United States Exploration

Steven D. Durrett, CEO

Overview of U.S. Exploration

U.S. Exploration was a publicly-traded E&P company owning long-lived natural gas reserves with significant development drilling upside, with over 400,000 undeveloped acres.

U.S. Exploration was defensively managed by its previous managers with fewer than 200 company operated wells and minor non-operated interests in another 200 wells

U.S. Exploration’s focus was on exploitation of the Wattenberg Field with expansion opportunities located on other acreage in the Denver – Julesburg Basin

Initial acquisition was $57 million (including fees), financed with $32 million of equity from Greenhill Capital Partners and Lime Rock Partners along with $25 million of Senior Debt from Wells Fargo. In July 2004, the equity partners funded an additional $6 million to support the growth strategy

Purchase price was 4.4x EBITDA, $0.69 / Mcfe and 64% of PV-10

Energy

U.S. Exploration: Development Plan

Development Plan

Began in-fill drilling and re-completion programs designed to complete over 100 new wells per year

Drilled or re-completed approximately 300 new wells with 98% success

Since taking control of U.S. Exploration in January 2004, management team (10 employees) grew net production at a 47% CAGR and run-rate EBITDA at a 154% CAGR

The Company proved-up over 2,000 additional Proved and Probable well locations and developed an additional 4,000 unbooked Probable and Possible well locations

In March 2006, we closed the sale of U.S. Exploration to Noble Energy for total consideration of $411 million yielding an equity ROI of 7x and an IRR of 155%

Energy

0

100

200

300

400

500

600

700

800

Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06

U.S. Exploration: Monthly Production

Energy

(Mmcfe / Month)

47% CAGR

U.S. Exploration: EBITDA by Quarter

Energy

$2.6

$4.2

$5.7

$7.5

$6.8

$8.4

$11.0

$13.3

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

$14.0

Q1 '04 Q2 '04 Q3 '04 Q4 '04 Q1 '05 Q2 '05 Q3 '05 Q4 '05

($ millions)

154% CAGR

$0.48$0.36 $0.35

$0.16

$0.06

$0.61$0.47

$0.38

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

2003 2004 2005

$/M

cfe

Direct Op Ex / McfeOne-Time Expenses / Mcfe

Pro Forma G&A / Mcfe

U.S. Exploration: Per Unit Costs

Energy

$1.09

$0.99

$0.80

Pre-Acquisition Post-Acquisition

(1)

Notes:(1) Other expenses consist of non-recurring transition expenses in 2004 and bonuses paid in 2005.

($ in millions)

U.S. Exploration: Value Creation

Energy

-$60

$53 $53

$105 $105

$173

$411

$111

$68

$239

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

Purchase Price Increase due toCommodity Price

Cash FlowReinvested

Asset GrowthThrough Capex

Value Added Exit Value

Why Private Equity?

•Relief from expensive public regulatory burdens

•Drop below the radar to allow for restructuring and reinvention without micro-scrutiny

•Build your business and establish a track record in relative anonymity

•Management compensation structure