775351--3/16/2007--QUEST_RESOURCE

related topics

{gas, price, oil}

{stock, price, share}

{operation, natural, condition}

{loss, insurance, financial}

{acquisition, growth, future}

{debt, indebtedness, cash}

{provision, law, control}

{control, financial, internal}

{personnel, key, retain}

{operation, international, foreign}

{competitive, industry, competition}

{cost, regulation, environmental}

{capital, credit, financial}

Because the Company faces uncertainties in estimating proven recoverable natural gas reserves, you should not place undue reliance on such reserve information. The Company s future success depends upon its ability to find, develop and acquire additional natural gas reserves that are economically recoverable. The development of natural gas properties involves substantial risks that may result in a total loss of investment. Currently the vast majority of the Company s producing properties are located in the Cherokee Basin of southeastern Kansas and northeastern Oklahoma, making the Company vulnerable to risks associated with having its production concentrated in one area. The Company s business involves many hazards and operational risks, some of which may not be fully covered by insurance of the Company or the operator of a property. If a significant accident or event occurs that is not fully insured, the Company s operations and financial results could be adversely affected. The Company s use of hedging arrangements could result in financial losses or reduce the Company s income. The Company s natural gas sales are dependent on two customers. The Company incurs risks in acquiring producing properties. The Company may incur losses as a result of title deficiencies in the properties in which the Company invests. The Company s ability to market the natural gas that it produces is essential to its business. The Company s operations expose it to significant costs and liabilities with respect to environmental and operational safety matters applicable to natural gas exploration and production operations. The Company operates in a highly competitive environment and its competitors may have greater resources than the Company. The Company may have difficulty managing growth in its business. The Company s success depends on its key management personnel, the loss of any of whom could disrupt the Company s business. Shortages of natural gas and oil field service personnel and equipment could adversely affect the Company s business. Acquisition of entire businesses may be a component of the Company s growth strategy in the future and the Company s failure to complete future acquisitions successfully could reduce its earnings and slow its growth. The Company may not be able to replace its reserves or generate cash flows if the Company is unable to raise capital. If the Company borrows money to expand its business, the Company will face the risks of leverage. If the Company fails to maintain an effective system of internal controls, then it may not be able to accurately report its financial results or prevent fraud. The Company s credit agreements contain operating and financial restrictions that may restrict its business and financing activities. Terrorist attacks, and the threat of terrorist attacks, have resulted in increased costs to the Company s business. Continued hostilities in the Middle East or other sustained military campaigns may adversely impact the Company s results of operations. Risks Relating to the Company s Common Stock The Company s stock price may be volatile. It is unlikely that the Company will be able to pay dividends on the common stock. The percentage ownership evidenced by the common stock is subject to dilution. The common stock is an unsecured equity interest. Provisions in Nevada law could delay or prevent a change in control, even if that change would be beneficial to the Company s stockholders.

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775351--3/16/2007--QUEST_RESOURCE_CORP