IPAA/TIPRO September Lunch Dan Pickering September 13, 2006 The Pause That Refreshes

2 Agenda Commodities E&P Industry Stocks

3 Who Is Pickering Energy Partners? Houston-based Energy Research 24 Employees Clients Are:  Institutional Investors  Companies Seeking Capital Wall Street via the Galleria

4 Overview Oil Stays Strong Gas Worse Before Better U.S. Activity Hiccup Cycle Has Legs Into 2008 E&P Consolidation Continues Service Cost Moderation Stocks Volatile But Cheap

5 We Are In A Boom Year

6 Viva la Crude! NYMEX Futures, Crude Oil

7 Oil Thoughts/Outlook Scarce, But Not Peak Demand Is Key Factor Demand Reacts To Price Recent Correction Not Armageddon $60/bbl Feels Realistic

8 OPEC Excess Capacity

9 Demand Is THE Cycle Killer

10 No Website For Cheap Milk Or Whiskey! Consumers Care About Oil Price Wal-Mart, Starbucks, Detroit Blame Gasoline U.S. Mogas Demand Only +0.8% In 2006 Asia More Resilient, But Not Impervious Watch Demand!

11 NYMEX Futures…Natural Gas

12 Gas Thoughts/Outlook Storage At Record Levels Supply Growing Price Volatility Pain Before Gain Treadmill Running Fast

13 Storage Levels High

14 Supply/Demand Out Of Kilter

15 The Futures Can Lie

16 The Treadmill Churns Diminishing Productivity Per Well

17 Not All Wells Are Equal

18 E&P Industry Issues Resource Plays Service Availability Consolidation

19 Resource Plays “If You Don’t Have One….Get One!” Technology Driving New Areas Learning Curves Are Big Not Immune To Gas Prices Revenge Of The Nerds!

20 Rising Prices, Rising Costs

21 Relief Is On The Way 350 New Rigs By YE 2007 Pressure Pumping Horsepower +25% Coiled Tubing +20% 2006 Oil Service Capex +60% y/y

22 Asset Transactions

23 Basin Specific Deals

24 Public Values Look Intriguing $3+ Valuation, $/mcf

25 Consolidation APC Deal Opened Eyes Assets vs. Companies Natural Gas Sentiment Could Create Lull Too Early For Majors One Big Deal Topples Dominoes

26 Conclusions Volatile Commodities Fickle Wall Street Big Cash Flows Nothing Goes Straight Up Still In An Upcycle

27 Pickering Energy Partners, Inc. is a leading institutional brokerage firm focusing on energy-sector research for institutional investors. The Company, a NASD broker-dealer, develops investment ideas for our clients by actively covering the E&P and oil service industries, while monitoring energy subsectors such as coal, nuclear, tankers and alternative energy. In addition to research activities, Pickering Energy has executed share repurchases and helped energy companies raise equity capital via co-manager and syndicate positions in numerous energy offerings including CPX, HERO, WARR, BAS, XCO. Our research is provided to institutional clients via published reports, concise s, and through direct interaction with our highly rated analysts and unique, specialized sales force. Established in February 2004, Pickering Energy Partners has 24 employees working from our main Houston office and two satellite offices in Denver, Colorado and New Orleans, Louisiana. Contact Us Houston: Denver: New Orleans: