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IPPA Private Capital Conference Houston, Texas January 19, 2006

PETRIE PARKMAN & Co. IPPA Private Capital Conference Houston, Texas January 19, 2006. Mike Bock, CFA Principal and Director of Corporate Finance Petrie Parkman & Co. . Petrie Parkman Recent Experience – IPO’s 2000-2006 YTD. E&P Equity Market Performance . IPO Issuance Volume 2000 - 2005 .

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IPPA Private Capital Conference Houston, Texas January 19, 2006

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  1. PETRIEPARKMAN & Co. IPPA Private Capital ConferenceHouston, TexasJanuary 19, 2006 Mike Bock, CFA Principal and Director of Corporate Finance Petrie Parkman & Co.

  2. Petrie Parkman Recent Experience – IPO’s 2000-2006 YTD

  3. E&P Equity Market Performance

  4. IPO Issuance Volume 2000 - 2005 3 deals 2 deals 1 deal 2 deals 3 deals 0 deals

  5. E&P IPO’s by Class 2001 Encore GMX Res ATP Oil & Gas 2002 None 2003 Whiting 2000 Westport Res Energy Prtnrs Mariner Stroud Rosetta CNX Gas 2006 Linn Energy 2004 Bill Barrett Warren Res Atlas America 2005 Bois d’Arc W&T Offshore

  6. Capital Market Environment- Recent IPO’s • Bois d’ Arc 5/5/05 • 13.5 million shares priced at $13.00 • Use of proceeds: Repay outstanding debt to Comstock • Lead managed by Raymond James, Co-managed by Petrie Parkman and others % Change Since Pricing

  7. Capital Market Environment- Recent IPO’s • W&T Offshore- 1/27/05 • 12.66 million shares priced at $19.00 • Use of proceeds: Secondary sale of shares by management and Jefferies & Company • Lead managed by Jefferies and Lehman Brothers % Change Since Pricing

  8. Capital Market Environment- Recent IPO’s Bill Barrett Corporation- 12/9/04 • 14.95 million shares at $25.00 • Use of proceeds: Repay indebtedness in connection with acquisitions, in order to free up availability under credit facility to fund capex and future acquisitions • Lead managed by Goldman Sachs, Co-managed by Petrie Parkman and others % Change Since Pricing

  9. Capital Market Environment- Recent IPO’s • Warren Resources- 12/17/04 • 9.5 million shares priced at $7.50 • Use of proceeds: To accelerate and fund exploration and development activities in the Atlantic and Pacific Rim projects of the Washakie Basin, as well as in the Willmington unit and Powder River Basin • Lead managed by Keybanc Capital Markets % Change Since Pricing

  10. Exit Alternatives: IPO vs. Sale of Assets

  11. Exit Alternatives: IPO vs. Sale of Assets

  12. Exit Alternatives: IPO vs. Sale of Assets

  13. Exit Alternatives: IPO vs. Sale of Assets

  14. Exit Alternatives: IPO vs. 144A 144A IPO Pros- Quicker financing, avoids SEC delays Pros- Sometimes patience pays Market Risk Cons- Potential to bust general solicitation rules Cons- SEC Delays Valuation Pros- Better if market declines Pros- Lesser discount / Better valuation Cons- 20% discount versus typical 5-15% on IPO’s Cons- Worse if market declines Research Coverage Pros- Fewer analysts to deal with Pros- More coverage Cons- Lesser coverage Cons- More analysts

  15. Basic Requirements for an Institutionally-Embraced IPO • Offering at least $100 million • Market capitalization of at least $250 million • SARBOX compliant, notably: • -No loans to management • -Independent board of directors • Growth potential • Use of proceeds • Management team with desire to run a public company

  16. Market Preferences • Offering of at least $200 million • Market capitalization of at least $1 billion • Geographic and strategic focus • Resource-oriented plays • Solid future organic growth potential combined with company-maker exposure • Well-articulated use of proceeds • Seasoned management with public experience

  17. The Hidden Costs of Public Market Capital • Regulatory compliance- a drain on financial and human resources • Sarbanes Oxley • SEC filings and reviews • Trading exchange regulations • Short-term demands of public markets can influence executive decision-making • Increased personal scrutiny of and liability for executives • Increased costs of audit and reservoir engineering services

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