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Business of the Company Crystal River Oil & Gas, LLC is an exploration and production company with offices in Basalt, Colorado and Cardiff by the Sea, California. Crystal River, founded in 1982, operates over 300 oil and gas producing wells in the states of Oklahoma, Texas, Kansas, Colorado, California, and New Mexico. Additionally, Crystal River excels in the drilling and development of low risk infil properties. Products and Services The two products underlying the Company’s operations are light sweet crude oil and natural gas. Market factors drive the current and future prices for both oil and gas. Working programs are based on price. Light sweet crude oil and the natural gas where Company Properties are located are premium products in the energy sector. They command the highest prices in the market, as compared to Saudi Arabia, which produces a “heavy sour” oil. Saudi oil receives approximately $6.00 to $7.00 less per barrel than the light, sweet crude produced in Oklahoma. In addition, much of the oil produced in Canada is very tar-like, which also drives the price down due to increased refining requirements. Market The market for light sweet crude oil and the natural gas includes all persons and companies that operate vehicles, machinery, and any device requiring petroleum and natural gas as a fuel source. It is a multi-trillion dollar market that is expanding as the global population increases. In addition, Asian countries like China and India are experiencing high-growth, providing additional demand for both oil and natural gas. Most of the oil produced from the Properties will be sold to local buyers for use in the surrounding cities and states. This helps reduce transportation costs associated with cross-country shipping. The produced gas will be pipelined to any of several local energy companies.
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Copyright 2006-2010, Crystal River Oil and Gas, LLC, All Rights Reserved |
Competition
from other oil and gas companies to acquire, explore and develop acreage,
has intensified. This competition has also increased utilization rates and
the costs of contracting with seismic acquisition and drilling contractors.
Although it is not possible to accurately predict whether this competition
will continue in future periods, it could put upward pressure on costs
incurred to explore for, acquire, drill, complete and operate oil and gas
properties. The oil and gas industry is highly competitive in many
respects, including identification of attractive oil and gas properties for
acquisition, drilling and development, securing financing for these
activities, and obtaining the necessary equipment and personnel to conduct
operations. In seeking suitable opportunities, the Company competes with a
number of other companies, including major oil and gas players and other
independent operators with greater financial resources. Many other oil and
gas companies in the industry have financial resources, personnel, and
facilities substantially greater than those of the Company, and there can
be no assurance that the Company can effectively compete with these larger
entities.