally flared.
In the areas where we have significant operations, there have been, and could be, in the future, constraints in gas takeaway capacity which has historically led to increased gas flaring. We are subject to laws established by state and other regulatory agencies that restrict the duration and amount of natural gas that can be legally flared.
Another significant risk inherent in our drilling plans is the need to obtain drilling permits from state, local, and other governmental authorities.
Another significant risk inherent in our drilling plans is the need to obtain drilling permits from federal, state, tribal, local, and other governmental authorities.
Please refer to Reserves in Part I, Items 1 and 2 of this report for discussion 28 regarding the prices used in estimating the present value of our proved reserves as of December 31, 2023, and to the caption Oil and Gas Reserve Quantities under Critical Accounting Estimates in Part II, Item 7 of this report for additional information.
Refer to Reserves in Part I, Items 1 and 2 of this report for discussion regarding the prices used in estimating the present value of our proved reserves as of December 31, 2024, and to the caption Oil and Gas Reserve Quantities under Critical Accounting Estimates in Part II, Item 7 of this report for additional information.
For example: • inflation has increased the costs of our drilling and completion activities, and the costs of oilfield services, equipment, and materials in recent years and could continue or worsen and further impact our financial condition, liquidity, and results of operations, and could limit our pool of economic development opportunities; • a potential economic recession could impact demand for oil, gas, and NGLs, and cause commodity price volatility; • the tightening of credit or lack of credit availability to our customers could adversely affect our ability to collect our trade receivables; • the liquidity available under our Credit Agreement could be reduced if one or more of our lenders is unable to fund its commitment; • our ability, or the ability of our suppliers or contractors, to access the capital markets may be restricted or non-existent at a time when we or they would like, or need, to raise capital for our or their business, including for the exploration and/or development of reserves; • our commodity derivative contracts could become economically ineffective if our counterparties are unable to perform their obligations or seek bankruptcy protection; • the Federal Reserve could change interest rates, as they did during 2022 and 2023, which could impact borrowing costs; • variable interest rate spread levels, including for SOFR and the prime rate, could increase significantly, resulting in higher interest costs for unhedged variable interest rate based borrowings under our Credit Agreement; and • changes in tax laws and regulations could require us to adjust our business plan. 23 Global geopolitical tensions may create heightened volatility in oil, gas, and NGL prices and could adversely affect our business, financial condition and results of operations.
For example: • inflation has increased certain costs of our drilling and completion activities, and the costs of oilfield services, equipment, and materials in recent years and could continue or worsen and further impact our financial condition, liquidity, and results of operations, and could limit our pool of economic development opportunities; • a potential economic recession could impact demand for oil, gas, and NGLs, and cause commodity price volatility; • the tightening of credit or lack of credit availability to our customers could adversely affect our ability to collect our trade receivables; • the liquidity available under our Credit Agreement could be reduced if any of our lenders is unable to fund its commitment; • our ability, or the ability of our suppliers or contractors, to access the capital markets may be restricted or non-existent at a time when we or they would like, or need, to raise capital for our or their business, including for the exploration and/or development of reserves; • our commodity derivative contracts could become economically ineffective if our counterparties are unable to perform their obligations or seek bankruptcy protection; • the Federal Reserve may change interest rates, as they did in 2024, 2023, and 2022, which could impact borrowing costs; • variable interest rate spread levels, including for SOFR and the prime rate, could increase significantly, resulting in higher interest costs for unhedged variable interest rate-based borrowings under our Credit Agreement; and • changes in tax laws and regulations could require us to adjust our business plan.
In 2013, a court in California, and in 2020, the United States District Court for the District of Montana, each held that the Bureau of Land Management (“BLM”) did not comply with the National Environmental Policy Act (“NEPA”) because it did not adequately consider the impact of hydraulic fracturing and horizontal drilling before issuing leases.
In 2013, a court in California, and in 2020, the United States District Court for the District of Montana, each held that the BLM did not comply with the National Environmental Policy Act (“NEPA”) because it did not adequately consider the impact of hydraulic fracturing and horizontal drilling before issuing leases.
Wide fluctuations in oil, gas, and NGL prices often result from relatively minor changes in the supply of and demand for oil, gas, and NGLs, market uncertainty, and other factors that are beyond our control, including: • global and domestic supplies of oil, gas, and NGLs, and the productive capacity of the industry as a whole; • the level of consumer demand for oil, gas, and NGLs; • overall global and domestic economic conditions; • inflation and other economic factors that contribute to market volatility; • weather conditions; • the availability and capacity of gathering, transportation, processing, storage, and/or refining facilities in asset-specific or localized areas; • liquefied natural gas deliveries to and from the United States; • the increased demand for, price, and availability of alternative fuels or sources of energy; • technological advances in, and regulations affecting, energy consumption and conservation; • the ability of the members of OPEC+ to maintain effective oil price and production controls; 22 • political instability or armed conflict involving oil or gas producing countries or regions, such as instability in the Middle East, and the wars between Russia and Ukraine and Israel and Hamas; • shipping channel constraints and disruptions to and from oil and gas producing countries or regions; • actual or perceived epidemic or pandemic risks; • strengthening and weakening of the United States dollar relative to other currencies; • stockholder activism or activities by non-governmental organizations to limit sources of funding or restrict the exploration and production of oil, gas, and NGLs and related infrastructure; and • governmental regulations and taxes.
Wide fluctuations in oil, gas, and NGL prices often result from relatively minor changes in the supply of and demand for oil, gas, and NGLs, market uncertainty, and other factors that are beyond our control, including: • global and domestic supplies of oil, gas, and NGLs, and the productive capacity of the industry as a whole; • the level of consumer demand for oil, gas, and NGLs; • overall global and domestic economic conditions; • inflation and other economic factors that contribute to market volatility including tariffs and trade restrictions; • weather conditions; • the availability and capacity of gathering, transportation, processing, storage, and/or refining facilities in asset-specific or localized areas; • liquefied natural gas deliveries to and from the United States; • the increased demand for, price, and availability of alternative fuels or sources of energy; • technological advances in, and regulations affecting, energy consumption and conservation; • the ability of the members of OPEC+ to maintain effective oil price and production controls; • War and Geopolitical Instability; • shipping channel constraints and disruptions to and from oil and gas producing countries or regions; • actual or perceived epidemic or pandemic risks; • strengthening and weakening of the United States dollar relative to other currencies; 22 • stockholder activism or activities by non-governmental organizations to limit sources of funding or restrict the exploration and production of oil, gas, and NGLs and related infrastructure; and • governmental regulations and taxes.
Legislation and regulations affecting the industry are under constant review for amendment or expansion, raising the possibility of changes that may become more stringent and, as a result, may affect, among other things, the pricing, or marketing of oil, gas, and NGL production.
Legislation and regulations affecting the industry are under constant review for amendment or expansion, and subject to constantly changing or differing interpretations, raising the possibility of changes that may become more stringent and, as a result, may affect, among other things, the pricing, or marketing of oil, gas, and NGL production.
These factors may include, but are not limited to: • supply chain issues, including cost increases and availability of equipment or materials; • unexpected adverse drilling or completion conditions; • title problems; • disputes with owners or holders of surface interests on or near areas where we operate; • pressure or geologic irregularities in formations; • engineering and construction delays; • equipment failures or accidents; • hurricanes, tornadoes, flooding, wildfires or other adverse weather conditions; • operational restrictions resulting from seismicity concerns; • governmental permitting delays; • compliance with environmental and other governmental requirements; and • shortages or delays in the availability of or increases in the cost of drilling rigs and crews, fracture stimulation crews and equipment, pipe, chemicals, water, sand, and other supplies. 29 The wells we drill may not be productive, and we may not recover all or any portion of our investment in such wells.
These factors may include, but are not limited to: • supply chain issues, including cost increases and availability of equipment or materials; • unexpected adverse drilling or completion conditions; • title problems; • disputes with owners or holders of surface interests on or near areas where we operate; • pressure or geologic irregularities in formations; • engineering and construction delays; • equipment failures or accidents; • hurricanes, tornadoes, flooding, wildfires, seasonal weather, or other adverse weather conditions; • operational restrictions resulting from seismicity concerns; • governmental permitting delays; • compliance with environmental and other governmental requirements; and • shortages or delays in the availability of or increases in the cost of drilling rigs and crews, fracture stimulation crews and equipment, pipe, chemicals, water, sand, and other supplies.
Divestitures of properties, incurrence of additional debt, or declines in commodity prices could limit our borrowing base and reduce the amount we can borrow under our Credit Agreement, which could in turn impact, among other things, our ability to service our debt, fund our capital program, or compete for the acquisition of new properties. 31 Substantial capital is required to develop and replace our reserves.
Divestitures of properties, incurrence of additional debt, or declines in commodity prices could limit our borrowing base and reduce the amount we can borrow under our Credit Agreement, which could in turn impact, among other things, our ability to service our debt, fund our capital program, or compete for the acquisition of new properties.
Please refer to Significant Developments in 2023 and Reserves in Part I, Items 1 and 2, Comparison of Financial Results and Trends Between 2023 and 2022 and Between 2022 and 2021 in Part II, Item 7, and Note 1 – Summary of Significant Accounting Policies , Note 8 – Fair Value Measurements , and Supplemental Oil and Gas Information (unaudited) in Part II, Item 8 for specific discussion.
Refer to Significant Developments in 2024 and Reserves in Part I, Items 1 and 2, Comparison of Financial Results and Trends Between 2024 and 2023 and Between 2023 and 2022 and Overview of Liquidity and Capital Resources in Part II, Item 7, and Note 1 – Summary of Significant Accounting Policies , Note 8 – Fair Value Measurements , and Supplemental Oil and Gas Information (unaudited) in Part II, Item 8 for specific discussion.
New laws or regulations, or changes to current requirements, including the designation of previously unprotected wildlife or plant species as threatened or endangered in areas we operate in, could result in material costs or claims with respect to properties we own or have owned or limitations on exploration and production activities in certain locations.
New laws or regulations, or changes to current requirements, including, among other things, air quality and GHG emissions standards and the designation of previously unprotected wildlife or plant species as threatened or endangered in areas we operate in, could result in material costs or claims with respect to properties we own or have owned or limitations on exploration and production activities in certain locations.
Our commodity derivative contracts typically include price swap and collar arrangements for oil, gas, and NGLs.
Our commodity derivative contracts typically include price 34 swaps and collar arrangements for oil, gas, and NGLs.
Certain states, including Texas, have adopted, and other states are considering adopting, regulations that could impose more stringent permitting, public disclosure, waste disposal, and well construction requirements on hydraulic fracturing operations or otherwise seek to ban fracturing activities altogether.
Certain states, including Texas and Utah, have adopted or may adopt, regulations that could impose more stringent permitting, public disclosure, waste disposal, and well construction requirements on hydraulic fracturing operations or otherwise seek to ban fracturing activities altogether.
Global geopolitical tensions, including instability in the Middle East, and the wars between Russia and Ukraine and Israel and Hamas, could lead to significant market and other disruptions, including, but not limited to: significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, shipping channel constraints and disruptions, political and social instability, political and economic sanctions, geopolitical shifts, embargoes, changes in consumer or purchaser preferences, the potential destruction of critical oil-related infrastructure, as well as increases in cyberattacks and espionage.
War and Geopolitical Instability could lead to significant market and other disruptions, including, but not limited to: significant volatility in commodity prices and supply of energy resources, instability in financial markets, supply chain interruptions, shipping channel constraints and disruptions, political and social instability, political and economic sanctions, geopolitical shifts, embargoes, 23 changes in consumer or purchaser preferences, the potential destruction of critical oil-related infrastructure, as well as increases in cyberattacks and espionage.
As of December 31, 2023, we had $1.6 billion of aggregate principal amount outstanding of Senior Notes with maturities through 2028, as further discussed and defined in Note 5 – Long-Term Debt in Part II, Item 8 of this report.
As of December 31, 2024, we had $2.7 billion of aggregate principal amount outstanding of Senior Notes with maturities through 2032, as further discussed and defined in Note 5 – Long-Term Debt in Part II, Item 8 of this report.
As of December 31, 2023, 44 percent, or 263.6 MMBOE, of our estimated proved reserves were proved undeveloped. In order to develop our net proved undeveloped reserves, as of December 31, 2023, we estimate approximately $2.8 billion of capital expenditures would be required.
As of December 31, 2024, 40 percent, or 274.3 MMBOE, of our estimated proved reserves were proved undeveloped. In order to develop our net proved undeveloped reserves, as of December 31, 2024, we estimate approximately $2.8 billion of capital expenditures would be required.
Potential adverse effects could include disruption of our drilling, completion, and production activities, including, for example, damages to our facilities from flooding or increases in our costs of operation or reductions in the efficiency of our operations, as well as potentially increased costs for insurance coverage in the aftermath of such events.
Potential adverse effects could include disruption of our drilling, completion, and production activities, including, for example, damages to our facilities from flooding or increases in our costs of operation or reductions in the efficiency of our operations.
Our total net acreage as of February 8, 2024, that is scheduled to expire over the next three years, represents approximately 19 percent of our total net undeveloped acreage as of December 31, 2023.
Our total net acreage as of January 31, 2025, that is scheduled to expire over the next three years, represents approximately 34 percent of our total net undeveloped acreage as of December 31, 2024.
We had no outstanding balance on our revolving credit facility and had $1.2 billion of available borrowing capacity under our Credit Agreement as of December 31, 2023. Our long-term debt represented 30 percent of our total book capitalization as of December 31, 2023.
We had $68.5 million outstanding balance on our revolving credit facility and had $1.9 billion of available borrowing capacity under our Credit Agreement as of December 31, 2024. Our long-term debt represented 40 percent of our total book capitalization as of December 31, 2024.
The EPA also has authority under the Clean Water Act to regulate wastewater generated by unconventional oil and gas operations during the hydraulic fracturing process and discharged to publicly-owned wastewater treatment facilities.
The EPA has authority to regulate underground injections that contain diesel in the fluid system under the Safe Drinking Water Act. The EPA also has authority under the Clean Water Act to regulate wastewater generated by unconventional oil and gas operations during the hydraulic fracturing process and discharged to publicly-owned wastewater treatment facilities.
As of December 31, 2023, we were contractually committed to deliver a minimum of 5 MMBbl of oil through July of 2026 and 11 MMBbl of produced water through June of 2027. We may enter into additional firm transportation agreements as we expand the development of our resource plays.
As of December 31, 2024, we were contractually committed to deliver a minimum of 46 MMBbl of oil through December of 2028 and 3 MMBbl of produced water to certain disposal facilities through June of 2027. We may enter into additional firm transportation agreements as we expand the development of our resource plays.
In addition, the 10 percent discount factor required by the SEC to calculate PV-10 for reporting purposes is not necessarily the most appropriate discount factor given actual interest rates, costs of capital, and other risks to which our business and the oil and gas industry in general are subject.
In addition, the 10 percent discount factor required by the SEC to calculate PV-10 for reporting purposes is not necessarily the most appropriate discount factor given actual interest rates, costs of capital, and other risks to which our business and the oil and gas industry in general are subject. 29 Our disposition activities may be subject to factors beyond our control, and in certain cases we may retain unforeseen liabilities for certain matters .
If we fail to successfully integrate AI into our business processes, or if we fail to keep pace with rapidly evolving AI technological developments, including attracting and retaining talented data scientists, data engineers, and programmers, we may face a competitive disadvantage. Our business could be negatively impacted by security threats, including cybersecurity threats, terrorism, armed conflict, and other disruptions.
If we fail to successfully integrate AI into our business processes, or if we fail to keep pace with rapidly evolving AI technological developments, including attracting and retaining talented data scientists, data engineers, and programmers, we may face a competitive disadvantage.
The seismic data and other technologies we use do not allow us to know conclusively prior to drilling a well if oil, gas, or NGLs are present, or whether they can be produced economically.
The wells we drill may not be productive, and we may not recover all or any portion of our investment in such wells. The seismic data and other technologies we use do not allow us to know conclusively prior to drilling a well if oil, gas, or NGLs are present, or whether they can be produced economically.
Public interest in environmental protection has increased in recent years, and environmental organizations have opposed, with some success, certain projects. Under certain circumstances, regulatory authorities may deny a proposed permit or right-of-way grant or impose conditions of approval to mitigate potential environmental impacts, which could, in either case, negatively affect our ability to explore or develop certain properties.
Under certain circumstances, regulatory authorities may deny a proposed permit or right-of-way grant or impose conditions of approval to mitigate potential environmental impacts, which could, in either case, negatively affect our ability to explore or develop certain properties.
These factors include the purchase price and transaction costs for the acquisition, future oil, gas, and NGL prices, the ability to reasonably estimate the recoverable volumes of reserves, rates of future production and future net revenues attainable from reserves, future operating and capital costs, results of future exploration, exploitation, and development activities on the acquired properties, and future abandonment and possible future environmental or other liabilities.
These factors include the purchase price and transaction costs for the acquisition; future oil, gas, and NGL prices; the ability to reasonably estimate the recoverable volumes of reserves, rates of future production and future net revenues attainable from reserves; future operating and capital costs; results of future exploration, exploitation, and development activities on the acquired properties; future abandonment and possible future environmental or other liabilities; ability to attract and retain employees and contractors; success in transitioning ownership of the acquired properties; relationships with local regulatory authorities, landowners, and communities; and the ability to review and confirm the seller’s title to the subject properties.
As a result, these provisions could make it more difficult for a third party to acquire us, even if doing so would benefit our stockholders, which may limit the price investors are willing to pay in the future for shares of our common stock. 33 In addition, stockholder activism in our industry has been present in recent years, and if investors seek to exert influence or affect changes to our business that we do not believe are in the long-term best interests of our stockholders, such actions could adversely impact our business by, among other things, distracting our Board of Directors and management team, causing us to incur unexpected advisory fees and other related costs, impacting execution of our strategic objectives, and creating unnecessary market uncertainty.
In addition, stockholder activism in our industry has been present in recent years, and if investors seek to exert influence or affect changes to our business that we do not believe are in the long-term best interests of our stockholders, such actions could adversely impact our business by, among other things, distracting our Board of Directors and management team, causing us to incur unexpected advisory fees and other related costs, impacting execution of our strategic objectives, and creating unnecessary market uncertainty.
Hydraulic fracturing involves injecting water, sand, and certain chemicals under pressure to fracture the hydrocarbon-bearing rock formation to allow the flow of hydrocarbons into the wellbore. The process is typically regulated by state oil and gas commissions.
Hydraulic fracturing involves injecting water, sand, and certain chemicals under pressure to fracture the hydrocarbon-bearing rock formation to allow the flow of hydrocarbons into the wellbore. The process is typically regulated by state oil and gas commissions. However, the EPA and other federal agencies have asserted federal regulatory authority over certain aspects of hydraulic fracturing activities, as outlined below.
Risks Related to Corporate Governance and Ownership of Public Equity Securities Our certificate of incorporation and by-laws have provisions that discourage corporate takeovers and could prevent stockholders from receiving a takeover premium on their investment, which could adversely affect the price of our common stock.
We do not have sufficient working capital to satisfy our debt obligations in the event of an acceleration of all or a significant portion of our outstanding indebtedness. 35 Risks Related to Corporate Governance and Ownership of Public Equity Securities Our certificate of incorporation and by-laws have provisions that discourage corporate takeovers and could prevent stockholders from receiving a takeover premium on their investment, which could adversely affect the price of our common stock.
As these cyber risks continue to evolve and our dependence on digital technologies grows, we may be required to expend significant additional resources to continue to modify or enhance our protective measures and remediate cyber vulnerabilities.
As these cyber risks continue to evolve and our dependence on digital technologies grows, we may be required to expend significant additional resources to continue to modify or enhance our protective measures and remediate cyber vulnerabilities. Refer to Cybersecurity in Item 1C of this report for discussion of the Audit Committee’s role in cybersecurity governance.
The inability of customers or co-owners of assets to meet their obligations may adversely affect our financial results. Substantially all of our accounts receivable result from oil, gas, and NGL sales or joint interest billings to co-owners of oil and gas properties we operate.
Substantially all of our accounts receivable result from oil, gas, and NGL sales or joint interest billings to co-owners of oil and gas properties we operate.
As a result, we may incur material write-downs, and the value of our undeveloped acreage could decline if drilling results are unsuccessful. Many of our operations involve utilizing the latest drilling and completion techniques as developed by us, other operators and our service providers in order to maximize production and ultimate recoveries and therefore generate the highest possible returns.
Many of our operations involve utilizing the latest drilling and completion techniques as developed by us, other operators and our service providers in order to maximize production and ultimate recoveries and therefore generate the highest possible returns.
Certain segments of the public as a whole, and the investment community in particular, have developed negative sentiment toward our industry. In recent years, equity returns in the sector versus other industry sectors have led to lower oil and gas representation in certain key equity market indices.
In recent years, equity returns in the sector versus other industry sectors have led to lower oil and gas representation in certain key equity market indices.
From January 1, 2023, to February 8, 2024, the intraday trading prices per share of our common stock as reported by the New York Stock Exchange ranged from a low of $24.66 per share in March 2023 to a high of $43.73 per share in October 2023.
From January 1, 2024, to January 31, 2025, the intraday trading prices per share of our common stock as reported by the New York Stock Exchange ranged from a low of $34.76 per share in January 2024 to a high of $53.26 per share in April 2024.
If a significant accident or other event occurs and is not fully covered by insurance, we could suffer an uninsured material loss. We have limited control over the activities on properties we do not operate. Some of our properties are operated by other companies and involve third-party working interest owners.
We have limited control over the activities on properties we do not operate. Some of our properties are operated by other companies and involve third-party working interest owners.
If we are unable to deliver the necessary quantities of oil, gas, NGL, or produced water to our counterparties, our results of operations, financial position, and liquidity could be adversely affected.
We have entered into firm transportation contracts that require us to pay fixed sums of money to our counterparties regardless of the quantities actually transported under these contracts. If we are unable to deliver the necessary quantities of oil, gas, NGL, or produced water to our counterparties, our results of operations, financial position, and liquidity could be adversely affected.
We also occasionally sell interests in core assets for the purpose of accelerating the development and increasing efficiencies in other core assets.
We periodically sell non-core assets in order to increase capital resources available for core assets and other purposes and to create organizational and operational efficiencies. We also occasionally sell interests in core assets for the purpose of accelerating the development and increasing efficiencies in other core assets.
Undeveloped acreage has greater risk of title defects than developed acreage and title insurance is not generally available for oil and gas properties. Oil and gas drilling, completion, and production activities are subject to numerous risks, including the risk that no commercially producible oil, gas, or NGLs will be found.
Oil and gas drilling, completion, and production activities are subject to numerous risks, including the risk that no commercially producible oil, gas, or NGLs will be found.
The failure of a third-party service provider to adequately perform operations could delay drilling or completion or reduce production from the property and adversely affect our financial condition and results of operations. Title to the properties in which we have an interest may be impaired by title defects.
The failure of a third-party service provider to adequately perform operations could delay drilling or completion or reduce production from the property and adversely affect our financial condition and results of operations. The inability of customers or co-owners of assets to meet their obligations may adversely affect our financial results.
Exploratory well costs are initially capitalized, pending the determination of whether proved reserves have been discovered. If commercial quantities of proved reserves are not discovered with an exploratory well, the costs initially capitalized are expensed as dry hole costs. During the years ended December 31, 2023, and 2022, we recorded amounts related to certain unsuccessful exploration activity to exploration expense.
Exploratory well costs are initially capitalized, pending the determination of whether proved reserves have been discovered. If commercial quantities of proved reserves are not discovered with an exploratory well, the costs initially capitalized are expensed as dry hole costs.
To the extent that acquired properties are substantially different than our existing properties, our ability to efficiently realize the expected economic benefits of such transactions may be limited. Integrating acquired businesses and properties involves a number of unique risks.
For example, newly acquired properties may have substantially different operating and geological characteristics or be in different geographic locations than our existing properties. To the extent that acquired properties are substantially different than our existing properties, our ability to efficiently realize the expected economic benefits of such transactions may be limited.
The borrowing base is subject to semi-annual redetermination based on the bank group’s assessment of the value of our proved reserves, which in turn is impacted by oil, gas, and NGL prices. The next borrowing base redetermination date is scheduled for April 1, 2024.
As of December 31, 2024, the borrowing base and aggregate revolving lender commitments under our Credit Agreement were $3.0 billion and $2.0 billion, respectively. The borrowing base is subject to semi-annual redetermination based on the bank group’s assessment of the value of our proved reserves, which in turn is impacted by oil, gas, and NGL prices.
If we cannot retain our technical personnel or attract additional experienced technical personnel and professionals, our ability to compete could be harmed. Our operations are subject to complex laws and regulations, including environmental regulations, that result in substantial costs and other risks. Federal, state, and local authorities extensively regulate the oil and gas industry.
Risks Related to Government Regulations Our operations are subject to complex laws and regulations, including environmental regulations, which result in substantial costs and other risks. Federal, state, tribal, and local authorities extensively regulate the oil and gas industry.
Additionally, we could be subject to third-party claims and liability based on allegations that our operations caused or contributed to seismic events that resulted in damage to property or personal injury, or that are otherwise related to seismic events.
Additionally, we could be subject to third-party claims and liability based on allegations that our operations caused or contributed to seismic events that resulted in damage to property or personal injury, or that are otherwise related to seismic events. 30 If we experience any of the problems with well stimulation, completion activities, and disposal referenced above, our ability to explore for and produce oil, gas, and NGLs may be adversely affected.
No assurance can be given that any particular number or dollar value of our shares will be repurchased. General Risk Factors Our increasing dependence on digital technologies puts us at risk for a cyber incident that could result in information theft, data corruption, operational disruptions or financial loss. We are subject to cybersecurity risks.
If we cannot retain our technical personnel or attract additional experienced technical personnel and professionals, our ability to compete could be harmed. Our increasing dependence on digital technologies puts us at risk for a cyber incident that could result in information theft, data corruption, operational disruptions or financial loss. We are subject to cybersecurity risks.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Audit Committee receives a quarterly cybersecurity report and regular updates from our Vice President and Chief Information Officer and our Director of Cybersecurity Risk and Business Continuity, which includes, among other information, the steps management has taken, and the specific guidelines and policies that have been established, to monitor, control, mitigate and report exposure to IT and cybersecurity risk.
Biggest changeThe Audit Committee receives a quarterly cybersecurity report and regular updates from our Vice President and Chief Information Officer and our Director of Cybersecurity Risk and Business Continuity, which includes, among other information, the steps management has taken, and the specific guidelines and policies that have been established, to monitor, control, mitigate and report exposure to IT and cybersecurity risk. 37 We have established a Cyber Incident Response Team (“CIRT”) to provide an efficient, effective, and orderly response to technology related incidents and our Cybersecurity Incident Response Plan contains protocols for communication within this team and reporting to executive management and the Audit Committee.
For additional discussion of the IT and cybersecurity risks facing our business, please refer to Risk Factors in Part 1, Item 1A of this report. We prioritize investment in cybersecurity risk management and governance. We continually assess the adequacy of our resources and capabilities to address emerging threats, regulatory requirements, and changes in technology.
For additional discussion of the IT and cybersecurity risks facing our business, refer to Risk Factors in Part 1, Item 1A of this report. We prioritize investment in cybersecurity risk management and governance. We continually assess the adequacy of our resources and capabilities to address emerging threats, regulatory requirements, and changes in technology.
Our processes for assessing, identifying, and managing material risks from cybersecurity threats include: • monitoring the threat landscape and taking measures to enhance our cybersecurity program to adapt to new and developing risks; • ongoing training, testing, and utilizing other forms of social engineering awareness and education for our employees; 35 • using cybersecurity systems and tools to monitor endpoints and environment logs in a centralized security information and event management system with capabilities for reporting and alerting on known threats and anomalous behaviors; • assessing the cybersecurity practices and external ratings and assessments of certain of our third-party technology and data vendors and service providers, and maintaining preventative controls and monitoring systems related to these partners; • creating and testing various incident response plans to hypothetical cybersecurity attacks in order to quickly assess and respond to potential and actual threats; • utilizing third-party experts to perform penetration testing and scanning of our systems for vulnerabilities; • obtaining third-party security maturity assessments, benchmarking, and security effectiveness ratings of our cybersecurity program; and • maintaining a retainer for incident response services with a trusted cybersecurity partner in order to quickly respond, investigate, contain, and recover in the event of a cybersecurity incident.
Our processes for assessing, identifying, and managing material risks from cybersecurity threats include: • monitoring the threat landscape and taking measures to enhance our cybersecurity program to adapt to new and developing risks; • ongoing training, testing, and utilizing other forms of social engineering awareness and education for our employees; • using cybersecurity systems and tools to monitor endpoints and environment logs in a centralized security information and event management system with capabilities for reporting and alerting on known threats and anomalous behaviors; • assessing the cybersecurity practices and external ratings and assessments of certain of our third-party technology and data vendors and service providers, and maintaining preventative controls and monitoring systems related to these partners; • creating and testing various incident response plans to hypothetical cybersecurity attacks in order to quickly assess and respond to potential and actual threats; • engaging third-party cybersecurity experts and consultants to perform penetration testing and scanning of our systems for vulnerabilities; • obtaining third-party security maturity assessments, benchmarking, and security effectiveness ratings of our cybersecurity program; and • maintaining a retainer for incident response services with a trusted cybersecurity partner in order to quickly respond, investigate, contain, and recover in the event of a cybersecurity incident.
ITEM 1C. CYBERSECURITY RISK MANAGEMENT, STRATEGY, AND GOVERNANCE Risk Management and Strategy We believe that mitigating cybersecurity risks is the responsibility of every employee. We take a preventative approach with respect to cybersecurity threats by building a resilient cybersecurity culture and strong IT infrastructure.
ITEM 1C. CYBERSECURITY Risk Management and Strategy We believe that mitigating cybersecurity risks is the responsibility of every employee. We take a preventative approach with respect to cybersecurity threats by building a resilient cybersecurity culture and strong IT infrastructure.
During 2023, we did not experience any cybersecurity incidents that materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition, however, there can be no assurance that the measures we have taken to address IT and cybersecurity risks will prove effective in the future.
During 2024, we did not experience any cybersecurity incidents that materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition, however, there can be no assurance that the measures we have taken to address IT and cybersecurity risks will prove effective in the future.
Our Vice President and Chief Information Officer is a seasoned IT professional with over 28 years of experience encompassing all facets of IT within the energy industry. His extensive background comprises managing IT service delivery, designing and administering secure solutions, establishing robust IT and Internet of Things infrastructures, and effectively managing technology-related risks.
Our Vice President and Chief Information Officer is a seasoned IT professional with over 29 years of experience encompassing all facets of IT within the energy industry. His extensive background comprises managing IT service delivery, designing and administering secure solutions, establishing robust IT and Internet of Things infrastructures, and effectively managing technology-related risks.
Our Director of Cybersecurity Risk and Business Continuity has over 23 years of experience in the IT field with a 36 majority of that time focused on designing, building and maintaining technology systems. His experience includes implementing security solutions and processes with a focus on adapting to the evolving cybersecurity threat landscape.
Our Director of Cybersecurity Risk and Business Continuity has over 24 years of experience in the IT field with a majority of that time focused on designing, building and maintaining technology systems. His experience includes implementing security solutions and processes with a focus on adapting to the evolving cybersecurity threat landscape.
Removed
We have established a Cyber Incident Response Team (“CIRT”) to provide an efficient, effective, and orderly response to technology related incidents and our Cybersecurity Incident Response Plan contains protocols for communication within this team and reporting to executive management and the Audit Committee.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeAs of the filing of this report, no legal proceedings are pending against us that we believe individually or collectively are likely to have a material adverse effect upon our financial condition, results of operations, or cash flows. ITEM 4. MINE SAFETY DISCLOSURES These disclosures are not applicable to us. 37 PART II
Biggest changeAs of the filing of this report, no legal proceedings are pending against us that we believe individually or collectively are likely to have a material adverse effect upon our financial condition, results of operations, or cash flows. ITEM 4.
Added
MINE SAFETY DISCLOSURES The required disclosure under Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95.1 to this report. 38 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe following table provides information about purchases made by us and any affiliated purchaser (as defined in Rule 10b-18(a)(3) under the Exchange Act) during the indicated quarters and months, and the year ended December 31, 2023, of shares of our common stock, which is the sole class of equity securities registered by us pursuant to Section 12 of the Exchange Act: PURCHASES OF EQUITY SECURITIES BY ISSUER AND AFFILIATED PURCHASERS Period Total Number of Shares Purchased (1) Weighted Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program (2) Maximum Number or Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (as of the period end date) (2) First quarter of 2023 1,413,758 $ 28.32 1,413,758 $ 402,780,476 Second quarter of 2023 2,550,976 $ 26.95 2,550,706 $ 334,036,922 Third quarter of 2023 2,600,605 $ 40.07 2,351,642 $ 237,700,848 10/01/2023 - 10/31/2023 — $ — — $ 237,700,848 11/01/2023 - 11/30/2023 614,729 $ 37.16 614,729 $ 214,854,687 12/01/2023 - 12/31/2023 — $ — — $ 214,854,687 Total 7,180,068 $ 32.85 6,930,835 ____________________________________________ (1) 249,233 shares purchased by us in 2023 were to offset tax withholding obligations that occurred upon the delivery of outstanding shares underlying Restricted Stock Units (“RSU” or “RSUs”) issued under the terms of award agreements granted under the Equity Plan.
Biggest changeThe following table provides information about purchases made by us and any affiliated purchaser (as defined in Rule 10b-18(a)(3) under the Exchange Act) during the indicated quarters and months, and the year ended December 31, 2024, of shares of our common stock, which is the sole class of equity securities registered by us pursuant to Section 12 of the Exchange Act: PURCHASES OF EQUITY SECURITIES BY ISSUER AND AFFILIATED PURCHASERS Period Total Number of Shares Purchased (1) Weighted Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Program (2) Maximum Number or Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (as of the period end date) (2) First quarter of 2024 712,844 $ 45.98 712,235 $ 182,101,195 Second quarter of 2024 1,058,956 $ 48.35 1,058,956 $ 500,000,000 Third quarter of 2024 157,643 $ 43.23 — $ 500,000,000 10/01/2024 - 10/31/2024 — $ — — $ 500,000,000 11/01/2024 - 11/30/2024 — $ — — $ 500,000,000 12/01/2024 - 12/31/2024 — $ — — $ 500,000,000 Total 1,929,443 $ 47.06 1,771,191 ____________________________________________ (1) 158,252 shares purchased by us in 2024 were to offset tax withholding obligations that occurred upon the delivery of outstanding shares underlying Restricted Stock Units (“RSU” or “RSUs”) issued under the terms of award agreements granted under the Equity Plan.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is currently traded on the New York Stock Exchange under the ticker symbol “SM.” For dividend information, please refer to the caption Uses of Cash in Overview of Liquidity and Capital Resources in Item 7 of this report.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is currently traded on the New York Stock Exchange under the ticker symbol “SM.” For dividend information, refer to the caption Uses of Cash in Overview of Liquidity and Capital Resources in Item 7 of this report.
A substantially greater number of holders of our common stock are beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions. 38 Purchases of Equity Securities by Issuer and Affiliated Purchasers.
A substantially greater number of holders of our common stock are beneficial holders, whose shares of record are held by banks, brokers, and other financial institutions. 39 Purchases of Equity Securities by Issuer and Affiliated Purchasers.
PERFORMANCE GRAPH The following performance graph compares the cumulative return on our common stock, for the period beginning December 31, 2018, and ending December 31, 2023, with the cumulative total returns of the Dow Jones Exploration and Production Index (“DJUSOS”), and the Standard & Poor’s 500 Stock Index (“SPX”).
PERFORMANCE GRAPH The following performance graph compares the cumulative return on our common stock, for the period beginning December 31, 2019, and ending December 31, 2024, with the cumulative total returns of the Dow Jones Exploration and Production Index (“DJUSOS”), and the Standard & Poor’s 500 Stock Index (“SPX”).
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURNS The preceding information under the caption Performance Graph shall be deemed to be furnished, but not filed with the SEC. Holders. As of February 8, 2024, the number of record holders of our common stock was 102.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURNS The preceding information under the caption Performance Graph shall be deemed to be furnished, but not filed with the SEC. Holders. As of January 31, 2025, the number of record holders of our common stock was 111.
(2) Our Stock Repurchase Program, which authorizes us to repurchase up to $500.0 million in aggregate value of our common stock through December 31, 2024, permits us to repurchase our shares from time to time in open market transactions, through privately negotiated transactions or by other means in accordance with federal securities laws and subject to certain provisions of our Credit Agreement and the indentures governing our Senior Notes.
The Stock Repurchase Program permits us to repurchase our shares from time to time in open market transactions, through privately negotiated transactions or by other means in accordance with federal securities laws and subject to certain provisions of our Credit Agreement and the indentures governing our Senior Notes.
During the year ended December 31, 2023, we repurchased and subsequently retired 6,930,835 shares of our common stock under the Stock Repurchase Program at a weighted-average share price of $32.89 for a total cost of $228.0 million, excluding excise taxes, commissions and fees.
During the year ended December 31, 2024, we repurchased and subsequently retired 1,771,191 shares of our common stock under the Stock Repurchase Program at a weighted-average share price of $47.40 for a total cost of $84.0 million, excluding excise taxes, commissions and fees.
During the year ended December 31, 2023, we paid $71.6 million in dividends to our stockholders. Dividends paid reflects $0.60 per share during the year ended December 31, 2023.
During the year ended December 31, 2024, we paid $85.0 million in dividends to our stockholders. Dividends paid reflect $0.74 per share during the year ended December 31, 2024.
Removed
During 2023, our Board of Directors approved a 20 percent increase to our fixed dividend to $0.72 per share annually, to be paid in quarterly increments of $0.18 per share, beginning in the first quarter of 2024.
Added
(2) In June 2024, our Board of Directors re-authorized the existing Stock Repurchase Program, and authorized us to repurchase up to $500.0 million in aggregate value of our common stock through December 31, 2027.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeManagement’s Discussion and Analysis of Financial Condition and Results of Operations 40 Overview of the Company 40 Financial Results of Operations and Additional Comparative Data 44 Comparison of Financial Results and Trends Between 2023 and 2022 , and Between 2022 and 2021 46 Overview of Liquidity and Capital Resources 50 Critical Accounting Estimates 54 Accounting Matters 57 Environmental 57 Non-GAAP Financial Measures 58 Item 7A.
Biggest changeManagement’s Discussion and Analysis of Financial Condition and Results of Operations 41 Overview of the Company 41 Financial Results of Operations and Additional Comparative Data 45 Comparison of Financial Results and Trends Between 2024 and 2023, and Between 2023 and 2022 49 Overview of Liquidity and Capital Resources 52 Critical Accounting Estimates 56 Accounting Matters 58 Environmental 58 Non-GAAP Financial Measures 59 Item 7A.
Quantitative and Qualitative Disclosures About Market Risk 59 Item 8. Consolidated Financial Statements and Supplementary Data 60
Quantitative and Qualitative Disclosures About Market Risk 60 Item 8. Consolidated Financial Statements and Supplementary Data 61

Item 7. Management's Discussion & Analysis

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

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Biggest changeSelected Performance Metrics For the Three Months Ended December 31, September 30, June 30, March 31, 2023 2023 2023 2023 Average net daily equivalent production (MBOE per day) 153.5 153.7 154.4 146.4 Lease operating expense (per BOE) $ 5.31 $ 5.08 $ 4.98 $ 5.16 Transportation costs (per BOE) $ 2.08 $ 2.07 $ 2.89 $ 2.81 Production taxes as a percent of oil, gas, and NGL production revenue 4.6 % 4.3 % 4.3 % 4.7 % Ad valorem tax expense (per BOE) $ 0.37 $ 0.70 $ 0.83 $ 0.81 Depletion, depreciation, amortization, and asset retirement obligation liability accretion (per BOE) $ 13.39 $ 13.39 $ 11.23 $ 11.70 General and administrative (per BOE) $ 2.60 $ 2.07 $ 1.96 $ 2.10 ____________________________________________ Note: Amounts may not calculate due to rounding. 44 Overview of Selected Production and Financial Information, Including Trends For the Years Ended December 31, Amount Change Between Percent Change Between 2023 2022 2021 2023/2022 2022/2021 2023/2022 2022/2021 Net production volumes: (1) Oil (MMBbl) 23.8 24.0 27.9 (0.2) (4.0) (1) % (14) % Gas (Bcf) 132.4 125.9 108.4 6.4 17.6 5 % 16 % NGLs (MMBbl) 9.7 8.0 5.4 1.7 2.6 21 % 49 % Equivalent (MMBOE) 55.5 53.0 51.4 2.5 1.6 5 % 3 % Average net daily production: (1) Oil (MBbl per day) 65.1 65.7 76.5 (0.6) (10.8) (1) % (14) % Gas (MMcf per day) 362.7 345.0 296.9 17.6 48.1 5 % 16 % NGLs (MBbl per day) 26.4 21.9 14.7 4.5 7.2 21 % 49 % Equivalent (MBOE per day) 152.0 145.1 140.7 6.9 4.4 5 % 3 % Oil, gas, and NGL production revenue (in millions): (1) Oil production revenue $ 1,813.8 $ 2,270.1 $ 1,891.8 $ (456.3) $ 378.2 (20) % 20 % Gas production revenue 327.9 790.9 525.5 (463.0) 265.4 (59) % 51 % NGL production revenue 222.2 285.0 180.6 (62.7) 104.3 (22) % 58 % Total oil, gas, and NGL production revenue $ 2,363.9 $ 3,345.9 $ 2,597.9 $ (982.0) $ 748.0 (29) % 29 % Oil, gas, and NGL production expense (in millions): (1) Lease operating expense $ 284.8 $ 266.5 $ 225.5 $ 18.3 $ 41.0 7 % 18 % Transportation costs 136.2 150.0 139.4 (13.8) 10.6 (9) % 8 % Production taxes 105.1 162.6 121.1 (57.5) 41.5 (35) % 34 % Ad valorem tax expense 37.4 41.7 19.4 (4.3) 22.3 (10) % 115 % Total oil, gas, and NGL production expense $ 563.5 $ 620.9 $ 505.4 $ (57.4) $ 115.5 (9) % 23 % Realized price: Oil (per Bbl) $ 76.28 $ 94.67 $ 67.72 $ (18.39) $ 26.95 (19) % 40 % Gas (per Mcf) $ 2.48 $ 6.28 $ 4.85 $ (3.80) $ 1.43 (61) % 29 % NGLs (per Bbl) $ 23.02 $ 35.66 $ 33.67 $ (12.64) $ 1.99 (35) % 6 % Per BOE $ 42.60 $ 63.18 $ 50.58 $ (20.58) $ 12.60 (33) % 25 % Per BOE data: (1) Oil, gas, and NGL production expense: Lease operating expense $ 5.13 $ 5.03 $ 4.39 $ 0.10 $ 0.64 2 % 15 % Transportation costs 2.46 2.83 2.71 (0.37) 0.12 (13) % 4 % Production taxes 1.89 3.07 2.36 (1.18) 0.71 (38) % 30 % Ad valorem tax expense 0.67 0.79 0.38 (0.12) 0.41 (15) % 108 % Total oil, gas, and NGL production expense (1) $ 10.16 $ 11.72 $ 9.84 $ (1.56) $ 1.88 (13) % 19 % Depletion, depreciation, amortization, and asset retirement obligation liability accretion $ 12.44 $ 11.40 $ 15.08 $ 1.04 $ (3.68) 9 % (24) % General and administrative $ 2.18 $ 2.16 $ 2.18 $ 0.02 $ (0.02) 1 % (1) % Net derivative settlement gain (loss) (2) $ 0.49 $ (13.42) $ (14.58) $ 13.91 $ 1.16 104 % 8 % Earnings per share information (in thousands, except per share data): (3) Basic weighted-average common shares outstanding 118,678 122,351 119,043 (3,673) 3,308 (3) % 3 % Diluted weighted-average common shares outstanding 119,240 124,084 123,690 (4,844) 394 (4) % — % Basic net income per common share $ 6.89 $ 9.09 $ 0.30 $ (2.20) $ 8.79 (24) % 2,930 % Diluted net income per common share $ 6.86 $ 8.96 $ 0.29 $ (2.10) $ 8.67 (23) % 2,990 % 45 ____________________________________________ (1) Amounts and percentage changes may not calculate due to rounding.
Biggest changeFinancial Results of Operations and Additional Comparative Data The tables below provide information regarding selected production and financial information for the three months ended December 31, 2024, and the preceding three quarters: For the Three Months Ended December 31, September 30, June 30, March 31, 2024 2024 2024 2024 (in millions) Production (MMBOE) 19.1 15.6 14.4 13.2 Oil, gas, and NGL production revenue $ 835.9 $ 642.4 $ 633.5 $ 559.6 Oil, gas, and NGL production expense $ 214.6 $ 148.4 $ 136.6 $ 137.4 Depletion, depreciation, and amortization $ 260.5 $ 202.9 $ 179.7 $ 166.2 Exploration $ 16.3 $ 12.1 $ 17.1 $ 18.6 General and administrative $ 41.9 $ 35.1 $ 31.1 $ 30.2 Net income $ 188.3 $ 240.5 $ 210.3 $ 131.2 ____________________________________________ Note: Amounts may not calculate due to rounding. 45 Selected Performance Metrics For the Three Months Ended December 31, September 30, June 30, March 31, 2024 2024 2024 2024 Average net daily equivalent production (MBOE per day) 208.0 170.0 158.5 145.1 Lease operating expense (per BOE) $ 5.35 $ 4.73 $ 4.82 $ 5.54 Transportation costs (per BOE) $ 4.10 $ 2.13 $ 1.94 $ 2.07 Production taxes as a percent of oil, gas, and NGL production revenue 4.1 % 4.6 % 4.3 % 4.5 % Ad valorem tax expense (per BOE) $ (0.03) $ 0.76 $ 0.82 $ 0.89 Depletion, depreciation, and amortization (per BOE) $ 13.61 $ 12.98 $ 12.46 $ 12.59 General and administrative (per BOE) $ 2.19 $ 2.25 $ 2.16 $ 2.29 ____________________________________________ Note: Amounts may not calculate due to rounding. 46 Overview of Selected Production and Financial Information, Including Trends For the Years Ended December 31, Amount Change Between Percent Change Between 2024 2023 2022 2024/2023 2023/2022 2024/2023 2023/2022 Net production volumes: (1) Oil (MMBbl) 29.4 23.8 24.0 5.6 (0.2) 24 % (1) % Gas (Bcf) 137.0 132.4 125.9 4.6 6.4 3 % 5 % NGLs (MMBbl) 10.2 9.7 8.0 0.6 1.7 6 % 21 % Equivalent (MMBOE) 62.4 55.5 53.0 6.9 2.5 12 % 5 % Average net daily production: (1) Oil (MBbl per day) 80.2 65.1 65.7 15.1 (0.6) 23 % (1) % Gas (MMcf per day) 374.3 362.7 345.0 11.6 17.6 3 % 5 % NGLs (MBbl per day) 27.9 26.4 21.9 1.4 4.5 5 % 21 % Equivalent (MBOE per day) 170.5 152.0 145.1 18.5 6.9 12 % 5 % Oil, gas, and NGL production revenue (in millions): (1) Oil production revenue $ 2,187.5 $ 1,813.8 $ 2,270.1 $ 373.7 $ (456.3) 21 % (20) % Gas production revenue 249.1 327.9 790.9 (78.8) (463.0) (24) % (59) % NGL production revenue 234.7 222.2 285.0 12.5 (62.7) 6 % (22) % Total oil, gas, and NGL production revenue $ 2,671.3 $ 2,363.9 $ 3,345.9 $ 307.4 $ (982.0) 13 % (29) % Oil, gas, and NGL production expense (in millions): (1) Lease operating expense $ 319.0 $ 284.8 $ 266.5 $ 34.2 $ 18.3 12 % 7 % Transportation costs 167.1 136.2 150.0 30.9 (13.8) 23 % (9) % Production taxes 116.0 105.1 162.6 10.8 (57.5) 10 % (35) % Ad valorem tax expense 34.9 37.4 41.7 (2.5) (4.3) (7) % (10) % Total oil, gas, and NGL production expense $ 637.0 $ 563.5 $ 620.9 $ 73.4 $ (57.4) 13 % (9) % Realized price: Oil (per Bbl) $ 74.49 $ 76.28 $ 94.67 $ (1.79) $ (18.39) (2) % (19) % Gas (per Mcf) $ 1.82 $ 2.48 $ 6.28 $ (0.66) $ (3.80) (27) % (61) % NGLs (per Bbl) $ 23.01 $ 23.02 $ 35.66 $ (0.01) $ (12.64) — % (35) % Per BOE $ 42.81 $ 42.60 $ 63.18 $ 0.21 $ (20.58) — % (33) % Per BOE data: (1) Oil, gas, and NGL production expense: Lease operating expense $ 5.11 $ 5.13 $ 5.03 $ (0.02) $ 0.10 — % 2 % Transportation costs 2.68 2.46 2.83 0.22 (0.37) 9 % (13) % Production taxes 1.86 1.89 3.07 (0.03) (1.18) (2) % (38) % Ad valorem tax expense 0.56 0.67 0.79 (0.11) (0.12) (16) % (15) % Total oil, gas, and NGL production expense (1) $ 10.21 $ 10.16 $ 11.72 $ 0.05 $ (1.56) — % (13) % Depletion, depreciation, and amortization $ 12.97 $ 12.44 $ 11.40 $ 0.53 $ 1.04 4 % 9 % General and administrative $ 2.22 $ 2.18 $ 2.16 $ 0.04 $ 0.02 2 % 1 % Net derivative settlement gain (loss) (2) $ 1.10 $ 0.49 $ (13.42) $ 0.61 $ 13.91 124 % 104 % Earnings per share information (in thousands, except per share data): (3) Basic weighted-average common shares outstanding 114,757 118,678 122,351 (3,921) (3,673) (3) % (3) % Diluted weighted-average common shares outstanding 115,533 119,240 124,084 (3,707) (4,844) (3) % (4) % Basic net income per common share $ 6.71 $ 6.89 $ 9.09 $ (0.18) $ (2.20) (3) % (24) % Diluted net income per common share $ 6.67 $ 6.86 $ 8.96 $ (0.19) $ (2.10) (3) % (23) % 47 ____________________________________________ (1) Amounts and percentage changes may not calculate due to rounding.
Our weighted-average interest rate and weighted-average borrowing rate are affected by the occurrence and timing of long-term debt issuances and redemptions and the average outstanding balance on our revolving credit facility. Additionally, our weighted-average interest rate is affected by the fees paid on the unused portion of our aggregate lender commitments.
Our weighted-average interest rate and weighted-average borrowing rate are affected by the occurrence and timing of long-term debt issuances and redemptions and the average outstanding balance on our revolving credit facility. Additionally, our weighted-average interest rate is affected by the fees paid on the unused portion of our aggregate revolving lender commitments.
Uses of Cash We use cash for the development, exploration, and acquisition of oil and gas properties; for the payment of operating and general and administrative costs, income taxes, debt obligations, including interest and early repayments or redemptions, dividends, and for repurchases of shares of our outstanding common stock under the Stock Repurchase Program.
Uses of Cash We use cash for the development, exploration, and acquisition of oil and gas properties; for the payment of operating and general and administrative costs, income taxes, debt obligations, including interest and early repayments or redemptions, and dividends; and for repurchases of shares of our outstanding common stock under the Stock Repurchase Program.
Net cash used in financing activities during the year ended December 31, 2022, related to $480.2 million of cash paid, including premium, to redeem our 2025 Senior Secured Notes, and $104.8 million of cash paid to redeem our 2024 Senior Notes.
Net cash used in financing activities during the year ended December 31, 2022, related to $480.2 million of cash paid, including premium, to redeem our 2025 Senior Secured Notes, and $104.8 million to redeem our 2024 Senior Notes.
Additionally, we paid $57.2 million, including commission and fees, to repurchase and subsequently retire 1.4 million shares of our common stock under the Stock Repurchase Program, $25.1 million for the net share settlement of employee stock awards, and $19.6 million of dividends paid to our stockholders.
Additionally, we paid $57.2 million, including commission and fees, to repurchase and subsequently retire 1.4 million shares of our common stock under the Stock Repurchase Program, $25.1 million for the net share settlement of employee stock awards, and paid $19.6 million of dividends to our stockholders.
Off-Balance Sheet Arrangements We have not participated in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities (“SPE” or “SPEs”). Please refer to Off-Balance Sheet Arrangements within Note 1 – Summary of Significant Accounting Policies in Part II, Item 8 of this report for additional discussion.
Off-Balance Sheet Arrangements We have not participated in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities (“SPE” or “SPEs”). Refer to Off-Balance Sheet Arrangements within Note 1 – Summary of Significant Accounting Policies in Part II, Item 8 of this report for additional discussion.
Please refer to Critical Accounting Estimates below and Note 4 – Income Taxes in Part II, Item 8 of this report for further discussion. Overview of Liquidity and Capital Resources Based on the current commodity price environment, we believe we have sufficient liquidity and capital resources to execute our business plan while continuing to meet our current financial obligations.
Refer to Critical Accounting Estimates below and Note 4 – Income Taxes in Part II, Item 8 of this report for further discussion. Overview of Liquidity and Capital Resources Based on the current commodity price environment, we believe we have sufficient liquidity and capital resources to execute our business plan while continuing to meet our current financial obligations.
Please refer to Risk Factors in Part I, Item 1A of this report for additional discussion. If the estimates of proved reserves decline, the rate at which we record DD&A expense will increase, which would reduce future net income. Changes in DD&A rate calculations caused by changes in reserve quantities are made prospectively.
Refer to Risk Factors in Part I, Item 1A of this report for additional discussion. If the estimates of proved reserves decline, the rate at which we record DD&A expense will increase, which would reduce future net income. Changes in DD&A rate calculations caused by changes in reserve quantities are made prospectively.
Oil, gas, and NGL prices are subject to unpredictable fluctuations resulting from a variety of factors that are typically beyond our control, including changes in supply and demand associated with the broader macroeconomic environment, constraints on gathering systems, processing facilities, pipelines, and other transportation systems, and weather-related events.
Oil, gas, and NGL prices are subject to unpredictable fluctuations resulting from a variety of factors that are typically beyond our control, including changes in supply and demand associated with the broader macroeconomic environment, constraints on gathering systems, processing facilities, pipelines, rail systems, and other transportation systems, and weather-related events.
Conversely, for the portion of the revolving credit facility that has a floating interest rate, interest rate changes will not affect the fair value but will affect future results of operations and cash flows. Changes in interest rates do not affect the amount of interest we pay on our fixed-rate Senior Notes, but can affect their fair 53 values.
Conversely, for the portion of the revolving credit facility that has a floating interest rate, interest rate changes will not affect the fair value but will affect future results of operations and cash flows. Changes in interest rates do not affect the amount of interest we pay on our fixed-rate Senior Notes, but can affect their fair values.
In addition, there have been international conventions and efforts to establish standards for the reduction of GHGs globally, including the Paris accords in December 2015. The conditions for entry into force of the Paris accords were met on October 5, 2016 and the Agreement went into force 30 days later on November 4, 2016.
In addition, there have been international conventions and efforts to establish standards for the reduction of GHGs globally, including the Paris Agreement in December 2015. The conditions for entry into force of the Paris Agreement were met on October 5, 2016, and the Agreement went into force 30 days later on November 4, 2016.
Consequently, we expect to continue experiencing these types of changes. 55 We cannot reasonably predict future commodity prices, although we believe that together, the below analyses provide reasonable information regarding the impact of changes in pricing and trends on total estimated net proved reserves.
Consequently, we expect to continue experiencing these types of changes. We cannot reasonably predict future commodity prices, although we believe that together, the analyses below provide reasonable information regarding the impact of changes in pricing and trends on total estimated net proved reserves.
We make 43 decisions about the amount of our expected production that we cover by derivatives based on the amount of debt on our balance sheet, the level of capital commitments and long-term obligations we have in place, and the terms and futures prices that are made available by our approved counterparties.
We make decisions about the amount of our expected production that we cover by derivatives based on the amount of debt on our balance sheet, the level of capital commitments and long-term obligations we have in place, and the terms and futures prices that are made available by our approved counterparties.
Proved oil and gas properties are evaluated for impairment on a depletion pool-by-pool basis and reduced to fair value when events or changes in circumstances indicate that their carrying amount may not be recoverable.
Impairment of Proved Properties. Proved oil and gas properties are evaluated for impairment on a depletion pool-by-pool basis and reduced to fair value when events or changes in circumstances indicate that their carrying amount may not be recoverable.
(2) For the year ended December 31, 2023, amount excludes certain capital expenditures related to unsuccessful exploration activity for one well that experienced technical issues during the drilling phase. For the year ended December 31, 2022, amount excludes certain capital expenditures related to unsuccessful exploration efforts outside of our core areas of operation.
For the year ended December 31, 2023, amount excludes certain capital expenditures related to unsuccessful exploration activity for one well that experienced technical issues during the drilling phase. For the year ended December 31, 2022, amount excludes certain capital expenditures related to unsuccessful exploration efforts outside of our core areas of operation.
Please refer to Note 7 – Derivative Financial Instruments in Part II, Item 8 of this report and to Commodity Price Risk in Overview of Liquidity and Capital Resources below for additional information regarding our oil, gas, and NGL derivatives.
Refer to Note 7 – Derivative Financial Instruments in Part II, Item 8 of this report and to Commodity Price Risk in Overview of Liquidity and Capital Resources below for additional information regarding our oil, gas, and NGL derivatives.
In addition, the impact of oil, gas, and NGL prices on investment opportunities, the availability of capital, tax law and other regulatory changes, and the timing and results of our exploration and development activities may lead to changes in funding requirements for future development.
In addition, the impact of oil, gas, and NGL prices on investment opportunities, the availability of capital, 53 tax law and other regulatory changes, and the timing and results of our exploration and development activities may lead to changes in funding requirements for future development.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion includes forward-looking statements. Please refer to the Cautionary Information about Forward-Looking Statements section of this report for important information about these types of statements.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion includes forward-looking statements. Refer to the Cautionary Information about Forward-Looking Statements section of this report for important information about these types of statements.
Please refer to Note 3 – Equity in Part II, Item 8 of this report for additional discussion of our Stock Repurchase Program and Note 5 – Long-Term Debt in Part II, Item 8 of this report for additional discussion and definitions related to our debt transactions.
Refer to Note 3 – Equity in Part II, Item 8 of this report for additional discussion of our Stock Repurchase Program and Note 5 – Long-Term Debt in Part II, Item 8 of this report for additional discussion and definitions related to our debt transactions.
Commodity derivative contracts may limit the prices we receive for our oil, gas, and NGL sales if oil, gas, or NGL prices rise substantially over the price established by the commodity derivative contract.
Commodity derivative contracts may limit the prices we receive for our oil, gas, and NGL sales if oil, gas, or NGL prices rise over the price established by the commodity derivative contract.
Comparison of Financial Results and Trends Between 2023 and 2022 and Between 2022 and 2021 Please refer to Comparison of Financial Results and Trends Between 2022 and 2021 and Between 2021 and 2020 in 46 Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our 2022 Annual Report on Form 10-K, filed with the SEC on February 23, 2023, for a detailed discussion of certain comparisons of our financial results and trends for the year ended December 31, 2022, compared with the year ended December 31, 2021.
Refer to Comparison of Financial Results and Trends Between 2022 and 2021 and Between 2021 and 2020 in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Part II, Item 7 of our 2022 Annual Report on Form 10-K, filed with the SEC on February 23, 2023, for a detailed discussion of certain comparisons of our financial results and trends for the year ended December 31, 2022, compared with the year ended December 31, 2021.
(2) The change solely reflects the impact of replacing SEC pricing with the five-year average NYMEX strip pricing as of December 31, 2023, and does not include additional impacts to our estimated net proved reserves that may result from our internal intent to drill hurdles or changes in future service or equipment costs.
(2) The change solely reflects the impact of replacing SEC pricing with the five-year average NYMEX strip pricing as of December 31, 2024, and does not include additional impacts to our estimated net proved reserves that may result from our internal intent to drill hurdles or changes in future service or equipment costs.
Please refer to Note 7 – Derivative 50 Financial Instruments in Part II, Item 8 of this report for additional information about our commodity derivative contracts currently in place and the timing of settlement of those contracts . Credit Agreement Our Credit Agreement provides for a senior secured revolving credit facility with a maximum loan amount of $3.0 billion.
Refer to Note 7 – Derivative Financial Instruments in Part II, Item 8 of this report for additional information about our commodity derivative contracts currently in place and the timing of settlement of those contracts . Credit Agreement Our Credit Agreement provides for a senior secured revolving credit facility with a maximum loan amount of $3.0 billion.
Please refer to Overview of Selected Production and Financial Information, Including Trends above for discussion of DD&A expense on a per BOE basis.
Refer to Overview of Selected Production and Financial Information, Including Trends above for discussion of DD&A expense on a per BOE basis.
Please refer to Costs Incurred in Supplemental Oil and Gas Information (unaudited) in Part II, Item 8 of this report for additional discussion.
Refer to Costs Incurred in Supplemental Oil and Gas Information (unaudited) in Part II, Item 8 of this report for additional discussion.
In accordance with SEC requirements, we based these measures on the unweighted arithmetic average of the first-day-of-the-month price of each month within the trailing 12-month period ended December 31, 2023. Actual future prices and costs may be materially higher or lower than the prices and costs utilized in the estimates.
In accordance with SEC requirements, we based these measures on the unweighted arithmetic average of the first-day-of-the-month price of each month within the trailing 12-month period ended December 31, 2024. Actual future prices and costs may be materially higher or lower than the prices and costs utilized in the estimates.
Average net daily equivalent production, production revenue, and production expense The following table presents the changes in our average net daily equivalent production, production revenue, and production expense, by area, between the years ended December 31, 2023, and 2022: Net Equivalent Production Increase (Decrease) Production Revenue Decrease Production Expense Decrease (MBOE per day) (in millions) (in millions) Midland Basin (6.0) $ (726.8) $ (44.3) South Texas 13.0 (255.3) (13.1) Total 6.9 $ (982.0) $ (57.4) ____________________________________________ Note: Amounts may not calculate due to rounding.
The following table presents the changes in our average net daily equivalent production, oil, gas, and NGL production revenue, and oil, gas, and NGL production expense, by area, between the years ended December 31, 2023, and 2022: Average Net Equivalent Production Increase (Decrease) Oil, Gas, and NGL Production Revenue Decrease Oil, Gas, and NGL Production Expense Decrease (MBOE per day) (in millions) (in millions) Midland Basin (6.0) $ (726.8) $ (44.3) South Texas 13.0 (255.3) (13.1) Total 6.9 $ (982.0) $ (57.4) ____________________________________________ Note: Amounts may not calculate due to rounding.
We have no control over the market prices for oil, gas, and NGLs, although we may be able to influence the amount of our realized revenues from our oil, gas, and NGL sales through the use of commodity derivative contracts as part of our commodity price risk management program.
We have no control over the market prices for oil, gas, and NGLs, although we may be able to influence the amount of our realized revenues from our oil, gas, and NGL sales through the use of commodity derivative contracts as part of our financial risk management program.
We expect increases in benchmark commodity prices to result in net derivative losses, and decreases in benchmark commodity prices to result in net derivative gains, as measured against our derivative contract prices. Please refer to Note 7 – Derivative Financial Instruments in Part II, Item 8 of this report for additional discussion.
We expect increases in benchmark commodity prices to result in net derivative losses, and decreases in benchmark commodity 50 prices to result in net derivative gains, as measured against our derivative contract prices. Refer to Note 7 – Derivative Financial Instruments in Part II, Item 8 of this report for additional discussion.
It should not be assumed that the standardized measure of discounted future net cash flows (GAAP) or PV-10 (non-GAAP) as of December 31, 2023, is the current market value of our estimated proved reserves.
It should not be assumed that the standardized measure of discounted future net cash flows (GAAP) or PV-10 (non-GAAP) as of December 31, 2024, is the current market value of our estimated proved reserves.
These circumstances have contributed to inflation, instances of supply chain disruptions, and a rise in interest rates, and could have further industry-specific impacts that may require us to adjust our business plan. The realized prices we receive for our production also depend on numerous factors that are typically beyond our control.
These circumstances have contributed to inflation, instances of supply chain disruptions, and fluctuations in interest rates, and could have further industry-specific impacts that may require us to adjust our business plan. The realized prices we receive for our production also depend on numerous factors that are typically beyond our control.
(2) Net derivative settlements for the years ended December 31, 2023, 2022, and 2021, are included within the net derivative (gain) loss line item in the accompanying consolidated statements of operations (“accompanying statements of operations”). (3) Please refer to Note 9 – Earnings Per Share in Part II, Item 8 of this report for additional discussion.
(2) Net derivative settlements for the years ended December 31, 2024, 2023, and 2022, are included within the net derivative (gain) loss line item in the accompanying consolidated statements of operations (“accompanying statements of operations”). (3) Refer to Note 9 – Earnings Per Share in Part II, Item 8 of this report for additional discussion.
Analysis of Cash Flow Changes Between 2023 and 2022 and Between 2022 and 2021 The following tables present changes in cash flows between the years ended December 31, 2023, 2022, and 2021, for our operating, investing, and financing activities.
Analysis of Cash Flow Changes Between 2024 and 2023 and Between 2023 and 2022 The following tables present changes in cash flows between the years ended December 31, 2024, 2023, and 2022, for our operating, investing, and financing activities.
Accounting Matters Please refer to Recently Issued Accounting Standards in Note 1 – Summary of Significant Accounting Policies in Part II, Item 8 of this report for information on new authoritative accounting guidance.
Accounting Matters Refer to Recently Issued Accounting Guidance in Note 1 – Summary of Significant Accounting Policies in Part II, Item 8 of this report for information on new authoritative accounting guidance.
They are used in comparative financial ratios and are the basis for significant accounting estimates in our consolidated financial statements, including the calculations of DD&A expense, impairment of proved and unproved oil and gas properties, and asset retirement obligations.
They are used in comparative financial ratios and are the basis for significant accounting estimates in our consolidated financial statements, including the calculations of DD&A expense, impairment of proved and unproved oil and gas properties, asset retirement obligations, and purchase price allocations.
The Environmental, Social and Governance Committee of our Board of Directors oversees, among other things, the effectiveness of our ESG policies, programs and initiatives, monitors and responds to emerging issues, and, together with management, reports to our Board of Directors regarding such matters.
The Environmental, Social and Governance Committee of our Board of Directors oversees, among other things, the effectiveness of our ESG policies, programs and initiatives, monitors and responds to emerging trends, issues, and associated risks, and, together with management, reports to our Board of Directors regarding such matters.
The borrowing base is subject to regular, semi-annual redetermination, and considers the value of both our proved oil and gas properties reflected in our most recent reserve report and commodity derivative contracts, each as determined by our lender group. The next scheduled borrowing base redetermination date is April 1, 2024.
The borrowing base is subject to regular, semi-annual redetermination, and considers the value of both our proved oil and gas properties reflected in our most recent reserve report and commodity derivative contracts, each as determined by our lender group. The next borrowing base redetermination date is scheduled to occur on April 1, 2025.
Loss on extinguishment of debt For the Years Ended December 31, 2023 2022 2021 (in millions) Loss on extinguishment of debt $ — $ (67.6) $ (2.1) The redemption of our 2025 Senior Secured Notes during 2022 resulted in a net loss on extinguishment of debt of 49 $67.2 million, which included $33.5 million of premium paid, $26.3 million of accelerated expense recognition of the unamortized debt discount, and $7.4 million of accelerated expense recognition of the unamortized deferred financing costs.
Loss on extinguishment of debt For the Years Ended December 31, 2024 2023 2022 (in millions) Loss on extinguishment of debt $ (0.5) $ — $ (67.6) The redemption of our 2025 Senior Secured Notes during 2022 resulted in a net loss on extinguishment of debt of $67.2 million, which included $33.5 million of premium paid, $26.3 million of accelerated expense recognition of the unamortized debt discount, and $7.4 million of accelerated expense recognition of the unamortized deferred financing costs.
We were in compliance with all financial and non-financial covenants as of December 31, 2023, and through the filing of this report.
We were in compliance with all financial and non-financial covenants as of December 31, 2024, and through the filing of this report.
The following table reflects the estimated MMBOE change and percentage change to our total reported estimated proved reserve volumes from the described hypothetical changes: For the year ended December 31, 2023 MMBOE Change Percentage Change 10 percent decrease in SEC pricing (1) (14.3) (2) % Average NYMEX strip pricing as of fiscal year end (2) 2.5 — % 10 percent decrease in net proved undeveloped reserves (3) (26.4) (4) % ____________________________________________ (1) The change solely reflects the impact of a 10 percent decrease in SEC pricing to the total reported estimated net proved reserve volumes as of December 31, 2023, and does not include additional impacts to our estimated net proved reserves that may result from our internal intent to drill hurdles or changes in future service or equipment costs.
The following table reflects the estimated MMBOE change and percentage change to our total reported estimated net proved reserve volumes from the described hypothetical changes: For the year ended December 31, 2024 MMBOE Change Percentage Change 10 percent decrease in SEC pricing (1) (19.3) (3) % Average NYMEX strip pricing as of fiscal year end (2) 11.5 2 % 10 percent decrease in net proved undeveloped reserves (3) (27.4) (4) % ____________________________________________ (1) The change solely reflects the impact of a 10 percent decrease in SEC pricing to the total reported estimated net proved reserve volumes as of December 31, 2024, and does not include additional impacts to our estimated net proved reserves that may result from our internal intent to drill hurdles or changes in future service or equipment costs.
The oil and gas sector is often subjected to additional controls when areas within states are not attaining the ozone NAAQS as the VOCs emitted by the oil and gas sector are a precursor to ozone formation. The ozone NAAQS was set at 70 parts per billion (“ppb”) in 2015.
States are also required to comply with the NAAQS. The oil and gas sector is often subjected to additional controls when areas within states are not attaining the ozone NAAQS as the VOCs emitted by the oil and gas sector are a precursor to ozone formation. The ozone NAAQS was set at 70 parts per billion (“ppb”) in 2015.
In general, we expect total transportation costs to fluctuate relative to changes in gas and NGL production from our South Texas assets, where we incur a majority of our transportation costs.
In general, we expect total transportation costs to fluctuate relative to changes in gas and NGL production from our South Texas assets and oil production from our Uinta Basin assets, where we incur a majority of our transportation costs.
Please refer to Note 5 – Long-Term Debt in Part II, Item 8 of this report for additional discussion, including the definition of 2025 Senior Secured Notes.
Refer to Note 5 – Long-Term Debt in Part II, Item 8 of this report for additional discussion and the definition of 2025 Senior Secured Notes.
Weighted-Average Interest and Weighted-Average Borrowing Rates Our weighted-average interest rate includes paid and accrued interest, fees on the unused portion of the aggregate commitment amount under the Credit Agreement, letter of credit fees, the non-cash amortization of deferred financing costs, and for the periods during which they were outstanding, the non-cash amortization of the discounts related to the 2021 Senior Secured Convertible Notes and 2025 Senior Secured Notes, each as defined in Note 5 – Long-Term Debt in Part II, Item 8 of this report.
Weighted-Average Interest and Weighted-Average Borrowing Rates Our weighted-average interest rate includes paid and accrued interest, fees on the unused portion of the aggregate commitment amount under the Credit Agreement, letter of credit fees, the non-cash amortization of deferred financing costs, and for the portion of 2022 during which they were outstanding, the non-cash amortization of the discount related to the 2025 Senior Secured Notes, as defined in Note 5 – Long-Term Debt in Part II, Item 8 of this report.
Non-GAAP Financial Measures Adjusted EBITDAX represents net income (loss) before interest expense, interest income, income taxes, depletion, depreciation, amortization and asset retirement obligation liability accretion expense, exploration expense, property abandonment and impairment expense, non-cash stock-based compensation expense, derivative gains and losses net of settlements, gains and losses on divestitures, gains and losses on extinguishment of debt, and certain other items.
Non-GAAP Financial Measures Adjusted EBITDAX represents net income (loss) before interest expense, interest income, income taxes, depletion, depreciation, and amortization expense, exploration expense, property abandonment and impairment expense, non-cash stock-based compensation expense, derivative gains and losses net of settlements, gains and losses on divestitures, gains and losses on extinguishment of debt, and certain other items.
For the Years Ended December 31, 2023 2022 2021 MMBOE Change Revisions resulting from performance (1) 37.2 (11.1) 3.4 Removal of net proved undeveloped reserves no longer in our five-year development plan (30.8) (19.9) (40.6) Revisions resulting from price changes (28.4) 9.5 37.2 Total (22.0) (21.5) — ____________________________________________ Note: Amounts may not calculate due to rounding.
For the Years Ended December 31, 2024 2023 2022 MMBOE Change Revisions resulting from performance (1) (8.0) 37.2 (11.1) Removal of net proved undeveloped reserves no longer in our five-year development plan (30.5) (30.8) (19.9) Revisions resulting from price changes (13.4) (28.4) 9.5 Total (51.9) (22.0) (21.5) ____________________________________________ Note: Amounts may not calculate due to rounding.
In 2023, the EPA announced its plan to perform a full and complete review of the ozone NAAQS and intends to release an integrated review plan in 2024. The results of this review could result in changes to the ozone NAAQS which, if lowered, may result in additional actions by states requiring further emission controls and associated costs.
In 2023, the EPA announced its plan to perform a full and complete review of the ozone NAAQS. The results of this review could result in changes to the ozone NAAQS which, if lowered, may result in additional actions by states requiring further emission controls and associated costs.
Our asset portfolio is comprised of high-quality assets in the Midland Basin of West Texas and in the Maverick Basin of South Texas that we believe are capable of generating strong returns in the current macroeconomic environment and provide resilience to commodity price risk and volatility.
Our asset portfolio is comprised of high-quality assets in the Midland Basin of West Texas, the Maverick Basin of South Texas, and the Uinta Basin of northeastern Utah, which we believe are capable of generating strong returns in the current macroeconomic environment and provide resilience to commodity price risk and volatility.
If commodity prices had been 10 percent lower, our net derivative settlements for the year ended December 31, 2023, would have offset the declines in oil, gas, and NGL production revenue by approximately $61.2 million. We enter into commodity derivative contracts in order to reduce the risk of fluctuations in commodity prices.
If commodity prices had been 10 percent lower, our net derivative settlements for the year ended December 31, 2024, would have offset the declines in oil, gas, and NGL production revenue by approximately $50.3 million. We enter into commodity derivative contracts in order to reduce the risk of fluctuations in commodity prices.
Please refer to Note 5 – Long-Term Debt in Part II, Item 8 of this report for additional discussion, as well as the presentation of the outstanding balance, total amount of letters of credit, and available borrowing capacity under the Credit Agreement as of February 8, 2024, December 31, 2023, and December 31, 2022.
Refer to Note 5 – Long-Term Debt in Part II, Item 8 of this report for additional discussion, as well as the presentation of the outstanding balance, total amount 52 of letters of credit, and available borrowing capacity under the Credit Agreement as of January 31, 2025, December 31, 2024, and December 31, 2023.
Changes to the Internal Revenue Code (“IRC“), could increase the corporate income tax rate and could eliminate or reduce current tax deductions for intangible drilling costs, depreciation of equipment costs, and other deductions which currently reduce our taxable income.
Changes to the Internal Revenue Code (“IRC“) and federal income tax laws could increase our corporate income tax rate and eliminate or reduce current tax deductions, such as those for intangible drilling costs, depreciation of equipment costs, and other deductions which currently reduce our taxable income.
Please refer to our Definitive Proxy Statement on Schedule 14A for the 2024 annual meeting of stockholders to be filed within 120 days from December 31, 2023, for additional discussion. We are impacted by global commodity and financial markets that remain subject to heightened levels of uncertainty and volatility.
Refer to our Definitive Proxy Statement on Schedule 14A for the 2025 annual meeting of stockholders to be filed within 120 days from December 31, 2024, for additional discussion of our compensation programs. We are affected by global commodity and financial markets that remain subject to heightened levels of uncertainty and volatility.
This amount differs from the costs incurred amount of $1.2 billion for the year ended December 31, 2023, as costs incurred is an accrual-based amount that also includes asset retirement obligations, geological and geophysical expenses, and exploration overhead amounts.
This amount differs from the costs incurred amount of $3.5 billion for the year ended December 31, 2024, as costs incurred is an accrual-based amount that also includes asset retirement obligations, geological and geophysical expenses, and exploration overhead amounts.
Operational activities during the year ended December 31, 2023, resulted in the following: • Net cash provided by operating activities of $1.6 billion, compared with $1.7 billion for 2022. • Net income of $817.9 million, or $6.86 per diluted share, compared with net income of $1.1 billion, or $8.96 per diluted share for 2022. • Adjusted EBITDAX, a non-GAAP financial measure, of $1.7 billion, compared with $1.9 billion for 2022.
Operational activities during the year ended December 31, 2024, resulted in the following: • Net cash provided by operating activities of $1.8 billion, compared with $1.6 billion for 2023. • Net income of $770.3 million, or $6.67 per diluted share, compared with net income of $817.9 million, or $6.86 per diluted share for 2023. • Adjusted EBITDAX, a non-GAAP financial measure, of $2.0 billion, compared with $1.7 billion for 2023.
Despite any amount of future impairment being difficult to predict, based on our commodity price assumptions as of February 8, 2024, we do not expect any material oil and gas property impairments in the first quarter of 2024 resulting from commodity price impacts.
Despite any amount of future impairment being difficult to predict, based on our commodity price assumptions as of January 31, 2025, we do not expect any material proved oil and gas property impairments in the first quarter of 2025 resulting from commodity price impacts.
The following table summarizes commodity price data, as well as the effect of net derivative settlements, for the years ended December 31, 2023, 2022, and 2021: For the Years Ended December 31, 2023 2022 2021 Oil (per Bbl): Average NYMEX contract monthly price $ 77.62 $ 94.23 $ 67.92 Realized price $ 76.28 $ 94.67 $ 67.72 Effect of oil net derivative settlements $ (1.13) $ (21.46) $ (18.73) Gas: Average NYMEX monthly settle price (per MMBtu) $ 2.74 $ 6.64 $ 3.84 Realized price (per Mcf) $ 2.48 $ 6.28 $ 4.85 Effect of gas net derivative settlements (per Mcf) $ 0.37 $ (1.36) $ (1.41) NGLs (per Bbl): Average OPIS price (1) $ 27.71 $ 43.48 $ 36.65 Realized price $ 23.02 $ 35.66 $ 33.67 Effect of NGL net derivative settlements $ 0.48 $ (3.06) $ (13.68) ____________________________________________ (1) Effective January 1, 2023, average OPIS price per barrel of NGL, historical or strip, assumes a composite barrel product mix of 42% Ethane, 28% Propane, 6% Isobutane, 11% Normal Butane, and 13% Natural Gasoline.
The following table summarizes commodity price data, as well as the effect of net derivative settlements, for the years ended December 31, 2024, 2023, and 2022: For the Years Ended December 31, 2024 2023 2022 Oil (per Bbl): Average NYMEX contract monthly price $ 75.72 $ 77.62 $ 94.23 Realized price $ 74.49 $ 76.28 $ 94.67 Effect of oil net derivative settlements $ 0.43 $ (1.13) $ (21.46) Gas: Average NYMEX monthly settle price (per MMBtu) $ 2.27 $ 2.74 $ 6.64 Realized price (per Mcf) $ 1.82 $ 2.48 $ 6.28 Effect of gas net derivative settlements (per Mcf) $ 0.43 $ 0.37 $ (1.36) NGLs (per Bbl): Average OPIS price (1) $ 28.30 $ 27.71 $ 43.48 Realized price $ 23.01 $ 23.02 $ 35.66 Effect of NGL net derivative settlements $ (0.25) $ 0.48 $ (3.06) ____________________________________________ (1) Effective January 1, 2023, average OPIS price per barrel of NGL, historical or strip, assumes a composite barrel product mix of 42% Ethane, 28% Propane, 6% Isobutane, 11% Normal Butane, and 13% Natural Gasoline.
During the years ended December 31, 2023, and 2022, we repurchased and subsequently retired 6.9 million shares and 1.4 million shares, respectively, of our common stock at a cost, excluding excise taxes, commissions, and fees, of $228.0 million and $57.2 million, respectively.
During the years ended December 31, 2024, and 2023, we repurchased and subsequently retired 1.8 million shares and 6.9 million shares, respectively, of our common stock at a cost, excluding excise taxes, commissions, and fees, of $84.0 million and $228.0 million, respectively.
For additional information about hydraulic fracturing and related environmental matters, please refer to Risk Factors – Risks Related to Oil and Gas Operations and the Industry – Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays. Climate Change and Air Quality.
For additional information about hydraulic fracturing and related environmental matters, refer to Risk Factors – Risks Related to Government Regulations – Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays. Climate Change and Air Quality.
For each of the years ended December 31, 2023, and 2022, approximately 40 percent of our production on a per BOE basis was gas.
For the years ended December 31, 2024, and 2023, approximately 37 percent and 40 percent, respectively, of our production on a per BOE basis was gas.
Adjusted EBITDAX is a non-GAAP measure that we believe provides useful additional information to investors and analysts, as a performance measure, for analysis of our ability to internally generate funds for exploration, development, acquisitions, and to service debt.
Adjusted EBITDAX is a non-GAAP measure that we believe provides useful additional information to investors and analysts, as a performance measure, for analysis of our ability to internally generate funds for exploration, development, acquisitions, and to service debt. We are also subject to financial covenants under our Credit Agreement.
As of the filing of this report, $214.9 million remains available under the Stock Repurchase Program for repurchases of our common stock through December 31, 2024. Effective January 1, 2023, shares of common stock repurchased, net of shares of common stock issued, are subject to a one percent excise tax imposed by the IRA.
As of December 31, 2024, $500.0 million remained available under the Stock Repurchase Program for repurchases of our common stock through December 31, 2027. Effective January 1, 2023, shares of common stock repurchased, net of shares of common stock issued, are subject to a one percent excise tax imposed by the IRA.
As of December 31, 2023, a 10 percent increase or decrease in the forward curves associated with our oil, gas, and NGL commodity derivative instruments would have changed our net derivative positions for these products by approximately $30.0 million, $5.2 million, and $0.7 million, respectively.
As of December 31, 2024, a 10 percent increase or decrease in the forward curves associated with our oil, gas, and NGL commodity derivative instruments would have changed our net derivative positions for these products by approximately $51.9 million, $23.4 million, and $1.7 million, respectively.
Given the uncertainty surrounding global financial markets, production output from OPEC+, global shipping channel constraints and disruptions, instability in the Middle East, economic and trade sanctions associated with the wars between Russia and Ukraine and Israel and Hamas, changes in oil inventory in storage, and the potential impacts of these issues on global commodity and financial markets, we expect benchmark prices for oil, gas, and NGLs to remain volatile for the foreseeable future, and we cannot reasonably predict the timing or likelihood of any future impacts that may result, which could include further inflation, supply chain disruptions, fluctuations in interest rates, and industry-specific impacts.
Given the uncertainty surrounding global financial markets, production output from OPEC+, global shipping channel constraints and disruptions, fluctuations in oil and gas demand from China, War and Geopolitical Instability, changes in global oil inventory in storage, tariffs or trade restrictions, and the potential impacts of these issues on global commodity markets, we expect benchmark prices for oil, gas, and NGLs to remain volatile for the foreseeable future, and we cannot reasonably predict the timing or likelihood of any future impacts that may result, which could include inflation, supply chain disruptions, fluctuations in interest rates, and industry-specific impacts.
In addition to supply and demand fundamentals, as global commodities, the prices for oil, gas, and NGLs are affected by real or perceived geopolitical risks in various regions of the world as well as the relative strength of the United States dollar compared to other currencies.
Realized prices reflect our actual product mix. 44 As global commodities, the prices for oil, gas, and NGLs are affected by real or perceived geopolitical risks in various regions of the world, as well as the relative strength of the United States dollar compared to other currencies.
Depletion, depreciation, amortization, and asset retirement obligation liability accretion For the Years Ended December 31, 2023 2022 2021 (in millions) Depletion, depreciation, amortization, and asset retirement obligation liability accretion $ 690.5 $ 603.8 $ 774.4 DD&A expense for the year ended December 31, 2023, increased 14 percent, compared with 2022, primarily as a result of inflation and a five percent increase in average net daily equivalent production volumes, partially offset by a shift in production mix due to higher activity in our South Texas assets, which have a lower DD&A rate than our Midland Basin assets.
DD&A expense for the year ended December 31, 2023, increased 14 percent compared with 2022, primarily as a result of inflation and a five percent increase in average net daily equivalent production volumes, partially offset by a shift in production mix due to higher activity in our South Texas assets, which have a lower DD&A rate than our Midland Basin assets.
We recorded an immaterial amount of excise tax related to common stock repurchases during 2023. Please refer to Note 3 – Equity in Part II, Item 8 of this report for discussion of the Stock Repurchase Program.
We paid a minimal amount of excise tax related to common stock repurchases during 2024. Refer to Note 3 – Equity in Part II, Item 8 of this report for discussion of the Stock Repurchase Program.
During the years ended December 31, 2023, 2022, and 2021, we paid $71.6 million, $19.6 million, and $2.4 million, respectively, in dividends to our stockholders. Dividends paid reflects $0.60, $0.16, and $0.02 per share during the years ended December 31, 2023, 2022, and 2021, respectively.
During the years ended December 31, 2024, 2023, and 2022, we paid $85.0 million, $71.6 million, and $19.6 million, respectively, in dividends to our stockholders. Dividends paid were $0.74, $0.60, and $0.16 per share during the years ended December 31, 2024, 2023, and 2022, respectively.
Investing Activities For the Years Ended December 31, Amount Change Between 2023 2022 2021 2023/2022 2022/2021 (in millions) Net cash used in investing activities $ (1,098.7) $ (880.3) $ (667.2) $ (218.4) $ (213.1) Net cash used in investing activities increased for the year ended December 31, 2023, compared with 2022, as a result of a $109.5 million increase in capital expenditures and $109.9 million of cash paid to acquire proved and unproved oil and gas properties in the Midland Basin, including the acquisition of additional working interests in certain wells.
Net cash used in investing activities increased for the year ended December 31, 2023, compared with 2022, as a result of a $109.5 million increase in capital expenditures and $109.9 million of cash paid to acquire proved and unproved oil and gas properties in the Midland Basin, including the acquisition of additional working interests in certain wells.
The following table summarizes 12-month strip prices for NYMEX WTI oil, NYMEX Henry Hub gas, and OPIS NGLs as of February 8, 2024, and December 31, 2023: As of February 8, 2024 As of December 31, 2023 NYMEX WTI oil (per Bbl) $ 74.58 $ 71.53 NYMEX Henry Hub gas (per MMBtu) $ 2.63 $ 2.67 OPIS NGLs (per Bbl) $ 28.29 $ 25.77 We use financial derivative instruments as part of our financial risk management program.
The following table summarizes 12-month strip prices for NYMEX WTI oil, NYMEX Henry Hub gas, and OPIS NGLs as of January 31, 2025, and December 31, 2024: As of January 31, 2025 As of December 31, 2024 NYMEX WTI oil (per Bbl) $ 70.00 $ 70.01 NYMEX Henry Hub gas (per MMBtu) $ 3.63 $ 3.53 OPIS NGLs (per Bbl) $ 29.02 $ 28.77 We use financial derivative instruments as part of our financial risk management program.
Please refer to Non-GAAP Financial Measures below for additional discussion, including our definition of adjusted EBITDAX and reconciliations to net income and net cash provided by operating activities. • Total estimated net proved reserves as of December 31, 2023, increased 13 percent from December 31, 2022, to 604.9 MMBOE, of which, 58 percent were liquids (oil and NGLs) and 56 percent were proved developed reserves.
Refer to Non-GAAP Financial Measures below for additional discussion, including our definition of adjusted EBITDAX and reconciliations to net income and net cash provided by operating activities. • A 12 percent increase in total estimated net proved reserves as of December 31, 2024, from December 31, 2023, to 678.3 MMBOE, of which, 62 percent were liquids (oil and NGLs) and 60 percent were proved developed reserves.
Financing Activities For the Years Ended December 31, Amount Change Between 2023 2022 2021 2023/2022 2022/2021 (in millions) Net cash used in financing activities $ (304.5) $ (693.9) $ (159.8) $ 389.4 $ (534.1) Net cash used in financing activities during the year ended December 31, 2023, primarily consisted of $228.1 million of cash paid, including commission and fees, to repurchase and subsequently retire 6.9 million shares of our common stock under the Stock Repurchase Program, and $71.6 million of dividends paid to our stockholders.
Net cash used in financing activities during the year ended December 31, 2023, primarily consisted of $228.1 million of cash paid, including commission and fees, to repurchase and subsequently retire 6.9 million shares of our common stock under the Stock Repurchase Program, and $71.6 million of dividends paid to our stockholders.
As of December 31, 2023, the borrowing base and aggregate lender commitments under our Credit Agreement were $2.5 billion and $1.25 billion, respectively.
As of December 31, 2024, the borrowing base and aggregate revolving lender commitments under our Credit Agreement were $3.0 billion and $2.0 billion, respectively.
Realized prices for oil, gas, and NGLs decreased 19 percent, 61 percent, and 35 percent, respectively, for the year ended December 31, 2023, compared with 2022, as a result of decreases in benchmark commodity prices during 2023.
Realized prices for oil and gas decreased two percent and 27 percent, respectively, for the year ended December 31, 2024, compared with 2023, as a result of decreases in oil and gas benchmark commodity prices. Realized price for NGLs remained flat for the year ended December 31, 2024, compared with 2023.
Please refer to Comparison of Financial Results and Trends Between 2023 and 2022 and Between 2022 and 2021 below for additional discussion. We present certain information on a per BOE basis in order to evaluate our performance relative to our peers and to identify and measure trends we believe may require additional analysis and discussion.
We present certain information on a per BOE basis in order to evaluate our performance relative to our peers and to identify and measure trends we believe may require additional analysis and discussion.
The following table presents our weighted-average interest rates and our weighted-average borrowing rates for the years ended December 31, 2023, 2022, and 2021: For the Years Ended December 31, 2023 2022 2021 Weighted-average interest rate 7.1 % 7.6 % 7.7 % Weighted-average borrowing rate 6.4 % 6.8 % 6.8 % Our weighted-average interest rate and weighted-average borrowing rate both decreased for the year ended December 31, 2023, compared with 2022, as a result of the redemptions of our 2024 Senior Notes and 2025 Senior Secured Notes during 2022.
Our weighted-average interest rate and weighted-average borrowing rate each decreased for the year ended December 31, 2023, compared with 2022, as a result of the redemptions of our 2024 Senior Notes and 2025 Senior Secured Notes during 2022.
We plan to focus our 2024 capital program on highly economic oil development projects in both our Midland Basin and South Texas assets, including the assets we acquired during 2023.
We plan to focus our 2025 capital program on highly economic oil development projects in our Midland Basin, South Texas, and Uinta Basin assets.
Operating Activities For the Years Ended December 31, Amount Change Between 2023 2022 2021 2023/2022 2022/2021 (in millions) Net cash provided by operating activities $ 1,574.4 $ 1,686.4 $ 1,159.8 $ (112.0) $ 526.6 Net cash provided by operating activities decreased for the year ended December 31, 2023, compared with 2022, primarily as a result of a $937.3 million decrease in cash received from oil, gas, and NGL production revenues, net of transportation costs and production taxes and an increase of $44.5 million in cash paid for LOE and ad valorem taxes, partially offset by a decrease of $749.3 million in cash paid on settled derivative trades and a $45.5 million decrease in cash paid for interest. 52 Net cash provided by operating activities increased for the year ended December 31, 2022, compared with 2021, primarily as a result of an $833.2 million increase in cash received from oil, gas, and NGL production revenues, net of transportation costs and production taxes, partially offset by an increase in cash paid for LOE and G&A expense of $70.7 million and an increase of $69.2 million in cash paid on settled derivative trades.
Net cash provided by operating activities decreased for the year ended December 31, 2023, compared with 2022, primarily as a result of a $937.3 million decrease in cash received from oil, gas, and NGL production revenues, net of transportation costs and 54 production taxes, and an increase of $44.5 million in cash paid for LOE and ad valorem taxes, partially offset by a decrease of $749.3 million in cash paid on settled derivative trades and a $45.5 million decrease in cash paid for interest.
The markets for oil, gas, and NGLs have been volatile, especially over the last decade, and remain subject to high levels of uncertainty and volatility related to production output from OPEC+, global shipping channel constraints and disruptions, instability in the Middle East, economic and trade sanctions associated with the wars between Russia and Ukraine and Israel and Hamas, and the potential impacts of these issues on global commodity and financial markets.
The markets for oil, gas, and NGLs have been volatile, especially over the last decade, and remain subject to high levels of uncertainty and volatility related to production output from OPEC+, fluctuations in oil and gas demand from China, global shipping channel constraints and disruptions, War and Geopolitical Instability, tariffs or trade restrictions, and the potential impacts of these issues on global commodity and financial markets.
The table below presents the disaggregation of our net production volumes by product type for each of our assets for the year ended December 31, 2023: Midland Basin South Texas Total Net production volumes: Oil (MMBbl) 17.5 6.3 23.8 Gas (Bcf) 59.8 72.6 132.4 NGLs (MMBbl) — 9.6 9.7 Equivalent (MMBOE) 27.5 28.0 55.5 Average net daily equivalent (MBOE per day) 75.4 76.7 152.0 Relative percentage 50 % 50 % 100 % ____________________________________________ Note: Amounts may not calculate due to rounding.
The table below presents the disaggregation of our net production volumes by product type for each of our assets for the year ended December 31, 2024: Midland Basin South Texas Uinta Basin Total Net production volumes: Oil (MMBbl) 19.1 7.4 2.9 29.4 Gas (Bcf) 62.0 72.3 2.7 137.0 NGLs (MMBbl) — 10.2 — 10.2 Equivalent (MMBOE) 29.4 29.6 3.3 62.4 Average net daily equivalent (MBOE per day) 80.5 81.0 9.1 170.5 Relative percentage 47 % 48 % 5 % 100 % ____________________________________________ Note: Amounts may not calculate due to rounding.
During 2023, our Board of Directors approved a 20 percent increase to our fixed dividend to $0.72 per share annually, to be paid in quarterly increments of $0.18 per share, beginning in the first quarter of 2024.
During 2024, our Board of Directors approved an 11 percent increase to our fixed dividend to $0.80 per share annually, to be paid in quarterly increments of $0.20 per share, which commenced in the fourth quarter of 2024.

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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 changeQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information required by this Item is provided under the captions Interest Rate Risk and Commodity Price Risk in Item 7 above, as well as under the section entitled Summary of Oil, Gas, and NGL Derivative Contracts in Place in Note 7 – Derivative Financial Instruments in Part II, Item 8 of this report and is incorporated herein by reference. 59
Biggest changeQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information required by this Item is provided under the captions Interest Rate Risk and Commodity Price Risk in Item 7 above, as well as under the section entitled Summary of Oil, Gas, and NGL Derivative Contracts in Place in Note 7 – Derivative Financial Instruments in Part II, Item 8 of this report and is incorporated herein by reference. 60

Other SM 10-K year-over-year comparisons