Permian Resources (PR) risk factors, FY2024 10-K

Risks Related to Commodity Prices

1. 01Commodity prices are volatile, and a sustained period of low commodity prices for oil, natural gas and NGLs could adversely affect our business, financial condition and results of operations
2. 02These factors and the volatility of the energy markets make it extremely difficult to predict future oil, natural gas and NGL price movements with any certainty
3. 03If commodity prices decrease to a level such that our future undiscounted cash flows from our properties are less than their carrying value, we may be required to take write-downs of the carrying values of our properties

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 reserves, our reserves and production will decline, which would adversely affect our future cash flows and results of operations
3. 06Our use of seismic data is subject to interpretation and may not accurately identify the presence of oil and natural gas, which could adversely affect the results of our drilling operations
4. 07The development of our estimated PUDs may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our estimated PUDs may not be ultimately developed or produced
5. 08Certain of our undeveloped leasehold acreage is subject to leases that will expire over the next several years unless production is established on units containing the acreage, the primary term is extended through continuous drilling provisions or the leases are renewed
6. 09Our 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
7. 10Properties that we decide to drill may not yield oil or natural gas in commercially viable quantities

Risks Related to Our Operations

1. 11Our development and acquisition projects require substantial capital expenditures. We may be unable to obtain required capital or financing on satisfactory terms, which could lead to a decline in our ability to access or grow production and reserves
2. 12Drilling for and producing oil and natural gas are high risk activities with many uncertainties that could adversely affect our business, financial condition or results of operations. Additionally, we may not be insured for, or our insurance may be inadequate to protect us against, these risks
3. 13Many of our properties are in areas that may have been partially depleted or drained by offset 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
4. 14Part of our strategy involves using some of the latest available horizontal drilling and completion techniques, which involve risks and uncertainties in their application
5. 15Our operations are substantially dependent on the availability of water. Restrictions on our ability to obtain water may have an adverse effect on our financial condition, results of operations and cash flows
6. 16Our ability to produce crude oil, natural gas and NGLs economically and in commercial quantities could be impaired if we are unable to recycle or dispose of the produced water we produce in an economical and environmentally safe manner
7. 17Industry in Part I, Items 1 and 2 of this Annual Report for further discussion regarding regulations affecting the handling and disposal of produced water
8. 18Our producing properties are concentrated in the Permian Basin, making us vulnerable to risks associated with operating in a single geographic area
9. 19The marketability of our production is dependent upon transportation and other facilities, most of which we do not control. If these facilities are unavailable, or if we are unable to access these facilities on commercially reasonable terms, our operations could be interrupted and our revenues reduced
10. 20The unavailability or high cost of additional drilling rigs, equipment, supplies, personnel and oilfield services could adversely affect our ability to execute our development plans within our budget and on a timely basis
11. 21We 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
12. 22We depend upon a small number of significant purchasers for the sale of most of our oil, natural gas and NGL production
13. 23We may incur losses as a result of title defects in the properties in which we invest
14. 24Multi-well pad drilling may result in volatility in our operating results
15. 25We 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
16. 26We are heavily dependent on our information technology systems and other digital technologies
17. 27The loss of senior management or technical personnel could adversely affect operations

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

1. 28Our derivative activities could result in financial losses or could reduce our earnings
2. 29our derivative instruments
3. 30Our leverage and debt service obligations may adversely affect our financial condition, results of operations, business prospects and our ability to make payments on our outstanding debt
4. 31We may not be able to generate sufficient cash to service all of OpCo’s indebtedness and may be forced to take other actions to satisfy OpCo’s obligations under applicable debt instruments, which may not be successful
5. 32Restrictions in OpCo’s existing and future debt agreements could limit our growth and ability to engage in certain activities
6. 33In addition, OpCo’s Credit Agreement requires us to maintain certain financial ratios or to reduce our indebtedness if we are unable to comply with such ratios. As of December 31, 2024, we were in full compliance with such financial ratios and covenants
7. 34If OpCo is unable to comply with the restrictions and covenants in the agreements governing its indebtedness, there could be a default under the terms of these agreements, which could result in an acceleration of payment of funds that OpCo has borrowed
8. 35Any significant reduction in the borrowing base under OpCo’s revolving credit facility as a result of the periodic borrowing base redeterminations or otherwise may negatively impact our ability to fund our operations
9. 36If we experience liquidity concerns, we could face a downgrade in our debt ratings which could restrict our access to, and negatively impact the terms of, current or future financings or trade credit
10. 37Increases in interest rates could adversely affect our business

Risks Related to Legislative and Regulatory Initiatives

1. 38Climate change laws and regulations restricting emissions of GHGs could increase our costs and reduce demand for the oil and natural gas we produce, while potential physical effects of climate change could disrupt our production and cause us to incur significant costs in preparing for or responding to those effects
2. 39GHG emissions. International climate commitments made by political, industrial, and financial stakeholders may also impact commercial, regulatory, and consumer trends related to climate change
3. 40Federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing as well as governmental reviews of such activities could result in increased costs and additional operating restrictions or delays in the completion of oil and natural gas wells and adversely affect our production
4. 41Conservation measures, technological advances and any negative shift in market perception toward the oil and natural gas industry could reduce demand for oil and natural gas
5. 42Our operations may be exposed to significant delays, costs and liabilities as a result of environmental and occupational health and safety requirements applicable to our business activities
6. 43Restrictions on drilling activities intended to protect certain species of wildlife may adversely affect our ability to conduct drilling activities in areas where we operate
7. 44A negative shift in investor sentiment towards the oil and natural gas industry and increased attention to environmental, social and governance (“ESG”) and conservation matters may adversely impact our business
8. 45Any restrictions on oil and natural gas development on federal lands has the potential to adversely impact our operations
9. 46Tax laws and regulations may change over time, and any such changes could adversely affect our business and financial condition
10. 47Changes in laws or regulations, or a failure to comply with any laws and regulations, may adversely affect our business, investments and results of operations

Risks Related to Our Common Stock and Capital Structure

1. 48Our cash flow is dependent upon the ability of our operating subsidiaries to make cash distributions to us, the amount of which will depend on various factors
2. 49There may be future sales or other dilution of our equity, which may adversely affect the market price of our common stock
3. 50Provisions contained in our Charter and Bylaws, as well as provisions of Delaware law, could impair a takeover attempt, which may adversely affect the market price of our common stock
4. 51These provisions, alone or together, could delay hostile takeovers and changes in control of the Company or changes in our board of directors and management