b'natural gas production. Our decisions to purchase, explore or develop discoveries, prospects or licenseswill depend in part on the evaluation of seismic data through geophysical and geological analyses,production data and engineering studies, the results of which are often inconclusive or subject tovarying interpretations.Furthermore, the marketability of expected oil and natural gas production from our discoveries andprospects will also be affected by numerous factors. These factors include, but are not limited to,market fluctuations of prices (such as recent significant declines in oil and natural gas prices),proximity, capacity and availability of drilling rigs and related equipment, qualified personnel andsupport vessels, processing facilities, transportation vehicles and pipelines, equipment availability, accessto markets and government regulations (including, without limitation, regulations relating to prices,taxes, royalties, allowable production, domestic supply requirements, importing and exporting of oil andnatural gas, the ability to flare or vent natural gas, health and safety matters, environmental protectionand climate change). The effect of these factors, individually or jointly, may result in us not receivingan adequate return on invested capital.In the event that our currently undeveloped discoveries and prospects are developed and becomeoperational, they may not produce oil and natural gas in commercial quantities or at the costsanticipated, and our projects may cease production, in part or entirely, in certain circumstances.Discoveries may become uneconomic as a result of an increase in operating costs to produce oil andnatural gas. Our actual operating costs and rates of production may differ materially from our currentestimates. Moreover, it is possible that other developments, such as increasingly strict environmental,climate change, health and safety laws and regulations and enforcement policies thereunder and claimsfor damages to property or persons resulting from our operations, could result in substantial costs andliabilities, delays, an inability to complete the development of our discoveries or the abandonment ofsuch discoveries, which could cause a material adverse effect on our financial condition and results ofoperations.We are subject to drilling and other operational and environmental risks and hazards.The oil and natural gas business involves a variety of risks, including, but not limited to:\x7f fires, blowouts, spills, cratering and explosions;\x7f mechanical and equipment problems, including unforeseen engineering complications;\x7f uncontrolled flows or leaks of oil, well fluids, natural gas, brine, toxic gas or other pollutants orhazardous materials;\x7f gas flaring operations;\x7f marine hazards with respect to offshore operations;\x7f formations with abnormal pressures;\x7f pollution, environmental risks, and geological problems; and\x7f weather conditions and natural or man-made disasters.These risks are particularly acute in deepwater drilling and exploration. Any of these events couldresult in loss of human life, significant damage to property, environmental or natural resource damage,impairment, delay or cessation of our operations, lower production rates, adverse publicity, substantiallosses and civil or criminal liability. We expect to maintain insurance against some, but not all, of theserisks and losses. The occurrence of any of these events, whether or not covered by insurance, couldhave a material adverse effect on our financial position and results of operations.52'