• speculation in the press or investment community regarding our business; 

• political conditions in oil and natural gas producing regions of the world; 

• general market and economic conditions; and 

• domestic and international economic, legal, and regulatory factors unrelated to our performance. 

In addition, U.S. securities markets have experienced significant price and volume fluctuations. These fluctuations often have been unrelated to the operating performance of companies in these markets. Market fluctuations and broad market, economic, and industry factors may negatively affect the price of our Class A Common Stock, regardless of our operating performance. Any volatility or a significant decrease in the market price of our Class A Common Stock could also negatively affect our ability to make acquisitions using Class A Common Stock. Further, if we were to be the object of securities class action litigation as a result of volatility in our Class A Common Stock price or for other reasons, it could result in substantial costs and diversion of our management’s attention and resources, which could negatively affect our financial results. 

## We are subject to certain requirements of Section 404 of the Sarbanes-Oxley Act. If we fail to comply with the requirements of Section 404 or if we or our auditors identify and report material weaknesses in internal control over financial reporting, our investors may lose confidence in our reported information and our stock price may be negatively affected. 

As of December 31, 2018, we are required to comply with certain provisions of Section 404 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). Section 404 requires that we document and test our internal control over financial reporting and issue our management’s assessment of our internal control over financial reporting. This section also requires that our independent registered public accounting firm issue an attestation report on such internal control. If we fail to comply with the requirements of Section 404 of the Sarbanes-Oxley Act, or if we or our auditors identify and report material weaknesses in our internal control over financial reporting, the accuracy and timeliness of the filing of our annual and quarterly reports may be materially adversely affected and could cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our Class A Common Stock. In addition, a material weakness in the effectiveness of our internal control over financial reporting could result in an increased chance of fraud and the loss of customers, reduce our ability to obtain financing and require additional expenditures to comply with these requirements, each of which could have a material adverse effect on our business, results of operations and financial condition. 

## Anti-takeover provisions could make a third-party acquisition difficult. 

Our Third Amended and Restated Certificate of Incorporation provides for a classified board of directors, with each member serving a three-year term. Provisions in our Third Amended and Restated Certificate of Incorporation could make it more difficult for a third party to acquire us without the approval of our Board. In addition, the Delaware corporate statutes also contain certain provisions that could make an acquisition by a third party more difficult. 

## Our stockholders may act by unilateral written consent. 

Under our Third Amended and Restated Certificate of Incorporation, any action required to be taken at any annual or special meeting of our stockholders, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, is signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Thus, consents of this type can be effected without the participation or input of minority stockholders. 

## Item 1B. Unresolved Staff Comments 

None. 

## Item 2. Properties 

## Summary of Oil and Gas Properties 

## Midland Basin 

We have an operated position of approximately 22,800 net acres in the core of the Midland Basin of west Texas across Reagan, Upton, and Midland counties with an average working interest of approximately 94%. As of December 31, 2018, we had 15 gross vertical and 51 gross horizontal operated producing wells. Current internal estimates indicate 500 potential gross, largely de-risked, operated drilling locations, the vast majority of which are in various benches of the Wolfcamp and the Spraberry formations. Of these 500 operated locations, 462 locations are expected to have an average working interest of 83%, whereas 38 locations are expected to be operated units where we hold an average working interest of approximately 35%. We are actively pursuing trades 

