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Edgar Filing: TIDELANDS OIL & GAS CORP/WA - Form 10-K - page 16 / 83

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Edgar Filing: TIDELANDS OIL & GAS CORP/WA - Form 10-K

regulatory status.

Our gas gathering operations are increases the costs of operating

subject to regulation at

our

pipeline

facilities

regulation include rates,

service and

safety. We have bee

the state level, which . Matters subject to n granted an exemption

a public

utility

Changes

in state

from

regulation

as

regulated

in

Texas.

in Texas.

Present

regulations,

or

o

regulatio subject u financial environme and liabi

ns due to

configuration

s to further

regulation

changes in our operat could have a material

condition.

ntal protection lities.

Litigation

or

and

operational

governmental

re

safety

may

resul

ly,

our

rates

are

not

ur status

under

ing

facilities,

these that

adverse

effect on

our

gulation

relating

to

t

in

substantial

costs

Our opera owners of connectio clean-up the gathe laws that methods o that the we canno liable.

tions

are

subject

to

federal

and

state

environme

ntal

laws under which

We

can

bef

ore

natural gas

pipelines

can be liable for clean-

up

the pipelines. which occurred

n with any pollution costs resulting from

caused by pollution

costs and fines in also be liable for our acquisition of

ring

systems.

In

addition,

we

are

subject

to

fe

dictate f welding gathering

the type and other

of pipeline, quality construction-related

of pip standa

systems

comply

in

all

material

respects

deral and state

safety

e

protection,

depth,

rds. with

While we believe applicable laws,

not occ

ur

strict

er

for which we may be laws or enforcement

t

assure

you that

future

events

will

Possible

future

developments,

including

policies, or claims for personal or property damages resulting operations could result in substantial costs and liabilities to us.

from our

SOVEREIGN RISK

The Company is focusing on the development of

infrastructure

project

s

through

its Mexican entity, United Mexican States

Terranova (Mexico).

Energia S.de The risk of

R.L. de C.V., in the nation of the

indirect

or

regulatory

actions

by

local, state or federal or block projects under

operations

conducted

b

y

authorities in Mexico development in Mexico past businesses other

which may inhibit, is very high given

than

the

Company

in

delay, hinder the history of

Mexico.

There

is a substantial the various actors

could

negatively

risk that a set of actions taken by commission or omission by

in the impact

public, private, nongovernmental and/or social sectors

a

project

or

investment

in

Mexico.

The

legal

system

employed in Mexico is

dramatically

different

in its

structure

and method of

operation

compared

to

America.

The level

of

the common law foundation legal protection afforded

present in the United States of investors by the North American

Free Trade viewpoint.

Agreement

has not

materially

improved

from a foreign

investor's

There can be no assurance that due to the above factors which

a commercially could result in

viable project will be

commercial

competitors

completed trying to

circumvent the market system through extraofficial channels of influence that

the exploitation of undocumented, constitute unfair competition. Federal,

state

and

local

authorities

are

not

well

coordinated

in

their

legal

protections

and improper influence

and competition may arise from any level of government to

disrupt or

destroy

the

While the

Company

has

commercial viability of investments by foreign

taken

precautions

to

limit

its

investments

investors. to prudent

levels, sources

there that

is a continuing risk of adverse activities arising

could

impair

or

result

in

the

entire

loss

of

from the above

investment

in

otherwise

commercially viable projects initiated by the Company in Mexico.

PIPELINE

SYSTEM

INTERRUPTI

ONS

OPERATIONS

ARE

SUBJECT

TO

OPERATIONAL

HAZARDS

AND

UNFORESEEN

The opera interrupti events, b extensive customary offer no a we may inc

tions ons, eyond

of our pipeline

systems are subject to hazards and

unforeseen

including natural disasters, adverse

our

control.

A

casualty

occurrence

weather, accidents or other might result in injury and

property

or

environmental

damage.

Although

we intend to maintain

insurance coverages ssurance that these ur.

for gathering systems of similar coverages will be sufficient for

capacity, we can any casualty loss

16

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