Archrock (AROC) risk factors, FY2024 10-K

Industry and General Economic Risks

1. 01Macroeconomic conditions, including an increase in inflation and trade tensions, could have adverse effects on our results of operations
2. 02Pandemics and other public health crises may negatively affect demand for our services, and may have a material adverse impact on our financial condition, results of operations and cash flows
3. 03The conflict in Ukraine, the Israel-Hamas war and related price volatility and geopolitical instability could negatively impact our business

Business and Operational Risks

1. 04Our operations entail inherent risks that may result in substantial liability. We do not insure against all potential losses and could be seriously harmed by unexpected liabilities
2. 05We face significant competitive pressures that may cause us to lose market share and harm our financial performance
3. 06Any acquisitions we complete are subject to substantial risks that could reduce our ability to make distributions to our common stockholders
4. 07If we do not make acquisitions on economically acceptable terms, our future growth could be limited
5. 08Our sustainability initiatives, including emissions reduction and our public statements and disclosures regarding the same, expose us to numerous risks
6. 09We cannot provide assurance that we will, at any time in the future, again generate sufficient surplus cash that would be available for distribution to the holders of our common stock as a dividend or that our Board of Directors would determine to use any of our net profits to pay a dividend

Financial Risks

1. 10We have a substantial amount of debt that could limit our ability to fund future growth and operations and increase our exposure to risk during adverse economic conditions
2. 11Covenants in our Debt Agreements may impair our ability to operate our business
3. 12(1) Subject to a temporary increase to 5.50 to 1.0 for any quarter during which an acquisition satisfying certain thresholds is completed and for the two quarters immediately following such quarter
4. 13We may be unable to access the capital and credit markets or borrow on affordable terms to obtain additional capital that we may require
5. 14Our inability to fund purchases of additional compression equipment could adversely impact our financial results
6. 15We may be vulnerable to fluctuations in interest rates due to our variable rate debt obligations
7. 16The erosion of the financial condition of our customers could adversely affect our business
8. 17The loss of any of our most significant customers would result in a decline in our revenue and cash available to pay dividends to our common stockholders
9. 18Our ability to manage and grow our business effectively may be adversely affected if we lose management or operational personnel
10. 19We may not realize the intended benefits of our process and technology transformation project, which could have an adverse effect on our business
11. 20Threats of cyber-attacks or terrorism could affect our business
12. 21Tax legislation and administrative initiatives or challenges to our tax positions could adversely affect our results of operations and financial condition
13. 22Our ability to use NOLs and interest expense limitation carryovers to offset future income may be limited

Legal and Regulatory Risks

1. 23From time to time, we are subject to various claims, tax audits, litigation and other proceedings that could ultimately be resolved against us and require material future cash payments or charges, which could impair our financial condition or results of operations
2. 24New regulations, proposed regulations and proposed modifications to existing regulations under the CAA, if implemented, could result in increased compliance costs
3. 25Both the EPA rules and the BoLM rules are subject to ongoing judicial challenges
4. 26We do not believe that these rules will have a material adverse impact on our business, financial condition, results of operations or cash flows, but we cannot yet definitively predict the impact of any revision of the current rules or issuance of new rules, which impact could be material
5. 27We are subject to a variety of governmental regulations; failure to comply with these regulations may result in administrative, civil and criminal enforcement measures and changes in these regulations could increase our costs or liabilities
6. 28Climate change legislation and regulatory initiatives may arise from a variety of sources, including international, national, regional and state levels of government and associated administrative bodies, seeking to restrict or regulate emissions of GHGs such as carbon dioxide and methane
7. 29legislation, regulations, and initiatives, as well as uncertainty regarding the future success of such regulations and initiatives in reducing demand for oil and gas, could indirectly affect our business and our results of operations by reducing demand for our services
8. 30A climate–related decrease in demand for oil and natural gas could negatively affect our business
9. 31Climate change may increase the frequency and severity of weather events that could result in severe personal injury, property and environmental damage, which could curtail our or our customers’ operations and otherwise materially adversely affect our cash flows
10. 32Environmental, social and governance scrutiny and changing expectations from stakeholders may impose additional costs or additional risks