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The Barnett ShaleAnd Other Shale Dreams

Nissa Darbonne,

Executive Editor,

Oil and Gas Investor,

May 17, 2006

IHS Energy User Forum

8/8/2019 Shale vs Conventional IRR F&D COMP

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Economics of Some Barnett Shale Asset Acquisitions, 2003-06*

Date Buyer Seller Purchase Price($MM)

ProvedReserv

es

(Bcfe)

Production(MMcfe/d)

$/Mcfe $MMcfe/d % Gas

6-Apr Devon Energy

Corp.

Chief Oil &

Gas

$2,200 617 55 $3.57 $40,000 100%

5-Aug Undisclosed Undisclosed $250.00 40.4 14 $6.19 $17,857 100%

5-Mar Dune Energy

Inc.

Voyager

Partner

s Ltd.

$68.30 27 8.5 $2.53 $8,042 NA

5-Jan XTO Energy

Inc.

Antero

Resour

ces

$685.00 440 60 $1.56 $11,417 100%

4-Nov Chesapeake

Energy

Hallwood

Energy

$277.00 135 25 $2.05 $11,080 100%

4-Feb XTO Energy

Inc.

Undisclosed $200.00 154 25 $1.30 $7,999 99%

3-Feb Progress FuelsCorp. RepublicEnergy

et al.

$148.00 195 30.1 $0.76 $4,911 100%

Max $685.00 440 60 $6.19 $17,857 100%

Min $68.30 27 8.5 $0.76 $4,911 99%

* As of mid-May 2006.

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Publicly Held Barnett Players*

Company Barnett Production (MMcf/d)

Devon Energy Corp. (excluding Chief) 600

Devon Energy Corp. (including Chief) 655

XTO Energy Inc. 103

ConocoPhillips (Burlington Resources) 80

EnCana Corp. 70

EOG Resources Inc. 70

Chesapeake Energy Corp. 50

Others: Denbury Resources Inc., Quicksilver Resources Inc., Carrizo Oil & Gas Inc., Infinity Energy Resources Inc., Parallel

Petroleum Corp., Westside Energy Corp.

Source: Pickering Energy Partners Inc., Houston *As of mid-Oct 2005, except Devon figures, which are as of April 2006.

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Comparative Barnett Economics*

Core Vertical Tier 1 Horizontal Tier II Horizontal

Peak Monthly

Production

(Mcf/d)

650 1,520 900

Year 1 Decline 61% 53% 53%

EUR (MMcf) 733 2,356 1,395

Well Cost ($MM) $1.00 $2.00 $1.50

F&D Cost ($/Mcfe) $1.71 $1.06 $1.34

Rate of Return/Gas Price

@ $5 12% 73% 38%

@ $6 39% 113% 70%

@ $7 65% 153% 101%* For good wells. Source: Pickering Energy Partners Inc., Houston, mid-October 2005

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EOG Resources Inc. Barnett Shale Economic Model*

Johnson County Other Counties(Mix)

Direct Well Cost $1.8MM $1.1MM

Potential Locations 750 2,000

Net Reserves/Well 2.0 Bcf 0.8-1.4 Bcf

Net Bcf Potential 1.1-1.8 Tcf 1.6-2.8 Tcf

AFIT ROR % >100% >70%

Direct Finding Cost($/Mcfe)

$0.90 $0.79-$1.38

* Based on original 1,000-foot spacing; Oct. 26, 2005, 3-year strip

and $5 flat thereafter; $0.55/MMBtu differential from Henry Hub.Source: EOG Resources Inc.

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Conventional Play Mean Expected Case Parameters and IRRs

Conventional Plays Conventional Shelf Deep Shelf Open

Water

Platform Open Water Platform

F&D Cost ($Mcf) $3.17 $2.74 $2.95 $2.79

Reserves (Bcf/well 5.7 5.7 18 18

Initial Rate (MMcf/d) 4 4 15 15

Project IRR Sensitivity to Nymex @

$4.50/Mcf 6% 12% 9% 13%

$6.50 29% 40% 42% 48%

$8.50 55% 72% 80% 90%

Sources: Simmons & Co. International as per company reports, PetroDataSource, April 24, 2006

8/8/2019 Shale vs Conventional IRR F&D COMP

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Shale Play Mean Expected Case Parameters and IRRs

Shale Plays Barnett/FortWorth Basin

Fayetteville Woodford

F&D Cost ($Mcf) $1.20 $1.63 $1.78

Reserves (Bcf/well) 2.3 1.3 2.9

Initial Rate (MMcf/d) 2.5 1.4 2.5

Project IRR Sensitivity to Nymex @

$4.50/Mcf 14% 7% 6%

$6.50 31% 16% 15%

$8.50 55% 28% 26%Sources: Simmons & Co. International as per company reports, PetroDataSource, April 24, 2006

8/8/2019 Shale vs Conventional IRR F&D COMP

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The Barnett ShaleAnd Other Shale Dreams

Nissa Darbonne,

Executive Editor,

Oil and Gas Investor,

May 17, 2006

IHS Energy User Forum