778438--2/28/2007--BERRY_PETROLEUM

related topics

{gas, price, oil}

{loss, insurance, financial}

{acquisition, growth, future}

{competitive, industry, competition}

{interest, director, officer}

{cost, regulation, environmental}

{personnel, key, retain}

{condition, economic, financial}

Other Factors Affecting the Company's Business and Financial Results Oil and gas prices fluctuate widely, and low prices for an extended period of time are likely to have a material adverse impact on our business, results of operations and financial condition. Our heavy crude in California is less economic than lighter crude oil and natural gas. A widening of commodity differentials may adversely impact our revenues and per barrel economics. Market conditions or operational impediments may hinder our access to crude oil and natural gas markets or delay our production. We may be subject to the risk of adding additional steam generation equipment if the electrical market deteriorates significantly. The future of the electricity market in California is uncertain. A shortage of natural gas in California could adversely affect our business. Our use of oil and gas price and interest rate hedging contracts involves credit risk and may limit future revenues from price increases or reduced expenses from lower interest rates, as well as result in significant fluctuations in net income and shareholders' equity. Our future success depends on our ability to find, develop and acquire oil and gas reserves. Actual quantities of recoverable oil and gas reserves and future cash flows from those reserves , future production, oil and gas prices, revenues, taxes, development expenditures and operating expenses most likely will vary from estimates. If oil or gas prices decrease or if our exploration and development activities are unsuccessful, we may be required to take writedowns. Competitive industry conditions may negatively affect our ability to conduct operations. Drilling is a high-risk activity. The oil and gas business involves many operating risks that can cause substantial losses; insurance may not protect us against all of these risks. These risks include: We are subject to complex federal, state, regional, local and other laws and regulations that could give rise to substantial liabilities from environmental contamination or otherwise adversely affect our cost, manner or feasibility of doing business. Property acquisitions are a component of our growth strategy, and our failure to complete future acquisitions successfully could reduce our earnings and slow our growth. Acquisitions are subject to the uncertainties of evaluating recoverable reserves and potential liabilities. There are risks in acquiring producing properties, including difficulties in integrating acquired properties into our business, additional liabilities and expenses associated with acquired properties, diversion of management attention, and costs of increased scope, geographic diversity and complexity of our operations. The loss of key personnel could adversely affect our business. We have limited control over the activities on properties that we do not operate. We may not adhere to our proposed drilling schedule. We may incur losses as a result of title deficiencies.

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778438--2/28/2007--BERRY_PETROLEUM_CO