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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. We may not inspect
every well, and we may not be able to observe structural and environmental
problems even when we do inspect a well. If problems are identified,
the seller may be unwilling or unable to provide effective contractual
protection against all or part of those problems. Any acquisition
of property interests may not be economically successful, and unsuccessful
acquisitions may have a material adverse effect on our financial
condition and future results of operations.
Our business may suffer if we lose key personnel.
We depend to a large extent on the services
of certain key management personnel, including our executive officers
and other key employees, the loss of any of whom could have a material
adverse effect on our operations. We have entered into employment
agreements with each of S.P. Johnson IV, our President and Chief
Executive Officer, Paul F. Boling, our Vice President and Chief
Financial Officer, J. Bradley Fisher, our Vice President and Chief
Operating Officer, Gregory E. Evans, our Vice President of Exploration
and Richard H. Smith, our Vice President of Land. We do not maintain
key-man life insurance with respect to any of our employees. Our
success will be dependent on our ability to continue to employ and
retain skilled technical personnel.
We may experience difficulty in achieving
and managing future growth.
We have experienced growth in the
past primarily through the expansion of our drilling program. Future
growth may place strains on our financial, technical, operational
and administrative resources and cause us to rely more on project
partners and independent contractors, possibly negatively affecting
our financial condition and results of operations. Our ability to
grow will depend on a number of factors, including:
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