813779--3/27/2009--CRIMSON_EXPLORATION

related topics

{gas, price, oil}

{stock, price, share}

{cost, regulation, environmental}

{stock, price, operating}

{loss, insurance, financial}

{control, financial, internal}

{personnel, key, retain}

{provision, law, control}

{competitive, industry, competition}

{operation, natural, condition}

{acquisition, growth, future}

{debt, indebtedness, cash}

{capital, credit, financial}

Risks Related to Our Business Natural gas, crude oil and natural gas liquids prices are volatile, and a decline in prices can significantly affect our financial results and impede our growth. Recent changes in the financial and credit markets may impact economic growth and natural gas, crude oil and natural gas liquids prices may continue to be adversely affected by general economic conditions. We have a substantial amount of indebtedness, a major portion of which is contingent upon semi-annual redeterminations of a borrowing base that determines the maximum amount that can be borrowed under our senior revolving credit facility. If an event of default occurs under either of our credit facilities, all of our indebtedness may become due and payable, which may adversely affect our cash flow and our ability to operate our business. market events and conditions, including disruptions in the U.S. and international credit markets and other financial systems and the deterioration of the U.S. and global economic conditions, could, among other things, impede access to capital or increase the cost of capital, which would have an adverse effect on our ability to fund our working capital and other capital requirements. We have incurred net losses in the past and there can be no assurance that we will be profitable in the future. We may not be able to successfully integrate the properties and assets we acquire with our existing operations. Reserve estimates depend on many assumptions that may turn out to be inaccurate. Any material inaccuracies in our reserve estimates could materially reduce the estimated quantities and present value of our reserves. You should not assume that the present value referred to in this Annual Report is the current market value of our estimated natural gas, crude oil and natural gas liquids reserves. Approximately 31% of our total estimated proved reserves at December 31, 2008 were proved undeveloped reserves, which are by their nature less certain. Our development and exploration operations require substantial capital, and we may be unable to obtain needed capital or financing on satisfactory terms, which could lead to a loss of properties and a decline in our natural gas, crude oil and natural gas liquids reserves. Drilling for natural gas and crude oil may not be profitable. The interpretation and analysis of 3D seismic data does not allow the interpreter to know if hydrocarbons are present or economically producible. Drilling for and producing natural gas and crude oil are high risk activities with many uncertainties that could adversely affect our business, financial condition or results of operations. Our past growth has been partially attributable to acquisitions of producing natural gas and crude oil properties with proved reserves. When we acquire properties, in most cases, we are not entitled to contractual indemnification for pre-closing liabilities, including environmental liabilities. We cannot control activities on properties that we do not operate and are unable to control their proper operation and profitability. If our access to markets is restricted, it could negatively impact our production, our income and ultimately our ability to retain our leases. Unless we replace our natural gas, crude oil and natural gas liquids reserves, our reserves and production will decline, which would adversely affect our cash flows, our ability to raise capital and the value of our common stock. The potential lack of availability or high cost of drilling rigs, equipment, supplies, personnel and field services could adversely affect our ability to execute on a timely basis our exploration and development plans within our budget. Competition in the natural gas and crude oil industry is intense, and many of our competitors have resources that are greater than ours. We depend on our senior management team and other key personnel. Accordingly, the loss of any of these individuals could adversely affect our business, financial condition and the results of operations and future growth. 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 operations expose us to potentially substantial costs and liabilities with respect to environmental, health and safety matters. If we are unable to successfully prevent or address material weakness 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 reporting requirements may be adversely affected. A terrorist attack or armed conflict could harm our business by decreasing our revenues and increasing our costs. Our hedging activities could result in financial losses or reduce our income. Historically, we have been dependent on a few purchasers since we operate in a single industry; the loss of one or more purchasers could adversely affect our financial condition and results of operations. One stockholder holds a significant number of our shares and the right to elect a majority of our board of directors, which will limit stockholders ability to influence corporate activities and may adversely affect the market price of our common stock. The interests of OCMGW may conflict with the interests of our other stockholders. The price of our common stock may fluctuate significantly, and you could lose all or part of your investment. We have no plans to pay regular dividends on our common stock. Delaware law and our organizational documents may impede or discourage a takeover, which could deprive our investors of the opportunity to receive a premium for their shares. We have blank check preferred stock. The holders of our common stock do not have cumulative voting rights, preemptive rights or rights to convert their common stock to other securities. The number of shares of outstanding Common Stock could increase significantly as a result of the exercise of outstanding stock options or conversion of our preferred stock. Our Common Stock is thinly traded and there is no active trading market for our Common Stock and an active trading market may not develop. The impairment of financial institutions could adversely affect us

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813779--3/27/2009--CRIMSON_EXPLORATION_INC.