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Exhibit 13.1
 RISK FACTORS
  An investment in our Series A Preferred Stock involves
    various risks. You should carefully consider the following risk
    factors in conjunction with the other information included or
    incorporated by reference in this prospectus supplement and the
    accompanying prospectus before making a decision to purchase our
    Series A Preferred Stock. Any of these risks could
    materially and adversely affect our business, financial
    condition and results of operations which, in turn, could
    materially and adversely affect the value of our Series A
    Preferred Stock, resulting in the loss of some or all of your
    investment.
  Risks
    Related to Our Business
  We may be unable to further develop our CBM projects in the
    Atlantic Rim, which would have a significant adverse effect on
    our current growth opportunities.
    We cannot
    predict the future price of oil and natural gas and an extended
    decline in prices could hurt our business prospects.
  and/or
  We could
    be adversely impacted by a variety of changes in the oil and gas
    market which are beyond our control.
    We may be
    unable to find additional reserves, which would adversely impact
    our revenues.
   S-15




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We may be
    unable to fund our planned capital expenditures.
    
    general economic and financial market conditions;
    oil and natural gas prices; and
    our market value and operating performance.    New
    government regulation and environmental risks could increase our
    cost of doing business.
    
    prevention of waste;
    discharge of materials into the environment;
    conservation of oil and natural gas, pollution, permits for
    drilling operations, drilling bonds, reports concerning
    operations;
    spacing of wells; and
    unitization and pooling of properties.    The
    exploration, development and operation of oil and gas properties
    involve substantial risks that may result in a total loss of
    investment.
    
    unexpected drilling conditions;
    pressure or irregularities in formations;
    equipment failures or accidents; S-16




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
    adverse changes in prices;
    weather conditions;
    shortages in experienced labor; and
    shortages or delays in the delivery of equipment.  and/or
  
    unusual or unexpected geological formations, pressures,
    equipment failures or accidents, fires, explosions, blowouts,
    cratering, pollution and other environmental risks;
    shortages or delays in the availability of drilling rigs and the
    delivery of equipment; and
    loss of circulation of drilling fluids or other conditions.  and/or
  Our
    industry experiences numerous operating hazards that could
    result in substantial losses, and our insurance coverage may be
    insufficient to cover these losses.
  clean-up
    Our
    prices may be impacted adversely by new taxes.
    Our
    reserves and future net revenues may differ significantly from
    our estimates.
   S-17




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Acquisitions
    are a part of our business strategy and are subject to the risks
    and uncertainties of evaluating recoverable reserves and
    potential liabilities.
        The
    unavailability or high cost of drilling rigs, equipment,
    supplies, personnel and other oil field services could adversely
    affect our ability to execute our exploration and development
    plans on a timely basis and within our budget.
    We do not
    control all of our operations and development
    projects.
      
    timing and amount of capital expenditures;
    expertise and financial resources;
    inclusion of other participants in drilling wells; and
    use of technology.   S-18




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Competition in the oil and natural gas industry is intense,
    and many of our competitors have greater financial and other
    resources than we do.
    
    seeking to acquire desirable producing properties or new leases
    for future exploration; and
    seeking to acquire the equipment and expertise necessary to
    develop and operate our properties.    We depend
    on key personnel.
    Risks
    Relating to This Offering
  The
    Series A Preferred Stock is a new issuance of securities
    and does not have an established trading market, which may
    negatively affect its market value and your ability to transfer
    or sell your shares; the Series A Preferred Stock has no
    stated maturity date.
    The
    market value of the Series A Preferred Stock could be
    substantially affected by various factors.
    
    market liquidity;
    prevailing interest rates;
    the market for similar securities;
    general economic conditions; and
    our financial condition, performance and prospects.   S-19




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We could
    be prevented from paying dividends on the Series A
    Preferred Stock.
    Investors
    should not expect us to redeem the Series A Preferred Stock
    on the date the Series A Preferred Stock becomes redeemable
    or on any particular date afterwards.
    We or our
    successor may not have sufficient funds available to redeem the
    Series A Preferred Stock after a Change of Ownership or
    Control.
  page S-26
    The
    Series A Preferred Stock has not been rated and will be
    subordinated to all of our existing and future debt.
  winding-up
  Holders
    of Series A Preferred Stock have limited voting
    rights.
   S-20




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Future
    offerings of preferred stock may adversely affect the value of
    our Series A Preferred Stock.
  and/or
  You may
    be required to use other sources of funds to pay income taxes in
    respect of dividends received, or deemed to be received, on the
    Series A Preferred Stock in certain
    circumstances.
       USE OF
    PROCEEDS       S-21