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

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

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

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

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

Commodity Prices

Drilling Rig Count

Price Paid per Mcfe

Peer Group Performance & Index

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

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

Private Placement(s)

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

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

Market Evolution

Breakdown of 2003/04 Transactions Transactions NYSE – Common = 2$73.6 million NYSE – Non – Common = 1$15.0 million AMEX – Common = 9$101.7 million Amex – Non-Common = 4$37.0 million

Breakdown of 2003/04 Transactions Transactions NASDAQ/NMS – Common = 8$95.8 million NASDAQ/NMS – Non-Common = 8$88.7 million NASDAQ/Small-Cap – Common = 5$37.8 million NASDAQ/Small-Cap – Non-Common = 7$59.4 million

Breakdown of 2003/04 Transactions Transactions OTCBB – Common = 50$322.0 million OTCBB – Non-Common = 16$149.0 million

Quality vs. Size

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

Use of Proceeds

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

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