access and ownership. Storm also seeks to mitigate such risks through careful management of key supplier  relationships. Declines in commodity prices should result in lower service costs; however, these may be offset by  service providers choosing to retire equipment rather than operate at sub-optimum prices.  Capital expenditures are designed to accomplish two main objectives, being the generation of short and medium term  cash flow from development activities, and expansion of future cash flow from the identification or further  development of reserves. The Company focuses its activity in core areas, which allows it to leverage its experience  and knowledge, and acts as operator wherever possible. The Company may use farm-outs to minimize risk on plays  it considers higher risk or where total capital invested exceeds an acceptable level. In addition, Storm may enter into  hedging agreements in support of capital programs, particularly when cash flow for any period is anticipated to be  lower than capital expenditures. Generally, capital programs are financed from cash flow and disciplined use of debt. Failure to develop producing wells and to maintain an acceptable level of cash flow will result in the exhaustion of  available financial resources and will require the Company to seek additional capital which may not be available, or  only available on unacceptable terms or terms dilutive to existing shareholders. In addition, future credit availability  from the Company’ s bankers is also necessary to support capital programs and any changes to credit arrangements  may have an effect on both the size of the Company’ s future capital program and the timing of expenditures.  The Company’ s objectives are, in part, supported through carefully selected and managed acquisitions. Acquisitions  have to be acceptably priced and production should provide acceptable netbacks, or provide identifiable opportunities  to increase value. In the current pricing environment, natural gas properties providing a reasonable netback are  difficult to identify. An acquisition should also offer potential for near and medium term development and be in areas  where the Company can readily add to the acquired land position. Processing and transportation infrastructure must  also be in place, or within the Company’ s financial capacity to construct or acquire.  Acquisitions in 2012 and in the first quarter of 2014 involved assumptions about future revenues, costs, operations  and reserves and growth opportunities which have been and will continue to be invalidated by circumstances. The  acquisition completed in 2014 comprised production and undeveloped land contiguous to the Company’ s existing  lands at Umbach. This serves to mitigate, but not eliminate, development risk.  In addition, acquired assets must compete for investment capital with existing Company properties, which may result  in postponement of development programs on acquired or existing properties.  Estimates of economically recoverable oil and natural gas reserves and natural gas liquids, and related future net  cash flows, are based upon a number of variable factors and assumptions. These include commodity prices,  production, future development and operating costs, access to market, and potential changes to the Company’ s  operations or to reserve measurement protocols arising from regulatory or fiscal changes. All of these estimates may  vary from actual results, with the result that estimates of recoverable oil and natural gas reserves attributable to any  property are subject to revision. In future, the Company’ s actual production, revenues, royalties, transportation,  operating expenditures and finding and development costs associated with its reserves may vary from such  estimates, and such variances may be material. Production of oil and natural gas reserves at an acceptable level of profitability may not be possible during periods of  low commodity prices. The Company will attempt to mitigate this risk by focusing on higher netback opportunities  and will act as operator where possible, thus allowing the Company to manage costs, timing, method and marketing  of production. Production risk is also addressed by concentrating exploration and development efforts in regions  where infrastructure is or will be Storm owned or readily accessible at an acceptable cost. In periods of low  commodity prices the Company will shut in production, either temporarily or permanently, if netbacks are sub- economic.  Production is also dependent in part on access to third party facilities with the result that production may be reduced  by outages, accidents, maintenance programs and similar interruptions outside of the Company’ s control. For  example, a gas processing facility, to which a majority of the Company’ s gas production is directed, will be closed for  maintenance in the second quarter for an estimated period of 35 days.  $^{ }$Reserve Estimates $^{ }$Production $^{ }$Acquisitions  $^{ }$Capital Programs  45 