1322866--3/11/2010--Kodiak_Oil_&_Gas

related topics

{gas, price, oil}

{condition, economic, financial}

{stock, price, share}

{cost, regulation, environmental}

{loss, insurance, financial}

{stock, price, operating}

{provision, law, control}

{loan, real, estate}

{control, financial, internal}

{cost, contract, operation}

{operation, natural, condition}

{regulation, change, law}

{personnel, key, retain}

{customer, product, revenue}

{cost, operation, labor}

{system, service, information}

{interest, director, officer}

Risks Relating to the Company We may not be able to successfully drill wells that produce oil or natural gas in commercially viable quantities. Our commodity derivative agreement could result in financial losses or could reduce our earnings. If we place hedges on future production and encounter difficulties meeting that production, we may not realize the originally anticipated cash flows. We have historically incurred losses and cannot assure investors as to future profitability. The actual quantities and present value of our proved reserves may be lower than we have estimated. Our reserves and production will decline, and unless we replace our oil and natural gas reserves, our business, financial condition and results of operations will be adversely affected. The ongoing economic recession may have material adverse impacts on our business and financial condition that we currently cannot predict. We may incur termination fees related to two drilling rig contracts that we entered into in 2008 which could impair our working capital. Our business involves numerous operating hazards and exposure to significant weather and climate risks. We have not insured and cannot fully insure against all risks related to our operations, which could result in substantial claims for which we are underinsured or uninsured. We have limited control over activities in properties we do not operate, which could reduce our production and revenues and affect the timing and amounts of capital requirements. Our operations in North Dakota, Montana and Wyoming could be adversely affected by poor weather conditions. Market conditions or operational impediments may hinder our access to oil and natural gas markets or delay our production. We depend on a limited number of customers for sales of our oil. We are exposed to credit risk if one or more of our significant customers becomes insolvent and fails to pay amounts owed to us. To the extent our customers cease to be creditworthy, our revenues could decline. We rely on independent experts and technical or operational service providers over whom we may have limited control. Our interests are held in the form of leases that we may be unable to retain and the title to our properties may be defective. Properties that we acquire may not produce oil or natural gas as projected, and we may be unable to determine reserve potential, identify liabilities associated with the properties or obtain protection from sellers against them, which could cause us to incur losses. Increases in interest rates could adversely affect our results of operations. Our officers and directors may become subject to conflicts of interest. We depend on a number of key personnel who would be difficult to replace. Risks Relating to Our Industry A substantial or extended decline in oil or natural gas prices could reduce our future revenue and earnings. Oil and natural gas are commodities subject to price volatility based on many factors outside the control of producers, and low prices may make properties uneconomic for future production. Lower oil and natural gas prices may cause us to record ceiling test write-downs. Conducting operations in the oil and natural gas industry subjects us to complex laws and regulations that can have a material adverse effect on the cost, manner and feasibility of doing business. The adoption of climate change and derivatives legislation by Congress may increase operating costs and reduce demand for the oil and natural gas we produce and could have an adverse impact on our ability to hedge risks associated with our business. Potential legislation related to "over-the-counter" derivatives could adversely impact our ability to execute our hedging strategy. Federal and state legislation and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays. Proposed legislation to eliminate or reduce certain federal income tax incentives and deductions available to oil and gas exploration and production companies could, if enacted into law, have a material adverse effect on our results of operations and cash flows. Exploration and drilling operations are subject to significant environmental regulation, including those related to climate and emission of "greenhouse gases," which may increase costs or limit our ability to develop our properties. The oil and natural gas industry is subject to significant competition, which may increase costs or otherwise adversely affect our ability to compete. Our operations and demand for our products are affected by seasonal factors, which may lead to fluctuations in our operating results. Risks Relating to Our Common Stock Future sales or other issuances of our common stock could depress the market for our common stock. Our common stock has a limited trading history and has experienced price and volume volatility. We have not paid cash dividends on our common stock and do not anticipate paying any dividends on our common stock in the foreseeable future. Our constating documents permit us to issue an unlimited number of shares without shareholder approval.

Full 10-K form ▸

1322866--3/11/2010--Kodiak_Oil_&_Gas_Corp