Post on 15-Jan-2016
April 2004April 2004
Certain statements in this presentation Certain statements in this presentation regarding future expectations, plans for regarding future expectations, plans for drilling, estimates of oil and gas reserves drilling, estimates of oil and gas reserves and production and pricing may be and production and pricing may be regarded as "forward looking regarded as "forward looking statements" within the meaning of the statements" within the meaning of the Securities Litigation Reform Act. They Securities Litigation Reform Act. They are subject to various risks, such as are subject to various risks, such as operating hazards, drilling risks, and the operating hazards, drilling risks, and the inherent uncertainties in interpreting inherent uncertainties in interpreting engineering data relating to the engineering data relating to the underground accumulations of oil and underground accumulations of oil and gas. Actual results may vary materially.gas. Actual results may vary materially.
NYSE: CRKNYSE: CRK
CompanyCompanyOverviewOverview
Investment ConsiderationsInvestment Considerations
Consistent growth in reserves and productionConsistent growth in reserves and production Successful acquisition program (average cost Successful acquisition program (average cost
of 83¢ per Mcfe)of 83¢ per Mcfe) Successful exploration program fueled Successful exploration program fueled
growth in the last two yearsgrowth in the last two years
High quality, geographically balanced asset baseHigh quality, geographically balanced asset base
Low cost operations and high cash marginsLow cost operations and high cash margins
Improved balance sheetImproved balance sheet
Experienced managementExperienced management
Major PropertiesMajor Properties
Glick Glick
GilmerGilmer BlockerBlocker
Box Box ChurchChurch
LongwooLongwoodd
LoganspoLogansportrtSugar CreekSugar Creek
New Albany Shale New Albany Shale GasGas
Double A Double A WellsWells
North MarkhamNorth Markham
Vermilion/Vermilion/SMISMI
LopenoLopenoJC MartinJC Martin
Ship Ship ShoalShoal
South Pelto/South Pelto/ South Timbalier South Timbalier
Main Main PassPass
WaskomWaskom
BeckvilleBeckville
Gulf of Mexico
LisboLisbonn
East White PointEast White Point
High qualityHigh qualityreserve basereserve base
617 Bcfe617 Bcfe81% natural gas81% natural gas
67% proved developed67% proved developed14 year reserve life14 year reserve life
East Texas / North Louisiana RegionEast Texas / North Louisiana Region
East Texas / North LaEast Texas / North LaReserves: 175 Bcfe - 28%Reserves: 175 Bcfe - 28%
Daily Production: 31 Mmcfe – 25% Daily Production: 31 Mmcfe – 25%
GilmerGilmer BlockerBlockerWaskomWaskom LongwooLongwoo
dd
LisbonLisbon
LoganspLogansportort
BeckvilleBeckville
Texas Louisiana
East Texas / North Louisiana RegionEast Texas / North Louisiana Region
Long-lived natural gas propertiesLong-lived natural gas properties Successful development drilling Successful development drilling
program since 1995program since 1995 Drilled 146 wells with 92% success Drilled 146 wells with 92% success
raterate
Spent $6 million to drill five wells Spent $6 million to drill five wells in 2003 in 2003 4 out of 5 wells successful4 out of 5 wells successful 1.7 Mmcfe per day average IP rate1.7 Mmcfe per day average IP rate
Similar Budget in 2004 of $7 million to Similar Budget in 2004 of $7 million to drill 6 wellsdrill 6 wells
Southeast Texas RegionSoutheast Texas Region
Southeast TexasSoutheast Texas Reserves: 127 Bcfe - 21%Reserves: 127 Bcfe - 21%
Daily Production: 33 Mmcfe – 27%Daily Production: 33 Mmcfe – 27%
Sugar CreekSugar Creek
Double A Double A WellsWells
Texas
Double A Wells FieldDouble A Wells Field
Robin ProspectRobin Prospect
Polk County, TexasPolk County, Texas Successfully redeveloped Successfully redeveloped
field from 1999 to 2001field from 1999 to 2001 Began redevelopment and Began redevelopment and
exploratory program in exploratory program in 1999 based on 3-D seismic 1999 based on 3-D seismic datadata
Spent $50 million to Spent $50 million to acquire additional acreage acquire additional acreage and drill 22 wellsand drill 22 wells
19 of the 22 wells drilled in 19 of the 22 wells drilled in program were successful program were successful (86%)(86%)
Successful wells had an 6.6 Successful wells had an 6.6 Mmcfe per day average IP Mmcfe per day average IP raterate
In 2002 and 2003 we spent In 2002 and 2003 we spent $13 million to extend the $13 million to extend the field to the South with the field to the South with the Hamman discoveryHamman discovery
2004 budget of $20 million 2004 budget of $20 million to drill six wells to drill six wells
Hamman #1Hamman #1
New 3-D New 3-D SeismicSeismic
3-D Seismic3-D Seismic
South Texas RegionSouth Texas Region
South TexasSouth Texas Reserves: 47 Bcfe - 8%Reserves: 47 Bcfe - 8%
Daily Production: 10 Mmcfe – 8%Daily Production: 10 Mmcfe – 8%
Successful exploration Successful exploration program in 2003program in 2003 Spent $15 million to Spent $15 million to
drill 13 wells drill 13 wells 9 out of 13 wells 9 out of 13 wells
successfulsuccessful 7.4 Mmcfe per day 7.4 Mmcfe per day
average IP rateaverage IP rateNorth North MarkhamMarkham
LopenoLopeno
JC MartinJC Martin
Texas
DIMMITDIMMIT LA LA SALLESALLE
McMULLENMcMULLEN
WEBBWEBB DUVALDUVAL
LIVE LIVE OAKOAK
BEEBEE
GOLIADGOLIAD
REFUGIOREFUGIO
NUECESNUECES
JIMJIM
WELLSWELLS
SANSAN
PATRICIOPATRICIO
ZAPATAZAPATA JIM JIM HOGGHOGG
BROOKSBROOKS
KLEBERGKLEBERG
KENEDYKENEDY
STARRSTARR
HIDALGOHIDALGO
WILLACYWILLACY
CAMERONCAMERON
ARANSASARANSAS
VICTORIAVICTORIA
JACKSONJACKSON
CALHOUNCALHOUN
MATAGORDAMATAGORDA
ARMSTRONG RANCH (40%)
4 Wells
BALL RANCH (20%)
5 Wells
2004 Budget -2004 Budget - $15 million$15 million 15 wells15 wells
South Texas Exploration ProgramSouth Texas Exploration Program
Gulf of Mexico RegionGulf of Mexico Region
Gulf of MexicoGulf of Mexico Reserves: 216 Bcfe - 35%Reserves: 216 Bcfe - 35%
Daily Production: 41 Mmcfe – 34%Daily Production: 41 Mmcfe – 34%
Spent $60 Spent $60 million to drill million to drill 18 offshore 18 offshore wells in 2003wells in 2003 All wells All wells
successfulsuccessful
Ship Shoal
South Pelto
Main Pass
South Timbalier
Louisiana
VermilionSouth Marsh Island
Gulf of Mexico RegionGulf of Mexico Region
99
107106
56
166
98
109
146
97
110
121
134
96
111
158
120
135
95
112
119
136
113
118
66
69
114
117
67
68
5
116
1
74
21 22
9
102101
96
110
95
70
25
1514
11
516
34
17 18 222019
32 31 30 29 28
50 46
86
South PeltoSouth Pelto
South TimbalierSouth Timbalier
2004 Budget of $67 million2004 Budget of $67 million 24 wells24 wells 5 deep shelf wells5 deep shelf wells
Ship ShoalShip Shoal
1996
123
Area Mmcfe/day
(# of wells) Gross Net April May June July
SP 22 (3)SP 22 (3) 4242 1010
SP 25 (2)SP 25 (2) 2727 55
V 122 (3)V 122 (3) 1616 55
SS 109/110 (2)SS 109/110 (2) 1111 33
V 51 (3)V 51 (3) 1515 44
Total (13)Total (13) 111111 2727 2020 77
Facilities InstallationFacilities Installation ProducingProducing
Gulf Wells Connection TimingGulf Wells Connection Timing
Offshore Prospect InventoryOffshore Prospect Inventory
BlocksBlocks AcreageAcreage
# of # of
ProspectsProspects
ReserveReserve
PotentialPotential(Bcfe)(Bcfe)
Working Working InterestInterest
South TimbalierSouth Timbalier 16, 17, 18, 20, 22, 16, 17, 18, 20, 22, 28, 29, 31, 32, 74,28, 29, 31, 32, 74,
86, 95, 96, 101, 86, 95, 96, 101,
102, 110, 123102, 110, 123
61,216 61,216
2121 699699 33% to 33% to 40%40%
Ship ShoalShip Shoal 56, 95, 96, 106, 11156, 95, 96, 106, 111
116, 117, 118, 120, 116, 117, 118, 120, 121, 135, 136, 158121, 135, 136, 158
57,39157,391 2222 330330 33% to 33% to 40%40%
South PeltoSouth Pelto 14, 19, 2114, 19, 21 12,50012,500 44 6666 25% to 25% to 40%40%
Eugene IslandEugene Island 17, 16617, 166 6,4326,432 33 109109 40%40%
OtherOther BM 4, EC 123,BM 4, EC 123,
V 127, WD 56V 127, WD 56 11,29411,294 55 5858 40%40%
148,833148,833 5555 1,2621,262
FinancialFinancialOverviewOverview
2003 Results2003 Results
Production (Bcfe)
in millions, except production
Oil & Gas Sales
Cash Flow Net Income
Capital ExpendituresCapital Expenditures
in millions
Acquisitions
Development
Development Related
Exploration
2003 2004
$91
$110
Sensitivity to Gas PricesSensitivity to Gas Prices
NYMEX Gas Price $3.50 $4.00 $4.50 $5.00 $5.50
2004E Cash Flow From Operations $120 $139 $157 $175 $193
Less: 2004E Capex (110) (110) (110) (110) (110)
2004E Free Cash Flow $10 $29 $47 $65 $83
$4.32
$4.62$4.86
$5.84
$3.27$3.10
$2.91$3.12
$3.43
$3.61 $3.70 $3.76 $3.93$3.71
$3.16
$4.30
CO
MS
TOC
K P
F X W
CO
MS
TOC
K C P F H P P D V R S M N
NYMEX Break Even PriceNYMEX Break Even Price
Average = $3.91 Average = $3.91 Average = $3.91 Average = $3.91
Break Even Price = (Lifting + G&A + Finding + Interest) / Average Realization as a % of NYMEX
Based on Actual 2003 Costs and Price Realizations and 3 Year Average Finding Costs
CapitalizationCapitalization
62%62%
$592$592
226226
$366$366
220220
$146$146
As of As of
Dec 31, Dec 31, 20022002
51%51% Debt / Total CapitalizationDebt / Total Capitalization
$596$596 Total CapitalizationTotal Capitalization
290290Stockholders’ EquityStockholders’ Equity
$306$306 Total DebtTotal Debt
220220 11 1/4% Senior Notes11 1/4% Senior Notes
$86$86 Bank Credit Facility Bank Credit Facility ($260MM borrowing base @ 12/31/03)($260MM borrowing base @ 12/31/03)
Total Debt:Total Debt:
As of As of
Dec 31, Dec 31, 20032003
In millions
Improved CapitalizationImproved Capitalization
Record Setting ProfitsRecord Setting Profits
Debt Reduction of $60MMDebt Reduction of $60MM
Pro Forma Debt StructurePro Forma Debt Structure
6868¢
$30 $30
$366$366
220220
$86$86
20032003
4343¢Interest Expense per McfeInterest Expense per Mcfe
$19$19Interest ExpenseInterest Expense
$327$327 Total DebtTotal Debt
175175 Senior NotesSenior Notes
$152$152 Bank Credit FacilityBank Credit Facility
Total Debt:Total Debt:
Pro FormaPro Forma
20032003In millions except
per unit data
36% Savings36% Savings
Coupon Reduced to 6 7/8 %Coupon Reduced to 6 7/8 %
Borrowing Base of $300MMBorrowing Base of $300MM
Average life of debt extended from 2.4 to 5.9 years