June 2007 Capital Adequacy Extension © Copyright 2007, CCRO. All rights reserved. Page 9 of 92 Capital, or Risk Capital, outlined in Chapters 3-7, with the difference that in this analysis focuses on sources and uses of cash rather than earnings and equity. 1.7. Summary In summary, this paper lays out a risk-based capital adequacy framework that energy companies, industry analysts, and other stakeholders can use to analyze a company’s ability to meet both near-term and long-term obligations. The practices described in this document should be viewed as a continuum ranging from an accounting type of implementation to an economic-based capital adequacy calculation. The intent is to make the energy industry and its stakeholders aware of emerging practices and to encourage early implementation of a capital adequacy framework. With this in mind, the CCRO has endeavored to provide as much guidance in this paper without being prescriptive. We expect energy companies and other stakeholders to read this document in the same spirit.