Matador Resources Co

Previous wording

•We cannot predict the impact of the ongoing military conflicts between Russia and Ukraine and Israel and Hamas.

Current wording

•We cannot predict the impact of the ongoing military conflicts between Russia and Ukraine and in the Middle East.

Previous wording

•Approximately 39% of our total proved reserves at December 31, 2023 consisted of undeveloped and developed non-producing reserves, and those reserves may not ultimately be developed or produced.

Current wording

•Approximately 41% of our total proved reserves at December 31, 2024 consisted of undeveloped and developed non-producing reserves, and those reserves may not ultimately be developed or produced.

Previous wording

•San Mateo’s and Pronto’s long-term success depends on their ability to obtain new sources of products, which depends on certain factors beyond their control.

Current wording

•San Mateo’s long-term success depends on its ability to obtain new sources of products, which depends on certain factors beyond its control.

Previous wording

•Approximately 32% of our leasehold and mineral acres in the Delaware Basin is located on federal lands, which are subject to various requirements and regulations.

Current wording

•Approximately 33% of our leasehold and mineral acres in the Delaware Basin is located on federal lands, which are subject to various requirements and regulations.

Previous wording

We may incur significant costs and liabilities resulting from compliance with pipeline safety regulations.

Current wording

•We may incur significant costs and liabilities resulting from compliance with emissions or pipeline safety regulations.

Previous wording

Risks Relating to Our Common Stock

Current wording

Risks Related to Our Common Stock

Previous wording

The prices we receive for the oil, natural gas and NGLs we produce heavily influence our revenue, profitability, cash flow available for capital expenditures, the repayment of debt and the payment of cash dividends, if any, access to capital, borrowing capacity under our Credit Agreement and future rate of growth. Oil, natural gas and NGLs are commodities and, therefore, their prices are subject to wide fluctuations in response to relatively minor changes in supply and demand. Historically, the markets for oil, natural gas and NGLs have been volatile and will likely continue to be volatile in the future. For the year ended December 31, 2023, oil prices averaged $77.60 per Bbl, as compared to $94.33 per Bbl in 2022, ranging from a high of $93.68 per Bbl in late September to a low of $66.74 per Bbl in mid-March, based upon the WTI oil futures contract price for the earliest delivery date. For the year ended December 31, 2023, natural gas prices averaged $2.66 per MMBtu, as compared to $6.54 per MMbtu in 2022, based upon the NYMEX Henry Hub natural gas futures contract price for the earliest delivery date. During 2023, natural gas prices ranged from a low of $1.99 per MMBtu in late March to a high of $4.17 per MMBtu in early January before finishing the year at $2.51 per MMBtu.

Current wording

The prices we receive for the oil, natural gas and NGLs we produce heavily influence our revenue, profitability, cash flow available for capital expenditures, the repayment of debt and the payment of cash dividends, if any, access to capital, borrowing capacity under our Credit Agreement and future rate of growth. Oil, natural gas and NGLs are commodities and, therefore, their prices are subject to wide fluctuations in response to relatively minor changes in supply and demand. Historically, the markets for oil, natural gas and NGLs have been volatile and will likely continue to be volatile in the future. For the year ended December 31, 2024, oil prices averaged $75.76 per Bbl, as compared to $77.60 per Bbl in 2023, ranging from a high of $86.91 per Bbl in early April to a low of $65.75 per Bbl in mid-September, based upon the WTI oil futures contract price for the earliest delivery date. For the year ended December 31, 2024, natural gas prices averaged $2.40 per MMBtu, as compared to $2.66 per MMBtu in 2023, based upon the NYMEX Henry Hub natural gas futures contract price for the earliest delivery date. During 2024, natural gas prices ranged from a low of $1.58 per MMBtu in late March to a high of $3.95 per MMBtu in late December.

Previous wording

The prices we receive for our production, and the levels of our production, depend on numerous factors. These factors include, but are not limited to, the following:

Current wording

The prices we receive for our production, and the levels of our production, depend on numerous factors. These factors include the following:

Previous wording

•the prices and availability of alternative fuel sources;

Current wording

•the prices and availability of alternative fuel and energy sources;

Previous wording

•the ongoing military conflicts between Russia and Ukraine and Israel and Hamas, as well as the related actions of U.S. and other governments and governmental organizations relating to oil, natural gas and NGLs, including through sanctions, embargoes, import restrictions and commodity price caps;

Current wording

•the ongoing military conflicts between Russia and Ukraine and in the Middle East, as well as the related actions of U.S. and other governments and governmental organizations relating to oil, natural gas and NGLs, including through sanctions, embargoes, import restrictions and commodity price caps;

Previous wording

•the continued threat of terrorism and the impact of military action and civil unrest;

Current wording

•the threat of terrorism and the impact of military action and civil unrest;

Previous wording

•technological advances affecting energy consumption; and

Current wording

•technological advances affecting energy consumption;

Previous wording

Our industry and the broader U.S. economy have experienced higher than expected inflationary pressures in recent years related to increases in oil and natural gas prices, continued supply chain disruptions, labor shortages and geopolitical instability, among other pressures. Should these conditions persist, it may impact our ability to procure services, materials and equipment on a cost-effective basis, or at all, and, as a result, our business, financial condition, results of operations and cash flows could be materially and adversely affected.

Current wording

Our industry and the broader U.S. economy have experienced higher than expected inflationary pressures in recent years. Should these conditions persist, it may impact our ability to procure services, materials and equipment on a cost-effective basis, or at all, and, as a result, our business, financial condition, results of operations and cash flows could be materially and adversely affected.

Previous wording

Inflation in the U.S. has become much more significant in recent years. Throughout 2022 and 2023, we experienced significant increases in the costs of certain oilfield services, materials and equipment, including diesel, steel, labor, trucking, sand, personnel and completion costs, among others, as a result of the recent increases in oil and natural gas prices, as well as availability constraints, supply chain disruptions, increased demand, labor shortages and wage increases associated with a low U.S unemployment rate, inflation and other factors. Supply and demand fundamentals have been aggravated by disruptions in global energy supply caused by multiple geopolitical events, including the ongoing military conflicts between Russia and Ukraine and Israel and Hamas, as well as related actions of the U.S. and other governments and governmental organizations relating to oil, natural gas and NGLs, including through sanctions, embargoes, import restrictions and commodity price caps. Should oil and natural gas prices remain at their current levels or increase, we expect to be subject to additional supply chain constraints and service cost inflation in future periods, which may increase our costs to drill, complete, equip and operate wells. In addition, supply chain disruptions and other inflationary pressures being experienced throughout the U.S. and global economy and in the oil and natural gas industry may limit our ability to procure the necessary products and services we need for drilling, completing and producing wells in a timely and cost-effective manner, which could result in reduced margins and delays to our operations and could, in turn, have a material adverse effect on our business, financial condition, results of operations and cash flows.

Current wording

Inflation in the U.S. has become much more significant in recent years. Since 2022, we have experienced significant increases in the costs of certain oilfield services, materials and equipment, including diesel, steel, labor, trucking, sand, personnel and completion costs, among others. Supply and demand fundamentals have been aggravated by disruptions in global energy supply caused by multiple geopolitical events, including the ongoing military conflicts between Russia and Ukraine and in the Middle East, as well as related actions of the U.S. and other governments and governmental organizations relating to oil, natural gas and NGLs, including through sanctions, embargoes, import restrictions and commodity price caps. Should oil and natural gas prices remain at their current levels or increase, we expect to be subject to additional supply chain constraints and service cost inflation in future periods, which may increase our costs to drill, complete, equip and operate wells. In addition, supply chain disruptions and other inflationary pressures being experienced throughout the U.S. and global economy and in the oil and natural gas industry may limit our ability to procure the necessary products and services we need for drilling, completing and producing wells in a timely and cost-effective manner, which could result in reduced margins and delays to our operations and could, in turn, have a material adverse effect on our business, financial condition, results of operations and cash flows.

Previous wording

We cannot predict the impact of the ongoing military conflicts between Russia and Ukraine and Israel and Hamas and the related humanitarian crises on the global economy, energy markets, geopolitical stability and our business.

Current wording

We cannot predict the impact of the ongoing military conflicts between Russia and Ukraine and in the Middle East and the related humanitarian crises on the global economy, energy markets, geopolitical stability and our business.

Previous wording

Although our leasehold acreage is located primarily in the Delaware Basin, the broader consequences of the conflicts between Russia and Ukraine and Israel and Hamas, which may include further sanctions, embargoes, supply chain disruptions, regional instability and geopolitical shifts, may have adverse effects on global macroeconomic conditions, increase volatility in the price and demand for oil and natural gas, increase exposure to cyberattacks, cause disruptions in global supply chains, increase foreign currency fluctuations, cause constraints or disruption in the capital markets and limit sources of liquidity. We cannot predict the extent of either conflict’s effect on our business and results of operations as well as on the global economy and energy markets.

Current wording

Although our leasehold acreage is located primarily in the Delaware Basin, the broader consequences of the conflicts between Russia and Ukraine and in the Middle East, which may include further sanctions, embargoes, supply chain disruptions, regional instability and geopolitical shifts, may have adverse effects on global macroeconomic conditions, increase volatility in the price and demand for oil and natural gas, increase exposure to cyberattacks, cause disruptions in global supply chains, increase foreign currency fluctuations, cause constraints or disruption in the capital markets and limit sources of liquidity. We cannot predict the extent of either conflict’s effect on our business and results of operations as well as on the global economy and energy markets.

Previous wording

The process of estimating accumulations of oil and natural gas is complex and inexact due to numerous inherent uncertainties. This process relies on interpretations of available geological, geophysical, engineering and production data. The extent, quality and reliability of this technical data can vary. This process also requires certain economic assumptions related to, among other things, oil and natural gas prices, drilling and operating expenses, capital expenditures, taxes and availability of funds. The accuracy of a reserves estimate is a function of:

Current wording

The process of estimating accumulations of oil and natural gas is complex and inexact due to numerous inherent uncertainties. This process relies on interpretations of available geological, geophysical, petrophysical, engineering and production data. The extent, quality and reliability of this technical data and the associated interpretations can vary. This process also requires certain economic assumptions related to, among other things, oil and natural gas prices, drilling and operating expenses, capital expenditures, taxes and availability of funds. The accuracy of a reserves estimate is a function of:

Previous wording

Approximately 39% of our total proved reserves at December 31, 2023 consisted of undeveloped and developed non-producing reserves, and those reserves may not ultimately be developed or produced.

Current wording

Approximately 41% of our total proved reserves at December 31, 2024 consisted of undeveloped and developed non-producing reserves, and those reserves may not ultimately be developed or produced.

Previous wording

At December 31, 2023, approximately 37% of our total proved reserves were undeveloped and approximately 2% of our total proved reserves were developed non-producing. Our undeveloped and/or developed non-producing reserves may never be developed or produced, or such reserves may not be developed or produced within the time periods we have projected or at the costs we have estimated. SEC rules require that, subject to limited exceptions, proved undeveloped reserves may only be booked if they are related to wells scheduled to be drilled within five years after the date of booking. Delays in the development of our reserves or increases in costs to drill and develop such reserves would reduce the present value of our estimated proved undeveloped reserves and future net revenues estimated for such reserves, resulting in some projects becoming uneconomical and reducing our total proved reserves. In addition, delays in the development of reserves or declines in the oil and/or natural gas prices used to estimate proved reserves in the future could cause us to have to reclassify a portion of our proved reserves as unproved reserves. Any reduction in our proved reserves caused by the reclassification of undeveloped or developed non-producing reserves could materially affect our business, financial condition, results of operations and cash flows.

Current wording

At December 31, 2024, approximately 40% of our total proved reserves were undeveloped and approximately 1% of our total proved reserves were developed non-producing. Our undeveloped and/or developed non-producing reserves may never be developed or produced, or such reserves may not be developed or produced within the time periods we have projected or at the costs we have estimated. SEC rules require that, subject to limited exceptions, proved undeveloped reserves may only be booked if they are related to wells scheduled to be drilled within five years after the date of booking. Delays in the development of our reserves or increases in costs to drill and develop such reserves would reduce the present value of our estimated proved undeveloped reserves and future net revenues estimated for such reserves, resulting in some projects becoming uneconomical and reducing our total proved reserves. In addition, delays in the development of reserves or declines in the oil and/or natural gas prices used to estimate proved reserves in the future could cause us to have to reclassify a portion of our proved reserves as unproved reserves. Any reduction in our proved reserves caused by the reclassification of undeveloped or developed non-producing reserves could materially affect our business, financial condition, results of operations and cash flows.

Previous wording

to us. Three-way costless collars also provide us with downside price protection through the purchase of a put option, but they also allow us to participate in price upside through the purchase of a call option. The purchase of both the put option and call option are financed through the sale of a call option. Because the proceeds from the call option sale are used to offset the cost of the purchased put and call options, these arrangements are also initially “costless” to us. In the case of a costless collar, the put option and the call option or options have different fixed price components. In a swap contract, a floating price is exchanged for a fixed price over the specified period, providing downside price protection. The goal of these and other hedges is to lock in a range of prices in the case of collars or a fixed price in the case of swaps so as to mitigate price volatility and increase the predictability of cash flows. These transactions limit our potential gains if oil, natural gas or NGL prices rise above the maximum price established by the call option or swap, as applicable, and may offer protection if prices fall below the minimum price established by the put option or swap, as applicable, only to the extent of the volumes then hedged.

Current wording

To manage our exposure to price risk, including price differential risk, we, from time to time, enter into hedging arrangements, using primarily “costless collars” or “swaps” with respect to a portion of our future production. Costless collars provide us with downside price protection through the purchase of a put option, which is financed through the sale of a call option. Because the call option proceeds are used to offset the cost of the put option, these arrangements are initially “costless” to us. Three-way costless collars also provide us with downside price protection through the purchase of a put option, but they also allow us to participate in price upside through the purchase of a call option. The purchase of both the put option and call option are financed through the sale of a call option. Because the proceeds from the call option sale are used to offset the cost of the purchased put and call options, these arrangements are also initially “costless” to us. In the case of a costless collar, the put option and the call option or options have different fixed price components. In a swap contract, a floating price is exchanged for a fixed price over the specified period, providing downside price protection. The goal of these and other hedges is to lock in a range of prices in the case of collars or a fixed price in the case of swaps so as to mitigate price volatility and increase the predictability of cash flows. These transactions limit our potential gains if oil, natural gas or NGL prices rise above the maximum price established by the call option or swap, as applicable, and may offer protection if prices fall below the minimum price established by the put option or swap, as applicable, only to the extent of the volumes then hedged.

Previous wording

Although the completion of additional oil and natural gas pipeline capacity from West Texas to the Texas Gulf Coast and other end markets improved these price differentials in 2020 and 2021, these price differentials for natural gas widened in 2022 and 2023 and could widen further in future periods. Should we experience future periods of negative pricing for natural gas as we have experienced historically, we may temporarily shut in certain high gas-oil ratio wells and take other actions to mitigate the impact on our realized natural gas prices and results.

Current wording

Although the completion of additional oil and natural gas pipeline capacity from West Texas to the Texas Gulf Coast and other end markets improved these price differentials in the latter part of 2024 and early in 2025, these price differentials for natural gas remain wide and could widen further in future periods. Should we experience future periods of negative pricing for natural gas as we have experienced historically, including in 2024, we may temporarily shut in certain high gas-oil ratio wells and take other actions to mitigate the impact on our realized natural gas prices and results.

Previous wording

It is not our practice in all acquisitions of oil and natural gas leases or mineral interests, or undivided interests in such interests, to undergo the expense of retaining lawyers to examine the title to the interest. Rather, in certain acquisitions we rely upon the judgment of oil and natural gas brokers and/or landmen who perform the field work by examining records in the appropriate governmental office before attempting to acquire a lease or mineral interest.

Current wording

It is not our practice in all acquisitions of oil and natural gas leases or mineral interests, or undivided interests in such interests, to undergo the expense of retaining lawyers to examine the title to the interest. Rather, in certain acquisitions we rely upon the judgment of oil and natural gas brokers and landmen who perform the field work by examining records in the appropriate governmental office before attempting to acquire a lease or mineral interest.

Previous wording

From time to time, we may sell an interest in a strategic asset for the purpose of assisting or accelerating the asset’s development. In addition, we regularly review our property base for the purpose of identifying nonstrategic assets, the disposition of which would increase capital resources available for other activities and create organizational and operational efficiencies. Various factors could materially affect our ability to dispose of such interests or nonstrategic assets or complete announced dispositions, including the receipt of approvals of governmental agencies or third parties and the identification of purchasers willing to acquire the interests or purchase the nonstrategic assets on terms and at prices acceptable to us.

Current wording

From time to time, we may sell a portion of an interest in a strategic asset for the purpose of assisting or accelerating the asset’s development. In addition, we regularly review our property base for the purpose of identifying nonstrategic assets, the disposition of which would increase capital resources available for other activities and create organizational and operational efficiencies. Various factors could materially affect our ability to dispose of such interests or nonstrategic assets or complete announced dispositions, including the receipt of approvals of governmental agencies or third parties and the identification of purchasers willing to acquire the interests or purchase the nonstrategic assets on terms and at prices acceptable to us.

Previous wording

As of February 20, 2024, the maximum facility amount under the Credit Agreement was $2.00 billion, the borrowing base was $2.50 billion and our elected borrowing commitment was $1.325 billion. Borrowings under the Credit Agreement are limited to the lowest of the borrowing base, the maximum facility amount and the elected borrowing commitment (subject to compliance with the covenants noted below). At February 20, 2024, we had available borrowing capacity of approximately $772.6 million under our Credit Agreement (after giving effect to outstanding letters of credit). Our borrowing base is determined semi-annually by our lenders based primarily on the estimated value of our existing and future oil and natural gas reserves, but both we and our lenders can request one unscheduled redetermination between scheduled redetermination dates. Our Credit Agreement is secured by our interests in the majority of our oil and natural gas properties and contains covenants restricting our ability to incur additional indebtedness, sell assets, pay dividends and make certain investments. Since the borrowing base is subject to periodic redeterminations, if a redetermination resulted in a borrowing base that was less than our borrowings under the Credit Agreement, we would be required to provide additional collateral satisfactory in nature and value to the lenders to increase the borrowing base to an amount sufficient to cover such excess or repay the deficit in equal installments over a period of six months. If we are required to do so, we may not have sufficient funds to fully make such repayments. The Credit Agreement requires us to maintain a debt to EBITDA ratio, which is defined as debt outstanding (net of up to $75.0 million of unrestricted cash and cash equivalents), divided by a rolling four quarter EBITDA calculation, of 3.50 to 1.0 or less and a current ratio, which is defined as (x) total consolidated current assets plus the unused availability under the Credit Agreement divided by (y) total consolidated current liabilities less current maturities under the Credit Agreement, of equal to or greater than 1.0 to 1.0 at the end of each fiscal quarter.

Current wording

As of February 18, 2025, the maximum facility amount under the Credit Agreement was $3.50 billion, the borrowing base was $3.25 billion and our elected borrowing commitment was $2.25 billion. Borrowings under the Credit Agreement are limited to the lowest of the borrowing base, the maximum facility amount and the elected borrowing commitment (subject to compliance with the covenants noted below). At February 18, 2025, we had available borrowing capacity of approximately $1.55 billion under our Credit Agreement (after giving effect to outstanding letters of credit and subject to our compliance with the covenants noted below).

Previous wording

As of February 20, 2024, the facility amount under the San Mateo Credit Facility was $535.0 million, and San Mateo had available borrowing capacity of approximately $36.0 million (after giving effect to outstanding letters of credit and subject to San Mateo’s compliance with the covenants noted below). The San Mateo Credit Facility includes an accordion feature, which provides for potential increases in the commitments of the lenders to up to $735.0 million. The San Mateo Credit Facility is non-recourse with respect to Matador and its other subsidiaries, but is guaranteed by San Mateo’s subsidiaries and secured by substantially all of San Mateo’s assets, including real property. The San Mateo Credit Facility requires San Mateo to maintain a debt to EBITDA ratio, which is defined as total consolidated funded indebtedness outstanding (as defined in the San Mateo Credit Facility) divided by a rolling four quarter EBITDA calculation, of 5.00 or less, subject to certain exceptions. The San Mateo Credit Facility also requires San Mateo to maintain an interest coverage ratio, which is defined as a rolling four quarter EBITDA calculation divided by San Mateo’s consolidated interest expense for such period, of 2.50 or more. The San Mateo Credit Facility also restricts the ability of San Mateo to distribute cash to its members if San Mateo’s liquidity is less than 10% of the lender commitments under the San Mateo Credit Facility. In addition to these restrictions, the San Mateo Credit Facility also contains covenants restricting San Mateo’s ability to incur additional indebtedness, sell assets, pay dividends and make certain investments.

Current wording

As of February 18, 2025, the facility amount under the San Mateo Credit Facility was $800.0 million, and San Mateo had available borrowing capacity of approximately $244.0 million (after giving effect to outstanding letters of credit and subject to

Previous wording

A high level of indebtedness could affect our operations in several ways, including the following:

Current wording

A high level of indebtedness could affect our operations in several ways, including:

Previous wording

The borrowing base under the Credit Agreement is determined semi-annually as of May 1 and November 1 by the lenders based primarily on the estimated value of our proved oil and natural gas reserves at December 31 and June 30 of each year, respectively. We and the lenders may each request an unscheduled redetermination of the borrowing base once between scheduled redetermination dates. In addition, our lenders have the flexibility to reduce our borrowing base due to a variety of factors, some of which may be beyond our control. As of February 20, 2024, our borrowing base was $2.50 billion, our elected borrowing commitment was $1.325 billion, the maximum facility amount under the Credit Agreement was $2.00 billion and we had $500.0 million in outstanding borrowings under, and approximately $52.4 million in outstanding letters of credit issued pursuant to, the Credit Agreement. Borrowings under the Credit Agreement are limited to the lowest of the borrowing base, maximum facility amount and elected borrowing commitment (subject to compliance with the covenants noted above). We could be required to repay a portion of any outstanding debt under the Credit Agreement to the extent that, after a redetermination, our outstanding borrowings at such time exceeded the redetermined borrowing base. We may not have sufficient funds to make such repayments, which could result in a default under the terms of the Credit Agreement and an acceleration of the loans thereunder, requiring us to negotiate renewals, arrange new financing or sell significant assets, all of which could have a material adverse effect on our business and financial results.

Current wording

The borrowing base under the Credit Agreement is determined semi-annually as of May 1 and November 1 by the lenders based primarily on the estimated value of our proved oil and natural gas reserves at December 31 and June 30 of each year, respectively. We and the lenders may each request an unscheduled redetermination of the borrowing base once between scheduled redetermination dates. In addition, our lenders have the flexibility to reduce our borrowing base due to a variety of factors, some of which may be beyond our control. Since the borrowing base is subject to periodic redeterminations, if a redetermination resulted in a borrowing base that was less than our borrowings under the Credit Agreement, we could be required to provide additional collateral satisfactory in nature and value to the lenders to increase the borrowing base to an amount sufficient to cover such excess or repay the deficit in equal installments over a period of six months. If we are required to do so, we may not have sufficient funds to fully make such repayments, which could result in a default under the terms of the Credit Agreement and an acceleration of the loans thereunder, requiring us to negotiate renewals, arrange new financing or sell significant assets, all of which could have a material adverse effect on our business and financial results.

Previous wording

The borrowing base under our Credit Agreement is subject to periodic redetermination, and we are subject to interest rate risk under our Credit Agreement and the San Mateo Credit Facility.

Current wording

We are subject to interest rate risk under our Credit Agreement and the San Mateo Credit Facility.

Previous wording

Effective Rate (as defined in the Credit Agreement) on such day, plus 0.50%, and (iii) the Adjusted Term SOFR Rate (as defined in the Credit Agreement) for a one month tenor, plus 1.00%, plus, in each case, an amount ranging from 0.75% to 1.75% depending on the level of borrowings under the Credit Agreement. If we borrow funds as a SOFR loan, such borrowings will bear interest at a rate equal to (x) the Adjusted Term SOFR Rate for the chosen interest period plus (y) an amount ranging from 1.75% to 2.75% depending on the level of borrowings under the Credit Agreement. If we have outstanding borrowings under our Credit Agreement and interest rates increase, so will our interest costs, which may have a material adverse effect on our results of operations and financial condition.

Current wording

Our earnings are exposed to interest rate risk associated with borrowings under our Credit Agreement and the San Mateo Credit Facility. Borrowings under the Credit Agreement may be in the form of a base rate loan or a loan based on the secured overnight financing rate administered by the Federal Reserve Bank of New York (“SOFR”). If we borrow funds as a base rate loan, such borrowings will bear interest at a rate equal to the greatest of (i) the prime rate for such day, (ii) the Overnight Bank Funding Rate (as defined in the Credit Agreement) on such day, plus 0.50%, and (iii) the Daily Simple SOFR (as defined in the Credit Agreement) on such day, plus 1.00%, plus, in each case, an amount ranging from 0.75% to 1.75% depending on the level of borrowings under the Credit Agreement. If we borrow funds as a SOFR loan, such borrowings will bear interest at a rate equal to (x) the Adjusted Term SOFR Rate (as defined in the Credit Agreement) for the chosen interest period plus (y) an amount ranging from 1.75% to 2.75% depending on the level of borrowings under the Credit Agreement. If we have outstanding borrowings under our Credit Agreement and interest rates increase, so will our interest costs, which may have a material adverse effect on our results of operations and financial condition.

Previous wording

Similarly, borrowings under the San Mateo Credit Facility may be in the form of a base rate loan or a SOFR loan. If San Mateo borrows funds as a base rate loan, such borrowings will bear interest at a rate equal to the greatest of (i) the prime rate for such day, (ii) the Federal Funds Effective Rate (as defined in the San Mateo Credit Facility) on such day, plus 0.50% and (iii) the Adjusted Term SOFR Rate (as defined in the San Mateo Credit Facility) for a one month tenor, plus 1.00% plus, in each case, an amount ranging from 1.25% to 2.25% depending on San Mateo’s Consolidated Total Leverage Ratio (as defined in the San Mateo Credit Facility). If San Mateo borrows funds as a SOFR loan, such borrowings will bear interest at a rate equal to (x) the Adjusted Term SOFR Rate for the chosen interest period plus (y) an amount ranging from 2.25% to 3.25% depending on San Mateo’s Consolidated Total Leverage Ratio. If San Mateo has outstanding borrowings under the San Mateo Credit Facility and interest rates increase, so will San Mateo’s interest costs, which may have a material adverse effect on San Mateo’s results of operations and financial condition.

Current wording

Similarly, borrowings under the San Mateo Credit Facility may be in the form of a base rate loan or a SOFR loan. If San Mateo borrows funds as a base rate loan, such borrowings will bear interest at a rate equal to the greatest of (i) the prime rate for such day, (ii) the Federal Funds Effective Rate (as defined in the San Mateo Credit Facility) on such day, plus 0.50% and (iii) the Adjusted Term SOFR Rate (as defined in the San Mateo Credit Facility) for a one month tenor, plus 1.00% plus, in each case, an amount ranging from 1.00% to 2.00% depending on San Mateo’s Consolidated Total Leverage Ratio (as defined in the San Mateo Credit Facility). If San Mateo borrows funds as a SOFR loan, such borrowings will bear interest at a rate equal to (x) the Adjusted Term SOFR Rate for the chosen interest period plus (y) an amount ranging from 2.00% to 3.00% depending on San Mateo’s Consolidated Total Leverage Ratio. If San Mateo has outstanding borrowings under the San Mateo Credit Facility and interest rates increase, so will San Mateo’s interest costs, which may have a material adverse effect on San Mateo’s results of operations and financial condition.

Previous wording

Interest rates rose significantly during 2022 and remained elevated throughout 2023 as the Federal Reserve sought to control inflation. Interest rates may remain high or increase during 2024. Our Credit Agreement and the San Mateo Credit Facility have floating rates tied to SOFR or other interest rate benchmarks that generally rise alongside the increase in the federal funds rates. As a result, interest expense on our existing floating rate debt rose during 2022 and 2023 and may remain high or increase during 2024. In addition, interest rates on future credit facilities and debt offerings could be higher than current levels, causing our financing costs to increase accordingly.

Current wording

Facility have floating rates tied to SOFR or other interest rate benchmarks that generally increase or decrease alongside changes in the federal funds rates. As a result, interest expense on our existing floating rate debt rose during 2022 and 2023, remained high during 2024 and may remain high during 2025. In addition, interest rates on future credit facilities and debt offerings could be higher than current levels, causing our financing costs to increase accordingly.

Previous wording

Our Credit Agreement, the San Mateo Credit Facility and the indentures governing our senior notes contain, and any future indebtedness we incur will likely contain, a number of restrictive covenants that impose significant operating and financial restrictions, including restrictions on our ability to engage in acts that may be in our best long-term interest. One or more of these agreements include covenants that, among other things, restrict our ability to:

Current wording

Our Credit Agreement, the San Mateo Credit Facility and the indentures governing our senior notes contain, and any future indebtedness we or San Mateo incur will likely contain, a number of restrictive covenants that impose significant operating and financial restrictions, including restrictions on our and San Mateo’s ability to engage in acts that may be in our best long-term interest. One or more of these agreements include covenants that restrict our or San Mateo’s ability to:

Previous wording

•pay dividends on capital stock or redeem, repurchase or retire our capital stock or subordinated indebtedness;

Current wording

•declare or pay dividends or distributions or redeem, repurchase or retire our capital stock or subordinated indebtedness;

Previous wording

A breach of any of these covenants could result in an event of default under our Credit Agreement, the San Mateo Credit Facility and the indentures governing our outstanding senior notes. For example, our Credit Agreement requires us to maintain a debt to EBITDA ratio, which is defined as debt outstanding (net of up to $75.0 million of unrestricted cash and cash equivalents) divided by a rolling four quarter EBITDA calculation, of 3.50 to 1.0 or less and a current ratio, which is defined as current assets plus the unused availability under the Credit Agreement, divided by current liabilities, of equal to or greater than 1.0 to 1.0. Low oil and natural gas prices or a decline in our oil or natural gas production may adversely impact our EBITDA, cash flows and debt levels, and therefore our ability to comply with this covenant.

Current wording

A breach of any of these covenants could result in an event of default under our Credit Agreement, the San Mateo Credit Facility and the indentures governing our outstanding senior notes. For example, our Credit Agreement requires us to comply with certain financial covenants, including maintaining a specified debt to EBITDA ratio and current ratio. Low oil and natural gas prices or a decline in our oil or natural gas production may adversely impact our EBITDA, cash flows and debt levels, and therefore our ability to comply with these covenants.

Previous wording

Similarly, the San Mateo Credit Facility requires San Mateo to meet a debt to EBITDA ratio, which is defined as total consolidated funded indebtedness outstanding (as defined in the San Mateo Credit Facility) divided by a rolling four quarter EBITDA calculation, of 5.00 or less, subject to certain exceptions. The San Mateo Credit Facility also requires San Mateo to maintain an interest coverage ratio, which is defined as a rolling four quarter EBITDA calculation divided by San Mateo’s consolidated interest expense for such period, of 2.50 or more. Lower revenues as a result of less volumes than anticipated, or otherwise, or an increase in interest rates may adversely impact San Mateo’s EBITDA and interest expense, and therefore San Mateo’s ability to comply with these covenants. The San Mateo Credit Facility also restricts the ability of San Mateo to distribute cash to its members if San Mateo’s liquidity is less than 10% of the lender commitments under the San Mateo Credit Facility.

Current wording

Similarly, the San Mateo Credit Facility requires San Mateo to comply with certain financial covenants, including maintaining a specified debt to EBITDA ratio and interest coverage ratio. Lower revenues as a result of less volumes than anticipated, or otherwise, or an increase in interest rates may adversely impact San Mateo’s EBITDA and interest expense, and therefore San Mateo’s ability to comply with these covenants. For a summary of these financial restrictions and other covenants in our Credit Agreement, the San Mateo Credit Facility and the indentures governing our senior notes, see Note 7 to the consolidated financial statements in this Annual Report.

Previous wording

In March 2020, our corporate credit rating from S&P Global Ratings was downgraded from “B+” to “B-” and our corporate credit rating from Moody’s Investors Service was downgraded from “B1” to “B3.” The downgrades resulted in significant part due to the sudden decline in oil prices in early 2020. Moody’s Investor Services subsequently upgraded our corporate credit rating to “B2” in July 2020, to “B1” in September 2021 and to “Ba3” in September 2022. S&P Global Ratings upgraded our corporate credit rating to “B” in June 2021, “B+” in January 2022 and “BB-” in September 2022. In September 2021, Fitch Ratings assigned us a corporate credit rating of “B+” and subsequently upgraded our corporate credit rating to “BB-” in September 2022. As of February 20, 2024, our corporate credit ratings from S&P Global Ratings, Moody’s Investors Service and Fitch Ratings remained “BB-,” “Ba3” and “BB-,” respectively. We cannot assure you that our credit ratings will remain in effect for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if, in its judgment, circumstances so warrant. Any future downgrade could increase the cost of any indebtedness incurred in the future.

Current wording

In March 2020, our corporate credit ratings from S&P Global Ratings and Moody’s Investors Service were downgraded in significant part due to the sudden decline in oil prices in early 2020. These corporate credit ratings were subsequently upgraded, and as of February 18, 2025, our corporate credit ratings from S&P Global Ratings, Moody’s Investors Service and Fitch Ratings remained “BB-,” “Ba3” and “BB-,” respectively. We cannot guarantee you that our credit ratings will remain in effect for any given period of time or that a rating will not be lowered or withdrawn entirely by a rating agency if, in its judgment, circumstances so warrant. Any future downgrade could increase the cost of any indebtedness incurred in the future.

Previous wording

In February 2023, April 2023 and July 2023, our Board declared quarterly cash dividends of $0.15 per share of common stock. In October 2023, the Board amended our dividend policy to increase the quarterly dividend to $0.20 per share of common stock and also declared a quarterly cash dividend of $0.20 per share of common stock. On February 13, 2024, the Board declared a quarterly cash dividend of $0.20 per share of common stock payable on March 13, 2024 to shareholders of record as of February 23, 2024. We intend to continue to pay a quarterly dividend in the future pursuant to the dividend policy adopted by our Board. However, the payment and amount of future dividend payments, if any, are subject to declaration by our Board. Such payments will depend on, among other things, our available cash, earnings, financial condition, capital requirements, level of indebtedness, stock price, statutory and contractual restrictions applicable to the payment of dividends and other considerations that our Board deems relevant. Cash dividend payments in the future may only be made out of legally available funds, and, if we experience substantial losses, such funds may not be available.

Current wording

In each of the first, second and third quarters of 2024, our Board declared quarterly cash dividends of $0.20 per share of common stock. In October 2024, the Board amended our dividend policy to increase the quarterly dividend to $0.25 per share of common stock and also declared a quarterly cash dividend of $0.25 per share of common stock. In February 2025, the Board amended our dividend policy to increase the quarterly dividend to $0.3125 per share of common stock and also declared a quarterly cash dividend of $0.3125 per share of common stock payable on March 14, 2025 to shareholders of record as of February 28, 2025. We intend to continue to pay a quarterly dividend in the future pursuant to the dividend policy adopted by our Board. However, the payment and amount of future dividend payments, if any, are subject to declaration by our Board. Such payments will depend on, among other things, our available cash, earnings, financial condition, capital requirements, level of indebtedness, stock price, statutory and contractual restrictions applicable to the payment of dividends and other considerations that our Board deems relevant. Cash dividend payments in the future may only be made out of legally available funds, and, if we experience substantial losses, such funds may not be available.

Previous wording

If we decide to drill a certain location, there is a risk that no commercially productive oil or natural gas reservoirs will be found or produced. We may drill or participate in new wells that are not productive. We may drill or participate in wells that are productive, but that do not produce sufficient net revenues to return a profit after drilling, operating and other costs. There is no way to affirmatively determine in advance of drilling and testing whether any particular location will yield oil or natural gas in sufficient quantities to recover exploration, drilling and completion costs or to be economically viable. Even if sufficient amounts of oil or natural gas exist, we may damage the potentially productive hydrocarbon-bearing formation or experience mechanical difficulties while drilling or completing the well, resulting in a reduction in production and reserves from, or abandonment of, the well. The productivity and profitability of a well may be negatively affected by a number of additional factors, including the following:

Current wording

If we decide to drill a certain location, there is a risk that no commercially productive oil or natural gas reservoirs will be found or produced. We may drill or participate in new wells that are not productive. We may drill or participate in wells that are productive, but that do not produce sufficient net revenues to return a profit after drilling, operating and other costs. There is no way to affirmatively determine in advance of drilling and testing whether any particular location will yield oil or natural gas in sufficient quantities to recover exploration, drilling and completion costs or to be economically viable. Even if sufficient amounts of oil or natural gas exist, we may damage the potentially productive hydrocarbon-bearing formation or experience mechanical difficulties while drilling or completing the well, resulting in a reduction in production and reserves from, or abandonment of, the well. The productivity and profitability of a well may be negatively affected by a number of additional factors, including:

Previous wording

Furthermore, our exploration and production operations involve using some of the latest drilling and completion techniques developed by us, other operators and service providers. Risks that we face while drilling and completing horizontal wells include, but are not limited to, the following:

Current wording

Furthermore, our exploration and production operations involve using some of the latest drilling and completion techniques developed by us, other operators and service providers. Risks that we face while drilling and completing horizontal wells include:

Previous wording

Each of these risks is magnified in wells with longer laterals. In 2023, the average completed lateral length for operated wells turned to sales was approximately 9,800 feet. If we do not drill productive and profitable wells in the future, our business, financial condition, results of operations, cash flows and reserves could be materially and adversely affected.

Current wording

Each of these risks is magnified in wells with longer laterals. In 2024, the average completed lateral length for operated wells turned to sales was approximately 9,300 feet. If we do not drill productive and profitable wells in the future, our business, financial condition, results of operations, cash flows and reserves could be materially and adversely affected.