SM Energy (SM) risk factors, FY2024 10-K

Risks Related to Commodity Prices and Global Macroeconomics

1. 01Oil, gas, and NGL prices are volatile, and declines in prices may adversely affect our profitability, financial condition, cash flows, access to capital, and ability to grow
2. 02Future oil, gas, and NGL price declines or unsuccessful exploration efforts may result in write-downs of our asset carrying values
3. 03Weakness in economic conditions, inflation, or uncertainty in financial markets may have material adverse impacts on our business that we cannot predict
4. 04Global geopolitical tensions may create heightened volatility in oil, gas, and NGL prices and could adversely affect our business, financial condition and results of operations

Risks Related to Oil and Gas Operations and the Industry

1. 05We have incurred additional costs in connection with the Uinta Basin Acquisition, which may continue in 2025
2. 06Securities class action and derivative lawsuits may be brought against us in connection with the Uinta Basin Acquisition, which could result in substantial costs
3. 07The loss of personnel could adversely affect our business
4. 08Our 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
5. 09We are incorporating artificial intelligence technologies into our processes and these technologies may present business, compliance, and reputational risks
6. 10Competition in our industry is intense, and many of our competitors have greater financial, technical, and human resources than we do
7. 11We have limited control over the activities on properties we do not operate
8. 12We rely on third-party service providers to conduct drilling and completion and other related operations
9. 13The inability of customers or co-owners of assets to meet their obligations may adversely affect our financial results
10. 14Many 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
11. 15Oil 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
12. 16to 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
13. 17If we are unable to replace reserves, we will not be able to sustain production
14. 18Significant acquisitions can change the nature of our operations and business depending upon the character of the acquired properties. For example, newly acquired properties may have substantially different operating and geological characteristics or be in different geographic locations than our existing properties
15. 19The results of our operations are subject to drilling and completion technique risks, and results may not meet our expectations for reserves or production. As a result, we may incur material write-downs, and the value of our undeveloped acreage could decline if drilling and completion results are unsuccessful
16. 20The actual quantities and present value of our proved oil, gas, and NGL reserves may be less than we have estimated, and the cost to develop our reserves may be more than we have estimated
17. 21Our disposition activities may be subject to factors beyond our control, and in certain cases we may retain unforeseen liabilities for certain matters
18. 22Title to the properties in which we have an interest may be impaired by title defects
19. 23Our business could be negatively impacted by security threats, including cybersecurity threats, terrorism, armed conflict, and other disruptions
20. 24We are subject to operating and environmental risks and hazards that could result in substantial losses or liabilities that may not be fully insured
21. 25The impact of seasonal and extreme weather conditions and lease stipulations adversely affect our ability to conduct drilling activities in some of the areas where we operate

Risks Related to Government Regulations

1. 26Our operations are subject to complex laws and regulations, including environmental regulations, which result in substantial costs and other risks
2. 27Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays
3. 28Federal and state regulatory initiatives relating to air quality and greenhouse gas emissions could result in increased costs and additional operating restrictions or delays
4. 29Legislative 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
5. 30Requirements to reduce gas flaring could have an adverse effect on our operations

Risks Related to Debt, Liquidity, and Access to Capital

1. 31Lower oil, gas, or NGL prices could limit our ability to borrow under our Credit Agreement
2. 32Negative public perception and investor sentiment regarding our business and the oil and gas industry as a whole could adversely affect our business, operations, and our ability to attract capital
3. 33Substantial capital is required to develop and replace our reserves
4. 34Downgrades in our credit ratings by various credit rating agencies could impact our access to capital and have a material adverse effect on our business and financial condition
5. 35Our commodity derivative contract activities may result in financial losses or may limit the prices we receive for oil, gas, and NGL sales
6. 36The amount of our debt may limit our ability to obtain financing for acquisitions, make us more vulnerable to adverse economic conditions, and make it more difficult for us to make payments on our debt
7. 37The agreements governing our debt arrangements contain various covenants that limit our discretion in the operation of our business, could prohibit us from engaging in transactions we believe to be beneficial, and could lead to the accelerated repayment of our debt

Risks Related to Corporate Governance and Ownership of Public Equity Securities

1. 38Our 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
2. 39The price of our common stock may fluctuate significantly, which may result in losses for investors
3. 40We may not always pay dividends on our common stock or repurchase common stock under our Stock Repurchase Program