892986--3/6/2007--WARREN_RESOURCES

related topics

{gas, price, oil}

{cost, regulation, environmental}

{stock, price, share}

{debt, indebtedness, cash}

{provision, law, control}

{loss, insurance, financial}

{operation, natural, condition}

{investment, property, distribution}

{control, financial, internal}

{loan, real, estate}

{competitive, industry, competition}

{personnel, key, retain}

{acquisition, growth, future}

Risks Relating to Our Business Our reserve estimates depend on many assumptions that may turn out to be inconclusive, subject to varying interpretations or inaccurate. We are subject to complex federal, state, local and other laws and regulations that could adversely affect the cost, manner or feasibility of doing business. Our substantial contingent obligations to repurchase drilling program interests could strain our financial resources. We face significantly increasing water disposal costs in our CBM drilling operations. Operational impediments may hinder our access to natural gas and oil markets or delay our production. We may not adhere to our proposed drilling schedule. We have substantial capital requirements that, if not met, may hinder our growth and operations. We have incurred losses from operations in the past and cannot guarantee profitability in the future. Our credit facility contains operating restrictions and financial covenants, and we may have difficulty obtaining additional credit. We may incur additional debt in order to fund our exploration and development activities, which would reduce our financial flexibility and could have a material adverse effect on our business, financial condition or results of operations. Properties that we buy may not produce as projected, and we may be unable to determine reserve potential, identify liabilities associated with the properties or obtain protection from sellers against them, which could cause us to incur losses. Seasonal weather conditions and lease stipulations adversely affect our ability to conduct drilling activities in some of the areas where we operate. As general partner of limited partnerships and co-venturer in joint ventures, we are liable for various obligations of those partnerships and joint ventures. Our role as general partner of limited partnerships and co-venturer in joint ventures may result in conflicts of interest, which may not be resolved in our best interests or the best interests of our stockholders. The loss of our chief executive officer or other key management and technical personnel or our inability to attract and retain experienced technical personnel could adversely affect our ability to operate. We do not insure against all potential operating risks. We may incur substantial losses and be subject to substantial liability claims as a result of our natural gas and oil operations. We have limited control over activities on properties we do not operate, which could reduce our production and revenues. Defects in the title to any of our natural gas and oil interests could result in the loss of some of our natural gas and oil properties or portions thereof or liability for losses resulting from defects in the assignment of leasehold rights. Risks Relating to the Oil and Gas Industry A substantial or extended decline in natural gas and oil prices may adversely affect our ability to meet our capital expenditure obligations and financial commitments. Drilling for and producing natural gas and oil are high risk activities with many uncertainties that could have a material adverse effect on our business, financial condition or results of operations. Unless we replace our oil and natural gas reserves, our reserves and production will decline, which would adversely affect our business, financial condition and results of operations. Prospects that we decide to drill may not yield natural gas or oil in commercially viable quantities. Our identified drilling location inventories are scheduled out over several years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling. If natural gas and oil prices decrease, we may be required to record an impairment, which would reduce our stockholders equity. Competition in the oil and gas industry is intense, and many of our competitors have greater financial, technological and other resources than we do, which may adversely affect our ability to compete. We are subject to complex laws and regulations, including environmental regulations, that can have a material adverse effect on the cost, manner or feasibility of doing business. Shortages of rigs, equipment, supplies and personnel could delay or otherwise adversely affect our cost of operations or our ability to operate according to our business plans. Unless we replace, maintain or expand our natural gas and oil reserves, our reserves and production will decline, which could have a material adverse effect on our business, financial condition and results of operations. Risks Relating to Ownership of Our Common Stock The number of shares eligible for future sale or which have registration rights could adversely affect the future market for our common stock. Our stock price may be volatile, and your investment in our stock could decline in value. Control by our executive officers and directors may limit your ability to influence the outcome of matters requiring stockholder approval and could discourage our potential acquisition by third parties. Provisions in our articles of incorporation, bylaws and Maryland law may make it more difficult to effect a change in control, which could adversely affect the price of our common stock. We have not paid cash dividends on our common stock and do not anticipate paying any dividends on our common stock in the foreseeable future. Failure of the Company s internal control over financial reporting could harm its business and financial results.

Full 10-K form ▸

892986--3/6/2007--WARREN_RESOURCES_INC