The Barnett Shale

And Other Shale Dreams

Nissa Darbonne,
Executive Editor,
Oil and Gas Investor,
May 17, 2006
IHS Energy User Forum
Economics of Some Barnett Shale Asset Acquisitions, 2003-06*
Date Buyer Seller Purchase Price Proved Production $/Mcfe $MMcfe/d % Gas
($MM) Reserv (MM
es cfe/d)
(Bcfe)
6-Apr Devon Energy Chief Oil & $2,200 617 55 $3.57 $40,000 100%
Corp. Gas

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

5-Mar Dune Energy Voyager $68.30 27 8.5 $2.53 $8,042 NA

Inc. Partner
s Ltd.
5-Jan XTO Energy Antero $685.00 440 60 $1.56 $11,417 100%
Inc. Resour
ces
4-Nov Chesapeake Hallwood $277.00 135 25 $2.05 $11,080 100%
Energy Energy
4-Feb XTO Energy Undisclosed $200.00 154 25 $1.30 $7,999 99%
Inc.
3-Feb Progress Fuels Republic $148.00 195 30.1 $0.76 $4,911 100%
Corp. Energy
et al.
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.
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.
Comparative Barnett Economics*
Core Vertical Tier 1 Horizontal Tier II Horizontal

Peak Monthly 650 1,520 900

Production
(Mcf/d)

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
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 $0.90 $0.79-$1.38
($/Mcfe)
* 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.
Conventional Play Mean Expected Case Parameters and IRRs

Conventional Plays Conventional Shelf Deep Shelf

Open Platform Open Water Platform
Water
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
Shale Play Mean Expected Case Parameters and IRRs

Shale Plays Barnett/Fort Fayetteville Woodford

Worth Basin

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
The Barnett Shale
And Other Shale Dreams

Nissa Darbonne,
Executive Editor,
Oil and Gas Investor,
May 17, 2006
IHS Energy User Forum