1209821--3/2/2009--CROSSTEX_ENERGY

related topics

{operation, natural, condition}

{gas, price, oil}

{loss, insurance, financial}

{stock, price, operating}

{investment, property, distribution}

{capital, credit, financial}

{debt, indebtedness, cash}

{customer, product, revenue}

{acquisition, growth, future}

{cost, regulation, environmental}

{regulation, change, law}

We are largely prohibited from engaging in activities that compete with the Partnership. In our corporate charter, we have renounced business opportunities that may be pursued by the Partnership or by certain stockholders. Although we control the Partnership, the general partner owes fiduciary duties to the Partnership and the unitholders. If the general partner is not fully reimbursed or indemnified for obligations and liabilities it incurs in managing the business and affairs of the Partnership, its value, and therefore the value of our common stock, could decline. The Partnership may not be able to obtain funding or obtain funding on acceptable terms because of the deterioration of the credit and capital markets. This may hinder or prevent the Partnership from meeting its future capital needs. Due to current economic conditions, the Partnership s ability to obtain funding under its bank credit facility could be impaired. The Partnership s profitability is dependent upon prices and market demand for natural gas and NGLs, which are beyond its control and have been volatile. Due to the Partnership s lack of asset diversification, adverse developments in its gathering, transmission, treating, processing and producer services businesses would materially impact its financial condition. Many of the Partnership s customers drilling activity levels and spending for transportation on its pipeline system or gathering and processing at its facilities may be impacted by the current deterioration in the credit markets. The Partnership is exposed to the credit risk of its customers and counterparties, and a general increase in the nonpayment and nonperformance by those customers could have an adverse effect on financial condition and results of operations. The Partnership s use of derivative financial instruments does not eliminate exposure to fluctuations in commodity prices and interest rates and has in the past and could in the future result in financial losses or reductions in income. The Partnership must continually compete for natural gas supplies, and any decrease in its supplies of natural gas could adversely affect its financial condition and results of operations. The Partnership is vulnerable to operational, regulatory and other risks associated with its assets including, with respect to its south Louisiana and the Gulf of Mexico assets, the effects of adverse weather conditions such as hurricanes. A substantial portion of the Partnership s assets is connected to natural gas reserves that will decline over time, and the cash flows associated with those assets will decline accordingly. Growing the Partnership s business by constructing new pipelines and processing and treating facilities subjects the Partnership 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 and complying with local ordinances. Acquisitions typically increase the Partnership s debt and subject it to other substantial risks, which could adversely affect its results of operations. The Partnership expects to encounter significant competition in any new geographic areas into which it seeks to expand and its ability to enter such markets may be limited. The Partnership may not be able to retain existing customers or acquire new customers, which would reduce revenues and limit future profitability. The Partnership depends on certain key customers, and the loss of any of those key customers could adversely affect financial results. The Partnership s 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 the Partnership s results of operations and its ability to raise capital. Federal, state or local regulatory measures could adversely affect the Partnership s business. The Partnership s business involves hazardous substances and may be adversely affected by environmental regulation.

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1209821--3/2/2009--CROSSTEX_ENERGY_INC