1071993--9/12/2006--CONTANGO_OIL_&_GAS

related topics

{gas, price, oil}

{personnel, key, retain}

{stock, price, share}

{acquisition, growth, future}

{loss, insurance, financial}

{operation, natural, condition}

{competitive, industry, competition}

{cost, regulation, environmental}

{provision, law, control}

{investment, property, distribution}

We have outsourced the marketing of our production and have no ability to control the prices that we receive for natural gas and oil. Natural gas and oil prices fluctuate widely, and low prices would have a material adverse effect on our revenues, profitability and growth. We depend on the services of our chairman, chief executive officer and chief financial officer, and implementation of our business plan could be seriously harmed if we lost his services. We are highly dependent on the technical services provided by our alliance partners and could be seriously harmed if our alliance agreements were terminated. Our ability to successfully execute our business plan is dependent on our ability to obtain adequate financing. We lack experience as Operator in drilling high pressure wells in the Gulf of Mexico. We may have excessive resources committed to our Arkansas Fayetteville Shale Play. Increasing capital investment in certain prospects increases our dry hole risk exposure. The construction of our LNG receiving terminal in Freeport, Texas is subject to various development and completion risks. If we are not able to fund or finance our 10% ownership in the LNG receiving facility in Freeport, Texas, including any expansion of the facility, we may lose our 10% investment in the project. If we default on our Sundance loan we could lose our 10% investment in the LNG receiving facility in Freeport, Texas. Natural gas and oil reserves are depleting assets and the failure to replace our reserves would adversely affect our production and cash flows. Reserve estimates depend on many assumptions that may turn out to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions could materially affect the quantities and present values of our reserves. We rely on the accuracy of the estimates in the reservoir engineering reports provided to us by our outside engineers. Exploration is a high risk activity, and our participation in drilling activities may not be successful. The natural gas and oil business involves many operating risks that can cause substantial losses. Not hedging our production may result in losses. Our ability to market our natural gas and oil may be impaired by capacity constraints on the gathering systems and pipelines that transport our natural gas and oil. We have no assurance of title to our leased interests. Competition in the natural gas and oil industry is intense, and we are smaller and have a more limited operating history than most of our competitors. We are subject to complex laws and regulations, including environmental regulations that can adversely affect the cost, manner or feasibility of doing business. We cannot control the activities on properties we do not operate. Acquisition prospects are difficult to assess and may pose additional risks to our operations. We do not currently intend to pay dividends on our common stock. Anti-takeover provisions of our certificate of incorporation, bylaws and Delaware law could adversely effect a potential acquisition by third parties that may ultimately be in the financial interests of our stockholders. Our common stock is thinly traded.

Full 10-K form ▸

1071993--9/12/2006--CONTANGO_OIL_&_GAS_CO