1179060--3/15/2006--CROSSTEX_ENERGY

related topics

{operation, natural, condition}

{gas, price, oil}

{loss, insurance, financial}

{product, market, service}

{cost, regulation, environmental}

{regulation, change, law}

{customer, product, revenue}

{acquisition, growth, future}

{personnel, key, retain}

We are vulnerable to operational, regulatory and other risks associated with South Louisiana and the Gulf of Mexico, including the effects of adverse weather conditions such as hurricanes, because we have a significant portion of our assets located in South Louisiana. Our profitability is dependent upon prices and market demand for natural gas and NGLs, which are beyond our control and have been volatile. We must continually compete for natural gas supplies, and any decrease in our supplies of natural gas could adversely affect our financial condition and results of operations. A substantial portion of our assets is connected to natural gas reserves that will decline over time, and the cash flows associated with those assets will decline accordingly. Growing our business by constructing new pipelines and processing and treating facilities subjects us to construction risks, risks that natural gas supplies will not be available upon completion of the facilities and risks of construction delay and additional costs due to obtaining rights-of-way. We have limited control over the development of certain assets because we are not the operator. We expect to encounter significant competition in any new geographic areas into which we seek to expand and our ability to enter such markets may be limited. We are exposed to the credit risk of our customers and counterparties, and a general increase in the nonpayment and nonperformance by our customers could have an adverse effect on our financial condition and results of operations. We may not be able to retain existing customers or acquire new customers, which would reduce our revenues and limit our future profitability. We depend on certain key customers, and the loss of any key customer could adversely affect financial results. Our business involves many hazards and operational risks, some of which may not be fully covered by insurance. The threat of terrorist attacks has resulted in increased costs, and future war or risk of war may adversely impact our results of operations and our ability to raise capital. Federal, state or local regulatory measures could adversely affect our business. Our business involves hazardous substances and may be adversely affected by environmental regulation. Our use of derivative financial instruments has in the past and could in the future result in financial losses or reduce our income. Due to our lack of asset diversification, adverse developments in our gathering, transmission, treating, processing and commercial services businesses would materially impact our financial condition.

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1179060--3/15/2006--CROSSTEX_ENERGY_LP