870756--3/16/2006--NATIONAL_ENERGY_GROUP

related topics

{gas, price, oil}

{investment, property, distribution}

{acquisition, growth, future}

{cost, regulation, environmental}

{operation, natural, condition}

{loss, insurance, financial}

{personnel, key, retain}

{interest, director, officer}

{stock, price, share}

{product, candidate, development}

{tax, income, asset}

Our principal sources of revenues and cash flows are derived from affiliates which we do not control. We are a management company and have no direct ownership of oil and natural gas properties or proved reserves. We are not certain that there would be any residual value in Holding LLC after Guaranteed Payments and Priority Amount distributions. The Holding LLC Operating Agreement includes a provision that allows NEG Oil Gas to redeem our membership interest in Holding LLC at a price equal to the fair market value of such interest determined as if Holding LLC had sold all of its assets for fair market value and liquidated. Oil and natural gas prices are volatile. A decrease in oil and natural gas prices could have a material adverse effect on our investment in Holding LLC, payments of the Guaranteed Amounts or Priority Amount. Estimating Holding LLC s reserves, production and future net cash flow may not represent the current market value of our oil and natural gas reserves. The businesses of Holding LLC and the companies that we manage involve significant operating risks. Holding LLC s commodity price risk management activities may limit future revenues from price increases and result in financial losses or reduce income. Holding LLC may experience difficulty finding and acquiring additional reserves and may be unable to compensate for the depletion of proved reserves. Oil and natural gas exploration, exploitation and development activities may not be successful. Our insurance coverage may not be sufficient and insufficient insurance coverage and increased insurance costs could adversely impact our results of operations, financial condition or cash flows. Holding LLC is subject to complex laws and regulations, including environmental laws and regulations, that can adversely affect the cost, manner and feasibility of doing business. Holding LLC may be required to write down the carrying value of its properties. The loss of our president and chief executive officer or other key personnel could adversely affect our business. Changes in the financial condition of any of Holding LLC s large oil and natural gas purchasers could make it difficult to collect amounts due from those purchasers. Threatened or actual terrorist activity could adversely affect our business. Factors That May Impact Future Results of Operations If we fail to realize the anticipated benefits of the merger with NEG, Inc., our stockholders may receive lower returns than they expect. The number of shares of NEG, Inc. common stock that our stockholders receive in the merger will be based upon a fixed exchange ratio. The value of the shares of NEG, Inc. common stock at the time our stockholders receive them could be less than the value of our common stock today. Obtaining required approvals and satisfying closing conditions may delay or prevent completion of the merger.

Full 10-K form ▸

870756--3/16/2006--NATIONAL_ENERGY_GROUP_INC