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[MISSION RESOURCES LOGO]
ANALYST CONFERENCE
MARCH 30, 2001
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SAFE HARBOR DISCLOSURE
================================================================================
This presentation includes "forward-looking statements" as defined by the
Securities and Exchange Commission. Such statements are those concerning the
companies' merger and strategic plans, expectations and objectives for future
operations. All statements included in this presentation that address
activities, events or developments that the companies expect, believe or
anticipate will or may occur in the future are forward-looking statements. This
includes completion of the proposed merger, completion of reserve estimates,
production, cash flow and EBITDA estimates, future financial performance, future
equity issuance and other matters. These statements are based on certain
assumptions made by the companies based on their experience and perception of
historical trends, current conditions, expected future developments and other
factors they believe are appropriate in the circumstances. Such statements are
subject to a number of assumptions, risks and uncertainties, many of which are
beyond the control of the companies. Statements regarding future production are
subject to all of the risks and uncertainties normally incident to the
exploration for and development and production of oil and gas. These risks
include, but are not limited to, inflation or lack of availability of goods and
services, environmental risks, drilling risks and regulatory changes. Investors
are cautioned that any such statements are not guarantees of future performance
and that actual results or developments may differ materially from those
projected in the forward-looking statements.
Investors and security holders are urged to read the proxy statement/prospectus
that will be included in the Registration Statement on Form S-4 filed with the
SEC in connection with the proposed merger. Bellwether Exploration Company
("Bellwether") and Bargo Energy Company ("Bargo") have filed the proxy
statement/prospectus with the SEC. Investors and security holders may obtain a
free copy of the proxy statement/prospectus (when available) and other documents
filed by Bellwether and Bargo with the SEC at the SEC's web site at www.sec.gov.
The proxy statement/prospectus and such other documents (relating to Bellwether)
may also be obtained for free from Bellwether by directing such request to:
Bellwether Exploration Company, 1331 Lamar, Suite 1455, Houston, Texas 77010,
Attention: Lance Weaver; telephone: (713) 495-3061; e-mail:
weaverl@bellwetherexp.com. The proxy statement/prospectus and such other
documents (relating to Bargo) may also be obtained for free from Bargo by
directing such request to: Bargo Energy Company, 700 Louisiana, Suite 3700,
Houston, Texas 77002, Attention: Jerry Sears; telephone: (713) 236-9792; e-mail:
jsears@bargo.com.
Bellwether, its directors, executive officers and certain members of management
and employees may be considered "participants in the solicitation" of proxies
from Bellwether's shareholders in connection with the merger. Information
regarding such persons and a description of their interests in the merger is
contained in the Registration Statement on Form S-4.
Bargo, its directors, executive officers and certain members of management and
employees may be considered "participants in the solicitation" in connection
with the merger. Information regarding such persons and a description of their
interests in the merger is contained in the Registration Statement on Form S-4.
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AGENDA
================================================================================
Introduction to Mission Resources Doug Manner
Property overview & operating objectives Joe Nicknish
2001 capital expenditure budget
& strategic initiatives Kent Williamson
Financial strategy Jon Clarkson
Actual 2000, pro forma 2001
& 2002 financials Ann Kaesermann
Corporate M&A strategy &
administrative overview Dan Foley
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================================================================================
[PHOTO] Doug Manner
Chairman & CEO
[Page 4 depicts picture of Doug Manner]
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SITUATION - BELLWETHER & BARGO
================================================================================
Bellwether (2000)
o Issues
- Scattered assets, low reserve life index, 30% operated, 85%
hedged, debt to book capital of 70%, inexperienced management,
too small
o Actions
- Sold $49 MM of properties
- Paid down debt
- Bought back 15,000 MMBTU/Day of hedges
- Acquired new management expertise - engineering, budget
control, finance
- Commenced acquisition/merger discussions
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SITUATION - BELLWETHER & BARGO
================================================================================
Bellwether (2000)
o Desired position was:
- Focused assets
- 8 year reserve life index
- 70% operated
- Less than 50% hedged
- Debt to book capitalization less than 50%
- Strong management
- Billion dollar market capitalization with extensive market
coverage
o Strategy
- Base - Exploitation and low risk exploration, farm-out high
risk exploration
- Growth - Corporate consolidation and acquisition
- Looking for strategic corporate acquisition
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SITUATION - BELLWETHER & BARGO
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Bargo (2000)
o Strong results in executing acquisition strategy, and subsequent
optimization of operations
- Texaco acquisition quadrupled reserves
o Focus on maximization of return on investments in long-life oil
properties
- Sold >$100 MM of assets for well above acquisition cost
o Minimal access to capital markets for further growth
o Shareholders desiring tax efficient liquidity
- Decided against IPO or addition of private equity
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MISSION RESOURCES - THE COMBINATION
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o Bellwether plus Bargo
- Asset overlap, increased reserve life index, increased
operated production, hedge dilution, improved debt to book
capital, completed management team, increased market
capitalization
- High grading opportunities and operations
- Continuing both companies' strategy of growth by acquisition
- Management team with technical and financial expertise to
accomplish significant strategic growth as well as base asset
growth
o Pro forma asset statistics
- 78.5 MMBOE, net of January property sale
- R/P 9 years, 80% developed, 68% oil, 46% operated
- 23 MBOE/day production
- Three focus areas:
o Permian - 39% of reserves, long life oil
o Onshore Gulf Coast - 20% of reserves, exploitation
opportunities
o Gulf of Mexico - 8% of reserves, exploitation and
exploration opportunities
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MERGER DETAILS
================================================================================
o Bellwether acquiring Bargo, deal announced Jan 25th
o New Name: Mission Resources Corporation
o $1.26 per share for Bargo common ($140 MM, approximately 40% in cash,
60% in Bellwether stock)
o Bargo preferred stockholders receive cash ($61 MM)
o Amendment No. 1 to S-4 filed with the SEC Mar 19th
o Anticipate Bellwether Shareholder meeting in early May
o Total deal (Pro Forma at December 31, 2000)
- $200 MM for common and preferred stock ($120MM Cash, $80MM
stock)
- $29 MM assumed debt
- 46.9 MMBOE proved reserves
- Less than $5.00/BOE direct acquisition cost
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STRATEGIC DIRECTION
================================================================================
o Fully exploit existing asset base
- Focus on costs, full cycle economics
o Divest non-core, non-strategic properties
- Reduce Company's operating cost/BOE
o Growth through acquisition
- Corporate transactions via "unadvertised" opportunities,
public and private companies
- Property transactions in focus areas, potential addition of
new core area
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EXECUTIVE MANAGEMENT
================================================================================
[PHOTO]
Doug Manner
Chairman & CEO
Jon Clarkson
President & CFO
Kent Williamson Joe Nicknish Dan Foley
Sr. VP - Planning Sr. VP - Operations Sr. VP - Corporate
& Exploration & Exploitation Finance
Portfolio Management Field Operations Corporate M&A
Budget Control Drilling Accounting & Tax
Exploration Land Finance
Marketing
Administration
[Page 11 depicts pictures of the management & organizational chart w/Doug
Manner as Chairman & CEO, Jon Clarkson as President & CFO, Kent Williamson Sr.
VP - Planning & Exploration, Joe Nicknish Sr. VP - Operations & Explorations &
Dan Foley Sr. VP - Corporate Finance]
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BOARD OF DIRECTORS (nominated)
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Doug Manner Chairman and CEO, Mission Resources
Jon Clarkson President and CFO, Mission Resources
Judy Ley Allen Board Member of Federal Reserve Bank - Dallas
J.P. Bryan Senior Managing Director,
Torch Energy Advisors, Inc.
Tim J. Goff Ranching (former Chairman and CEO, Bargo)
Habib Kairouz Managing Director, Rho Management Co., Inc.
D. Martin Phillips Managing Director, Encap Investments L.L.C.
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MISSION RESOURCES - STATUS & GOALS
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o Integration of Bellwether and Bargo is well underway
o Major goals for 2001
- Maintain production levels with targeted capex - predominantly
exploitation, nominal exploration
- Reduce costs by managing the portfolio and improving operation
efficiencies
- Increase balance sheet liquidity
- Pursue corporate consolidation opportunities, close one or
more
- Improve visibility and perception in capital markets
o Mission Resources is a unique mid-cap E&P investment opportunity
- New, enthusiastic management team with expertise in
exploitation, M&A, and capital markets
- Growth philosophy coupled with extensive industry contacts
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================================================================================
[PHOTO] Joe Nicknish
Sr. Vice President of Operations
and Exploitation
[Page 14 depicts picture of Joe Nicknish]
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PROPERTY OVERVIEW
================================================================================
[MAP]
TOP TWENTY FIELDS
1 East Texas TX Oil
2 Leroy North LA Gas
3 Waddell TX Oil
4 Levelland/Slaughter TX Oil
5 Cross Creek TX Gas
6 Bright Falcon TX Gas
7 Tiguino EC OIl
8 Eugene Island Block 292 FO Gas
9 Wasson TX Oil
10 Raccoon Bend TX Oil
11 Second Bayou LA Gas
12 Goldsmith OBO TX Oil
13 Ship Shoal Block 246 FO Gas
14 Charapa EC Oil
15 Giddings TX Mix
16 TXL TX Oil
17 High Island Block 552 FO Gas
18 Porter's Creek TX Gas
19 Bedford TX Oil
20 Reddell LA Gas
[Page 15 depicts a map of New Mexico, Texas, Louisiana, & the Gulf of Mexico w/
a map of Ecuador inserted in the lower left corner. The map contains pictures
from 1-20 indicating the top 20 fields.
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RESERVES BY REGION
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o Pro Forma reserves at December 31, 2000 of 78.5 MMBOE
[PIE CHART]
{Page 16 depicts a pie chart. The text of the chart is as follows:
EAST TEXAS 14%
GULF COAST ONSHORE 20%
GULF COAST OFFSHORE 8%
GULF COAST COMBINED 28%)
ECUADOR 10%
PERMIAN 39%
OTHER 9%]
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RESERVE PROFILE
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o Production approximately 23,000 BOE per day, reserve life index 9 years
[PIE CHART] [PIE CHART] [PIE CHART]
RESERVE CATEGORIES OIL vs. GAS OPERATED vs.
NON-OPERATED
[Page 17 depicts 3 pie charts. The pie chart titled Reserve Categories contains
the following text:
PUD 20%
PDP 70%
PDN 10%
The pie chart titled Oil vs. Gas contains the following text:
Gas 32%
Oil 68%
The pie chart titled Operated vs. Non-operated contains the following text:
Non-Op 54%
Operated 46%]
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CHARACTERIZATION OF MISSION PROPERTIES
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o Permian (39% of Reserves)
- Long-life production, primarily oil
- Mostly operated by majors or large independents
- Waterfloods with long-term CO2 potential for increased oil
recovery
- New Mexico gas production with exploration upside
o Gulf Coast (20% of Reserves)
- Upside potential in structural and stratigraphic gas plays
- Upside oil potential in large field previously operated by a
major
- Inventory of exploration and exploitation prospects
o Gulf of Mexico (8% of Reserves)
- High rate gas production
- Focus of exploration program
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CHARACTERIZATION OF MISSION PROPERTIES
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o East Texas (14% of Reserves)
- Operated oil production primarily from East Texas oil field
- Properties purchased from Arco and Texaco
- Optimization potential on previous Texaco properties
o Ecuador (10% of Reserves)
- Oil production with significant exploitation upside
- Exploration upside
o Mid-Continent (4% of Reserves)
- Panhandle gas production with exploitation potential
o West Coast (5% of Reserves)
- Significant oil production and potential offshore California
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OPERATING OBJECTIVES
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o Focus on production engineering to capture low risk opportunities
o Reduce operating costs by reorganizing staff and optimizing key
operating drivers
o Utilize current technology to maximize returns - fracs, 3-D, etc.
o Perform detailed field studies to identify additional reserves
o Focus energies on core assets to optimize field operations - decrease
lifting costs and increase production rates
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OUTSOURCING STRATEGY - OPERATIONS
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o Both companies currently outsource operations
- Bellwether uses Torch Energy Advisers and Tecnie
- Bargo uses Cameron Engineering and Gas Solutions
o Mission will outsource field operations
- Choice of contractor will be a function of service quality and
cost
- Contract Operator will function as essential member of Asset
Teams
o Mission Asset Management Teams will retain ultimate decision authority
on:
- Project identification
- scheduling
- funding
- third party vendor approvals
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OPERATIONS / TECHNICAL
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FUNCTIONS:
Budget Control
Operations
Land
Drilling - Exploration
Drilling - Exploitation
Portfolio Management
[ORGANIZATIONAL CHART]
[Page 22 depicts an organizational chart w/ Doug Manner as Chairman & CEO, Kent
Williamson as Sr. VP - Planning & Exploration, Joe Nicknish as Sr. VP -
Operations & Exploration, Matt Gallagher as Exploration Manager, Rudy
Wildenstein as Engineering Manager, Jim Enlow as Land Manager, Steve Turk as
Operations Manager & Byron Yeatman as V.P. Exploration]
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================================================================================
[PHOTO] Kent Williamson
Sr. Vice President of Planning
and Exploration
[Page 23 depicts a picture of Kent Williamson]
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CAPITAL EXPENDITURE STRATEGY
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o Group projects according to degree of discretion allowed and urgency:
- Safety, health, environment, regulatory Least Discretionary
- Protection of land position / work commitment
- Prevention of production disruptions Least Discretionary
|
- Competitive production situations More discretionary
- OBO Exploitation and exploration opportunities
- Operated exploitation and exploration opportunities
- LOE reduction More discretionary
o Prioritize projects based on analysis that considers:
- Rate of return
- return on investment
- production and reserves added
- Probability of success
o Strike balance between projects that provide immediate cash flow
enhancement versus projects that increase reserves or set up future
reserve growth
o Control spending throughout the year, and adjust priorities to adapt to
changing circumstances and new opportunities
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PROJECTED CAPITAL EXPENDITURES
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2001 ESTIMATED CAPEX
$110 MM
---------
[PIE CHART] EXPLORATION PROJECTS:
Madisonville
Raccoon Bend
Morrow / Atoka plays
Ship Shoal Blk 225
DEVELOPMENT PROJECTS:
Oak Hill
Cross Creek
Candy
Tiquino
[Page 25 depicts a pie chart of 2001 Estimated CAPEX $110MM. The text of the
chart is as follows:
*Exploratory $11MM
Land/Seis./Oth $ 8MM
Development $41MM
Acquisition $50MM
* includes all non-proved drilling]
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PROJECTED CAPITAL EXPENDITURES
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2002 ESTIMATED CAPEX
$160 MM
---------
EXPLORATION PROJECTS:
[PIE CHART] North Leroy
S. Bayou Boeuf
High Island Blk 552
Tranquillon Ridge
DEVELOPMENT PROJECTS:
S. Kilgore unit
Various permian fields
Ship Shoal Blk 214
Tiguino
Charapa
[Page 26 depicts a pie chart of 2002 Estimated CAPEX $160MM. The text of the
chart is as follows:
Acquisition $100MM
Land/Seis./Oth $ 10MM
*Exploratory $ 20MM
Development $ 30MM
* includes all non-proved drilling]
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CAPITAL PROJECT INVENTORY
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Number Net Net
Of Capital Unrisked
Project Type Projects Cost Potential
- ------------ -------- ---- ---------
Proved
(Low risk exploitation) 472 $ 80 MM 26 MMBOE
Other Potential
(Exploitation & exploratory) 209 $142 MM Not disclosed
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SOUTH TIMBALIER BLOCK 199
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[DIAGRAM]
o SEISMIC USED FOR RISK REDUCTION...Lentic Channel Sand objectives defined by
mapping with 3-D seismic. AVO processing of 2-D seismic data shows presence of
hydrocarbon indicator.
o ANALOGOUS TO NEARBY PRODUCTION...South Timbalier Block 212 and 213 Fields
produce from similar Lentic Channel sand reservoirs..
o SIGNIFICANT INTEREST...Mission owns 25% working interest in the prospect.
o NEAR-TERM SPUD DATE... Anticipate May 2001 spud.
[Page 28 depicts a diagram of the Lentic Amplitude & Structure Overlay of South
Timbalier Block 199.]
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SHIP SHOAL 225
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o 3-D SEISMIC RESULTS IN RISK REDUCTION ...
Interpretation of high quality seismic
survey identified Bul1 amplitudes trapped
downthrown to major fault.
o TARGETS PRODUCTIVE IN FIELD ... Oil and gas
[DIAGRAM] production already established in the
prospective zones (ET-FA2 sands) upthrown to
the same fault in SS 225 Field.
o DIVERSIFICATION OF RISK ... Negotiated trade
of portion of interest in ST 199 Prospect
for interest in this prospect. Mission
gained an 18.75% Working Interest in SS 225
Prospect as a result of the trade.
o NEAR-TERM SPUD ... Anticipate first well to
test this prospect will spud in May 2001.
[Page 29 depicts a Bul 1 Sand Amplitude of Ship Shoal 225.]
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EUGENE ISLAND BLOCK 310
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o ANALOG TO LARGE DEEP WATER FIELDS...Many
structural and stratigraphic similarities to
prolific deep water fields, but EI 310 is in
only 210' foot water depth.
o 3-D DOCUMENTED...A multi-block high
quality 3-D seismic survey was used for
[DIAGRAM] interpretation.
o DEVELOPED INFRASTRUCTURE...Block 310 is
adjacent to our EI 292 Field with numerous
pipelines nearby.
o ADDITIONAL DRILLING OPPORTUNITIES...More
wells can be drilled in untested fault
blocks.
o WELL IN PROGRESS...Expect to log before
May 1, 2001.
[Page 30 depicts a diagram of Eugene Island Block 310.]
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MADISONVILLE PROSPECT
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o MULTI-ZONE PROJECT...Primary target
includes development of the fractured Glen
Rose "B" Limestone, with secondary
objectives in the overlying Sub-Clarksville,
Dexter, Buda, Georgetown and Edwards.
o DIRECT ANALOG TO FT. TRINIDAD GLEN ROSE
"B" FIELD...Total recovery to date is 50
Bcfe from an area the same size as the
[DIAGRAM] Madisonville Prospect.
o SIGNIFICANT ACREAGE POSITION...Bellwether
holds acreage options across 10,000 acres.
o 3D SEISMIC USED FOR RISK REDUCTION...
Achieved through the acquisition
of a 32 square mile proprietary shoot.
o DEVELOPED INFRASTRUCTURE...Presence of
active gas pipelines on the prospect acreage
allow for immediate production and sales.
o NEAR-TERM SPUD DATE...Will spud before
April 1, 2001.
[Page 31 depicts a diagram of the Madisonville Prospect.]
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TRANQUILLON RIDGE UNIT
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o DIRECT ANALOG TO PT. PEDERNALES FIELD...
Tranquillon is a shoreward extension of Pt.
Pedernales Field. Ultimate recovery from Pt.
Pedernales is estimated to be 82 MMBO and 30
BCF. As of December 2000, Pt. Pedernales had
produced 64 MMBO and 19 BCF.
o SEISMIC INDICATES...The Tranquillion Ridge
structure is larger than the Pt. Pedernales
structure. The A-28 well produces oil in the
[DIAGRAM] lower portion of the Tranquillion Ridge
structure indicating hydrocarbon
accumulation
o NEAR-TERM ACTIVITY...EIR baseline study is
in progress with an estimated completion
date of November 2001. California State
Lands Commission is expected to issue the
lease after completion of EIR.
o LONG-TERM PLANS...First drilling in the
field is projected to start in July 2002.
[Page 32 depicts a diagram of the Tranquillon Ridge Unit.]
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PORTFOLIO MANAGEMENT
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o Overall goals
- Increase portfolio value
- Concentrate properties in core areas
- Increase percentage of properties operated
- Reduce overall operating costs/BOE
- Potentially add one additional core area
o Basic Strategy
- Acquire properties to which the Mission technical staff can
add value
- Divest properties which have more value to prospective
purchasers than they do to Mission Resources
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================================================================================
[PHOTO] Jonathan Clarkson
President & CFO
[Page 34 depicts a picture of Jon Clarkson.]
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BARGO ACQUISITION HISTORY
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Acq. Cost Incl. Proved Developed
Cost Dev. Reserves Cost
Deal Properties $MM $MM MMBOE $ / BOE
- ---- ---------- ---- ---------- -------- ---------
Conoco I St. Martinville $ 7.5 $ 10.6 1.9 $5.58
Conoco II Conroe, Etc. 11.0 11.7 4.9 2.37
Phillips Permian Basin 10.5 11.4 3.3 3.41
Texaco Odem 8.7 10.3 1.6 6.65
Cody Misc. Package 8.4 10.6 5.5 1.91
Exxon Raccoon Bend 10.0 13.6 4.2 3.26
ARCO East Texas 16.0 17.0 3.9 4.40
Texaco Permian, Etc. 153.7 168.0 45.3 3.71
Aera Coles Levee 10.1 10.1 4.8 2.13
All others Various 38.4 52.9 14.9 3.53
------ ------ ---- -----
Total $274.3 $316.2 90.3 $3.50
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BALANCE SHEET COMPARISON ($ in millions)
================================================================================
DECEMBER 31, 2000
------------------------- MISSION
MISSION MAY 2001
BELW BARGO PRO FORMA EST. CLOSING
---- ----- --------- ------------
Current Assets 45 29 74
Property, Plant & Equipment 151 155 411
Goodwill -- 2 27
Other Assets 26 10 13
--- --- ---
Total Assets 222 196 525
=== === ===
Current Liabilities 37 25 73
Bank Debt 25 85 170 150
Sub Debt 100 -- 100 100
Deferred Tax & Other Liabilities 3 6 46
Preferred Stock -- 58 --
Stockholders' Equity 57 22 136
--- --- ---
Total Liabilities & Equity 222 196 525
=== === ===
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FINANCIAL STRATEGY
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o Maintain liquidity and balance sheet capacity
- Limit capex in 2001 and 2002, free cash flow used to pay down
bank debt
- Utilize high yield debt to increase liquidity under senior
revolver
- Long Term objective of 50% debt to book capital and $100 MM of
unused bank capacity
o Reduce cost of capital
- Increased liquidity in stock and analyst coverage - equity and
high yield
- Lower cost of debt capital
o Focus on reducing G&A and LOE per BOE - divestitures, outsourcing
o Use equity to fund acquisition transactions
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SENIOR SECURED REVOLVER
================================================================================
o Borrower: Mission Resources Corporation
o Co-Arrangers: JPMorgan and BNP Paribas
o Administrative Agent: The Chase Manhattan Bank
o Syndication Agent: BNP Paribas
o Facility: A $200 million senior secured
revolver with a $20 million letter of
credit sublimit
o Commitment Increase
Provision: Up to $300 million
o Termination Date: 3 years
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EFFECT OF HIGH YIELD ADD-ON ON BANK DEBT
================================================================================
Initial
Borrowing Base
--------------
Sub debt less than
or equal to $100 MM $185.0 MM
Sub debt more than $100 MM
& less than or equal to $150 MM $170.0 MM
Sub debt more than $150 MM
& less than or equal to $175 MM $162.5 MM
Sub debt more than $175 MM $155.0 MM
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BELLWETHER SENIOR SUBORDINATED NOTES
================================================================================
Issue: $100 million Senior Subordinated
Notes, issued April 1997
Coupon: 10 7/8%
Maturity: 10 years (2007)
Optional
Redemption: 5 year non-call
(callable April 2002 @ 105.4)
Ratings
(Moody's/S&P) B3/B-
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INITIATIVES WITH CAPITAL MARKETS
================================================================================
o Initial meetings with a number of equity and high-yield analysts over the
past several weeks
o "Courtesy call" meetings with Moody's and Standard & Poor's on February 21
o Presentation to equity and high yield analysts on March 30 in the
Woodlands
o Continued communication with markets and analysts through conferences and
roadshows
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TRANSACTION TIMETABLE
================================================================================
Sign merger agreement Jan 25
Preliminary S-4 proxy filed Feb 1
Bank Financing Committed Mar 16
Amended S-4 proxy filed Mar 19
Meeting for Equity & High Yield analysts Mar 30
SEC approval Apr 6*
Rating agency upgrade request -
Senior and subordinated debt Apr 11*
Shareholder meeting May 7*
Close May 7*
* Projected
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MAJOR SHAREHOLDERS* (amounts in millions)
================================================================================
SHARES PERCENT
FULLY DILUTED FULLY DILUTED
------------- -------------
BELLWETHER:
Rho Mgmt. 1.7 7.2%
Icahn Holding 1.0 4.3%
Dimensional Fund 0.9 3.5%
Doug Manner 0.8 3.3%
J.P. Bryan 0.7 2.8%
All others 9.1 37.6%
-----
58.7%
-----
BARGO:
Tim Goff 1.8 7.4%
Encap 1.7 7.1%
Bank of America 1.2 5.2%
Thomas D. Barrow 1.1 4.7%
Kayne Anderson 0.8 3.3%
All others 3.4 13.6%
-----
41.3%
-----
*Assumed 10 MM shares to Bargo shareholders
based on $8.00/share; includes all options
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FINANCE & ADMINISTRATION
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FUNCTIONS:
Corporate M&A
Finance
Financial Reporting
Tax
Treasury
Internal Auditing [ORGANIZATIONAL CHART]
Accounting*
Legal*
Marketing*
Administration*
Human Resources*
Information Technology*
* Services provided by Torch
[Page 44 depicts an organizational chart with Jon Clarkson as President and CEO,
Roland Sledge as Secretary & General Counsel, Dan Foley as Sr. V.P. Corporate
Finance, Audit Committees, Dave Johnson as Director - Internal Audit, Ann
Kaesermann as VP Chief Accounting Officer, Lance Weaver as Director Investor
Relations and Financial Analysis, and Mike Gibson as Manager - Business
Development.]
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================================================================================
[PHOTOGRAPH] Ann Kaesermann
Vice President - Chief Accounting Officer
[Page 45 depicts a picture of Ann Kaesermann.]
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FINANCIAL INFORMATION
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o Bellwether Historical 2000
- Recurring net income excludes $17MM tax benefit and $8.6 MM loss on
disposition of hedges
- Fourth quarter sale of 6.4 MMBOE of reserves producing 3,600 BOE/D,
net
o Mission 2001 Estimate
- Pro forma; merger and major asset sale assumed at the beginning of
the year
- Fourth quarter $18MM sale of non - core and marginal properties
- Fourth quarter $50MM acquisition - debt financed
- Excludes approximately $10MM of one time non-cash loss items due to
FAS 133, Gas plant sale and Carpatsky transaction
o Mission 2002 Estimate
- Second quarter $100MM acquisition - equity financed
- Second quarter $9MM non-core asset divestiture
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FINANCIAL HIGHLIGHTS
================================================================================
REPORTED PRO FORMA
BELW MISSION MISSION
2000 2001 EST. 2002 EST.
-------- ----------- -------------
Total Production (MMBOE) 5.8 8.3 - 8.7 10.5 - 11.5
Production (MBOE/D) 15.8 22 - 24 29 - 32
Spot WTI Price ($/BBL) 30.14 26.53 24.15
Spot Henry Hub Price ($/MCF) 3.91 5.47 4.86
Total Revenue ($MM) 119 200 - 210 255 - 265
OP. Cost (inc. prod. tax) per BOE 5.27 6.70 - 6.90 6.40 - 6.60
G&A per BOE 1.58 1.55 - 1.65 1.30 - 1.40
Recurring G&A per BOE 1.37 1.35 - 1.45 1.30 - 1.40
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FINANCIAL HIGHLIGHTS
================================================================================
REPORTED PRO FORMA
BELW MISSION MISSION
2000 2001 EST. 2002 EST.
-------- ----------- -------------
Recurring EDITDA* ($MM) 68 125 -140 170 - 185
Discretionary Cash flow ($MM) 63 95 - 105 125 - 140
DCF/share 4.42 4.10 - 4.50 4.25 - 4.70
Recurring Net Income* ($MM) 18 30 - 40 40 - 50
Recurring NI*/share 1.25 1.30 - 1.70 1.35 - 1.70
*Excludes potential one time non-cash losses in 2001
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2001 ESTIMATE BY QUARTER
================================================================================
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
2001 2001 2001 2001
------------- ------------ ------------ -----------
Production (MBOE/D) 22 - 24 22 - 24 22 - 24 24 - 26
Total Revenue ($MM) 50 - 60 40 - 50 40 - 50 50 - 60
Ebitda* ($MM) 30 - 40 25 - 35 25 - 35 30 - 40
Disc. Cash Flow ($MM) 25 - 35 20 - 30 20 - 30 25 - 35
DCF/Share 1.10 - 1.50 .85 - 1.30 .85 - 1.30 1.10 - 1.50
Rec. Net Income* ($MM) 7 - 12 5 - 10 5 - 10 7 - 12
Rec. NI*/Share .30 - .50 .20 - .45 .20 - .45 .30 - .50
OP. Cost (inc. prod. Tax)
per BOE 6.75 - 7.00 6.75 - 7.00 6.75 - 7.00 6.50 - 6.75
G&A per BOE 1.45 - 1.55 2.20 - 2.25 1.35 - 1.45 1.30 - 1.40
Recurring G&A per BOE* 1.45 - 1.55 1.45 - 1.55 1.35 - 1.45 1.30- 1.40
*Excludes potential one time non-cash losses in 2001
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FINANCIAL HIGHLIGHTS
================================================================================
REPORTED PRO FORMA
BELW MISSION MISSION
2000 2001 EST. 2002 EST.
-------- ------------ -------------
Proved Reserves (MMBOE) 31.6 (Jan 01) 78.5
Reserve Life (R/P) 6 9
Cash Interest expense $MM 14.8 25 - 30 25 - 30
Total Assets $MM* 221.5 500 - 550 550 - 600
Total Debt $MM* 125.5 250 - 280 180 - 220
Stockholders equity $MM* 57.0 150 - 170 310 - 330
Total Book Capitalization $MM* 182.5 400 - 450 490 - 550
Recurring EBITDA **/Interest Exp. 4.6x 4.6x - 5.3x 6.0 - 6.4
Total Debt/Recurring EBITDA** 1.8x 1.8x - 2.1x 1.1x - 1.4x
Total Debt/Book Capitalization 69% 60% - 64% 35% - 40%
* As of year end
**Excludes potential one time non-cash losses in 2001
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PRICE DIFFERENTIALS
================================================================================
QTR 1 QTR 2 QTR 3 QTR 4 TOTAL YR
2001 2001 2001 2001 2002
-------- -------- -------- -------- --------
OIL:
Futures Price 28.14 26.11 26.17 25.69 24.15
Location, Gravity, etc. (3.70) (3.70) (3.90) (3.95) (3.60)
Hedging -- -- -- -- --
----- ----- ----- ----- -----
Net Realized Oil Price 24.44 22.41 22.27 21.74 20.55
===== ==== ===== ===== =====
GAS:
Futures Price 5.60 5.34 5.42 5.52 4.86
Location, Gravity, etc. (.20) (.20) (.20) (.20) (.15)
Hedging (.90) (1.45) (1.50) (.40) --
----- ----- ----- ----- -----
Net Realized Gas Price 4.50 3.69 3.72 4.92 4.71
===== ==== ===== ===== =====
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HEDGING STRATEGY
================================================================================
o Hedge to protect downside - plan to use floors and/or collars
o Hedges currently in place cover about 55% of total equivalent production
OIL HEDGES NYMEX NYMEX
- ----------
BBLS % OF TOTAL PRICE PRICE
PERIOD PER DAY OIL PROD. TYPE FLOOR CEILING
- ---------------------- --------- ---------- --------- ------- -------
Jan. 2001 - Dec. 2001 1,500 12% Collar $24.00 $30.00
Jan. 2001 - Dec. 2001 6,000 48% Floor $21.00
GAS HEDGES NYMEX NYMEX
BBLS % OF TOTAL PRICE PRICE
PERIOD PER DAY OIL PROD. TYPE FLOOR CEILING
- ---------------------- --------- ---------- --------- ------- -------
Jan. 2001 - MARCH 2001 25,000 43% Collar $2.30 $3.37
April 2001 - Oct. 2001 35,000 60% Collar $2.30 $2.92
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PRICE SENSITIVITIES
================================================================================
2001 PRICE CHANGE 2001 PRICE CHANGE
-------------------------- ---------------------------
$1.00 / BBL $.10 / MCF $1.00 / BBL $.10 / MCF
----------- ---------- ----------- ----------
EBITDA $4.3 MM $1.1 MM $5.7 MM $2.7 MM
Discretionary Cash Flow $3.8 MM $1.0 MM $4.7 MM $2.2 MM
Per Share - Diluted $.16 $.04 $.16 $.08
Net Income $2.6 MM $0.7 MM $3.4 MM $1.6 MM
Per Share - Diluted $.11 $.03 $.11 $.05
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================================================================================
[PHOTOGRAPH] Dan Foley
Sr. Vice President of Corporate
Finance
[Page 54 depicts a picture of Dan Foley.]
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CORPORATE M&A OBJECTIVES
================================================================================
o Focus will be on uncovering opportunities before they reach the auction
market
- Information from Board of Directors, shareholders, industry contacts
and potential sellers
o Deal structures will utilize Mission Resources' common equity to the
extent possible
- Potential use of bridge financing or liquidity under senior revolver
to bridge to secondary stock offering
o Goal of at least one corporate transaction this year
o Interesting Areas include three current core areas (permian, Gulf Coast,
Gulf of Mexico), as well as Canada, Mid continent, Rockies, and South
Texas
- No foreign acquisitions
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SMALL - CAP E&P COMPANIES - LOW VALUATIONS / UNDERFOLLOWED
================================================================================
PARTIAL LIST
Carrizo Oil & Gas Miller Exploration
Chaparral Resources National Energy Corp.
Clayton Williams North Coast Energy
Coho Energy Panaco
Devx Energy Petrocorp
Hallwood Energy Petroquest
Inland Resources Pyr Energy
KCS Energy Remington Oil & Gas
Key Production Southern Mineral
Maynard Oil Wiser Oil
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UMC CORPORATE ACQUISITION HISTORY
================================================================================
[LINE GRAPH]
[Page 57 depicts a line graph of UMC Corporate Acquisition History. The vertical
axis measures Proved Reserves (MMBOE)(from 0-300) and the horizontal axis
measures years (from 1986-1997).]
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ADMINISTRATIVE FUNCTIONS
================================================================================
o Torch, Novistar and others will provide financial and administrative
services for Mission Resources as follows:
- Accounting and Information Technology
- Human Resources
- Corporate Secretary
- AFE administration
- Risk Management
- Oil and Gas Marketing
o Management is reviewing the terms of these services and quality of
service to maximize the benefit to Mission Resources
- Renegotiate contracts given expanded size of company
- Potentially bring some functions in-house
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[MISSION RESOURCES LOGO]
[Page 59 depicts the Mission Resource's logo.]