CARBON ENERGY CORPORATION The following discussion includes forward-looking statements about our business,
financial condition and results of operations, including discussions about
management's expectations for our business. These statements represent
projections, beliefs and expectations based on current circumstances and
conditions, and you should not construe these statements either as assurances of
performance or as promises of a given course of action. Instead, various known
and unknown factors may cause our actual performance and management's actions to
vary, and the results of these variances may be both material and adverse. A
description of material factors known to us that may cause our results to vary
or may cause management to deviate from its current plans and expectations, is
set forth under "Risk Factors." The following discussion should be read in
conjunction with "Forward-Looking Statements," "Risk Factors" and our unaudited
condensed consolidated financial statements, including the notes thereto
appearing elsewhere in this Quarterly Report on Form 10-Q and the information
included or incorporated by reference in the Company's Annual Report on Form
10-K for the fiscal year ended
General Overview
At
? Acquire and develop oil and gas producing properties that deliver
attractive risk adjusted rates of return, provide for field development
projects, and complement our existing asset base; and
? Develop, optimize and maintain a portfolio of low risk, long-lived oil and
natural gas properties that provide stable cash flows and attractive risk
adjusted rates of return.
Reverse Stock Split
As more fully described in proxy materials filed with the
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The purpose of the Reverse Stock Split is to enable the Company to reduce the
number of record holders of its common stock below 300, which is the level below
which the Company can suspend its duty to file periodic and current reports and
other information with the
The Company anticipates that after the Reverse Stock Split its common stock will trade on the Pink Non-Current platform of the OTC Markets Group.
Factors That Significantly Affect Our Financial Condition and Results of Operations
Our revenue, profitability and future growth rate depend on many factors which are beyond our control, including but not limited to, economic, political and regulatory developments and competition from other industry participants. Our financial results are sensitive to fluctuations in oil and natural gas prices. Oil and gas prices historically have been volatile and may fluctuate widely in the future due to a variety of factors, including but not limited to, prevailing economic conditions, supply and demand of hydrocarbons in the marketplace, actions by speculators, and geopolitical events such as wars or natural disasters.
COVID-19
Like other oil and gas companies, our business is being adversely affected by
the COVID-19 pandemic and measures being taken to mitigate its impact. The
pandemic has resulted in widespread adverse impacts on the global economy and on
our employees, customers, suppliers and other parties with whom we have business
relations. As the coronavirus pandemic and government responses are rapidly
evolving, the extent of the impact on domestic exploration and production
companies remains unknown. Further, the impact of the pandemic, including the
resulting significant reduction in global demand for oil and gas, coupled with
the sharp decline in oil prices following the announcement of price reductions
and production increases in
Given the dynamic nature of the COVID-19 pandemic and related market conditions, we cannot reasonably estimate the period of time these events will persist or the full impact that COVID-19 or the significant disruption and volatility currently being experienced in the oil and natural gas markets will have on our business, cash flows, liquidity, financial condition and results of operations at this time, due to numerous uncertainties. The ultimate impacts will depend on future developments, including, among others, the consequences of countermeasures taken by governments, businesses and individuals to slow the spread of the pandemic, the ability of pharmaceutical companies to develop effective and safe vaccines and therapeutic drugs, the duration of the outbreak, actions taken by customers, suppliers and other third parties, workforce availability, and the timing and extent to which normal economic and operating conditions resume.
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Oil Pricing Environment
In the midst of the ongoing COVID-19 pandemic, oil prices declined significantly
due to potential increases in supply emanating from the disagreement on
production cuts among members of
For example, in
2020 2019
Q1 Q2 Q1 Q2 Q3 Q4
Oil (Bbl) $ 45.78 $ 28.00 $ 54.90 $ 59.96 $ 56.43 $ 56.87
Natural Gas (MMBtu) $ 1.90 $ 1.89 $ 3.00 $ 2.57 $ 2.38 $ 2.40 Low oil, NGL and natural gas prices may decrease our revenues, may reduce the amount of oil, NGL and natural gas that we can produce economically and potentially lower our oil and natural gas reserves. Our estimated proved reserves may decrease if the economic life of underlying producing wells is shortened as a result of lower oil, NGL and natural gas prices. A substantial or extended decline in oil, NGL or natural gas prices may result in future impairments of our proved reserves and may materially and adversely affect our future business, financial condition, cash flows, results of operations or liquidity. Lower oil, NGL and natural gas prices may also reduce the amount of borrowing base under our bank credit facilities, which are determined at the discretion of our lenders and may make it more difficult to comply with the covenants and other restrictions under our bank credit facilities.
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We use the full cost method of accounting for our oil and gas properties and
perform a ceiling test quarterly. The ceiling calculation utilizes a rolling
12-month average commodity price. We did not recognize an impairment for the
three and six months ended
Future write downs or impairments, if any, are difficult to predict and will depend not only on commodity prices, but also other factors that include, but are not limited to, incremental proved reserves that may be added each period, revisions to previous reserve estimates, capital expenditures and operating costs. There are numerous uncertainties inherent in the estimation of proved reserves and accounting for oil and natural gas properties in subsequent periods.
Impairment charges do not affect cash flows from operating activities but do adversely affect net income and stockholders' equity. An extended decline in oil or natural gas prices may materially and adversely affect our future business, financial condition, cash flows and liquidity.
We use commodity derivative instruments, such as swaps and costless collars, to manage and reduce price volatility and other market risks associated with our production. These arrangements are structured to reduce our exposure to commodity price decreases, but they can also limit the benefit we might otherwise receive from commodity price increases.
Future property acquisitions or dispositions could have a material impact on our financial condition and results of operations by increasing or decreasing our reserves, production and revenues as well as expenses and future capital expenditures. We currently anticipate that we would finance any future acquisitions with available borrowings under our credit facilities, sales of properties or the issuance of additional equity or debt.
Operational Highlights
During 2020, we concentrated our efforts on the acquisition and development of
producing properties through the prior acquisitions consummated by Carbon
California. Our field development activities have consisted principally of
oil-related drilling, remediation and return to production and recompletion
projects in
As of
Our oil and natural gas assets contain an inventory of field development projects which may provide growth opportunities when oil and natural gas commodity prices warrant capital investment to develop the properties.
We are continually evaluating producing property and land acquisition opportunities in our operating areas which would expand our operations and provide attractive risk adjusted rates of return on invested capital. The drilling of additional oil and natural gas wells is contingent on our expectation of future oil and natural gas prices.
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Principal Components of Our Cost Structure
? Lease operating expenses. Lease operating expenses are costs incurred to bring
oil and natural gas out of the ground, together with the costs incurred to
maintain our producing properties. Such costs include maintenance, repairs and
workover expenses related to our oil and natural gas properties.
? Pipeline operating expenses. Pipeline operating expenses are costs incurred to
accept, transport and deliver gas across our midstream assets.
? Transportation and gathering costs. Transportation and gathering costs are
incurred to bring oil and natural gas to market. Gathering refers to the
utilization of low-pressure pipelines to move the oil and natural gas from the
wellhead into a transportation pipeline or natural gas processing facility, or
in case of oil, into a tank battery or pipeline from which sales of oil are
made.
? Production and property taxes. Production and property taxes consist of
severance, property and ad valorem taxes. Production and severance taxes are
paid on oil and natural gas produced based on a percentage of market prices or
at fixed rates established by federal, state or local taxing authorities. Ad
valorem tax rates, which can fluctuate by year, are determined by individual
counties where we have production and are assessed on our sales one or two
years in arrears depending on the location of the production.
? Marketing gas purchases. Marketing gas purchases consist of third-party
purchases of gas associated with our midstream operations.
? Depreciation, amortization and impairment. We use the full cost method of
accounting for oil and gas properties. All costs incidental to the
acquisition, exploration and development of oil and gas properties, including
costs of undeveloped leasehold, dry holes and leasehold equipment, are
capitalized. We perform a quarterly ceiling test based on average
first-of-the-month prices during the twelve-month period prior to the
reporting date. The full cost ceiling test is a limitation on capitalized
costs prescribed by the SEC . The ceiling test is not a fair value-based
measurement; rather, it is a standardized mathematical calculation that
compares the net capitalized costs of our full cost pool to estimated
discounted cash flows. Should the net capitalized cost exceed the sum of the
estimated discounted cash flows, a ceiling test write-down would be recognized
to the extent of the excess.
? Depletion. Depletion is calculated using capitalized costs in the full cost
pool, including estimated asset retirement costs and estimated future
expenditures to be incurred in developing proved reserves, net of estimated
salvage values and depleted based on a unit-of-production method.
? General and administrative expense. General and administrative expense
includes payroll and benefits for our corporate staff, non-cash stock-based
compensation, costs of maintaining our offices, costs of managing our
production, marketing, development and acquisition operations, franchise
taxes, audit, tax, legal and other professional fees and legal compliance.
? Interest expense. We finance a portion of our working capital requirements for
drilling and completion activities and acquisitions with borrowings under our
bank credit facilities. As a result, we incur interest expense that is
affected by both fluctuations in interest rates and our financing decisions.
Interest expense, net is net of interest income.
? Income tax expense. We are subject to state and federal income taxes but
typically have not been in a tax paying position for regular federal income
taxes, primarily due to the current deductibility of intangible drilling costs
("IDC") and until 2023 tangible drilling costs and net operating loss ("NOL")
carryforwards. We pay alternative minimum tax, state income or franchise taxes
where IDC or NOL deductions do not exceed taxable income or where state income
or franchise taxes are determined on another basis.
Results of Operations
The results of operations are inclusive of the Appalachia Divestiture.
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The following discussion and analysis relates to items that have affected our
results of operations for the three and six months ended
Three Months EndedJune 30, 2020 Compared to the Three Months EndedJune 30, 2019 Three Months Ended June 30, Percent (in thousands, except production and per unit data) 2020 2019 Change Revenue: Natural gas sales$ 4,138 $ 14,216 (71 %) Natural gas liquids sales 49 195 (75 %) Oil sales 3,767 9,902 (62 %) Transportation and handling 274 322 (15 %) Marketing gas sales 2,380 3,221 (26 %) Commodity derivative gain (loss) (5,647 ) 8,680 * Other income 2 305 * Total revenues 4,963 36,841 (87 %) Expenses: Lease operating expenses 5,086 7,480 (32 %) Pipeline operating expenses 1,432 2,950 (51 %) Transportation costs 1,475 1,130 31 % Production and property taxes 1,136 1,666 (32 %) Marketing gas purchases 1,329 4,795 (72 %) General and administrative 5,402 3,947 37 % Depreciation, depletion and amortization 2,149 3,881 (45 %) Accretion of asset retirement obligations 299 405 (26 %) Loss on Appalachia Divestiture 34,463 - * Total expenses 52,771 26,254 101 % Operating income$ (47,808 ) $ 10,587 * Other income and (expense): Interest expense (2,774 ) (3,445 ) * Investments in affiliates - 21 * Other expense 104 - * Total other expense$ (2,670 ) $ (3,424 ) * Production data: Natural gas (Mcf) 2,927,911 5,299,644 (45 %) Oil (Bbl) 128,647 150,274 (14 %) Natural gas liquids (Bbl) 11,671 11,780 (1 %) Combined (Mcfe) 3,769,817 6,271,968 (40 %) Average prices before effects of hedges: Natural gas (per Mcf)$ 1.41 $ 2.68 (47 %) Oil (per Bbl)$ 29.28 $ 65.89 (56 %) Natural gas liquids (per Bbl)$ 4.22 $ 16.53 (74 %) Combined (per Mcfe)$ 2.11 $ 3.88 (46 %) Average prices after effects of hedges**: Natural gas (per Mcf)$ 2.25 $ 2.72 (17 %) Oil (per Bbl)$ 51.86 $ 60.01 (14 %) Natural gas liquids (per Bbl)$ 4.22 $ 16.53 (74 %) Combined (per Mcfe)$ 3.53 $ 3.77 (6 %) Average costs (per Mcfe): Lease operating expenses$ 1.35 $ 1.19 13 % Transportation costs$ 0.39 $ 0.18 117 % Production and property taxes$ 0.30 $ 0.27 11 % Cash-based general and administrative expenses$ 0.60 $ 0.59 0 % Depreciation, depletion and amortization$ 0.57 $ 0.62 (8 %) * Not meaningful or applicable ** Includes effect of settled commodity derivative gains and losses 22
Natural gas sales, natural gas liquids sales, and oil sales - Sales of natural
gas, natural gas liquids and oil decreased approximately
Transportation and handling- Revenue from transportation and handling correlates to the price of natural gas, which decreased 15% compared to the same period in 2019.
Marketing gas sales - Sales from marketing gas decreased
Commodity derivative gain (loss) - We do not designate our commodity derivatives
as cash flow hedges; therefore, they do not receive hedge accounting treatment
and all mark-to-market gains or losses, as well as settlement gains or losses on
the derivative instruments, are currently recognized in our results of
operations. The unrealized gains and losses represent the changes in the fair
value of these contracts as oil and natural gas futures prices fluctuate
relative to the fixed price we will receive from these contracts. For the three
months ended
Lease operating expenses and pipeline operating expenses - Lease operating
expenses and pipeline operating expenses decreased
Transportation costs - Transportation costs increased
Production and property taxes - Production and property taxes decreased
Marketing gas purchases- Marketing gas purchases decreased
Depreciation, depletion and amortization ("DD&A") - DD&A decreased
General and administrative expenses - General and administrative expenses
increased
Three Months Ended
General and administrative expenses June 30,
(in thousands) 2020 2019
General and administrative expenses $ 5,402 $ 3,947 Adjustments:
Stock-based compensation (3,151 ) (224 )
Cash-based general and administrative expense
Interest expense - Interest expense, net decreased
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Six Months Ended
Six Months Ended
June 30, Percent
(in thousands, except production and per unit data) 2020 2019 Change
Revenue:
Natural gas sales $ 12,572 $ 33,532 (63 %)
Natural gas liquids sales 201 441 (54 %)
Oil sales 10,982 18,891 (42 %)
Transportation and handling 908 1,056 (14 %)
Marketing gas sales 8,698 8,165 7 %
Commodity derivative gain (loss) 14,067 (627 ) *
Other income - 697 *
Total revenues 47,428 62,155 (24 %)
Expenses:
Lease operating expenses 12,458 14,095 (12 %)
Pipeline operating expenses 4,125 6,035 (32 %)
Transportation costs 4,052 2,799 45 %
Production and property taxes 1,146 3,676 (69 %)
Marketing gas purchases 4,801 11,097 (57 %)
General and administrative 8,702 8,636 (1 %)
Depreciation, depletion and amortization 5,960 7,860 (24 %)
Accretion of asset retirement obligations 777 799 (3 %)
Loss on Appalachia Divestiture 34,463 - *
Total expenses 76,484 54,997 39 %
Operating (loss) income $ (29,056 ) $ 7,158 *
Other income and (expense):
Interest expense (5,647 ) (6,725 ) *
Investments in affiliates (421 ) 40 *
Other income 104 - *
Total other expense $ (5,964 ) $ (6,685 ) *
Production data:
Natural gas (Mcf) 8,174,941 10,843,696 (25 %)
Oil (Bbl) 275,172 297,766 (8 %)
Natural gas liquids (Bbl) 24,034 24,990 (4 %)
Combined (Mcfe) 9,970,175 12,780,232 (22 %)
Average prices before effects of hedges:
Natural gas (per Mcf) $ 1.54 $ 3.09 (50 %)
Oil (per Bbl) $ 39.91 $ 63.44 (37 %)
Natural gas liquids (per Bbl) $ 8.38 $ 17.66 (53 %)
Combined (per Mcfe) $ 2.38 $ 4.14 (43 %)
Average prices after effects of hedges**:
Natural gas (per Mcf) $ 2.20 $ 3.09 (29 %)
Oil (per Bbl) $ 50.79 $ 62.85 (19 %)
Natural gas liquids (per Bbl) $ 8.38 $ 17.66 (53 %)
Combined (per Mcfe) $ 3.23 $ 4.12 (22 %)
Average costs (per Mcfe):
Lease operating expenses $ 1.25 $ 1.10 14 %
Transportation costs $ 0.41 $ 0.22 86 %
Production and property taxes $ 0.11 $ 0.29 (62 %)
Cash-based general and administrative expenses $ 0.54 $ 0.64 (16 %)
Depreciation, depletion and amortization $ 0.60 $ 0.62 (3 %)
* Not meaningful or applicable
** Includes effect of settled commodity derivative gains and losses
Natural gas sales, natural gas liquids sales, and oil sales - Sales of natural
gas, natural gas liquids and oil decreased approximately
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Transportation and handling- Revenue from transportation and handling correlates to the price of natural gas, which decreased 14% compared to the same period in 2019.
Marketing gas sales - Sales from marketing gas increased
Commodity derivative gain (loss) - We do not designate our commodity derivatives
as cash flow hedges; therefore, they do not receive hedge accounting treatment
and all mark-to-market gains or losses, as well as settlement gains or losses on
the derivative instruments, are currently recognized in our results of
operations. The unrealized gains and losses represent the changes in the fair
value of these contracts as oil and natural gas futures prices fluctuate
relative to the fixed price we will receive from these contracts. For the six
months ended
Lease operating expenses and pipeline operating expenses - Lease operating
expenses and pipeline operating expenses decreased
Transportation costs - Transportation costs increased
Production and property taxes- Production and property taxes decreased
Marketing gas purchases- Marketing gas purchases decreased
Depreciation, depletion and amortization ("DD&A") - DD&A decreased
General and administrative expenses - General and administrative expenses
increased
Six Months Ended
General and administrative expenses June 30,
(in thousands) 2020 2019
General and administrative expenses $ 8,702 $ 8,636 Adjustments:
Stock-based compensation (3,355 ) (446 )
Cash-based general and administrative expense
Interest expense - Interest expense, net decreased
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Liquidity and Capital Resources
Our primary sources of liquidity and capital resources are cash flows from
operations and borrowings under Carbon California's Senior Secured Revolving
Notes which mature on
As of
Paycheck Protection Program Loan
In
The PPP Loan is evidenced by the PPP Note, which contains customary events of default relating to, among other things, payment defaults and breaches of representations and warranties, and bears interest at 1.0% per annum. No payments of principal or interest are due during the Deferral Period.
The Company intends to use the proceeds for purposes consistent with the PPP. In order to obtain full or partial forgiveness of the PPP Loan, the Company must request forgiveness and must provide satisfactory documentation in accordance with applicable SBA guidelines. Interest payable on the PPP Note may be forgiven only if the SBA agrees to pay such interest on the forgiven principal amount of the PPP Note. The Company will be obligated to repay any portion of the principal amount of the PPP Note that is not forgiven, together with interest accrued and accruing thereon at the rate set forth above, until such unforgiven portion is paid in full.
Beginning one month following expiration of the Deferral Period, and continuing monthly until the Maturity Date, the Company is obligated to make monthly payments of principal and interest to the Lender with respect to any unforgiven portion of the PPP Note, in such equal amounts required to fully amortize the principal amount outstanding on the PPP Note as of the last day of the Deferral Period by the Maturity Date. The Company is permitted to prepay the PPP Note at any time without payment of any prepayment premium or penalty.
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The CARES Act also provides for deferred payment of the employer portion of
Appalachia Divestiture and 2018 Credit Facility and Old Ironsides Notes
On
The Appalachia Divestiture constitutes a sale of substantially all of the
Company's assets under the Delaware General Corporation Law. The Company
continues to own its membership interests in Carbon California and continues to
conduct operations in the
Upon closing of the Appalachia Divestiture, we received net cash proceeds of
Yorktown, as the holder of all of the Series B convertible preferred stock, has
waived its right to be paid a liquidating distribution of approximately
Access to additional capital within the current commodity price environment is limited and the terms of any available capital may not be acceptable to the Company.
Commodity Derivatives
Our exploration, development and acquisition activities may require us to make significant operating and capital expenditures. Changes in the market prices for oil and natural gas directly impact our level of cash flow generated from operations. The prices we receive for our production are determined by prevailing market conditions and greatly influence our revenue, cash flow, profitability, access to capital and future rate of growth. We employ a commodity hedging strategy to moderate the effects of commodity price fluctuations on our cash flow.
This hedge program mitigates uncertainty regarding cash flow that we will receive with respect to a portion of our expected production through 2022. Future hedging activities may result in reduced income or even financial losses to us. See "Risk Factors-The use of derivative instruments used in hedging arrangements could result in financial losses or reduce income," in our 2019 Annual Report on Form 10-K for further details of the risks associated with our hedging activities. In the future, we may determine to increase or decrease our hedging positions. See Note 13 - Commodity Derivatives in the unaudited condensed consolidated financial statements in Item 1 for more information, including our outstanding derivatives.
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Sources and Uses of Cash
The following table presents net cash provided by or used in operating, investing and financing activities:
Six Months Ended
June 30,
(in thousands) 2020 2019
Net cash (used in) provided by operating activities
$ (80,003 ) $ (9,243 ) Operating Activities
Net cash from operating activities is primarily affected by production volumes
and commodity prices, net of the effects of settlements of our derivative
contracts, and changes in working capital. The negative operating cash flows for
the six months ended
Investment Activities
Net cash used in investing activities is primarily comprised of the acquisition,
exploration and development of oil and natural gas properties, net of
dispositions of oil and natural gas properties. Net cash provided by investing
activities increased approximately
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Financing Activities
Net cash provided by or used in financing activities is primarily comprised of
activities associated with our credit facilities. During the six months ended
Capital Expenditures
Capital expenditures incurred are summarized in the following table:
Six Months Ended
June 30,
(in thousands) 2020 2019
Drilling and development $ 3,236 $ 1,792
Other 224 71
Total capital expenditures $ 3,460 $ 1,863 Capital expenditures presented in the table above represent cash used for capital expenditures.
Factors impacting the level of our capital expenditures include the cost and availability of oil field services, general economic and market conditions, and weather disruptions.
Credit Facilities and Notes Payable
For a discussion of our long-term debt, see Note 7 - Credit Facilities and Notes Payable in the unaudited condensed consolidated financial statements in Item 1.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of
Critical Accounting Policies, Estimates, Judgments, and Assumptions
Our critical accounting policies and estimates are set forth in "Part II. Item
7. Management's Discussion and Analysis of Financial Condition and Results of
Operations- Critical Accounting Policies, Estimates, Judgments, and Assumptions"
in our 2019 Annual Report on Form 10-K. As of
Forward Looking Statements
The information in this Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act. Forward-looking statements are statements other than statements of historical or present facts, that address activities, events, outcomes, and other matters that the Company plans, expects, intends, assumes, believes, budgets, predicts, forecasts, projects, estimates, or anticipates (and other similar expressions) will, should, or may occur in the future. Generally, the words "expects," "anticipates," "targets," "goals," "projects," "intends," "plans," "believes," "seeks," "estimates," "may," "will," "could," "should," "future," "potential," "continue," variations of such words, and similar expressions identify forward-looking statements. These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events.
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These forward-looking statements appear in several places in this report and include statements with respect to, among other things:
? estimates of our oil, natural gas liquids, and natural gas reserves; ? effect of the COVID-19 pandemic and theOPEC price war on our business results; ? the timing and effectiveness of the Reverse Stock Split and the deregistration of our common stock; ? estimates of our future oil, natural gas liquids, and natural gas production, including estimates of any increases or decreases in our production; ? our future financial condition and results of operations; ? our future revenues, cash flows, and expenses; ? our access to capital and our anticipated liquidity; ? our future business strategy and other plans and objectives for future operations and acquisitions; ? our outlook on oil, natural gas liquids, and natural gas prices; ? the amount, nature, and timing of future capital expenditures, including future development costs; ? our ability to access the capital markets to fund capital and other expenditures; ? our assessment of our counterparty risk and the ability of our counterparties to perform their future obligations; and ? the impact of federal, state and local political, regulatory, and environmental developments inthe United States of America
We believe the expectations and forecasts reflected in our forward-looking
statements are reasonable, but we can give no assurance that they will prove to
be correct. We caution you that these forward-looking statements can be affected
by inaccurate assumptions and are subject to all the risks and uncertainties,
most of which are difficult to predict and many of which are beyond our control,
incident to the exploration for and development, production, and sale of oil,
natural gas liquids and natural gas. When considering forward-looking
statements, you should keep in mind the risk factors and other cautionary
statements described under the heading "Risk Factors" included in our 2019
Annual Report on Form 10-K and our Quarterly Report on Form 10-Q for the three
months ended
Should one or more of the risks or uncertainties described above or elsewhere in this Quarterly Report on Form 10-Q occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.
We caution you not to place undue reliance on these forward-looking statements,
which speak only as of the date of this report, and we undertake no obligation
to update this information to reflect events or circumstances after the filing
of this report with the
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