1469510--3/30/2010--Resolute_Energy

related topics

{gas, price, oil}

{financial, litigation, operation}

{loss, insurance, financial}

{debt, indebtedness, cash}

{operation, natural, condition}

{cost, regulation, environmental}

{cost, operation, labor}

{competitive, industry, competition}

{personnel, key, retain}

{loan, real, estate}

{regulation, change, law}

Current financial conditions may have effects on Resolute s business and financial condition that Resolute cannot predict. Inadequate liquidity could materially and adversely affect Resolute s business operations in the future. Resolute s planned operations, as well as replacement of its production and reserves, will require additional capital that may not be available. A significant part of Resolute s development plan involves the implementation of its CO 2 projects. The supply of CO 2 and efficacy of the planned projects is uncertain, and other resources may not be available or may be more expensive than expected, which could adversely impact production, revenue and earnings, and may require a write-down of reserves. Resolute is a party to contracts that require it to pay for a minimum quantity of CO 2 . These contracts limit Resolute s ability to curtail costs if its requirements for CO 2 decrease. Oil and gas prices are volatile and change for reasons that are beyond Resolute s control. Decreases in the price Resolute receives for its oil and gas production can adversely affect its business, financial condition, results of operations and liquidity and impede its growth. Resolute s estimated proved reserves are based on many assumptions that may turn out to be inaccurate. Any significant inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities of Resolute s proved reserves. The standardized measure of future net cash flows from Resolute s net proved reserves is based on many assumptions that may prove to be inaccurate. Any material inaccuracies in Resolute s reserve estimates or underlying assumptions will materially affect the quantities and present value of its proved reserves. Currently, substantially all of Resolute s oil producing properties are located on the Navajo Reservation, making Resolute vulnerable to risks associated with laws and regulations pertaining to the operation of oil and gas properties on Native American tribal lands. NNOG has options to purchase a portion of Resolute s Aneth Field Properties. The statutory preferential purchase right held by the Navajo Nation to acquire transferred Navajo Nation oil and gas leases and NNOG s right of first negotiation could diminish the value Resolute may be able to receive in a sale of its properties. All of Resolute s producing properties are located in two geographic areas, making it vulnerable to risks associated with operating in only two geographic areas. Developing and producing oil and gas are costly and high-risk activities with many uncertainties that could adversely affect Resolute s financial condition or results of operations, and insurance may not be available or may not fully cover losses. Exploration and development drilling may not result in commercially productive reserves. If Resolute does not make acquisitions of reserves on economically acceptable terms, Resolute s future growth and ability to maintain production will be limited to only the growth it intends to achieve through the development of its proved developed non-producing and proved undeveloped reserves. Any acquisitions Resolute completes are subject to substantial risks that could negatively affect its financial condition and results of operations. Resolute s future debt levels may limit its flexibility to obtain additional financing and pursue other business opportunities. Resolute s revolving credit facility has substantial financial and operating covenants that restrict Resolute s business and financing activities and prohibit Resolute from paying dividends. Future borrowing agreements would likely include similar restrictions. Shortages of qualified personnel or field equipment and services could affect Resolute s ability to execute its plans on a timely basis, reduce its cash flow and adversely affect its results of operations. Resolute s hedging activities could reduce its net income, which could reduce the price at which the Company s stock may trade. The effectiveness of hedging transactions to protect Resolute from future oil price declines will be dependent upon oil prices at the time it enters into future hedging transactions as well as its future levels of hedging, and as a result its future net cash flow may be more sensitive to commodity price changes. The nature of Resolute s assets exposes it to significant costs and liabilities with respect to environmental and operational safety matters. Resolute is responsible for costs associated with the removal and remediation of the decommissioned Aneth Gas Processing Plant. Resolute may be unable to compete effectively with larger companies, which may adversely affect its operations and ability to generate and maintain sufficient revenue. Resolute is subject to complex federal, state, tribal, local and other laws and regulations that could adversely affect the cost, manner or feasibility of doing business. Possible regulation related to global warming and climate change could have an adverse effect on Resolute s operations and demand for oil and gas. Resolute depends on a limited number of key personnel who would be difficult to replace. Terrorist attacks aimed at Resolute s facilities or operations could adversely affect its business. Work stoppages or other labor issues at Resolute s facilities could adversely affect its business, financial position, results of operations, or cash flows. Resolute may be required to write down the carrying value of its properties in the future. Compliance with the Sarbanes-Oxley Act of 2002 and other obligations of being a public company will require substantial financial and management resources.

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1469510--3/30/2010--Resolute_Energy_Corp