A View from Wall Street Independent Petroleum Association of America Private Capital Conference

1. A View from Wall Street Independent Petroleum Association of America Private Capital Conference April 19, 2004

2. Background • Formed in 1981 • Oil & Gas Focus Since 1996 • Research Focus • Full Service Investment Bank

5. Equity Research Focus • Exploration & Production • Market Capitalization of >$500m • Focus on Core Research Thesis

6. SMALL/MID CAP BUSINESS CYCLE MICRO-CAP BUSINESS CYCLE Identify Investment Opportunity Management Team Exits and Starts Over Maintain Growth Rates Niche Business Strategy Accumulate Positions Acquire Assets/ Companies Sale/Exit at Premium Sale/Exit at Premium Development of Value Recognition of Value Exit Strategy = Above Average Returns Further Develop Niche Selective Selling

7. Review of 2003 • Stock Market Performance • Commodity Prices • Drilling Rig Count • Acquisition/Merger Market • Share Price Performance

8. Commodity Prices

9. Drilling Rig Count

10. Price Paid per Mcfe

11. Peer Group Performance & Index

12. 2004 Summary Outlook • Larger Market Exposure • Solid Fundamental Outlook • Increasing Prices for Acquisitions • Ample Access to Capital • Niche Value = Success

13. Capital Formation - Private • Evolution of this Aspect of Capital Markets • Capital Growth for all size of E&P issues • Relative Quick Execution • 5 to 45 Days

14. Private Placement(s)

15. Typical Deal Terms • Common Stock Transactions • Discount to Market Price • 10 – 20% Discount • Warrant Coverage • 0 – 100% Coverage • Varying Exercise Price & Term

16. Typical Deal Terms • Preferred Stock • Typical Premium to Market • 5 – 25% • Multiple Options – Bells & Whistles • Warrant(s) sometimes included

17. Market Evolution

18. Breakdown of 2003/04 Transactions

19. Breakdown of 2003/04 Transactions

20. Breakdown of 2003/04 Transactions

21. Quality vs. Size

22. Visible Trends • Access to Capital across the Spectrum • Smaller Companies – Smaller Deals • Continue evolution of Business Cycles – Fewer Issues at Higher Tiers

23. Use of Proceeds

24. Visible Trends • Investors Desire Upside Development • Restructuring Balance Sheet in an Attractive Interest Rate Market • Acquisitions @ Higher Price Matrix’s • General Corporate Purposes – (Large Degree of “Story”)

25. Conclusion • Ample Capital in the Public Markets through Private Placements • Use of Proceeds is not as Critical as in early 2003 • Quality Issuer = Terms & Size