1125057--2/24/2009--ENCORE_ACQUISITION

related topics

{gas, price, oil}

{acquisition, growth, future}

{loss, insurance, financial}

{operation, natural, condition}

{cost, regulation, environmental}

{debt, indebtedness, cash}

{competitive, industry, competition}

{personnel, key, retain}

{condition, economic, financial}

{loan, real, estate}

An increase in the differential between benchmark prices of oil and natural gas and the wellhead price we receive could adversely affect our financial condition, results of operations, and cash flows. Our estimated proved reserves are based on many assumptions that may prove to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves. Our oil and natural gas reserves naturally decline and the failure to replace our reserves could adversely affect our financial condition. Price declines may result in a write-down of our asset carrying values, which could have a material adverse effect on our results of operations and limit our ability to borrow funds under our revolving credit facility. If we do not make acquisitions, our future growth could be limited. Any acquisitions we complete are subject to substantial risks that could adversely affect our financial condition and results of operations. A substantial portion of our producing properties is located in one geographic area and adverse developments in any of our operating areas would negatively affect our financial condition and results of operations. Our commodity derivative contract activities could result in financial losses or could reduce our income and cash flows. Furthermore, in the future our commodity derivative contract positions may not adequately protect us from changes in commodity prices. The counterparties to our derivative contracts may not be able to perform their obligations to us, which could materially affect our cash flows and results of operations. We have limited control over the activities on properties we do not operate. Our development and exploratory drilling efforts may not be profitable or achieve our targeted returns. Developing and producing oil and natural gas are costly and high-risk activities with many uncertainties that could adversely affect our financial condition or results of operations. Secondary and tertiary recovery techniques may not be successful, which could adversely affect our financial condition or results of operations. Our operations are subject to operational hazards and unforeseen interruptions for which we may not be adequately insured. Our development, exploitation, and exploration operations require substantial capital, and we may be unable to obtain needed financing on satisfactory terms. Shortages of rigs, equipment, and crews could delay our operations. The loss of key personnel could adversely affect our business. Our business depends in part on gathering and transportation facilities owned by others. Any limitation in the availability of those facilities could interfere with our ability to market our oil and natural gas production and could harm our business. Competition in the oil and natural gas industry is intense, and many of our competitors have greater resources than we do. As a result, we may be unable to effectively compete with larger competitors. We are subject to complex federal, state, local, and other laws and regulations that could adversely affect the cost, manner, or feasibility of conducting our operations. We have significant indebtedness and may incur significant additional indebtedness, which could negatively impact our financial condition, results of operations, and business prospects. We are unable to predict the impact of the recent downturn in the credit markets and the resulting costs or constraints in obtaining financing on our business and financial results. Our operations expose us to significant costs and liabilities with respect to environmental and operational safety matters.

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1125057--2/24/2009--ENCORE_ACQUISITION_CO