Oil & Natural Gas Corpn Ltd

1. The Economy

Global economy continues to be under shadow of one of the worst global economicdownturn. Dubai debacle, then economic turmoil in Greece and now doubts about thefinancial health of certain other countries in the European Union bears testimony to thefact that all is still not well with the financial health of many countries.

Global economy shrunk by 0.6% in 2009 on account of 3.2% decline in advanced economies;Europe being the worst affected with a decline of 4.1%. However, developing Asia grew by6.6% led by China (8.7%) and India (5.7%).

WEO 2010 (April 2010) projects that in 2010 the world output may increase by 4.2% over2009 and growth in advanced economies is expected to be 2.3% over 2009. Emerging andDeveloping economies are projected to grow by 6.3% over 2009; led by China (10%) and India(8.8%).

Striking an optimistic note in July, 2010, IMF raised its 2010 world growth forecast to4.6% and boasted estimates for the US and China. India is projected to grow at 9.5%.However, IMF warned that 'risks have risen sharply' and Europe has to quickly resolve debtproblems and restore confidence in banks.

During the fiscal 2009-10 Gross Domestic Product (GDP) in India registered a growth of7.4% against 6.7% during 2008-09.

Helped by timely and appropriate measures taken by the government in the form of fiscaland monetary stimulus, the Indian economy kept up momentum despite weak recoveries inadvanced economies. 2. Oil & Gas Industry & developments

Oil consumption

Global crude oil consumption declined by 1.4% in 2009; from 85.04 million barrels perday (mb/d) in 2008 to 84.04 mb/d in 2009. Consumption declined in OECD countries by 4.3%.USA and Japan, the two leading economies of the world, registered a decline of 4.2% and9.3% respectively. In contrast, non-OECD countries registered 2.3% increase in crude oilconsumption led by countries like China and India.

Oil consumption is also increasing in large number of developing nations in the MiddleEast, Latin America and Africa which may % Change in gas consumption in 2009 over 2008.

25.5% respectively. A significant development in India was commencement of new suppliesfrom the East coast.

Demand pulls & crude oil price volatility

Sustained increase in crude oil demand up to 2007 (CAGR of 1.5% during 1997-2007; CAGRof 3.3% in case of non-OECD countries) coupled with perceived supply constraints,complexities in the oil market and resultant inter-plays at commodity exchanges resultedin high volatility in crude oil

The upward journey of price started in 2004 and peaked to US$ 147/bbl in July, 2008.Thereafter there was a free fall to US$35/bbl in December 2008. The volatility provedbeyond doubt that factors other than fundamentals had taken the driver's seat.

Demand shrinkage and collapse of oil prices forced OPEC to cut supplies by 4.2 mb/d inlate 2008. As a result, oil prices started increasing since January, 2009 to hover in therange of US$ 75-85 per barrel.

Though this price band is perceived to be in 'goldilocks range'-comfortable forproducers as well as consumers-the volatility still exists. Dated Brent touched US$ 88/bblin the first week of May, 2010 and within two weeks the prices fell below US$ 70/bbl dueto economic turmoil in Euro-zone; inching up intermittently thereafter.

The gas price (Henry hub) also followed volatility of oil price curve. It increased toUS$ 12.68/mmBtu in June, 2008 only to crash to US$ 1.88/mmBtu in September, 2009;currently hovering around US$ 4.70/mmBtu.

Prices to remain volatile as fundamentals have not changed World over oil fielddepletion, declining discovery rates, insufficient new projects and waning investment inE&P projects is a real concern which may bring in complications for the industry inCrude oil production (MMT).

Field depletion

During the period 2000-2009, in Non-OPEC countries {other than Former Soviet Union(FSU) countries} crude oil production declined by 6.3%. In OECD countries oil productiondeclined by 15%. Arresting decline in these fields is the biggest challenge for theindustry which requires systematic technology interventions

Declining discoveries

Since 2004 more than 2,000 discoveries have been reported from different parts of theworld (Source: GlobalData), except a few large discoveries in the Gulf of Mexico, most ofthe discoveries are small. Alarge number of these discoveries are in deepwater and ultradeepwater locations for which technology and investment remains a challenge. The meanfield size post 1995 has decreased in most of the regions except those in few African andFSU countries (Former Soviet Union) where exploratory efforts were mobilized during lastdecade.

Oil & Gas Investments

In high oil price regime, the industry attracted huge investments. Total investment inthe sector doubled in just four years i.e., US$ 428 billion in 2005 to US$ 864 billion in2008 (Source: GlobalData). The industry leaped forward even to take risky projects in thechallenging geographical location and unconventional sources. However, in volatile marketconditions majority of the companies revisited their capital expenditure plans, manyprojects were slashed and cautious approach became the strategy the world over. As aresult investment during 2009 declined by 19% compared to 2008 (Source: GlobalData). Incase the prices remain low it will discourage the industry from making big moves.

Bio-fuels

In recent years, bio-fuel has emerged as a preferred cost-effective substitute. Globalethanol production increased by 158% in last six years {from 14.9 in 2004 to 34.4 milliontonnes of oil equivalent (mtoe) in 2009}; mainly due to increase in production in USAandBrazil, which account for about 87% of the global ethanol production. During the period2004-

2009, ethanol production in USA and Brazil increased by 216% and 78% respectively(Source: BP Statistical Review 2010). However, ethanol as a partial substitute may pose abig question mark over global food security.

Shale gas revolution

In a short span of time, the Shale gas revolution in USA has changed the basics of gasbusiness. Shale gas now accounts for 20% of the gas production in USA which is expected toincrease to 50% of the supply by 2035. However, attendant environmental concerns stillremain unresolved.

The 'Game changer'

The British Petroleum (BP) operated Deepwater Horizon rig disaster, in the Gulf ofMexico, is going to change the oil game by raising grave concerns about offshore drilling.Tougher restrictive regulations may shortly be in place.

3. Indian Oil & Gas Industry

Increasing consumption of petroleum products

Oil and natural gas consumption in India posted robust growth during the recent yearsi.e. at a Compounded Annual Growth Rate (CAGR) of 5.1% in last 5 years (FY06 to FY'10).Consumption of most of the products increased substantially except Naphtha and Fuel oilwhich were substituted by new gas supplies.

Crude oil production

During FY'10, domestic crude oil production has been 33.51 MMT (ONGC's share 26.46 MMT)almost same the same level as during FY'09. Production levels could be maintained becauseof systematic technology and capital infusion in old and matured fields and bringing newdiscovered fields to production. RJ-ON-90/1 block, in which your Company has 30%participative interest, commenced production from 24th August, 2009. Presently it isproducing more than 1,05,000 bopd. The peak production from the field is expected to bearound 210,000 bopd by Q4 of FY'12.

Crude oil price (Indian basket) and under-recoveries

During FY'10, average crude oil price for the Indian basket has been US$ 69.76/bblagainst US$ 83.57/bbl during FY'09. Though the oil prices increased at a staggering CAGRof 20.8% during the period FY'05 to FY'09, the Indian basket prices of four sensitivepetroleum products i.e., HSD, MS, LPG & SKO were controlled by the government to makethese products available to the consumers at affordable prices.

ONGC's average gross crude price in FY'10 has been US$ 71.65/bbl (against US$ 86.15/bblin FY'09); however, the net crude price realization to ONGC has been US$ 55.94/bbl(against US$ 47.70/bbl in FY'09) after sharing under-recoveries of US$ 15.71/bbl to OilMarketing Companies (OMCs) as per the government directives. ONGC's share ofunder-recoveries during FY'10 has been Rs. 115.54 billion (previous year ? 282.25billion).

Natural Gas production

During FY'10 domestic natural gas production has been 47.51 BCM the highest-ever(ONGC's share 25.59 BCM). Major upside came from the new production from D-6 field ofReliance Industries Ltd. (RIL) in the East Coast which commenced production from 1stApril, 2009.

Share of natural gas to increase in the Indian Energy basket:

Compared to world primary energy basket, Indian scenario is slightly different. InIndia, Coal remains the dominant fuel with a share of 52% (against 29% in world) in energybasket followed by Oil with a share of 32% (against 35% in the world).

During the year 2009, share of natural gas in Indian energy basket increased to 10%(against 8% in 2008). However, it remains much lower than global average share of 24%.

Big impetus for gas Dusmess

The gas business in India got big impetus with two remarkable decisions. Hon'bleSupreme Court of India upheld the decision of the Government to fix a price of US$4.2/mmbtu for D-6 gas. Subsequently, the Government enhanced the price of APM(Administered Price Mechanism) gas, produced by ONGC and OIL from nominated blocks, fromaround US$ 1.79/mmbtu to US$ 4.2/mmbtu (including royalty). This will help in wiping outthe under-recoveries in gas business and incentivize investment.

4. Operational performance

Your Company has been able to maintain oil and gas production levels in recent yearsthrough two pronged strategy; optimizing production from existing old fields and bringingnew fields to stream. Oil and gas production profile from domestic as well as overseasassets during last five years are as below:

Accelerated and intensive exploration campaign initiated by your Company helped inaccreting good quantity of oil and gas reserves which helped in improving position of theproved reserves (1P).

ONGC (Stand alone)

ONGC Group

Note: Segment information as per Accounting Standard (AS)-17, is detailed elsewhere inthe report.

6. Opportunities & Threats

In recent years India has emerged as one of the most vibrant energy markets in theworld. Demand for all forms of energy registered robust growth and is going to sustainwith fast growing Indian economy. This provides an opportunity to your Company tomeaningfully integrate in the entire energy value-chain to leverage businessopportunities. Presently, more than 33% of the sedimentary basins in India are eitherunexplored or poorly explored. Yet-to-find (YTF) hydrocarbons may be located in theseareas which may throw up opportunities for the companies who are able to take lead inthese frontier areas.

Government of India is now looking for Open Acreage Licensing Policy (OALP), anoperator friendly flexible system. Your Company will have opportunity to leverage its vastexploration data base to its advantage.

Improving recovery factor of the existing matured fields provides enormous opportunityin terms of production upside to your Company. These established fields have significantscope in terms of brown-field development leveraging superior technology. The Improved OilRecovery (IOR) and Enhanced Oil Recovery (EOR) techniques which your Company has masteredover the years provide good opportunity for association and growth in global oil businessas number of operators or countries are looking for such know-how and skills.

Presently, more than 90% of the global oil and gas reserves are controlled by theNational Oil Companies (NOCs) in various countries. Establishing meaningful relation withthe NOCs provides opportunity for growth.

Commercialization of new sources of energy like CBM, UCG, Shale gas, etc., hassubstantial upside for growth. At the same time alternate sources of energy have alsoenormous potential. Early lead in cost effective commercialization of these sourcesthrough innovative technologies and solutions is an opportunity.

Hydrocarbon exploration is now being principally focused in frontier areas like-deeperpays, deepwater, ultra-deepwater and high risk stratigraphic traps. These so called'invisible frontiers' are becoming an increasingly important target. Regional or 'newgeology will once again become critical as itwas in the initial wildcatting days.

Likely strict regulations for offshore E&P operations may emerge as one of thebiggest threats for E&P operations globally.

7. Risks and Concerns

E & P business due to inherent uncertainties has always been highly risky.

New technology and solutions for new plays would require concerted efforts withsubstantial investment; however, volatile price regime is emerging as a drag for theindustry where focus is more on reducing costs all the while responsibly addressinginfrastructure and environmental issues.

Depleting fields in most of the matured basins is a concern for the industry; however,designed solutions in present market conditions and uncertainties appear to be elusive.This may have direct impact on future supplies.

As far as India is concerned, seventy eight percent of the offshore acreage is indeepwater and ultra-deepwater. The success in deep waters especially in the East Coast hasopened up vast area for active exploration; however, capital and technology intensiveexploration drive can only unleash potential from these deeper challenges.

Sharing of under-recoveries on adhoc basis remains a concern for your Company. Besides,there always remains a concern for Health, Safety and Environment owing to very nature ofE&P operation and geographical location of its operation like high seas.

8. Strategic business pursuits

Your Company, keeping in view the dynamics of the industry and opportunities in theenergy sector, has well defined its strategies for sustaining growth. Basic premise forthe strategy evolves round-creating energy and value assets on continuous basis forsustained growth. The strategic pursuits of your Company are:

a. Intensive exploration to locate new oil & gas assets.

b. Expeditious development of discoveries.

c. Arresting decline from the matured fields.

d. Leverage its position as a favoured partner globally for overseas energy projects.

e. Developing new sources of energy like-CBM, UCG, Shalegas, etc.

f. Establish alternate energy as commercially viable option.

g. Value-multiplication through integration in hydrocarbon and energy value-chains.

Intensive exploration

Your Company has intensified exploratory efforts in recent years to locate new oil andgas assets and accrete more and more reserves. During last 5 years (FY'06 to FY10) yourCompany acquired 126,222 Line Kilometer (LKM) of 2D and 111,923 Square Kilometer (Sq.Km)of 3D Seismic data and drilled 525 numbers of exploratory wellsin domestic basins.

These exploratory inputs helped your Company to accurate more than one billion tonnesof in-place hydrocarbon reserves in domestic basins. The average Reserve Replacement Ratio(RRR) in last five years has been 1.39 (with 3P reserves) which implies that your Companyaccreted more reserve than it produced.

Expeditious Development of Discoveries

During the period 2002-2010 your Company made 134 discoveries (84 onland and 50offshore). Out of these 134 discoveries, 58 discoveries (56 onshore & 2 offshore) havealready been put on production. Seven discoveries will commence production during thecurrent fiscal i.e. FY'11. Systematic efforts are on to bring balance discoveries tostream. Most of these discoveries are in offshore (including deepwater) and few in Tripurawhich are linked with commissioning of 726.6 MW Power Plant, forwhich lead time forcreating required infrastructure is generally more. However, most of the shallow waterdiscoveries will be on stream by 2012-13.

Arresting Decline

Prudent reservoir management is an established practice in your Company. Systematicinterventions are made on continuous basis to maintain the health of the reservoirs. Since2001, your Company has taken up 21 IOR/EOR and redevelopment schemes in 15 major fields toarrest natural decline. Out of these 21 schemes, 14 schemes have already been completed.So far your Company has invested Rs. 209.44 billion in these schemes and will be investinganother Rs.156 billion in ongoing 7 schemes. These schemes helped your Company to maintainproduction levels by arresting decline in the major fields and improving recovery factor.The cumulative oil gain from these schemes has been more than 56 MMT; 7.97 MMT duringFY'10. At the same time recovery factor of these major fields also improved from 28% inFY01 to 33.5% in FY'10.

Overseas operations

Over the years your Company has systematically established itself as a favoured partnerin global E&P business. ONGC Videsh Ltd. (OVL), the flagship wholly owned subsidiaryfor overseas operations, has footprints across 15 countries with 40 projects. During FY10,it sourced 8.87 MTOE of O+OEG; the highest-ever. Production came from 9 producing assetsin seven countries.

New sources of energy

Your Company is aggressively pursuing technology intensive solutions to leveragepotential of new sources of energy like - Coal Bed Methane (CBM), Under Ground CoalGasification (UCG), Shale Gas, etc.

a. Coal Bed Methane (CBM)

Your Company is pursuing CBM exploration in five blocks i.e., Jharia, Bokaro, NorthKaranpura, Raniganj and South Karanpura. Your Company has submitted Final Development Plan(FDP) for approval to the Government of India for Parbatpur area in Jharia Block withestimated in-place reserve of 17.72 BCM. However, CBM production from Pilot Project atParbatpur, Jharia, Jharkhand commenced in January 2010. Your Company has also taken up acollaborative research project with University of New South Wales, Australia for reservoircharacterization and rock in-situ stress and natural fracture characterization in Bokaro,North Karanpura and Jharia blocks.

b. Underground Coal Gasification (UCG)

Your Company has identified Vastan Mine block in Gujarat for UCG Pilot Project withestimated investment of US 15.32 million. Environmental clearance has been obtained fromthe Ministry of Environment & Forest for pursuing the pilot project. Request has alsobeen submitted for award of the Minning Lease (ML) for the Vastan mine block.

c. Shale Gas Exploration

Your Company launched an integrated R&D pilot project for shale gas exploration on23rd April, 2010 in Damodar Basin, Jharkhand, the first of its kind in the country.

Alternate sources of energy

After successful commissioning of a 50 MW wind farm in Gujarat, your Company isplanning for another 100 MW wind farm. Further, feasibility of setting up a 10 MWgrid-connected Solar Photo Voltaic (PV) project is being studied.

ONGC Energy Centre, a dedicated centre, created by your Company for holistic researchand development of energy sources beyond hydrocarbon and conventional sources has taken upseveral projects such as -Thermo-chemical Reactor for hydrogen generation, Bio-conversionof Coal/ Oil to methane, SolarThermal Engine, LED project, Uranium exploration, etc.

Refining

Mangalore Refinery & Petrochemicals Ltd (MRPL), subsidiary of your Company,increased its nameplate capacity to 11.82 MMTPA from 9.69 MMTPA. The refining capacity ofthe MRPL is being enhanced to 15 MMTPA; the project is on track and is expected to becompleted by 2012.

Petrochemicals

The two petrochemical plants ONGC Petro-additions Limited (OPaL) and ONGC MangalorePetrochemicals Limited (OMPL) promoted by your Company are progressing well and areexpected to become operational in 2012 and 2013 respectively. These projects havebasically been promoted for value-multiplication of in-house produced Naphtha at Uran,Hazira, and Mangalore and C2-C3 components at C2-C3 extraction plant at Dahej.

Power

726.6 MW (363.3x2) gas based Combined Cycle Power Plant (CCPP) being set up by ONGCTripura Power Company Ltd. (OTPC), an SPV promoted by your Company, at Pallatana, Tripuraaims to monetize its idle gas assets in the state of Tripura. This plant is scheduled tobe operational in 2011-12.

Exploration acreage

Your Company has been awarded 17 NELP blocks (including 4 as non-operator) in NELP VIIIround of bidding for which the contracts were signed on 30th June, 2010. Including these,your Company holds Petroleum Exploration License (PEL) for 93 NELP blocks (10 asnon-operator). In addition, it holds 62 PEL nomination blocks and 320 Petroleum MiningLease (PML). Your Company endeavours to convert most of the PEL areas into PML to havesufficiently large portfolio of E&P assets.

Exploration programme

In first three years (FY'08, FY09 & FY'10) of XI plan period itself, your Companyover achieved 2D seismic survey targets (110,275 LK against XI target of 54,359 LK) andachieved 89% (67,886 sq km against XI plan target of 76,398) of 3D seismic survey target.Total 1,023 wells (Exploratory wells: 332 & Development wells: 691) were drilledduring the period (62% of the XI plan target of 1,651 wells). Your Company accreted 718MToE of O+OEG in-place hydrocarbon in first three years of plan against XI Plan target of1,000 MToE. With the present deployment of 120 drilling rigs (78 owned and 42charter-hired) your Company plans to drill 728 wells (Exploratory: 254 & Development:474), including 30 deepwater wells, during balance two years of the plan period (FY'10& FY'11).

New field development

Your Company has taken up a number of new offshore fields for development withenvisaged investment of Rs. 181,060 million. Notable among these projects are: C-Series,G-1 & GS-15, B-22, B-193, B-46, D-1, North Tapti and Cluster-7. C-series field hasalready commenced production and other fields will be on stream from 2011-12 and havepotential to provide substantial upside to O+OEG production starting from 2011-12.Expeditious development of Daman fields-Daman (Main), Daman (North), B-23 & B-24, isalso being taken up.

Your Company discovered natural gas in NELP-1 block KG-DWN-98/2. The block is currentlyunder appraisal stage and is divided into two discovery area Northern Discovery Area (NDA)consisting of discoveries like-Padmavati, Kanakdurga, Annapuma, N-1, D/KT, U, A, W and Ein the water depth of 594 to 1,283 meters and Southern Discovery Area (SDA) consisting ofUD-1 discovery in ultra-deepwater at a water depth of 2,841 meters. Field DevelopmentPlans (FDP) shall be in place after appraisal of discoveries. However, your Company hasalready submitted request for Declaration of Commerciality (DOC) to DGH for NDA on 16thJuly, 2010.

Plan expenditure

During the year FY'11, your Company has earmarked a budget of ? 265,230 million fordomestic operations; about 9.3% for seismic survey; 31.9% for exploratory drilling; 13.7%for development drilling; 36.8% for capital projects and purchases; 5% for domesticE&P JVs and balance 3.2% is for R&D and integration projects.

In first three years of XI Plan period, plan expenditure for domestic operations hasbeen Rs. 630,701 million against total plan outlay of Rs.759,838 million (i.e., 83% of thetotal plan outlay.

About 56% (Rs.256 billion) of the XI Plan outlay of Rs 453 billion for OVL has alreadybeen invested towards overseas E&P operations and acquisitions in the first threeyears of the plan period. OVL's plan expenditure during two terminal years of XI plan willbe more guided by acquisition of new E&P projects for which OVL is aggressivelyscouting for.

Overseas E & P

Presently (as on 31st March, 2010), OVL has reserve base of 356.78 MTOE (2P reserves)which translates to R/P ratio (Reserve to Production ratio) of more than 40 years atpresent production level (i.e., 8.87 during FY' 10). Participation in Carabobo project isgoing to enhance 2P reserves of OVL by 45 MMT.

As expected, production from three major assets-GNOP (Sudan) and Sakhalin-1(Russia)-have entered into decline phase; however, OVL recorded highest-ever O+OEGproduction in FY10 due to contribution from the new assets like BC-10 (Brazil), ImperialEnergy (Russia), etc. Production from Imperial Energy fields in Russia was enhanced to16,700 barrels of oil per day (bopd) from 6,000 bopd at the time of acquisition in January2009.

BC-10 deepwater field in Brazil commenced production from 12th July 2009 and iscurrently producing about 72,500 bopd. Blocks A1 and A3 in Myanmar, in which OVL has 20%stake, are expected to commence production from mid-2013. First oil from Carabobo projectis expected to flow in 2012-13 with estimated peak production of 400,000 barrels of extraheavy oil per day in 2014-15 (OVL's share 44,000 bopd).

11. Internal Control Systems

Over the years your Company has developed robust internal control systems for allgamuts of its operations. A dedicated group -Performance Management and Benchmarking Group(PMBG) - monitors performance of all the business units on continuous basis. Besidestechnical and quality monitoring teams at business unit level continuously monitorstechnology and field operations. Internal audit is conducted in-house as well as throughoutsourcing in certain areas requiring specialization. Statutory auditors are appointed byComptroller and Auditor General of India (C&AG) for fixed tenures. Oil Industry SafetyDirectorate (OISD) conducts safety audits periodically.

Your Company revised the Book of Delegated Powers (BDP) in 2009 for financial andadministrative delegations with focus on fiscal and administrative discipline anddecentralization of certain powers. All transactions in the company are carried out on SAPR/3 ERP based business portal which was upgraded from mySAP 4.6c to ECC 6.0 to leveragethe new functionalities of the latest ERP system consisting of Production RevenueAccounting (PRA), Governance, Risk & Compliance (GRC), Master Data Management (MDM),Identity Management (IDM), Occupation Health (OH), Mobile Asset Management (MAM).

Your Company has institutionalized Invoice Monitoring System (IMS) and all payments aremade electronically through a time-bound monitored process. Even all payments to theemployees are now system based including Performance Related Pay (PRP), Perks and otherclaims and re-imbursements.

Audit & Ethics committee of the Board oversees the functioning of Internal Auditand control systems. Your Company implemented Whistle Blower policy w.e.f. from 1stDecember 2009. The Company is in the process of formulating a fraud prevention policy.

12. Human Resource Development

Your Company is priviledged to have experienced pool of technical and professionalmanpower who dedicate themselves for excellence. ONGC, recognized as the best company towork in core sector in India (Business Today; 7th Feb 2010 edition), kept its promise tostrengthen its HR activities through innovative initiatives.

Some of the significant initiatives towards human resource development have been:Coaching & Mentoring scheme, Business Games, Employee Engagement Survey, HR Audit,Assessment Development Centre (ADC), etc. Structured initiatives have been taken toinstitutionalize Multi Disciplinary Team (MDT) concept throughout the organization for itscore activities.

Your Company has been able to contain attrition in recent years due to proactivemanagerial interventions and policies. During the year FY110,57 executives left theorganization compared to 150 during FY09 and 328 during FY'08.

Beginning 2010, more than 1,500 people will be superannuating every year. Keeping thisin view your Company has also firmed up long-term recruitment plan for acceleratedinduction and training of manpower for core E&P activities ensuring availability oftalent.

13. Corporate Governance

The initiatives taken by your Company are detailed in the Corporate Governance report,a part of the Annual report.

14. Corporate Social Responsibility (CSR)

Initiatives taken by your Company towards CSR are detailed in Directors' Report.

15. Cautionary Statement

Statements in the Management Discussion and Analysis and Directors Report describingthe Company's objectives, projections and estimates, are forward-looking statements andprogressive within the meaning of applicable laws and regulations. Actual results may varyfrom those expressed or implied, depending upon economic conditions, Government Policiesand other incidental factors. Readers are cautioned not to place undue reliance on theforward looking statements.