Over the years, the Company has acquired interests in producing wells through purchases of existing wells and by drilling new wells. Our financial statements reflect the results of the sale of oil and natural gas from our interest in these wells as Oil and Gas Sales. Oil and Gas Sales are determined by the amount of oil and gas produced by the Company's interest in the wells and the price we receive for the oil and gas we sell. The expenses associated with Oil and Gas Sales are the costs of operating the wells (including severance and ad valorem taxes).

Over 80% of our production is natural gas, and our development activities are focused on the development of natural gas reserves and production. Some of our natural gas wells also produce oil. In fact most of our Wattenberg Field wells in Colorado produce a combination of oil and gas.

Most of our oil and gas are sold under contracts with pricing tied to a market index for the area of production. This means prices for natural gas typically vary monthly, and oil prices can change even more quickly. We use natural gas and oil hedges to help protect against price variations.