As filed with the Securities and Exchange Commission on May 11, 2026.

Registration No. 333-     

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

WhiteHawk Income Corporation

(Exact name of registrant as specified in its charter)*

* WhiteHawk Income Corporation to be renamed WhiteHawk Minerals Corp. in connection with the consummation of this offering.

 

 

 

Delaware		1311		88-0862160
(State or Other Jurisdiction of Incorporation or Organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

 

 

2000 Market Street, Suite 910

Philadelphia, PA 19103

(610) 484-3412

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

 

 

Daniel Herz

Chief Executive Officer

2000 Market Street, Suite 910

Philadelphia, PA 19103

(610) 484-3412

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)

 

 

Copies to:

 

Ryan J. Maierson Christopher D. Lueking Nick S. Dhesi Latham & Watkins LLP 811 Main Street, Suite 3700 Houston, TX 77002 (713) 546-5400		Barrie Hananel General Counsel 2000 Market Street, Suite 910 Philadelphia, PA 19103 (610) 484-3412		Douglas E. McWilliams Thomas G. Zentner Alexandra M. Lewis Vinson & Elkins L.L.P. 845 Texas Avenue, Suite 4700 Houston, TX 77002 (713) 758-2222

 

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer		☐		Accelerated filer		☐
Non-accelerated filer		☒		Smaller reporting company		☐
				Emerging growth company		☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

 

 

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

Building the Premier Natural Gas Mineral Company APPALACHIA HAYNESVILLE EQTANTE RORAN GECNX EXPAND OTHER EXPAND MITS UBIS HI COM STOCK TRINITY TOKYO GAS OTHER APPALACHIA & HAYNESVILLE MAP 8,700+ gross undeveloped locations 10,000+ producing wells ~13% exposure to all 2025 U.S. dry gas production 8 large acquisitions since inception 3.4MM+ gross DSU acre position 2025 PRODUCTION EXPOSURE BY OPERATOR 86452-044 07May26 20:02 Page 3

TABLE OF CONTENTS

 

		Page
ABOUT THIS PROSPECTUS			iii
PROSPECTUS SUMMARY			1
RISK FACTORS			34
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS			76
OUR ORGANIZATIONAL STRUCTURE			79
USE OF PROCEEDS			83
DIVIDEND POLICY			84
CAPITALIZATION			85
DILUTION			87
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED COMBINED FINANCIAL INFORMATION			89
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			95
BUSINESS			110
MANAGEMENT			141
EXECUTIVE AND DIRECTOR COMPENSATION			146
PRINCIPAL STOCKHOLDERS			155
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS			157
DESCRIPTION OF MATERIAL INDEBTEDNESS			167
DESCRIPTION OF CAPITAL STOCK			174
SHARES ELIGIBLE FOR FUTURE SALE			182
MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR NON-U.S. HOLDERS OF COMMON STOCK			184
UNDERWRITING			188
LEGAL MATTERS			196
EXPERTS			196
CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM			197
WHERE YOU CAN FIND MORE INFORMATION			198
INDEX TO FINANCIAL STATEMENTS			F-1
ANNEX A – GLOSSARY OF NATURAL GAS AND OIL TERMS			A-1

 

 

You should rely only on the information contained in this prospectus or in any free writing prospectus we may specifically authorize to be delivered or made available to you. Neither we nor any of the underwriters (or any of our or their respective affiliates) have authorized anyone to provide any information or to make any representations other than those contained in this prospectus, any amendment or supplement to this prospectus or in any free writing prospectus prepared by us or on our behalf or to which we have referred you. Neither we nor the underwriters (or any of our or their respective affiliates) take any responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares of Class A common stock offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. You should assume that the information contained in this prospectus or any free writing prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or the time of any sale of shares of our Class A common stock. Our business, financial condition, results of operations and prospects may have changed since that date.

For investors outside the United States: Neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside of the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of the shares of our Class A common stock and the distribution of this prospectus outside of the United States.

Through and including    , 2026 (25 days after the date of this prospectus), all dealers effecting transactions in our Class A common stock, whether or not participating in this offering, may be required to deliver a prospectus. This requirement is in addition to the dealers’ obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.

ABOUT THIS PROSPECTUS

Organizational Structure

In connection with the closing of this offering, we will undertake certain organizational transactions to reorganize our corporate structure. Unless otherwise stated or the context otherwise requires, all information in this prospectus reflects the consummation of the organizational transactions described in the section titled “Our Organizational Structure” and this offering, and the application of the proceeds therefrom, which we refer to collectively as the “Transactions.” Additionally, unless otherwise indicated, share amounts in this prospectus reflecting the consummation of the Transactions do not give effect to OpCo Interests or shares of our Class B common stock that may be issued as a part of the Earnout Amount (as defined herein), as more fully described in the section titled “Certain Relationships and Related Party Transactions—Internalization—Earnout.”

See “Our Organizational Structure” for a diagram depicting our organizational structure after giving effect to the Transactions, including this offering.

Certain Definitions

As used in this prospectus, unless the context otherwise requires, references to:

 

•

“Contribution Agreement” refers to the contribution agreement we will enter into with WhiteHawk OpCo, the Management Contributor, ManagementCo, WhiteHawk Energy LLC and WhiteHawk Energy Services LLC to effectuate the acquisition of ManagementCo, our current external manager, by WhiteHawk OpCo (the “Internalization”).

 

•

“Continuing Equity Owners” refers collectively to the Management Owners who will be holders of OpCo Interests (together with a corresponding number of shares of Class B common stock) immediately following consummation of the Transactions, who may, following the consummation of this offering, exchange at each of their respective options, in whole or in part from time to time, their OpCo Interests (together with a corresponding number of shares of Class B common stock), for, at our election (determined solely by our independent directors (within the meaning of the NYSE rules) who are disinterested), cash or newly-issued shares of our Class A common stock as described in “Certain Relationships and Related Person Transactions—OpCo Agreement—Agreement in Effect Upon Consummation of the Transactions.”

 

•

“Exchange” or “NYSE” refers to the New York Stock Exchange.

 

•

“Legacy Common Stock Investors” refers, collectively, to the holders of shares of Class A common stock, par value $0.0001 per share, Class I common stock, par value $0.0001 per share, and Class T common stock, par value $0.0001 per share, but excludes Continuing Equity Owners.

 

•

“OpCo Interests” refers to the common units of WhiteHawk Income Operating Partnership L.P., including those that we purchase with the net proceeds from this offering.

 

•

“Management Contributor” refers to WhiteHawk Minerals LLC.

 

•

“Management Owners” refers collectively to the direct and indirect owners of WhiteHawk Management, LLC (“ManagementCo”, “WHIC Manager” or “WhiteHawk Management”) prior to the consummation of the Transactions). Management Owners may also be Continuing Equity Owners. See “Certain Relationships and Related Person Transactions—Contribution Agreement.”

 

•

“OpCo Agreement” refers, as applicable, to WhiteHawk OpCo’s amended and restated limited partnership agreement, as currently in effect, or to the amended and restated limited partnership agreement effective immediately prior to the consummation of this offering, and as such agreement may thereafter be amended and/or restated.

 

•

“Transactions” refers to the organizational transactions described in the section titled “Our Organizational Structure” and this offering, and the application of the net proceeds therefrom.

 

iii

•

“we,” “us,” “our,” the “Company,” “WhiteHawk,” and similar references refer to, prior to this offering, WhiteHawk Income Corporation, and after this offering, WhiteHawk Minerals Corp., and, unless otherwise stated, in each case, all of its direct and indirect subsidiaries, including OP GP and WhiteHawk OpCo.

We are a holding company and the sole member of WhiteHawk Income OP GP LLC (“OP GP”), the sole general partner of WhiteHawk OpCo. As the sole member of OP GP, we control the business and affairs of WhiteHawk OpCo.

Presentation of Financial Results

WhiteHawk Income Corporation (“WhiteHawk,” the “Company,” “we,” “us” and “our”) was formed in February 2022. On June 23, 2025, pursuant to that certain Agreement and Plan of Merger, dated as of May 8, 2025 (the “PHX Merger Agreement”), by and among WhiteHawk Acquisition, Inc., a Delaware corporation and wholly owned subsidiary of the Company (“WH Acquisition Corp.”), WhiteHawk Merger Sub, Inc., a Delaware corporation (“Merger Sub” and, together with WH Acquisition Corp., the “Company Parties”) and PHX Minerals, Inc. (“PHX”), the Company Parties fully acquired all of the issued and outstanding shares of PHX’s common stock (the “PHX Acquisition”). On March 31, 2025, the Company purchased mineral and royalty interests in the Marcellus Shale (the “Three Rivers Royalty Acquisition” or the “TRR Acquisition”) from Three Rivers Royalty, LLC (the “TRR Seller”). Prior to the Three Rivers Royalty Acquisition, the TRR Seller was a wholly owned subsidiary of San Jacinto Minerals I, LLC (“SJM”).

This prospectus includes historical consolidated financial information of the Company and its subsidiaries as of December 31, 2025 (as restated) and 2024. This prospectus also includes historical financial information of PHX for the years ended December 31, 2024 and 2023 and the three months ended March 31, 2025 and 2024, as well as the carve-out financial statement information of the TRR Seller for the years ended December 31, 2024 and 2023. Historical financial and operating information is not indicative of the results that may be expected in any future periods. For more information, please see the historical consolidated financial statements and related notes thereto included elsewhere in this prospectus. Unless otherwise indicated, the historical financial information presented in this prospectus represents the historical data and information of WhiteHawk, without giving effect to the PHX Acquisition for periods prior to June 23, 2025, the Three Rivers Royalty Acquisition for periods prior to March 31, 2025, the Transactions or other adjustments.

This prospectus also includes certain unaudited pro forma financial information. See “Unaudited Pro Forma Condensed Consolidated Combined Financial Information.” As used herein, except as noted in this prospectus, the term “pro forma” when used with respect to any financial data, refers to the historical data of WhiteHawk, as adjusted after giving effect to (i) the PHX Acquisition, (ii) the Three Rivers Royalty Acquisition and (iii) the Transactions. Pro forma financial data for the year ended December 31, 2025 gives effect to the PHX Acquisition, the Three Rivers Royalty Acquisition and the Transactions as if each had been consummated on January 1, 2025. Pro forma financial data as of December 31, 2025 gives effect to the Transactions as if they had been consummated on December 31, 2025. Pro forma financial data contains certain reclassification adjustments to conform the historical PHX financial statement presentation and the historical TRR Seller financial statement presentation to the Company’s financial statement presentation. The pro forma data is presented for illustrative purposes only and should not be relied upon as an indication of the financial condition or the operating results that would have been achieved if the PHX Acquisition, the Three Rivers Royalty Acquisition and the Transactions had taken place on the specified dates. Future results may vary significantly from the results reflected in such pro forma financial data and should not be relied on as an indication of future results.

Certain monetary amounts, percentages and other figures included in this prospectus have been subject to rounding adjustments. Percentage amounts included in this prospectus have not in all cases been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason, percentage amounts in this prospectus may vary from those obtained by performing the same calculations using the figures

 

iv

in our consolidated financial statements included elsewhere in this prospectus. Certain other amounts that appear in this prospectus may not sum due to rounding.

Restatement

On April 22, 2026, we concluded that our audited consolidated financial statements for the fiscal year ended December 31, 2025 could no longer be relied upon as a result of certain material accounting errors identified by management subsequent to the issuance of our audited consolidated financial statements as of and for the fiscal year ended December 31, 2025. Accordingly, the audited consolidated financial statements as of and for the fiscal year ended December 31, 2025 included elsewhere in this prospectus were restated by the Company in order to reflect the correction of the identified errors (the “Misstatements”) related to (i) the recording of management fees and (ii) the misclassification of pre-closing date and post-effective date monies received related to acquisitions (the “Restatement”). For additional information, see “Note 3, Restatement of Financial Statements” to our audited consolidated financial statements as of and for the fiscal year ended December 31, 2025 included elsewhere in this prospectus and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Internal Controls and Procedures—Material Weaknesses in Internal Control over Financial Reporting.”

Control Considerations

Although management did not, and was not required to, conduct a formal assessment of internal control over financial reporting as of December 31, 2025, as a result of the Misstatements and the Restatement, the Company identified certain material weaknesses in its internal control over financial reporting. As a result of these material weaknesses in internal control over financial reporting, our disclosure controls and procedures were not effective at a reasonable assurance level as of December 31, 2025. Management expects to implement changes to strengthen our internal controls and remediate the material weaknesses. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Internal Controls and Procedures—Material Weaknesses in Internal Control over Financial Reporting” for additional information related to the material weaknesses in internal control over financial reporting and our related remediation activities. See “Risk Factors—Risks Related to Our Business—We recently restated our audited consolidated financial statements as of and for the fiscal year ended December 31, 2025 to correct material accounting errors and have identified material weaknesses in our internal control over financial reporting.”

Reserves Estimates and Acreage Presentation

Unless otherwise indicated, operating and reserve information of the Company presented herein does not give effect to the PHX Acquisition or the Three Rivers Royalty Acquisition for the periods prior to the date of such transactions. We provide estimates of our proved reserves in this prospectus as of December 31, 2025 and 2024 based on SEC pricing, meaning the unweighted first day of the month arithmetic average price of natural gas and oil over the 12 months prior to the determination date. The estimates of our proved reserves as of December 31, 2025 were prepared by Cawley, Gillespie & Associates (“CG&A”), independent petroleum engineers. The estimates of our proved reserves as of December 31, 2024 have been prepared by Schaper Energy Consulting, LLC (“Schaper Energy”), independent petroleum engineers. We refer to Schaper Energy and CG&A as our “reserve engineers.” Summaries of their reports are included as exhibits to the registration statement of which this prospectus forms a part. We refer to such reports herein as “our reserve reports.” The estimates of PHX’s proved reserves as of December 31, 2024 were prepared by CG&A, PHX’s independent petroleum engineer. The estimates of the proved reserves of the TRR Seller as of December 31, 2024 have been prepared by Ryder Scott Company, L.P. (“Ryder Scott”), the TRR Seller’s independent petroleum engineer, at the request of SJM as part of their audit process. For additional information regarding our, PHX’s and TRR Seller’s reserves estimates as of December 31, 2025 and 2024, see “Business—Natural Gas, NGL and Oil Data.”

In this prospectus, references to gross DSU acres include both actual and theoretical DSUs. Theoretical DSUs are drilling spacing units that have not yet been formally established but are internally delineated by our engineering

 

v

and land teams based on operator unitization practices, development patterns in the surrounding area and our reasonable assumptions regarding future well development.

Non-GAAP Financial Measures

This prospectus contains certain financial measures that are not required by or prepared in accordance with generally accepted accounting principles (“GAAP”), including Adjusted EBITDA and Cash Available for Distribution (and their pro forma counterparts). We refer to these measures as “non-GAAP financial measures.” See “Prospectus Summary—Summary Historical and Pro Forma Condensed Consolidated Financial and Other Data—Non-GAAP Financial Measures” for our definitions of these non-GAAP financial measures, information about how and why we use these non-GAAP financial measures and a reconciliation of each of these non-GAAP financial measures to its most directly comparable financial measure calculated in accordance with GAAP.

Trademarks and Trade Names

We own or have rights to various trademarks, service marks and trade names that we use in connection with the operation of our business. This prospectus may also contain trademarks, service marks and trade names of third parties, which are the property of their respective owners. Our use or display of third parties’ trademarks, service marks, trade names or products in this prospectus is not intended to, and does not imply, a relationship with us or an endorsement or sponsorship by or of us. Solely for convenience, the trademarks, service marks and trade names referred to in this prospectus may appear without the TM, SM or ^® symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the right of the applicable licensor to these trademarks, service marks and trade names.

Industry and Market Data

The market data and certain other statistical information used throughout this prospectus are based on independent industry publications, government publications and other published independent sources. These sources include reports entitled: Electric Power Monthly, dated December 2025, (the “EIA Electric Monthly”), Short-Term Energy Outlook, dated December 2025 (the “EIA Short-Term Energy Outlook”), Natural Gas Annual, dated December 2025 (the “EIA Natural Gas Annual”), the Liquefied Natural Gas Monthly, dated December 2025 (the “EIA Natural Gas Monthly”), the Annual Report of Domestic Oil and Gas Reserves, U.S. Crude Oil and Natural Gas Proved Reserves, Year-end 2023, dated December 2025 (the “EIA Reserve Report”), Liquefied U.S. Natural Gas Exports, dated December 2025 (the “EIA Natural Gas Exports”), U.S. Liquefaction Capacity, dated December 2025 (the “EIA Liquefaction Report”), by the Energy Information Administration (the “EIA”), a report entitled 2024 Statistical Review of World Energy (the “World Energy Report”) by the Energy Institute, FactSet International LNG Pricing, dated January 2025 (the “International LNG Report”), FactSet Spot Price, dated December 2025 (the “Spot Price Report”) and Upstream Outlook, dated December 2025 (the “Upstream Outlook Report”) by FactSet, as well as data and analytics derived from Enverus Prism^®, dated December 31, 2025 (the “Enverus Data”). Although we believe these third-party sources are reliable as of their respective dates, neither we nor the underwriters have independently verified the accuracy or completeness of this information. Some data is also based on our good faith estimates. The industry in which we operate is subject to a high degree of uncertainty and risk due to a variety of factors, including those described in the section entitled “Risk Factors.” These and other factors could cause results to differ materially from those expressed in these publications.

Additionally, this prospectus includes industry and market data and forecasts that we obtained from internal company surveys, publicly available information and industry publications and surveys. Our internal research and forecasts are based on management’s understanding of industry conditions, and such information has not been verified by independent sources. Industry publications and surveys generally state that the information contained therein has been obtained from sources believed to be reliable.

 

vi

 

1

 

2

 

3

 

4

 

5

 

6

 

7

 

8

 

9

 

10

 

11

 

12

 

13

 

14

 

15

 

16

 

17

 

18

 

19

 

20

 

21

 

22

 

23

 

24

 

25

 

26

 

27

 

28

 

29

 

30

 

31

 

32

 

33

RISK FACTORS

Investing in our Class A common stock involves a high degree of risk. You should carefully consider each of the following risk factors, as well as other information contained in this prospectus, including the matters addressed under “Cautionary Note Regarding Forward-Looking Statements,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our audited consolidated financial statements and related notes, before investing in our Class A common stock. The occurrence of any of the following risks could have a material adverse effect on our business, financial condition and results of operations, in which case the trading price of our Class A common stock could decline and you could lose all or part of your investment. Some statements in this prospectus, including statements in the following risk factors, constitute forward-looking statements. See the section of this prospectus captioned “Cautionary Note Regarding Forward-Looking Statements.”

Risks Related to Our Business

Our revenues are primarily derived from mineral and royalty payments that are based on the price at which natural gas, NGLs and oil produced by our third-party operators from the acreage underlying our interests are sold. The volatility of these prices due to factors beyond our control could have a material adverse effect on our business, financial condition and results of operations.

The supply of and demand for natural gas, NGLs and oil impact the revenues we realize and, in turn, could materially affect our financial results. Our revenues, operating results, Cash Available for Distribution and the carrying value of our natural gas, NGL and oil properties depend significantly upon the prevailing prices for natural gas, NGLs and oil. Natural gas, NGL and oil prices have historically been, and will likely continue to be, volatile. The prices for natural gas, NGLs and oil are subject to wide fluctuation in response to a number of factors beyond our control, including:

 

•

global economic conditions and market uncertainty;

 

•

changes in the supply of and demand for natural gas, NGLs and oil, both domestically and abroad;

 

•

the level of global natural gas and oil exploration and production;

 

•

commodity futures trading and the level of prices and expectations about future prices of natural gas and oil;

 

•

regional price differentials and differing quality and NGL content of natural gas produced;

 

•

the price and quantity of imports and the level of U.S. exports of natural gas, NGLs and oil, including the export of natural gas as LNG;

 

•

availability and development of liquefication facilities to support LNG export demand;

 

•

actions taken by the Organization of Petroleum Exporting Countries Plus (“OPEC+”) or other major natural gas, NGL and oil producing or consuming countries and the ability of members of OPEC+ to agree to and maintain oil price and production controls;

 

•

technological advancements affecting energy consumption and energy supply, including the development of AI data centers and related demand for natural gas power generation;

 

•

the impact of ongoing conflict and changing sanctions regimes in oil or natural gas producing regions, such as Iran, Russia and Venezuela;

 

•

disruptions to global oil supply and transportation through critical maritime chokepoints, including the Strait of Hormuz, through which a substantial portion of the world’s oil supply transits, due to military conflict, naval blockades, mine deployment, or other hostile actions by state or non-state actors, which could cause significant and rapid fluctuations in global oil prices;

 

•

risks associated with operating drilling rights;

 

34

•

the cost of exploring for, developing, producing and delivering natural gas and oil;

 

•

the proximity, cost, availability and capacity of natural gas, NGLs and oil pipelines and other transportation and processing facilities;

 

•

speculative trading in natural gas and crude oil derivative contracts;

 

•

conservation and environmental protection efforts and the price and availability of, and competition from, alternative fuels;

 

•

events outside of our control such as weather conditions and other natural disasters, the impacts and effects of public health crises, pandemics and epidemics;

 

•

changes in U.S. energy policy and other domestic and foreign governmental regulations, taxes, duties and tariffs; and

 

•

the continued threat of terrorism, social unrest, and political instability or armed conflict in major natural gas and oil producing regions outside the United States and the impact of military and other actions, including, but not limited to, U.S. military operations in the Middle East and Venezuela.

These factors and the volatility of the energy markets make it extremely difficult to predict future natural gas, oil and NGL price movements with any certainty. Natural gas and oil prices continued to fluctuate in fiscal year 2025, with the benchmark Henry Hub natural gas spot price increasing approximately 58% in 2025 compared to 2024, while the WTI crude oil benchmark declined approximately 15% over the same period. If the prices of natural gas, NGLs and oil decline, our operations, financial condition and level of expenditures for the development of our natural gas, NGL and oil reserves may be materially and adversely affected, and can include other material negative effects including, but not limited to, the following:

 

•

significantly decrease the number of wells operators drill on our acreage, or the development of pipelines to transport production, thereby reducing our production and cash flows;

 

•

cash flows would be reduced, decreasing cash available for distribution and/or acquisitions to replace reserves and maintain or increase production;

 

•

certain reserves may no longer be economic for our operators to produce, leading to lower proved reserves, production and cash flows;

 

•

future undiscounted and discounted net cash flows from producing properties would decrease, possibly resulting in recognition of impairment expense;

 

•

access to sources of capital, such as equity and debt markets, could be severely limited or unavailable; and

 

•

could limit our ability to make scheduled payments on our First Lien Senior Secured Notes (our “Senior Notes”) and our Revolving Credit Facility (our “Revolving Credit Facility”).

Lower natural gas, NGL and oil prices or negative adjustments to natural gas, NGL and oil reserves may result in significant impairment charges.

The Company follows the successful efforts method of accounting for our natural mineral operations. Under this method, costs to acquire mineral and royalty interests in natural gas mineral properties are capitalized when incurred. We review and evaluate our mineral and royalty interests in natural gas mineral properties for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. Proved natural gas properties are reviewed for impairment when events and circumstances indicate a potential decline in the fair value of such properties below the carrying value, such as a downward revision of the reserve estimates or lower commodity prices. The factors used to determine fair value include, but are not limited to, estimates of proved reserves, future commodity prices, the timing of future production and a discount rate commensurate with the risk reflective of the lives remaining for the respective natural gas properties. Because of

 

35

the uncertainty inherent in these factors, we cannot predict when or if future impairment charges will be recorded. If an impairment charge is recognized, cash flows from operating activities is not impacted, but net income and, consequently, stockholders’ equity are reduced. In periods when impairment charges are incurred, it could have a material adverse effect on our results of operations.

Historically, natural gas, NGLs and oil prices have been volatile and may continue to be volatile in the future. During the past five years, the Henry Hub spot market price for natural gas has ranged from a low of $1.21 per MMBtu in November 2024 to a high of $23.86 per MMBtu in February 2021. The posted price for WTI has ranged from a low of negative $36.98 per barrel in April 2020 to a high of $123.64 per barrel in March 2022. As of December 31, 2025, the posted price for WTI was $57.26 per barrel and the Henry Hub spot market price of natural gas was $4.00 per MMBtu. Lower prices not only decrease our revenues, but also potentially impact the amount of natural gas, NGLs and oil that our operators can produce economically. This, in turn, can impact the capital budgets for our operators and their development pace of our properties. We expect commodity price volatility will continue in the future. If these pricing trends persist, our revenues and cash flows could be materially reduced, which could adversely affect our ability to pay dividends, service our debt obligations, and pursue our acquisition strategy. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional discussion of the impact of commodity prices on our business.

See “Note 2, Summary of Significant Accounting Policies—Mineral Interests in Natural Gas Properties” to the audited consolidated financial statements included elsewhere in this prospectus for further discussion.

Our derivative activities may reduce the cash flows received for natural gas and oil sales.

In order to manage exposure to price volatility on our natural gas and oil production, we currently, and may in the future, enter into natural gas and oil derivative contracts for a portion of our expected production. Natural gas and oil price derivatives may limit the cash flows we actually realize and therefore reduce our ability to fund future projects. None of our natural gas and oil price derivative contracts are designated as hedges for accounting purposes; therefore, all changes in fair value of derivative contracts are reflected in earnings. Accordingly, these fair values may vary significantly from period to period, materially affecting reported earnings. In addition, this type of derivative contract can limit the benefit we would receive from increases in the prices for natural gas and oil. The fair value of our natural gas and oil derivative instruments outstanding as of December 31, 2025 was approximately a net asset of $0.7 million.

There is risk associated with derivative contracts that involves the possibility that counterparties may be unable to satisfy contractual obligations to us. If any counterparty to our derivative instruments were to default or seek bankruptcy protection, it could subject a larger percentage of our future natural gas and oil production to commodity price changes, could adversely affect our cash flows and could have a negative effect on our ability to fund future acquisitions. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosures about Market Risk.”

The development of our properties in which we own mineral and royalty interests relies exclusively on our various third-party operators. Our third-party operators’ failure to develop our existing inventory of mineral and royalty acreage could have a material adverse effect on our business, financial condition and results of operations.

We depend exclusively on various unaffiliated third-party operators for all of the exploration, development and production of our mineral and royalty interests and a substantial amount of our revenue is derived from royalty payments made by these third-party operators. We are unable to determine with certainty which third-party operators will ultimately operate our properties and there is no guarantee that any particular third-party operator will become or remain the operator on the properties associated with our mineral and royalty interests, and such third-party operators may identify, and subsequently focus their efforts and development on, prospects in which we do not maintain mineral or royalty interests. A reduction in the expected number of wells to be drilled on our

 

36

acreage by these operators or the failure of our third-party operators to adequately and efficiently develop and operate the wells on our acreage could have a material adverse effect on our business, financial conditions and results of operations. The success and timing of drilling and development activities and whether the operators elect to drill any additional wells on our acreage depends on a number of factors that are largely outside of our control, including:

 

•

the capital costs required for drilling activities by our third-party operators, which could be significantly more than anticipated;

 

•

the ability of our third-party operators to access capital;

 

•

prevailing commodity prices;

 

•

the availability of suitable drilling equipment, production and transportation infrastructure and qualified operating personnel;

 

•

the availability of storage for hydrocarbons;

 

•

the operators’ expertise, operating efficiency and financial resources;

 

•

approval of other participants in drilling wells;

 

•

the operators’ expected return on investment in wells drilled on our acreage as compared to opportunities in other areas;

 

•

the selection of technology;

 

•

the selection of counterparties for the marketing and sale of production; and

 

•

the rate of production of the reserves.

Our proved undeveloped reserves may not be developed or produced as a result of any number of these factors. Recovery of proved undeveloped reserves requires significant capital expenditures and successful drilling operations, and the decision to pursue development of a proved undeveloped drilling location will be made by our third-party operators and not by us. Our third-party operators may elect not to undertake development activities or may undertake to develop these activities in a delayed or an unanticipated fashion, which may result in significant fluctuations in the revenues generated by our mineral and royalty interests. Third-party operators will make decisions in connection with their operations, which may not be in our best interests and our third-party operators may also reduce capital expenditures devoted to exploration, development and production on our properties in the future, which could negatively impact the revenues we receive. We have limited ability to exercise influence over the operational decisions of our third-party operators, including the setting of capital expenditure budgets and drilling locations and schedules.

Drilling for and producing natural gas, NGLs and oil are high-risk activities with many uncertainties that may materially adversely affect our business, financial condition and results of operations.

Drilling for natural gas and oil invariably involves unprofitable efforts, not only from dry wells, but also from wells that are productive but do not produce sufficient reserves to return a profit after deducting drilling, completion, operating and other costs. In addition, wells that are profitable may not achieve a targeted rate of return. We rely on third-party operators for substantially all of the exploration, development, and production activities on our acreage. Nevertheless, prior to drilling a well, the exploration and development activities used do not allow operators to know conclusively whether natural gas, NGLs and oil are present in commercial quantities.

Cost factors can adversely affect the economics of any project, and the eventual cost of drilling, completing and operating a well is controlled by well operators and existing market conditions. Further, drilling operations may be curtailed, delayed or canceled as a result of numerous factors, including:

 

•

unexpected drilling conditions;

 

37

•

title problems;

 

•

pressure or irregularities in formations;

 

•

equipment failures or accidents;

 

•

fires, explosions, blowouts and surface cratering;

 

•

lack of availability to market production via pipelines or other transportation;

 

•

adverse weather conditions;

 

•

environmental, health or safety hazards or liabilities;

 

•

lack of water disposal facilities;

 

•

environmental and other governmental regulations;

 

•

cost and availability of drilling rigs, equipment, materials and services; and

 

•

expected sales price to be received for natural gas, NGLs and oil produced from the wells.

Acreage must be drilled before lease expiration, generally within three to five years, in order to hold the acreage by production. Our third-party operators’ failure to drill sufficient wells to hold acreage may result in loss of the lease and prospective drilling opportunities.

Leases on natural gas and oil properties typically have a term of three to five years, after which they expire unless, prior to expiration, production is established within the spacing units covering the undeveloped acres. Any reduction in our third-party operators’ drilling programs, either through a reduction in capital expenditures or the unavailability of drilling rigs, could result in the loss of acreage through lease expirations which may terminate our overriding royalty interests derived from such leases. Since our royalties are derived from mineral interests, if production or drilling ceases on the leased property, the lease is typically terminated, subject to certain exceptions, and all mineral rights revert back to us, and we will have to seek new lessees to explore and develop our acreage. There can be no assurance that we will be able to re-lease such properties following termination on favorable terms, or at all. Any such losses of our third-party operators or lessees could materially and adversely affect the growth of our business, financial condition and results of operations.

We may experience delays in the receipt of royalty payments and be unable to replace our third-party operators that do not make required royalty payments, and we may not be able to terminate our leases with defaulting lessees if any of such operators on those leases declare bankruptcy.

We may experience delays in receiving royalty payments from our third-party operators, including as a result of delayed division orders received from our third-party operators. Additionally, most of our operators are also dependent on the availability of external debt and equity financing sources to maintain their drilling programs. If those financing sources are not available to the operators on favorable terms or at all, or if an operator were to otherwise experience financial difficulty, the operator might not be able to make its royalty payments or continue its operations, which could have a material adverse impact on our business. A failure on the part of our third-party operators to make royalty payments typically gives us the right to terminate the lease, repossess the property and enforce payment obligations under the lease. If we repossessed any of our properties, we would seek a replacement operator. However, we might not be able to find a replacement operator and, if we did, we might not be able to enter into a new lease on favorable terms within a reasonable period of time. In addition, the outgoing operator could be subject to a proceeding under Title 11 of the United States Code (the “Bankruptcy Code”), in which case our right to enforce or terminate the lease for any defaults, including non-payment, may be substantially delayed or otherwise impaired. In general, in a proceeding under the Bankruptcy Code, the bankrupt operator would have a substantial period of time to decide whether to ultimately reject or assume the lease, which could prevent the execution of a new lease or the assignment of the existing lease to another operator. If the operator rejected the lease, our ability to collect amounts owed would be substantially delayed, and our ultimate recovery may be only a fraction of the amount owed or nothing. In addition, if we are able to enter into a new lease with a new operator, the replacement operator may not achieve the same levels of production or sell natural gas or oil at the same price as the operator we replaced.

 

38

We may incur losses as a result of title defects or other issues in the properties we own which could have a material adverse effect on our business, financial condition and results of operations.

We depend in part on acquisitions to grow our reserves, production and cash generated from operations. In connection with these acquisitions, record title to mineral and royalty interests are conveyed to us or our subsidiaries by asset assignment, and we or our subsidiaries become the record owner of these interests. Upon such a change in ownership of mineral and royalty interests, and at regular intervals pursuant to routine audit procedures at each of our third-party operator’s discretion, such third-party operator of the underlying property has the right to investigate and verify the title and ownership of mineral and royalty interests with respect to the properties it operates. Consistent with industry practice, we do not have current abstracts or title opinions on all of our mineral acreage and, therefore, cannot be certain that we have unencumbered title to all of these properties. The third-party operators of our properties could suspend our right to receive royalty payments due to title or other issues and we are not required to, and under certain circumstances we may elect not to, incur the expense of retaining lawyers to examine the title to our mineral and royalty interests. If any title or ownership issues are not resolved to the third-party operator’s reasonable satisfaction in accordance with customary industry standards, the third-party operator may suspend payment of the related royalty. Our failure to cure any title defects that may exist may adversely impact our ability in the future to increase production and reserves. There is no assurance that we will not suffer a monetary loss from title defects or title failure. At any time that a third-party operator puts our assets in pay suspense, we would not receive the applicable mineral or royalty payment owed to us from sales of the underlying natural gas, NGLs and oil related to such mineral interest. Additionally, undeveloped acreage has greater risk of title defects than developed acreage. Leases in the Appalachian Basin, and particularly leases involving gas and oil properties, are particularly vulnerable to title deficiencies due to the nature of the history of land ownership in the area, resulting in extensive and complex chains of title. The existence of a material title deficiency can render an interest worthless and can materially adversely affect our business, financial condition and results of operations. If there are any title defects or defects in assignment of leasehold rights in properties in which we hold an interest, we may suffer a financial loss and it could have a material adverse effect on our business, financial condition and results of operations.

A limited number of operators currently generate a significant portion of our revenue and accounts receivable.

A large portion of our current mineral and royalty interests and lease holdings are serviced by a limited number of third-party operators and, as a result, we generate a significant portion of our revenue and accounts receivable from a limited number of third-party operators. In the year ended December 31, 2025, we received revenue from 365 third-party operators, with approximately 54% of our consolidated revenue coming from the top three third-party operators. Our revenue is generally derived from our diverse holdings of mineral and royalty interests and lease holdings and these mineral and royalty interests generate revenue from the sale of natural gas and crude oil, which is paid monthly to us by various third-party operators once any extracted natural gas and crude oil is delivered by such operators to purchasers.

While our revenue and accounts receivable relating to our mineral rights and lease holdings are derived from a significant number of different units that are subject to different leases and pooling orders from various state oil and gas commissions, the incapacity or loss of one of the operators that generate a significant portion of our revenue and accounts receivable could negatively impact our revenue and accounts receivable and could result in a reduction or delay in revenue generated from the related mineral rights and lease holdings while a replacement operator is selected and designated. Further, we do not always determine or control the rights, payments, discounts or other terms related to leases or the extraction and sale of assets from our mineral rights and lease holdings.

 

39

Various factors could adversely impact our third-party operators’ ability to control costs, including their operating expenses and capital costs.

Our third-party operators are dependent on various supplies and equipment, as well as qualified personnel, to carry out their extraction operations. An increase in natural gas and oil prices may cause the costs of such materials and services to rise. Furthermore, any shortage, unavailability, or increase in the cost of such supplies, personnel, equipment, and parts could have a material adverse effect on their ability to carry out operations. We cannot predict any future trends in the rate of inflation or interest rates and a significant increase in inflation or interest rates, to the extent we or our third-party operators are unable to recover higher costs through higher commodity prices and revenues or otherwise mitigate the impact of such costs on our or their business, could have a material adverse effect on our business, financial condition and results of operations.

The substantial majority of our business is concentrated in the Appalachian and Haynesville Basins, making us vulnerable to risks associated with concentration of our assets in limited geographic areas.

The substantial majority of our business is concentrated in the Appalachian and Haynesville Basins. As a result, we may be disproportionately exposed to various factors, including, among others:

 

•

the impact of regional supply and demand factors;

 

•

delays or interruptions of production from wells in such areas caused by governmental regulation, including changes to field wide rules;

 

•

gathering, processing or transportation capacity constraints;

 

•

availability of equipment, facilities, personnel or services market limitations;

 

•

adverse weather conditions and natural disasters;

 

•

plant closures for scheduled maintenance, resulting in reduced demand for natural gas; and/or

 

•

interruption of the processing or transportation of natural gas, NGLs and/or oil.

This concentration in limited geographic areas also increases our exposure to changes in local laws and regulations, certain lease stipulations designed to protect wildlife, and unexpected events that may occur in the region, such as natural disasters, seismic events, industrial accidents or labor difficulties. Any one of these factors has the potential to cause producing wells to be shut-in, delay operations, decrease cash flows, increase operating and capital costs, and prevent development of leases before expirations. Any of the risks described above could have a material adverse effect on our business, financial condition and results of operations.

In addition, the effect of fluctuations on supply and demand may become more pronounced within specific geographic areas, which may cause these conditions to occur with greater frequency to our properties or magnify the effects of these conditions. Due to the concentrated nature of our properties, a number of our properties could experience any of the same conditions at the same time, resulting in a relatively greater impact on our results of operations than they might have on other companies that have a more diversified portfolio of properties. In addition, we have limited to no control over the marketability of our hydrocarbon sales and rely on third-party operators to market our hydrocarbons which limits our ability to optimize the pricing we receive, especially in instances of regional bottlenecks. As a result of our focus on the Appalachian and Haynesville Basins, we may be less competitive than other companies in bidding to acquire assets that include properties both within and outside of those areas.

We may be subject to risks related to our wells where we are a non-operating working interest owner which could have a material adverse effect on our business, financial condition and results of operations.

Like our mineral and royalty interests, we are dependent upon third-party operators to develop the properties in which we own non-operating working interests. In addition, financial risks are inherent in any operation where

 

40

we have a non-operating working interest and the cost of drilling, equipping, completing and operating wells is shared by more than one party. We could be responsible for joint activity obligations of a working interest owner, such as nonpayment of expended costs, including costs of regulatory compliance. We may also be liable for damage to the environment caused by our third-party operators. Additionally, if another non-operator fails to pay its share of costs because of its insolvency or otherwise, the third-party operator could require us to pay the proportionate share of the defaulting party’s share of costs. We are also responsible for our proportionate share of the costs associated with plugging, abandoning and reclaiming wells, pipelines and other facilities that we own (or own in part) for production of natural gas and oil reserves. Abandonment and reclamation of these facilities and the costs associated therewith is often referred to as “asset retirement.” We accrue a liability for asset retirement costs associated with these wells, but have not established any cash reserve account for these potential costs in respect of any of our properties. It may be difficult for us to predict such asset retirement costs. If asset retirement is required before economic depletion of our properties or if our estimates of the costs of asset retirement exceed the value of the reserves remaining at any particular time to cover such asset retirement costs, we may have to draw on funds from other sources to satisfy such costs, which may be substantial. The use of other funds to satisfy such asset retirement costs could impair our ability to dedicate our capital to other areas of our business.

Our future success depends on replacing reserves through acquisitions and the exploration and development activities of our operators.

Producing natural gas and oil wells, and associated NGLs, are characterized by declining production rates that vary depending upon reservoir characteristics and other factors. Our natural gas, NGLs and oil reserves and our third-party operators’ production thereof and our cash flows are highly dependent on the successful development and exploitation of our current reserves and our ability to successfully acquire additional reserves that are economically recoverable. We have little to no control over the exploration and development of our properties and the production decline rates of our properties may be significantly higher than currently estimated if the wells on our properties do not produce as expected. We may also not be able to find or acquire additional reserves to replace the current and future production of our properties at economically acceptable terms and we may not have sufficient resources to acquire such reserves.

There is intense competition for acquisition opportunities in our industry which may increase the cost of, or cause us to refrain from, completing acquisitions. The successful acquisition of producing properties requires an assessment of several factors, including recoverable reserves, future oil and natural gas prices and their applicable differentials, operating costs and potential environmental and other liabilities. The accuracy of these assessments is inherently uncertain and we may not be able to identify attractive acquisition opportunities. If we are not able to adequately replace or grow our natural gas, NGLs and oil reserves, our business, financial condition and results of operations would be adversely affected.

Constraints in financing mineral and royalty asset acquisitions, and the risks associated with entering new geographic markets, may adversely affect our business, financial condition, and results of operations.

Our ability to complete acquisitions may be dependent upon, among other things, our ability to obtain debt and equity financing and, in some cases, regulatory approvals. Furthermore, we cannot assure you that we will be able to access the capital markets after this offering or obtain other external capital on terms favorable to us or at all. Additionally, our ability to secure financing or access the capital markets could be adversely affected if financial institutions and institutional lenders elect not to provide funding for fossil fuel energy companies in connection with the adoption of sustainable lending initiatives or are required to adopt policies that have the effect of reducing the funding available to the fossil fuel sector. If we are unable to access capital, we may be unable to complete acquisitions, take advantage of business opportunities or respond to competitive pressures, any of which could have a material adverse effect on business, financial condition and results of operations.

In addition, if we determine to enter into new geographic markets, such entry into new geographic markets may result in the dilution of our resources dedicated to our current geographic focus and we may be subject to

 

41

additional and unfamiliar legal and regulatory requirements. Compliance with added regulatory requirements may impose substantial additional obligations on us and our management, cause us to expend additional time and resources in compliance activities and increase our exposure to penalties or fines for non-compliance with such additional legal requirements. In addition, possible future acquisitions may be larger and for purchase prices significantly higher than those paid for earlier acquisitions.

No assurance can be given that we will be able to identify suitable mineral and royalty interest acquisition opportunities, negotiate acceptable terms, obtain financing for acquisitions on acceptable terms or successfully acquire identified targets.

We have experienced significant business and portfolio growth in a short time, which may make it difficult for you to evaluate our business and prospects. Our previous growth rates and performance may not be sustainable or indicative of our future growth and financial results, and there can be no assurance that we will be able to achieve the same level of financial performance in the future. If we are unable to manage our business and growth effectively, our business could be materially and adversely affected.

Our business has grown considerably since our founding in 2022. The significant growth in the size and diversity of our mineral and royalty interests and revenue we have experienced since our founding makes evaluation of our business and prospects difficult. There can be no assurance that our growth will continue at a similar pace, or that we will be able to manage our growth effectively. Furthermore, the growth of our business places significant demands on our key personnel, including managing increased numbers of interests, revenue streams, operator relationships, and title administration responsibilities. If we do not effectively manage the increased obligations brought by the growth of our business, we may not be able to execute on our business plan, respond to competitive pressures or take advantage of market opportunities, which could have a material adverse effect on our business, financial condition and results of operations.

Our historical results, including our historical cash-on-cash returns, may not be sustainable, and we cannot assure you that we will achieve similar cash-on-cash returns or continue to pay cash or stock dividends. The historical returns to our investors should not be considered as indicative of the future results of our operations or any returns expected on an investment in our Class A common stock. In addition, we expect our overall general and administrative expenses to continue to increase in the foreseeable future, as we may be required to hire additional personnel and incur additional expenses as a newly public company. These efforts and additional expenses may be more costly than we currently expect, and there is no assurance that we will be able to maintain sufficient operating revenue to offset our operating expenses. Any failure to increase revenue or to manage our costs would adversely impact our business and could prevent us from maintaining positive operating cash flow at all, or on a consistent basis, which would cause our business, financial condition, and results of operations to suffer.

In addition, we may encounter risks and difficulties experienced by companies whose performance is dependent upon newly acquired mineral and royalty interests, such as failing to integrate, or realizing the expected benefits of, such assets. As a result of the foregoing, we may be less successful in achieving consistent results and sustaining the growth of our business, as compared with companies that have longer histories of operations and more stable portfolios of mineral and royalty assets. In addition, we may be less equipped to identify and address risks and hazards in the conduct of our business than those companies that have longer operating histories.

Any acquisition of additional mineral and royalty interests that we complete will be subject to substantial risks.

Any acquisition of mineral and royalty interests involves substantial risks, all of which could have a material adverse effect on our business, financial condition and results of operations. Even if we identify attractive acquisition opportunities, we may not be able to complete such acquisitions or do so on commercially acceptable terms. We also typically bear certain transactional expenses (including professional fees, legal fees and other due diligence-related items) and the costs of investments that are not consummated (i.e. broken deal costs). Any

 

42

acquisitions of additional mineral and royalty interests that we complete will be subject to substantial risks and we may acquire interests in properties that do not produce as projected. Such risks include, but are not limited to:

 

•

the validity of our assumptions about estimated reserves, future production, prices, revenues, operating expenses and costs;

 

•

a decrease in our liquidity by using a significant portion of our cash generated from operations or borrowing capacity to finance acquisitions;

 

•

a significant increase in our interest expense or financial leverage if we incur debt to finance acquisitions;

 

•

the inability to effectively manage the integration of acquisitions could adversely impact our ability to achieve the anticipated benefits of our acquisitions and reduce our focus on subsequent acquisitions and current operations;

 

•

the assumption of unknown liabilities, losses or costs for which we are not indemnified or for which any indemnity we receive is inadequate;

 

•

mistaken assumptions about the overall cost of equity or debt;

 

•

our ability to obtain satisfactory title to the assets we acquire;

 

•

an inability to hire, train or retain qualified personnel to manage and operate our growing business and assets; and

 

•

the occurrence of other significant changes, such as impairment of natural gas and oil properties, goodwill or other intangible assets, asset devaluation or restructuring charges.

In addition, the due diligence required with respect to a potential natural gas and oil royalty investment may not reveal or highlight all relevant facts that may be necessary or helpful in evaluating such an investment opportunity and its potential risks. In connection with these assessments, we perform a review of the subject properties that we believe to be generally consistent with industry practices. The accuracy of these assessments is inherently uncertain and, as a result, we may assume unknown liabilities, losses or costs for which we are not indemnified or for which any indemnity we receive is inadequate. We may base our decisions on mistaken assumptions about estimated reserves, future production, prices, revenues, the operating expenses and costs our third-party operators would incur to develop the minerals. Our review will not reveal all existing or potential problems including title defects or environmental issues, which, if material, can render an interest worthless, nor will it permit us to become sufficiently familiar with the properties to assess fully their deficiencies and capabilities. Inspections may not always be performed on every well, and environmental problems, such as groundwater contamination, are not necessarily observable even when an inspection is undertaken. Environmental or other regulatory issues may arise with respect to acquired entities or operations years after the acquisitions. Even when problems are identified, the seller may be unwilling or unable to provide effective contractual protection against all or part of such problems. Significant acquisitions and other strategic transactions may involve other risks that may cause our business to be adversely impacted, including diversion of our management’s attention to evaluating and negotiating such transactions. As a result of the foregoing, any acquisition of mineral and royalty interests involves both foreseen and unforeseen risks, all of which could have a material adverse effect on our business, financial condition and results of operations.

We expect to distribute a substantial majority of the cash we generate from operations, which could limit our ability to grow and make acquisitions.

We expect to distribute a substantial majority of the cash we generate from operations each quarter. As a result, we will have limited cash generated from operations to reinvest in our business or to fund acquisitions, and we will rely primarily upon external financing sources, including commercial bank borrowings and the issuance of debt and equity securities, to fund our acquisitions and growth capital expenditures. If we are unable to finance growth externally, our distribution policy will significantly impair our ability to grow.

 

43

If we issue additional shares of Class A common stock in connection with any acquisitions or growth capital expenditures, the payment of distributions on those additional shares of Class A common stock may increase the risk that we will be unable to maintain or increase our per unit distribution level. The incurrence of additional commercial borrowings or other debt to finance our growth would result in increased interest expense and required principal repayments, which, in turn, may reduce the cash that we have available to distribute to our shareholders. See “Dividend Policy” for more information.

While we expect to distribute a substantial majority of the cash we generate from operations each quarter, there can be no assurance that we will be able to pay dividends at the levels we currently anticipate, or at all. Our ability to pay dividends is subject to significant restrictions and limitations, including:

 

•

Covenants under our Revolving Credit Facility. Under the Revolving Credit Facility, we may not declare or make any restricted payment (including dividends, distributions in respect of, or redemptions of, our equity interests) except as specifically permitted. Permitted restricted payments include, among others, cash dividends and distributions to holders of our equity interests so long as, both before and immediately after giving pro forma effect to any such restricted payment, (i) no default, event of default or borrowing base deficiency exists or would result therefrom, (ii) Unused Availability (as defined in the Revolving Credit Facility) is at least 10% of the Loan Limit (as defined in the Revolving Credit Facility) and (iii) the Consolidated Net Leverage Ratio (as defined in the Revolving Credit Facility), recomputed on a Pro Forma Basis (as defined in the Revolving Credit Facility), is less than or equal to 3.00 to 1.00; provided that, prior to the discharge of the obligations under the Note Purchase Agreement, such restricted payments are also permitted under the Note Purchase Agreement, as in effect immediately following the amendment to the Note Purchase Agreement. See “Description of Material Indebtedness.” The Revolving Credit Facility also permits Permitted Tax Distributions (as defined in the Revolving Credit Facility), distributions to our parent to fund Public Company Compliance costs and ordinary-course corporate overhead in an aggregate amount not to exceed $3,000,000 per fiscal year, distributions and repurchases pursuant to management or employee equity plans (capped at $1,000,000 per fiscal year), stock-settled dividends, cash payments in lieu of fractional shares and certain other limited exceptions. In addition, the Revolving Credit Facility requires us to maintain, as of the last day of each fiscal quarter (commencing with the first full fiscal quarter ending after the effective date thereof), (i) a Consolidated Net Leverage Ratio for the rolling period then ending of not greater than 3.50 to 1.00 and (ii) a Current Ratio (as defined in the Revolving Credit Facility) of not less than 1.0 to 1.0, and to satisfy minimum hedging requirements that vary based on the Consolidated Net Leverage Ratio, each of which may limit our flexibility to make distributions or otherwise reduce cash that would otherwise be available for dividends. The Revolving Credit Facility also contains a “most favored term” provision pursuant to which any representation, warranty, covenant (including financial covenants), event of default or other term (excluding applicable margin for determining interest rates) in the Note Purchase Agreement that is more restrictive than the corresponding term of the Revolving Credit Facility will be automatically incorporated into the Revolving Credit Facility, with the result that the Revolving Credit Facility will at all times contain restrictions on restricted payments, negative covenants and other matters that are at least as restrictive as those in the Note Purchase Agreement governing our Senior Notes.

 

•

Covenants under our Senior Notes. We are currently in negotiations with the lenders under our Note Purchase Agreement and expect to enter into an amendment providing, among other things, more favorable restricted payment covenants in connection with the completion of this offering. However, there can be no guarantee that we will enter into such amendment on terms satisfactory to us or at all. See “—Risks Related to Our Indebtedness—The Revolving Credit Facility and the Note Purchase Agreement restrict our ability to pay cash dividends and make other distributions to our stockholders.” Under the Note Purchase Agreement (prior to effect to the amendment to the Note Purchase Agreement (as described under “Description of Material Indebtedness”)) governing our Senior Notes, we may not make restricted payments (such as dividends or stock redemptions) except as specifically permitted thereby. See “Description of Material Indebtedness.”

 

44

•

Delaware law limitations. Under the Delaware General Corporation Law, we may only pay dividends out of surplus (the excess of net assets over capital) or, if there is no surplus, out of net profits for the current and/or immediately preceding fiscal year.

 

•

Business and liquidity needs. Our board of directors may determine to reduce or eliminate dividends to fund acquisitions, repay debt, satisfy working capital needs, or address other business requirements.

Additionally, our ability to pay dividends may be restricted by the terms of any future credit agreement or any future debt or preferred equity securities of us. See “Risk Factors—We intend to pay regular dividends to our stockholders, but our ability to do so is subject to the discretion of our board of directors and may be limited…” and “Description of Material Indebtedness” for additional information regarding restrictions on our ability to pay dividends.

If we fail to retain our key personnel or attract additional qualified personnel, we may not be able to achieve our business strategy which could have a material adverse effect on our business, financial condition and results of operations.

Our future success and ability to implement our business strategy depends, in part, on our ability to attract, train, compensate, motivate and retain key personnel and service providers, and on the continued contributions of members of our management team and key employees or service providers, each of whom would be difficult to replace. We are a relatively new company and rely heavily on our executives and management team for their knowledge of the natural gas and crude oil industry and experience identifying, evaluating and completing acquisitions. The departure of executives or other members of our management or key personnel or key service providers could disrupt our business, as competition for highly skilled individuals with technical expertise is extremely intense within and outside of our markets, and we face challenges identifying, hiring, training and retaining qualified personnel and service providers in many areas of our business. Integrating new key personnel into our team and identifying and coordinating with key service providers could prove disruptive to our operations, require substantial resources and management attention and ultimately prove unsuccessful. The ability to remain competitive by offering competitive compensation packages and programs for growth and development of personnel, with a view to retaining existing talent and attracting new talent, and attracting key service providers, has become increasingly important to our business and its operations in the current climate. We cannot be certain that our labor costs will not increase as a result of a shortage in the supply of skilled, unskilled and technical personnel or any related governmental regulations, or due to the need to recruit and retain key personnel and service providers. Labor shortages and/or an inability to retain our executives, other senior management, and other key personnel, service providers, and talent or to attract and train additional qualified personnel and service providers could limit or delay our ability to implement our business strategy, all of which could have a material adverse effect on our business, financial condition and results of operations.

Our management team and board of directors may also perform similar services for other businesses and thus are not solely focused on our business.

Our officers and directors are not required to, and may not, commit their full time to our affairs, which may result in challenges allocating their time between our operations and the other businesses at which they may serve in similar or other roles. Certain of our officers are engaged in other business endeavors for which he or she may be obligated to contribute significant time and attention. Additionally, certain of our directors may also serve as officers or board members for other entities. For example, prior to this offering, our executive officers served in similar capacities with the manager. If our officers’ and directors’ other business affairs require them to devote substantial amounts of time to such affairs in excess of their current commitment levels, it could limit their ability to devote time to our affairs which may have a negative impact on our business. The other business activities of our officers and directors may create potential conflicts of interest, including situations where they may be presented with investment or business opportunities that could benefit both the Company and another entity with which they are affiliated. In such cases, our officers or directors may be required to determine how to allocate such opportunities, and there can be no assurance that any such determination will be made in our favor. Additionally, our officers and directors may have fiduciary duties to other entities that could conflict with their

 

45

duties to us. For a complete discussion of our officers’ and directors’ other business affairs, please see the section of this prospectus entitled “Management.”

Our estimated proved reserves are based on many assumptions that may prove to be inaccurate. Any inaccuracies in these reserve estimates or underlying assumptions may materially affect the quantities and present value of our reserves, business, financial condition and results of operations.

It is not possible to measure underground accumulations of natural gas, NGLs and oil with precision. Natural gas, NGL and oil reserve engineering requires subjective estimates of underground accumulations of natural gas, NGLs and oil using assumptions concerning future prices of these commodities, future production levels and operating and development costs. In estimating our reserves, we and our independent petroleum engineer must make various assumptions with respect to many matters that may prove to be incorrect, including:

 

•

future natural gas, NGL and oil prices;

 

•

unexpected complications from offset well development;

 

•

production rates;

 

•

reservoir pressures, decline rates, drainage areas and reservoir limits;

 

•

interpretation of subsurface conditions including geological and geophysical data;

 

•

potential for water encroachment or mechanical failures;

 

•

levels and timing of capital expenditures, lease operating expenses, production taxes and income taxes, and availability of funds for such expenditures; and

 

•

effects of government regulation.

As a result, estimated quantities of proved reserves, projections of future production rates and the timing of development expenditures may turn out to be incorrect. If any of these assumptions prove to be incorrect, our estimates of reserves, the classifications of reserves based on risk of recovery and our estimates of the future net cash flows from our reserves could change significantly.

Our standardized measure of natural gas and oil reserves is calculated using the 12-month average price calculated as the unweighted arithmetic average of the first-day-of-the-month individual product prices for each month within the 12-month period prior to fiscal year end. These prices and the operating costs in effect as of the date of estimation are held flat over the life of the properties. Production and income tax expenses are deducted from this calculation of future estimated development, with the result discounted at 10% per annum to reflect the timing of future net revenue in accordance with the rules and regulations of the SEC. Since forward-looking prices and costs are not used to estimate discounted future net cash flows from our estimated reserves, the standardized measure of our estimated reserves is not necessarily the same as the current market value of our estimated proved natural gas, NGL and oil reserves. The timing of the development and production on our properties will affect the timing of actual future net cash flows from proved reserves, and thus their actual present value. Over time, we may make material changes to reserve estimates to take into account changes in our assumptions and the results of actual development and production. In addition, the 10% discount factor used when calculating discounted future net cash flows, in compliance with the FASB statement on natural gas and oil producing activities disclosures, may not be the most appropriate discount factor based on interest rates in effect from time to time and risks associated with the Company, or the natural gas and oil industry in general.

The reserve estimates made for fields that do not have a lengthy production history are less reliable than estimates for fields with lengthy records. A lack of production history may contribute to inaccuracy in our estimates of proved reserves, future production rates and the timing of development expenditures. Further, our lack of knowledge of all individual well information known to the well operators such as incomplete well stimulation efforts, restricted production rates for various reasons and up-to-date well production data, etc. may cause differences in our reserve estimates.

 

46

In addition, the reserve data included in our reserve reports assume that substantial capital expenditures are required to develop the reserves. We cannot be certain that the estimated costs of the development of these reserves are accurate, that development will occur as scheduled or that the results of the development will be as estimated. Delays in the development of our reserves, increases in costs to drill and develop our reserves, or decreases in commodity prices will reduce the future net revenues of our estimated proved undeveloped reserves and may result in some projects becoming uneconomical. Because PUD reserves, under SEC reporting rules, may only be recorded if the wells they relate to are scheduled to be drilled within five years of the date of recording, the removal of PUD reserves that are not developed within this five-year period may be required.

Our identified drilling locations are susceptible to uncertainties that could materially alter the occurrence or timing of their drilling. Further, our estimates of these locations are based on assumptions derived from the publicly available disclosure of our third-party operators and industry-wide results of operations, which may not be accurate or ultimately come to fruition. As a result, there is no guarantee that our estimates will be consistent with potential drilling locations that our third-party operators have identified or that the actual drilling activities of our third-party operators will be materially consistent with those presently identified.

Our management team has identified and scheduled drilling locations in our operating areas over a multi-year period. The potential drilling locations we have identified are based on geologic and other data available to us and our interpretation of such data through our specialized software. Our third-party operators may have reached different conclusions about the potential drilling locations on our properties, and our third-party operators control the ultimate decision as to where and when a well is drilled. As result, such estimates may not be accurate and the ultimate number of wells drilled on our properties may be lower than expected. Whether these locations are ultimately drilled and developed depends on a number of factors, including oil and natural gas prices, assessment of risks, costs, drilling results, reservoir heterogeneities, the availability of equipment and capital, approval by regulators, lease terms, seasonal conditions and the actions of other operators. Because of these uncertainties, we do not know if the drilling locations we have identified will be drilled within our expected timeframe, or at all, or if our third-party operators will be able to economically produce hydrocarbons from these or any other potential drilling locations. The actual drilling activities on our acreage may be materially different from our current expectations, which could adversely affect our business, financial condition and results of operations.

We rely on our third-party operators, other third parties and government databases for information regarding our assets and, to the extent that information is incorrect, incomplete or lost, our financial and operational information and projections may be incorrect.

As an owner of mineral and royalty interests, we rely on our third-party operators to notify us of information regarding production on our properties in a timely and complete manner, as well as the accuracy of information obtained from third parties and government databases. We use this information to evaluate our operations and cash flows, as well as to predict our expected production and possible future locations. To the extent we do not timely receive this information or the information is incomplete or incorrect, our results may be incorrect and our ability to project potential growth may be materially adversely affected. Furthermore, to the extent that we have to update any publicly disclosed results or projections made in reliance on this incorrect or incomplete information, investors could lose confidence in our reported financial information, which would likely have a negative effect on the trading price of our Class A common stock. If any of such third-party or government databases or systems were to fail for any reason, including as a result of a cyber-attack, possible consequences include loss of communication links and inability to automatically process commercial transactions or engage in similar automated or computerized business activities. Any of the foregoing consequences could materially adversely affect our business, financial condition and results of operations.

We may be subject to information technology system failures, network disruptions, cyber-attacks or other breaches in data security.

The natural gas and oil industry has generally become increasingly dependent upon digital technologies to conduct day-to-day operations. As such reliance on technology has increased, so have the risks posed to both us

 

47

and our third-party operators. Our third-party operators are likely dependent on digital technologies to conduct certain exploration, development, production and processing activities, including interpreting seismic data, managing drilling rigs, production activities and gathering systems, conducting reservoir modeling and estimating reserves. The U.S. government has issued public warnings that indicate that energy assets might be specific targets of cyber security threats. If our third-party operators become the target of cyber-attacks with security breaches of information, their business operations may be substantially disrupted, which could have an adverse effect on our business, financial condition and results of operations. Cyber incidents could also cause operational interruption, compromise our confidential information and damage our reputation.

We and our third-party operators also face increased risk with the growing sophistication of generative AI capabilities, which may improve or expand the existing capabilities of cybercriminals described above in a manner we cannot predict at this time. Further, as cyber-attacks continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyber-attacks.

We may be involved in legal proceedings that could result in substantial liabilities.

We may from time to time be involved in various legal and other proceedings, including, without limitation, title, royalty or contractual disputes, regulatory compliance matters and personal injury or property damage matters in the ordinary course of our business. Such legal proceedings are inherently uncertain and their results cannot be predicted. Regardless of the outcome, such proceedings could have an adverse impact on us because of legal costs, diversion of management, and other personnel and other factors. In addition, it is possible that a resolution of one or more such proceedings could result in liability, penalties or sanctions, as well as judgments, consent decrees or orders requiring a change in our business practices, which could materially and adversely affect our business, operating results and financial condition. Accruals for such liability, penalties or sanctions may be insufficient. Judgments and estimates to determine accruals or range of losses related to legal and other proceedings could change from one period to the next, and such changes could be material.

A terrorist attack or armed conflict could harm our business.

Terrorist activities, anti-terrorist activities and other armed conflicts involving the United States or other countries (including the war in Ukraine, ongoing conflict in Iran and the Israel-Hamas conflict) may adversely affect the United States and global economies and could prevent us from meeting our financial and other obligations. If any of these events occur, the resulting political instability and societal disruption could reduce overall demand for natural gas, NGLs and oil, potentially putting downward pressure on demand for our third-party operators’ services and causing a reduction in our revenues. Natural gas, NGL and oil-related facilities, including those of our third-party operators, could be direct targets of terrorist attacks, and, if infrastructure integral to our third-party operators or the purchasers of their production is destroyed or damaged, they may experience a significant disruption in their operations which, in turn, could materially adversely affect our business, financial condition and results of operations. Costs for insurance and other security may increase as a result of these threats, and some insurance coverage may become more difficult to obtain, if available at all.

Declining general economic, business or industry conditions may have a material adverse effect on our results of operations, cash flows and financial position.

Concerns over global economic conditions, energy costs, supply chain disruptions, increased demand, labor shortages, the imposition of new tariffs, geopolitical issues, high levels of inflation, the availability and cost of credit and the U.S. financial market and other factors have contributed to increased global economic uncertainty. The United States experienced a significant increase in inflation beginning in the second half of 2021, and, although inflation has moderated throughout 2024 and 2025, higher interest rates have generally persisted. To the extent elevated inflation and interest rates remain or increase, our third-party operators may experience further cost increases for their labor and operations, including oil field services and equipment. Our third-party operators

 

48

may also experience supply chain constraints, due to international trade policies or otherwise, and inflationary pressure on their cost structures, which could impact the revenues we receive from them. Our third-party operators also may face shortages of equipment, raw materials, supplies, commodities, labor and services, which may prevent them from executing their development plans on or around our land. These supply chain constraints, trade policies and inflationary pressures may continue to adversely impact our third-party operators’ operating costs and, if they are unable to manage their supply chain, it may impact their ability to procure materials and equipment in a timely and cost-effective manner, if at all, which could materially and adversely affect our business, financial condition and results of operations.

We recently restated our audited consolidated financial statements as of and for the fiscal year ended December 31, 2025 to correct material accounting errors and have identified material weaknesses in our internal control over financial reporting. As a result of the material weaknesses in internal control over financial reporting, our disclosure controls and procedures were not effective at a reasonable assurance level as of December 31, 2025. A failure to maintain effective internal control over financial reporting or disclosure controls and procedures could impact our ability to accurately and timely report our financial results and other material disclosures or otherwise cause us to fail to meet our reporting obligations, which could have a material adverse effect on our operations and investor confidence in our business.

On April 22, 2026, we concluded that our audited consolidated financial statements as of and for the fiscal year ended December 31, 2025 could no longer be relied upon as a result of material accounting errors identified by management subsequent to the issuance of our audited consolidated financial statements for the fiscal year ended December 31, 2025. Accordingly, the audited consolidated financial statements for the fiscal year ended December 31, 2025 included elsewhere in this prospectus were restated by the Company in order to reflect the correction of the identified errors related to (i) the recording of management fees and (ii) the misclassification of pre-closing date and post-effective date monies received related to acquisitions. For additional information, see “Note 3, Restatement of Financial Statements” to our audited consolidated financial statements for the fiscal year ended December 31, 2025 included elsewhere in this prospectus. As a result of the Restatement, we are subject to additional risks and uncertainties, including unanticipated legal and accounting costs, litigation, governmental proceedings or investigations and loss of investor confidence or reputational harm to our business.

Although management did not, and was not required to, conduct a formal assessment of internal control over financial reporting as of December 31, 2025, as a result of the Misstatement and the Restatement, the Company identified certain material weaknesses in its internal control over financial reporting. As a result of the material weaknesses in internal control over financial reporting, our disclosure controls and procedures were not effective at a reasonable assurance level as of December 31, 2025. Management will be implementing changes to strengthen our internal controls and remediate the material weaknesses. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Internal Controls and Procedures—Material Weaknesses in Internal Control over Financial Reporting” for additional information related to the material weaknesses in internal control over financial reporting and our related remediation activities.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of a company’s consolidated interim or annual financial statements will not be prevented or detected on a timely basis. As such, if we do not remediate these material weaknesses in a timely manner, or if additional material weaknesses in our internal control over financial reporting are discovered, they may adversely affect our ability to record, process, summarize and report financial information timely and accurately and, as a result, our consolidated interim or annual financial statements may contain material misstatements or omissions. Additionally, because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

49

Risks Related to Our Organizational Structure

We are a holding company. Our sole material asset after completion of this offering will be our equity interests in WhiteHawk OpCo and OpCo GP, and we are accordingly dependent upon distributions from WhiteHawk OpCo and our operating subsidiaries to pay taxes and cover our corporate and other overhead expenses.

We are a holding company and will have no material assets other than our equity interests in WhiteHawk OpCo and OpCo GP. We have no independent means of generating revenue or cash flow, and our ability to pay our taxes and operating expenses or declare and pay dividends in the future, if any, will be dependent upon the financial results and cash flows of WhiteHawk OpCo and distributions we receive from WhiteHawk OpCo and our operating subsidiaries. WhiteHawk OpCo will continue to be treated as a partnership for U.S. federal income tax purposes and, as such, generally will not be subject to any entity-level U.S. federal income tax. Instead, any taxable income of WhiteHawk OpCo will be allocated to holders of OpCo Interests, including us. Accordingly, we will incur income taxes on our allocable share of any net taxable income of WhiteHawk OpCo. Under the terms of the OpCo Agreement, WhiteHawk OpCo will be obligated, subject to various limitations and restrictions, including with respect to our debt agreements, to make tax distributions to holders of OpCo Interests, including us. To the extent WhiteHawk OpCo has available cash, we intend to cause WhiteHawk OpCo (a) to generally make pro rata distributions to its unitholders, including us, in an amount at least sufficient to allow unitholders to pay taxes imposed on their allocable share of taxable income of WhiteHawk OpCo to the extent unitholders, including us, do not otherwise receive non-tax distributions from WhiteHawk OpCo in amounts at least sufficient to allow unitholders, including us, to pay such taxes and (b) to reimburse us for our corporate and other overhead expenses through non-pro rata payments that are not treated as distributions under the OpCo Agreement. We are limited, however, in our ability to cause WhiteHawk OpCo and our operating subsidiaries to make these and other distributions to us due to the restrictions under the agreements governing our indebtedness. To the extent that we need funds and WhiteHawk OpCo or our operating subsidiaries are restricted from making such distributions under applicable law or regulation or under the terms of their financing arrangements, or are otherwise unable to provide such funds, it could materially adversely affect our liquidity and financial condition.

As mentioned above, under the OpCo Agreement, we intend to cause WhiteHawk OpCo, from time to time, to make distributions in cash to its unitholders (including us) in amounts at least sufficient to cover the taxes imposed on their allocable share of taxable income of WhiteHawk OpCo to the extent unitholders, including us, do not otherwise receive non-tax distributions from WhiteHawk OpCo in amounts at least sufficient to allow unitholders, including us, to pay such taxes. As a result of (i) potential differences in the amount of net taxable income allocable to us and to the Continuing Equity Owners, (ii) the lower tax rate under current law applicable to corporations as compared to individuals, and (iii) that tax distributions are required to be paid by WhiteHawk OpCo to its common unit holders pro rata in accordance with each common unitholder’s economic interests in WhiteHawk OpCo, these tax distributions may be in amounts that exceed our tax liabilities. Our board of directors will determine the appropriate uses for any excess cash so accumulated, which may include, among other uses, the payment of distributions to our stockholders and the payment of other expenses. However, we will have no obligation to distribute such cash (or other available cash) to our stockholders. In addition, no adjustments to the exchange ratio for common units and corresponding shares of Class A common stock will be made as a result of any cash distribution by us or any retention of cash by us. To the extent we do not distribute such excess cash as distributions on our Class A common stock we may take other actions with respect to such excess cash, for example, holding such excess cash, contributing such cash to WhiteHawk OpCo in exchange for additional common units (or contributing such cash to WhiteHawk OpCo and making corresponding adjustments to the Continuing Equity Owners common units), lending it (or a portion thereof) to WhiteHawk OpCo, or repurchasing outstanding shares of our Class A common stock, some of which may result in shares of our Class A common stock increasing in value relative to the value of common units. The holders of common units may benefit from any value attributable to such cash balances if they acquire shares of Class A common stock in exchange for their common units, notwithstanding that such holders may have participated previously as holders of common units in distributions that resulted in such excess cash balances to us.

 

50

Changes in effective tax rates or adverse outcomes resulting from examination of our income or other tax returns could adversely affect our results of operations and financial condition.

We are subject to taxation by U.S. federal, state, and local tax authorities. Our future effective tax rates could be subject to volatility or adversely affected by a number of factors, including:

 

•

allocation of expenses to and among different jurisdictions;

 

•

changes to our assessment about our ability to realize, or in the valuation of, our deferred tax assets that are based on estimates of our future results, the prudence and feasibility of possible tax planning strategies, and the economic and political environments in which we do business;

 

•

expected timing and amount of the release of any tax valuation allowances;

 

•

tax effects of stock-based compensation;

 

•

costs related to intercompany restructurings;

 

•

changes in tax laws, regulations, or interpretations thereof;

 

•

the outcome of current and future tax audits, examinations, or administrative appeals;

 

•

lower than anticipated future earnings in jurisdictions where we have lower statutory tax rates and higher than anticipated future earnings in jurisdictions where we have higher statutory tax rates; and

 

•

limitations or adverse findings regarding our ability to do business in some jurisdictions.

Any changes in U.S. taxation may increase our effective tax rate and harm our business, financial condition, and results of operations. In particular, new income or other tax laws or regulations could be enacted at any time, which could adversely affect our business operations and financial performance. Further, existing tax laws and regulations could be interpreted, modified, or applied adversely to us.

If we were deemed to be an investment company under the Investment Company Act of 1940, as amended (the “1940 Act”), including as a result of our ownership of WhiteHawk OpCo, applicable restrictions could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.

Under Sections 3(a)(1)(A) and (C) of the 1940 Act, a company generally will be deemed to be an “investment company” for purposes of the 1940 Act if (i) it is, or holds itself out as being, engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities, or (ii) it engages, or proposes to engage, in the business of investing, reinvesting, owning, holding, or trading in securities and it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. We do not believe that we are an “investment company,” as such term is defined in either of those sections of the 1940 Act.

We and WhiteHawk OpCo intend to conduct our operations so that we will not be deemed an investment company. As the sole managing member of WhiteHawk OpCo, we will control and operate WhiteHawk OpCo. On that basis, we believe that our interest in WhiteHawk OpCo is not an “investment security” as that term is used in the 1940 Act. However, if we were to cease participation in the management of WhiteHawk OpCo, or if WhiteHawk OpCo itself becomes an investment company, our interest in WhiteHawk OpCo could be deemed an “investment security” for purposes of the 1940 Act.

We and WhiteHawk OpCo intend to conduct our operations so that we will not be deemed an investment company. If it were established that we were an unregistered investment company, there would be a risk that we would be subject to monetary penalties and injunctive relief in an action brought by the U.S. Securities and Exchange Commission (the “SEC”), that we would be unable to enforce contracts with third parties and that third parties could seek to obtain rescission of transactions undertaken during the period it was established that we were an unregistered investment company. If we were required to register as an investment company, restrictions

 

51

imposed by the 1940 Act, including limitations on our capital structure and our ability to transact with affiliates, could make it impractical for us to continue our business as contemplated and could have a material adverse effect on our business.

Risks Related to Our Industry

Our industry is highly competitive, and competitive pressures could negatively affect our business.

Competition in the natural gas, NGL and oil industry is intense, which may adversely affect our and our third-party operators’ ability to succeed. Many of these companies explore for and produce natural gas, NGLs and crude oil, carry on midstream and refining operations, and market petroleum and other products on a regional, national or worldwide basis. Competition for acquisitions of mineral and royalty interests may increase the cost of, or cause us to refrain from, completing acquisitions. In addition, some of our competitors have significant financial, technical and marketing resources and may also have lower overhead cost structures, and therefore may be able operate at lower costs than us. Our third-party operators’ larger competitors may also be able to absorb the burden of present and future federal, state, local and other laws and regulations more easily than our third-party operators can, which would adversely affect our third-party operators’ competitive position. Our third-party operators may have fewer financial and human resources than many companies in our third-party operators’ industry and may be at a disadvantage in bidding for exploratory prospects and producing oil and natural gas properties. Furthermore, the natural gas and oil industry has experienced recent consolidation amongst some operators, which has resulted in certain instances of combined companies with larger resources. Such combined companies may compete against our third-party operators or, in the case of consolidation amongst our third-party operators, may choose to focus their operations on areas outside of our properties.

Furthermore, a substantial portion of our revenues is directly or indirectly dependent upon our ability to acquire additional properties which is dependent upon our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment. As a result of the factors described above, the competitive environment we operate in could have a material adverse effect on our business, financial condition and results of operations.

Failure of exported liquid natural gas to be a competitive source of energy for the United States or international markets could adversely affect our third-party operators and could have a material adverse effect on our business, financial condition and results of operations.

Operations of LNG projects are dependent upon the ability of our third-party operators to deliver LNG supplies from the United States, which is primarily dependent upon LNG being a competitive source of energy internationally. The success of our business plan is dependent, in part, on the extent to which LNG can, for significant periods and in significant volumes, be supplied from North America and delivered to international markets at a lower cost than the cost of alternative energy sources. Through the use of improved exploration technologies, additional sources of natural gas may be discovered outside the United States, which could increase the available supply of natural gas outside the United States and could result in natural gas in those markets being available at a lower cost than LNG exported to those markets. Additionally, insufficient receiving capacity, LNG tanker capacity or political instability in foreign countries that import natural gas may also impede the willingness or ability of LNG purchasers and merchants in such countries to export LNG from the United States. In the United States, due mainly to a historically abundant supply of natural gas and discoveries of substantial quantities of unconventional, or shale, natural gas, imported LNG has not developed into a significant energy source making LNG a competitive source of energy within the United States. However, in addition to natural gas, LNG also competes with other sources of energy, including coal, oil, nuclear, hydroelectric, wind and solar energy. Some of these sources of energy may be available at a lower cost than LNG in certain markets including in the United States.

As a result of these and other factors, LNG may not be a competitive source of energy in the United States or internationally. The failure of LNG to be a competitive supply alternative to local natural gas, oil and other alternative energy sources in markets accessible to our third-party operators could adversely affect the ability of

 

52

our third-party operators to deliver LNG from the United States or to the United States on a commercial basis. Any significant impediment to the ability to deliver LNG to or from the United States generally could have a material adverse effect on our third-party operators, or the purchasers of their production, and on our business, financial condition and results of operations.

Our growth strategy is partly dependent upon the continued expansion of electricity demand driven by AI data center development. Expectations regarding increased demand for natural gas related to data centers and AI may not materialize, and our business prospects could be harmed if demand for natural gas does not develop as expected or takes longer to develop than we anticipate.

Our growth and success are partly dependent on continued expansion of electricity demand driven by the rapid increase in AI data center development, which has contributed to record power consumption and is expected to continue to drive increased demand for electricity. However, there is no assurance that these forecasts of load growth will be accurate or that the anticipated load growth will occur as projected. Factors such as evolving technology, improvements in energy efficiency, changes in economic conditions, shifts in government policy, regulation or consumer sentiment related to AI usage and development, or project delays or cancellations by data center developers could reduce or slow demand for electricity relative to current expectations. Further, there is no assurance that natural gas will be used to meet such demand. If the anticipated load growth and related increase in demand for natural gas fails to materialize in areas in which we maintain mineral and royalty interests, it could have a material adverse effect on our business, financial condition and results of operations.

The unavailability, high cost or shortages of rigs, equipment, raw materials, supplies or personnel may restrict or result in increased costs for our third-party operators related to developing and operating our properties.

The natural gas, NGL and crude oil industry is cyclical, which can result in shortages of drilling rigs, equipment, raw materials (particularly water and sand and other proppants), supplies and personnel. When shortages occur, the costs and delivery times of rigs, equipment and supplies increase and demand for, and wage rates of, qualified drilling rig crews also rise. We cannot predict whether these conditions will exist in the future and, if so, what their timing and duration will be. In accordance with customary industry practice, our third-party operators rely on independent third-party service providers to provide many of the services and equipment necessary to drill new wells. If our third-party operators are unable to secure a sufficient number of drilling rigs at reasonable costs, our financial condition and results of operations could suffer. In addition, they may not have long-term contracts securing the use of their rigs. Shortages of drilling rigs, equipment, raw materials, supplies, personnel, trucking services, tubulars, hydraulic fracturing and completion services and production equipment could delay or restrict our third-party operators’ exploration and development operations, which in turn could have a material adverse effect on our business, financial condition and results of operations.

The marketability of natural gas, NGLs and crude oil is dependent upon transportation, pipelines and refining facilities, which neither we nor many of our third-party operators control. Any limitation in the availability of those facilities or our third-party operators’ inability to obtain access to such facilities on commercially reasonable terms or otherwise could interfere with our third-party operators’ ability to store, process, transmit and market our third-party operators’ production as well as their plans to develop and sell our reserves, and could harm our business.

The marketability of our third-party operators’ production depends in part on the availability, proximity and capacity of pipelines, tanker trucks and other transportation methods, and processing and refining facilities developed and owned by third parties. Our third-party operators rely, and expect to rely in the future, on these third-party facilities in order to store, process, transmit and sell their production. Neither we nor the majority of our third-party operators control these third-party transportation facilities and our third-party operators’ access to them may be limited or denied. The inability or unwillingness of third parties to provide sufficient facilities and services to our third-party operators on commercially reasonable terms or otherwise could have a material and adverse effect on our third-party operators’ plans to develop and sell our reserves. Additionally, insufficient production from the wells

 

53

on our acreage or a significant disruption in the availability of third-party transportation facilities or other production facilities could adversely impact our third-party operators’ ability to deliver, to market or produce natural gas, NGLs and crude oil and thereby cause a significant interruption in our third-party operators’ operations. If these facilities are unavailable to our third-party operators on commercially reasonable terms or otherwise, our third-party operators could be forced to shut in some production or delay or discontinue drilling plans and commercial production on our properties following a discovery of hydrocarbons. If these facilities are unable, for any sustained period, to implement acceptable delivery or transportation arrangements or encounter production-related difficulties, they may also be required to shut in or curtail production. In addition, the amount of natural gas, NGLs and oil that can be produced and sold is subject to curtailment in certain other circumstances outside of our or our third-party operators’ control, such as pipeline interruptions due to scheduled and unscheduled maintenance, excessive pressure, physical damage or lack of available capacity on these systems, downstream processing facilities’ failure to accept unprocessed natural gas, tanker truck availability and extreme weather conditions. Also, production from our wells may be insufficient to support the construction of pipeline facilities, and the shipment of our third-party operators’ natural gas, NGLs and crude oil on third-party pipelines may be curtailed or delayed if it does not meet the quality specifications of the pipeline owners. The curtailments arising from these and similar circumstances may last for an extended period of time. In many cases, we and our third-party operators are provided only with limited, if any, notice as to when these circumstances will arise and their duration. Any significant curtailment in gathering system or transportation, processing or refining-facility capacity, or an inability to obtain favorable terms for delivery of the natural gas, NGLs and crude oil produced from our acreage, could reduce our third-party operators’ ability to market the production from our properties and have a material adverse effect on our financial condition, results of operations and cash flows. Our third-party operators’ access to transportation options and the prices our third-party operators receive can also be affected by U.S. federal and state regulation—including regulation of natural gas, NGL and crude oil production, transportation and pipeline safety—as well by general economic conditions and changes in supply and demand. The interstate transportation and sale for resale of natural gas are subject to federal regulation, including regulation of the terms, conditions and rates for interstate transportation, storage and various other matters, primarily by the Federal Energy Regulatory Commission (“FERC”). FERC’s regulations for interstate natural gas transmission in some circumstances may also affect the intrastate transportation of natural gas. Federal and state regulations also govern the price and terms for access to natural gas pipeline transportation. In addition, the third parties on whom our third-party operators rely for transportation services are subject to complex federal, state, tribal and local laws that could adversely affect the cost, manner or feasibility of conducting our business.

Finally, a decrease in access to midstream and operational infrastructure and bottlenecks in processing and transportation could result in a decline in the price of natural gas, NGLs and crude oil, which could have a material adverse effect on our business, financial condition and results of operations.

Risks Related to Legal, Regulatory and Environmental Matters

Our third-party operators are subject to significant governmental regulations, and governmental authorities can delay or deny permits and approvals or change legal requirements governing our business, which could restrict their operations, increase costs of conducting our business, and delay our implementation of, or cause us to change, our business strategy.

The current and future operations of our business and that of the third-party operators on our land are and will be governed by complex and stringent federal, state, local, and other laws and regulations, including but not limited to:

 

•

laws and regulations governing mineral acquisition, development, production, transportation, marketing and sales;

 

•

laws and regulations related to exports, taxes and fees;

 

•

labor standards and regulations related to occupational health and safety; and

 

•

environmental, health or safety standards and regulations related to waste disposal, pollution clean-up, toxic substances, land use, and protection of the environment and natural resources.

 

54

Federal, state and local agencies may assert overlapping authority to regulate in these areas. Under these laws and regulations, we (either directly or indirectly through our third-party operators) could be liable for personal injuries, property and natural resource damages and other damages. Failure to comply with these laws and regulations may result in the suspension or termination of our business and subject us to administrative, civil and criminal penalties. In addition, certain of these laws and regulations may apply retroactively and may impose strict or joint and several liability on us for events or conditions over which we and our predecessors had no control, without regard to fault, legality of the original activities, or ownership or control by third parties.

Companies engaged in exploration activities often experience increased costs and delays in production and other schedules as a result of the need to comply with applicable laws, regulations and permits. Costs of compliance may increase, and operational delays or restrictions may occur, as existing laws and regulations are revised or reinterpreted, or as new laws and regulations become applicable to our business and our third-party operators. Government authorities and other organizations continue to study health, safety and environmental aspects of mineral operations, including those related to air, soil and water quality, ground movement or seismicity, and natural resources. Government authorities have also adopted or proposed new or more stringent requirements for permitting well construction, and public disclosure or environmental review of, or restrictions on, mineral operations. Such requirements or associated litigation could result in potentially significant added costs to comply, delay or curtail the exploration, development, disposal or production activities of our third-party operators, which could have a material adverse effect on our business, financial condition and results of operations.

To operate in compliance with these laws and regulations, our third-party operators must obtain and maintain permits, approvals and certificates from federal, state and local government authorities for a variety of activities. These permits are generally subject to protest, appeal or litigation, which could in certain cases delay or halt projects, production of wells and other operations. Failure to comply with laws and regulations, including obtaining and maintaining permits, approvals and certificates, may result in enforcement actions, including the forfeiture of claims, or orders issued by regulatory or judicial authorities requiring operations to cease or be curtailed, the assessment of administrative, civil, and criminal fines and penalties and liability for noncompliance, costs of corrective action, cleanup or restoration, including capital expenditures, installation of additional equipment, or remedial actions, compensation for personal injury, property damage or other losses, and the imposition of injunctive or declaratory relief restricting or limiting their operations.

Our business may also be adversely affected by seasonal or permanent restrictions on drilling activities designed to protect various wildlife. The Endangered Species Act (“ESA”) and analogous state laws restrict activities that may affect endangered or threatened species or their habitats. Similar protections are offered to migratory birds under the Migratory Bird Treaty Act. Certain of our properties may overlap with the habitat for species listed under the ESA or analogous state laws, and restrictions designed to protect threatened or endangered species or their habitat may limit the abilities of our third-party operators to operate in certain areas and can intensify competition for drilling rigs, oilfield equipment, services, supplies and qualified personnel, which may lead to periodic shortages when drilling is allowed. Permanent restrictions could prohibit drilling or emplacement of pipelines in certain areas or require the implementation of expensive mitigation measures. These restrictions could have a material adverse effect on our business, financial condition and results of operations to the extent they impact our properties, our third-party operators or our mineral and royalty interests.

The development and enactment of climate change legislation and regulation regarding emissions of greenhouse gases (“GHGs”) could adversely affect the mineral industry and reduce demand for the natural gas and oil that our third-party operators produce.

The energy industry is affected from time to time in varying degrees by political developments and a wide range of federal, tribal, state and local statutes, rules, orders and regulations that may, in turn, affect the operations and costs of the companies engaged in the energy industry. While Congress has from time to time considered legislation to reduce emissions of GHGs, comprehensive legislation aimed at reducing GHG emissions has not

 

55

yet been adopted at the federal level. Notwithstanding the U.S. Environmental Protection Agency’s (“EPA”) recent final rule repealing the “Endangerment Finding” that underlies the majority of its GHG-related regulations, GHG emissions have been regulated by the EPA under previous administrations pursuant to the Clean Air Act of 1970 (as amended, the “CAA”), as well as by state environmental authorities. For example, in December 2023, the EPA finalized stringent emissions control requirements for certain new and existing upstream and midstream natural gas and oil facilities, known as Subparts OOOOb and OOOOc, and failure to comply with these new rules may result in substantial fines and penalties, as well as injunctive relief. However, in March 2025, the EPA announced plans to reconsider Subparts OOOOb and OOOOc and, in November 2025, the EPA finalized an interim final rule extending certain compliance deadlines for certain provisions provided in the rules. Litigation challenging the interim final rule remains pending. In addition, the EPA has adopted rules requiring the monitoring and reporting of GHG emissions from specified onshore and offshore oil and gas production sources in the United States on an annual basis, which may include operations on our properties. In September 2025, the EPA proposed to delay the reporting of GHG emissions for the oil and gas sector until 2034. These proposals are still under consideration and are subject to a number of uncertainties and likely could face legal challenges that would further delay the implementation of any rules, and we cannot predict the ultimate outcome. Litigation challenging the rule rescinding the “Endangerment Finding” is ongoing, and as a result, there is significant uncertainty with respect to regulation of GHG emissions. To the extent new laws or regulations are adopted or issued to address GHG emissions, they could increase compliance costs for our third-party operators or restrict the ability to permit GHG emissions from new or modified sources, which in turn could result in a material adverse impact on our business. In addition, substantial limitations on GHG emissions could adversely affect demand for natural gas, NGLs and oil, which may also adversely affect our business and financial results. Further, the Infrastructure Investment and Jobs Act and the Inflation Reduction Act of 2022 (the “IRA”) include billions of dollars in incentives for the development of renewable energy, clean hydrogen, clean fuels, electric vehicles, investments in advanced biofuels and supporting infrastructure, and carbon capture and sequestration. Additionally, the IRA includes a Waste Emissions Charge for methane emissions from specific types of facilities that emit 25,000 metric tons of carbon dioxide equivalent or more per year, and, although the IRA generally provides for a conditional exemption under certain circumstances, the charge applies to emissions that exceed an established emissions threshold for each type of covered facility. In November 2024, the EPA finalized the Waste Emissions Charge rule. However, in February 2025, Congress repealed the Waste Emissions Charge rule using the Congressional Review Act. In addition, the One Big Beautiful Bill Act, enacted in July 2025, delayed implementation of the charge until 2034. While the EPA cannot reissue its rule implementing the Waste Emissions Charge (either in substantially the same form or in a new rule), the underlying requirement in the IRA remains unchanged. We cannot predict if the Trump administration and/or Congress may take action to repeal or revise this requirement in the IRA. However, compliance with this and other air pollution control and permitting requirements has the potential to delay the development of natural gas and oil projects and increase our third-party operators’ costs of development, with possible significant costs, and adversely affect our business.

Additional GHG regulation could also result from the agreement crafted during the United Nations climate change conference in Paris, France, in December 2015 (the “Paris Agreement”). Under the Paris Agreement, the United States committed to reducing its GHG emissions by 26-28% by the year 2025 as compared with 2005 levels. Moreover, in November 2021, at the U.N. Framework Convention on Climate Change Conference of the Parties (the “Conference of the Parties”), the United States and the European Union advanced a Global Methane Pledge to reduce global methane emissions at least 30% from 2020 levels by 2030, which over 100 countries have signed. At the 27th Conference of the Parties, the United States agreed, in conjunction with the European Union and a number of other partner countries, to develop standards for monitoring and reporting methane emissions to help create a market for low methane intensity natural gas. A decision from the 28^th Conference of the Parties serving as a meeting of the Parties to the Paris Agreement calls on countries to contribute to a list of global efforts, taking into account the Paris Agreement and their different national circumstances, pathways and approaches. This list includes a tripling of renewable energy capacity and doubling the global average rate of energy efficiency improvements by 2030; phasing out inefficient fossil fuel subsidies that do not address energy poverty or just transitions, as soon as possible; and transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner, accelerating action in the 2020s, so as to achieve net zero by 2050 in keeping

 

56

with the science. However, in January 2025, President Trump announced the United States’ withdrawal from the Paris Agreement, and in January 2026, President Trump announced the United States’ withdrawal from the United Nations Framework Convention on Climate Change. In addition, the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo to overrule Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., thus ending the concept of general deference to regulatory agency interpretations of laws, introduces new complexity for federal agencies and administration of climate change policy and regulatory programs. The full impact of these actions remains uncertain at this time but many of these initiatives to address climate change at the international, state and local levels are expected to continue. Consequently, legislation and regulatory programs to address climate change or reduce emissions of GHGs could have a material adverse effect on our business, financial condition and results of operations. In the absence of comprehensive federal climate legislation, a number of state and regional efforts have emerged that are aimed at tracking or reducing GHG emissions by means of cap-and-trade programs, and we cannot predict what or whether states may take further action to regulate GHG emissions following the EPA’s rescission of the “Endangerment Finding.”. These programs typically require major sources of GHG emissions to acquire and surrender emission allowances in return for emitting those GHGs.

Although it is not possible at this time to predict how legislation or new regulations that may be adopted to address GHG emissions would impact us and our third-party operators, any future laws and regulations imposing reporting obligations on, or limiting emissions of GHGs from, such operators’ equipment and operations could require them to incur costs to reduce emissions of GHGs associated with their operations, which could adversely impact our business. In addition, substantial limitations on GHG emissions could adversely affect demand for the natural gas and oil produced from our properties. Restrictions on emissions of methane or carbon dioxide, such as restrictions on venting and flaring of natural gas, that may be imposed in various states, as well as state and local climate change initiatives, such as increased energy efficiency standards or mandates for renewable energy sources, could adversely affect the oil and gas industry. It is not possible at this time to accurately estimate how potential future laws or regulations addressing GHG emissions would impact oil and gas assets. Increasingly, natural gas and oil companies are exposed to litigation risks resulting from climate change. A number of parties have brought suits against natural gas and oil companies in state or federal court, including suits for alleged contributions to, or failure to disclose the impacts of, climate change. While we are not currently party to any such litigation, we or our third-party operators could be named in future actions making similar claims of liability. Moreover, to the extent that societal pressures or political or other factors are involved, it is possible that such liability could be imposed without regard to the company’s causation of or contribution to the asserted damage. Involvement in any such litigation could have a material adverse impact on our business, financial condition and results of operations.

Finally, climate change may have significant physical effects, such as increased frequency and severity of extreme weather events (including storms, freezes, floods, drought, hurricanes and other climatic events) or changes in meteorological and hydrological patterns, that could adversely impact our third-party operators. Such effects may result from damage to our third-party operators’ facilities, including through restrictions on the use of water due to drought and indirect impacts from supply chain disruption and market volatility. These effects may adversely affect our business, financial condition and results of operations.

Increased attention to sustainability-related matters and conservation measures may impact our business or the business of our third-party operators.

Increased attention to climate change, and sometimes conflicting societal expectations on companies to address climate change and consumer demand for alternative forms of energy, may result in increased costs, reduced demand for natural gas, NGLs and oil, reduced profits, increasing administrative, legislative and judicial scrutiny, reputational damage and negative impacts on us or our third-party operators, which may ultimately have adverse impacts on our business, such as our access to capital markets as well as the price of our Class A common stock. Increased attention to climate change and environmental conservation, for example, may result in demand shifts for natural gas and oil products and governmental investigations, private litigation or activist campaigns against us or our third-party operators.

 

57

While we may elect to pursue certain sustainable energy-related strategies in the future, any such goals are aspirational and may not have the intended impact on our business. We may also receive pressure from investors, lenders or other groups to adopt more aggressive climate or other sustainability-related goals, and we cannot guarantee that we will be able to pursue or implement such goals because of potential costs or technical or operational obstacles. Moreover, failure or a perception (whether or not valid) of failure to pursue or implement such strategies or achieve such goals or commitments, including any GHG emission reduction or carbon intensity goals or commitments, could result in private litigation and damage our reputation, cause investors or consumers to lose confidence in us, and negatively impact our third-party operators. Additionally, to the extent sustainability-related matters negatively impact our reputation, we may not be able to compete as effectively to recruit or retain employees, which may adversely affect our business.

Some organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on their approach to sustainability concerns. Such ratings are used by some investors to inform their investment and voting decisions. While such ratings do not impact all investors’ decisions, unfavorable ratings and any recent activism directed at shifting funding away from companies with energy-related assets could lead to increased negative investor sentiment toward us, our third-party operators and our industry and to the diversion of investment to other industries, which could have a negative impact on our access to and costs of capital. Additionally, certain public statements with respect to sustainability matters, such as emissions reduction claims, are becoming increasingly subject to heightened scrutiny from public and governmental authorities, as well as other parties, related to the risk of potential “greenwashing”—i.e., misleading information or false claims overstating potential benefits. Any alleged claims of greenwashing against us or others in our industry may lead to further negative sentiment and diversion of investments.

Our third-party operators’ exploration and development activities are subject to hazardous operating risks, which could expose our third-party operators to significant liability, delay, suspension or termination of their operations.

Our third-party operators are subject to all of the hazards and operating risks associated with drilling for and production of natural gas, NGLs and crude oil, including the risk of fire, explosions, blowouts, surface cratering, uncontrollable flows of natural gas, NGLs and crude oil and formation water, pipe or pipeline failures, abnormally pressured formations, casing collapses and environmental hazards such as crude oil and NGL spills, natural gas leaks and ruptures or discharges of toxic gases. In addition, their operations will be subject to risks associated with hydraulic fracturing, including any mishandling, surface spillage or potential underground migration of fracturing fluids, including chemical additives. The occurrence of any of these events could result in substantial losses to our third-party operators due to injury or loss of life, severe damage to or destruction of property, natural resources and equipment, pollution or other environmental damage, clean-up responsibilities, regulatory investigations and penalties, suspension of operations and repairs required to resume operations, which in turn could have a material adverse effect on our business, financial condition and results of operations.

The exploration and possible future development phases of the business of the third-party operators we work with are and will be subject to federal, state and local environmental, health and safety regulations. These regulations mandate, among other things, the maintenance of air and water quality standards and land reclamation. They also set out limitations on the generation, transportation, storage and disposal of solid and hazardous waste, impose restrictions on activities to protect certain species and regulate worker health and safety. Future environmental legislation may require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments and a heightened degree of responsibility for companies and their officers, directors and employees. Future changes in environmental regulations, if any, may adversely affect our third-party operators, and, as a result, our business. If our third-party operators fail to comply with any applicable environmental laws, regulations or permit requirements, they could face regulatory or judicial sanctions. Penalties imposed by either the courts or administrative bodies could delay or stop their operations to develop our minerals or require considerable capital expenditures. Furthermore, certain groups

 

58

opposed to exploration and mining may attempt to interfere with their operations through the legal or regulatory process or by engaging in disruptive protest activities. The occurrence of any of these risks to our third-party operators could in turn have a material adverse effect on our business, financial condition and results of operations.

Environmental hazards unknown to us, which have been caused by previous or existing owners or operators of our properties, may exist on our properties. Our properties could be located on or near the site of a federal cleanup project, and that environmental cleanup or other environmental restoration procedures could remain pending or mandated by law, which may result in unexpected liabilities, with total costs that are difficult to predict.

The Comprehensive Environmental, Response, Compensation and Liability Act (“CERCLA”) and comparable state statutes impose strict, joint and several liability on current and former owners and operators of sites and on persons who disposed of or arranged for the disposal of hazardous substances found at such sites. It is not uncommon for the government to file claims requiring cleanup actions, demands for reimbursement for government-incurred cleanup costs, or natural resource damages, or for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by hazardous substances released into the environment. The Federal Resource Conservation and Recovery Act (“RCRA”) and comparable state statutes govern the disposal of solid waste and hazardous waste and authorize the imposition of substantial fines and penalties for noncompliance, as well as requirements for corrective actions and financial assurance. CERCLA, RCRA and comparable state statutes can impose liability for clean-up of sites and disposal of substances found on exploration and processing sites long after activities on such sites have been completed.

The CAA restricts the emission of air pollutants from many sources, including drilling and production activities. The drilling and production operations conducted by third parties to develop our minerals may produce air emissions, including fugitive dust and other air pollutants from stationary equipment, storage facilities and the use of mobile sources such as trucks and heavy construction equipment, which are subject to review, monitoring and/or control requirements under the CAA and state air quality laws. In undeveloped properties, our third-party operators may be required to obtain permits before work can begin, and, in properties with existing facilities, our third-party operators may need to incur capital costs in order to remain in compliance. In addition, permitting rules may impose limitations on operators’ production levels or result in additional capital expenditures in order to comply with the rules.

The National Environmental Policy Act requires federal agencies to integrate environmental considerations into their decision-making processes by evaluating the environmental impacts of their proposed actions and assessing alternatives to those actions. If a proposed federal action could significantly affect the environment, the agency must prepare a detailed statement known as an Environmental Impact Statement (“EIS”). The EPA, other federal agencies and any interested third parties will review and comment on the scoping of the EIS and the adequacy of and findings set forth in the draft and final EIS. This process can cause delays in the issuance of required permits, litigation over the adequacy of the EIS or result in changes to a project to mitigate its potential environmental impacts, which can in turn adversely impact the economic feasibility of a proposed project.

The Clean Water Act (the “CWA”) and comparable state statutes impose restrictions and controls on the discharge of pollutants into waters of the United States. The discharge of pollutants into regulated waters is prohibited, except in accordance with the terms of a permit issued by the EPA or an analogous state agency. Such a permit requires the regulated facility to monitor and sample storm water run-off from its operations. The CWA and regulations implemented thereunder also prohibit the discharge of dredged and fill material in certain wetlands and other regulated waters unless authorized by an appropriately issued permit. The CWA and comparable state statutes provide for civil, criminal and administrative penalties for the unauthorized discharge of pollutants and impose liability on parties responsible for those discharges for the costs of cleaning up any environmental damage caused by the discharge and for natural resource damages resulting from the discharge.

 

59

The Safe Drinking Water Act (the “SDWA”) and the Underground Injection Control (the “UIC”) program promulgated thereunder regulate the drilling and operation of subsurface injection wells. The EPA directly administers the UIC program in some states; in other states, including those in which we own property, the responsibility for the program has been delegated to the state. The UIC program requires that a permit be obtained before drilling a disposal or injection well. Violation of these regulations and/or contamination of groundwater may result in fines, penalties and remediation costs, among other sanctions and liabilities under the SDWA and state laws. In addition, third-party claims may be filed by neighboring landowners and other parties claiming damages for alternative water supplies, property damages, and bodily injury.

There can be no assurance that the defense of such claims by us or our third-party operators will be successful and a successful claim against us or any of the third parties we contract with could have an adverse effect on our business, financial condition and results of operations.

Future legislative or regulatory changes may result in increased costs and decreased revenues, cash flows and liquidity, all of which could have a material adverse effect on our business, financial condition and results of operations.

Companies that operate wells in which we own mineral and royalty interests are subject to extensive federal, state and local regulation. We, as a minerals and royalties interest owner, are therefore indirectly subject to these same regulations. In particular, changes in law or regulation related to hydraulic fracturing or GHGs could significantly increase capital, compliance and operating costs, as well as halt or delay the further development of gas and oil reserves on our properties.

Federal Income Taxation

We are subject to U.S. federal income tax, as well as income or capital-based taxes in various states, and our operating cash flows are sensitive to the amount of income taxes we must pay. Income taxes are assessed on our net income as determined for federal income tax purposes, considering allowable deductions and credits. Changes in the types of earnings that are subject to income tax, the types of items that are considered allowable deductions or the rates assessed on our taxable earnings would all impact our income taxes and resulting operating cash flows.

Further revisions to U.S. tax law, such as any increase in corporate income tax rates, the repeal of the percentage depletion allowance, or the repeal of expensing for intangible drilling costs, could have a material adverse effect on our business. Moreover, the U.S. Department of Treasury has broad authority to issue regulations and interpretative guidance that may significantly impact how we apply U.S. tax law, with a corresponding impact on the results of our operations for the periods affected.

Hydraulic Fracturing and Water Disposal

The vast majority of natural gas and oil wells drilled in recent years have been, and future wells are expected to be, hydraulically fractured as a part of the process of completing the wells and putting them on production, including the wells drilled in which we own an interest. Hydraulic fracturing is a process that involves pumping water, sand and additives at high pressure into rock formations to stimulate natural gas and oil production. In developing plays where hydraulic fracturing, which requires large volumes of water, is necessary for successful development, the demand for water may exceed the supply. Over the past several years, parts of the country have experienced extreme drought conditions. As a result of this severe drought, some local water districts have begun restricting the use of water subject to their jurisdiction for hydraulic fracturing to protect local water supply. Such conditions may be exacerbated by climate change. If our third-party operators are unable to obtain water to use in their operations from local sources, or if our third-party operators are unable to effectively utilize flowback water, they may be unable to economically drill for or produce natural gas, NGLs and crude oil from our properties, which could have a material adverse effect on our business, financial condition and results of operations.

 

60

In addition to water, hydraulic fracturing fluid contains chemical additives designed to optimize production. Well operators are required in certain states to disclose the components of these additives. Additional states and the federal government may follow with similar requirements or may restrict the use of certain additives. This could result in more costly or less effective development of wells.

The fluid produced from the fractured formation must be either treated for reuse or disposed of by injecting the fluid into disposal wells. Injection well disposal processes have been, and continue to be, studied to determine the extent of correlation between injection well disposal and the occurrence of earthquakes. Certain studies have concluded there is a correlation, and this has resulted in the cessation of or the reduction of injection rates in certain water disposal wells, especially in northern Oklahoma.

Efforts to regulate hydraulic fracturing and fluid disposal continue at the local, state and federal level. For example, the EPA has asserted regulatory authority pursuant to the SDWA UIC program over hydraulic fracturing activities involving the use of diesel and issued guidance covering such activities. New regulations are being considered, including limiting water withdrawals and usage, limiting water disposition, restricting which additives may be used, implementing statewide hydraulic fracturing moratoriums and temporary or permanent bans in certain environmentally sensitive areas. Public sentiment against hydraulic fracturing and fluid disposal and shale production could result in more stringent permitting and compliance requirements. Consequences of any of these regulation efforts could increase capital, compliance and operating costs significantly, as well as delay or halt the further development of gas and oil reserves on our properties.

Any of the above factors could have a material adverse effect on our business, financial condition and results of operations.

Inflation Reduction Act of 2022

The IRA appropriates significant federal funding for renewable energy initiatives. These incentives could accelerate the transition of the U.S. economy towards lower- or zero-carbon emissions alternatives, which could decrease demand for oil and gas. Moreover, the IRA imposes a federal fee on GHG emissions through a Waste Emissions Charge. The IRA amends the federal Clean Air Act to impose a fee on the emission of methane from sources required to report their GHG emissions to the EPA, including those sources in the onshore petroleum and natural gas production and gathering and boosting source categories. However, the One Big Beautiful Bill Act, enacted in July 2025, delays implementation of the charge until 2034. While the EPA cannot reissue its rule implementing the Waste Emissions Charge (either in substantially the same form or in a new rule), the underlying requirement in the IRA remains unchanged. Although we cannot predict if the Trump administration and/or Congress may take action to repeal or revise this requirement of the IRA, compliance with this and other air pollution control and permitting requirements has the potential to delay the development of natural gas projects and increase our third-party operators’ costs of development, which costs could be significant, and in turn have a material adverse effect on our business, financial condition and results of operations.

On January 20, 2025, President Trump issued the “Unleashing American Energy” executive order (EO 14154), which directs federal agencies to suspend the disbursement of funds under the IRA, reassess existing energy policies, and streamline permitting processes for oil and gas development. If fully implemented, EO 14154 is expected to reduce compliance costs, expand development opportunities, and provide more investment certainty. However, while the executive order signals a shift in energy policy, certain provisions of the IRA were enacted through legislation that may require congressional action or judicial review before being fully repealed or modified, and agency actions taken pursuant to EO 14154 have been subject to litigation. We will continue to monitor regulatory developments, potential legal challenges, and legislative actions that may affect the implementation of EO 14154. While the administration’s energy policies appear broadly supportive of the oil and gas industry, ongoing legal and political dynamics may impact the extent to which specific provisions are ultimately enforced or rescinded.

 

61

Seismic Activity

In response to concerns related to earthquakes in northern and central Oklahoma and Texas near underground disposal wells used for the injection of flowback and produced water (known as “induced seismicity”), regulators in some states, including Oklahoma and Texas, have imposed, or are considering imposing, certain limits on or requirements related to the permitting or operation of produced water disposal wells in areas with increased instances of induced seismic events. States may, from time to time, develop and implement plans directing certain wells in proximity to where seismic incidents have occurred to restrict or suspend well operations. These legislative and regulatory initiatives may result in additional levels of regulation that could lead to operational delays, litigation concerning, and greater opposition to, natural gas and oil activities using injection wells for waste disposal, and increased operating and compliance costs or otherwise adversely affect operations. Increased restrictions may also have a material adverse effect on our third-party operators and operations on our properties, which could have an indirect adverse effect on our business, financial condition and result of operations.

The adoption of derivatives legislation by the U.S. Congress could have an adverse effect on us and our ability to hedge risks associated with our business.

The Dodd-Frank Act required, in part, that the U.S. Commodity Futures Trading Commission (“CFTC”) and the SEC promulgate rules and regulations to establish federal oversight for the over-the-counter (“OTC”) derivatives markets and entities that participate in those markets. Although the CFTC and the SEC have issued final regulations in certain areas, final rules in other areas and the scope of relevant definitions and/or exemptions still remain to be finalized.

Effective March 15, 2021, the CFTC implemented its final rule concerning speculative position limits, adopting new and amended federal spot-month limits for 2025 physical commodity derivatives. Under this rule, certain types of hedging transactions are exempt from these limits on the size of positions that may be held, provided that such hedging transactions satisfy the CFTC’s requirements for certain enumerated “bona fide hedging” transactions or positions.

The CFTC has also adopted final rules regarding aggregation of positions, under which a party that controls the trading of, or owns 10% or more of the equity interests in, another party will have to aggregate the positions of the controlled or owned party with its own positions for purposes of determining compliance with position limits unless an exemption applies. With the implementation of the final aggregation rules and upon the adoption and effectiveness of final CFTC position limits rules, our ability to execute our hedging strategies described above could be limited. It is uncertain at this time whether, when and in what form the CFTC’s proposed new position limits rules may become final and effective.

The CFTC issued a final rule on margin requirements for uncleared swap transactions on January 6, 2016. This final rule was amended on February 24, 2021 to permit the application of a minimum transfer amount of up to $50,000 for each separately managed account of a legal entity that is a counterparty to a swap dealer or a major swap participant in an uncleared swap transaction and to permit the application of separate minimum transfer amounts for initial margin and variation margin.

In addition, the CFTC has issued a final rule authorizing an exemption from the otherwise applicable mandatory obligation to clear certain types of swap transactions through a derivatives clearing organization and to trade such swaps on a regulated exchange, which exemption applies to swap transactions entered into by commercial end-users in order to hedge commercial risks affecting their business. The mandatory clearing requirement currently applies only to certain interest rate swaps and credit default swaps, but the CFTC could act to impose mandatory clearing requirements for other types of swap transactions. The Dodd-Frank Act also imposes recordkeeping and reporting obligations on counterparties to swap transactions and other regulatory compliance obligations.

All of the above regulations could increase the costs to us of entering into financial derivative transactions to hedge or mitigate our exposure to commodity price volatility and other commercial risks affecting our business.

 

62

The Volcker Rule provisions of Dodd-Frank may also require our current bank counterparties that engage in financial derivative transactions to spin off some of their derivatives activities to separate entities, which separate entities may not be as creditworthy as the current bank counterparties. Under such rules, other bank counterparties may cease their current business as hedge providers. These changes could reduce the liquidity of the financial derivatives markets thereby reducing the ability of entities like us, as commercial end-users, to have access to financial derivatives to hedge or mitigate our exposure to commodity price volatility.

As a result, Dodd-Frank and any new regulations issued thereunder could significantly increase the cost of derivative contracts (including through requirements to post cash collateral), which could adversely affect our capital available for other purposes, materially alter the terms of future swaps relative to the terms of our existing bilaterally negotiated financial derivative contracts and reduce the availability of derivatives to protect against commercial risks we encounter.

If we reduce our use of derivative contracts as a result of the new requirements, our results of operations may become more volatile and cash flows less predictable, which could adversely affect our ability to plan for and fund capital expenditures. Finally, the legislation was intended, in part, to reduce the volatility of natural gas, NGL and oil prices, which some legislators attributed to speculative trading in derivatives and commodity instruments related to natural gas, NGLs and oil. Our revenues could therefore be adversely affected if a consequence of the legislation and regulations is to lower commodity prices. Any of these consequences could have a material adverse effect on our business, financial condition and results of operations.

Restrictions on the ability of our third-party operators to obtain water may have a material adverse effect on our business, financial condition and results of operations.

Water is an essential component of natural gas, NGL and crude oil production during both the drilling and hydraulic fracturing processes. Over the past several years, parts of the country have experienced extreme drought conditions. As a result of this severe drought, some local water districts have begun restricting the use of water subject to their jurisdiction for hydraulic fracturing to protect local water supply. Such conditions may be exacerbated by climate change. If our third-party operators are unable to obtain water to use in their operations from local sources or at commercially reasonable rates, or if our third-party operators are unable to effectively utilize flowback water, they may be unable to economically drill for or produce natural gas, NGLs and crude oil from our properties, which could have a material adverse effect on our business, financial condition and results of operations.

Risks Related to Our Indebtedness

Our use of borrowings to finance our business exposes us to risks.

We use indebtedness as a means to finance our business strategies, which exposes us to the typical risks associated with using leverage. Upon the closing of this offering, we expect our material indebtedness to consist of (i) our Note Purchase Agreement, which we anticipate assigning to WhiteHawk OpCo, paying down to approximately $75.0 million of principal, and amending to become a second lien obligation, and (ii) our new Revolving Credit Facility, providing for an initial aggregate maximum credit amount of $500 million, an initial aggregate elected commitment amount of $150 million and an initial borrowing base of $150 million. See “Description of Material Indebtedness” for further information regarding our outstanding indebtedness. We may continue to strategically utilize long-term indebtedness in connection with the acquisition of additional assets. There can be no assurance that we will have sufficient cash on hand with which to repay any outstanding borrowings. There can also be no assurance that leveraged financing will continue to be available to us on favorable terms or at all. Our stockholders may bear the burden of any increase in our expenses as a result of our use of leverage, including interest expenses. To the extent that we use leverage to finance our assets, our financing costs will reduce cash available for dividends to our stockholders.

 

63

Our failure to comply with the covenants contained in the Note Purchase Agreement and the Revolving Credit Facility, including as a result of events beyond our control, could result in an event of default that could cause repayment of our Senior Notes and borrowings under the Revolving Credit Facility to be accelerated.

The Note Purchase Agreement (as defined herein) governing our Senior Notes and the Revolving Credit Facility impose, and the agreements governing our future indebtedness may impose, material restrictions on us that limit our operating flexibility, which could harm our long-term interests. These restrictions, subject in certain cases to ordinary course of business and other exceptions, may limit our ability to engage in some transactions, including the following:

 

•

incurring or guaranteeing additional indebtedness;

 

•

paying dividends, redeeming capital stock or making other restricted payments;

 

•

making payments in respect of certain second lien/senior notes or junior debt;

 

•

making investments, including acquisitions, loans and advances;

 

•

entering into burdensome agreements with negative pledge clauses or restrictions on subsidiary distributions;

 

•

selling, transferring or otherwise disposing of assets, properties or licenses;

 

•

creating liens on assets and capital stock to secure any indebtedness

 

•

undergoing a change in control;

 

•

merging, consolidating, liquidating, or dissolving;

 

•

entering into new lines of business or materially altering our business and the business conducted by certain of our subsidiaries; and

 

•

entering into transactions with affiliates.

In addition to imposing restrictions on our business and operations, the Note Purchase Agreement includes covenants relating to financial ratios and tests, and the Revolving Credit Facility will require us to maintain, as of the last day of each fiscal quarter (commencing with the first full fiscal quarter ending after the closing of this offering), a consolidated net leverage ratio of no greater than 3.50 to 1.00 and a current ratio of no less than 1.00 to 1.00. Any future debt instruments may also include such covenants. The Note Purchase Agreement also requires us to prepay our Senior Notes on a quarterly basis, an amount equal to the lesser of: (A) the difference between the aggregate outstanding principal amount of our Senior Notes and the Target Debt Balance (as defined in the Note Purchase Agreement) as of the date thereof, and (B) any liquidity (calculated on a Distribution PF Basis (as defined in the Note Purchase Agreement)) in excess of the Minimum Liquidity Amount (as defined in the Note Purchase Agreement).

Any failure to comply with the restrictions of our indebtedness, and any subsequent financing agreements, including as a result of events beyond our control, may result in an event of default under these agreements, which in turn may result in defaults or acceleration of obligations under these agreements and other agreements, giving our lenders and other debt holders the right to terminate any commitments they may have made to provide us with further funds and to require us to repay all amounts then outstanding. Our assets and cash flows may not be sufficient to fully repay borrowings under our outstanding debt instruments. In addition, we may not be able to refinance or restructure the payments on the applicable debt. Even if we were able to secure additional financing, it may not be available on favorable terms.

 

64

Our Revolving Credit Facility and our hedging agreements are secured by substantially all of our assets and is subject to an intercreditor agreement, and our Note Purchase Agreement will be a second lien obligation, which could limit our financial and operating flexibility and expose holders of our Senior Notes to increased risk in the event of an enforcement action.

The Revolving Credit Facility and our obligations under our hedging agreements will be secured by liens on substantially all of WhiteHawk OpCo’s properties and assets, the properties and assets of its subsidiaries, and pledges of the equity interests in all of WhiteHawk OpCo’s present and future subsidiaries (subject to certain exceptions), and will be guaranteed by substantially all of WhiteHawk OpCo’s existing and future direct and indirect subsidiaries, with certain customary or agreed upon exceptions. Upon the closing of this offering, the Note Purchase Agreement is expected to be amended to become a second lien obligation on substantially the same collateral, subject to an intercreditor agreement governing the relative rights and priorities of the first lien secured parties under the Revolving Credit Facility and the second lien secured parties under the Note Purchase Agreement. If we are unable to repay our secured obligations when due, the first lien lenders could foreclose on or otherwise exercise remedies with respect to the collateral prior to the second lien secured parties, and the value of the collateral may not be sufficient to repay all amounts owing under the Revolving Credit Facility and the Note Purchase Agreement. The intercreditor agreement may also restrict the ability of the holders of our Senior Notes to exercise remedies, challenge the first lien liens, or otherwise protect their interests during periods of default or insolvency.

The borrowing base under our Revolving Credit Facility is subject to periodic redetermination and other automatic reductions, which could require us to repay outstanding borrowings on short notice.

The borrowing base under the Revolving Credit Facility is subject to semi-annual redeterminations on April 15 and October 15 of each year, commencing October 15, 2026, based on a review of our proved oil and gas reserves, commodity prices and other factors deemed relevant by the administrative agent. In addition, each of WhiteHawk OpCo and the administrative agent (at the direction of the required lenders) may elect to initiate one interim redetermination between scheduled redeterminations, and we may elect an additional interim redetermination in connection with acquisitions of oil and gas properties representing at least 5% of the then-effective borrowing base. The borrowing base will also be automatically reduced (i) by the borrowing base value of any oil and gas properties disposed of or swap agreements terminated if the aggregate value of such dispositions and terminations since the most recent redetermination exceeds 5% of the then-effective borrowing base and (ii) upon the issuance of any permitted senior notes, by 25% of the aggregate stated principal amount of such notes. A decrease in commodity prices, downward revisions to our reserve estimates, asset dispositions, swap terminations, senior note issuances or changes in the lenders’ lending policies could result in a reduction of our borrowing base. If our outstanding borrowings exceed the redetermined borrowing base, we could be required to repay such excess, which we may be unable to do on a timely basis or at all, and any such mandatory repayment could materially and adversely affect our liquidity, financial condition and results of operations.

The Revolving Credit Facility will require us to maintain specified commodity hedges, which may limit our ability to benefit from favorable commodity prices and expose us to counterparty and other hedging risks.

The Revolving Credit Facility will require us, on the last day of each fiscal quarter, to maintain swap agreements hedging a minimum percentage of our reasonably projected production of crude oil and natural gas from proved developed producing reserves, with required percentages and tenors that vary based on our Consolidated Net Leverage Ratio. If our Consolidated Net Leverage Ratio is at least 1.50 to 1.00, we must hedge at least 50% of reasonably projected production for each of the 24 months following such date; if the ratio is at least 1.00 to 1.00 but less than 1.50 to 1.00, we must hedge at least 50% for 12 months and at least 25% for months 13 through 24; and if the ratio is less than 1.00 to 1.00, we must hedge at least 50% for 12 months; provided that if our natural gas production exceeds 90% of our aggregate production, determined on a barrel of oil equivalent basis, we will not be required to hedge our volumes of crude oil. These required hedging levels may prevent us from realizing the full benefit of increases in commodity prices, may require us to enter into or maintain hedges at unfavorable

 

65

times or prices, and expose us to counterparty credit risk and mark-to-market volatility. A failure to maintain required hedges would result in an event of default under the Revolving Credit Facility.

The Revolving Credit Facility and the Note Purchase Agreement restrict our ability to pay cash dividends and make other distributions to our stockholders.

The Revolving Credit Facility will permit us to make cash restricted payments to holders of our equity interests only if, both before and immediately after giving effect to any such restricted payment, (i) no default, event of default or borrowing base deficiency exists, (ii) unused availability is at least 10% of the loan limit, (iii) our Consolidated Net Leverage Ratio is less than or equal to 3.00 to 1.00 on a pro forma basis and (iv) such dividends and distributions are permitted by the Note Purchase Agreement, as in effect immediately following the amendment to the Note Purchase Agreement. See “Description of Material Indebtedness.” As a result, our ability to pay cash dividends on, or repurchase, our common stock will depend on our continued compliance with these conditions as well as the other covenants in our debt agreements. If we are unable to satisfy these conditions, we may be unable to pay cash dividends at the levels anticipated at the time of this offering, or at all, which could adversely affect the market price of our common stock.

Despite current indebtedness levels, we may incur substantial additional indebtedness in the future. This could further increase the risks associated with our indebtedness.

We may incur substantial additional indebtedness in the future, which would increase our debt service obligations and could further reduce cash available to invest in additional assets. The terms of our Notes do not fully prohibit us or our subsidiaries from incurring additional indebtedness, subject to limitations. As of December 31, 2025, we had $237.7 million of borrowings outstanding under our Senior Notes. Upon the closing of this offering, we will have borrowing capacity under the Revolving Credit Facility of up to an initial aggregate elected commitment amount of $150 million (with an initial aggregate maximum credit amount of $500 million), subject to borrowing base redeterminations and satisfaction of customary borrowing conditions. The Revolving Credit Facility will also allow us to request that the aggregate elected commitments be increased up to the aggregate maximum credit amount, subject to certain conditions. If new debt is added to our debt levels, or any debt is incurred by our subsidiaries, the related risks that we and our subsidiaries currently face could increase.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Our Notes and borrowings under the Revolving Credit Facility bear interest at variable rates and expose us to interest rate risk. See “Description of Material Indebtedness” for further information regarding our Notes and the Revolving Credit Facility. Borrowings under the Revolving Credit Facility will bear interest, at our option, at a rate equal to either (i) an alternate base rate (the greatest of the Prime Rate, the Federal Funds Rate plus 1/2 of 1.00%, or one-month Term SOFR plus 1.00%) plus an applicable margin ranging from 1.50% to 2.50%, or (ii) Term SOFR plus an applicable margin ranging from 2.50% to 3.50%, in each case based on utilization of the borrowing base, and the unused portion of the Revolving Credit Facility will be subject to a commitment fee ranging from 0.375% to 0.50%. Term SOFR will be subject to a floor of 2.50% while the Senior Notes are in effect and 0.00% thereafter. If interest rates increase, our interest payments would increase even though the amount borrowed remains the same, and our net income and cash flows, including cash available for servicing our indebtedness, would correspondingly decrease. Although we may enter into agreements limiting our exposure to higher interest rates, these agreements may not be effective.

 

66

Risks Related to this Offering and Ownership of Our Class A Common Stock

As an emerging growth company within the meaning of the Securities Act, we may utilize certain modified disclosure requirements, and we cannot be certain if these reduced requirements will make shares of our Class A common stock less attractive to investors.

We are an emerging growth company, and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to “emerging growth companies,” including:

 

•

presenting only two years of audited financial statements;

 

•

an exemption from compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act;

 

•

reduced disclosure about our executive compensation arrangements in our periodic reports, proxy statements and registration statements; and

 

•

exemptions from the requirements of holding non-binding advisory votes on executive compensation or golden parachute arrangements.

We have in this prospectus utilized, and we may in future filings with the SEC continue to utilize, the modified disclosure requirements available to emerging growth companies. As a result, our stockholders may not have access to certain information they may deem important.

In addition, Section 107 of the JOBS Act also provides that an emerging growth company can utilize the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Thus, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to not “opt out” of this exemption from complying with new or revised accounting standards, and, therefore, we are permitted to adopt new or revised accounting standards at the time private companies adopt the new or revised accounting standards and are permitted to do so until such time that we either (i) irrevocably elect to “opt out” of such extended transition period or (ii) no longer qualify as an emerging growth company. As a result, we will not be subject to the same new or revised accounting standards at the same time as other public companies that are not emerging growth companies or those that have opted out of using such extended transition period, which may make comparison of our financial statements with such other public companies more difficult.

Following this offering, we will remain an emerging growth company until the last day of the fiscal year following the fifth anniversary of the completion of our initial public offering unless, prior to that time, we have more than $1.235 billion in annual gross revenue, have a market value for our Class A common stock held by non-affiliates of more than $700 million as of the last day of our second fiscal quarter of the fiscal year and a determination is made that we are deemed to be a “large accelerated filer,” as defined in Rule 12b-2 promulgated under the Exchange Act, or issue more than $1.0 billion of non-convertible debt over a three-year period, whether or not issued in a registered offering.

We could be subject to claims based on the defective corporate acts ratified by us pursuant to Section 204 of the DGCL.

In connection with our preparation for this offering, we identified that our certificate of incorporation, as filed with the Delaware Secretary of State, did not align with our historical issuances of Class A common stock. As a result, shares of our Class A common stock were issued in excess of the number of authorized shares of Class A common stock under our certificate of incorporation then in effect. We also identified that shares of our Class A common stock and preferred stock may have been issued without obtaining certain required approvals of our board of directors and stockholders, and that our initial board of directors was not properly elected. Because these actions were not authorized and effected in compliance with the DGCL, they constituted “defective corporate acts” within the meaning of Section 204 of the DGCL.

 

67

On December 29, 2025, our board of directors adopted resolutions ratifying these defective corporate acts in accordance with Section 204 of the DGCL, including the election of our initial board of directors and all historical issuances of our Class A common stock and preferred stock. In connection with the ratification, we filed certificates of validation with the Delaware Secretary of State to reflect the intended number of authorized shares of Class A common stock in our certificate of incorporation, which have been processed and are effective. We delivered notice of the ratification to our stockholders on January 15, 2026, in accordance with the requirements of Section 204 of the DGCL.

Under Section 204 of the DGCL, any claim that any of the ratified defective corporate acts or putative stock is void or voidable due to the failures of authorization (as that term is used in Section 204), or any claim that the Delaware Court of Chancery should declare in its discretion that the ratification thereof not be effective or be effective only on certain conditions, must be brought within 120 days from the date on which notice of the ratification is given. Until such notice is given and the applicable 120-day period has expired, a stockholder or other party may seek to challenge the effectiveness of the ratification and the Delaware Court of Chancery could determine that the ratification was not effective or that additional actions are required to fully validate the defective corporate acts.

If the ratification of these defective corporate acts is successfully challenged, or if we are required to undertake additional corrective actions, we could be subject to further claims, disputes, or liabilities, including with respect to the validity, ownership, or issuance of our outstanding equity securities. Any such claims, disputes, or liabilities could result in significant costs, divert management’s attention, adversely affect our business, financial condition, and results of operations, and adversely affect the rights of our stockholders.

Delaware law and anti-takeover provisions in our governing documents, as well as our existing and future debt agreements, could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current directors and may deprive our investors of the opportunity to receive a premium for their shares.

Our amended and restated certificate of incorporation, amended and restated bylaws and Delaware law contain provisions that will have the effect of rendering more difficult, delaying or preventing a third party from, acquiring control of us without the approval of our board of directors. Among other things, these provisions:

 

•

have terms that have the same effect as DGCL Section 203;

 

•

provide for a classified board of directors with staggered three-year terms;

 

•

authorize the issuance of “blank check” preferred stock, the terms of which are established by our board of directors without any need for action by stockholders, that could be used to implement a stockholder rights plan;

 

•

do not permit stockholders to call special meetings of stockholders;

 

•

do not permit stockholders to act by written consent; and

 

•

establish advance notice procedures, which apply for stockholders to nominate candidates for election to our board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings.

Further, documents governing our indebtedness impose limitations on our ability to enter into change of control transactions and we anticipate that any documents governing our future indebtedness will also impose such limitations. The occurrence of a change of control transaction could constitute an event of default thereunder and permit acceleration of the indebtedness, thereby impeding our ability to enter into certain transactions.

The foregoing factors could discourage, delay or prevent a transaction involving a change in control of the Company, which could limit the opportunity for our stockholders to receive a premium for their shares of our Class A common stock and could also affect the price that some investors are willing to pay for Class A common stock. See “Description of Capital Stock.”

 

68

We intend to pay regular dividends to our stockholders, but our ability to do so is subject to the discretion of our board of directors and may be limited by distributions and other payments from OpCo and our operating subsidiaries our financial condition, results of operations, cash flows, prospects, industry conditions, capital requirements, instruments governing our indebtedness and other factors and restrictions our board of directors deems relevant.

After the consummation of this offering, we intend to pay our stockholders regular dividends. However, the payment of dividends and other distributions is at the discretion of our board of directors and our board of directors may, in its discretion, increase, decrease or eliminate the payment of dividends. Our ability to pay dividends depends on many factors, including, but not limited to, financial conditions, results of operations, cash flows, prospects, industry conditions, capital requirements, instruments governing our indebtedness (including those goverinng our Senior Notes and the Revolving Credit Facility), any preferred stock, general business conditions and any other factors that our board of directors may deem relevant in making such a determination. Additionally, because we have no independent means of generating revenue or cash flow and we anticipate that the only source of our earnings will be cash distributions from our operating subsidiaries, our ability to pay dividends is dependent on the ability of our operating subsidiaries to make distributions to OpCo and the ability of OpCo to make distributions to us in an amount sufficient to cover such obligations. In particular, our ability to pay dividends is limited by covenants governing our Senior Notes and Revolving Credit Facility and may be further restricted by the terms of any future debt or preferred securities. See “Description of Material Indebtedness.” Furthermore, our ability to declare and pay dividends to our stockholders is likewise subject to Delaware law (which may limit the amount of funds available for dividends). While we do not currently believe that these restrictions will impair our ability to continue to pay regular cash dividends, there can be no assurance that we will not need or determine to reduce or eliminate the payment of dividends on our Class A common stock in the future. See “Dividend Policy.”

We may issue preferred stock whose terms could adversely affect the voting power or value of our Class A common stock.

Our amended and restated certificate of incorporation will authorize our board of directors to issue, without the approval of our stockholders, one or more classes or series of preferred stock having such designations, preferences, limitations and relative rights, including preferences over our Class A common stock respecting dividends and distributions, as our board of directors may determine. In addition, following this offering, we expect to have shares of Series B preferred stock and Series D preferred stock outstanding. See “Description of Capital Stock.” The terms of one or more classes or series of our preferred stock could adversely impact the voting power or value of our Class A common stock. For example, we might grant holders of a class or series of our preferred stock the right to elect some number of our directors in all events or on the happening of specified events or the right to veto specified transactions. Similarly, the repurchase or redemption rights or liquidation preferences we might assign to holders of our preferred stock could affect the residual value of our Class A common stock.

No market currently exists for our Class A common stock and we cannot assure you that an active market will develop for such stock.

Prior to this offering, there has been no public market for our Class A common stock. The initial public offering price for our Class A common stock has been determined through negotiations among us and the representatives of the underwriters and may not be indicative of the market price of our Class A common stock after this offering or to any other established criteria of the value of our business. If you purchase shares of our Class A common stock, you may not be able to resell those shares at or above the initial public offering price. We cannot predict the extent to which investor interest in us will lead to the development of an active trading market on the NYSE or otherwise or how liquid that market might become. An active public market for our Class A common stock may not develop or be sustained after this offering. If an active public market does not develop or is not sustained, it may be difficult for you to sell your shares of Class A common stock at a price that is attractive to you or at all.

 

69

We cannot assure you that our stock price will not decline or not be subject to significant volatility after this offering.

The market price of shares of Class A common stock could be subject to significant fluctuations after this offering. The price of our stock may change in response to fluctuations in our results of operations in future periods and also may change in response to other factors, including factors specific to companies in our industry, many of which are beyond our control. As a result, our share price may experience significant volatility and may not necessarily reflect the value of our expected performance and may cause our stockholders to incur losses.

Among the factors that could affect our stock price are:

 

•

changes in laws or regulations applicable to our industry;

 

•

speculation about our business or industry in the press or the investment community;

 

•

price and volume fluctuations in the overall stock market;

 

•

volatility in the market price and trading volume of companies in our industry or companies that investors consider comparable;

 

•

share price and volume fluctuations attributable to inconsistent trading levels of our shares;

 

•

sales of Class A common stock by us or our significant stockholders, officers and directors;

 

•

the expiration or waiver of the lock-up provision contained in the lock-up agreements and our amended and restated certificate of incorporation;

 

•

the development and sustainability of an active trading market for shares of our Class A common stock;

 

•

the public’s response to press releases or other public announcements by us or others, including our filings with the SEC, announcements relating to litigation or changes to our key personnel;

 

•

the effectiveness of our internal controls over financial reporting;

 

•

variations in our quarterly or annual results of operations;

 

•

changes in our earnings estimates (if provided) or differences between our actual results of operations and those expected by investors and analysts;

 

•

the contents of published research reports about us or our industry or the failure of securities analysts to cover our Class A common stock;

 

•

actions by institutional stockholders;

 

•

changes in our capital structure, such as future issuances of debt or equity securities;

 

•

our entry into new markets;

 

•

tax developments in the United States or other markets;

 

•

strategic actions by us or our competitors, such as acquisitions, significant contracts, dispositions, strategic relationships, joint ventures, capital commitments or restructurings; and

 

•

changes in accounting principles.

Further, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations can be unrelated or disproportionate to the operating performance of those companies. In addition, the stock prices of many energy companies have experienced wide fluctuations that have often been unrelated to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, interest rate changes or international currency fluctuations, may cause the market price of shares of our Class A common stock to decline.

 

70

We cannot assure you that you will be able to resell any of your shares of Class A common stock at or above the initial public offering price. The initial public offering price will be determined by negotiations between us and the representatives of the underwriters and may not be indicative of prices that will prevail in the trading market, if a trading market develops, after this offering. If the market price of shares of Class A common stock after this offering does not exceed the initial public offering price, you may not realize any return on your investment and may lose some or all of your investment.

Our amended and restated certificate of incorporation will designate the Court of Chancery of the State of Delaware and the federal district courts of the United States as the sole and exclusive forums for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or other employees.

Our amended and restated certificate of incorporation will provide that, subject to certain exceptions, unless we consent in writing in advance to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the sole and exclusive forum for any (i) derivative action or proceeding brought on our behalf, (ii) action asserting a claim of breach of a fiduciary duty or other wrongdoing by any current or former director, officer, employee, agent or stockholder to us or our stockholders, (iii) action asserting a claim arising pursuant to any provision of the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws or as to which the DGCL confers jurisdiction on the Court of Chancery of the State of Delaware or (iv) action asserting a claim governed by the internal affairs doctrine of the law of the State of Delaware. Pursuant to the Exchange Act, claims or causes of action arising thereunder must be brought in federal district courts of the United States. The exclusive forum provision will provide that the provision will not apply to claims or causes of action arising under the Exchange Act. However, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce a duty or liability created by the Securities Act or the rules and regulations thereunder; accordingly, we cannot be certain that a court would enforce such provision. Our amended and restated certificate of incorporation will further provide that any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have notice of and consented to the provisions of our amended and restated certificate of incorporation described above; however, investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder.

Our amended and restated certificate of incorporation will also provide that, unless we consent in writing to an alternative forum, the federal district courts of the United States will be the sole and exclusive forum for the resolution of any action asserting a claim arising under the Securities Act or the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder, accordingly we cannot be certain that a court would enforce such a provision. By agreeing to this provision, however, stockholders will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.

These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, employees or other stockholders, which may discourage such lawsuits. While the Delaware courts have determined that such choice of forum provisions are facially valid, a stockholder may nevertheless seek to bring an action in a venue other than those designated in the exclusive forum provisions. In such instance, we would expect to assert the validity and enforceability of our exclusive forum provisions, which may require significant additional costs associated with resolving such action in other jurisdictions, and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions. If a court were to find that the exclusive forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving the dispute in other jurisdictions, which could have a material adverse effect on our business, financial condition and results of operations.

 

71

Claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.

Our amended and restated certificate of incorporation and amended and restated bylaws will provide that we will indemnify our directors and officers, in each case, to the fullest extent permitted by Delaware law. Pursuant to our certificate of incorporation, our directors will not be liable to us or any stockholders for monetary damages for any breach of fiduciary duty, except (i) for acts that breach his or her duty of loyalty to us or our stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of the law, (iii) pursuant to Section 174 of the DGCL, which provides for liability of directors for unlawful payments of dividends of unlawful stock purchase, or (iv) for any transaction from which the director derived an improper personal benefit. Our amended and restated bylaws will also require us, if so requested, to advance expenses that such director or officer incurred in defending or investigating a threatened or pending action, suit or proceeding, provided that such person will return any such advance if it is ultimately determined that such person is not entitled to indemnification by us. Any claims for indemnification by our directors and officers may reduce our available funds to satisfy successful third-party claims against us and may reduce the amount of money available to us.

As a public reporting company, we will be subject to rules and regulations established from time to time by the SEC regarding our disclosure controls and procedures and internal control over financial reporting. If we fail to establish and maintain effective disclosure controls and procedures and internal control over financial reporting, we may not be able to accurately report our financial results, or report them in a timely manner.

As a public reporting company, we will be subject to the rules and regulations established from time to time by the SEC and the national securities exchange on which our securities are listed. These rules and regulations require, among other things, that we establish and periodically evaluate procedures with respect to our internal control over financial reporting. Reporting obligations as a public company are likely to place a considerable strain on our financial and management systems, processes and controls, as well as on our personnel.

In addition, upon becoming a public company, we will be required to comply with the Sarbanes-Oxley Act, which requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting and, pursuant to Section 404 of the Sarbanes-Oxley Act, furnish a report by management on the effectiveness of our internal control over financial reporting in our second annual report. However, as discussed above, for as long as we are an emerging growth company under the JOBS Act, our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting pursuant to Section 404. We could be an emerging growth company for up to five years. An independent assessment of our internal control over financial reporting could detect problems that our management’s assessment might not. The process of reviewing and improving our internal controls is both costly and challenging and may also require substantial attention from our management team, which could negatively impact other matters that are important to our business.

Although management did not, and was not required to, conduct a formal assessment of internal control over financial reporting as of December 31, 2025, as a result of the Misstatement and the Restatement, the Company identified certain material weaknesses in its internal control over financial reporting. As a result of the material weaknesses in internal control over financial reporting, our disclosure controls and procedures were not effective at a reasonable assurance level as of December 31, 2025. Management will be implementing changes to strengthen our internal controls and remediate the material weaknesses. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Internal Controls and Procedures—Material Weaknesses in Internal Control over Financial Reporting” for additional information related to the material weaknesses in internal control over financial reporting and our related remediation activities.

If our senior management is unable to conclude that we have effective disclosure controls and procedures and internal control over financial reporting, or to certify the effectiveness of such controls, and our independent registered public accounting firm cannot render an unqualified opinion on management’s assessment and the effectiveness of our internal control over financial reporting at such time as it is required to do so and material

 

72

weaknesses in our internal control over financial reporting are identified, we could be subject to regulatory scrutiny, a loss of public and investor confidence and litigation from investors and stockholders, which could have a material adverse effect on our business and our stock price. In addition, if we do not maintain adequate financial and management personnel, processes and controls, we may not be able to manage our business effectively or accurately report our financial performance on a timely basis, which could cause a decline in the price of shares of Class A common stock and have a material adverse effect on our business, financial condition and results of operations. Failure to comply with the Sarbanes-Oxley Act could potentially subject us to sanctions or investigations by the SEC, the exchange upon which our securities are listed or other regulatory authorities, which would require additional financial and management resources.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our Class A common stock will be influenced by the research and reports that industry or securities analysts publish about us or our business. We do not currently have and may never obtain research coverage by securities and industry analysts. If no securities or industry analysts commence coverage of us, the trading price for our Class A common stock would be negatively impacted. If we obtain securities or industry analyst coverage and if one or more of these analysts cease coverage of our company or fails to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline. Moreover, if our results of operations do not meet the expectations of the investor community, or one or more of the analysts who cover our company downgrade our stock, our stock price could decline. As a result, you may not be able to sell shares of our Class A common stock at prices equal to or greater than the initial public offering price.

Becoming a public company will significantly increase our compliance costs and require the expansion and enhancement of a variety of financial and management control systems and infrastructure and the hiring of additional qualified personnel.

Prior to this offering, we have not been subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act or the other rules and regulations of the SEC, or any securities exchange relating to public companies. We are working with our legal, independent accounting and financial advisors to identify those areas in which changes should be made to our financial and management control systems to manage our growth and our obligations as a public company. These areas include financial planning and analysis, tax, corporate governance, accounting policies and procedures, internal controls, internal audit, disclosure controls and procedures and financial reporting and accounting systems. We have made, and will continue to make, significant changes in these and other areas and have begun incurring expenses in preparation for becoming a public company. The expenses that will be required in order to adequately prepare for being, and those required to operate as, a public company could be material. Compliance with the various reporting and other requirements applicable to public companies will also require considerable time and attention of management and we could be required to hire additional qualified personnel into our existing finance, legal, human resources and operations departments to meet such compliance needs.

The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members and officers, which may divert from our business operations.

As a public company, we are subject to the reporting requirements of the Exchange Act, the listing requirements of the national securities exchange on which our securities are listed and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, strain our resources, make some activities more difficult, time-consuming or costly and increase demand on our systems, resources, management and employees. As a public company, we will be required to enhance our investor relations, legal, financial and tax reporting, internal audit, legal, governance, investor relations and

 

73

corporate communications functions. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and results of operations and maintain effective disclosure controls and procedures and internal control over financial reporting. To maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could have a material adverse effect on our business, financial condition and results of operations.

We also expect that being a public company will make it more expensive for us to obtain director and officer liability insurance, and we may be required to choose between reduced coverage and substantially higher costs in order to obtain coverage. These factors could make it more difficult for us to attract and retain qualified executive officers and members of our board of directors, particularly to serve on our audit committee and compensation committee.

Future sales and issuances of our Class A common stock or rights to purchase our Class A common stock (or other equity securities or securities convertible into our Class A common stock), or the perception that future sales by us or our other existing stockholders in the public market following this offering could cause dilution of the percentage of ownership of our stockholders, could cause the market price for our Class A common stock to decline.

After this offering, the sale of shares of our Class A common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of our Class A common stock. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

Upon consummation of this offering, we will have a total of      shares of our Class A common stock outstanding (or    shares if the underwriters exercise in full their option to purchase additional shares). Of the outstanding shares, the    shares sold in this offering (or     shares if the underwriters exercise in full their option to purchase additional shares) will be freely tradable without restriction or further registration under the Securities Act, other than any shares held by our affiliates. Any shares of our Class A common stock held by our affiliates will be eligible for resale pursuant to Rule 144 under the Securities Act, subject to the volume, manner of sale, holding period and other limitations of Rule 144.

We and our directors and executive officers will enter into lock-up agreements pursuant to which we and they will be subject to certain restrictions with respect to the offer, sale or disposition or hedge of any of our securities for a period of 180 days following the date of this prospectus. Additionally, our amended and restated certificate of incorporation will provide that, subject to certain exceptions, all of the shares of Class A common stock held by the Legacy Common Stock Investors may not be sold, pledged, transferred or otherwise disposed of for 365 days following the consummation of this offering, or such shorter period as determined by the board of directors, but in no event less than 180 days without the prior written consent of the managing underwriter of this offering. Upon the expiration of the lock-up restrictions, shares held by our directors, executive officers and the Legacy Common Stock Investors will be eligible for resale in the public market subject, in the case of shares held by our affiliates, to the volume, manner of sale, holding period and other limitations of Rule 144. The representatives of the underwriters may, in their sole discretion and at any time without notice, release all or any portion of the shares or securities subject to any such lock-up restrictions. See “Underwriting” and “Shares Eligible for Future Sale” for a description of these lock-up restrictions.

In addition, in connection with this offering, we intend to enter into the Registration Rights Agreement with certain of our Continuing Equity Owners. The Registration Rights Agreement will provide such holders with certain registration rights in respect of shares of our Class A common stock held by them, subject to certain conditions. Registration of any of these outstanding shares of Class A common stock would result in such shares becoming freely tradable without compliance with Rule 144 upon effectiveness of the registration statement.

 

74

Such Continuing Equity Owners party to the Registration Rights Agreement will, subject to the terms of the agreement, determine the timing and amount of sales of their Class A common stock, and such sales could be executed at a time or times that otherwise may not align with our interests and the interests of our other stockholders. See “Certain Relationships and Related Party Transactions” and “Shares Eligible for Future Sale” for a description of these registration rights.

In connection with this offering, we intend to file a registration statement with the SEC on Form S-8 providing for the registration of shares of our Class A common stock issued or reserved for issuance under new and existing equity incentive plans. Subject to the satisfaction of vesting conditions and the expiration of lock-up restrictions, shares issued pursuant to or registered under the registration statement on Form S-8 will be available for resale immediately in the public market without restriction.

We cannot predict the size of future issuances of our Class A common stock or the effect, if any, that future issuances and sales of shares of our Class A common stock will have on the market price of our Class A common stock. In the future, we may issue securities in connection with investments, acquisitions or capital raising activities. In particular, the number of shares of our Class A common stock issued in connection with an investment or acquisition, or to raise additional equity capital, could constitute a material portion of our then-outstanding shares of our Class A common stock. Any such issuance of additional securities in the future, or the perception that such issuances could occur, may result in additional dilution to you, or may adversely impact the price of our Class A common stock.

If you purchase shares of our Class A common stock sold in this offering, you will incur immediate and substantial dilution.

If you purchase Class A common stock in this offering, you will pay more for your shares than the amounts paid by existing stockholders for their shares. As a result, you will incur immediate dilution of $    per share, representing the difference between the assumed initial public offering price of $    per share (the midpoint of the estimated initial public offering price range set forth on the cover of this prospectus) and our pro forma net tangible book value (deficit) per share after giving effect to this offering. See “Dilution.”

Increases in interest rates may cause the market price of our Class A common stock to decline.

An increase in interest rates may cause a corresponding decline in demand for equity investments in general, and in particular, for yield-based equity investments such as our Class A common stock. Any such increase in interest rates or reduction in demand for our Class A common stock resulting from other investment opportunities may cause the trading price of our Class A common stock to decline.

 

75

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The information in this prospectus includes “forward-looking statements.” All statements, other than statements of historical fact, included in this prospectus regarding our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this prospectus, the words “may,” “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions and the negative of such words and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Such statements may be influenced by factors that could cause actual outcomes and results to differ materially from those projected. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading “Risk Factors” included in this prospectus.

The following important factors, in addition to those discussed elsewhere in this prospectus, could affect the future results of the energy industry in general, and our company in particular, and could cause actual results to differ materially from those expressed in such forward-looking statements:

 

•

our revenues are primarily derived from mineral and royalty payments that are based on the price of natural gas, NGL and oil which is subject to volatility due to factors beyond our control;

 

•

lower natural gas, NGL and oil prices or negative adjustments of natural gas, NGL and oil prices may result in significant impairment charges;

 

•

our derivative activities may limit the cash flows received from natural gas and oil sales;

 

•

the development of our properties relies exclusively on our third-party operators and these operators may fail to develop our existing inventory of mineral and royalty acreage;

 

•

drilling for and producing natural gas, NGLs and oil are high-risk activities with many uncertainties;

 

•

our third-party operators may fail to drill sufficient wells to hold acreage before lease expiration which may result in loss of lease and prospective drilling opportunities;

 

•

we may experience delays in the receipt of royalty payments and may not be able to terminate leases with defaulting lessees if our third-party operators declare bankruptcy;

 

•

we may incur losses as a result of title defects or other issues in the properties we own;

 

•

a limited number of third-party operators currently generate a significant portion of our revenue and accounts receivable;

 

•

the substantial majority of our business is concentrated in the Appalachian and Haynesville Basins, making us vulnerable to risks associated with such geographic concentration of our assets;

 

•

we are subject to risks related to our wells where we are a non-operating working interest owner;

 

•

our future success depends on replacing reserves through acquisitions and there may be constraints in our ability to finance acquisitions;

 

•

we have experienced significant business and portfolio growth in a short time, and our significant growth rates and financial results may not be sustainable or indicative of future financial performance;

 

•

any acquisition of additional mineral and royalty interests that we complete will be subject to substantial risks;

 

•

our failure to retain our key personnel or attract additional qualified personnel could negatively affect our business strategy;

 

•

our estimated proved reserves are based on many assumptions that may prove to be inaccurate;

 

76

•

our identified drilling locations are susceptible to uncertainties that could materially alter the occurrence or timing of their drilling and there is no guarantee that our estimates will be materially consistent with actual drilling activities;

 

•

we rely on our third-party operators, other third parties and government databases for information regarding our assets and such information may be incorrect, incomplete or lost;

 

•

we may be subject to information technology system failures, network disruptions, cyber-attacks or other breaches in data security;

 

•

declining general economic, business or industry conditions, which could have a material adverse effect on our business;

 

•

our industry is highly competitive, and competitive pressures could negatively affect our business;

 

•

exported liquid natural gas could fail to be a competitive source of energy for the United States or international markets;

 

•

our growth strategy is partly dependent upon the continued expansion of electricity demand driven by AI data center development and expectations regarding increased demand may not materialize;

 

•

the unavailability, high cost or shortages of equipment, raw materials, supplies or personnel for our third-party operators related to developing and operating our properties;

 

•

the marketability of natural gas, NGLs and crude oil is dependent on the availability of equipment and transportation facilities that is outside of our and our third-party operators’ control;

 

•

our third-party operators are subject to significant governmental regulations, and governmental authorities can delay or deny permits and approvals or change legal requirements governing our business, which could restrict their operations, increase costs of conducting our business, and delay our implementation of, or cause us to change, our business strategy;

 

•

the development and enactment of climate change legislation as well as increased attention to sustainability may impact our business or the business of our third-party operators;

 

•

future legislative or regulatory changes may have a material adverse effect on our business;

 

•

our use of borrowings to finance our business exposes us to risks and any future indebtedness we may incur could further increase the risks associated with our indebtedness;

 

•

Delaware law and anti-takeover provisions in our governing documents, to be adopted upon the consummation of this offering, may have the effect of delaying or preventing a change of control or changes in our management and may deprive our investors of the opportunity to receive a premium for their shares;

 

•

our ability to pay regular dividends to our stockholders may be limited by our financial condition, results of operations, cash flows, prospects, industry conditions, capital requirements, instruments governing our indebtedness and other factors and restrictions; and

 

•

the requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain qualified board members and officers.

Should one or more of the risks or uncertainties described in this prospectus occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking

 

77

statements we make in this report are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved or occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

Reserve engineering is a process of estimating underground accumulations of natural gas and oil that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data and price and cost assumptions made by reserve engineers. In addition, the results of drilling, testing and production activities may justify revisions of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of natural gas and oil that are ultimately recovered.

All forward-looking statements, expressed or implied, included in this prospectus are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this prospectus.

 

78

OUR ORGANIZATIONAL STRUCTURE

In connection with the consummation of the offering, we will consummate the Transactions:

 

•

we will amend and restate our certificate of incorporation (our “amended and restated certificate of incorporation”) to, among other things, (i) change our name to “WhiteHawk Minerals Corp.”; (ii) provide for the Common Stock Reclassification; (iii) provide for an adjustment to the number of authorized shares such that our authorized capital stock shall consist of 250,000,000 shares of Class A common stock, par value $0.0001 per share, 100,000,000 shares of Class B common stock, par value $0.0001 per share, and 10,000,000 shares of preferred stock, par value $0.0001 per share; (iv) authorize our board of directors to establish and issue one or more series of preferred stock from time to time and to fix the rights, preferences, privileges and restrictions thereof; (v) provide for the creation of Class B common stock in connection with our anticipated Up-C structure, with shares of Class B common stock to be issued to Continuing Equity Owners, with each share of Class B common stock entitled to one vote per share and no economic rights; and (vi) establish that Legacy Common Stock Investors are prohibited from selling their Class A common stock or related securities for 365 days following the consummation of this offering, or such shorter period as determined by the board of directors, but in no event less than 180 days without the prior written consent of the managing underwriter of this offering;

 

•

WhiteHawk OpCo will enter into an amended and restated limited partnership agreement (the “OpCo Agreement”) to, among other things, (i) appoint OP GP as the sole general partner of WhiteHawk OpCo with the authority to manage and control the business and affairs of WhiteHawk OpCo, (ii) authorize the issuance of OpCo Interests to us in exchange for the interests we own in WhiteHawk OpCo prior to this offering as well as the proceeds from this offering, (iii) provide the Continuing Equity Owners with the right to require WhiteHawk OpCo to redeem their OpCo Interests for, at our election (determined solely by our independent directors who are disinterested), cash or newly-issued shares of our Class A common stock on a one-for-one basis (subject to customary adjustments), (iv) provide that, in connection with any redemption or exchange of OpCo Interests, if applicable, a corresponding number of shares of Class B common stock held by the redeeming or exchanging Continuing Equity Owner will automatically be transferred to us for no consideration and canceled, and (v) authorize the issuance to us of such number of Series B preferred units in WhiteHawk OpCo equal to the number of shares of our Series B preferred stock outstanding upon the consummation of the Transactions;

 

•

we will enter into the Registration Rights Agreement with certain Continuing Equity Owners, as further described in “Certain Relationships and Related Person Transactions;”

 

•

in connection with and in order to effectuate the Internalization, the Contribution Agreement will be entered into by the parties thereto, pursuant to which, among other things, OpCo will acquire all of the outstanding equity interests in ManagementCo from the Management Owners in exchange for OpCo Interests and shares of Class B common stock. Prior to the closing of this offering, ManagementCo, as our external manager, provided certain management, acquisition, disposition and oversight functions with respect to us and WhiteHawk OpCo. As a result of the Internalization, ManagementCo will become a wholly owned subsidiary of WhiteHawk OpCo and we will become internally managed;

 

•

we will issue     shares of our Class A common stock to the purchasers in this offering (or     shares if the underwriters exercise in full their option to purchase additional shares of Class A common stock) in exchange for net proceeds of approximately $    million (or approximately $    million if the underwriters exercise in full their option to purchase additional shares of Class A common stock) based upon an assumed initial public offering price of $    per share (which is the midpoint of the estimated price range set forth on the cover page of this prospectus), less the underwriting discount; and

 

•

we will use the net proceeds from this offering to purchase newly issued OpCo Interests for approximately $    million directly from WhiteHawk OpCo at the initial public offering price less the underwriting discount.

 

79

Immediately following the consummation of the Transactions (including this offering):

 

•

we will be a holding company and our principal asset will consist of OpCo Interests we acquire or are otherwise issued directly from WhiteHawk OpCo;

 

•

as the sole member of OP GP, the sole general partner of WhiteHawk OpCo, we will control the business and affairs of WhiteHawk OpCo;

 

•

we will own, directly or indirectly,     OpCo Interests, representing approximately  % of the economic interest in WhiteHawk OpCo (or     OpCo Interests, representing approximately  % of the economic interest in WhiteHawk OpCo if the underwriters exercise in full their option to purchase additional shares of Class A common stock);

 

•

we will own a number of Series B preferred units in WhiteHawk OpCo equal to the number of shares of Series B Preferred Stock outstanding after the consummation of the Transactions, representing 100% of the preferred units of WhiteHawk OpCo;

 

•

we will no longer have any shares of Series D preferred stock outstanding;

 

•

the Continuing Equity Owners will own (i)     OpCo Interests, representing approximately  % of the economic interest in WhiteHawk OpCo (or     OpCo Interests, representing approximately  % of the economic interest in WhiteHawk OpCo if the underwriters exercise in full their option to purchase additional shares of Class A common stock) and (ii)     shares of our Class B common stock, representing approximately  % of the combined voting power of all of our common stock (or     shares of our Class B common stock, representing approximately  % if the underwriters exercise in full their option to purchase additional shares of Class A common stock);

 

•

the purchasers in this offering will own (i)     shares of our Class A common stock (or     shares of our Class A common stock if the underwriters exercise in full their option to purchase additional shares of Class A common stock), representing approximately  % of the combined voting power of all of our common stock and  % of the economic interest in us (or approximately  % of the combined voting power and  % of the economic interest if the underwriters exercise in full their option to purchase additional shares of Class A common stock), and (ii) through our ownership of OpCo Interests, indirectly will hold approximately  % of the economic interest in WhiteHawk OpCo (or approximately  % of the economic interest in WhiteHawk OpCo if the underwriters exercise in full their option to purchase additional shares of Class A common stock).

The foregoing description of the Transactions does not give effect to OpCo Interests or shares of our Class B common stock that may be issued as a part of the Earnout Amount (as defined herein), as more fully described in the section titled “Certain Relationships and Related Party Transactions—Internalization—Earnout.”

Following the Transactions, including this offering, we will control the management of WhiteHawk OpCo through our ownership of OP GP. As a result, we will consolidate WhiteHawk OpCo in our consolidated financial statements.

Unless otherwise indicated, this prospectus assumes the shares of Class A common stock are offered at $    per share (the midpoint of the estimated price range set forth on the cover page of this prospectus). For more information regarding the impact of the initial offering price on the share information included throughout this prospectus, see “The Offering.”

Our corporate structure following this offering, as described below, is an Up-C structure. The Up-C structure will allow the Continuing Equity Owners to retain their equity ownership in WhiteHawk OpCo following the Transactions and to continue to realize tax benefits associated with owning interests in an entity that is treated as a partnership, or “flow-through” entity, for U.S. federal income tax purposes. Investors in this offering will, by contrast, hold their equity ownership in us, a Delaware corporation that is a domestic corporation for U.S. federal income tax purposes, in the form of shares of Class A common stock. One of the tax benefits to the Continuing

 

80

Equity Owners associated with this structure is that future taxable income of WhiteHawk OpCo that is allocated to the Continuing Equity Owners will be taxed on a flow-through basis and, therefore, will not be subject to corporate taxes at the entity level. Moreover, the Up-C structure permits the Continuing Equity Owners to defer the recognition of taxable gain on their OpCo Interests until they elect to exercise their redemption right (rather than recognizing such gain at the time of this offering). Additionally, because the Continuing Equity Owners may at their election have their OpCo Interests redeemed by WhiteHawk OpCo (or at our option, directly exchanged by us) for newly issued shares of our Class A common stock on a one-for-one basis (subject to customary adjustments, including for stock splits, stock dividends, and reclassifications) or, at our option, for cash, the Up-C structure also provides the Continuing Equity Owners with potential liquidity that holders of non-publicly traded limited liability companies are not typically afforded. Upon any such redemption or exchange of OpCo Interests for shares of Class A common stock, the Company may benefit from certain tax attributes, including potential increases in tax basis that may reduce the amount of tax that would otherwise be payable by us. In connection with any such redemption or exchange of OpCo Interests, a corresponding number of shares of Class B common stock held by the relevant Continuing Equity Owner will automatically be transferred to us for no consideration and be canceled.

For more information regarding the Transactions and our structure, see “Our Organizational Structure.”

Organizational Structure

The diagram below depicts our organizational structure after giving effect to the Transactions, including this offering and proposed use of proceeds, assuming no exercise by the underwriters of their option to purchase additional shares of Class A common stock and does not give effect to the issuance of any OpCo Interests or shares of Class B common stock in respect of the Earnout Amount.

 

 

(1)	Excludes any Continuing Equity Owners who hold Class A common stock as a result of the Common Stock Reclassification (in addition to OpCo Interests and Class B common stock).

(2)

Legacy Common Stock Investors will be prohibited from selling their Class A common stock or related securities for up to 365 days following the consummation of this offering, or such shorter period as determined by the board of directors, but in no event less than 180 days without the prior written consent of the managing underwriter of this offering.

 

81

(3)

We intend to use a portion of the proceeds from this offering to redeem any shares of Series D preferred stock outstanding. See “Use of Proceeds.” To the extent the proceeds of offering are insufficient to redeem the total aggregate principal amount of Series D preferred stock outstanding, the Company intends to use cash on hand to fully redeem the total aggregate principal amount of Series D preferred stock outstanding. As a result, following this offering, the only outstanding preferred stock outstanding will be the Series B preferred stock.

 

82

USE OF PROCEEDS

We estimate that the net proceeds to us from our sale of     shares of Class A common stock in this offering will be approximately $    , after deducting underwriting discounts and commissions and estimated expenses payable by us in connection with this offering. The underwriters also have an option to purchase up to an additional     shares of Class A common stock from us. We estimate that the net proceeds to us, if the underwriters exercise their right to purchase the maximum of      additional shares of Class A common stock from us, will be approximately $    , after deducting underwriting discounts and commissions and estimated expenses payable by us in connection with this offering. This assumes a public offering price of $    per share of Class A common stock, which is the midpoint of the price range set forth on the cover of this prospectus.

We intend to use the net proceeds from this offering, as well as cash on hand, as follows: (i) approximately $     million to prepay, in whole or in part, the outstanding principal of our Senior Notes, (ii) approximately $     million for the redemption of all of the outstanding shares of our Series D preferred stock, (iii) approximately $    million for the redemption of a portion of our outstanding Series B preferred stock, and (iv) the remainder for other general corporate purposes, including the payment of a Liquidity Incentive Fee of $     million to     upon completion of this offering. See “Certain Relationships and Related Person Transactions—Investment Management Agreement.”

We are a holding company and our only assets after consummation of this offering will be our ownership of OpCo Interests and membership units in OP GP. Accordingly, we intend to use the gross proceeds from this offering to purchase newly issued OpCo Interests from WhiteHawk OpCo at a price per unit equal to the initial public offering price per share of Class A common stock, less estimated underwriting discounts and commissions. In the event the underwriters exercise their option to purchase additional shares of Class A common stock, we intend to use any such additional proceeds in the same manner.

As of December 31, 2025, we had $237.7 million of principal outstanding under our Senior Notes. Our Senior Notes bear interest at the adjusted term SOFR rate plus 6.50%, which, as of December 31, 2025, resulted in an interest rate of 10.80% per annum. The Senior Notes mature on June 23, 2030.

Assuming no exercise of the underwriters’ option to purchase additional shares, a $1.00 increase (decrease) in the assumed initial public offering price of $    per share (the midpoint of the price range set forth on the cover of this prospectus) would increase (decrease) the net proceeds to us from this offering by $    , assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting underwriting discounts and commissions and estimated expenses payable by us.

 

83

DIVIDEND POLICY

We initially intend to make a significant portion of our Cash Available for Distribution available for dividends. Holders of our Class B common stock are not entitled to participate in any dividends declared by our Board. We aim to balance the return of capital to investors with the selective allocation of capital toward acquisitions that we believe will be accretive to stockholder value while preserving a strong balance sheet through varying commodity price environments. In order to effect this approach, we intend to return capital to our stockholders through quarterly dividends, after retaining cash for debt service, our working capital needs and acquisition activities.

While we expect to pay regular dividends in accordance with this financial philosophy, we have not adopted a formal written dividend policy to pay a fixed amount of cash regularly or to pay any particular amount based on the achievement of, or derivable from, any specific financial metrics, including Cash Available for Distribution. The actual amount of any dividends we pay may fluctuate depending on our cash flow needs, which may be impacted by potential acquisition opportunities and the availability of financing alternatives, the need to service any indebtedness or other liquidity needs and general industry and business conditions, including the impact of commodity prices and the pace of the development of our properties by our third-party operators. Our payment of dividends will be at the sole discretion of our board of directors, which may change our dividend philosophy at any time. Our board of directors will take into account:

 

•

general economic and business conditions;

 

•

our financial condition and operating results;

 

•

our cash flows from operations and current and anticipated cash needs;

 

•

legal, tax, regulatory and contractual restrictions; and

 

•

such other factors as our board of directors may deem relevant.

Additionally, our ability to pay dividends is restricted by covenants governing our Senior Notes and the Revolving Credit Facility. For a description of the covenants governing our Senior Notes and those contained in the Revolving Credit Facility that restrict our ability to pay dividends, see “Description of Material Indebtedness.” Additionally, our ability to pay dividends may be restricted by the terms of any future credit agreement or any future debt or preferred equity securities of us. Therefore, there can be no assurance that we will pay any dividends to holders of our Class A common stock, or as to the amount of any such dividends. See “Risk Factors—Risks Related to this Offering and Ownership of Our Class A Common Stock—We intend to pay regular dividends to our stockholders, but our ability to do so is subject to the discretion of our board of directors and may be limited by our financial condition, results of operations, cash flows, prospects, industry conditions, capital requirements, instruments governing our indebtedness and other factors and restrictions our board of directors deems relevant.”

 

84