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selection of technology; and
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the rate of production of reserves, if any.
This limited ability to exercise control over the operations of some of our prospects may cause a material adverse effect on our
results of operations and financial condition.
Development drilling may not result in commercially productive quantities of oil and gas reserves.
Our exploration success has provided us with a number of major development projects on which we are moving forward. We
must successfully execute our development projects, including development drilling, in order to generate future production and cash
flow. However, development drilling is not always successful and the profitability of development projects may change over time.
For example, in new development projects available data may not allow us to completely know the extent of the reservoir or
choose the best locations for drilling development wells. Therefore, a development well we drill may be a dry hole or result in
noncommercial quantities of hydrocarbons. Projects in frontier areas may require the development of special technology for
development drilling or well completion and we may not have the knowledge or expertise in applying new technology. All costs of
development drilling and other development activities are capitalized, even if the activities do not result in commercially productive
quantities of hydrocarbon reserves. This puts a property at higher risk for future impairment if commodity prices decrease or operating
or development costs increase.
Our drilling and development plans are scheduled out over several years, making them susceptible to uncertainties that could
materially alter their occurrence or timing.
Our drilling and development plans on our acreage are scheduled out over a multi-year period. Our drilling and development
plans depend on a number of factors, including the availability of capital and equipment, qualified personnel, seasonal and weather
conditions, regulatory and block partner approvals, civil and political conditions, oil prices, costs and drilling results. The final
determination on whether to drill any exploration, appraisal, or development well, including the exact drilling location as well as the
successful development of any discovery, will be dependent upon the factors described elsewhere in this Annual Report on Form 10-K
as well as, to some degree, the results of our drilling activities. Because of these uncertainties, we do not know if the drilling locations
we have identified or targeted will be drilled in the location we currently anticipate, within our expected timeframe or at all or if we
will be able to economically produce oil or gas from these or any other potential drilling locations. As such, our actual drilling and
development plans and locations may be materially different from our current expectations, which could adversely affect our results of
operations and financial condition.
Drilling wells is speculative, often involving significant costs that may be more than our estimates, and may not result in any
discoveries or additions to our future production or reserves. Any material inaccuracies in drilling costs, estimates or underlying
assumptions will materially affect our business.
Exploring for and developing oil reserves involves a high degree of operational and financial risk, which precludes definitive
statements as to the time required and costs involved in reaching certain objectives. The budgeted costs of drilling, completing and
operating exploration, appraisal and development wells are often exceeded and can increase significantly when drilling costs rise due
to a tightening in the supply of various types of oilfield equipment and related services. Drilling may be unsuccessful for many
reasons, including geological conditions, weather, cost overruns, equipment shortages and mechanical difficulties. Exploration wells
bear a much greater risk of financial loss than development wells. In the past we have experienced unsuccessful drilling efforts.
Moreover, the successful drilling of an oil well does not necessarily result in a profit on investment. A variety of factors, both
geological and market-related, can cause a well or an entire development project to become uneconomic or only marginally economic.
Our initial drilling sites, and any potential additional sites that may be developed, require significant additional exploration and
appraisal, regulatory approval and commitments of resources prior to commercial development. We face additional risks in the
Inboard Lower Tertiary Trend in the U.S. Gulf of Mexico and offshore Gabon due to a general lack of infrastructure and, in the case
of offshore Gabon, underdeveloped oil and gas industries and increased transportation expenses due to geographic remoteness. Thus,
this may require either a single well to be exceptionally productive, or the existence of multiple successful wells, to allow for the
development of a commercially viable field. If our actual drilling and development costs are significantly more than our estimated
costs, we may not be able to continue our business operations as proposed and would be forced to modify our plan of operation.
We contract with third parties to conduct drilling and related services on our development projects and exploration prospects for
us. Such third parties may not perform the services they provide us on schedule or within budget. The recent decline in oil and gas
prices may have an adverse impact on certain third parties from which we contract drilling, development and related oilfield services,
which in turn could affect such companies’ ability to perform such services for us and result in delays to our exploration, appraisal and
