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Item 1A Risk Factors
We are subject to various risks and uncertainties in the course of our business. A discussion of such risks and uncertainties may be found under the heading Risk Factors in our 2023 Annual Report. Except as set forth below, there were no material changes to those risk factors during the three months ended JuneSeptember 30, 2024.
IWe may face increases in prices for commodities used id local restrictions on our oil and natural gas opeexplorations may neg and production operatively affect our financial results.
Oons or even be prohibited from operating and capital costs in the oil and natural gas industry are heaviin certain areas as a result of recently enacted California legislation.
On September 25, 2024, Assembly influencBill 3233 (AB 3233) was enacted by commodity prices, including the prices we pay which authorizes local governments to limit methods for electricity, natural gas a, or even prohibit, oil and steel-based materials. Fgas operations or example, we use natural gas in our odevelopment within their jurisdiction, including with respect to existing operations . Prior to generate steam for use the passage of this law, certain steamfloods. Following the closing of the Aera Merger on Julocal governments within California had previously 1, 2024, we expect that our consumptaken steps to limit oil and gas operation of natural gas will increase significants that were struck down by California courts. Monterey County previously and could exceed tsought to ban only new production and prohibit the amountuse of natural gwastewater injection as wea produce. We also use electricition method. The City generated band County our Elk Hillf Los Angeles power planreviously sought to power our oilboth ban new wells and gas operations in the Elk Hills field. If we are unable to generate sufficient natural gas or electricity for use phaseout existing wells over a certain period of time. Although both those local measures were struck down in cour operat, following the adoptions, we may nee of AB 3233, certain legal arguments used to purchasellenge these commodities from third parties. Increases in local actions are no longer valid and it is possible that these or othe volumes or prir local governments in places of commodities used in owhere we operate may pass similar regulations. For the three months ended September 30, 2024, approximately 12% of our operagross productions could cause is located increases in our operating expenses. We attempt to manage our Los Angeles County and approximately 3% is in Monterey County. It is difficult to predict how local governments in California may choose to exposure to price increases of certain commoditiercise their new authority under AB 3233.
While there may be future legal challenges to AB 3233 and any local ordinances used in our operations, incluenacted thereunder, we cannot predict whether or not such challenges will be successful. Notwithstanding naturany potential gas, by enterclaims for regulatory taking into hedges or longer-term contracts with fixed price arranges we may have in the event local jurisdictions seek to prohibit any of our existing operations, to the extent that the local governments. However, in these m areasures do not fully protect us from the eff where we operate in California enact new restrictions or prohibitions with respects of commodity price to oil and gas exploration and production activities, we could face increases and we may not be able to enter into similar arrangemend operating costs, loss of revenues, and other material and adverse impacts in the future on acceptable termto our business and results or at all. f operations.