Company: ACTG
Filing Date: 2025-03-17
Form Type: 10-K
Source: 0000934549-25-000004
Chunk: 37

Company: ACACIA RESEARCH CORP
Filing Date: 2025-03-17
Form: 10-K
Item: Item 1
Chunk 37
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 personnel of the pipeline or its affiliates. We cannot predict what new or different regulations the FERC and other regulatory agencies may adopt, or what effect subsequent regulations may have on our activities. Similarly, we cannot predict what proposals, if any, that affect the oil and natural gas industry might actually be enacted by the U.S. Congress or the various state legislatures and what effect, if any, such proposals might have on us. Further, we cannot predict whether the recent trend 

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toward federal deregulation of the natural gas industry will continue or what effect future policies will have on our sale of gas.

Federal Regulation of Swap Transactions

Our Energy Operations Business uses derivative financial instruments such as collar, swap and basis swap agreements to attempt to manage price risk due to the impact of changes in commodity prices on its operating results and cash flows. The Commodity Exchange Act provides the U.S. Commodity Futures Trading Commission (the “CFTC”) with jurisdiction to regulate the over-the-counter (“OTC”) derivatives market (which includes the sorts of financial instruments used by our Energy Operations Business) and participants in that market. We endeavor to ensure that Benchmark’s OTC derivatives transactions comply with applicable CFTC regulations. Although the CFTC does not currently require the clearing of OTC commodity derivatives transactions of the types that Benchmark uses, we believe that Benchmark’s use of swaps to hedge against changes in commodity prices qualifies it as a commercial end‑user, which would exempt it from a future requirements to centrally clear its commodity swaps. Nevertheless, future changes in CFTC regulations could increase the cost of entering into derivative contracts, limit the availability of derivatives to protect against risks that Benchmark encounters, reduce Benchmark’s ability to monetize or restructure our existing derivative contracts and increase Benchmark’s exposure to less creditworthy counterparties. If Benchmark reduces its use of swaps, results of operations of our Energy Operations Business may become more volatile and its cash flows may be less predictable.

Federal Regulation of Petroleum

Sales of crude oil and NGLs are not regulated and are made at market prices. However, the price received from the sale of these products is affected by the cost of transporting the products to market. Much of that transportation is through interstate common carrier pipelines, which are regulated by the FERC under the Interstate Commerce Act (“ICA”). The FERC requires that pipelines regulated under the ICA file tariffs setting forth the rates and terms and conditions of service and that such service not be unduly discriminatory or preferential.

The FERC’s regulations provide for an indexing