addition,
we are dependent on finding partners for our exploratory activity. To the extent
that others in the industry do not have the financial resources or choose not
to participate in our exploration activities, we will be adversely affected. Natural
gas and oil prices are highly volatile, and lower prices will negatively affect
our financial results. Our revenue, profitability,
cash flow, future growth and ability to borrow funds or obtain additional capital,
as well as the carrying value of our properties, are substantially dependent on
prevailing prices of natural gas and oil. Historically, the markets for natural
gas and oil prices have been volatile, and those markets are likely to continue
to be volatile in the future. It is impossible to predict future natural gas and
oil price movements with certainty. Prices for natural gas and oil are subject
to wide fluctuation in response to relatively minor changes in the supply of and
demand for natural gas and oil, market uncertainty and a variety of additional
factors beyond our control. These factors include: - the
level of consumer product demand;
- overall economic conditions;
- weather conditions;
- domestic and
foreign governmental relations;
- the price and availability
of alternative fuels;
- political conditions;
- the
level and price of foreign imports of oil and liquefied natural gas; and
- the
ability of the members of the Organization of Petroleum Exporting Countries to
agree upon and maintain oil price controls.
Declines
in natural gas and oil prices may materially adversely affect our financial condition,
liquidity and ability to finance planned capital expenditures and results of operations.
We face strong competition from other natural gas and
oil companies. We encounter competition from other
natural gas and oil companies in all areas of our operations, including the acquisition
of exploratory prospects and proven properties. Our competitors include major
integrated natural gas and oil companies and numerous independent natural gas
and oil companies, individuals and drilling and income programs. Many of our competitors
are large, well-established companies that have been engaged in the natural gas
and oil business much longer than we have and possess substantially larger operating
staffs and greater capital resources than we do. These companies may be able to
pay more for exploratory projects and productive natural gas and oil properties
and may be able to define, evaluate, bid for and purchase a greater number of
properties and prospects than our financial or human resources permit. In addition,
these companies may be able to expend greater resources on the existing and changing
technologies that we believe are and will be increasingly important to attaining
success in the industry. Such competitors may also be in a better position to
secure oilfield services and equipment on a timely basis or on favorable terms.We
may not be able to conduct our operations, evaluate and select suitable properties
and consummate transactions successfully in this highly competitive environment.
We may not be able to keep pace with technological developments
in our industry. The natural gas and oil industry
is characterized by rapid and significant technological advancements and introductions
of new products and services using new technologies. As others use or develop
new technologies, we may be placed at a competitive disadvantage, and competitive
pressures may force us to implement those new technologies at substantial cost.
In addition, other natural gas and oil companies may have greater financial, technical
and personnel resources that allow them to enjoy technological advantages and
may in the future allow them to implement new technologies before we can. We may
not be able to respond to these competitive pressures and implement new technologies
on a timely basis or at an acceptable cost. If one or more of the technologies
we use now or in the future were to become obsolete or if we are unable to use
the most advanced commercially available technology, our business, financial condition
and results of operations could be materially adversely affected. | 
