Acreage
Data The following table sets forth certain information
regarding our developed and undeveloped lease acreage as of December 31, 2005.
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 2,879 gross and 771 net acres under lease option that we
had a right to acquire in Texas and Louisiana, pursuant to various seismic and
lease option agreements at December 31, 2005. 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 21,864 gross and
5,466 net acres under lease option in Wyoming that CCBM has the right to earn
pursuant to certain drilling obligations and other predetermined terms. We
make certain statements in “Business and Properties-General” above regarding acreage
that we are currently pursuing in various project areas. This acreage is not included
in the table above. We have no rights in acreage that we are only pursuing because
the acreage is not under lease or option and, in many cases, we are not in negotiations
with respect to such acreage. Moreover, there can be no assurance that we will
ever acquire such acreage. Marketing Our
production is marketed to third parties consistent with industry practices. Typically,
oil is sold at the wellhead at fieldposted 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 | 
