Infinity Natural Resources (INR) risk factors, FY2025 10-K

Risks Related to Commodity Prices

1. 01Oil, natural gas and NGL prices are volatile. A sustained decline in prices could adversely affect our business, financial condition and results of operations, liquidity and our ability to meet our financial commitments or cause us to delay our planned capital expenditures
2. 02We could experience periods of higher costs if commodity prices rise. These increases could reduce our profitability, cash flow and ability to complete development activities as planned
3. 03Certain factors could require us to write down the carrying values of our properties, including commodity prices decreasing to a level such that our future undiscounted cash flows from our properties are less than their carrying value

Risks Related to Our Reserves, Leases and Drilling Locations

1. 04Reserve estimates depend on many assumptions that may turn out to be inaccurate. Any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves
2. 05Unless we replace our reserves with new reserves and develop those new reserves, our reserves and production will decline, which would adversely affect our future cash flows and results of operations
3. 06The development of our estimated PDNPs and PUDs may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our estimated PDNPs and PUDs may not be ultimately developed or produced
4. 07Our identified drilling locations are scheduled out over many years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling
5. 08Properties that we decide to drill may not yield oil, natural gas and NGLs in commercially viable quantities
6. 09Seismic data is subject to interpretation and may not accurately identify the presence of drilling hazards, which could adversely affect the results of our drilling operations

Risks Related to Our Operations

1. 10We may be unable to integrate the recently acquired Antero Ohio Assets successfully, or realize the anticipated benefits of the acquisitionNew
2. 11Notwithstanding the due diligence investigation that we performed in connection with our entry into the definitive agreement to purchase the Antero Ohio Assets, the Antero Ohio Assets may have liabilities, losses or other exposures for which we do not have adequate insurance coverage or other protectionNew
3. 12Our development projects and acquisitions require substantial capital expenditures. We may be unable to obtain any required capital or financing on satisfactory terms, which could lead to a decline in our production and reserves32% rewritten
4. 13Drilling for and producing oil, natural gas and NGLs are high-risk activities with many uncertainties that could adversely affect our business, financial condition or results of operations
5. 14Some of our properties are in areas that may have been partially depleted or drained by offset (i.e., neighboring) wells, and certain of our wells may be adversely affected by actions other operators may take when drilling, completing or operating wells that they own
6. 15Part of our business strategy involves using some of the latest available horizontal drilling and completion techniques, which involve risks and uncertainties in their application88% rewritten
7. 16Our producing properties are concentrated in the Appalachian Basin, making us vulnerable to risks associated with operating in one major geographic area
8. 17The unavailability or high cost of drilling rigs, completion crews, equipment, supplies, personnel and oilfield services could adversely affect our ability to execute our development plans within our budget and on a timely basis
9. 18The loss of one or more of the purchasers of our production could adversely affect our business, results of operations, financial condition and cash flows
10. 19We may incur losses as a result of title defects in the properties in which we invest
11. 20We may be unable to make attractive acquisitions or successfully integrate acquired businesses, and any inability to do so may disrupt our business and hinder our ability to grow
12. 21Changes in effective tax rates, or adverse outcomes resulting from other tax increases or an examination of our income or other tax returns, could adversely affect our results of operations and financial condition64% rewritten
13. 22Continuing or worsening inflationary pressures and associated changes in monetary policy may result in increases to the cost of our goods, services, and personnel, which in turn could cause our capital expenditures and operating costs to rise
14. 23We are not the operator of all of our oil and natural gas properties and therefore are not in a position to control the timing of development efforts, the associated costs or the rate of production of the reserves on such properties
15. 24Properties we acquire may not produce as projected, and we may be unable to determine reserve potential, identify liabilities associated with the properties that we acquire or obtain protection from sellers against such liabilities
16. 25Strategic determinations, including the allocation of capital and other resources to strategic opportunities, are subject to risk and uncertainties, and our failure to appropriately allocate capital and resources among our strategic opportunities may adversely affect our financial condition
17. 26We maintain insurance against some, but not all, operating risks and losses. Losses and liabilities arising from uninsured and underinsured events could materially and adversely affect our business, financial condition or results of operations65% rewritten
18. 27Competition in our industry is intense, making it more difficult for us to acquire properties, market oil, natural gas and NGLs, secure trained personnel and raise additional capital
19. 28The loss of senior management or technical personnel could adversely affect operations
20. 29Loss of our information and computer systems could adversely affect our business
21. 30Cyberattacks targeting systems and infrastructure used by the oil and gas industry and related regulations may adversely impact our operations and, if we are unable to obtain and maintain adequate protection for our data, our business may be harmed
22. 31Terrorist activities could materially adversely affect our business and results of operations
23. 32A deterioration in general economic, business or industry conditions would have a material adverse effect on our results of operations, liquidity, financial condition, results of operations, cash flows and ability to pay dividends on our Class A common stock
24. 33We previously identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future which, if not corrected, could affect the reliability of our consolidated financial statements and have other adverse consequences

Risks Related to Our Derivative Transactions, Debt and Access to Capital

1. 34Our derivative activities could result in financial losses or could reduce our earnings69% rewritten
2. 35The failure of our hedge counterparties, significant customers or working interest holders to meet their obligations to us may adversely affect our financial results
3. 36Our ability to obtain financing on terms acceptable to us may be limited in the future by, among other things, increases in interest rates
4. 37The borrowing base under our Credit Facility may be reduced if commodity prices decline, which could hinder or prevent us from meeting our future capital needs
5. 38The enactment of derivatives legislation could have an adverse effect on our ability to use derivative instruments to reduce the effect of commodity price, interest rate and other risks associated with our business

Risks Related to our Class A Common Stock, Series A Preferred Stock and Capital Structure

1. 39We are a holding company. Our sole material asset is our equity interest in INR Holdings and we are accordingly dependent upon distributions from INR Holdings to pay taxes, make payments under the Tax Receivable Agreement and cover our corporate and other overhead expenses
2. 40Pearl, NGP, Quantum and Carnelian collectively hold a substantial majority of our capital stock and voting powerNew
3. 41Conflicts of interest could arise in the future between us and Pearl, NGP, Quantum, Carnelian and their respective affiliates, including their portfolio companies concerning conflicts over our operations or business opportunities25% rewritten
4. 42An active, liquid trading market for our Class A common stock may not be maintained
5. 43Certain of our directors have significant duties with, and spend significant time serving, entities that may compete with us in seeking acquisitions and business opportunities and, accordingly, may have conflicts of interest in allocating time or pursuing business opportunities
6. 44rights of, holders of our Class A common stockNew
7. 45The Certificate of Designation governing our Series A Preferred Stock contains covenants that may limit our business flexibilityNew
8. 46We may issue additional preferred stock whose terms could adversely affect the voting power or value of our Class A common stock
9. 47Our Charter and amended and restated bylaws (“Bylaws”), as well as Delaware law, contain provisions that could discourage acquisition bids or merger proposals, which may adversely affect the market price of our Class A common stock54% rewritten
10. 48We cannot assure you that we will be able to pay dividends on our Class A common stock
11. 49We may issue additional shares of Class A common stock or convertible securities in future public offeringsNew
12. 50We cannot guarantee that our Share Repurchase Program will be fully consummated or that it will enhance long-term stockholder value. Share repurchases could also increase the volatility of the trading price of our Class A common stock and could diminish our cash reservesNew
13. 51We limit the liability of, and indemnify, our directors and officers93% rewritten
14. 52For as long as we are an emerging growth company, we will not be required to comply with certain reporting requirements, including disclosure about our executive compensation, that apply to other public companies
15. 53Because we have elected to take advantage of the extended transition period pursuant to Section 107 of the JOBS Act, our financial statements may not be comparable to those of other public companies
16. 54Terms of subsequent financings may adversely impact stockholder equity
17. 55If securities or industry analysts do not publish research or reports or publish unfavorable research about our business, if they adversely change their recommendations regarding our Class A common stock or if our operating results do not meet their expectations, our stock price could decline
18. 56We will be required to make payments under the Tax Receivable Agreement for certain tax benefits we may claim, and the amounts of such payments could be significant
19. 57payments under the Tax Receivable Agreement are not anticipated to commence until 2030 at the earliest (with respect to the tax year 2025)New
20. 58In certain cases, payments under the Tax Receivable Agreement may be accelerated and/or significantly exceed the actual benefits we realize, if any, in respect of the tax attributes subject to the Tax Receivable Agreement25% rewritten
21. 59In the event that our payment obligations under the Tax Receivable Agreement are accelerated upon certain mergers, other forms of business combinations or other changes of control, the consideration payable to holders of our Class A common stock could be substantially reduced
22. 60We will not be reimbursed for any payments made under the Tax Receivable Agreement in the event that any tax benefits are subsequently disallowed
23. 61In certain circumstances, INR Holdings will be required to make tax distributions to us and the INR Unit Holders, and the tax distributions that INR Holdings will be required to make may be substantial
24. 62The Legacy Owners’ interests may not be fully aligned with the interests of the holders of our Class A common stock

Risks Related to Environmental and Regulatory Matters

1. 63Our operations are subject to stringent environmental, health and safety laws and regulations that may expose us to significant costs and liabilities that could exceed current expectations62% rewritten
2. 64permits or permit renewals that could have a material adverse effect on our business, financial condition or results of operationsNew
3. 65We may be involved in legal and regulatory proceedings that could result in substantial liabilities
4. 66Climate change legislation or regulations restricting emissions of GHGs could result in increased operating costs and adversely affect our business80% rewritten
5. 67aimed at reducing GHG emissions could increase demand for natural gas, they may also result in increased costs for permitting, equipping, monitoring and reporting GHGs associated with natural gas production and useNew
6. 68which we can operate and reductions in our oil, natural gas and NGL production, which could adversely affect our production and businessNew
7. 69Prolonged negative investor sentiment toward upstream oil and natural gas focused companies could limit our access to capital funding, damage our reputation and adversely impact our business, financial condition and results of operations
8. 70Restrictions on drilling activities intended to protect certain species of wildlife may adversely affect our ability to conduct drilling activities in areas where we operate35% rewritten
9. 71We are subject to risks related to climate change, which could have a material adverse effect on our business, financial condition and results of operations
10. 72Attention to Environmental, Social and Governance (“ESG”) and sustainability matters may expose us to additional risk, which could have an adverse effect on our business, financial condition and results of operations and damage our reputation
11. 73Should we fail to comply with all applicable FERC administered statutes, rules, regulations and orders, we could be subject to substantial penalties and fines34% rewritten