Item 13. Certain Relationships and Related Transactions and Director Independence

Independence of Board Members

To ensure a strong and independent board, all directors of the Company, other than our Interim CEO, Mr. Wichterich, are independent. A director cannot be considered independent unless the Board of Directors affirmatively determines that he or she does not have any relationship with management or the Company that may interfere with the exercise of his or her independent judgment.

How We Assess Director Independence

The Board’s guidelines. For a director to be considered independent, the Board must determine that he or she does not have any relationship that, in the opinion of the Board, would interfere with his or her independent judgment as a director. The Board’s guidelines for director independence conform to the independence requirements in the listing standards of the Nasdaq Stock Market. In addition to applying these guidelines, the Board considers all relevant facts and circumstances when making an independence determination.

Board Committees and Director Independence

All members of the current Board committees (the Audit Committee, Compensation Committee, Environmental and Social Governance Committee and Nominating and Corporate Governance Committee) and the former Board committees (the Audit Committee, Compensation Committee, Finance Committee and Nominating, Governance and Social Responsibility Committee) must be independent, as defined by the Board’s Governance Principles.

Applying the Guidelines in 2021 – New Board of Directors. In determining director independence, the Board considered all relevant transactions, relationships and arrangements in assessing independence, including relationships among Board members, their family members and the Company in 2018, 2019, 2020, and the 2021 first quarter. In accordance with our Corporate Governance Principles and the listing standards of The Nasdaq Stock Market, the Board determined that there were no material transactions or relationships with the Company that would impair the independence of any of the current non-employee directors. As such, the current Board of Directors affirmatively determined that: (i) all six of our current non-employee directors (listed in Item 10 above, beginning on page 5) are independent under the Company’s guidelines and the independence standards of The Nasdaq Stock Market; and (ii) all members of the Audit, Compensation and Nominating & Corporate Governance Committees, and Environmental and Social Responsibility Committees, where applicable, also satisfy the heightened committee-specific independence requirements.

Applying the Guidelines in 2020 – Former Board of Directors. Prior to the Company's emergence from Chapter 11 in February 2021, the Company's Board of Directors consisted of the following non-employee directors: Gloria R. Boyland, Luke R. Corbett, Mark A. Edmunds, Leslie Starr Keating, R. Brad Martin, Merrill A. (“Pete”) Miller and Thomas L. Ryan. In determining director independence, the Board considered relevant transactions, relationships and arrangements in assessing independence, including relationships among Board members, their family members and the Company in 2018, 2019, 2020, as described below:

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Relationships and Transactions Considered for Director Independence

In accordance with our Corporate Governance Principles and the listing standards of the New York Stock Exchange, the then-serving Board of Directors determined that all transactions and relationships it considered during its review were not material transactions or relationships with the Company and did not impair the independence of any of the non-employee directors. As such, the then-serving members of the Board determined that all members of the Board’s former committees, including the Audit, Compensation, Nominating, Governance & Social Responsibility and Finance Committees, were independent and, where applicable, also satisfied the heightened committee-specific independence requirements.

Transactions With Related Persons

The Company has adopted a written related party transaction policy with respect to any transaction, arrangement or relationship or series of similar transactions, arrangements or relationships (including any indebtedness or guarantee of indebtedness) in which: (1) the aggregate amount involved will or may be expected to exceed $120,000; (2) the Company is a participant; and (3) any of its currently serving directors and executive officers, or those serving as such at any time since the beginning of the last fiscal year, or greater than 5% shareholders, or any of the immediate family members of the foregoing persons, has or will have a direct or indirect material interest. The Audit Committee reviews and approves all interested transactions, as defined above, subject to certain enumerated exceptions that the Audit Committee has determined do not present a “direct or indirect material interest” on behalf of the related party, consistent with the rules and regulations of the SEC. Such transactions are subject to the Company’s Code of Business Conduct. Certain transactions with former executive officers and directors that fall within the enumerated exceptions are reviewed by the Audit Committee. The Audit Committee approves or ratifies only those transactions that it determines in good faith are in, or are not inconsistent with, the best interests of the Company and its shareholders. All transactions described below that do not fall within the enumerated exceptions described in the policy have been reviewed or approved by the Audit Committee.

Employment of Family Members

Grant Loxton, the son-in-law of Mr. Corbett, a former non-employee director of the Company who resigned in February 2021, has been an employee of the Company since May 2011. Mr. Loxton’s total 2020 cash and equity compensation was $409,684. In addition, Anna Patterson, the daughter of Frank J. Patterson, our EVP – Exploration and Production, has been an employee of the Company since June 2019. Ms. Patterson’s total 2020 cash and equity compensation was $159,499. The Company is a significant employer in Oklahoma City. We seek to fill positions with qualified employees, whether or not they are related to our executive officers or directors. We compensate employees who have such relationships within what we believe to be the current market rate for their position and provide benefits consistent with our policies that apply to similarly situated employees. Compensation arrangements for family members of related parties were approved by the Compensation Committee.

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