The booming U.S. oil and gas industry has prospered thanks to technology advances, stable commodity prices and the mighty shales. But there are always challenges.

BDO, an advisory firm, recently surveyed risk factors cited in the most current 10-Ks of the 100 largest publicly traded exploration and production (E&P) companies in the U.S. While the usual risk suspects surfaced—regulatory changes and commodity price volatility—additional threats drew emphasis. Most significant were the attraction and retention of leadership talent and the challenge of economically recovering undeveloped reserves.

This year, 80% of companies said finding qualified personnel was a risk, up by 10% from 2013. “As the sector continues to grow, the number of operational entities has proliferated, with the U.S. Bureau of Labor Statistics indicating that the number of active E&P companies increased by about 27% between 2003 and 2012,” according to the BDO report. Thus, competition to attract top talent has intensified.

As for the resource-recovery side of the equation, 81% of the companies expressed “increasing apprehension that they may be unable to recover their undeveloped reserves economically or before their leases expire”—a one-third increase since 2013.

“As the industry continues its upward trajectory, we may expect to see a growing number of companies vying for a relatively static and selective pool of prospects, leadership and labor,” said Charles Dewhurst, leader of the natural resources practice at BDO.

Federal, state and international regulations remain the most frequently cited risk in companies’ 10-Ks this year, continuing a trend, BDO said. Interestingly, fewer companies mentioned climate change and greenhouse gas regulations as risks, despite recent and widely disseminated reports on climate change and the potential for the Environmental Protection Agency to take stronger action on carbon emissions.

While many companies mentioned hydraulic fracturing use and regulation as threats, these concerns held steady with 2013 mentions. BDO said “the lack of significant increase this year suggests that companies are more prepared for regulation and are seeking to cooperate with both the government and public to manage fracking’s potential impact on communities, the land and the environment.”

BDO’s first risk survey was conducted in 2011. See below for the Top 20 risk factors cited by the largest U.S. E&Ps.

Top 20 Risk Factors, Largest US E&PS

2014 Rank

Risk Factor Cited In 10-K Filing

2014

2013

2012

2011

1.

Regulatory and legislative changes and increased cost of compliance

100%

100%

100%

100%

1t*.

Volatile oil and gas prices

100%

100%

99%

100%

3.

Inability to expand reserves or find replacement reserves

98%

96%

98%

98%

3t.

Environmental and/or health regulations

98%

96%

94%

94%

3t.

Operational hazards including blowouts, spills and personal injury

98%

95%

98%

97%

6.

Natural disasters and extreme weather conditions

96%

96%

95%

96%

7.

Inadequate liquidity or access to capital, indebtedness

95%

91%

94%

95%

8.

Changes in demand for oil or natural gas

92%

91%

87%

76%

9.

General national or global economic conditions

90%

92%

94%

91%

10.

Inaccurate reserve estimates

89%

93%

95%

96%

11.

Hydraulic fracturing regulation

85%

85%

74%

52%

11t.

Use of hedging or derivative instruments

85%

77%

48%

N/A

13.

General industry competition

84%

90%

89%

87%

13t.

Inadequate or unavailable insurance coverage

84%

86%

88%

87%

13t.

Insufficient pipeline, storage or trucking capacity

84%

80%

63%

29%

16.

Liabilities for pollution resulting from current or previous operations

83%

87%

79%

59%

17.

Ability to properly recover undeveloped reserves

81%

61%

26%

N/A

18.

Impact of climate change and greenhouse gas regulation

80%

89%

81%

69%

18t.

Ability to attract and retain key personnel

80%

73%

79%

78%

20.

Price of and competition from alternative fuels

79%

76%

78%

72%

Source: BDO *t represents a tie in rankings