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Gateway Energy Corporation welcomes questions
from stockholders and others interested in the Company. Below are some
of the most frequently asked questions with responses from the management
team. Management's responses may include forward-looking statements
that involve risks and uncertainties such as are detailed from time
to time in the Company's SEC filings. Actual results may differ materially
from Management expectations. 1. How does the price of natural gas affect Gateway's core business? GATEWAY IS NOT MATERIALLY IMPACTED BY THE COMMODITY PRICE OF NATURAL GAS BECAUSE GATEWAY DOES NOT OWN ANY NATURAL GAS RESERVES. Gateway does not currently produce natural gas; we are a provider of services to the producing segment. A portion of Gateway's operating margin is generated when the Company buys and sells natural gas. The Waxahachie industrial distribution business is a prime example of this. If the price of natural gas goes up, Gateway can sell the gas at the higher price, thus increasing top line revenue, but concurrently it must pay a higher price for the gas it purchases; the margin remains essentially unchanged. Gateway also gathers and transports gas for a fee per unit of throughput. The operating margin attributable to this fee revenue is relatively insensitive to the commodity price of gas. The indirect benefit to Gateway of higher prices is that over time more wells will be drilled thus increasing the likelihood that more gas will be available to be gathered and transported in our pipeline systems. 2. How does the Company identify exploration activity that is going on offshore near its pipelines? Apart from our industry contacts, we rely on industry publications and various public records—such as drilling permit filings and records of the Minerals Management Service and the Texas General Land Office—to find companies that may benefit from our pipeline transportation and terminal services. 3. What is the life expectancy of wells like those currently connected to Gateway's offshore pipeline systems? The life expectancy of a well is determined by many factors, but as a rule of thumb, wells in the Gulf of Mexico generally produce for five to seven years. Gateway Offshore Pipeline Company can generally obtain new transportation business without significant new investment because the producer will pay for the pipeline connection of its platform to our pipeline system. 4. How many barrels (Bbls) per day can be processed through the Crystal Beach terminal? The terminal is capable of handling 5,000 Bbls per day without any additional modifications. 5. What does the Company do to keep stockholders informed? Keeping our shareholders informed is a high priority of this management. However, the Company must adhere to the various regulations published by the SEC, particularly Regulation FD, regarding disclosure. We issue quarterly statements and an annual report. In addition, our policy, as with most public companies, is to make a public announcement through a press release and simultaneous addition to our website when we have something of substance to say so that the information is available to all shareholders at the same time. 6. What are you doing to increase the stock price? Our primary mission is to increase shareholder value. We believe quite simply that as we grow the business, the relevant financial measures will improve and that this will be reflected in the value of Gateway's stock. We believe that an investor relations program designed to "pump" up the value of the stock so that day traders or certain short-term oriented shareholders can "dump" it is not only inappropriate but in the long term harmful to the Company's credibility and to the value of its stock. The Company has recently hired Cameron Associates (Investor Relations) based in New York to assist the Company in communicating the "Gateway Story" to both potential and existing shareholders. 7. What is the Sarbanes-Oxley Act of 2002, and does it apply to Gateway? It is a very extensive statute adopted by Congress and signed by President Bush on July 30, 2002 to modernize and reform the oversight of public company auditing, to strengthen the independence of auditors and to improve the quality and transparency in financial reporting by public companies. It applies to Gateway and to virtually all public companies. With Gateway's outside directors and audit committee composition that includes a financial expert, the company was in compliance with most of the more stringent corporate governance rules before they were law. 8. How does the Act affect corporate audit committees? All members of corporate audit committees are required to be independent, and one member must be a financial expert, as defined in the rules. The audit committee is given free reign to question auditors without executive officers present. 9. Does Gateway have an independent audit committee? Yes. All three members of Gateway’s audit committee are independent and one member is a financial expert. 10. How does the Act affect company financial statements? The Chief Executive Officer and Chief Financial Officer of all public companies must certify that all quarterly and annual financial statements fairly present, in all material respects, the financial conditions and results of operations of the company.
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