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the amount
and timing of actual production; |
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supply
and demand for natural gas and oil; |
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increases
or decreases in consumption of natural gas and oil; and |
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changes
in governmental regulations or taxation. |
In addition, the 10% discount factor we
use when calculating discounted future net cash flows for reporting
requirements in compliance with the Financial Accounting Standards
Board Statement of Financial Accounting Standards No. 69 may not
be the most appropriate discount factor based on interest rates
in effect from time to time and risks associated with us or the
natural gas and oil industry in general.
We depend on successful exploration, development
and acquisitions to maintain reserves and revenue in the future.
In general, the volume of production from
natural gas and oil properties declines as reserves are depleted,
with the rate of decline depending on reservoir characteristics.
Except to the extent we conduct successful exploration and development
activities or acquire properties containing proved reserves, or
both, our proved reserves will decline as reserves are produced.Our
future natural gas and oil production is, therefore, highly dependent
on our level of success in finding or acquiring additional reserves.
In 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:
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the level
of consumer product demand; |
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overall
economic conditions; |
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weather
conditions; |
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domestic
and foreign governmental relations, regulations and taxes; |
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the price
and availability of alternative fuels; |
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political
conditions; |
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the level
and price of foreign imports of oil and liquefied natural gas;
and |
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the ability
of the members of the Organization of Petroleum Exporting Countries
to agree upon and maintain production constraints and 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.
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