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ACREAGE DATA
The following table sets forth certain information
regarding our developed and undeveloped lease acreage as of December
31, 2004. Developed acres refers to acreage on which wells have
been drilled or completed to a point that would permit production
of oil and gas in commercial quantities. Undeveloped acreage refers
to acreage on which wells have not been drilled or completed to
a point that would permit production of oil and gas in commercial
quantities whether or not the acreage contains proved reserves.
The table does not include 32,809 gross and
17,002 net acres under lease option that we had a right to acquire
in Texas, pursuant to various seismic and lease option agreements
at December 31, 2004. Under the terms of our option agreements,
we typically have the right for a period of one year, subject to
extensions, to exercise our option to lease the acreage at predetermined
terms. Our 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 23,784 gross and 5,946 net acres
under lease option in Wyoming that CCBM has the right to earn pursuant
to certain drilling obligations and other predetermined terms.
MARKETING
Our 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 and demand conditions.
Our marketing objective is to receive the highest
possible wellhead price for our product. We are aided by the presence
of multiple outlets near our production in the Texas and Louisiana
onshore Gulf Coast area and the Barnett Shale area. We take an active
role in determining the available pipeline alternatives for each
property based on historical pricing, capacity, pressure, market
relationships, seasonal variances and long-term viability.
There are a variety of factors that affect
the market for natural gas and oil, including:
- the extent of
domestic production and imports of natural gas and oil;
- the proximity
and capacity of natural gas pipelines and other transportation
facilities;
- demand for natural
gas and oil;
- the marketing
of competitive fuels; and
- the effects of
state and federal regulations on natural gas and oil production
and sales.
See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -
Risk Factors--Natural gas and oil prices are highly volatile, and
lower prices will negatively affect our financial results," "Management's
Discussion and Analysis of Financial Condition and Results of Operations
- Risk Factors--We are subject to various governmental regulations
and environmental risks" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations - Risk Factors--The
marketability of our natural gas production depends on facilities
that we typically do not own or control, which could result in a
curtailment of production and revenues."
We from time to time market our own production
where feasible with a combination of market-sensitive pricing and
forward-fixed pricing. We utilize forward pricing to take advantage
of anomalies in the futures market and to hedge a portion of our
production
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