0
Exploration & Production
Our Goals and Agenda

   Demonstrate clear progress on performance

   Describe our path to become “Top Tier”

   Detailed...
Top 10 Domestic Independent
         Total Company
 Well-situated in key U.S. basins
                                     ...
High Grading Our Portfolio

   Divested 309 Bcfe of properties for $845 MM
   (sales price and assumed asset retirement
  ...
Our Production is
More Heavily Weighted to U.S. Onshore
            2007 Reported                                         ...
Our Reserves are Also
More Heavily Weighted to U.S. Onshore
         2007 YE Reported                                     ...
Significant Undrilled Inventory
                                             6.1 Tcfe unrisked non-proved resources       ...
2007 Accomplishments
   Production growth 8%        Hit our targets

   Reserves growth 18%         Visible growth

   Uni...
Strategy for “Top Tier” Has Not Changed,
But it is Better Defined

   Build and apply competencies in assets with
   repea...
“Business Delivery Model” is the Core of
Our Approach to the Business




                                       67
“Top Tier” Requires Rigor on all Facets
of “Business Delivery Model”
   Growth Engine
                                    ...
Priority to Align Assets to Competencies

          High


                            Strengthen       Leverage Strengths...
Our Strategy Implies Strong Performance
in the Drivers of E&P Value

        Drivers                  Targets
   Productio...
E&P Production
Solid Growth Trajectory Through 2010
                                                                      ...
12% Inventory Growth
                                                                                                   Ne...
E&P Cash Costs
Continued Improvement and Focus
                                                                      $/Mcf...
Portfolio Provides Excellent Mix of
Long-Life and High-Return Programs

                 $6                               ...
Shorter R/P ratios compare with
Higher F&D Costs
                                          Peers with R/P ratios less than...
Domestic Reserve Efficiency Improving
        F&D Costs/Mcfe                    Reserve Replacement Ratio
    (Excluding A...
E&P Profitability
Growing Faster Than Peers
                                                                     EBITDA*/M...
E&P Consistently Adding Value
                                                                                     $ Billi...
El Paso Will Become a “Top-Tier” Performer


   Performance is steadily improving
   Growth strategy is rational and align...
Program Review




                 80
Program Assumptions

  Highlighted programs cover 85% of 2008 capital
  Program statistics are pro forma to exclude produc...
Onshore




          82
U.S. Onshore Operating Areas
                                                             Total Onshore
                  ...
Onshore Characterization

   Targeting repeatable, low to mid-risk programs
   High-quality, concentrated asset base
     ...
Raton (Unconventional)
                                                           Production
                             ...
Raton Economics
 Objective:        Vermejo & Raton Coals
 Depth:            2,000'–2,500'
 Well costs:       $0.5 MM–$0.6 ...
Black Warrior Basin (Unconventional)

                                                           Production
              ...
Black Warrior Economics
  Objective:      Pottsville, CBM
  Depth:          1,500'–2,000'
  Well costs:     $0.4 MM–$0.5 M...
Arklatex
                              AK
                                                            Production
         ...
Arklatex Economics

      Objective: Hosston, Cotton Valley                                                               ...
Haynesville Shale Play Outline—North
Louisiana

                                                     Approx. 36,000Claibor...
South Texas Wilcox

                                                     Production
                                      ...
South Texas Wilcox Economics
                                                                                         Perd...
Vicksburg/Frio
                     Brooks
                                                               Production
     ...
Vicksburg/Frio Economics
                                                                                      S-Sand
    ...
Upper Gulf Coast Wilcox
                                                        Production
                Speaks/Hardy’s ...
UGC Wilcox Economics

                                                                               Ewers Sand
Objective:...
Altamont-Bluebell
                                                   Production
                                          ...
Altamont Bluebell Economics
                                                                                Green River
Ob...
Gulf of Mexico/South Louisiana
(GOM/SLA)




                                 100
GOM/SLA Position
   Gulf of Mexico/SLA Statistics
                                                  TX                    ...
GOM/SLA Characterization

   Program emphasis on:
      Miocene and Plio-Pleistocene
      Discrete structural and stratig...
Miocene Areas of Interest
                                                                LA    New Orleans
           TX
...
GOM Miocene Economics

Objective:            Miocene Sands

Depth Range:          11,000'–22,000' TVD

Well Costs:        ...
Plio-Pleistocene Area of Interest
                                                      LA             New Orleans

      ...
GOM Plio-Pleistocene Economics

Objective:            Plio-Pleistocene Sands
Depth Range:          6,800'–13,500' TVD
Well...
International




                107
International Characterization

   Exploration and development opportunities in
   Brazil and Egypt
   Bia and Pinaúna dev...
Exploration and Production in Brazil

                                                   Potiguar
                        ...
Pinaúna Project
   Brazil                                                 Project Statistics:
                            ...
Bia/Camarupim Development
    BM-ES-5
    BM- ES-
    Petrobras: 65% Operator
    El Paso: 35%
                           ...
BM-ES-5 Exploration

                                                                               Asset Overview:
      ...
Brazil: Southern Camamu Exploration
                              MANATI FIELD
                              (PETROBRAS OP...
Egypt: South Mariut
             Nile
             Delta
                                             Gas Field
          ...
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Transcript of "el paso "

  1. 1. Exploration & Production
  2. 2. Our Goals and Agenda Demonstrate clear progress on performance Describe our path to become “Top Tier” Detailed review of operations Confirm performance expectations 59
  3. 3. Top 10 Domestic Independent Total Company Well-situated in key U.S. basins Onshore—U.S. Focused on unconventional and Nile Delta low-risk conventional programs Primarily coal seam and Sinai tight-gas programs ~80% natural gas Gulf Egypt Low to medium-risk 97% drilling success rate of Egypt Suez repeatable plays 2.8 Tcfe of proved reserves 98% drilling success rate 798 MMcfe/d of production 2.4 Tcfe of proved reserves 9.6 R/P Egypt 651 MMcfe/d of production Onshore conventional 10.1 R/P exploration 1 MM acres Brazil First drilling 2H 2008 Rio de Janeiro Gulf of Mexico Brazil Medium to high-risk exploration Large acreage position 2 discoveries in 2007 46% success rate in 2007 15,000–20,000 BOE/d beginning 2H 2009 151 Bcfe of proved reserves 247 Bcfe of proved reserves 133 MMcfe/d of production 14 MMcfe/d of production 3.1 R/P Note: All data is pro forma 2007 to exclude production and reserves related to properties divested in 2008 and to include a full year of production and reserves from our Peoples Energy Production Company (Peoples) acquisition in 2007; also includes production and reserves from our proportionate share of Four Star 60
  4. 4. High Grading Our Portfolio Divested 309 Bcfe of properties for $845 MM (sales price and assumed asset retirement obligation)—$2.73/Mcfe Low inventory, high operating costs Purchased Peoples for $887 MM End result—more focused; more profitable, faster growing; added 450 total gross drilling locations 61
  5. 5. Our Production is More Heavily Weighted to U.S. Onshore 2007 Reported 2007 Pro Forma INTL INTL 2% 2% GOM/SLA GOM/SLA 17% Central 22% 35% Central 38% ONSHORE ONSHORE TGC 81% 76% 25% TGC 24% Western Western 17% 18% 862 MMcfe/d 798 MMcfe/d Note: Pro forma data excludes properties divested in 2008 and includes a full year from Peoples in 2007; also includes proportionate share of Four Star 62
  6. 6. Our Reserves are Also More Heavily Weighted to U.S. Onshore 2007 YE Reported 2007 YE Pro Forma GOM/SLA GOM/SLA 9% 5% INTL INTL 8% 9% Central 42% Central TGC 46% 16% TGC 18% ONSHORE ONSHORE 83% 86% Western Western 24% 23% 3.1 Tcfe 2.8 Tcfe Note: Pro forma data excludes properties divested in 2008; also includes proportionate share of Four Star 63
  7. 7. Significant Undrilled Inventory 6.1 Tcfe unrisked non-proved resources 3,400 2.8 Tcfe risked non-proved resources Risked resources grew 12% in 2007 Resource Potential (Bcfe) Excludes domestic divestiture properties 2,130 Non-Proved Risked Unrisked 1,460 869 835 495 530 Proved Unconventional Conventional Conventional Undeveloped* Low-Risk Higher-Risk Raton, Arkoma, Black Warrior, Arklatex, Rockies, GOM, TGC, New Albany TGC, Brazil Int’l Exploration, Brazil, Egypt *As of 12/31/07 and includes proportionate share of Four Star 64
  8. 8. 2007 Accomplishments Production growth 8% Hit our targets Reserves growth 18% Visible growth Unit LOE dropped 7% Top quartile performance Inventory growth of 12% Visible growth Staff rose 10% Increasing capability Significant international Pinaúna, Bia (Brazil) exploration success Portfolio high grading More focused, faster growth, Peoples acquisition lower cost operator Divestitures We delivered on our commitments 65
  9. 9. Strategy for “Top Tier” Has Not Changed, But it is Better Defined Build and apply competencies in assets with repeatable programs and significant project inventory Sharpen execution skills to improve capital and expense efficiency and maximize returns Add assets with inventory that fit our competencies and divest assets that do not 66
  10. 10. “Business Delivery Model” is the Core of Our Approach to the Business 67
  11. 11. “Top Tier” Requires Rigor on all Facets of “Business Delivery Model” Growth Engine Strategic Direction Resource assessments Clear view of future in existing and new assets business environment Exploration and development Long-term divisional roles Acquisitions New ideas and concepts Optimization Plan Learn From Past Effective capital and Performance tracking resource allocation Lookbacks Scorecards Benchmarking Scorecards Team El Paso Compelling culture Strong leadership Execution Outstanding individual Sharpen execution skills and team performance Apply and build competencies Strong values Focus on efficiency Continuous improvement 68
  12. 12. Priority to Align Assets to Competencies High Strengthen Leverage Strengths Competencies & Increase Activity Repeatability Develop Rationalize Inventory Low Competency Weak Strong 69
  13. 13. Our Strategy Implies Strong Performance in the Drivers of E&P Value Drivers Targets Production growth 8%–12% per year Inventory Total resource > 2x proved reserves Cash costs Top quartile relative to E&P peer group Reserve Less than $3.00/Mcfe on replacement costs current asset and capital mix Value creation PVR > 1.15 70
  14. 14. E&P Production Solid Growth Trajectory Through 2010 MMcfe/d R CAG %–12% 8 860–920 862 798 2007 as 2007 2008E 2009E 2010E Reported Pro Forma* *Excludes volumes from domestic assets sold; assumes full year of Peoples and includes proportionate share of Four Star 71
  15. 15. 12% Inventory Growth Net Risked Bcfe 3,659 3,274 835 985 2,790 1,460 2,550 1,180 495 385 869 724 2006 YE 2007 YE Proved Undeveloped Unconventional Conventional Low Risk Conventional Higher Risk Note: Includes Four Star resource potential; 2007 YE excludes assets divested in 2008 72
  16. 16. E&P Cash Costs Continued Improvement and Focus $/Mcfe, Excluding Transportation $1.99 $1.75– $1.94 $1.88 $1.86 $1.90 $1.77 2006 2007 2008E Peer Average El Paso Peer group: APA, APC, CHK, DVN, EOG, FST, NBL, NFX, PXD, XEC, XTO Actual results from Peer company reports for 2006 and 2007; analyst models 2008E 73
  17. 17. Portfolio Provides Excellent Mix of Long-Life and High-Return Programs $6 60% $5 50% Rate of Return % $4 40% F&D/Mcfe (ROR) $3 30% $2 20% $1 10% $0 0% Coal Seam Tight Gas Texas Gulf Offshore Arklatex Coast F&D Costs Rate of Return Note: Returns and F&D exclude leasing, seismic, workover, equipment, and admin capital; assumes Plan pricing of $7.50/MMBtu and $70/Bbl 74
  18. 18. Shorter R/P ratios compare with Higher F&D Costs Peers with R/P ratios less than 11 typically have finding and development costs higher than $3/Mcfe 14 3-Yr. U.S. Drill Bit F&DC 12 10 ($/Mcfe) 8 6 EP 4 2 0 4 5 6 7 8 9 10 11 2007 U.S. R/P Ratio (22 Companies) Source: J.S. Herold 75
  19. 19. Domestic Reserve Efficiency Improving F&D Costs/Mcfe Reserve Replacement Ratio (Excluding Acquisitions) (Excluding Acquisitions) 129% $3.98 $3.94 108% $3.22 79% 2005 2006 2007 2005 2006 2007 F&D declined 19% over last two years vs. industry increase of 7%* *Source: J.S. Herold 76
  20. 20. E&P Profitability Growing Faster Than Peers EBITDA*/Mcfe, Including Hedging $5.75– $6.04 $6.00 $5.84 $5.58 $5.61 $4.82 2006 2007 2008E Peer Average El Paso Peer group: APA, APC, CHK, DVN, EOG, FST, NBL, NFX, PXD, XEC, XTO Actual results from Peer company reports for 2006 and 2007; analyst models 2008E *EBITDA excludes exploration and dry hole expense for successful efforts companies; 2008E based on Plan pricing of $7.50/MMBtu and $70.00/Bbl 77
  21. 21. E&P Consistently Adding Value $ Billions 2004 SEC PV10 value1 $ 4.8 Significant value creation 2007 SEC PV10 value2 9.3 $3.3 billion in value created Change in reserves value $ 4.5 Longer reserve life 2005–2007 net investment R/P extended by 30% Capital expenditures (3.4) Acquisition capital (2.2) Higher quality portfolio Asset sales 0.1 Less risk—more repeatable opportunities Net investment (5.5) Deeper inventory 2005–2007 EBITDA 4.3 2.8 Tcfe of non-proven resource potential Total value created $ 3.3 1YE SEC 2004 prices assumed $6.22/MMBtu HH and $43.45/Bbl WTI; value is pretax 2YE SEC 2007 prices assumed $6.80/MMBtu HH and $95.98/Bbl WTI; value is pretax Note: Four Star included in SEC PV10 value 78
  22. 22. El Paso Will Become a “Top-Tier” Performer Performance is steadily improving Growth strategy is rational and aligned with competencies Significantly improved portfolio Project inventory is high-quality and growing Highly competent workforce 79
  23. 23. Program Review 80
  24. 24. Program Assumptions Highlighted programs cover 85% of 2008 capital Program statistics are pro forma to exclude production from properties divested in 2008; includes a full year from Peoples Inventory Locations are on gross basis Resource potential is net to El Paso Resource includes proved undeveloped reserves Does not include value upside including infill drilling Economics Returns assume $7.50/MMBtu Henry Hub and $70.00/Bbl WTI F&D costs = drilling and completion costs Rate of return and PVR are risked; net to El Paso 81
  25. 25. Onshore 82
  26. 26. U.S. Onshore Operating Areas Total Onshore $1,038 MM 2008 capital (~63% of total company) 1,784 M net acres Western 2.4 Tcfe proved reserves Central 1.3 Tcfe risked non-proven $207 MM 2008 capital resource potential 915,000 net acres $420 MM 2008 capital 651 MMcfe/d production 675 Bcfe reserves 702,000 net acres 10 R/P 147 MMcfe/d 1,270 Bcfe reserves* 13 R/P 307 MMcfe/d* 12 R/P 8%–9% Production CAGR (MMcfe/d) 1,000 800 600 Texas Gulf Coast 400 $411 MM 2008 capital 200 168,000 net acres 0 457 Bcfe reserves 2006 2007 2008 2009 2010 197 MMcfe/d 6 R/P *Includes proportionate share of Four Star Note: All data is pro forma 2007 to exclude production and reserves related to properties divested in 2008 83 and include a full year of production from our Peoples acquisition in 2007
  27. 27. Onshore Characterization Targeting repeatable, low to mid-risk programs High-quality, concentrated asset base Material core positions in coal seam and tight gas Multi-year project inventory Strong positions in resource plays Annual capital spend of $1 billion generating EBITDA of $1.3 billion–$1.4 billion Predictable, mid-single digit production growth 84
  28. 28. Raton (Unconventional) Production CO (MMcfe/d) 100 80 60 Vermejo Park Ranch 40 20 0 NM 2006 2007 2008 2009 2010 Program Statistics: 2008 Plan: 854 operating wells 98 gross wells 100% avg. WI $84 MM net capital 74 PUD locations Value Upside: 39 Bcfe PUD reserves Niobrara (Pierre) Shale 165 non-proved locations Cost reductions 143 Bcfe unrisked resource potential 80 acre CBM infill 143 Bcfe risked resource potential 15 R/P 85
  29. 29. Raton Economics Objective: Vermejo & Raton Coals Depth: 2,000'–2,500' Well costs: $0.5 MM–$0.6 MM Reserves: 0.4–0.5 Bcfe Initial production: 25–50 Mcfe/d Type Curve Peak production: 75–150 Mcfe/d 100 80 Spacing: 160 acres Mcfe/d 60 IRR: 20%–30% 40 20 PVR: 1.30–1.50 0 1 2 3 4 5 6 7 8 9 10 F&D: $1.10–$1.70/Mcfe Normalized Years 86
  30. 30. Black Warrior Basin (Unconventional) Production Short Creek (MMcfe/d) 60 50 White Oak Creek Jefferson 40 30 20 AL 10 0 Blue Creek West 2006 2007 2008 2009 2010 Tuscaloosa Program Statistics: 2008 Plan: 1,003 operating wells 80 gross wells 91% avg. WI $43 MM net capital 171 PUD locations 66 Bcfe PUD reserves Value Upside: 219 non-proved locations Lateral extension 104 Bcfe unrisked resource potential Infill potential 104 Bcfe risked resource potential 15 R/P Note: Excludes Brookwood 87
  31. 31. Black Warrior Economics Objective: Pottsville, CBM Depth: 1,500'–2,000' Well costs: $0.4 MM–$0.5 MM Reserves: 0.3–0.4 Bcfe Initial prod: 50–60 Mcfe/d Type Curve Peak prod: 90–200 Mcfe/d 120 100 Spacing: 80 acres 80 Mcfe/d 60 IRR: 25%–35% 40 20 PVR: 1.40–1.60 0 1 2 3 4 5 6 7 8 9 10 F&D: $1.50–$1.80/Mcfe Normalized Years 88
  32. 32. Arklatex AK Production (MMcfe/d) Vacherie Dome/ 200 Bear Creek 150 TX Minden/SE 100 Brachfield LA 50 0 Holly/Bethany 2006 2007 2008 2009 2010 Longstreet/Logansport Program Statistics: 2008 Plan: 1,047 operating wells 111 gross wells 80% avg. WI $319 MM net capital 426 PUD locations 222 Bcfe PUD reserves Value Upside: 404 non-proved locations Cotton Valley horizontals 540 Bcfe unrisked resource potential Haynesville Shale 504 Bcfe risked resource potential Infill potential 11 R/P 89
  33. 33. Arklatex Economics Objective: Hosston, Cotton Valley Hosston 8,500 ft. Depth: 7,500'–12,800' Well costs: $2.5 MM–$3.1 MM Cotton Valley 10,500 ft. Reserves: 1.0–1.4 Bcfe Initial prod: 1–5 MMcfe/d Type Curve Spacing: 40–80 acres 1,000 IRR: 20%–30% 800 Mcfe/d 600 PVR: 1.15–1.25 400 200 F&D: $2.70–$3.10/Mcfe 0 1 2 3 4 5 6 7 8 9 10 Normalized Years Note: PVR and rate of return based on $7.50 MMBtu and $70.00/Bbl 90
  34. 34. Haynesville Shale Play Outline—North Louisiana Approx. 36,000Claiborne gross/ Webster Marion 27,000 net acres of Caddo Haynesville leases Bossier Chesapeake Petrohawk TX Discovery Discovery Harrison Bienville LA Red River Panola Encana Test Desoto Comstock Test Natchitoches Shelby 91
  35. 35. South Texas Wilcox Production (MMcfe/d) Zapata 120 100 Bustamante Las Comitas 80 60 40 20 0 Bob West 2006 2007 2008 2009 2010 Program Statistics: 2008 Plan: 253 operating wells 38 gross wells 95% avg. WI $155 MM net capital 32 PUD locations Value Upside: 43 Bcfe PUD reserves Infill drilling 162 non-proved locations Cost reduction in drilling and 255 Bcfe unrisked resource potential completion programs 161 Bcfe risked resource potential Redevelopment based on 2007 8 R/P field study 92
  36. 36. South Texas Wilcox Economics Perdido Objective: Wilcox Sand Series 12,500 ft. Depth: 10,000'–15,000’ Well costs: $5.1 MM–$6.1 MM Reserves: 2.1–3.1 Bcfe Lobo 14,000 ft. Initial production: 3–15 MMcfe/d Type Curve 4 Spacing: 40 acres 3 MMcfe/d IRR: 50%–70% 2 PVR: 1.40–1.60 1 F&D: $3.05–$3.55/Mcfe 0 1 2 3 4 5 6 7 8 9 10 Normalized Years 93
  37. 37. Vicksburg/Frio Brooks Production TX Kelsey / (MMcfe/d) Alvarado Kenedy 120 Hidalgo 100 80 60 MC/ Thompson 40 20 0 Willacy 2006 2007 2008 2009 2010 Jeffress Program Statistics: 2008 Plan: • 563 operating wells 34 gross wells • 88% avg. WI $121 MM net capital • 20 PUD locations • 34 Bcfe PUD reserves Value Upside: • 32 non-proved locations Infill potential • 53 Bcfe unrisked resource potential Shallow reservoir acceleration • 48 Bcfe risked resource potential Workovers and recompletions • 7 R/P 94
  38. 38. Vicksburg/Frio Economics S-Sand 9,000 ft. Objective: Frio-Vicksburg Depth: 8,000'–19,000' Well costs: $3.4 MM–$4.4 MM T-Sand 13,000 ft. Reserves: 1.9–2.9 Bcfe Initial production: 2–10 MMcfe/d Type Curve 2 Spacing: 40–80 acres MMcfe/d IRR: 30%–50% 1 PVR: 1.40–1.60 0 F&D: $2.25–$2.65/Mcfe 1 2 3 4 5 6 7 8 9 10 Normalized Years 95
  39. 39. Upper Gulf Coast Wilcox Production Speaks/Hardy’s Creek Speaks/Hardy’s Creek (MMcfe/d) 60 50 40 Lavaca Dry Hollow/Big Holler/Hope 30 Dry Hollow/ 20 Big Holler/Hope 10 0 TX 2006 2007 2008 2009 2010 Program Statistics: 2008 Plan: • 94 operating wells 12 gross wells • 62% avg. WI $100 MM net capital • 11 PUD locations Value Upside: • 14 Bcfe PUD reserves Trend extension to NE and SW • 58 non-proved locations Exploration success • 204 Bcfe unrisked resource potential Cost reductions on drilling and • 121 Bcfe risked resource potential completion programs • 6 R/P Proprietary 3-D seismic coverage 96
  40. 40. UGC Wilcox Economics Ewers Sand Objective: Middle/Lower Wilcox 13,400 ft. Depth: 10,500'–17,500' Well costs: $5.5 MM–$7.5 MM Reserves: 3–5 Bcfe Meine Sand 14,400 ft. Initial production: 3–25 MMcfe/d Spacing: 40–80 acres Type Curve 6 IRR: 45%–65% 5 4 MMcfe/d PVR: 1.40–1.60 3 2 F&D: $2.75–$3.25/Mcfe 1 0 Chance of success: 60%–70% 1 2 3 4 5 6 7 8 9 10 Normalized Years 97
  41. 41. Altamont-Bluebell Production (MBOE/d) 6 WY 5 4 3 Altamont-Bluebell 2 1 0 UT 2006 2007 2008 2009 2010 Program Statistics: 2008 Plan: • 246 operating wells • 5 gross wells • 87% avg. WI • $35 MM net capital • 32 PUD locations • 25 recompletions • 7 MMBOE PUD reserves • $14 MM net capital • 203 non-proved locations Value Upside: • 57 MMBOE unrisked resource potential • Workovers and recompletions • 52 MMBOE risked resource potential • Infill opportunities • Secondary recovery 98
  42. 42. Altamont Bluebell Economics Green River Objective: Wasatch/Green River 7,600 ft. Depth: 9,000'–14,000' Well costs: $5.0 MM–$7.0 MM Reserves: 350–520 MBOE Wasatch 9,800 ft. Initial production: 200–300 BOE/d Type Curve 300 Spacing: 320 acres 250 200 IRR: 20%–35% BOE/d 150 100 PVR: 1.20–1.40 50 0 F&D: $17.00–$19.00/BOE 1 2 34 5 6 78 9 10 Normalized Years 99
  43. 43. Gulf of Mexico/South Louisiana (GOM/SLA) 100
  44. 44. GOM/SLA Position Gulf of Mexico/SLA Statistics TX LA 383,000 net acres offshore New Orleans 21,000 net acres SLA Houston 133 MMcfe/d 151 Bcfe reserves 625 Bcfe risked non-proved resource potential 3 R/P Corpus Christi Production (MMcfe/d) 140 120 100 80 60 40 20 0 2006 2007 2008 2009 2010 Note: All data is pro forma 2007 to exclude production and reserves related to properties divested in 2008 and include a full year of production from our Peoples acquisition in 2007 101
  45. 45. GOM/SLA Characterization Program emphasis on: Miocene and Plio-Pleistocene Discrete structural and stratigraphic plays Geophysical-driven programs Higher rate, higher return wells Geared for $225 MM–$275 MM of capital spending generating $325 MM–$425 MM EBITDA Repeatable portfolio of prospects Essentially flat production 102
  46. 46. Miocene Areas of Interest LA New Orleans TX Houston Western Miocene Corpus Christi Central Miocene 2008 Plan: Program Statistics: 12 gross wells 90% Avg. WI $145 MM net capital 2 PUD locations 6 Bcfe PUD reserves Value Upside: 42 non-proved locations Utilization of deep drill technologies 1,017 Bcfe unrisked resource potential into new areas 398 Bcfe risked resource potential Exploration success 103
  47. 47. GOM Miocene Economics Objective: Miocene Sands Depth Range: 11,000'–22,000' TVD Well Costs: $25 MM–$35 MM Mean Reserves: 10–90 Bcfe 17,000 ft. Initial Production: 10–40 MMcfe/d IRR: 40%–60% 17,400 ft. PVR: 1.20–1.40 F&D: $3.00–$5.00/Mcfe Chance of Success: 35%–55% 104
  48. 48. Plio-Pleistocene Area of Interest LA New Orleans Houston TX Corpus Christi Plio-Pleistocene Program Statistics: 2008 Plan: 6 gross wells 100% avg. WI $72 MM net capital 33 non-proved locations 240 Bcfe unrisked resource potential Value Upside: Exploration success 118 Bcfe risked resource potential 105
  49. 49. GOM Plio-Pleistocene Economics Objective: Plio-Pleistocene Sands Depth Range: 6,800'–13,500' TVD Well Costs: $7 MM – $16 MM 7,000 ft. Mean Reserves: 2–12 Bcfe Initial Production: 2–20 MMcfe/d IRR: 50%–75% 7,600 ft. PVR: 1.4–1.6 F&D: $3.00–$4.00/Mcfe Chance of Success: 50%–70% 106
  50. 50. International 107
  51. 51. International Characterization Exploration and development opportunities in Brazil and Egypt Bia and Pinaúna development underway (Brazil) Risked resource potential of 1 Tcfe with more than 35 prospects/leads Up to 5 years of drilling inventory with up to 200 unrisked wells Egypt drilling program commences 4Q 2008 Yearly capital spend of $300 MM–$350 MM over next 3 years Material production and reserve growth expected 108
  52. 52. Exploration and Production in Brazil Potiguar 2 Production Blocks 2 Development Blocks 2 Exploration Blocks Pescada-Arabaiana Production Camamu 4 Development Areas 4 Exploration Blocks Pinaúna Development Brazil Stats 361,000 Net Acres Espirito Santo 14 MMcfe/d Rio de 1 Exploration Block Janeiro 247 Bcfe Reserves 695 Bcfe risked non-proved Bia Development resource potential 47 R/P 109
  53. 53. Pinaúna Project Brazil Project Statistics: 59–90 MMBOE total resource potential Rio de 13 MMBOE proved reserves Janeiro 1-BAS-64 BAS- 15–20 MBOE/D peak production Pinaúna Pinaú First oil in 2nd half of 2009 1-BAS-74 BAS- 1-BAS-73 BAS- 100% WI Exploring sell down Açaí Cacau 2008 Activity: 1-ELPS-17DA ELPS- 1-ELPS-16D ELPS- $100 MM–$200 MM net capital Integrate Cacau & Acai into development Re-sanction expanded Project Açaí 2.5 km East Continue with permitting and long lead sourcing Resource Outlook Proven Oil Additional Resource Tested Gas 110
  54. 54. Bia/Camarupim Development BM-ES-5 BM- ES- Petrobras: 65% Operator El Paso: 35% Brazil Rio de Janeiro 4-ESS-177 Project Statistics: Bia / 150–200 MMcf/d (gross) peak Camarupim First gas in 2009 6-ESS-168 Petrobras operated 4-ESS-164 2008 Activity: $100 MM–$150 MM net capital BES-100 Camarupim DOC BES- Unitization agreement with Petrobras Petrobras: 100% 2 KMS Gas sales contract negotiations Sanction development plan Gas Discovery well 111
  55. 55. BM-ES-5 Exploration Asset Overview: th ep BM-ES-5 rd 3 prospect areas with cretaceous te a w Petrobras 65% WI m 60 and tertiary objectives El Paso 35% WI 3 prospects 35% working interest 7 leads 300 Bcfe risked resource potential 400 Bcfe unrisked resource potential Brazil 4-ESS-177 6-ESS-168 2008 Activity: 4-ESS-164 Rio de Drill 1 exploration well in 2008 Janeiro 5 KMS $20 MM–$25 MM net capital Bia/Camarupim Field (U. Cretaceous) Windsor Discovery (Eocene) Value Upside: Discovery well 7 emerging leads 112
  56. 56. Brazil: Southern Camamu Exploration MANATI FIELD (PETROBRAS OPER) IN DEVELOPMENT Brazil Discovery Trend Asset Overview: (U. Jur., L. Cret.) CAMARAO FIELD Multiple plays (L&U Cretaceous, Tertiary) EP WI 100% Rio de 4 prospects in inventory in CAL-5 & 6 Janeiro PINAUNA FIELD EP WI 100% More than 125,000 net non-operated acres CARAMURU DISCOVERY (ACAI) 18%–20% WI EP WI 100% 144 Bcfe net risked resource potential SARDINHA FIELD EP (OP) WI 40% 683 Bcfe net unrisked resource potential 2008 Activity: Drill 1 exploration well $8 MM–$12 MM net capital CAL-M-312 BM-CAL-5 Value Upside: 11 emerging leads 4 prospects 11 leads Discovery / Field trend BM-CAL-6 CAL-M-372 Gas Field Oil Field / discovery 113
  57. 57. Egypt: South Mariut Nile Delta Gas Field Sinai Gulf Egypt Oil Field of Egypt Suez Significant recent discoveries Asset Overview: 10 prospective areas South Mariut—100% WI 100% WI 1.18 MM acres (4,785 km2) Area: 174 Bcfe net risked resource Status: Signed April 2007 Phase 1, 3 year term potential Work Program: 3D seismic survey 5 wells 757 Bcfe net unrisked resource potential NILE DELTA 10 prospective areas 2008 Activity: Alexandria PLAY $20 MM–$25 MM in net capital 3D seismic acquisition Rig procured First well to spud 4Q 2008 WESTERN DESERT 20 KMS PLAY 114
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