ippa private capital conference houston, texas january 19, 2006

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IPPA Private Capital ConferenceIPPA Private Capital Conference

Houston, TexasHouston, Texas

January 19, 2006January 19, 2006

PETRIEPETRIE PARKMAN & Co.PARKMAN & Co.

Mike Bock, CFAMike Bock, CFAPrincipal and Director of Principal and Director of

Corporate FinanceCorporate FinancePetrie Parkman & Co. Petrie Parkman & Co.

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Petrie Parkman Recent Experience – IPO’s 2000-2006 YTDPetrie Parkman Recent Experience – IPO’s 2000-2006 YTD


E&P Equity Market Performance E&P Equity Market Performance

80%

100%

120%

140%

160%

180%

200%

1/3/200

5

2/3/200

5

3/3/200

5

4/3/200

5

5/3/200

5

6/3/200

5

7/3/200

5

8/3/200

5

9/3/200

5

10/3/

2005

11/3/

2005

12/3/

2005

1/3/200

6

S&P E&P S&P 500 NASDAQ


IPO Issuance Volume 2000 - 2005 IPO Issuance Volume 2000 - 2005

$0.0$50.0

$100.0

$150.0$200.0

$250.0$300.0

$350.0

$400.0$450.0

$500.0

($m

m)

2000 2001 2002 2003 2004 2005

2 deals3 deals

0 deals

1 deal

3 deals

2 deals


E&P IPO’s by Class E&P IPO’s by Class

2000

Westport ResEnergy Prtnrs

2001

EncoreGMX ResATP Oil & Gas

2002

None

2003

Whiting

2005

Bois d’ArcW&T Offshore

2004

Bill Barrett Warren ResAtlas America

2006

Linn Energy MarinerStroudRosettaCNX Gas


Bois d’ Arc 5/5/05

• 13.5 million shares priced at $13.00

• Use of proceeds: Repay outstanding debt to Comstock

• Lead managed by Raymond James, Co-managed by Petrie Parkman and others

% Change Since Pricing

Capital Market Environment- Recent IPO’s

27.36%

32.86%

25.08%

9.67%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

Bois d' Arc ComparableCompanies

Commodities S&P 500



W&T Offshore- 1/27/05


• Use of proceeds: Secondary sale of shares by management and Jefferies & Company

• Lead managed by Jefferies and Lehman Brothers


9.49%

41.67%

27.58%

63.79%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

W&T Offshore ComparableCompanies

Commodities S&P 500


Bill Barrett Corporation- 12/9/04

• 14.95 million shares at $25.00

• Use of proceeds: Repay indebtedness in connection with acquisitions, in order to free up availability under credit facility to fund capex and future acquisitions

• Lead managed by Goldman Sachs, Co-managed by Petrie Parkman and others



51.92%

79.23%

49.11%

8.14%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

80.00%

90.00%

Bill Barrett Corp. Comparable Companies Commodities S&P 500



Warren Resources- 12/17/04


• Use of proceeds: To accelerate and fund exploration and development activities in the Atlantic and Pacific Rim projects of the Washakie Basin, as well as in the Willmington unit and Powder River Basin

• Lead managed by Keybanc Capital Markets


7.7%

40.1%

53.8%

93.3%

0.00%10.00%20.00%30.00%40.00%50.00%60.00%70.00%80.00%90.00%

100.00%

Warren Comparable Companies Commodities S&P 500


Exit Alternatives: IPO vs. Sale of AssetsExit Alternatives: IPO vs. Sale of Assets

Rockies2005 Average

Market Value or Purchase Price /

2005E EBITDA 2006E EBITDA $ / McfePublic Companies

Barrett 8.6x 6.7x $5.01Delta 11.5x 9.5x $4.83

2005 Private Company Sales /Asset Sales (3 Transactions)

High 6.4x 4.4x $3.12Average 4.3x 3.3x $1.98Low 2.8x 2.2x $0.76



Appalachia2005 Average


2005 EBITDA 2006 EBITDA $ / McfePublic Companies

Range 8.9x 7.3x $2.80

2005 Private Company Sales /Asset Sales (1 Transaction)

10.2x 6.5x $2.23



Permian2005 Average



Cabot 5.6x 4.8x $1.95Cimarex 4.8x 3.9x $3.00Whiting 5.5x 5.4x $1.52





East / South Texas2005 Average



Comstock 4.9x 4.5x $1.90Petrohawk 7.1x 4.3x $3.09Range 8.9x 7.3x $2.80




Cons- Potential to bust general solicitation rules

Pros- Sometimes patience paysPros- Quicker financing,

avoids SEC delaysCons- SEC Delays

Pros- Better if market declines

Pros- More coverage

Pros- Lesser discount /Better valuationCons- Worse if market declines

Cons- 20% discount versus typical 5-15% on IPO’s

Market Risk

IPO144A

Cons- More analysts

Valuation

Pros- Fewer analysts to deal with

Cons- Lesser coverage

ResearchCoverage

Exit Alternatives: IPO vs. 144AExit Alternatives: IPO vs. 144A


Basic Requirements for an Institutionally-Embraced IPOBasic Requirements for an Institutionally-Embraced IPO

• Offering at least $100 million

• Market capitalization of at least $250 million

• SARBOX compliant, notably: -No loans to management -Independent board of directors

• Growth potential

• Use of proceeds

• Management team with desire to run a public company


Market Preferences

• Offering of at least $200 million

• Market capitalization of at least $1 billion

• Geographic and strategic focus

• Resource-oriented plays

• Solid future organic growth potential combined with company-maker exposure

• Well-articulated use of proceeds

• Seasoned management with public experience


The Hidden Costs of Public Market CapitalThe Hidden Costs of Public Market Capital

• Regulatory compliance- a drain on financial and human resources ― Sarbanes Oxley― SEC filings and reviews― Trading exchange regulations

• Short-term demands of public markets can influence executive decision-making

• Increased personal scrutiny of and liability for executives

• Increased costs of audit and reservoir engineering services

ippa private capital conference houston, texas january 19, 2006

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