Amplify Energy Corp. (AMPY) 2020年年度報告「NYSE」.pdf

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1、UNITEDSTATESSECURITIESANDEXCHANGECOMMISSIONWashington,D.C.20549Form10KANNUALREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF1934ForthefiscalyearendedDecember31,2020ORTRANSITIONREPORTPURSUANTTOSECTION13OR15(d)OFTHESECURITIESEXCHANGEACTOF1934Forthetransitionperiodfromto.CommissionFileNumbe

2、r:001-35512AMPLIFYENERGYCORP.(Exactnameofregistrantasspecifiedinitscharter)Delaware82-1326219(Stateorotherjurisdictionofincorporationororganization)(I.R.S.EmployerIdentificationNo.)500DallasStreet,Suite1700,Houston,TX77002(Addressofprincipalexecutiveoffices)(ZipCode)Registrantstelephonenumber,includ

3、ingareacode:(713)490-8900SecuritiesregisteredpursuanttoSection12(g)oftheAct:NoneSecuritiesRegisteredPursuanttoSection12(b)oftheAct:TitleofeachclassTradingSymbol(s)NameofeachexchangeonwhichregisteredCommonStockAMPYNYSEIndicatebycheckmarkiftheregistrantisawellknownseasonedissuer,asdefinedinRule405ofth

4、eSecuritiesAct.YesNoIndicatebycheckmarkiftheregistrantisnotrequiredtofilereportspursuanttoSection13orSection15(d)oftheAct.YesNoIndicatebycheckmarkwhethertheregistrant(1)hasfiledallreportsrequiredtobefiledbySection13or15(d)oftheSecuritiesExchangeActof1934duringthepreceding12months(orforsuchshorterper

5、iodthattheregistrantwasrequiredtofilesuchreports)and(2)hasbeensubjecttosuchfilingrequirementsforthepast90days.YesNoIndicatebycheckmarkwhethertheregistranthassubmittedelectronicallyeveryInteractiveDataFilerequiredtobesubmittedpursuanttoRule405ofRegulationS-T(232.405ofthischapter)duringthepreceding12m

6、onths(orforsuchshorterperiodthattheregistrantwasrequiredtosubmitsuchfiles).YesNoIndicatebycheckmarkwhethertheregistrantisalargeacceleratedfiler,anacceleratedfiler,anon-acceleratedfiler,asmallerreportingcompany,oranemerginggrowthcompany.Seedefinitionof“largeacceleratedfiler,”“acceleratedfiler,”“small

7、erreportingcompany”and“emerginggrowthcompany”inRule12b2oftheExchangeAct.Largeacceleratedfiler Acceleratedfiler Non-acceleratedfiler Smallerreportingcompany Emerginggrowthcompany Ifanemerginggrowthcompany,indicatebycheckmarkiftheregistranthaselectednottousetheextendedtransitionperiodforcomplyingwitha

8、nyneworrevisedfinancialaccountingstandardsprovidedpursuanttoSection13(a)oftheExchangeAct.IndicatebycheckmarkwhethertheregistranthasfiledareportonandattestationtoitsmanagementsassessmentoftheeffectivenessofitsinternalcontroloverfinancialreportingunderSection404(b)oftheSarbanes-OxleyAct(15U.S.C.7262(b

9、)bytheregisteredpublicaccountingfirmthatpreparedorissueditsauditreport.Indicatebycheckmarkwhethertheregistrantisashellcompany(asdefinedinRule12b-2oftheExchangeAct)YesNoTheaggregatemarketvalueofvotingandnon-votingcommonequityheldbynon-affiliatesoftheregistrantwasapproximately$33.2milliononJune30,2020

10、,basedon$1.23pershare,thelastreportedsalespriceofthesharesontheNewYorkStockExchangeonsuchdate.IndicatebycheckmarkwhethertheregistranthasfiledalldocumentsandreportsrequiredtobefiledbySection12,13,or15(d)oftheSecuritiesExchangeActof1934subsequenttothedistributionofsecuritiesunderaplanconfirmedbyacourt

11、.YesNoAsofFebruary26,2021,theregistranthad37,943,167outstandingsharesofCommonStock,$0.01parvaluepershare.DocumentsIncorporatedByReference:Portionsoftheregistrantsdefinitiveproxystatementrelatingtoits2021AnnualMeetingofStockholders,whichwillbefiledwiththeSecuritiesandExchangeCommissionwithin120daysaf

12、terDecember31,2020,areincorporatedbyreferencetotheextentsetforthinPartIII,Items10-14ofthisForm10-K.AMPLIFYENERGYCORP.TABLEOFCONTENTS PagePARTIItem1.Business10Item1A.RiskFactors32Item1B.UnresolvedStaffComments46Item2.Properties46Item3.LegalProceedings47Item4.MineSafetyDisclosures47PARTIIItem5.Marketf

13、orRegistrantsCommonEquity,RelatedStockholderMattersandIssuerPurchasesofEquitySecurities48Item6.SelectedFinancialData48Item7.ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations49Item7A.QuantitativeandQualitativeDisclosuresAboutMarketRisk62Item8.FinancialStatementsandSupplementa

14、ryData62Item9.ChangesinandDisagreementswithAccountantsonAccountingandFinancialDisclosure62Item9A.ControlsandProcedures63Item9B.OtherInformation63PARTIIIItem10.Directors,ExecutiveOfficersandCorporateGovernance64Item11.ExecutiveCompensation64Item12.SecurityOwnershipofCertainBeneficialOwnersandManageme

15、ntandRelatedStockholderMatters64Item13.CertainRelationshipsandRelatedTransactions,andDirectorIndependence64Item14.PrincipalAccountantFeesandServices64PARTIVItem15.Exhibits,FinancialStatementSchedules65Item16.Form10-KSummary68Signatures69GLOSSARYOFOILANDNATURALGASTERMS3-D seismic:Geophysicaldatathatd

16、epictthesubsurfacestratainthreedimensions.3-Dseismictypicallyprovidesamoredetailedandaccurateinterpretationofthesubsurfacestratathan2-D,ortwo-dimensional,seismic.Analogous Reservoir:Analogousreservoirs,asusedinresourceassessments,havesimilarrockandfluidproperties,reservoirconditions(depth,temperatur

17、eandpressure)anddrivemechanisms,butaretypicallyatamoreadvancedstageofdevelopmentthanthereservoirofinterestandthusmayprovideconceptstoassistintheinterpretationofmorelimiteddataandestimationofrecovery.Whenusedtosupportprovedreserves,analogousreservoirreferstoareservoirthatsharesallofthefollowingcharac

18、teristicswiththereservoirofinterest:(i)thesamegeologicalformation(butnotnecessarilyinpressurecommunicationwiththereservoirofinterest);(ii)thesameenvironmentofdeposition;(iii)similargeologicstructure;and(iv)thesamedrivemechanism.API Gravity:Asystemofclassifyingoilbasedonitsspecificgravity,wherebytheg

19、reaterthegravity,thelightertheoil.Basin:Alargedepressionontheearthssurfaceinwhichsedimentsaccumulate.Bbl:Onestocktankbarrel,or42U.S.gallonsliquidvolume,usedinreferencetooilorotherliquidhydrocarbons.Bbl/d:OneBblperday.Bcfe:Onebillioncubicfeetofnaturalgasequivalent.Boe:Onebarrelofoilequivalent,calcula

20、tedbyconvertingnaturalgastooilequivalentbarrelsataratioofsixMcfofnaturalgastooneBblofoil.Boe/d:OneBoeperday.BOEM:BureauofOceanEnergyManagement.BSEE:BureauofSafetyandEnvironmentalEnforcement.Btu:OneBritishthermalunit,thequantityofheatrequiredtoraisethetemperatureofaone-poundmassofwaterbyone-degreeFah

21、renheit.Deterministic Estimate:Themethodofestimatingreservesorresourcesiscalleddeterministicwhenasinglevalueforeachparameter(fromthegeoscience,engineeringoreconomicdata)inthereservescalculationisusedinthereservesestimationprocedure.Developed Acreage:Thenumberofacreswhichareallocatedorassignabletopro

22、ducingwellsorwellscapableofproduction.Development Project:Adevelopmentprojectisthemeansbywhichpetroleumresourcesarebroughttothestatusofeconomicallyproducible.Asexamples,thedevelopmentofasinglereservoirorfield,anincrementaldevelopmentinaproducingfieldortheintegrateddevelopmentofagroupofseveralfieldsa

23、ndassociatedfacilitieswithacommonownershipmayconstituteadevelopmentproject.Development Well:Awelldrilledwithintheprovedareaofanoilornaturalgasreservoirtothedepthofastratigraphichorizonknowntobeproductive.Differential:Anadjustmenttothepriceofoilornaturalgasfromanestablishedspotmarketpricetoreflectdif

24、ferencesinthequalityand/orlocationofoilornaturalgas.Dry HoleorDry Well:Awellfoundtobeincapableofproducinghydrocarbonsinsufficientquantitiessuchthatproceedsfromthesaleofsuchproductionwouldexceedproductionexpensesandtaxes.Economically Producible:Thetermeconomicallyproducible,asitrelatestoaresource,mea

25、nsaresourcewhichgeneratesrevenuethatexceeds,orisreasonablyexpectedtoexceed,thecostsoftheoperation.Forthisdetermination,thevalueoftheproductsthatgeneraterevenuearedeterminedattheterminalpointofoilandnaturalgasproducingactivities.Estimated Ultimate Recovery:Estimatedultimaterecoveryisthesumofreservesr

26、emainingasofagivendateandcumulativeproductionasofthatdate.Exploitation:Adevelopmentorotherprojectwhichmaytargetprovenorunprovenreserves(suchasprobableorpossiblereserves),butwhichgenerallyhasalowerriskthanthatassociatedwithexplorationprojects.Exploratory Well:Awelldrilledtofindandproduceoilandnatural

27、gasreservesnotclassifiedasproved,tofindanewreservoirinafieldpreviouslyfoundtobeproductiveofoilornaturalgasinanotherreservoirortoextendaknownreservoir.Field:Anareaconsistingofasinglereservoirormultiplereservoirs,allgroupedonorrelatedtothesameindividualgeologicalstructuralfeatureand/orstratigraphiccon

28、dition.Thefieldnamereferstothesurfacearea,althoughitmayrefertoboththesurfaceandtheundergroundproductiveformations.Gross AcresorGross Wells:Thetotalacresorwells,asthecasemaybe,inwhichwehaveworkinginterest.ICE:Inter-ContinentalExchange.1MBbl:OnethousandBbls.MBbls/d:OnethousandBblsperday.MBoe:Onethousa

29、ndbarrelsofoilequivalent.MBoe/d:Onethousandbarrelsofoilequivalentperday.MMBoe:Onemillionbarrelsofoilequivalent.Mcf:Onethousandcubicfeetofnaturalgas.MMBtu:OnemillionBritishthermalunits.MMcf:Onemillioncubicfeetofnaturalgas.MMcfe:Onemillioncubicfeetofnaturalgasequivalent.MMcfe/d:OneMMcfeperday.Net Acre

30、sorNet Wells:Grossacresorwells,asthecasemaybe,multipliedbyourworkinginterestownershippercentage.Net Production:Productionthatisownedbyuslessroyaltiesandproductiondueothers.Net Revenue Interest:Aworkinginterestownersgrossworkinginterestinproductionlesstheroyalty,overridingroyalty,productionpaymentand

31、netprofitsinterests.NGLs:Thecombinationofethane,propane,butaneandnaturalgasolinesthatwhenremovedfromnaturalgasbecomeliquidundervariouslevelsofhigherpressureandlowertemperature.NYMEX:NewYorkMercantileExchange.Oil:Oilandcondensate.Operator:Theindividualorcompanyresponsiblefortheexplorationand/orproduc

32、tionofanoilornaturalgaswellorlease.Plugging and abandonment:Referstothesealingoffoffluidsinthestratapenetratedbyawellsothatthefluidsfromonestratumwillnotescapeintoanotherstratumortothesurface.Regulationsofallstatesrequirepluggingofabandonedwells.Present value of future net revenues or PV-9:Theestima

33、tedfuturegrossrevenuetobegeneratedfromtheproductionofprovedreserves,netofestimatedproductionandfuturedevelopmentandabandonmentcosts,usingpricesandcostsineffectatthedeterminationdate,beforeincometaxes,andwithoutgivingeffecttonon-property-relatedexpenses,discountedtoapresentvalueusinganannualdiscountr

34、ateof9%inaccordancewiththeguidelinesoftheU.S.SecuritiesExchangeCommission(the“SEC”).Present value of future net revenues or PV-10:Theestimatedfuturegrossrevenuetobegeneratedfromtheproductionofprovedreserves,netofestimatedproductionandfuturedevelopmentandabandonmentcosts,usingpricesandcostsineffectat

35、thedeterminationdate,beforeincometaxes,andwithoutgivingeffecttonon-property-relatedexpenses,discountedtoapresentvalueusinganannualdiscountrateof10%inaccordancewiththeguidelinesoftheSEC.Probabilistic Estimate:Themethodofestimationofreservesorresourcesiscalledprobabilisticwhenthefullrangeofvaluesthatc

36、ouldreasonablyoccurforeachunknownparameter(fromthegeoscienceandengineeringdata)isusedtogenerateafullrangeofpossibleoutcomesandtheirassociatedprobabilitiesofoccurrences.Productive Well:Awellthatproducescommercialquantitiesofhydrocarbons,exclusiveofitscapacitytoproduceatareasonablerateofreturn.Proved

37、Developed Reserves:Provedreservesthatcanbeexpectedtoberecoveredfromexistingwellswithexistingequipmentandoperatingmethods.2Proved Reserves:Thosequantitiesofoilandnaturalgas,which,byanalysisofgeoscienceandengineeringdata,canbeestimatedwithreasonablecertaintytobeeconomicallyproducible,fromagivendatefor

38、ward,fromknownreservoirsandunderexistingeconomicconditions,operatingmethodsandgovernmentregulations,priortothetimeatwhichcontractsprovidingtherighttooperateexpire,unlessevidenceindicatesthatrenewalisreasonablycertain,regardlessofwhetherdeterministicorprobabilisticmethodsareusedfortheestimation.Thepr

39、ojecttoextractthehydrocarbonsmusthavecommenced,ortheoperatormustbereasonablycertainthatitwillcommencetheproject,withinareasonabletime.Theareaofthereservoirconsideredasprovedincludes(i)theareaidentifiedbydrillingandlimitedbyfluidcontacts,ifany,and(ii)adjacentundrilledportionsofthereservoirthatcan,wit

40、hreasonablecertainty,bejudgedtobecontinuouswithitandtocontaineconomicallyproducibleoilornaturalgasonthebasisofavailablegeoscienceandengineeringdata.Intheabsenceofdataonfluidcontacts,provedquantitiesinareservoirarelimitedbythelowestknownhydrocarbons,asseeninawellpenetration,unlessgeoscience,engineeri

41、ngorperformancedataandreliabletechnologyestablishesalowercontactwithreasonablecertainty.Wheredirectobservationfromwellpenetrationshasdefinedahighestknownoilelevationandthepotentialexistsforanassociatednaturalgascap,provedoilreservesmaybeassignedinthestructurallyhigherportionsofthereservoironlyifgeos

42、cience,engineering,orperformancedataandreliabletechnologyestablishthehighercontactwithreasonablecertainty.Reserveswhichcanbeproducedeconomicallythroughapplicationofimprovedrecoverytechniques(includingfluidinjection)areincludedintheprovedclassificationwhen(i)successfultestingbyapilotprojectinanareaof

43、thereservoirwithpropertiesnomorefavorablethaninthereservoirasawhole,theoperationofaninstalledprograminthereservoir,orananalogousreservoirorotherevidenceusingreliabletechnologyestablishesthereasonablecertaintyoftheengineeringanalysisonwhichtheprojectorprogramwasbased;and(ii)theprojecthasbeenapprovedf

44、ordevelopmentbyallnecessarypartiesandentities,includinggovernmentalentities.Existingeconomicconditionsincludepricesandcostsatwhicheconomicproducibilityfromareservoiristobedetermined.Thepriceusedistheaveragepriceduringthetwelve-monthperiodpriortotheendingdateoftheperiodcoveredbythereport,determinedas

45、anunweightedarithmeticaverageofthefirst-day-of-the-monthpriceforeachmonthwithinsuchperiod,unlesspricesaredefinedbycontractualarrangements,excludingescalationsbaseduponfutureconditions.Proved Undeveloped Reserves:Provedoilandnaturalgasreservesthatareexpectedtoberecoveredfromnewwellsonundrilledacreage

46、orfromexistingwellswherearelativelymajorexpenditureisrequiredforrecompletion.Reservesonundrilledacreagearelimitedtothosedrillingunitsoffsettingproductiveunitsthatarereasonablycertainofproductionwhendrilled.Provedreservesforotherundrilledunitscanbeclaimedonlywhereitcanbedemonstratedwithcertaintythatt

47、hereiscontinuityofproductionfromtheexistingproductiveformation.Undernocircumstancesshouldestimatesforprovedundevelopedreservesbeattributabletoanyacreageforwhichanapplicationoffluidinjectionorotherimprovedrecoverytechniqueiscontemplatedunlesssuchtechniqueshavebeenprovedeffectivebyactualtestsinthearea

48、andinthesamereservoir.Realized Price:Thecashmarketpricelessallexpectedquality,transportationanddemandadjustments.Recompletion:Thecompletionforproductionofanexistingwellboreinanotherformationfromthatwhichthewellhasbeenpreviouslycompleted.Reliable Technology:Reliabletechnologyisagroupingofoneormoretec

49、hnologies(includingcomputationalmethods)thathasbeenfield-testedandhasbeendemonstratedtoprovidereasonablycertainresultswithconsistencyandrepeatabilityintheformationbeingevaluatedorinananalogousformation.Reserve Life:Ameasureoftheproductivelifeofanoilandnaturalgaspropertyoragroupofproperties,expressed

50、inyears.Reservelifeiscalculatedbydividingprovedreservevolumesatyearendbyproductionvolumes.Inourcalculationofreservelife,productionvolumesareadjusted,ifnecessary,toreflectpropertyacquisitionsanddispositions.Reserves:Reservesareestimatedremainingquantitiesofoilandnaturalgasandrelatedsubstancesanticipa

51、tedtobeeconomicallyproducible,asofagivendate,byapplicationofdevelopmentprojectstoknownaccumulations.Inaddition,theremustexist,ortheremustbeareasonableexpectationthattherewillexist,thelegalrighttoproduceorarevenueinterestintheproduction,installedmeansofdeliveringoilandnaturalgasorrelatedsubstancestom

52、arketandallpermitsandfinancingrequiredtoimplementtheproject.Reservesshouldnotbeassignedtoadjacentreservoirsisolatedbymajor,potentiallysealing,faultsuntilthosereservoirsarepenetratedandevaluatedaseconomicallyproducible.Reservesshouldnotbeassignedtoareasthatareclearlyseparatedfromaknownaccumulationbya

53、non-productivereservoir(i.e.,absenceofreservoir,structurallylowreservoirornegativetestresults).Suchareasmaycontainprospectiveresources(i.e.,potentiallyrecoverableresourcesfromundiscoveredaccumulations).Reservoir:Aporousandpermeableundergroundformationcontaininganaturalaccumulationofproducibleoiland/

54、ornaturalgasthatisconfinedbyimpermeablerockorwaterbarriersandisindividualandseparatefromotherreserves.Resources:Resourcesarequantitiesofoilandnaturalgasestimatedtoexistinnaturallyoccurringaccumulations.Aportionoftheresourcesmaybeestimatedtoberecoverableandanotherportionmaybeconsideredunrecoverable.R

55、esourcesincludebothdiscoveredandundiscoveredaccumulations.Spacing:Thedistancebetweenwellsproducingfromthesamereservoir.Spacingisoftenexpressedintermsofacres(e.g.,40-acrespacing)andisoftenestablishedbyregulatoryagencies.3Standardized Measure:Thepresentvalueofestimatedfuturenetrevenuetobegeneratedfrom

56、theproductionofprovedreserves,determinedinaccordancewiththerules,regulationsorstandardsestablishedbytheSECandtheFinancialAccountingStandardsBoard(“FASB”)(usingpricesandcostsineffectasofthedateofestimation),lessfuturedevelopment,productionandincometaxexpensesanddiscountedat10%perannumtoreflectthetimi

57、ngoffuturenetrevenue.Futureincometaxes,ifapplicable,arecomputedbyapplyingthestatutorytaxratetotheexcessofpre-taxcashinflowsoverourtaxbasisinouroilandnaturalgasproperties.Standardizedmeasuredoesnotgiveeffecttoderivativetransactions.Undeveloped Acreage:Leaseacreageonwhichwellshavenotbeendrilledorcompl

58、etedtoapointthatwouldpermittheproductionofcommercialquantitiesofoilandnaturalgasregardlessofwhethersuchacreagecontainsprovedreserves.Wellbore:Theholedrilledbythebitthatisequippedforoilornaturalgasproductiononacompletedwell.Alsocalledwellorborehole.Working Interest:Aninterestinanoilandnaturalgaslease

59、thatgivestheowneroftheinteresttherighttodrillforandproduceoilandnaturalgasontheleasedacreageandgenerallyrequirestheownertopayashareofthecostsofdrillingandproductionoperations.Workover:Operationsonaproducingwelltorestoreorincreaseproduction.WTI:WestTexasIntermediate.4NAMESOFENTITIESAsusedinthisForm10

60、-K,unlessweindicateotherwise:“AmplifyEnergy”“Company,”“we,”“our,”“us,”orliketermsreferstoAmplifyEnergyCorp.(f/k/aMidstatesPetroleumCompany,Inc.)individuallyandcollectively withitssubsidiaries,asthecontextrequires;“Company,”“we,”“our,”“us”orliketermsreferstoAmplifyEnergyCorp.forperiodspresentedaftert

61、heeffectivedateoftheMerger(asdefinedbelow)andtoLegacyAmplifyforperiodspresentedpriortoeffectivedateoftheMerger;“LegacyAmplify”referstoAmplifyEnergyHoldingLLC(f/k/aAmplifyEnergyCorp.),thesuccessorreportingCompanyofMemorialProductionPartnersLP,whichisnowawhollyownedsubsidiaryofAmplifyEnergyCorp.;“Mids

62、tates”referstoMidstatesPetroleumCompany,Inc.,whichontheeffectivedateoftheMerger(asdefinedbelow)changeditsnameto“AmplifyEnergyCorp.”;and“OLLC”referstoAmplifyEnergyOperatingLLC,ourwhollyownedsubsidiarythroughwhichweoperateourproperties.5FORWARDLOOKINGSTATEMENTSThisAnnualReportonForm10-Kcontainsforward

63、-lookingstatementsthataresubjecttoanumberofrisksanduncertainties,manyofwhicharebeyondourcontrol,whichmayincludestatementsaboutour:businessstrategies;acquisitionanddispositionstrategy;cashflowsandliquidity;financialstrategy;abilitytoreplacethereservesweproducethroughdrilling;drillinglocations;oilandn

64、aturalgasreserves;technology;realizedoil,naturalgasandNGLprices;productionvolumes;leaseoperatingexpense;gathering,processingandtransportation;generalandadministrativeexpense;futureoperatingresults;abilitytoprocuredrillingandproductionequipment;abilitytoprocureoilfieldlabor;plannedcapitalexpenditures

65、andtheavailabilityofcapitalresourcestofundcapitalexpenditures;abilitytoaccesscapitalmarkets;marketingofoil,naturalgasandNGLs;actsofGod,fires,earthquakes,storms,floods,otheradverseweatherconditions,war,actsofterrorism,militaryoperationsornationalemergency;theoccurrenceorthreatofepidemicorpandemicdise

66、ases,suchastheongoingnovelcoronavirus(“COVID-19”)pandemic,oranygovernmentresponsetosuchoccurrenceorthreat;expectationsregardinggeneraleconomicconditions;competitionintheoilandnaturalgasindustry;effectivenessofriskmanagementactivities;environmentalliabilities;counterpartycreditrisk;expectationsregard

67、inggovernmentalregulationandtaxation;expectationsregardingdevelopmentsinoil-producingandnatural-gasproducingcountries;andplans,objectives,expectationsandintentions.6Allstatements,otherthanstatementsofhistoricalfact,includedinthisreportareforward-lookingstatements.Theseforward-lookingstatementsmaybef

68、oundin“Item1.Business,”“Item1A.RiskFactors,”“Item7.ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations”andotheritemswithinthisAnnualReportonForm10-K.Insomecases,youcan identify forward-looking statements byterminology such as“may,”“will,”“could,”“should,”“expect,”“plan,”“proje

69、ct,”“intend,”“anticipate,”“believe,”“estimate,”“predict,”“potential,”“pursue,”“target,”“outlook,”“continue,”thenegativeofsuchtermsorothercomparableterminology.Thesestatementsaddressactivities,eventsordevelopmentsthatweexpectoranticipatewillormayoccurinthefuture,includingthingssuchasprojectionsofresu

70、ltsofoperations,plansforgrowth,goals,futurecapitalexpenditures,competitivestrengths,referencestofutureintentionsandothersuchreferences.Theseforward-lookingstatementsinvolverisksanduncertainties.Importantfactorsthatcouldcauseouractualresultsorfinancialconditiontodiffermateriallyfromthoseexpressedorim

71、pliedbyforward-lookingstatementsinclude,butarenotlimitedto,thefollowingrisksanduncertainties:ourresultsofevaluationandimplementationofstrategicalternatives;risksrelatedtoaredeterminationoftheborrowingbaseunderourseniorsecuredreserve-basedrevolvingcreditfacility;ourabilitytoaccessfundsonacceptableter

72、ms,ifatall,becauseofthetermsandconditionsgoverningourindebtedness,includingfinancialcovenants;ourabilitytosatisfyourdebtobligations;volatilityinthepricesforoil,naturalgasandNGLs,includingfurtherorsustaineddeclinesincommodityprices;thepotentialforadditionalimpairmentsduetocontinuingorfuturedeclinesin

73、oil,naturalgasandNGLprices;theuncertaintyinherentinestimatingquantitiesofoil,naturalgasandNGLreserves;oursubstantialfuturecapitalrequirements,whichmaybesubjecttolimitedavailabilityoffinancing;theuncertaintyinherentinthedevelopmentandproductionofoilandnaturalgas;ourneedtomakeaccretiveacquisitionsorsu

74、bstantialcapitalexpenditurestomaintainourdecliningassetbase;theexistenceofunanticipatedliabilitiesorproblemsrelatingtoacquiredordivestedbusinessesorproperties;potentialacquisitions,includingourabilitytomakeacquisitionsonfavorabletermsortointegrateacquiredproperties;theconsequencesofchangeswehavemade

75、,ormaymakefromtimetotimeinthefuture,toourcapitalexpenditurebudget,includingtheimpactofthosechangesonourproductionlevels,reserves,resultsofoperationsandliquidity;potentialshortagesof,orincreasedcostsfor,drillingandproductionequipmentandsupplymaterialsforproduction,suchasCO2;potentialdifficultiesinthe

76、marketingofoilandnaturalgas;changestothefinancialconditionofcounterparties;uncertaintiessurroundingthesuccessofoursecondaryandtertiaryrecoveryefforts;competitionintheoilandnaturalgasindustry;generalpoliticalandeconomicconditions,globallyandinthejurisdictionsinwhichweoperate;theimpactofclimatechangea

77、ndnaturaldisasters,suchasearthquakes,tidalwaves,mudslides,fireandfloods;theimpactoflegislationandgovernmentalregulations,includingthoserelatedtoclimatechangeandhydraulicfracturing;theriskthatourhedgingstrategymaybeineffectiveormayreduceourincome;thecostandavailabilityofinsuranceaswellasoperatingrisk

78、sthatmaynotbecoveredbyaneffectiveindemnityorinsurance;actionsofthird-partyco-ownersofinterestinpropertiesinwhichwealsoownaninterest;andotherrisksanduncertaintiesdescribedin“Item1A.RiskFactors.”7Theforward-lookingstatementscontainedinthisreportarelargelybasedonourexpectations,whichreflectestimatesand

79、assumptionsmadebyourmanagement.Theseestimatesandassumptionsreflectourbestjudgmentbasedoncurrentlyknownmarketconditionsandotherfactors.Althoughwebelievesuchestimatesandassumptionstobereasonable,theyareinherentlyuncertainandinvolveanumberofrisksanduncertaintiesthatarebeyondourcontrol.Inaddition,manage

80、mentsassumptionsaboutfutureeventsmayprovetobeinaccurate.Allreadersarecautionedthattheforward-lookingstatementscontainedinthisreportarenotguaranteesoffutureperformanceandwecannotassureanyreaderthatsuchstatementswillberealizedorthattheeventsorcircumstancesdescribedinanyforward-lookingstatementwilloccu

81、r.Actualresultsmaydiffermateriallyfromthoseanticipatedorimpliedintheforward-lookingstatementsduetofactorsdescribedin“Item1A.RiskFactors”andelsewhereinthisreport.Allforward-lookingstatementsspeakonlyasofthedateofthisreport.Wedonotintendtoupdateorreviseanyforward-lookingstatementsasaresultofnewinforma

82、tion,futureeventsorotherwise.Thesecautionarystatementsqualifyallforward-lookingstatementsattributabletousorpersonsactingonourbehalf.8RISKFACTORSUMMARYOurbusinessissubjecttonumerousrisksanduncertainties,includingthosehighlightedinthissectiontitled“RiskFactors”andsummarizedbelow.Wehavevariouscategorie

83、sofrisks,includingrisksrelatedtoourbusinessandindustry,risksrelatedtoinformationtechnology,datasecurityandprivacy,risksrelatedtolegal,regulatory,accounting,andtaxmatters,risksrelatedtoourCommonStock,andrisksrelatedtoourRevolvingCreditFacility,whicharediscussedmorefullybelow.Asaresult,thisriskfactors

84、ummarydoesnotcontainalloftheinformationthatmaybeimportanttoyou,andyoushouldreadthisriskfactorsummarytogetherwiththemoredetaileddiscussionofrisksanduncertaintiessetforthfollowingthissectionundertheheading“RiskFactors,”aswellaselsewhereinthisAnnualReport.Theserisksinclude,butarenotlimitedto,thefollowi

85、ng:Oil,naturalgasandNGLpricesarevolatile,duetofactorsbeyondourcontrol,andgreatlyaffectourbusiness,resultsofoperationsandfinancialcondition.Anydeclinein,orsustainedlowlevelsofoil,naturalgasandNGLpriceswillcauseadeclineinourcashflowfromoperations,whichcouldmateriallyandadverselyaffectourbusiness,resul

86、tsofoperationsandfinancialcondition.Ifcommoditypricesdeclinefurtherorremaindepressedforaprolongedperiod,asignificantportionofourdevelopmentprojectsmaybecomeuneconomicandcausefurtherwritedownsofthevalueofouroilandnaturalgasproperties,whichmayadverselyaffectourfinancialconditionandourabilitytofundouro

87、perations.TheoversupplyofoilandnaturalgasandlowerdemandcausedbyCOVID-19pandemic,thefailureofoilproducingcountriestosufficientlycurtailproductionandgeneralglobaleconomicinstabilitymayresultintransportationandstorageconstraints,reducedproductionortheshut-inofourproducingwells,anyofwhichwouldadverselya

88、ffectourbusiness,financialconditionandresultsofoperations.Ourbusinessoperations,financialposition,resultsofoperations,andcashflowshavebeenandmaybeadverselyaffectedbytheCOVID-19pandemic.WemaybeunabletomaintaincompliancewiththecovenantsintheRevolvingCreditFacility,whichcouldresultinaneventofdefaultthe

89、reunderthat,ifnotcuredorwaived,wouldhaveamaterialadverseeffectonourbusiness.RestrictivecovenantsinourRevolvingCreditFacilitycouldlimitourgrowthandourabilitytofinanceouroperations,fundourcapitalneeds,respondtochangingconditionsandengageinotherbusinessactivitiesthatmaybeinourbestinterests.Ourvariabler

90、ateindebtednesssubjectsustointerestraterisks,whichcouldcauseourdebtserviceobligationtoincreasesignificantly.Ourestimatedreservesandfutureproductionratesarebasedonmanyassumptionsthatmayturnouttobeinaccurate.Anymaterialinaccuraciesinourreserveestimatesorunderlyingassumptionswillmateriallyaffectthequan

91、titiesandpresentvalueofourestimatedreserves.Thefailuretoreplaceourprovedoilandnaturalgasreservescouldadverselyaffectourbusiness,financialcondition,resultsofoperationsproductionandcashflows.Manyofourpropertiesareinareasthatmayhavebeenpartiallydepletedordrainedbyoffsetwells.Ourexpectationsforfuturedev

92、elopmentactivitiesareplannedtoberealizedoverseveralyears,makingthemsusceptibletouncertaintiesthatcouldmateriallyaltertheoccurrenceortimingofsuchactivities.Theinabilityofoursignificantcustomerstomeettheirobligationstousmayadverselyaffectourfinancialresults.Wearesubjecttocomplexfederal,state,localando

93、therlawsandregulationsthatcouldadverselyaffectthecost,mannerorfeasibilityofconductingouroperations.WearecurrentlyoutofcompliancewiththeNYSEminimummarketcapitalizationrequirementandareatriskoftheNYSEdelistingourCommonStock,whichwouldhaveanadverseimpactonthetradingvolume,liquidityandmarketpriceofourCo

94、mmonStock.9PARTIITEM1.BUSINESSReferencesOnAugust6,2019,MidstatesPetroleumCompany,Inc.,aDelawarecorporation(“Midstates”),completeditsbusinesscombination(the“Merger”)withAmplifyEnergyCorp.,aDelawarecorporation(“LegacyAmplify”),inaccordancewiththetermsofthatcertainAgreementandPlanofMerger,datedMay5,201

95、9(the“MergerAgreement”),byandamongMidstates,LegacyAmplifyandMidstatesHoldings,Inc.,aDelawarecorporationanddirect,whollyownedsubsidiaryofMidstates(“MergerSub”).PursuanttothetermsoftheMergerAgreement,MergerSubmergedwithandintoLegacyAmplify,withLegacyAmplifysurvivingtheMergerasawhollyownedsubsidiaryofM

96、idstates,andimmediatelyfollowingtheMerger,LegacyAmplifymergedwithandintoAlphaMikeHoldingsLLC,aDelawarelimitedliabilitycompanyandwhollyownedsubsidiaryofMidstates(“LLCSub”),withLLCSubsurvivingasawhollyownedsubsidiaryofMidstates.OntheeffectivedateoftheMerger,Midstateschangeditsnameto“AmplifyEnergyCorp.

97、”(the“Company”)andLLCSubchangeditsnameto“AmplifyEnergyHoldingsLLC.”Forfinancialreportingpurposes,theMergerrepresenteda“reversemerger”andLegacyAmplifywasdeemedtobetheaccountingacquirerinthetransaction.LegacyAmplifyshistoricalresultsofoperationsreplacedMidstateshistoricalresultsofoperationsforallperio

98、dspriortotheMergerand,forallperiodsfollowingtheMerger,theCompanysfinancialstatementsreflecttheresultsofoperationsofthecombinedcompany.Accordingly,thefinancialstatementsfortheCompanyincludedinthisAnnualReportforperiodspriortotheMergerarenotthesameasMidstatespriorreportedfilingswiththeSEC,whichwereder

99、ivedfromtheoperationsofMidstates.Theresultsofanyonequartershouldnotberelieduponasanindicationoffutureperformance.WhenreferringtoLegacyAmplify,theintentistorefertoAmplifyEnergyCorp.priortotheMerger,anditsconsolidatedsubsidiariesasawholeoronanindividualbasis,dependingonthecontextinwhichthestatementsar

100、emade.LegacyAmplifyisthesuccessorreportingcompanyofMemorialProductionPartnersLPpursuanttoRule15d-5oftheSecuritiesExchangeActof1934,asamended(the“ExchangeAct”).OverviewAmplifyEnergyisanindependentoilandnaturalgascompanyengagedintheacquisition,development,exploitationandproductionofoilandnaturalgaspro

101、perties.Ourmanagementevaluatesperformancebasedononereportablebusinesssegment,astheeconomicenvironmentsarenotdifferentwithintheoperationofouroilandnaturalgasproperties.OurbusinessactivitiesareconductedthroughOLLC,ourwhollyownedsubsidiary,anditswhollyownedsubsidiaries.Ourassetsconsistprimarilyofproduc

102、ingoilandnaturalgaspropertieslocatedinOklahoma,theRockies,federalwatersoffshoreSouthernCalifornia,EastTexas/NorthLouisiana,andEagleFord.Mostofouroilandnaturalgaspropertiesarelocatedinlarge,matureoilandnaturalgasreservoirs.TheCompanyspropertiesconsistprimarilyofoperatedandnon-operatedworkinginterests

103、inproducingandundevelopedleaseholdacreageandworkinginterestsinidentifiedproducingwells.AsofDecember31,2020:Ourtotalestimatedprovedreserveswereapproximately113.8MMBoe,ofwhichapproximately41%wereoiland85%wereclassifiedasproveddevelopedreserves;Weproducedfrom2,448gross(1,354net)producingwellsacrossourp

104、roperties,withanaverageworkinginterestof55%andtheCompanyistheoperatorofrecordofthepropertiescontaining92%ofourtotalestimatedprovedreserves;andOuraveragenetproductionforthethreemonthsendedDecember31,2020was26.3MBoe/d,implyingareserve-to-productionratioofapproximately12years.IndustryTrendsInMarch2020,

105、theWorldHealthOrganizationdeclaredaglobalpandemicrelatedtotheproliferationofCOVID-19.TheimpactofCOVID-19andeffortstomitigateitsspreadhavecausedsignificantvolatilityinU.S.andinternationalmarketsandasubstantialreductioninglobalanddomesticdemandforoilandnaturalgas.Actionsbygovernmentalauthoritiestomiti

106、gatethespreadofCOVID-19,suchasimposingmandatoryclosuresofallnon-essentialbusinessfacilities,seekingvoluntaryclosuresofbusinessfacilities,andimposingrestrictionson,oradvisorieswithrespectto,travel,businessoperationsandpublicgatheringsorinteractions,havefurtherexacerbatedtheeconomicimpactofthepandemic

107、.Asaresultofthepandemic,therehasalsobeenasharpreductioninthedemandforoilandnaturalgasandaprecipitousdeclineincommodityprices,whichwerefurtherimpactedbydisputesoverproductionlevelsamongoil-producingcountries,thesignificantincreaseinproductionlevelsbysuchcountriesandlimitedstoragecapacityfornaturalgas

108、,oilandrefinedproducts.10Inresponsetotheunprecedentedandextremelylowcommodityprices,theCompanyexecutedseveralliquidityenhancementinitiativestobetterpositiontheCompanythroughthedownturn,includingsignificantdecreasestooperatingandG&Aexpenses,substantialreductionstocapitalprograms,themonetizationofapor

109、tionoftheCompanys2021in-the-moneycrudeoilhedges,thereceiptofloanproceedsfromthefederalgovernmentsPaycheckProtectionProgram,royaltyreliefattheCompanysBetaProperties(definedbelow)andthesuspensionofthequarterlydividend,amongotherthings.Thesuccessfulrealizationandexecutionofourliquidityenhancinginitiati

110、ves,coupledwithadisciplinedcommodityhedgingprogram,havesubstantiallymitigatedtheimpactofthepandemicontheCompanysoperationalandfinancialresultsanddemonstratedthesustainablevalueofourlong-lived,low-declineassets.Despitethegradualrecoveryincommoditypricesinthesecondhalfof2020andtheexpectationofasuccess

111、fulphasedrolloutofavaccinein2021,wehavecontinuedourcommitmenttooperatinginadisciplined,capitalefficientmanner,andweremaincommittedtotheresponsiblestewardshipofourassetsandtocontinuefocusingonmaximizingcashflows,furtherreducingdebt,deliveringlow-costcapitalefficientoperations,andgeneratingshareholder

112、value.Wewillcontinuetomonitordevelopmentsregardingthepandemic,thedistributionofthevaccinationandchangesinmarketconditionsaswepursueourbusinessandstrategicobjectives.RecentDevelopmentsAppointment of Chief Executive Officer and DirectorOnJanuary19,2021,theCompanyappointedMr.MartynWillsherastheCompanys

113、PresidentandChiefExecutiveOfficerandmemberoftheboardofdirectors.Mr.WillsherhadservedastheCompanysInterimChiefExecutiveOfficersinceApril3,2020andSeniorVicePresidentandChiefFinancialOfficersinceApril27,2018.Appointment of Senior Vice President and Chief Financial OfficerOnJanuary19,2021,theCompanyappo

114、intedMr.JasonMcGlynnastheCompanysSeniorVicePresidentandChiefFinancialOfficer.Mr.McGlynnhadservedastheCompanysVicePresidentofBusinessDevelopmentsinceFebruary3,2020.Resignation of Chairman of the Board of DirectorsOnJanuary19,2021,Mr.DavidH.PromanannouncedhisresignationfromhispositionasChairmanofthebo

115、ardofdirectorsoftheCompany.Mr.Promanretainedhisseatasamemberoftheboardofdirectors.Appointment of Chairman of the Board of DirectorsConcurrentlywithMr.Promansresignation,theboardofdirectorsunanimouslyapprovedandappointedMr.ChristopherW.HammastheCompanysnewChairmanoftheboardofdirectors.Appointment of

116、Director to the Board of DirectorsOnFebruary10,2021,Ms.PatriceDouglaswasappointedasamemberoftheCompanysboardofdirectorsandwillalsoserveontheCompanysauditcommittee.Secondary Public Offering of Common Stock for Selling StockholdersOnDecember11,2020,certainsellingstockholdersoftheCompany(the“SellingSto

117、ckholders”),RothCapitalPartners,LLC(the“Underwriter”)andtheCompanyenteredintoanunderwritingagreement,pursuanttowhichtheSellingStockholdersagreedtoselltotheUnderwriter,andtheUnderwriteragreedtopurchasefromtheSellingStockholders,subjecttoanduponthetermsandconditionssetforththerein,anaggregateof8,548,4

118、85sharesofcommonstock,parvalue$0.01pershareoftheCompany(“CommonStock”).TheofferingclosedonDecember15,2020.TheCompanydidnotreceiveanyproceedsfromthesaleofsharesofCommonStockintheoffering.Theofferingwasmadepursuanttoeffectiveshelfregistrationstatements(FileNo.333-233677,effectiveOctober11,2019,and333-

119、215602,effectiveMay1,2018)andprospectusesfiledbytheCompanywiththeSEC.Theofferingofthesesecuritieswasmadeonlybymeansofaprospectusandprospectussupplement.Borrowing Base RedeterminationOnNovember18,2020,aspartoftheCompanysfall2020semiannualborrowingbaseredetermination,theborrowingbaseandlendercommitmen

120、tsundertheCompanyscreditagreementamongwhollyownedsubsidiariesoftheCompany,BankofMontreal,asadministrativeagent,andotherlenderspartythereto(asamendedfromtimetotime,the“RevolvingCreditFacility”)reaffirmedtheborrowingbaseat$260.0million,withthenextsuchredeterminationscheduledforspring2021.TheRevolvingC

121、reditFacilityisareserve-basedrevolvingcreditfacilitywithamaturitydateofNovember2,2023,andsemiannualborrowingbaseredeterminations.11Notice of Non-Compliance with New York Stock Exchange(“NYSE”)Continued Listing StandardsOnAugust31,2020,theCompany,receivedwrittennotification(the“MarketCapNotice”)fromt

122、heNYSEthattheCompanynolongersatisfiedthecontinuedlistingcompliancestandardssetforthunderSection802.01BoftheNYSEListedCompanyManual(the“Manual”)becausetheaverageglobalmarketcapitalizationoftheCompanywaslessthan$50,000,000overaconsecutive30trading-dayperiodthatendedonAugust28,2020and,atthesametime,the

123、Companysstockholdersequitywaslessthan$50,000,000(the“MarketCapDeficiency”).UnderNYSEprocedures,theCompanyhad45daysfromitsreceiptoftheMarketCapNoticetosubmitaplantotheNYSEdemonstratinghowitintendstoregaincompliancewiththeNYSEscontinuedlistingstandardswithin18months.TheCompanysubmitteditsplantoregainc

124、ompliancewiththelistingstandardswithintherequiredtimeframe.Inaddition,onOctober13,2020,theCompanyreceivedwrittennotification(the“SharePriceNotice”)fromtheNYSEthattheCompanynolongersatisfiedthecontinuedlistingcompliancestandardssetforthunderSection802.01CoftheManualbecausetheaverageclosingpriceoftheC

125、ompanysCommonStockwasbelow$1.00overa30consecutivetrading-dayperiodthatendedOctober12,2020(the“SharePriceDeficiency”).UndertheNYSEsrules,theCompanyhadsixmonthsfollowingreceiptoftheSharePriceNoticetoregaincompliancewiththeminimumsharepricerequirement.TheCompanynotifiedtheNYSEofitsintenttocuretheShareP

126、riceDeficiencyandreturntocompliancewiththeNYSEscontinuedlistingrequirements.OnJanuary4,2021,theCompanyreceivedwrittennotificationfromtheNYSEthattheCompanyregainedcompliancewiththeNYSEscontinuedlistingstandards.TheCompanyregainedcomplianceafteritsaverageclosingpriceforthe30trading-dayperiodendedDecem

127、ber31,2020anditsclosingpriceonDecember31,2020bothexceeded$1.00pershare.UnderNYSErules,theCommonStockwillcontinuetobelistedontheNYSEduringthecureperiodrelatedtotheMarketCapDeficiency,subjecttotheCompanyscompliancewithothercontinuedlistingrequirements.TheCommonStockstradingsymbol“AMPY”wasassigneda“.BC

128、”indicatorbytheNYSEtosignifythattheCompanycurrentlyisnotincompliancewiththeNYSEscontinuedlistingrequirements.IftheCompanyfailstoregaincompliancewithSections802.01BoftheManualduringthecureperiod,theCommonStockwillbesubjecttotheNYSEssuspensionanddelistingprocedures.PropertiesWeengagedCawley,Gillespiea

129、ndAssociates,Inc.(“CG&A”),ourindependentreserveengineers,toprepareourreservesestimatesforallofourprovedreservesatDecember31,2020and2019.Thefollowingtablesummarizesinformation,basedonareservereportpreparedbyCG&A(whichwerefertoasour“reservereport”),aboutourprovedoilandnaturalgasreservesbygeographicreg

130、ionasofDecember31,2020andouraveragenetproductionforthethreemonthsendedDecember31,2020:EstimatedNetProvedReserves AverageNetProductionAverageReserve-to ProducingWellsRegionMMBoe(1)%OilandNGL%NaturalGas%ProvedDeveloped StandardizedMeasure(2)MBoe/d%ofTotal ProductionRatio(3)Gross Net (inmillions)(Years

131、)Oklahoma39.3 49%51%80%$96 7.5 28%14.4 335 242Rockies21.2 100%0%87%47 4.0 15%14.4 137 137California16.7 100%0%66%59 3.6 14%12.7 53 53EastTexas/NorthLouisiana34.4 25%75%100%78 10.4 39%9.1 1,609 899EagleFord2.2 91%9%54%18 0.8 3%7.6 314 23Total113.8 60%40%85%$298 26.3 100%11.8 2,448 1,354(1)Determinedu

132、singaratioofsixMcfofnaturalgastooneBblofoil,condensateorNGLsbasedonanapproximateenergyequivalency.Thisisanenergycontentcorrelationanddoesnotreflectavalueorpricerelationshipbetweenthecommodities.(2)StandardizedmeasureiscalculatedinaccordancewithAccountingStandardsCodification,orASC,Topic932,Extractiv

133、e ActivitiesOil and Gas,andiscalculatedusingSECpricing,beforemarketdifferentials,of$39.57/BblforcrudeoilandNGLsand$1.99/MMBtufornaturalgas.(3)Theaveragereserve-to-productionratioiscalculatedbydividingestimatednetprovedreservesasofDecember31,2020bytheannualizedaveragenetproductionforthethreemonthsend

134、edDecember31,2020.OurAreasofOperationOklahomaApproximately34%ofourestimatedprovedreservesasofDecember31,2020andapproximately28%ofouraveragedailynetproductionforthethreemonthsendedDecember31,2020werelocatedintheOklahomaregion.OurOklahomapropertiesincludewellsandpropertiesprimarilylocatedinAlfalfaandW

135、oodscountiesinOklahoma.Thosepropertiescollectivelycontained39.3MMBblsofestimatednetprovedreservesasofDecember31,2020basedonourreservereportandgeneratedaveragenetproductionof7.5MBoe/dforthethreemonthsendedDecember31,2020.12RockiesApproximately19%ofourestimatedprovedreservesasofDecember31,2020andappro

136、ximately15%ofouraveragedailynetproductionforthethreemonthsendedDecember31,2020werelocatedintheRockiesregion.OurRockiespropertiesincludewellsandpropertiesprimarilylocatedintheLostSoldierandWertzfieldsinWyomingatourBairoilcomplex.OurRockiespropertiescontained21.2MMBblsofestimatednetprovedoilandNGLsres

137、ervesasofDecember31,2020basedonourreservereportandgeneratedaveragenetproductionof4.0MBoe/dforthethreemonthsendedDecember31,2020.CaliforniaApproximately15%ofourestimatedprovedreservesasofDecember31,2020andapproximately14%ofouraveragedailynetproductionforthethreemonthsendedDecember31,2020werelocatedin

138、federalwatersoffshoreSouthernCalifornia.Theseproperties(the“BetaProperties”)consistof:100%oftheworkinginterestsandcurrently87.6%averagenetrevenueinterestinthreePacificOuterContinentalShelfleaseblocks(P-0300,P-0301andP-0306)(referredtoasthe“BetaUnit”),intheBetafieldlocatedinfederalwatersapproximately

139、11milesoffshorefromthePortofLongBeach,California.OurBetaPropertiescontained16.7MMBblsofestimatednetprovedoilreservesasofDecember31,2020basedonourreservereportandgeneratedaveragenetproductionof3.6MBoe/dforthethreemonthsendedDecember31,2020.OilandgasareproducedfromtheBetaUnitviatwoproductionplatforms,

140、referredtoastheEllenandEurekaplatforms,equippedwithpermanentdrillingrigsandassociatedequipment.Onathirdplatform,Elly,theoil,waterandgasareseparated,andtheoilispreparedforsale,whilethegasisburnedasfuelforpowerandthewaterisrecycledbackintothereservoirforpressuremaintenance.Salesqualityoilisthenpumpedf

141、romtheEllyplatformtotheBetapumpstationlocatedonshoreatthePortofLongBeach,Californiaviaa16-inchdiameteroilpipeline,whichextendsapproximately17.5miles.AmplifyEnergyswhollyownedsubsidiary,SanPedroBayPipelineCompany,ownsandoperatesthepipelinesystem.On,June24,2020,theBureauofSafetyandEnvironmentalEnforce

142、ment(“BSEE”)informedtheCompanythatithadbeenapprovedfortheSpecialCaseRoyaltyRelieffortheCompanysinterestsintheBetaUnit,effectivebeginningJuly1,2020.Theroyaltyrateswerereducedfrom25%to12.5%fortwooftheCompanysleasesandfrom16.67%to8.33%fortheremainingthirdlease.ThisresultedintheCompanysaveragenetrevenue

143、interestincreasingfrom75.2%to87.6%.TheSpecialCaseRoyaltyReliefissubjecttotwokeyprovisionsrelatedtocommoditypricesandcapitalinvestment.SpecialCaseRoyaltyReliefwillbesuspendedinmonthsinwhichtheweightedtwelve-monthaverageNYMEXoilandHenryHubgaspriceexceeds$66.19perBOE,whichrepresentsa25%premiumtotheaver

144、agerealizedpricerecognizedbytheCompanyduringthequalificationperiodofApril2019toMarch2020.TheSpecialCaseRoyaltyReliefwouldterminateintheeventthattheCompanygeneratesnobenefitfromthereducedratesduetothehigherrealizedpricingfor12consecutivemonths.Inaddition,SpecialCaseRoyaltyReliefrequiresthatduringthet

145、wo-yearperiodendingJune30,2022(andannuallythereafter),thecumulativeamountofa)developmentcostsandb)incrementalroyaltiesmustexceedthevalueoftheroyaltyreliefbenefitsreceivedbytheCompanyforproductionvolumesatorbelowthecalculatedproductionvolumeduringthequalificationperiod.Shouldthisconditionnotbemet,Spe

146、cialCaseRoyaltyReliefwillbeterminated.East Texas/North LouisianaApproximately30%ofourestimatedprovedreservesasofDecember31,2020andapproximately39%ofouraveragedailynetproductionforthethreemonthsendedDecember31,2020werelocatedintheEastTexas/NorthLouisianaregion.OurEastTexas/NorthLouisianapropertiesinc

147、ludewellsandpropertiesprimarilylocatedintheJoaquin,Carthage,WillowSpringsandEastHendersonfieldsinEastTexas.Thosepropertiescollectivelycontained34.4MMBoeofestimatednetprovedreservesasofDecember31,2020basedonourreservereportandgeneratedaveragenetproductionof10.4MBoe/dforthethreemonthsendedDecember31,2

148、020.Eagle FordApproximately2%ofourestimatedprovedreservesasofDecember31,2020andapproximately3%ofouraveragedailynetproductionforthethreemonthsendedDecember31,2020werelocatedintheEagleFordregion.OurEagleFordpropertiesincludewellsandpropertiesinfieldslocatedprimarilyintheEaglevillefields.OurEagleFordpr

149、opertiescontained2.2MMBoeofestimatednetprovedreservesasofDecember31,2020basedonourreservereport.Thosepropertiescollectivelygeneratedaveragenetproductionof0.8MBoe/dforthethreemonthsendedDecember31,2020.OurOilandNaturalGasDataOur ReservesInternal Controls.Ourprovedreserveswereestimatedatthewellorunitl

150、evelforreportingpurposesbyCG&A,ourindependentreserveengineers.TheCompanymaintainsinternalevaluationsofourreservesinasecurereserveengineeringdatabase.CG&AinteractswiththeCompanysinternalpetroleumengineersandgeoscienceprofessionalsineachofouroperatingareasandwithoperating,accounting,andmarketingemploy

151、eestoobtainthenecessarydatatopreparetheCompanysprovedreservesreport.Reservesarereviewedandapprovedinternallybyourseniormanagementonanannualbasisandevaluatedbyourlendergrouponatleastasemi-annualbasisinconnectionwithborrowingbaseredeterminationsunderourRevolvingCreditFacility.Ourreserveestimatesarepre

152、paredbyCG&Aatleastannually.13OurinternalprofessionalstaffworkscloselywithCG&Atoensuretheintegrity,accuracyandtimelinessofdatathatisfurnishedtotheminordertopreparethereservesreport.Allofthereserveinformationmaintainedinoursecurereserveengineeringdatabaseisprovidedtotheexternalengineers.Inaddition,wep

153、rovideCG&Aotherpertinentdata,suchasseismicinformation,geologicmaps,welllogs,productiontests,materialbalancecalculations,wellperformancedata,operatingproceduresandrelevanteconomiccriteria.Wemakeallrequestedinformation,aswellasourpertinentpersonnel,availabletotheexternalengineersaspartoftheirpreparati

154、onofourreserves.Qualifications of Responsible Technical PersonsInternal Engineers.TonyLopezisthetechnicalpersonattheCompanyprimarilyresponsibleforoverseeingandprovidingoversightofthepreparationofthereservesestimateswithourthird-partyreserveengineers.Mr.Lopezhasover15yearsofcorporatereservereportinge

155、xperience.Mr.LopezjoinedtheCompanyasVicePresidentofCorporateReservesinJune2018andcurrentlyservesastheCompanysSeniorVicePresidentofEngineering,ExploitationandInformationTechnology.PriortothatMr.LopezwasVicePresidentofAcquisitionsandEngineeringforEnerVest,Ltd.,wherehemanagedthecorporatereservereportin

156、gprocessandthefinancialplanning&analysisdepartment.Mr.LopezisagraduateofWestVirginiaUniversityandholdsaB.S.inPetroleumandNaturalGasEngineering.Mr.LopezisanactivememberoftheSocietyofPetroleumEngineers.Cawley,Gillespie and Associates,Inc.CG&Aisanindependentoilandnaturalgasconsultingfirm.Nodirector,off

157、icer,orkeyemployeeofCG&Ahasanyfinancialownershipinusoranyofouraffiliates.CG&Ascompensationforthepreparationofitsreportisnotcontingentupontheresultsobtainedandreported.CG&Ahasnotperformedotherworkforusoranyofouraffiliatesthatwouldaffectitsobjectivity.TheestimatesofourprovedreservespresentedintheCG&Ar

158、eservereportwereoverseenbyToddBrooker.Mr.BrookeristhePresidentofCG&AandhasbeenanemployeeofCG&Asince1992.Hisresponsibilitiesincludereserveandeconomicevaluations,fairmarketvaluations,fieldstudies,pipelineresourcestudiesandacquisition/divestitureanalysis.Hisreservereportsareroutinelyusedforpubliccompan

159、ySECdisclosures.PriortojoiningCG&A,Mr.BrookerworkedinGulfofMexicodrillingandproductionengineeringatChevronCorporation.Mr.BrookersexperienceincludessignificantprojectsinbothconventionalandunconventionalresourcesineverymajorU.S.producingbasinandabroad,includingoilandgasshaleplays,coalbedmethanefields,

160、waterfloodsandcomplex,faultedstructures.Mr.BrookergraduatedwithhonorsfromtheUniversityofTexasatAustinin1989withaBachelorofSciencedegreeinPetroleumEngineeringandisaregisteredProfessionalEngineerintheStateofTexas.HeisalsoamemberoftheSocietyofPetroleumEngineersandtheSocietyofPetroleumEvaluationEngineer

161、sandtheSocietyofPetroleumEvaluationEngineers.Estimated Proved ReservesThefollowingtablepresentstheestimatednetprovedoilandnaturalgasreservesattributabletoourpropertiesandthestandardizedmeasureassociatedwiththeestimatedprovedreservesattributabletoourpropertiesasofDecember31,2020,basedonthepreparedres

162、ervereportbyCG&A,ourindependentreserveengineers.Thestandardizedmeasureshowninthetableisnotintendedtorepresentthecurrentmarketvalueofourestimatedoilandnaturalgasreserves.Reserves OilNaturalGasNGLsTotal(MBbls)(MMcf)(MBbls)(MBoe)(1)EstimatedProvedReserves Developed35,613252,21819,00996,658Undeveloped11

163、,06321,9212,47517,191Total46,676274,13921,484113,849 Proveddevelopedreservesasapercentageoftotalprovedreserves 85%Standardizedmeasure(inthousands)(2)$298 OilandNaturalGasPrices(3)OilWTIperBbl$39.57NaturalgasHenryHubperMMBtu$1.99(1)DeterminedusingaratioofsixMcfofnaturalgastooneBblofoil,condensateorNG

164、Lsbasedonanapproximateenergyequivalency.Thisisanenergycontentcorrelationanddoesnotreflectavalueorpricerelationshipbetweenthecommodities.(2)Standardizedmeasureisthepresentvalueofestimatedfuturenetrevenuestobegeneratedfromtheproductionofprovedreserves,determinedinaccordancewiththerulesandregulationsof

165、theSECwithoutgivingeffecttonon-propertyrelatedexpenses,suchasgeneralandadministrativeexpenses,interestexpense,ortodepletion,depreciationandamortization.Thefuturecashflowsarediscountedusinganannualdiscountrateof10%.Standardizedmeasuredoesnotgiveeffecttoderivativetransactions.Foradescriptionofourcommo

166、dityderivativecontracts,see“Item1.BusinessOperationsDerivativeActivities”aswellas“Item7.ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperationsCommodityDerivativeContracts.”14(3)Ourestimatednetprovedreservesandrelatedstandardizedmeasureweredeterminedusing12-monthtrailingaverageoil

167、andnaturalgasindexprices,calculatedastheunweightedarithmeticaverageforthefirst-day-of-the-monthpriceforeachmonthineffectasofthedateoftheestimate,withoutgivingeffecttoderivativecontracts,heldconstantthroughoutthelifeoftheproperties.Thesepriceswereadjustedbyleaseforquality,transportationfees,geographi

168、caldifferentials,marketingbonusesordeductionsandotherfactorsaffectingthepricereceivedatthewellhead.Thedatainthetableaboverepresentsestimatesonly.Oilandnaturalgasreserveengineeringisinherentlyasubjectiveprocessofestimatingundergroundaccumulationsofoilandnaturalgasthatcannotbemeasuredexactly.Theaccura

169、cyofanyreserveestimateisafunctionofthequalityofavailabledataandengineeringandgeologicalinterpretationandjudgment.Accordingly,reserveestimatesmayvaryfromthequantitiesofoilandnaturalgasthatareultimatelyrecovered.Foradiscussionofrisksassociatedwithinternalreserveestimates,see“Item1A.RiskFactorsRisksRel

170、atedtoOurBusinessOurestimatedreservesandfutureproductionratesarebasedonmanyassumptionsthatmayturnouttobeinaccurate.Anymaterialinaccuraciesinourreserveestimatesorunderlyingassumptionswillmateriallyaffectthequantitiesandpresentvalueofourestimatedreserves.”Futurepricesreceivedforproductionandcostsmayva

171、ry,perhapssignificantly,fromthepricesandcostsassumedforpurposesoftheseestimates.Thestandardizedmeasureshownaboveshouldnotbeconstruedasthecurrentmarketvalueofourestimatedoilandnaturalgasreserves.The10%discountfactorusedtocalculatestandardizedmeasure,whichisrequiredbytheSECandFASB,isnotnecessarilythem

172、ostappropriatediscountrate.Thepresentvalue,nomatterwhatdiscountrateisused,ismateriallyaffectedbyassumptionsastotimingoffutureproduction,whichmayprovetobeinaccurate.Development of Proved Undeveloped ReservesAsofDecember31,2020,wehad17.2MMBoeofprovedundevelopedreservescomprisedof11.1MMBblsofoil,21.9Bc

173、feofnaturalgasand2.5MMBblsofNGLs.Noneofourprovedundevelopedreserves(“PUDs”)asofDecember31,2020arescheduledtobedevelopedonadatemorethanfiveyearsfromthedatethereserveswereinitiallybookedasPUDs.PUDswillbeconvertedfromundevelopedtodevelopedastheapplicablewellsbeginproduction.ChangesinPUDsthatoccurreddur

174、ing2020weredueto:Reserveaddsof0.2MMBoe;Reservedropsincludingpricerevisionsof15.8MMBoe;andPerformancerevisionsincludingroyaltyreliefof0.5MMBoe.Approximately0.4%(0.1MMBoe)ofourPUDsrecordedasofDecember31,2019weredevelopedduringthetwelvemonthsendedDecember31,2020.TotalcostsincurredtodevelopthesePUDswere

175、approximately$0.7million,allofwhichwasincurredinfiscalyear2020.Intotal,weincurredtotalcapitalexpendituresofapproximately$3.3millionduringfiscalyear2020developingPUDs,whichincludes$2.6millionassociatedwithPUDstobecompletedin2021.Basedonourcurrentexpectationsofourcashflows,webelievethatwecanfundthedri

176、llingofourcurrentPUDinventoryandourexpansionsinthenextfiveyearsfromourcashflowfromoperationsandborrowingsunderourRevolvingCreditFacility.Foramoredetaileddiscussionofourliquidityposition,see“Item7.ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperationsLiquidityandCapitalResources.”

177、Reserves sensitivityHistorically,commoditypriceshavebeenextremelyvolatileandduetothechangesinthemarketwiththeimpactofCOVID-19,weexpectthisvolatilitytocontinuefortheforeseeablefuture.Forexample,forthefiveyearsendedDecember31,2020,theNYMEX-WTIoilfuturepricerangedfromahighof$76.41perBbltoalowof$(37.63)

178、perBbl,whiletheNYMEX-HenryHubnaturalgasfuturepricerangedfromahighof$4.84perMMBtutoalowof$1.48perMMBtu.FortheyearendedDecember31,2020,theWTIpostedpricerangedfromahighof$63.27perBblonJanuary6,2020toalowof$(37.63)perBblonApril20,2020andtheNYMEX-HenryHubmarketpricerangedfromahighof$3.35perMMBtuonOctober

179、30,2020toalowof$1.48perMMBtuonJune25,2020.Thecontinuationoflowpricesforoilornaturalgascouldmateriallyandadverselyaffectourfinancialposition,ourresultsofoperations,thequantitiesofoilandnaturalgasreservesthatwecaneconomicallyproduceandouraccesstocapital.Thefollowingsensitivityisprovidedtoillustratethe

180、valueofourproveddevelopedreservesatpricingthatismorerepresentativeofthecurrentmarket.OuryearendproveddevelopedstandardizedmeasureatSECpricingwas$239.2million.Withanoilpriceof$50.00andnaturalgaspriceof$2.70ourproveddevelopedstandardizedmeasurewouldincreaseto$566.2million.Thereisnoassurancethatthesepr

181、iceswillactuallybeachieved.Production,Revenue and Price HistoryForadescriptionofourandLegacyAmplifyshistoricalproduction,revenues,andaveragesalespricesandperunitcosts,see“Item7.ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperationsResultsofOperations.”15Thefollowingtablessummariz

182、eouraveragenetproduction,averageunhedgedsalespricesbyproductandaverageproductioncosts(notincludingadvaloremandseverancetaxes)bygeographicregionfortheyearsendedDecember31,2020and2019,respectively:FortheYearEndedDecember31,2020OilNGLsNaturalGasTotal Average Average Average AverageLeaseProduction Sales

183、Production SalesProductionSalesProductionSalesOperatingVolumesPriceVolumesPriceVolumesPriceVolumesPriceExpense(MBbls)($/Bbl)(MBbls)($/Bbl)(MMcf)($/Mcf)(MBoe)($/Boe)($/Boe)Oklahoma687$36.84857$10.759,395$0.933,109$13.90$6.14Rockies1,49334.551,49334.55 28.84California1,25536.101,25536.10 27.98EastTexa

184、s/NorthLouisiana19835.3783612.5217,9051.874,01812.68 4.33EagleFord25435.753211.991732.0131531.14 16.05Total3,887$35.581,725$11.6327,473$1.5510,190$19.71$11.75 Averagenetproduction(MBoe/d)27.8 FortheYearEndedDecember31,2019OilNGLsNaturalGasTotal Average Average Average AverageLeaseProduction SalesPro

185、duction SalesProductionSalesProductionSalesOperatingVolumesPriceVolumesPriceVolumesPriceVolumesPriceExpense(MBbls)($/Bbl)(MBbls)($/Bbl)(MMcf)($/Mcf)(MBoe)($/Boe)($/Boe)Oklahoma372$54.81439$14.144,822$0.951,614$19.30$6.72Rockies1,38150.726338.801,445$50.20$30.49California1,13258.381,13258.38 39.63Eas

186、tTexas/NorthLouisiana21855.7781216.3521,4952.524,61217.28 4.40EagleFord39561.442914.311722.8145355.59 8.56Total3,498$55.161,343$16.6426,489$2.249,256$29.67$13.39 Averagenetproduction(MBoe/d)25.4 Productive WellsProductivewellsconsistofproducingwellsandwellscapableofproduction,includingnaturalgaswell

187、sawaitingpipelineconnectionstocommencedeliveriesandoilwellsawaitingconnectiontoproductionfacilities.Grosswellsarethetotalnumberofproducingwellsinwhichweownaninterestandnetwellsarethesumofourfractionalworkinginterestsownedingrosswells.Thefollowingtablesetsforthinformationrelatingtotheproductivewellsi

188、nwhichweownedaworkinginterestasofDecember31,2020.OilNaturalGasGrossNetGrossNetOperated469431972809Non-operated4083859976Total8774691,57188516Developed AcreageAcreagerelatedtoroyalty,overridingroyaltyandothersimilarinterestsisexcludedfromthissummary.AsofDecember31,2020,substantiallyallofourleaseholda

189、creagewasheldbyproduction.ThefollowingtablesetsforthinformationasofDecember31,2020relatingtoourleaseholdacreage.RegionDevelopedAcreage(1)Gross(2)Net(3)Oklahoma112,22194,464Rockies6,6536,653California17,28017,280EastTexas/NorthLouisiana256,947195,479EagleFord14,167811Total407,268314,687(1)Developedac

190、resareacresspacedorassignedtoproductivewellsorwellscapableofproduction.(2)Agrossacreisanacreinwhichweownaworkinginterest.Thenumberofgrossacresisthetotalnumberofacresinwhichweownaworkinginterest.(3)Anetacreisdeemedtoexistwhenthesumofourfractionalownershipworkinginterestsingrossacresequalsone.Thenumbe

191、rofnetacresisthesumofthefractionalworkinginterestsownedingrossacresexpressedaswholenumbersandfractionsthereof.Undeveloped AcreageThefollowingtablesetsforthinformationasofDecember31,2020relatingtoourundevelopedleaseholdacreage(includingtheremainingtermsofleasesandconcessions).Undeveloped NetAcreageSu

192、bjecttoRegionAcreage LeaseExpirationbyYearGross(1)Net(2)20212022Oklahoma21,4426,4563,849EastTexas/NorthLouisiana18Total21,4426,4563,867(1)Agrossacreisanacreinwhichweownaworkinginterest.Thenumberofgrossacresisthetotalnumberofacresinwhichweownaworkinginterest.(2)Anetacreisdeemedtoexistwhenthesumofourf

193、ractionalownershipworkinginterestsingrossacresequalsone.Thenumberofnetacresisthesumofthefractionalworkinginterestsownedingrossacresexpressedaswholenumbersandfractionsthereof.Drilling ActivitiesOurdrillingactivitiesprimarilyconsistofdevelopmentwells.Thefollowingtablesetsforthinformationwithrespectto(

194、i)wellsdrilledandcompletedduringtheperiodsindicatedand(ii)wellsdrilledinapriorperiodbutcompletedduringtheperiodsindicated.Theinformationshouldnotbeconsideredindicativeoffutureperformance,norshouldacorrelationbeassumedbetweenthenumberofproductivewellsdrilled,quantitiesofreservesfoundoreconomicvalue.A

195、tDecember31,2020,48gross(1net)wellswereinvariousstagesofcompletion.FortheYearEndedDecember31,20202019GrossNetGrossNetDevelopmentwells:Productive22.01.032.01.8DryExploratorywells:ProductiveDryTotalwells:Productive22.01.032.01.8DryTotal22.01.032.01.8Delivery CommitmentsWehavenocommitmentstodeliverafix

196、edanddeterminablequantityofouroilornaturalgasproductioninthenearfutureunderourexistingsalescontracts.17Wehaveenteredintoalong-termgasgatheringagreementassociatedwithacertainportionofourEastTexasproductionwithathird-partymidstreamserviceproviderthathasvolumetricrequirements.Wealsohavealong-termcontra

197、ctassociatedwithourNGLproductioninOklahomathatissubjecttoavolumeobligation.InformationregardingourdeliverycommitmentsunderthesecontractsiscontainedinNote16oftheNotestoConsolidatedFinancialStatementsincludedunder“Item8.FinancialStatementsandSupplementaryData,”containedherein.OperationsGeneralAsofDece

198、mber31,2020,theCompanyistheoperatorofrecordofpropertiescontaining92%ofourtotalestimatedprovedreserves.Wedesignandmanagethedevelopment,recompletionand/orworkoveroperations,andsuperviseotheroperationandmaintenanceactivities,forallofthewellsweoperate.Wedonotownthedrillingrigsorotheroilfieldservicesequi

199、pmentusedfordrillingormaintainingwellsonouronshoreproperties;independentcontractorsprovidealltheequipmentandpersonnelassociatedwiththeseactivities.OurBetaplatformshavepermanentdrillingsystemsinplace.Marketing and Major CustomersThefollowingindividualcustomerseachaccountedfor10%ormoreofourtotalreport

200、edrevenuesfortheperiodindicated:FortheYearEndedDecember31,2020 2019Majorcustomers:Phillips6623%27%SinclairOil&GasCompany21%21%BPAmericaProductionCompany17%13%Theproductionsalesagreementscoveringourpropertiescontaincustomarytermsandconditionsfortheoilandnaturalgasindustryandprovideforsalesbasedonprev

201、ailingmarketprices.Amajorityofthoseagreementshavetermsthatrenewonamonth-to-monthbasisuntileitherpartygivesadvancewrittennoticeoftermination.Ifweweretoloseanyoneofourcustomers,thelosscouldtemporarilydelayproductionandsaleofaportionofouroilandnaturalgasintherelatedproducingregion.Ifweweretoloseanysing

202、lecustomer,webelievewecouldidentifyasubstitutecustomertopurchasetheimpactedproductionvolumes.However,ifoneormoreofourlargercustomersceasedpurchasingoilornaturalgasaltogetherandwewereunabletoreplacethem,thelossofanysuchcustomercouldhaveadetrimentaleffectonourproductionvolumesandrevenuesingeneral.Titl

203、e to PropertiesWebelievethatwehavesatisfactorytitletoallofourproducingpropertiesinaccordancewithindustrystandards.Morethoroughtitleinvestigationsarecustomarilymadebeforetheconsummationofanacquisitionofproducingpropertiesandbeforecommencementofdrillingoperationsonundevelopedproperties.Individualprope

204、rtiesmaybesubjecttoburdensthatwebelievedonotmateriallyinterferewiththeuseoraffectthevalueoftheproperties.Asiscustomaryintheindustry,inthecaseofundevelopedproperties,oftencursoryinvestigationofrecordtitleismadeatthetimeofleaseacquisition.Burdensonpropertiesmayincludecustomaryroyaltyinterests,liensinc

205、identtooperatingagreementsandforcurrenttaxes,obligationsordutiesunderapplicablelaws,developmentobligationsundernaturalgasleases,ornetprofitsinterests.Derivative ActivitiesWeenterintocommodityderivativecontractswithunaffiliatedthirdparties,generallylendersunderourRevolvingCreditFacilityortheiraffilia

206、tes,toachievemorepredictablecashflowsandtoreduceourexposuretofluctuationsinoilandnaturalgasprices.Weintendtoenterintocommodityderivativecontractsattimesandontermsdesiredtomaintainaportfolioofcommodityderivativecontractscoveringatleast30%-60%ofourestimatedproductionfromtotalproveddevelopedproducingre

207、servesoveraone-to-three-yearperiodatanygivenpointoftime.Additionally,tosatisfythehedgingcovenantsinourRevolvingCreditFacility,weareexpectedtohedge65%and45%ofourestimatedproductionfromtotalproveddevelopedreservesforcalendaryears2021and2022,respectively.Wemay,however,fromtimetotime,hedgemoreorlessthan

208、thisapproximateamount.Periodically,weenterintointerestrateswapstomitigateexposuretomarketratefluctuationsbyconvertingvariableinterestrates(suchasthoseinourRevolvingCreditFacility)tofixedinterestrates.Itisourpolicytoenterintoderivativecontractsonlywithcreditworthycounterparties,whichgenerallyarefinan

209、cialinstitutions,deemedbymanagementascompetentandcompetitivemarketmakers.Someofthelenders,orcertainoftheiraffiliates,underourRevolvingCreditFacilityarecounterpartiestoourderivativecontracts.Wewillcontinuetoevaluatethebenefitofemployingderivativesinthefuture.18CompetitionWeoperateinahighlycompetitive

210、environmentforacquiringproperties,leasingacreage,contractingfordrillingequipmentandsecuringtrainedpersonnel.Manyofourcompetitorspossessandemployfinancial,technicalandpersonnelresourcessubstantiallygreaterthanours,whichcanbeparticularlyimportantintheareasinwhichweoperate.Asaresult,ourcompetitorsmaybe

211、abletopaymoreforproductiveoilandnaturalgaspropertiesandexploratoryprospects,aswellasevaluate,bidforandpurchaseagreaternumberofpropertiesandprospectsthanourfinancialorpersonnelresourcespermit.Ourabilitytoacquireadditionalpropertiesandtofindanddevelopreserveswilldependonourabilitytoevaluateandselectsu

212、itablepropertiesandtoconsummatetransactionsinahighlycompetitiveenvironment.Inaddition,thereissubstantialcompetitionforcapitalavailableforinvestmentintheoilandnaturalgasindustryandmanyofourcompetitorshaveaccesstocapitalatalowercostthanthatavailabletous.Seasonal Nature of BusinessThepricewereceiveforo

213、urnaturalgasproductionisimpactedbyseasonalfluctuationsindemandfornaturalgas.Thedemandfornaturalgastypicallypeaksduringthecoldestmonthsandtapersoffduringthemildermonths,withaslightincreaseduringthesummertomeetthedemandsofelectricgenerators.Theweatherduringanyparticularseasoncanaffectthiscyclicaldeman

214、dfornaturalgas.Seasonalanomaliessuchasmildwintersorhotsummerscanlessenorintensifythisfluctuation.Inaddition,certainnaturalgasusersutilizenaturalgasstoragefacilitiesandpurchasesomeoftheiranticipatedwinterrequirementsduringthesummer.Thiscanalsolessenseasonaldemandfluctuations.Hydraulic FracturingWeuse

215、hydraulicfracturingasameanstomaximizetheproductivityofalmosteverywellthatwedrillandcomplete,exceptinouroffshorewells.Hydraulicfracturingisanecessarypartofthecompletionprocessbecauseourpropertiesaredependentuponourabilitytoeffectivelyfracturetheproducingformationsinordertoproduceateconomicrates.Ourpr

216、ovednon-producingandprovedundevelopedreservesmakeup22.7%ofthetotalprovedreserveswithapproximately57%oftheserequiringhydraulicfracturingasofDecember31,2020.Webelievewehavefollowedandcontinuetosubstantiallyfollowapplicableindustrystandardpracticesandlegalandregulatoryrequirementsforgroundwaterprotecti

217、oninourhydraulicfracturingoperationswhicharesubjecttosupervisionbystateandfederalregulators(includingtheU.S.BureauofLandManagement(the“BLM”)onfederalacreage).Theseprotectivemeasuresincludesettingsurfacecasingatadepthsufficienttoprotectfreshwaterzonesasdeterminedbyregulatoryagenciesandcementingthewel

218、ltocreateapermanentisolatingbarrierbetweenthecasingpipeandsurroundinggeologicalformations.Thisaspectofwelldesignisintendedtoessentiallyeliminateapathwayforthefracturingfluidtocontactanyaquifersduringthehydraulicfracturingoperations.Forrecompletionsofexistingwells,theproductioncasingispressuretestedp

219、riortoperforatingthenewcompletioninterval.Injectionratesandpressuresaremonitoredinstantaneouslyandinrealtimeatthesurfaceduringourhydraulicfracturingoperations.Pressureismonitoredonboththeinjectionstringandtheimmediateannulustotheinjectionstring.Hydraulicfracturingoperationswouldbeshutdownimmediately

220、ifanabnormalchangeoccurredtotheinjectionpressureorannularpressure.Certainstateregulationsrequiredisclosureofthecomponentsinthesolutionsusedinhydraulicfracturingoperations.Approximately99%ofthehydraulicfracturingfluidsweusearemadeupofwaterandsand,andthefluidsaremanagedandusedinaccordancewithapplicabl

221、erequirements.Hydraulicfracturestimulationrequirestheuseofasignificantvolumeofwater.Uponflowbackofthewater,wedisposeofitintoapproveddisposalorinjectionwells.Wecurrentlydonotdischargewatertothesurface.Forinformationregardingexistingandproposedgovernmentalregulationsregardinghydraulicfracturingandrela

222、tedenvironmentalmatters,see“Environmental,OccupationalHealthandSafetyMattersandRegulationsHydraulicFracturing.”19InsuranceInaccordancewithcustomaryindustrypractice,wemaintaininsuranceagainstmany,butnotall,potentiallossesorliabilitiesarisingfromouroperationsandatcoststhatwebelievetobeeconomic.Weregul

223、arlyreviewourrisksoflossandthecostandavailabilityofinsuranceandreviseourinsuranceaccordingly.Ourinsurancedoesnotcovereverypotentialriskassociatedwithouroperations,includingthepotentiallossofsignificantrevenues.Wecanprovidenoassurancethatourcoveragewilladequatelyprotectusagainstliabilityfromallpotent

224、ialconsequences,damagesandlosses.Wecurrentlyhaveinsurancepoliciesthatincludethefollowing:CommercialGeneralLiability;OilPollutionActLiability;PrimaryUmbrella/ExcessLiability;PollutionLegalLiability;Property;CharterersLegalLiability;WorkersCompensation;Non-OwnedAircraftLiability;EmployersLiability;Aut

225、omobileLiability;MaritimeEmployersLiability;Directors&OfficersLiability;U.S.LongshoreandHarborWorkers;EmploymentPracticesLiability;EnergyPackage/ControlofWell;Crime;andLossofProductionIncome(offshoreonly);FiduciaryLiability.Wecontinuouslymonitorregulatorychangesandcommentsandconsidertheirimpactonthe

226、insurancemarket,alongwithandouroverallriskprofile.Asnecessary,wewilladjustourriskandinsuranceprogramtoprovideprotectionatalevelweconsiderappropriate,whileweighingthecostofinsuranceagainstthepotentialandmagnitudeofdisruptiontoouroperationsandcashflows.Changesinlawsandregulationscouldleadtochangesinun

227、derwritingstandards,limitationsonscopeandamountofcoverage,andhigherpremiums,includingpossibleincreasesinliabilitycapsforclaimsofdamagesfromoilspills.Environmental,OccupationalHealthandSafetyMattersandRegulationsGeneralOuroilandnaturalgasdevelopmentandproductionoperationsaresubjecttostringentandcompl

228、exfederal,stateandlocallawsandregulationsgoverningthedischargeofmaterialsintotheenvironment,healthandsafetyaspectsofouroperations,orotherwiserelatingtoenvironmentalprotection.Theselawsandregulationsimposenumerousobligationsapplicabletoouroperationsincludingtheacquisitionofapermitbeforeconductingregu

229、lateddrillingactivities;therestrictionoftypes,quantitiesandconcentrationofmaterialsthatcanbereleasedintotheenvironment;thelimitationorprohibitionofdrillingactivitiesoncertainlandslyingwithinwilderness,wetlands,seismicallyactiveareasandotherprotectedareas;theapplicationofspecifichealthandsafetycriter

230、iaaddressingworkerprotection;andtheimpositionofsubstantialliabilitiesforpollutionresultingfromouroperations.Numerousgovernmentalauthorities,suchastheU.S.EnvironmentalProtectionAgency(“EPA”)andanalogousstateagencies,havethepowertoenforcecompliancewiththeselawsandregulationsandthepermitsissuedunderthe

231、m,oftenrequiringdifficultandcostlycomplianceorcorrectiveactions.Failuretocomplywiththeselawsandregulationsmayresultintheassessmentofsanctions,includingadministrative,civilorcriminalpenalties,theimpositionofinvestigatoryorremedialobligations,thesuspensionorrevocationofnecessarypermits,licensesandauth

232、orizations,therequirementthatadditionalpollutioncontrolsbeinstalledandinsomeinstances,theissuanceoforderslimitingorprohibitingsomeorallofouroperations.Wemayalsoexperiencedelaysinobtainingorbeunabletoobtainrequiredpermits,whichmaydelayorinterruptouroperationsandlimitourgrowthandrevenue.Inaddition,the

233、long-termtrendinenvironmentalregulationhasbeentoplacemorerestrictionsandlimitationsonactivitiesthatmayaffecttheenvironmentandthus,ourcostsofcompliancemayincreaseifexistinglawsandregulationsarerevisedorreinterpreted,orifnewlawsandregulationsbecomeapplicabletoouroperations.Undercertainenvironmentallaw

234、sthatimposestrictaswellasjointandseveralliability,wemayberequiredtoremediatecontaminatedpropertiescurrentlyorformerlyownedoroperatedbyusorfacilitiesofthirdpartiesthatreceivedwastegeneratedbyouroperationsregardlessofwhethersuchcontaminationresultedfromtheconductofothersorfromconsequencesofourownactio

235、nsthatwereincompliancewithallapplicablelawsatthetimethoseactionsweretaken.Inaddition,claimsfordamagestopersonsorproperty,includingnaturalresources,mayresultfromtheenvironmental,healthandsafetyimpactsofouroperations.Moreover,publicinterestintheprotectionoftheenvironmenthasincreasedinrecentyears.Newla

236、wsandregulationscontinuetobeenacted,particularlyatthestatelevel,and,undertheBidenAdministration,thelong-termtrendofmoreexpansiveandstringentenvironmentallegislationandregulationsappliedtothecrudeoilandnaturalgasindustrycouldcontinue,resultinginincreasedcostsofdoingbusinessandconsequentlyaffectingpro

237、fitability.Totheextentlawsareenactedorothergovernmentalactionistakenthatrestrictsdrillingorimposesmorestringentandcostlyoperating,wastehandling,disposalandcleanuprequirements,ourbusiness,prospects,financialconditionorresultsofoperationscouldbemateriallyadverselyaffected.Thefollowingisasummaryofthemo

238、resignificantexistingenvironmental,occupationalhealthandsafetylawsandregulationstowhichourbusinessoperationsaresubjectandforwhichcompliancemayhaveamaterialadverseimpactonourcapitalexpenditures,resultsofoperationsorfinancialposition.20BOEM&BSEEOuroilandgasoperationsassociatedwithourBetaPropertiesarec

239、onductedonoffshoreleasesinfederalwaters.TheBureauofOceanEnergyManagement(“BOEM”)andtheBSEEhavebroadauthoritytoregulateouroilandgasoperationsassociatedwithourBetaProperties.BOEMisresponsibleformanagingenvironmentallyandeconomicallyresponsibledevelopmentofthenationsoffshoreresources.Itsfunctionsinclud

240、eoffshoreleasing,resourceevaluation,reviewandadministrationofoilandgasexplorationanddevelopmentplans,renewableenergydevelopment,NationalEnvironmentalPolicyAct(“NEPA”)analysisandenvironmentalstudies.LesseesmustobtainBOEMapprovalforexploration,developmentandproductionplanspriortothecommencementofoffsh

241、oreoperations.BOEMgenerallyrequiresthatlesseeshavesubstantialnetworth,postsupplementalbondsorprovideotheracceptableassurancesthattheobligationswillbemet.InOctober2020,BOEMandBSEEissuedaproposedruletoclarify,streamline,andprovidegreatertransparencytofinancialassurancerequirements,includingstreamlinin

242、gtheevaluationcriteriafordeterminingifandwhenadditionalsecurityisrequiredforOuterContinentalShelf(“OCS”)leases,pipelinerights-of-wayandrights-of-useandeasementandrevisingtheprocessforissuingdecommissioningobligationsforfacilitiesontheOCS.Thenewcriteriamayrequirelesseesoroperatorstotakeadditionalstep

243、stodemonstratethattheyhavethefinancialabilitytocarryouttheirleaseobligations.ItisunclearwhetherBOEMandBSEEwillfinalizethisruleundertheBidenAdministration.BSEEisresponsibleforsafetyandenvironmentaloversightofoffshoreoilandgasoperations.Itsfunctionsincludethedevelopmentandenforcementofsafetyandenviron

244、mentalregulations,permittingoffshoreexploration,developmentandproduction,inspections,offshoreregulatoryprograms,oilspillresponseandtrainingandenvironmentalcomplianceprograms.BSEEregulationsrequireoffshoreproductionfacilitiesandpipelineslocatedontheOCStomeetstringentengineeringandconstructionspecific

245、ations,andBSEEhasproposedand/orpromulgatedadditionalsafety-relatedregulationsconcerningthedesignandoperatingproceduresofthesefacilitiesandpipelines,includingregulationstosafeguardagainstorrespondtowellblowoutsandothercatastrophes.BSEEregulationsalsorestricttheflaringorventingofnaturalgas,prohibitthe

246、flaringofliquidhydrocarbonsandgovernthepluggingandabandonmentofwellslocatedoffshoreandtheinstallationandremovalofallfixeddrillingandproductionfacilities.BOEMandBSEEhaveadopted regulations providing forenforcement actions,including civil penalties andlease forfeiture orcancellation forfailure tocompl

247、ywithregulatoryrequirementsforoffshoreoperations.Ifwefailtopayroyaltiesorcomplywithsafetyandenvironmentalregulations,BOEMandBSEEmayrequirethatouroperationsontheBetaPropertiesbesuspendedorterminatedandwemaybesubjecttocivilorcriminalliability.InNovember2018,afederalcourtprohibitedBOEMandBSEEfromapprov

248、inganyplansorissuingpermitsinvolvinghydraulicfracturingand/oracidwellstimulationonthePacificOCSuntiltheagenciescompleteconsultationwiththeU.S.FishandWildlifeServiceundertheEndangeredSpeciesAct(the“ESA”)andsubmitaconsistencydeterminationundertheCoastalZoneManagementActtotheCaliforniaCoastalCommission

249、.AlthoughwedonotuseeitherhydraulicfracturingoracidstimulationroutinelyinconnectionwithouroperationsontheBetaProperties,delaysintheapprovalorrefusalofplansandissuanceofpermitsbyBOEMorBSEEbecauseofstaffing,economic,environmental,legalorotherreasons(orotheractionstakenbyBOEMorBSEE)couldadverselyaffecto

250、uroffshoreoperations.TherequirementsimposedbyBOEMandBSEEregulationsarefrequentlychangedandsubjecttonewinterpretations.Also,inadditiontopermitsandapprovalsrequiredbyBOEMandBSEE,approvalsandpermitsarerequiredfromotheragenciesfortheoilandgasoperationsassociatedwithourBetaProperties,suchastheU.S.CoastGu

251、ard,theEPA,U.S.DepartmentofTransportationandtheSouthCoastAirQualityManagementDistrict.21Hazardous Substances and Waste HandlingOuroperationsaresubjecttoenvironmentallawsandregulationsrelatingtothemanagementandreleaseofhazardoussubstances,solidandhazardouswastesandpetroleumhydrocarbons.Theselawsgener

252、allyregulatethegeneration,storage,treatment,transportationanddisposalofsolidandhazardouswasteandmayimposestrictand,insomecases,jointandseveralliabilityfortheinvestigationandremediationofaffectedareaswherehazardoussubstancesmayhavebeenreleasedordisposed.TheComprehensiveEnvironmentalResponse,Compensat

253、ionandLiabilityAct,asamended(“CERCLA”),alsoreferredtoastheSuperfundlawandcomparablestatelawsimposeliability,withoutregardtofaultorthelegalityoftheoriginalconduct,oncertainclassesofpersonsdeemed“responsibleparties.”Thesepersonsincludecurrentownersoroperatorsofthesitewhereareleaseofhazardoussubstances

254、occurred,priorownersoroperatorsthatownedoroperatedthesiteatthetimeofthereleaseordisposalofhazardoussubstancesandcompaniesthatdisposedorarrangedforthedisposalofthehazardoussubstancesfoundatthesite.UnderCERCLA,thesepersonsmaybesubjecttostrictandjointandseveralliabilityforthecostsofcleaningupthehazardo

255、ussubstancesthathavebeenreleasedintotheenvironment,fordamagestonaturalresourcesandforthecostsofcertainhealthstudies.CERCLAalsoauthorizestheEPAand,insomeinstances,thirdpartiestoactinresponsetothreatstothepublichealthortheenvironmentandtoseektorecoverthecoststheyincurfromtheresponsibleclassesofpersons

256、.Despitethe“petroleumexclusion”ofSection101(14)ofCERCLA,whichcurrentlyencompassesnaturalgas,wemaynonethelesshandlehazardoussubstanceswithinthemeaningofCERCLA,orsimilarstatestatutes,inthecourseofourordinaryoperationsandasaresult,maybejointlyandseverallyliableunderCERCLAforallorpartofthecostsrequiredt

257、ocleanupsitesatwhichthesehazardoussubstanceshavebeenreleasedintotheenvironment.Also,comparablestatestatutesmaynotcontainasimilarexemptionforpetroleum,anditisalsonotuncommonforneighboringlandownersandotherthirdpartiestofilecommonlaw-basedclaimsforpersonalinjuryandpropertydamageallegedlycausedbyhazard

258、oussubstancesorotherpollutantsreleasedintotheenvironment.Inaddition,wemayhaveliabilityforreleasesofhazardoussubstancesatourpropertiesbypriorownersoroperatorsorotherthirdparties.TheOilPollutionActof1990(“OPA”)istheprimaryfederallawimposingoilspillliability.TheOPAcontainsnumerousrequirementsrelatingto

259、thepreventionofandresponsetopetroleumreleasesintowatersoftheUnitedStates,includingtherequirementthatoperatorsofoffshorefacilitiesandcertainonshorefacilitiesnearorcrossingwaterwaysmustmaintaincertainsignificantlevelsoffinancialassurancetocoverpotentialenvironmentalcleanupandrestorationcosts.UndertheO

260、PA,strict,jointandseveralliabilitymaybeimposedon“responsibleparties”forallcontainmentandcleanupcostsandcertainotherdamagesarisingfromarelease,including,butnotlimitedto,thecostsofrespondingtoareleaseofoiltosurfacewatersandnaturalresourcedamagesresultingfromoilspillsintooruponnavigablewaters,adjoining

261、shorelinesorintheexclusiveeconomiczoneoftheUnitedStates.A“responsibleparty”includestheowneroroperatorofanonshorefacility.TheOPAestablishesaliabilitylimitforonshorefacilities,buttheseliabilitylimitsmaynotapplyif:aspilliscausedbyapartysgrossnegligenceorwillfulmisconduct;thespillresultedfromviolationof

262、afederalsafety,constructionoroperatingregulation;orapartyfailstoreportaspillortocooperatefullyinaclean-up.Wearealsosubjecttoanalogousstatestatutesthatimposeliabilitieswithrespecttooilspills.Forexample,theCaliforniaDepartmentofFishandWildlifesOfficeofOilSpillPreventionandResponsehaveadoptedoil-spillp

263、reventionregulationsthatoverlapwithfederalregulations.Wealsogeneratesolidwastes,includinghazardouswastes,whicharesubjecttotherequirementsoftheResourceConservationandRecoveryAct,asamended(“RCRA”),andcomparablestatestatutes.AlthoughRCRAregulatesbothsolidandhazardouswastes,itimposesstringentrequirement

264、sonthegeneration,storage,treatment,transportationanddisposalofhazardouswastes.CertainpetroleumproductionwastesareexcludedfromRCRAshazardouswasteregulations.Thesewastes,instead,areregulatedunderRCRAslessstringentsolidwasteprovisions,statelawsorotherfederallaws.Itispossiblethatthesewastes,whichcouldin

265、cludewastescurrentlygeneratedduringouroperations,couldbedesignatedas“hazardouswastes”inthefutureand,therefore,besubjecttomorerigorousandcostlydisposalrequirements.Indeed,legislationhasbeenproposedfromtimetotimeinCongresstore-categorizecertainoilandgasexplorationandproductionwastesas“hazardouswastes.

266、”Also,inDecember2016,theEPAenteredintoaconsentdecreerequiringittoreviewitsregulationofoilandgaswaste.InApril2019,theEPAdeterminedthatrevisionstotheRCRAregulationswerenotrequired,concludingthatanyadverseeffectsrelatedtooilandgaswastearemoreappropriatelyandreadilyaddressedwithintheframeworkofexistings

267、tateregulatoryprograms.However,anysuchchangestostateprogramscouldresultinanincreaseinourcoststomanageanddisposeofoilandgaswaste,whichcouldhaveamaterialadverseeffectonourmaintenancecapitalexpendituresandoperatingexpenses.Itispossiblethatouroilandnaturalgasoperationsmayrequireustomanagenaturallyoccurr

268、ingradioactivematerials(“NORM”).NORMispresentinvaryingconcentrationsinsub-surfaceformations,includinghydrocarbonreservoirs,andmaybecomeconcentratedinscale,filmandsludgeinequipmentthatcomesintocontactwithcrudeoilandnaturalgasproductionandprocessingstreams.Somestateshaveenactedregulationsgoverningtheh

269、andling,treatment,storageanddisposalofNORM.Administrative,civilandcriminalpenaltiescanbeimposedforfailuretocomplywithhazardoussubstanceandwastehandlingrequirements.WebelievethatweareinsubstantialcompliancewiththerequirementsofCERCLA,OPA,RCRA,andotherapplicablefederalandrelatedstateandlocallawsandreg

270、ulations,andthatweholdallnecessaryandup-to-datepermits,registrationsandotherauthorizationsrequiredundersuchlawsandregulations.Althoughwebelievethatthecurrentcostsofmanagingourhazardoussubstancesandwastesastheyarepresentlyclassifiedarereflectedinourbudget,anylegislativeorregulatoryreclassificationofo

271、ilandnaturalgasexplorationandproductionwastescouldincreaseourcoststomanageanddisposeofsuchwastes.22Water DischargesTheFederalWaterPollutionControlAct(the“CleanWaterAct”),theSafeDrinkingWaterAct(“SDWA”),theOPAandanalogousstatelaws,imposerestrictionsandstrictcontrolswithrespecttothedischargeofpollutan

272、ts,includingoilandhazardoussubstances,intonavigablewatersoftheUnitedStates,aswellasstatewaters.Thedischargeofpollutantsintoregulatedwatersisprohibited,exceptinaccordancewiththetermsofapermitissuedbytheEPAorananalogousstateagency.Theselawsandregulationsalsoprohibitcertainactivityinwetlandsunlessautho

273、rizedbyapermitissuedbytheU.S.ArmyCorpsofEngineers(“Corps”).InJune2015,theEPAandtheCorpsissuedaruletorevisethedefinitionof“watersoftheUnitedStates”(“WOTUS”)forallCleanWaterActprograms,whichwasrepealedbytheEPAonOctober22,2019andbecameeffectiveinDecember2019.InJanuary2020,theEPAandtheCorpsannouncedthef

274、inalrule,theNavigableWaterProtectionRule(“NWPR”),revisingthedefinitionofWOTUS,whichwaspublishedinApril2020andwentintoeffectinJune2020.Thenewdefinitionnarrowsthescopeofwatersthatarecoveredasjurisdictional.SeveralgroupshavealreadychallengedtheNWPR.AtPresidentBidensdirection,theEPAandtheCorpsrequestedt

275、helitigationbestayedwhiletheagenciesreviewtheNWPR.Asaresult,futureimplementationisuncertainatthistime.TotheextentastayofthisruleortheimplementationofarevisedruleexpandsthescopeoftheCleanWaterActsjurisdiction,orimpactsavailableagencyresources,theCompanycouldfaceincreasedcostsand/ordelayswithrespectto

276、obtainingpermitsfordredgeandfillactivitiesinwetlandareas.TheEPAhasalsoadoptedregulationsrequiringcertainoilandnaturalgasexplorationandproductionfacilitiestoobtainindividualpermitsorcoverageundergeneralpermitsforstormwaterdischarges.Costsmaybeassociatedwiththetreatmentofstormwaterordevelopingandimple

277、mentingstormwaterpollutionpreventionplans,aswellasformonitoringandsamplingthestormwaterrunofffromcertainofourfacilities.Somestatesalsomaintaingroundwaterprotectionprogramsthatrequirepermitsorspecifyotherrequirementsfordischargesoroperationsthatmayimpactgroundwaterconditions.Thesesameregulatoryprogra

278、msmayalsolimitthetotalvolumeofwaterthatcanbedischarged,hencelimitingtherateofdevelopmentandrequiringustoincurcompliancecosts.Additionally,wearerequiredtodevelopandimplementspillprevention,controlandcountermeasureplans,inconnectionwithon-sitestorageofsignificantquantitiesofoil.Theselawsandanyimplemen

279、tingregulationsprovideforadministrative,civilandcriminalpenaltiesforanyunauthorizeddischargesofoilandothersubstancesinreportablequantitiesandmayimposesubstantialpotentialliabilityforthecostsofremoval,remediationanddamages.Additionally,obtainingpermitshasthepotentialtodelaythedevelopmentofnaturalgasa

280、ndoilprojects.Wemaintainallrequireddischargepermitsnecessarytoconductouroperationsandwebelieveweareinsubstantialcompliancewiththeirterms.Inaddition,insomeinstances,theoperationofundergroundinjectionwellsforthedisposalofwastewaterhasbeenallegedtocauseearthquakes.Forexample,inFebruary2015,theEPAreleas

281、edareportwithfindingsandrecommendationsrelatedtopublicconcernaboutinducedseismicactivityfromdisposalwells.Thereportrecommendsstrategiesformanagingandminimizingthepotentialforsignificantinjection-inducedseismicevents.Insomejurisdictions,suchissueshaveledtoordersprohibitingcontinuedinjectionorthesuspe

282、nsionofdrillingincertainwellsidentifiedaspossiblesourcesofseismicactivityorresultedinstricterregulatoryrequirementsrelatingtothelocationandoperationofundergroundinjectionwells.Suchissueshavealsoledtolawsuitsbyprivatepartiesallegingdamagesrelatingtoinducedseismicity.Forexample,theRailroadCommissionof

283、Texas(the“Commission”)requiresapplicantsfornewdisposalwellsthatwillreceivenon-hazardousproducedwaterandhydraulicfracturingflowbackfluidtoconductseismicactivitysearchesutilizingtheU.S.GeologicalSurvey,whichareintendedtodeterminethepotentialforearthquakeswithinacircularareaof100squaremilesaroundapropo

284、sed,newdisposalwell.TheCommissionisauthorizedtomodify,suspendorterminateadisposalwellpermitifscientificdataindicatesadisposalwellislikelytocontributetoseismicactivity.TheCommissionisalsoconsideringnewrestrictionsthatcouldlimitthevolumeandpressureofproducedwaterinjectedintodisposalwells.Additionally,

285、weconductoilandgasdrillingandproductionoperationsintheMississippianLimeformationinOklahoma,ahigh-waterplay,whichrequiresustodisposeoflargevolumesofsaltwatergeneratedaspartofouroperations.In2015,theOklahomaGeologicalSurveyattributedanincreaseinseismicactivityinOklahomatosaltwaterdisposalwellsintheArb

286、uckleformation.Aroundthesametime,theOklahomaCorporationCommission(“OCC”),whoseOilandGasConservationDivisionregulatesoilandgasoperationsinOklahoma,beganissuingregulationstargetingsaltwaterdisposalactivitiesincertainareasofinterestwithintheArbuckleformation.Theregulationsincludeoperationalrequirements

287、(i.e.,mechanicalintegritytestingofwellspermittedfordisposalof20,000ormorebarrelsofwaterperday,dailymonitoringandrecordingofwellpressureanddischargevolume),aswellasorderstoshut-inwells,reducewelldepths,ordecreasedisposalvolumes.Undertheseregulations,in2016and2017,theOCCorderedustolimitthevolumeofsalt

288、waterdisposedofinsaltwaterdisposalwellsintheArbuckleformation,anditestablishedcapsfortenofoursaltwaterdisposalwellsinFebruary2017.Toensurethatwehadanadequatenumberofwellsfordisposal,wesecuredpermitsforadditionalsaltwaterdisposalwellsoutsideoftheArbuckleformation.WetimelysatisfiedallOCCsaltwaterdispo

289、salrequirements,whilemaintainingourproductionbasewithoutanynegativematerialimpact.However,anyfutureordersorregulationsaddressingconcernsaboutseismicactivityfromwellinjectioninjurisdictionswhereweoperatecouldaffectorcurtailouroperations.23Hydraulic FracturingWeusehydraulicfracturingextensivelyinouron

290、shoreoperations,butnotouroffshoreoperations.Hydraulicfracturingisanessentialandcommonpracticeintheoilandgasindustryusedtostimulateproductionofnaturalgasand/oroilfromlowpermeabilitysubsurfacerockformations.Hydraulicfracturinginvolvesusingwater,sandandcertainchemicalstofracturethehydrocarbon-bearingro

291、ckformationtoallowflowofhydrocarbonsintothewellbore.Whilehydraulicfracturinghashistoricallybeenregulatedbystateoilandnaturalgascommissions,thepracticehasbecomeincreasinglycontroversialincertainpartsofthecountry,resultinginincreasedscrutinyandregulation.InJune2016,theEPAfinalizedwastewaterpretreatmen

292、tstandardsthatprohibitonshoreunconventionaloilandnaturalgasextractionfacilitiesfromsendingwastewatertopublicly-ownedtreatmentworks.InJuly2019,afteralegalchallengebyenvironmentalgroups,theEPAdeclinedtorevisetheserules,and,forcertainfacilities,compliancewasrequiredbyAugust2019.Thisrestrictionofdisposa

293、loptionsforhydraulicfracturingwasteandotherchangestoenvironmentalrequirementsmayresultinincreasedcosts.Inaddition,inMarch2015,theBLMpublishedafinalrulegoverninghydraulicfracturingonfederalandIndianlands.Therulerequiredpublicdisclosureofchemicalsusedinhydraulicfracturing,implementationofacasingandcem

294、entingprogram,managementofrecoveredfluidsandsubmissiontotheBLMofdetailedinformationabouttheproposedoperation,includingwellboregeology,thelocationoffaultsandfracturesandthedepthsofallusablewater.Followingyearsoflitigation,theBLMrescindedtheruleinDecember2017.However,severalenvironmentalgroupsandstate

295、shavechallengedtheBLMsrescissionoftheruleinongoinglitigation.Severalstateshavealsoadopted,orareconsideringadopting,regulationsrequiringthedisclosureofthechemicalsusedinhydraulicfracturingand/orotherwiseimposingadditionalrequirementsforhydraulicfracturingactivities.Forexample,Oklahomarequiresoilandga

296、sproducerstoreportthechemicalstheyuseinhydraulicfracturingtoFracFocus.org,anationalhydraulicfracturingchemicalregistry,ortotheOCC,whichwillconveytheinformationtoFracFocus.org.TheLouisianaDepartmentofNaturalResourceshasadoptedrulesrequiringthepublicdisclosureofthecompositionandvolumeoffracturingfluid

297、susedinhydraulicfracturingoperations.Also,TexasrequiresoilandnaturalgasoperatorstodisclosetotheCommissionandthepublicthechemicalsusedinthehydraulicfracturingprocess,aswellasthetotalvolumeofwaterused.Texashasalsoimposedrequirementsfordrilling,puttingpipedownandcementingwells,andtestingandreportingreq

298、uirements.Certaingovernmentalreviewshavebeenconductedthatfocusonenvironmentalaspectsofhydraulicfracturingpractices,whichcouldleadtoincreasedregulation.Forexample,inDecember2016,theEPAreleasedastudyexaminingthepotentialforhydraulicfracturingactivitiestoimpactdrinkingwaterresources,findingthat,underso

299、mecircumstances,theuseofwaterinhydraulicfracturingactivities canimpactdrinkingwaterresources.TheEPAhasalsoissuedadraftstudyofonshoreconventionalandunconventionaloilandgasextraction wastewatermanagement,andconductedastudyofprivatewastewatertreatmentfacilities,alsoknownascentralizedwastetreatmentfacil

300、ities,acceptingoilandgasextractionwastewater.Othergovernmentalagencies,includingtheU.S.DepartmentofEnergy,theU.S.GeologicalSurvey,andtheU.S.GovernmentAccountabilityOffice,haveevaluatedvariousotheraspectsofhydraulicfracturing.Inaddition,asdiscussedabove,BOEMandBSEEcompletedastudyinMay2016regardingthe

301、potentialenvironmentalimpactsofwell-stimulationpracticesonthePacificOCS.Thesestudiescouldspurinitiativestofurtherregulatehydraulicfracturingandcouldultimatelymakeitmoredifficultorcostlyforustoperformfracturingandincreaseourcostsofcomplianceanddoingbusiness.Additionally,anumberoflawsuitsandenforcemen

302、tactionshavebeeninitiatedacrossthecountryallegingthathydraulicfracturingpracticeshaveinducedseismicactivityandadverselyimpacteddrinkingwatersupplies,useofsurfacewater,andtheenvironmentgenerally.Severalstatesandmunicipalitieshaveadopted,orareconsideringadopting,regulationsthatcouldrestrictorprohibith

303、ydraulicfracturingincertaincircumstances.Webelievethatwefollowstandardindustrypracticesandlegalrequirementsapplicabletoourhydraulicfracturingactivities.Nonetheless,intheeventofnewormorestringentfederal,stateorlocallegalrestrictionsareadoptedinareaswherewearecurrentlyconducting,orinthefutureplantocon

304、ductoperations,wemayincuradditionalcoststocomplywithsuchrequirementsthatmaybesignificantinnature,experiencedelaysorcurtailmentinthepursuitofexploration,development,orproductionactivities,andperhapsevenbeprecludedfromthedrillingofwells.Ifnewlawsorregulationsthatsignificantlyrestricthydraulicfracturin

305、gareadopted,suchlawscouldmakeitmoredifficultorcostlyforustoperformfracturingtostimulateproductionfromtightformationsaswellasmakeiteasierforthirdpartiesopposingthehydraulicfracturingprocesstoinitiatelegalproceedingsbasedonallegationsthatspecificchemicalsusedinthefracturingprocesscouldadverselyaffectg

306、roundwaterorotherwisehavenegativeimpacts.24Inaddition,ifhydraulicfracturingisfurtherregulatedatthefederal,stateorlocallevel,ourfracturingactivitiescouldbecomesubjecttoadditionalpermittingandfinancialassurancerequirements,morestringentconstructionspecifications,increasedmonitoring,reportingandrecordk

307、eepingobligations,pluggingandabandonmentrequirementsandalsotoattendantpermittingdelaysandpotentialincreasesincosts.Forexample,theU.S.CongresshasfromtimetotimeconsideredlegislationtoamendtheSDWA,includinglegislationthatwouldrepealtheexemptionforhydraulicfracturingfromthedefinitionof“undergroundinject

308、ion”andrequirefederalpermittingandregulatorycontrolofhydraulicfracturing,aswellaslegislativeproposalstorequiredisclosure ofthechemical constituents ofthefluids usedinthefracturing process.Suchlegislative changescouldcauseustoincursubstantial compliance costs,andcompliance ortheconsequencesofanyfailu

309、retocomplybyuscouldhaveamaterialadverseeffectonourfinancialconditionandresultsofoperations.Atthistime,itisnotpossibletoestimatetheimpactonourbusinessofnewlyenactedorpotentialfederalorstatelegislationgoverninghydraulicfracturing,andanyoftheaboveriskscouldimpairourabilitytomanageourbusinessandhaveamat

310、erialadverseeffectonouroperations,cashflowsandfinancialposition.Air EmissionsThefederalCleanAirAct,asamended(“CAA”),andcomparablestatelawsrestricttheemissionofairpollutantsfrommanysources,includingcompressorstations,throughtheissuanceofpermitsandtheimpositionofotherrequirements.TheSouthCoastAirQuali

311、tyManagementDistrict(“SCAQMD”)isaregulatorysubdivisionoftheStateofCaliforniaandresponsibleforairpollutioncontrolfromstationarysourceswithinOrangeCountyanddesignatedportionsofLosAngeles,Riverside,andSanBernardinoCounties.OurBetaPropertiesandassociatedfacilitiesaresubjecttoregulationbytheSCAQMD.Federa

312、l,SCAQMD,andotherstatelawsandregulationsmayrequireustoobtainpre-approvalfortheconstructionormodificationofcertainprojectsorfacilitiesexpectedtoproduceorsignificantlyincreaseairemissions,obtainandstrictlycomplywithstringentairpermitrequirementsorutilizespecificequipmentortechnologiestocontrolemission

313、sofcertainpollutants.TheNewSourcePerformanceStandards(“NSPS”)andNationalEmissionStandardsforHazardousAirPollutants(“NESHAP”)programsundertheCAAimposespecificrequirementsaffectingtheoilandgasindustryforemissionsfromcompressors,controllers,dehydrators,storagevessels,naturalgasprocessingplants,completi

314、onsandcertainotherequipment.Periodicreviewandrevisionoftheserulesbyfederalandstateagenciesmayrequirechangestoouroperations,includingpossibleinstallationofnewequipmenttocontrolemissions.Wecontinuouslyevaluatetheeffectofnewrulesonourbusiness.Forexample,inAugust2019,theEPAissuedaproposedruletorescindth

315、emethanerequirementsforcertainsourcesintheproductionandprocessingsegmentsoftheoilandgasindustry;therulemaking,knownastheReconsiderationRule,wasfinalizedinSeptember2020.OnJanuary20,2021,PresidentBidenissuedanExecutiveOrderdirectingtheEPAtorescindtheReconsiderationrulebySeptember2021.Separately,inSept

316、ember2020,theEPAfinalizedtheReviewRulerescindingrequirementsrelatedtotheregulationsofmethaneemissionsfromtheoilandnaturalgasindustry.Bothrulesaresubjecttoongoinglitigation;therefore,thescopeoffutureobligationscontinuestoremainuncertain.Similarly,inSeptember2018,theBLMissuedarulethatrelaxesorrescinds

317、certainrequirementsofregulationsitpreviouslyenactedtoreducemethaneemissionsfromventing,flaring,andleaksduringoilandgasoperationsonpubliclands;thisrulewasinvalidatedinfederaldistrictcourt.AnyfuturechangestotheNSPSandNESHAPprograms,andotherairqualityprograms,mayrequireustoobtainpre-approvalfortheexpan

318、sionormodificationofexistingfacilitiesortheconstructionofnewfacilitiesexpectedtoproduceairemissions,imposestringentairpermitrequirements,orutilizespecificequipmentortechnologiestocontrolemissions.Compliancewithsuchrulescouldresultinsignificantcosts,includingincreasedcapitalexpendituresandoperatingco

319、stsandcouldadverselyimpactourbusiness.Wemayberequiredtoincurcertaincapitalexpendituresinthenextfewyearsforairpollutioncontrolequipmentinconnectionwithmaintainingorobtainingoperatingpermitsaddressingairemissionrelatedissues,whichmayhaveamaterialadverseeffectonouroperations.Obtainingpermitsalsohasthep

320、otentialtodelaythedevelopmentofoilandnaturalgasprojectsandincreaseourcostsofdevelopment,whichcostscouldbesignificant.Webelievethatwecurrentlyareinsubstantialcompliancewithallairemissionsregulationsandthatweholdallnecessaryandvalidconstructionandoperatingpermitsforourcurrentoperations.Regulation of“G

321、reenhouse Gas”EmissionsInresponsetofindingsthatemissionsofcarbondioxide,methaneandothergreenhousegases(“GHGs”)presentanendangermenttopublichealthandtheenvironment,theEPAhasadoptedandimplementedregulationstorestrictemissionsofGHGsunderexistingprovisionsoftheCAA.Forexample,theEPA,aswellastheBLM,haveis

322、suedrulestoreducemethaneemissionsfromoilandnaturalgasproductionandprocessingoperations,whichregulationsarediscussedinmoredetailaboveunderthecaption“AirEmissions.”Severalstatesarepursuingsimilarmeasurestoregulateemissionsofmethanefromnewandexistingsourceswithintheoilandnaturalgassourcecategory.Inaddi

323、tion,theEPAhasadoptedregulationsrequiringthemonitoringandannualreportingofGHGemissionsfromspecifiedsourcesintheUnitedStates,including,amongothers,certainoilandnaturalgasproductionfacilities,whichincludecertainofouroperations.Theadoptionandimplementationofanyregulationsimposingreportingobligationson,

324、orlimitingemissionsofGHGsfrom,ourequipmentandoperationscouldrequireustoincurcoststoreduceemissionsofGHGsassociatedwithouroperationsorcouldadverselyaffectdemandfortheoilandnaturalgasweproduce.Suchclimatechangeregulatoryandlegislativeinitiativescouldhaveamaterialadverseeffectonourbusiness,financialcon

325、ditionandresultsofoperations.25WhileCongresshasfromtimetotimeconsideredlegislationtoreduceemissionsofGHGs,therehasnotbeensignificantactivityintheformofadoptedlegislationtoreduceGHGemissionsatthefederallevelinrecentyears.Intheabsenceofsuchfederalclimatelegislation,anumberofstateshavetakenlegalmeasure

326、storeduceemissionsofGHGs,includingthroughtheplanneddevelopmentofGHGsemissioninventoriesand/orregionalGHGscapandtradeprograms.Inaddition,onaninternationallevel,theUnitedStateswasoneofnearly200countriestosignaninternationalclimatechangeagreementinParis,FrancethatrequiresmembercountriestosettheirownGHG

327、emissionreductiongoalsbeginningin2020.However,theUnitedStatesformallyannounceditsintenttowithdrawfromtheParisAgreementinNovember2019,whichbecameeffectiveinNovember2020.OnJanuary20,2021,PresidentBidenissuedwrittennotificationtotheUnitedNationsoftheUnitedStatesintentiontorejointheParisAgreement,whichw

328、illbecomeeffectiveonFebruary19,2021.Inaddition,variousstatesandlocalgovernmentsvowedtocontinuetoenactregulationstoachievethegoalsoftheParisAgreement.RestrictionsonGHGemissionsthatmaybeimposedcouldadverselyaffecttheoilandnaturalgasindustry.AnyGHGregulationcouldincreaseourcostsofcompliancebypotentiall

329、ydelayingthereceiptofpermitsandotherregulatoryapprovals;requiringustomonitoremissions,installadditionalequipmentormodifyfacilitiestoreduceGHGandotheremissions;purchaseemissioncredits;andutilizeelectricdrivencompressionatfacilitiestoobtainregulatorypermitsandapprovalsinatimelymanner.Whilewearesubject

330、tocertainfederalGHGmonitoringandreportingrequirements,ouroperationsarenotadverselyimpactedbyexistingfederal,stateandlocalclimatechangeinitiativesand,atthistime,itisnotpossibletoaccuratelyestimatehowpotentialfuturelawsorregulationsaddressingGHGemissionswouldimpactourbusiness.Inaddition,claimshavebeen

331、madeagainstcertainenergycompaniesallegingthatGHGemissionsfromoilandnaturalgasoperationsconstituteapublicnuisanceorhavecausedotherredressableinjuriesunderfederaland/orstatecommonlaw.Whileourbusinessisnotapartytoanysuchlitigation,wecouldbenamedinactionsmakingsimilarallegations.Anunfavorablerulinginany

332、suchcasecouldadverselyimpactourbusiness,financialconditionandresultsofoperations.Moreover,anylegislationorregulatoryprogramstoreduceGHGemissionscouldincreasethecostofconsuming,andtherebyreducedemandfor,theoilandnaturalgasweproduce.Consequently,legislationandregulatoryprogramstoreduceemissionsofGHGsc

333、ouldhaveanadverseeffectonourbusiness,financialconditionandresultsofoperations.Incentivestoconserveenergyorusealternativeenergysourcesasameansofaddressingclimatechangecouldalsoreducedemandfortheoilandnaturalgasweproduce.Inaddition,partiesconcernedaboutthepotentialeffectsofclimatechangehavedirectedtheirattentionatsourcesoffundingforenergycompanies,whichhasresultedincertainfinancialinstitutions,funds