316300--2/29/2008--EXCO_RESOURCES

related topics

{gas, price, oil}

{debt, indebtedness, cash}

{stock, price, share}

{operation, natural, condition}

{stock, price, operating}

{provision, law, control}

{acquisition, growth, future}

{control, financial, internal}

{cost, regulation, environmental}

{loss, insurance, financial}

{tax, income, asset}

{cost, operation, labor}

{customer, product, revenue}

Risks relating to our business Fluctuations in oil and natural gas prices, which have been volatile at times, may adversely affect our revenues as well as our ability to maintain or increase our borrowing capacity, repay current or future indebtedness and obtain additional capital on attractive terms. Changes in the differential between NYMEX or other benchmark prices of oil and natural gas and the reference or regional index price used to price our actual oil and natural gas sales could have a material adverse effect on our results of operations and financial condition. Our use of derivative financial instruments may cause us to forego additional future profits or result in our making cash payments. We will face risks associated with our recent acquisitions relating to difficulties in integrating operations, potential disruptions of operations, and related negative impact on earnings. We incurred a substantial amount of indebtedness to fund our 2006 and 2007 acquisitions, which may adversely affect our cash flow and our ability to operate our business, remain in compliance with debt covenants and make payments on our debt. We may be unable to acquire or develop additional reserves, which would reduce our revenues and access to capital. We may not identify all risks associated with the acquisition of oil and natural gas properties, and any indemnifications we receive from sellers may be insufficient to protect us from such risks, which may result in unexpected liabilities and costs to us. We may be unable to obtain additional financing to implement our growth strategy. We may not be successful in managing our growth, which could adversely affect our operations and net revenues. If we are unable to successfully prevent or address material weaknesses in our internal control over financial reporting, or any other control deficiencies, our ability to report our financial results on a timely and accurate basis and to comply with disclosure and other requirements may be adversely affected. There are inherent limitations in all internal control systems over financial reporting, and misstatements due to error or fraud may occur and not be detected. We may encounter obstacles to marketing our oil and natural gas, which could adversely impact our revenues. There are risks associated with our drilling activity that could impact the results of our operations. We may not correctly evaluate reserve data or the exploitation potential of properties as we engage in our acquisition, development, and exploitation activities. We cannot control the development of the properties we own but do not operate, which may adversely affect our production, revenues and results of operations. Our estimates of oil and natural gas reserves involve inherent uncertainty, which could materially affect the quantity and value of our reported reserves and our financial condition. We are exposed to operating hazards and uninsured risks that could adversely impact our results of operations and cash flow. We are subject to complex federal, state, local and other laws and regulations that could adversely affect the cost, manner or feasibility of conducting our operations. Our business exposes us to liability and extensive regulation on environmental matters, which could result in substantial expenditures. Our business substantially depends on Douglas H. Miller, our Chief Executive Officer. We may have write-downs of our asset values, which could negatively affect our results of operations and net worth. We may experience a financial loss if any of our significant customers fail to pay us for our oil or natural gas. We may experience a decline in revenues if we lose one of our significant customers. Competition in our industry is intense and we may be unable to compete in acquiring properties, contracting for drilling equipment and hiring experienced personnel. The success of our natural gas gathering and transportation business depends upon our ability to continually obtain new sources of natural gas supply, and any decrease in supplies of natural gas could reduce our transportation revenues. If third-party pipelines and other facilities interconnected to our gathering and transportation pipelines become unavailable to transport or process natural gas, our revenues and cash flow could be adversely affected. We do not own all of the land on which our transportation and gathering pipelines and gathering system are located, which could disrupt our operations. Risks relating to our indebtedness We have a substantial amount of indebtedness, which may adversely affect our cash flow and our ability to operate our business, remain in compliance with debt covenants and make payments on our debt. We may incur substantially more debt, which may intensify the risks described above, including our ability to service our indebtedness. To service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control, and any failure to meet our debt obligations could harm our business, financial condition and results of operations. Restrictive debt covenants could limit our growth and our ability to finance our operations, fund our capital needs, respond to changing conditions and engage in other business activities that may be in our best interests. Risks relating to our common stock Our stock price may fluctuate significantly. Future sales of our common stock may cause our stock price to decline. The equity trading markets may be volatile, which could result in losses for our shareholders. Our articles of incorporation permit us to issue preferred stock that may restrict a takeover attempt that you may favor. We have not paid dividends on our common stock in the past, and any return on investment has historically been limited to the value of our common stock. Risks relating to our preferred stock The holders of 7.0% Preferred Stock and Hybrid Preferred Stock have rights that could adversely affect an investment in our common stock. The holders of 7.0% Preferred Stock and Hybrid Preferred Stock could restrict our ability to enter into various corporate transactions that may be beneficial to our business strategy.

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316300--2/29/2008--EXCO_RESOURCES_INC