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Productive Wells
The following table sets
forth the number of productive oil and natural gas wells in which
the Company owned an interest as of December 31, 2001.
Acreage Data
The following table sets forth certain information
regarding the Company's developed and undeveloped lease acreage
as of December 31, 2001. Developed acres refers to acreage within
producing units and undeveloped acres refers to acreage that has
not been placed in producing units. Leases covering substantially
all of the undeveloped acreage in the following table will expire
within the next three years. In general, the Company's leases
will continue past their primary terms if oil or natural gas in
commercial quantities is being produced from a well on such leases.
The table does not include
4,212 gross acres (1,895 net) that the Company had a right to
acquire in Texas pursuant to various seismic option agreements
at December 31, 2001. Under the terms of its option agreements,
the Company typically has the right for a period of one year,
subject to extensions, to exercise its option to lease the acreage
at predetermined terms. The Company's lease agreements generally
terminate if producing wells have not been drilled on the acreage
within a period of three years. Further, the table does not include
43,711 gross and 15,991 net acres in Wyoming that the Company
has the right to earn pursuant to certain drilling obligations
and other pre-determined terms.
Marketing
The Company's production
is marketed to third parties consistent with industry practices.
Typically, oil is sold at the wellhead at field-posted prices
plus a bonus and natural gas is sold under contract at a negotiated
price based upon factors normally considered in the industry,
such as distance from the well to the pipeline, well pressure,
estimated reserves, quality of natural gas and prevailing supply/demand
conditions.
The Company's marketing
objective is to receive the highest possible wellhead price for
its product. The Company is aided by the presence of multiple
outlets near its production in the Texas and Louisiana Gulf Coast.
The Company takes an active role in determining the available
pipeline alternatives for each property based upon historical
pricing, capacity, pressure, market relationships, seasonal variances
and long-term viability.
There are a variety of
factors which affect the market for oil and natural gas, including
the extent of domestic production and imports of oil and natural
gas, the proximity and capacity of natural gas pipelines and other
transportation facilities, demand for oil and natural gas, the
marketing of competitive fuels and the effects of state and federal
regulations on oil and natural gas production and sales. The Company
has not experienced any difficulties in marketing its oil and
natural gas. The oil and natural gas industry also competes with
other industries in supplying the energy and fuel requirements
of industrial, commercial and individual customers. The availability
of a ready market for the Company's oil and natural gas production
depends on the proximity of reserves to, and the capacity of,
oil and natural gas gathering systems, pipelines and trucking
or terminal facilities. The Company delivers natural gas through
gas gathering systems and gas pipelines that it does not own.
Federal and state regulation of natural gas and oil production
and transportation, tax and energy policies, changes in supply
and demand and general economic conditions all could adversely
affect the Company's ability to produce and market its oil and
natural gas.
The Company from time
to time markets its own production where feasible with a combination
of market-sensitive pricing and
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