- uncontrollable
flows of oil, natural gas or well fluids;
- fires;
- geologic
formations with abnormal pressures;
- pipeline ruptures
or spills;
- releases of toxic gases; and
- other
environmental hazards and risks.
Any of these
hazards and risks can result in the loss of hydrocarbons, environmental pollution,
personal injury claims and other damage to our properties and the property of
others. We may not have enough insurance to cover all
of the risks we face. In accordance with customary
industry practices, we maintain insurance coverage against some, but not all,
potential losses in order to protect against the risks we face. We do not carry
business interruption insurance. We may elect not to carry insurance if our management
believes that the cost of available insurance is excessive relative to the risks
presented. In addition, we cannot insure fully against pollution and environmental
risks. The occurrence of an event not fully covered by insurance could have a
material adverse effect on our financial condition and results of operations.
We cannot control the activities on properties we do
not operate and are unable to ensure their proper operation and profitability.
We do not operate all of the properties in which
we have an interest. As a result, we have limited ability to exercise influence
over, and control the risks associated with, operations of these properties. The
failure of an operator of our wells to adequately perform operations, an operator’s
breach of the applicable agreements or an operator’s failure to act in ways that
are in our best interests could reduce our production and revenues. The success
and timing of our drilling and development activities on properties operated by
others therefore depend upon a number of factors outside of our control, including
the operator’s - timing and amount of capital expenditures;
- expertise and financial resources;
- inclusion
of other participants in drilling wells; and
- use of technology.
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. The
marketability of our production depends in part upon the availability, proximity
and capacity of natural gas gathering systems, pipelines and processing facilities.
We generally deliver natural gas through gas gathering systems and gas pipelines
that we do not own under interruptible or short-term transportation agreements.
Under the interruptible transportation agreements, the transportation of our gas
may be interrupted due to capacity constraints on the applicable system, for maintenance
or repair of the system, or for other reasons as dictated by the particular agreements.
Our ability to produce and market natural gas on a commercial basis could be harmed
by any significant change in the cost or availability of such markets, systems
or pipelines. Our future acquisitions may yield revenues
or production that varies significantly from our projections. In
acquiring producing properties, we assess the recoverable reserves, future natural
gas and oil prices, operating costs, potential liabilities and other factors relating
to the properties. Our assessments are necessarily inexact and their accuracy
is inherently uncertain. Our review of a subject property in connection with our
acquisition assessment will not reveal all existing or potential problems or permit
us to become sufficiently familiar with the property to assess fully its deficiencies
and capabilities. | 
