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The principal elements of our business strategy are designed to generate growth in oil and gas reserves, production volumes and cash flow at a positive return on invested capital. We plan to focus on the following:
Exploit Existing Properties Through the Drillbit. We intend to increase our proved reserves by drilling numerous locations identified on our Rocky Mountain CBM properties and in the Wilmington field. As of December 2006, we have identified a total of 2,350 drilling locations, of which we plan to participate in the drilling of 142 gross wells during 2007.
Increase Our Working Interest in Future Wells. We plan to significantly increase our level of participation in future wells drilled by investing more of our own capital to drilling operations in our high growth areas. We believe this will enable us to accelerate our growth in production, reserves and cash flow.
Pursue Selective Acquisitions and Joint Ventures. We believe we are well positioned, given our asset base and technical expertise, to pursue selected acquisitions and attract industry joint venture partners. We expect to pursue further acquisitions of natural gas and oil properties in areas where we have specific technical knowledge and experience. We also plan to enter into additional joint ventures to increase our CBM acreage and develop our reserves.
Reduce Costs Through Economies of Scale and Efficient Operations. As we continue to increase our production and develop our existing properties, we expect that our unit cost structure will benefit from economies of scale. With respect to our CBM operations, we anticipate reducing unit costs by greater utilization of our existing infrastructure. We seek to exert greater control over costs and timing in our exploration, development and production activities through our operating activities and relationships with our joint venture partners.
As a result of the following strengths, we believe we are well positioned to execute our business strategy:
Substantial Rocky Mountain Undeveloped Acreage Position. We believe that the Rocky Mountain region is one of the few remaining high potential natural gas provinces in North America. We have assembled a substantial undeveloped acreage position of 244,251 gross (139,985 net) acres containing 2,350 identified drilling locations. Ninety-seven percent of our net undeveloped acreage is located in the Rocky Mountains. Our estimated total net proved reserves are located on less than 8% of our net acreage.
Technical Expertise. Since the beginning of our CBM operations in 1996, we have gained
considerable expertise in advanced CBM drilling, completion and re-entry techniques. Additionally, we have considerable expertise in directional and horizontal drilling relating to our waterflood recovery program in the Wilmington unit.
Experienced Management Team. Our management team has 29 years of experience on average in the oil and gas industry, and our technical professionals have 26 years of experience on average in oil and gas operations. Our personnel have extensive experience in managing large-scale operations in each of our areas of concentration. Most members of our senior management have been with us since the mid-1990’s.
Incentivized Management Ownership. The equity ownership of our management team is strongly aligned with that of our stockholders. As of March 30, 2007, our 12 directors and executive officers beneficially owned 6,098,051shares of common stock.
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