1223037--12/10/2008--STAR_GAS_PARTNERS

related topics

{gas, price, oil}

{condition, economic, financial}

{debt, indebtedness, cash}

{tax, income, asset}

{loss, insurance, financial}

{operation, natural, condition}

{cost, regulation, environmental}

{financial, litigation, operation}

{capital, credit, financial}

{loan, real, estate}

{stock, price, operating}

{acquisition, growth, future}

Current economic conditions could adversely affect our results of operations and financial condition. The Partnership relies on the continued solvency of our derivative and insurance counterparties. The Partnership regularly uses derivative instruments such as futures, options, and swap agreements, in order to mitigate our exposure to market risk associated with the purchase of home heating oil for our protected price customers, physical inventory on hand, inventory in transit and priced purchase commitments. The Partnership insures itself against catastrophic property and other losses with insurance companies. Our substantial debt and other financial obligations could impair our financial condition and our ability to fulfill our debt obligations. Any refinancing of this substantial debt could be at significantly higher interest rates. In light of the current financial turmoil, there can be no assurance that the lenders within our lending group will fund a borrowing request. Our credit facility expires in December 2009 and if the current adverse conditions in the credit markets continue, it may be more difficult and/or expensive to renew, extend or increase our credit facility. Unitholders may have to report income for federal income tax purposes on their investment in the Partnership without receiving any cash distributions from us. A change in ownership of Star Gas Partners may result in the limitation of the potential utilization of net operating loss carryforwards by our corporate subsidiary may impact our ability to pay cash distributions. Since weather conditions may adversely affect the demand for home heating oil, our financial condition is vulnerable to warm winters. Our operating results will be adversely affected if we continue to experience significant net attrition in our home heating oil customer base. Increases in home heating oil prices beyond current levels may have adverse effects on our business, financial condition and results of operations. The volatility in wholesale energy costs may adversely affect our liquidity. Sudden and sharp oil price increases that cannot be passed on to customers may adversely affect our operating results. A significant portion of our home heating oil volume is sold to price-protected customers (fixed and ceiling) and our gross margins could be adversely affected if we are not able to effectively hedge against fluctuations in the volume and cost of product sold to these customers. Significant declines in the wholesale price of home heating oil may cause fixed price customers to renegotiate or terminate their arrangements which may adversely impact our gross profit and net income. If we do not make acquisitions on economically acceptable terms, our future growth will be limited. Because of the highly competitive nature of the home heating oil business, we may not be able to retain existing customers or acquire new customers, which would have an adverse impact on our operating results and financial condition. We are subject to operating and litigation risks that could adversely affect our operating results whether or not covered by insurance. Our operations are subject to operational hazards and our insurance reserves may not be adequate to cover actual losses. We are the subject of a consolidated class action lawsuit alleging violation of the federal securities laws, which if decided adversely, could have a material adverse effect on our financial condition. Our results of operations and financial condition may be adversely affected by governmental regulation and associated environmental and regulatory costs. Energy efficiency and new technology may reduce the demand for our products and adversely affect our operating results. Conflicts of interest have arisen and could arise in the future as a result of relationships between the general partner and its affiliates on the one hand, and the Partnership and its limited partners, on the other hand. The risk of global terrorism and political unrest may adversely affect the economy and the price and availability of home heating oil and have a material adverse effect on our business, financial condition, and results of operations. The impact of hurricanes and other natural disasters could cause disruptions in supply and have a material adverse effect on our business, financial condition and results of operations. Cash distributions (if any) are not guaranteed and may fluctuate with performance and reserve requirements.

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1223037--12/10/2008--STAR_GAS_PARTNERS_LP