Notes

Outline

"Oil & Gas" Oil & Gas Acquisitions       Exploration   Development HAPL Luncheon Presentation February 22, 2000

Small Company Growth Strategies Many different models Specialized strategies (i.e. exploration, horizontal) Diversified strategies (i.e. acquisition, exploitation) Vision of founders / management Fundamentals Reserves / Production Cash flow Earnings Share price Story

Ingredients for Growth Equity Management Quality Properties Financial Partners Track Record Focus Company Promotion Project Promotion Luck Perseverance

Current Climate O & G investments have generated negative returns and destroyed capital Industry consolidations and liquidations will continue to result in divestitures Larger independents finding it difficult to economically drill for reserves – looking for acquisitions Limited (non-existent) public market Private capital is selectively available Cost of capital is increasing Financial discipline is being forced on the sector Investors want earnings and liquidity – not just growth!

Corporate Objectives Pursue a comprehensive growth plan - acquisitions, re-engineering, development and exploration Generate cash flow and superior returns on investments Increase per share value Increase earnings per share Expose shareholders to significant upside. Attract investors and partners Industry Partners Institutional Investors Shareholders

Growth

Production Map

Prospects

Management Advantage Big Company Training / Experience Entrepreneurial Ability Demonstrated Technical and Administrative Ability Prior Success Solid Reputation Equity Owners

Major Shareholders Management / Employees Vlasic Investments L.L.C. EnCap Equity 96 Energy Capital Investment Company First Union Capital Markets Corp. Lincoln National Life Insurance Resource Investors Management Co. Quantum Energy L.L.P.

Focus Focus Areas: Texas and Louisiana Proved reserves with development and exploratory potential Low risk exploratory properties Exposure to high potential exploration Onshore or offshore waters Opportunity to promote partners

Composition of Investment (3 Year Plan)

Hampton Resources Corp. Chronology of Events Date Event 1991 Initial concept memo Acquire / reorganize Hampton 1992 implement reorganization plan Initial mezzanine financing Two acquisitions Acquire control of partnerships Purchase L.P. interests 1993 Four acquisitions Retire mezzanine debt, acquire equity interest Bank financing   Odd lot tender offer

Hampton Resources Corp. Chronology of Events (cont.) Date Event 1994 Cadre Field - exploration / development Ft. Trinidad waterflood unitization Negotiate Cove 3-D shoot Sell producing field - 2 x PV 10% Merger / sale agreement - Bellwether Acquire Hermineta partnerships 1995 Close merger / sale

Cliffwood / Texoil Chronology of Events Acquisitions Date Event 1996 Initial concept memo Acquire Cliffwood Energy Company Roll up Cliffwood L.P. s Three acquisitions 1997 Acquire affiliated partnership Five acquisitions Sell producing field - 3 to 1 Sell non-op interests PV 10% Acquire Texoil, inc. 1998 Acquire affiliated partnership Sonat acquisition – South TX, Louisiana Incremental acquisitions 1999 Two acquisitions Sell non-op interests Incremental acquisitions

Cliffwood / Texoil Chronology of Events  Financing Date Event 1996 Raise initial equity Private loan / equity More equity Establish bank financing EnCap partnership 1997 Increase bank line More equity Deal - cash / stock Texoil acquisition Texoil convertible sub-debt

Cliffwood / Texoil Chronology of Events  Financing (cont.) Date Event 1998 Cut costs Exploration partners Revise / increase bank facility Sell properties 1999 Increase bank facility Repay sub-debt Preferred equity

Cliffwood / Texoil Chronology of Events Business Strategy Date Event 1996 Acquisitions 1997 Development Re-engineering Continue acquisitions Establish exploration program a) joint venture b) internally generated Corporate merger

Cliffwood / Texoil Chronology of Events Business Strategy (cont.) Date Event  1998 Development Re-engineering Large acquisition Sale of properties Maintain exploration Minimize write down Cut costs / maximize cash flow Communicate with banks and financial partners 1999 Continue acquisitions Re-engineering Incremental acquisitions Expand exploration Sales of (non-op) properties

Cliffwood / Texoil Chronology of Events Business Strategy (cont.) Date Event  2000 Continue acquisitions / development Step up exploration Expand mergers More equity Promote company

Summary Focus Acquisitions with development potential Drilling / exploration potential Engineering / technical expertise Promote diversified prospect inventory Experienced Management Large company training Independent operator success Resourcefulness / demonstrated ability Proven ability to find and fund projects Capital formation - Equity

…Forward Looking Statements This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 23E of the Securities Exchange Act of 1934, as amended.  All statements other than statements of historical facts included in this presentation, are forward-looking statements regarding the Company=s business strategy, plans, objectives and beliefs of management for future operations.   Although the Company believes the expectations and beliefs reflected in forward-looking statements included in this presentation are reasonable, it can give no assurance that such expectations will prove to have been correct.  Forward-looking statements are not guarantees of future performance and actual results, developments and business decisions may differ from those envisioned by such forward-looking statements.