867665--3/17/2008--ABRAXAS_PETROLEUM

related topics

{gas, price, oil}

{stock, price, share}

{stock, price, operating}

{debt, indebtedness, cash}

{loss, insurance, financial}

{competitive, industry, competition}

{tax, income, asset}

{provision, law, control}

{personnel, key, retain}

Risks Related to Our Business Abraxas may not be able to fund the substantial capital expenditures that will be required for it to increase reserves and production We may be unable to acquire or develop additional reserves, in which case its results of operations and financial condition would be adversely affected. A substantial portion of the Partnership s production is currently concentrated in one well. We may not find any commercially productive natural gas or crude oil reservoirs 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 The marketability of our production depends largely upon the availability, proximity and capacity of natural gas gathering systems, pipelines and processing facilities. Hedging transactions have in the past and may in the future impact our cash flow from operations. Lower natural gas and crude oil prices increase the risk of ceiling limitation write downs. Use of our net operating loss carryforwards may be limited. We depend on our Chairman, President and CEO and the loss of his services could have an adverse effect on our operations. Risks Related to Abraxas Ownership of General Partner Units and Common Units of the Partnership The Partnership may not have sufficient cash flow from operations to pay the quarterly distributions on the general partner units and common units following establishment of cash reserves and payment of fees and expenses. The Partnership is unlikely to be able to sustain its expected level of distributions without making accretive acquisitions or capital expenditures that maintain or grow its asset base. If the Partnership does not set aside sufficient cash reserves or make sufficient cash expenditures to maintain its asset base, it will be unable to pay distributions at the expected level from cash generated from operations and would likely reduce distributions. To fund its capital expenditures, the Partnership will be required to use cash generated from operations, additional borrowings or the issuance of additional partnership interests, or some combination thereof. The Partnership intends to make acquisitions of natural gas and crude oil properties to grow its asset base. Properties that the Partnership acquires may not produce as projected and it may be unable to determine reserve potential, identify liabilities associated with the properties or obtain protection from sellers against such liabilities, which could adversely affect its cash available for distribution. There may be conflicts of interest between Abraxas and the Partnership which could be detrimental to Abraxas. The general partner of the Partnership, which is wholly- owned by Abraxas, may be removed as general partner with the consent of unitholders owning at least 66 2 / 3 % of the common units, including units beneficially owned by Abraxas. Risks Related to Our Industry Market conditions for natural gas and crude oil, and particularly volatility of prices for natural gas and crude oil, could adversely affect our revenue, cash flows, profitability and growth. Estimates of our proved reserves and future net revenue are inherently imprecise. The present value of future net cash flows from our proved reserves is not necessarily the same as the current market value of our estimated reserves. Any material inaccuracies in our reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves, which could adversely affect our business, results of operations and financial condition. Our operations are subject to the numerous risks of natural gas and crude oil drilling and production activities. We operate in a highly competitive industry which may adversely affect our operations. The unavailability or high cost of drilling rigs, equipment, supplies, insurance, personnel and crude oil field services could adversely affect our ability to execute our exploration and development plans on a timely basis and within our budget. Our natural gas and crude oil operations are subject to various Federal, state and local regulations that materially affect our operations. Risks Related to the Common Stock Abraxas does not pay dividends on common stock. Shares eligible for future sale may depress our stock price. The price of Abraxas common stock has been volatile and could continue to fluctuate substantially. Abraxas may issue shares of preferred stock with greater rights than the common stock. Anti takeover provisions could make a third party acquisition of Abraxas difficult. An active market may not develop for the common stock. Future issuance of additional shares of common stock could cause dilution of ownership interests and adversely affect the stock price.

Full 10-K form ▸

867665--3/17/2008--ABRAXAS_PETROLEUM_CORP