arthur l smith

University of HoustonUniversity of HoustonBauer College -- GEMIBauer College -- GEMI

Energy Advancement Leadership Conference

CONVENTIONAL ENERGY

UNDER STRESS

Energy Advancement Leadership Conference

CONVENTIONAL ENERGY

UNDER STRESSArthur L. Smith, CFAJohn S. Herold, Inc. Chairman & CEO November 17, 2004

Arthur L. Smith, CFAJohn S. Herold, Inc. Chairman & CEO November 17, 2004

The end of the Oil Age?

October 25-31, 2003 edition

http://economist.com/index.cfm

http://economist.com/index.cfm

Let’s Place Today in Perspective

• Very Difficult 1998-99• Exceptionally Strong

Wellhead Prices for Oil & Natural Gas

• Phobia of another Price Meltdown (2001)

• Profound Cynicism among Energy Investors

• No visible reaction (demand downturn) to sharp (100%+) run up in all basic energy sources – oil, gas, coal, nuclear, et al.

Oil Price Crash of 1986

$10 Barrel

Why Energy Investors are Skeptical and Cynical

The Sector is Insignificant (7% up from 4.9%)

The record is Ugly -- Growth for Growth’s Sake Doesn’t Work

The duration of fundamental energy cycles have been increasingly brief

It’s hard to measure performance – RD/SC

Oil and Natural Gas prices are volatile and the accounting practices are always “ looking in the rear view mirror”

S&P 500 Historical Composition1982

Financials6% Health Care

18%Consumer

Staples11%

Consumer Discretionary

6%

Industrials7%

Materials6%

Energy25%Utilities

11%Technology9%

Transport1%

2000

Financials17%

Health Care14%

Consumer Staples8%


10%

Industrials11%

Materials2%

5%

Utilities4%

Telecommunications Services

5%

Information Technology

22%

2004

Information Technology

17%

Telecommunications Services

3%

Utilities3%

Energy7%

Materials3%

Industrials11%


11%

Consumer Staples

11%

Health Care14%

Financials21%

Life Cycle of U.S. Oil Production

World Oil ProductionColin Campbell

2004

NYMEX Crude Futures Price Expectations

$20

$22

$24

$26

$28

$30

$32

$34

$36

$38

$40

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

2002


$20

$22

$24

$26

$28

$30

$32

$34

$36

$38

$40

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

2003

2002


$20

$22

$24

$26

$28

$30

$32

$34

$36

$38

$40

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

2003

2002

2004


$20

$25

$30

$35

$40

$45

$50

$55

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

2003

2002

2004

2005

NYMEX Gas Future Strip Price Expectations

$3.00

$3.50

$4.00

$4.50

$5.00

$5.50

$6.00

$6.50

$7.00

$7.50

$8.00

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

2002

$6 MMBTU


$3.00

$3.50

$4.00

$4.50

$5.00

$5.50

$6.00

$6.50

$7.00

$7.50

$8.00

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

2002

2003

$6 MM BTU


$3.00

$3.50

$4.00

$4.50

$5.00

$5.50

$6.00

$6.50

$7.00

$7.50

$8.00

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

2002

2003

2004

$6 MM BTU


$3.00

$3.50

$4.00

$4.50

$5.00

$5.50

$6.00

$6.50

$7.00

$7.50

$8.00

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

2002

2003

2004

$6 MM BTU2005

Cumulative Gas Storage WithdrawalsCUMULATIVE GAS STORAGE WITHDRAWALS

0200400600800

1,0001,2001,4001,6001,8002,0002,2002,4002,600

0 2 4 6 8 10 12 14 16 18 20

Week Number

Bc

f

5 Yr Avg. 2003-04 2002-03

0 5025

Miles

Mature Production Area Deep Shelf Focus Area

Deep Water Exploration

Gulf of MexicoE & P in a Mature Basin

Peaked?•By virtually all measures, the domestic oil industry activity levels peaked in 1981– Operators, Seismic Crews, Rigs (4000), Exploratory Wells, Employment

•But Oil Production Peaked in 1970 (9.8 MMb/d)

• & Natural Gas Output peaked in 1973 (22.6 TCF)

•Domestic Oil and Natural Gas Consumption has yet to peak (2004 will top 2003)

•Oil Imports set new records daily – Gas Imports from Canada peaked in 2002

OXYMORONSJSH Favorites

Exxon Mobil

1. Humble Oil & Refining 2. Standard Oil (NJ) 3. Socony Vacuum 4. Superior Oil 5. Anglo-Iranian Oil 6. Standard Oil (Ohio) 7. Pan American Standard Oil (Indiana) 8. Dome Petroleum 9. Atlantic Refining 10. Richfield 11. Sinclair 12. Supron Energy 13. Union Sulfur & Oil 14. Anderson Pritchard 15. Royal/Dutch Shell 16. Shell Union (Shell Oil) 17. The Texas Company 18. Tidewater 19. Pacific Western-Getty 20. Skelly 21. Gulf 22. Standard Oil (CA) 23. Standard Oil (KY) 24. Cities Service 25. Occidental 26. Phillips 27. Aminoil 28. General American Oil 29. Continental Oil 30. Union Oil 31. Pure Oil 32. Sun Oil 33. Sunray-Sunray DX 34. Midcontinent 35. Texas Pacific 36. Kerr McGee 37. Plymouth Oil 38. Ohio Oil 39. Texas Oil & Gas 40. Amerada Petroleum 41. Hess Oil and Chemical 42. Total Petroleum 43. PetroFina 44. Fina Inc. 45. Elf Aquitaine

1950 1960 1970 1980 1990 2000

ExxonMobil

Amoco

Atlantic Richfield

Allied Chemical/Signal Union Texas (IPO)

BP

RD/SC

Getty Texaco

Chevron

Occidental

Phillips

ChevronTexaco

ConocoPhillipss

Unocal

Amerada Hess

USX

TotalFinaElf

Marathon

Sun Oil

Conoco

Kerr- McGee

Oryx

Sunoco

(Marathon)

PZL

British Petroleum

(Conoco)

BP Amoco

Dupont

Copyright © 2002 John S. Herold, Inc.

$0

$20

$40

$60

$80

$100

$120

$140

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

O&

G R

eser

ve $

Vo

lum

e (U

S$B

)

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

Imp

lied R

eserve Valu

e (US

$/bo

e)

O&G $ Volume (US $B) Implied Reserve Value (US$/boe)

Worldwide O&G $ Volume (US$B) vs.

Implied Reserve Value (US$/boe)

XOM

BP/ARCO

CVX

BP/Amoco

COP

$9.53

$5.88$5.98

$6.44

$9.64

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

Q1 '00 Q2 '00 Q3 '00 Q4 '00 Q1 '01 Q2 '01 Q3 '01 Q4 '01 Q1 '02 Q2 '02 Q3 '02 Q4 '04 Q1 '03 Q2 '03 Q3 '03 Q4 '03 Q1 '04 Q2 '04 Q3 '04

Average U.S. Implied Reserve Value (US$/boe)

2000 2001 2002 2003 2004


Alminex Ltd.Amarex, Inc.Amerada HessApco OilAsamera, Inc.Austral OilAztec Oil & GasBanff Oil, Ltd.Belco PetroleumBP Oil & GasBritish Col. Oil & GasButte Oil & Gas Canadian Exports Oil/GasCanadian GridoilCanadian HomesteadCanadian Ind. Gas & OilCanadian SuperiorCentral-Del RioCleary PetroleumClinton OilConsolidated Oil & GasConsolidated ProductionContinental Oil Co.CreoleCrestomont Oil & GasCrystal Oil & LandDome PetroleumEason OilEmpire State Oil Co.

Equity Oil & GasExchange Oil & GasFalcon SeaboardFelmont OilForest OilGeneral American OilGeneral Crude OilGreat Basins PetroleumGreat Plains DevelopmentGulf Oil CanadaHamilton Bros. PetroleumHelmerich & PayneHome OilHudson's Bay Oil & GasHusky Oil, Ltd.Imperial OilInexco OilKathol PetroleumKewaneeKirby PetroleumLouisiana Land & Exp.LVO Corp.Mesa PetroleumMidwest OilMission Corp.Noble AffiliatesOcean Drilling & Exp.Pacific PetroleumPan Ocean Oil Company

Pauley PetroleumPennzoil UnitedPetrofina CanadaPubcoRanger OilReading & BatesReserve Oil & GasSabine RoyaltyScurry-RainbowShenandoah OilSignal CompaniesSinclair VenezuelanSkellySouthern Natural GasSouthland RoyaltySouthwest Gas Producing Co.Superior OilTexas American OilTexas Int’l PetroleumTexas Oil & GasTexas Pacific Oil Co.Tipperary Land & Exp.TransOcean OilUnited Canso Oil & GasWebb ResourcesWestates PetroleumWestcoast Production Co.Western DecaltaWilshire Oil of Texas

86 INDEPENDENT E&P COMPANIES86 INDEPENDENT E&P COMPANIES

JSH Coverage--January 1970

JSH Coverage--January 1980

INDEPENDENT E&P COMPANIES-- 45 SurvivorsINDEPENDENT E&P COMPANIES-- 45 SurvivorsEquity Oil & Gas Pauley Petroleum

Amarex, Inc. Pennzoil UnitedAmerada Hess Petrofina Canada

Felmont OilAsamera, Inc. Forest Oil Ranger Oil

General American Oil Reading & Bates

Great Basins Petroleum Sabine Corp.Belco Petroleum Scurry-Rainbow

Gulf Oil CanadaHamilton Bros. Petroleum

Butte Oil & Gas Helmerich & PayneHome OilHudson's Bay Oil & Gas Southern Natural Resources

Canadian Homestead Husky Oil, Ltd. Southland RoyaltyImperial OilInexco Oil

Texas American OilTexas International Petroleum

Kirby Petroleum Texas Oil & GasConsolidated Oil & Gas

Louisiana Land & Exp. Tipperary Land & ExplorationMesa Petroleum TransOcean Oil

United Canso Oil & GasWebb Resources

Crystal Oil & Land Noble AffiliatesDome Petroleum Ocean Drilling & Exp. Westcoast Production Co.

Wilshire Oil of TexasEnergy Reserve Group

Conoco, Inc.

JSH Coverage 1990 & 2004INDEPENDENT E&P COMPANIES

Nov 2004 – 4 Nov 2004 – 4 SurvivorsSurvivors

Jan 1990 - 14 Survivors

Pennzoil

Amerada Hess

Forest Oil Ranger Oil

Reading & Bates

Imperial Oil

Louisiana Land

Mesa Inc.

Noble EnergyWilshire Oil of Texas

SONAT

Home OilHome Oil

Amerada Hess

Equity Oil & Gas

Forest Oil

Helmerich & Payne

Imperial Oil

Noble AffiliatesEquity Oil & Gas

Monthly U.S. Consumptionand Production of Natural Gas

Source: Energy Information Administration

1000

1200

1400

1600

1800

2000

2200

2400

2600

2800

1984

Jan Ju

l19

85 J

an Jul

1986

Jan Ju

l19

87 J

an Jul

1988

Jan Ju

l19

89 J

an Jul

1990

Jan Ju

l19

91 J

an Jul

1992

Jan Ju

l19

93 J

an Jul

1994

Jan Ju

l 19

95 J

an Jul

1996

Jan Ju

l 19

97 J

an Jul

1998

Jan

Ju

l 19

99 J

an

July

2000

Jan

July

2001

Jan

July

2002

Jan

July

2003

Jan

July

2004

Jan

July

Bcf

Dry Gas Production

Consumption

0

200

400

600

800

1000

1200

1400

1600

Ch

evro

n

Am

oco

Tex

aco

Exx

on

Mob

il

R/D

Sh

ell

Atl

anti

c R

ich

fiel

d

Un

ocal

Ph

illip

s P

etro

leu

m

Bu

rlin

gton

Con

oco

Occ

iden

tal

US

X-M

arat

hon

Am

erad

a H

ess

Ory

x E

ner

gy

Un

ion

Pac

ific

Res

En

ron

Pen

nzo

il

An

adar

ko

Con

sol.

Nat

. Gas


U.S. Natural Gas Production20 largest producers (1992)

Average – 380 Bcf

Companies that have been acquired by 2002

Enron became EOG Resources

0

200

400

600

800

1000

1200

1400

1600

BP

plc

Exx

on M

obil

Ch

evro

nT

exac

o

Roy

al D

utc

h/S

hel

l Gro

up

An

adar

ko

Pet

role

um

Con

ocoP

hill

ips

Dev

on E

ner

gy

El P

aso

Bu

rlin

gton

Res

ourc

es

Dom

inio

n R

esou

rces

Un

ocal

Con

sol.

Nat

ura

l Gas

Mar

ath

on O

il

Ker

r-M

cGee

EO

G R

esou

rces

Will

iam

s C

omp

anie

s

Occ

iden

tal P

etro

leu

m

XT

O E

ner

gy

Ap

ach

e

Ch

esap

eak

e E

ner

gy


U.S. Natural Gas Production20 largest producers (2002)

Average – 440 Bcf

Nat Gas Imports from Canada

Bcf

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

197

3

197

4

197

5

197

6

197

7

197

8

197

9

198

1

198

2

198

3

198

4

198

5

198

6

198

7

198

8

198

9

1990

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

2000

200

1

1980

Canadian Nat Gas Imports

Run out of Steam

Bcf

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

197

3

197

4

197

5

197

6

197

7

197

8

197

9

198

1

198

2

198

3

198

4

198

5

198

6

198

7

198

8

198

9

1990

199

1

199

2

199

3

199

4

199

5

199

6

199

7

199

8

199

9

2000

200

1

1980

2004

Large Canadian E&P companies1995 vs. 2004

• AEC• Anderson• Canadian

Natural• Conwest• Crestar• Gulf Canada• Home Oil• Husky• Nexen

• Norcen

• Pan Canadian

• Poco

• Ranger

• Renaissance

• Talisman

• Tarragon

• Wascana

•Canadian Natural

•Husky

•Nexen

•EnCana

•Talisman

Small & Mid-Cap Canadian E&Ps 1995 vs. 2004

• Amber• Archer• Barrington• Baytex• Beau Canada• Berkley• Blue Range• Bonavista• Cabre• Canadian 88• Cimarron• Chauvco• CS Resources• Dorset• ELAN• Elk Point• Encal• Genesis• Maxx• Morgan• Morrison• Newport

• Northrock• Northstar• Numac• Pacalta• PanEast• Paramount• Penn West• Petromet• Pinnacle• Remington• Rigel• Rio Alto• Sceptre• Stampeder• Summit• Tri-Link• Ulster• Vermilion

•Baytex Energy Trust

•Bonavista Energy Trust

•Enerplus Resources

•Espirit Exploration

•Freehold Royalty Trust

•NAL O&G Trust

•Paramount Energy Trust

•Pengrowth Energy Trust

•Petrofund Energy Trust

•Penn West Energy Trust

•Progress Energy

•Ultima Energy Trust

•Vermilion Energy Trust

World Crude Oil Production

Source: Degoyler & Macnaughton

South America

Europe (including F.S.U.)

Far East

Africa

Middle East

North America

Million Barrels per day7065

55

60

504540353025201510 5

01945 1950 1955 1960 19951970 1975 1980 1985 19901965

Imports of LNG

0

50

100

150

200

250

300

350

400

450

500

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

Imports of LNG 2004

0

50

100

150

200

250

300

350

400

450

500

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

What a Year for Energy – 2003!

• Natural Gas $4.41 Mcf

+71%

Oil Prices Up $4/Bbl to $27

World Production of JSH Oils climbed 5% to 11.3 Billion BOEs

John S. Herold, Inc.

Is The Best!

2004 Implied Values by Region


$1.50

$4.81

$6.98

$9.25$7.12

$9.66

$14.92

$16.56

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

Canada GOMOffshore

Gulf CoastOnshore

Mid-Continent

RockyMountains

Appalachia North Sea OtherWorldwide

US$/boe

2001-2003 Spending Changes Within Regions

(18%)

20%

63% 62%

13%

(30%)

4%

(40%)

(20%)

0%

20%

40%

60%

80%

Worldwide United States Canada Europe Africa & MiddleEast

Asia-Pacific South & CentralAmerica

Capital Flowing out of Mature Regions

Capital flowing to areas with higher returns

United States

Canada

South & Central America

Africa & Middle East

Asia-Pacific

Europe

U.S. Canada

So./Central America Africa/Middle East

Asia-

Europe

0% 50% 100% 150% 200% 250% 300%

Reserve Replacement %

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

Rese

rve R

epla

cem

ent

Cost

, $/b

oe

3-Year Average RRC, 3-Yr Replacement

Bubble Size = Total Costs Incurred Bubble with no Fill = 2001 values Bubble with Fill = 2002 values

SuperMajors Shun U.S. UpstreamPlowback 40-50% of 2003E CashFlow

$6,500

$5,500

$4,500 $4,500

$3,950

$2,218$1,700 $1,600

61.0

%

40.0

%

38.0

%

36.0

%

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

BP ExxonMobil ChevronTexaco Shell

$ M

illi

on

s

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

E&P CashFlow Capital & Exploratory Expenditure % Reinvested

Source: John S. Herold, Inc. data and analysis

Sustainable Growth?

0

500

1000

1500

2000

2500

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

Gas Reserves/Well for Super-Integrateds*Gas Reserves/Well for All Integrateds*Gas Reserves/Well for All Sampled Companies

Private Equity Capital is Plentiful

• Natural Gas Partners• EnCap Investments• Yorktown Partners• First Reserve Group• Spectrum• Quantum• Lyme Rock Partners

• Riverstone Holdings• Harvard• Yale Investments• Warburg Pincus• JP Morgan Partners• GE Structured Finance• Lehman Brothers

Independent E & P IPOs1992-2003

0

2

4

6

8

10

12

14

16

18

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003

BurlingtonResources

Chesapeake

Clayton Williams

Cross Timbers

General Atlantic

Louis Dreyfus

Newfield Expl.

Patterson Energy

Stone Energy

Torch Energy

United Meridian

Williams

Basin Expl.

Cross Timbers RT

HS Resource

St. MaryLand

Dominion Resources/ Blk.Warrior

Flores & Rucks

Hugoton

Tatham Offshore

Transtexas Gas

Vastar

CEC Resources

DLB Oil & Gas

Forcenergy

Belco Oil & Gas

Cavell Energy

Compton Petr.

Costilla Energy

Energy Africa

Houston Expl.

Monterey Res.

Offshore Energy

Petroleum Securities Australia

Rutherford-Moran

Tap Oil NL

Titan Exploration

ATP

Black Rock Oil

CNOOC

Eastern Star Gas

Encore

Acqus

Essential Petroleum

GMX Resources

Heritage Resources

Anglo Siberian

Eurosov Energy

Miller Exp.

Desire Petroleum

Beta Oil & Gas

Hugoton RT

Energy Partners

Westport Resources

DevX

Western Oil Sands

China Petroleum &

Chemical

Arrow Energy

PetroChina

Energy Partners

Westport Resources

DevX

Western Oil Sands

China Petroleum & Chemical

Arrow Energy

PetroChina

Petrobras

Apexindo Pratama

Bounty O&G

Cooper Energy

Regal Petroleum

Sunshine Gas

Faroe

Petroleum

Quit Complaining – Gas is Cheap!

Consumer Cost of Gasoline per Mile Traveled

0

2

4

6

8

10

12

14

16

1936

1945

1955

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

"200

2" C

ost

in C

ents

per

Mile

Source : EIA, EPA and JSH Analysis

Avg. Cost / Mile: 1936-2002

= $0.09 centsApril 2004 = $0.08 cents

How about 85.9 cents per gallon?

Relative Prices per 42-Gallon Barrel

Evian® Water

$28.03 $54.14 $189.90 $1,105.44

G asolineC rude O il E vian® W ater B en & Jerry’s“C hunky

M onkey”®

R elative Prices per 42-G allon B arrel

$28.03 $54.14 $189.90 $1,105.44

G asolineC rude O il Evian® W ater Ben & Jerry’s“C hunky

M onkey”®

Relative Prices per 42-G allon Barrel

Ben & Jerry’s“Chunky Monkey”®

$28.03 $54.14 $189.90 $1,105 .44


M onkey”®

R elative P rices per 42-G allon B arrel

Crude Oil

$41.38 $28.03 $54.14 $189.90 $1,105.44


M onkey”®

R elative Prices per 42-G allon B arrel

Gasoline

$79.80

$ 7 8 .7 3 $ 1 5 0 .3 6 $ 2 ,6 6 1 .1 2 $ 6 1 5 ,2 4 0 .9 5

M i l kC o c a C o l a ® T a b a s c o S a u c e ® F l o n a s e ®

Coca Cola® Milk

$ 7 8 .7 3 $ 1 5 0 .3 6 $ 2 ,6 6 1 .1 2 $ 6 1 5 ,2 4 0 .9 5


Tabasco Sauce®

$ 7 8 .7 3 $ 1 5 0 .3 6 $ 2 ,6 6 1 .1 2 $ 6 1 5 ,2 4 0 .9 5


Flonase®

$ 7 8 .7 3 $ 1 5 0 .3 6 $ 2 ,6 6 1 .1 2 $ 6 1 5 ,2 4 0 .9 5


•Relative Prices per 42-Gallon Barrel*

Recommendation:It’s a Marathon & not a Sprint

“Great success is possible, even in a hostile environment, even in a mature industry”

Willam K. Hall

“Failure is never fatal, and success is never final.” Joe B. Foster, Newfield Exploration

Anderson Exploration Stock Price vs. JSH ANW

0

10

20

30

40

Sep

-91

Sep

-92

Sep

-93

Sep

-94

Sep

-95

Sep

-96

Sep

-97

Sep

-98

Sep

-99

Sep

-00

Sep

-01

C$/

Sh

are

Top Winning Strategiesof Successful E&P Companies

• Focus Wins!

• Measure and Model

• Treasure Innovation

• Nurture Risk Taking

• Understand where we are on the Macro Energy Cycle

• Acquire/Divest like Warren Buffet

• Stick with a Good Strategy

• Don’t Confuse Brains with a Bull Market

• Balance Development and Exploration

• Use Leverage Judiciously

Barrett Resources Corp. Stock Price vs. JSH ANW

0

10

20

30

40

50

60

70

80S

ep

-92

Sep

-93

Sep

-94

Sep

-95

Sep

-96

Sep

-97

Sep

-98

Sep

-99

Sep

-00

Sep

-01

$/S

hare

Royal Dutch/Shell Experience

Copyright © 2004 John S. Herold

Relative Performance

90%

110%

130%

150%8/4

/2003

9/1

5/2

003

10/2

7/2

003

12/8

/2003

1/1

9/2

004

3/1

/2004

4/1

2/2

004

5/2

4/2

004

7/5

/2004

8/1

6/2

004

9/2

7/2

004

11/8

/2004

BP RD XOM

Reserve Announcement

01/08/04

March was horrible for

performanceBy 03/01/04 had made

almost all back

Price per BOE(6:1) (50/50)

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$30.00

$35.00

$40.00

Ja

n-9

7

Ja

n-9

8

Ja

n-9

9

Ja

n-0

0

Ja

n-0

1

Ja

n-0

2

Ja

n-0

3

Ja

n-0

4

Month

% C

han

ge

Oil annual avg. Gas annual avg. BOE annual avg. BOE 7-yr. Avg.

The 7-yr. avg. per BOE was $22.16 on a 50/50 split

Prices for ’01-’03 averaged $25.12 – up 56% from ’97-’99 average of $16.06

Strip @ 7/1/04

$37.76

1997 1998 1999 2000 2001 2002 2003

$22

arthur l smith

Documents