2012 Financial Results Our oil production increased 175% in 2012 driven by our oil focused drilling  program while natural gas production declined by 9%. Natural gas prices in  2012 declined 36%. The higher oil production was mostly offset by the weaker  natural gas prices and lower natural gas production as our oil and gas sales,  including realized gains from our oil hedging program, increased by 2% to $442  million as compared to $434 million in 2011. In 2012, oil made up 53% of our sales as compared to only 18% in 2011. We generated operating cash flow of $261 million in 2012 which was 12%  less than 2011’s operating cash flow of $298 million. Our operating costs  increased 30% in 2012 to $102 million as compared to $79 million in 2011. The increase is attributable to the higher lifting costs associated with the  increased oil production. Depreciation, depletion and amortization in 2012 of  $365 million increased 25% as compared to the $291 million we had in 2011. Our depreciation, depletion and amortization per Mcfe produced increased  to $3.83 in 2012 from $3.00 in 2011 due to the higher finding costs of our oil  projects combined with the downward revisions to our proved undeveloped  natural gas reserves related to the low 2012 natural gas prices. Our general  and administrative expenses in 2012 decreased to $34 million as compared  to $35 million in 2011. Our exploration costs increased in 2012 to $61  million as compared to $10 million in 2011. The increase in 2012 was due to  impairments of certain of our natural gas undrilled leases which we no longer  expect to develop. Our interest expense increased to $65 million in 2012 as  compared to $43 million in 2011 due to the increase in the amount of debt  we had outstanding. With the low outlook for natural gas prices for 2013, we  recorded an impairment of $25 million to write down the carrying value of  certain of our natural gas fields. We also had realized gains of $51 million on  sales of our marketable securities and oil and gas properties. For the year we  reported a net loss of $100 million or $2.16 per share. Our Eagle Ford shale horizontal well drilling program in South Texas and  our Wolfbone vertical well drilling program in West Texas were the primary  drivers of growth in our oil production and proved oil reserves in 2012. Our  successful drilling program in the Eagle Ford shale in South Texas added 11.9  million barrels of oil and 7.5 Bcf of natural gas to our proved reserves in 2012. The West Texas drilling program contributed 5.4 million barrels of oil and 9.5  Bcf to our proved reserves in 2012. Our limited activity in the Haynesville  shale and other regions added 14 Bcf of proved natural gas reserves in 2012. We spent $490 million for our drilling activities in 2012 (net of reimbursements  from our Eagle Ford shale joint venture) and an additional $35 million to  acquire leases for future exploration and development activities. In 2013, we  plan on focusing primarily on our oil projects in the Eagle Ford shale in South  Texa s a nd in t he Wolf bone a nd Wolfcamp shale in West Texa s. D r i l l i n g P r o g r a m  Oursuccessful  drillingprograminthe  EagleFordshaleinSouth  Texasadded11.9million  barrelsofoiland7.5Bcfof  naturalgastoourproved  reservesin2012.  Total Debt Stockholder’s Equity $ in billions $ in billions $1.3 $1.2 $0.5 2011 2012 2010 $0.9 $1.0 $1.1 2011 2010 2012