1. ENCAP INVESTMENTS, L.P. IPAA Private Capital Conference D. Martin Phillips April 19, 2004

2. ENCAP INVESTMENTS, L.P. 2 EnCap Investments Privately owned investment firm Privately owned investment firm Leading provider of growth capital to the independent sector of the U.S. oil and gas industry since 1988 Leading provider of growth capital to the independent sector of the U.S. oil and gas industry since 1988 Exclusive focus on oil and gas industry (upstream and midstream) Exclusive focus on oil and gas industry (upstream and midstream) Currently investing 10 th institutional fund and 4 th private equity fund ($528 million) Currently investing 10 th institutional fund and 4 th private equity fund ($528 million) Targeting a new $700 million private equity fund to close in June 2004 Targeting a new $700 million private equity fund to close in June 2004 Overview

3. ENCAP INVESTMENTS, L.P. 3 PRIVATE EQUITY OVERVIEW

4. ENCAP INVESTMENTS, L.P. 4 Private Equity Privately negotiated equity capital utilized as an alternative to traditional financing sources Privately negotiated equity capital utilized as an alternative to traditional financing sources Primarily focused on corporate issuers (typically private) Primarily focused on corporate issuers (typically private) Frequently structured as preferred or common stock or some combination thereof Frequently structured as preferred or common stock or some combination thereof Seeks an annual rate of return of 20% or greater Seeks an annual rate of return of 20% or greater Function of the relative risk profile of the Issuer and place within the capital structure Function of the relative risk profile of the Issuer and place within the capital structure Three to seven year investment cycle Three to seven year investment cycle Illiquid Illiquid Overview

5. ENCAP INVESTMENTS, L.P. 5 Used to facilitate growth in connection with a pending property or corporate acquisition or a development opportunity Used to facilitate growth in connection with a pending property or corporate acquisition or a development opportunity Strategic “reloading” of the balance sheet to create dry powder for future growth Strategic “reloading” of the balance sheet to create dry powder for future growth Typically fills a capital void left by the debt markets (including bank, mezzanine, and bond markets) Typically fills a capital void left by the debt markets (including bank, mezzanine, and bond markets) Tapped by Issuers when public equity markets are not available Tapped by Issuers when public equity markets are not available Provides flexibility in structuring a deal Provides flexibility in structuring a deal Adds a knowledgeable financial partner Adds a knowledgeable financial partner When and Why is it used? When? Why? Private Equity for the E&P Industry

6. ENCAP INVESTMENTS, L.P. 6 Active Private Equity Providers First Reserve * First Reserve * (Houston; $500MM) (Houston; $500MM) Quantum Quantum (Houston; $300MM) (Houston; $300MM) Energy Trust Partners Energy Trust Partners (Dallas; $115MM) (Dallas; $115MM) Yorktown Yorktown (NYC; $585MM) (NYC; $585MM) Warburg Pincus * Warburg Pincus * (NYC; $750MM) (NYC; $750MM) GreenHill Capital GreenHill Capital (NYC; $100MM) (NYC; $100MM) EnCap Investments EnCap Investments (Houston; $528MM) (Houston; $528MM) CSFB Capital Partners * CSFB Capital Partners * (Houston; $750MM) (Houston; $750MM) Natural Gas Partners Natural Gas Partners (Dallas; $600MM) (Dallas; $600MM) Kayne Anderson Kayne Anderson (Houston; $225MM) (Houston; $225MM) Riverstone Holdings * Riverstone Holdings * (NYC; $500MM) (NYC; $500MM) Active Private Equity Providers Active Private Equity Providers to the E&P Industry * Denotes large Energy focused fund; amount listed is estimated portion designated for E&P Note: All fund sizes are estimates

7. ENCAP INVESTMENTS, L.P. 7 Private Equity Private Equity is a form of risk capital that is consistently available to support the growth of independents regardless of market conditions Private Equity is a form of risk capital that is consistently available to support the growth of independents regardless of market conditions Diverse sources of private equity provide opportunities to find a capital partner with a similar strategy and risk profile Diverse sources of private equity provide opportunities to find a capital partner with a similar strategy and risk profile Flexibility in structuring an investment vs. inflexibility and fickleness of public equity and debt capital markets Flexibility in structuring an investment vs. inflexibility and fickleness of public equity and debt capital markets Private equity providers remain hungry for deal flow. Private equity providers remain hungry for deal flow. Conclusions

8. ENCAP INVESTMENTS, L.P. 8 ENCAP INVESTMENTS, L.P. ENCAP INVESTMENTS, L.P.

9. ENCAP INVESTMENTS, L.P. 9 David Miller Partner Gary PetersenPartner Marty PhillipsPartner Bob ZorichPartner INVESTMENT STAFF Wynne Snoots Mng. Dir. Brent BechtolVice Pres. Jason DeLorenzoVice Pres. Mitch HovendickVice Pres. Jason McMahonVice Pres. Sean SmithVice Pres. Doug SwansonVice Pres. Jonathan ShepkoAssoc. Travis WinfreyAssoc. Stacy DurbinAnalyst ADMINISTRATIVE STAFF Bobby HaierCFO Donna WrightController Audrey White Sr. Acct. John Stricker Sr. Acct. PRINCIPALS Organization EnCap Investments Offices in Houston and Dallas Independent once again!

10. ENCAP INVESTMENTS, L.P. 10 EnCap Funds Management 10 institutional funds since 1988 10 institutional funds since 1988 Over $1.8 billion raised since inception Over $1.8 billion raised since inception 3 Producing Property Acquisition Funds (1988 - 1996) 3 Producing Property Acquisition Funds (1988 - 1996) 3 Mezzanine Funds (1988 - 1993) 3 Mezzanine Funds (1988 - 1993) 4 Equity Funds (1994 - 2003) 4 Equity Funds (1994 - 2003) Currently raising EnCap Energy Capital Fund V ($700 MM) Currently raising EnCap Energy Capital Fund V ($700 MM)

11. ENCAP INVESTMENTS, L.P. 11 EnCap Industry Partners Laredo Energy – drill bit growth Laredo Energy – drill bit growth Ovation Energy – acquire/exploit Ovation Energy – acquire/exploit Sawtooth Energy – mgmt. play Sawtooth Energy – mgmt. play Medicine Bow – mgmt. play Medicine Bow – mgmt. play Nautilus – acquire/exploit Nautilus – acquire/exploit Plantation – mgmt. play Plantation – mgmt. play Petrohawk – mgmt. play Petrohawk – mgmt. play Stroud – acquire/exploit Stroud – acquire/exploit Tempest – mgmt. play Tempest – mgmt. play NCX – drill bit growth 3 Tec – mgmt play BreitBurn – acquire/exploit Plains Resources – mgmt play Bargo – acquire/exploit Cordillera – mgmt. play Matrix – acquire/exploit Copano – midstream growth AROC – acquire/exploit

12. ENCAP INVESTMENTS, L.P. 12 EnCap Investments $10-75 million investment size $10-75 million investment size Management teams with proven track record and open to opportunistic exit Management teams with proven track record and open to opportunistic exit Equity contribution by management (“skin in the game”) Equity contribution by management (“skin in the game”) Focused value creation strategy Focused value creation strategy Investment Focus

13. ENCAP INVESTMENTS, L.P. 13 EnCap Investments LLC or Limited Partnership is the most tax efficient for management structure LLC or Limited Partnership is the most tax efficient for management structure Common or Preferred Equity Common or Preferred Equity Fund equity as needed for acquisitions and/or development in conjunction with a prudent level of bank debt Fund equity as needed for acquisitions and/or development in conjunction with a prudent level of bank debt Increasing management participation linked to performance Increasing management participation linked to performance Board representation or control Board representation or control 3 to 7 year investment horizon 3 to 7 year investment horizon Typical Investment Structure

14. ENCAP INVESTMENTS, L.P. 14 EnCap Recent Activity In response to current market conditions, EnCap has monetized a significant portion of its portfolio over the last 12 months In response to current market conditions, EnCap has monetized a significant portion of its portfolio over the last 12 months Liquidated public securities Liquidated public securities Sold Laredo Energy I to Chesapeake Energy in October 2003 after 18 month investment period Sold Laredo Energy I to Chesapeake Energy in October 2003 after 18 month investment period Sold Plantation Petroleum to Forest Oil in December 2003 after 18 month investment period Sold Plantation Petroleum to Forest Oil in December 2003 after 18 month investment period Sold Cordillera to Patina in October 2003 Sold Cordillera to Patina in October 2003 Response to current environment

15. ENCAP INVESTMENTS, L.P. 15 EnCap Recent Activity Over last 12 months, EnCap has committed $300MM Over last 12 months, EnCap has committed $300MM Laredo II – committed $38 MM Laredo II – committed $38 MM Plantation II – committed $30MM Plantation II – committed $30MM Nautilius – committed $35MM Nautilius – committed $35MM Medicine Bow - committed $67MM Medicine Bow - committed $67MM Stroud – committed $27MM Stroud – committed $27MM Petrohawk – committed $38.3MM Petrohawk – committed $38.3MM NGL Ventures – committed $50MM NGL Ventures – committed $50MM Response to current environment

16. ENCAP INVESTMENTS, L.P. 16 EnCap Recent Activity Plantation is managed by Tom Meneley and Bill Walls Plantation is managed by Tom Meneley and Bill Walls Plantation I Plantation I Acquired Maynard Oil Company in July 2002 for $98MM with a $38MM equity investment from EnCap and Liberty Energy Acquired Maynard Oil Company in July 2002 for $98MM with a $38MM equity investment from EnCap and Liberty Energy In December 2003, Plantation sold Maynard to Forest Oil Company In December 2003, Plantation sold Maynard to Forest Oil Company Plantation II Plantation II Formed in November 2003 Formed in November 2003 EnCap and Liberty backed management to acquire properties in Southeast New Mexico for $20MM. EnCap and Liberty backed management to acquire properties in Southeast New Mexico for $20MM. Plantation I & Plantation II

17. ENCAP INVESTMENTS, L.P. 17 EnCap Recent Activity Laredo Energy is managed by Glen Hart and Graham Whaling Laredo Energy is managed by Glen Hart and Graham Whaling Laredo Energy I Laredo Energy I EnCap Fund IV invested $20MM in a partnership structure with Laredo I in December 2001. EnCap Fund IV invested $20MM in a partnership structure with Laredo I in December 2001. In October 2003, Chesapeake Energy purchased Laredo I for $110MM. In October 2003, Chesapeake Energy purchased Laredo I for $110MM. Laredo Energy II Laredo Energy II Formed in November 2003 Formed in November 2003 EnCap backed management to acquire Lobo Trend properties from Chevron for $23MM. EnCap backed management to acquire Lobo Trend properties from Chevron for $23MM. Laredo Energy I & Laredo Energy II

18. ENCAP INVESTMENTS, L.P. 18 What Sets EnCap Apart? Track Record Track Record Experience Experience Technical Expertise Technical Expertise Flexibility Flexibility Value-Added Partnership Value-Added Partnership

19. ENCAP INVESTMENTS, L.P. IPAA Private Capital Conference D. Martin Phillips April 19, 2004