Undeveloped acreage. Lease acreage
on which wells have not been drilled or completed to a point that
would permit the production of commercial quantities of oil and
natural gas regardless of whether such acreage contains proved reserves.
Working interest. The operating
interest that gives the owner the right to drill, produce and conduct
operating activities on the property and a share of production.
Workover. Operations on a producing
well to restore or increase production.
ITEM 3. LEGAL PROCEEDINGS
From time to time, we are party to certain
legal actions and claims arising in the ordinary course of business.
While the outcome of these events cannot be predicted with certainty,
management does not expect these matters to have a materially adverse
effect on our financial position or results of operations.
In July 2001, we were notified of a prior
lease in favor of a predecessor of ExxonMobil purporting to be valid
and covering the same property as our Neblett lease in Starr County,
Texas. The Neblett lease is part of a unit in N. La Copita Prospect
in which we own a non-operating interest. The operator of the lease,
GMT, filed a petition for, and was granted, a temporary restraining
order against ExxonMobil in the 229th Judicial Court in Starr County,
Texas enjoining ExxonMobil from taking possession of the Neblett
wells. Pending resolution of the underlying title issue, the temporary
restraining order was extended voluntarily by agreement of the parties,
conditioned on GMT paying the revenues into escrow and agreeing
to provide ExxonMobil with certain discovery materials in this action.
ExxonMobil filed a counterclaim against GMT and all the non-operators,
including us, to establish the validity of their lease, remove cloud
on title, quiet title to the property, and for conversion, trespass
and punitive damages. We, along with GMT and other partners, reached
a final settlement with ExxonMobil on February 11, 2003. Under the
terms of the settlement, we recovered the balance of our drilling
costs (approximately $0.1 million) and certain other costs and retained
no further interest in the property. No reserves with respect to
these properties were included in our reported proved reserves as
of December 31, 2001 and 2002.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to Instruction 3 to Item 401(b)
of Regulation S-K and General Instruction G(3) to Form 10-K, the
following information is included in Part I of this Form 10-K.
The following table sets forth certain
information with respect to our executive officers.
Set forth below is a description of the
backgrounds of each of our executive officers.
S.P. Johnson IV has served as our
President and Chief Executive Officer and a director since December
1993. Prior to that, he worked for Shell Oil Company for 15 years.
His managerial positions included Operations Superintendent, Manager
of Planning and Finance and Manager of Development Engineering.
Mr. Johnson is also a director of Basic Energy Services, Inc. (a
well servicing contractor). Mr. Johnson is a Registered Petroleum
Engineer and has a B.S. in Mechanical Engineering from the University
of Colorado.
Paul F. Boling became our Chief
Financial Officer, Vice President, Secretary and Treasurer in August
2003. From 2001 to 2003, Mr. Boling was the Global Controller for
Resolution Performance Products, LLC, an international epoxy resins
manufacturer. From 1990 to 2001, Mr. Boling served in a number of
financial and managerial positions with Cabot Oil & Gas Corporation,
serving most
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