The document summarizes the state of the US oil and gas industry from 2000-2011, including key events, price fluctuations, production levels, and policy issues. It highlights the economic importance of the industry in Louisiana and challenges it faces, such as increased regulation, lawsuits, and a difficult legislative environment. Alternative fuels like CNG are also discussed as an opportunity for the industry.

1. State of the Industry Gifford Briggs www.loga.la

2. Peaks & Valleys of the US Oil & Gas Industry China/India Demand Growth Subprime Lending Crash Invasion of Iraq Iraq Invaded Kuwait Iranian Revolution Price per Barrel of oil Southeast Asia Economic Downturn US/Russia Cold War Don Briggs / LOGA

3. “this administration ADMITTEDLY IS TRYING TO KILL OIL AND GAS” SENATOR INHOFE

4. 7% of Americas Energy Infrastructure Made up of Renewable Energy

5. Average Annual OIL PRICES 2000 - 2011

6. Natural Gas Average Annual Prices2000-2011

7. RIG MAKEUPOilvs.Natural Gas Natural Gas Rigs

8. OIL US Rig activity Map GAS

9. A golden age for gas? Gas is set to play a key role in meeting the world’s energy needs Gas glut will peak soon, but may dissipate only very slowly Lower prices could lead to stronger demands for gas, backing out renewables & coal in power generation Source IEA

10. Federal Issues Investment Incentives Gulf of Mexico Hydraulic Fracturing

11. President Obama Continues Efforts to Repeal Oil & Gas Investment Incentives $44 Billion Repeal expensing of intangible drilling cost Repeal deductions for tertiary recovery Repeal percentage depletion allowance for oil and gas wells Repeal domestic manufacturing deduction for oil and gas companies Increase geological and geophysical amortization for independent producers to 7 years

12. Gulf of MexicoUnprecedented Uncertainty

14. Obama-Salazar Moratorium Has Crippled Domestic Oil Production

15. Gulf of Mexico Drilling Activity Before Macondo

16. Gulf of Mexico Rig Activity61 Rigs 4/1/10 – 27 Rigs 2/21/11 Source : OCSBBS

17. Gulf of Mexico Permits IssuedPrevious year Avg. vs. Since Moratorium Lifted

18. Which is it ?

19. The Economic Impact of the Gulf of Mexico Offshore Oil and Natural Gas Industry and the Role of theIndependents SOURCE: IHS GLOBAL 81% of all producing Gulf of Mexico leases - Independents 46% of the Gulf’s producing deep water leases - Independents 1,298 wells drilled in the deep-water GOM - Independents 900,000 bbl. a day of oil equivalent (oil and natural gas together) GOM 2009, accounted for more than 200,000 jobs - Independents $38 Billion in economic benefit in 2009 – Independents Within the deep water, the exclusion of the independents would mean: Overall, the exclusion of the independents would cause a significant shrinkage in offshore oil and gas activity, a reduction in the dynamism of the industry, and a dilution of US. Technological and industry leadership

21. U.S. Export-Import Bank's plan to lend $2 billion to Brazil's state-run Petrobras with the promise of more to follow.

23. Hydraulic fracturing

24. Hydraulic Fracturing History First commercial “FRAC” job was conducted in 1947 States Regulate Hydraulic Fracturing More than 1 million wells had been completed using this method by 1988 Estimated that nearly 85% of wells drilled today are completed using hydraulic fracturing.

25. Interior Secretary Ken Salazar told a House subcommittee recently that a drilling technique known as hydraulic fracturing could be the “Achilles’ heel” that kills the natural gas industry.

27. The Truth About Gasland The Washington Examiner, “Nothing But Hot Air in “Gasland”

29. Haynesville Competition

30. Louisiana Tax Commission Rules

31. Legislative Session

33. Louisiana State mineral bonuses, Rentals, Royalty, and Severance

34. Natural Gas & Oil Pumps up Louisiana’s GDP NO. 1 SOUTH EAST - NO. 5 NATIONPercent Change in Real GDP 2008 - 2009 U.S. Bureau of Economic Analysis

35. South LA Land Drilling Activity 2000 -2011

36. Louisiana Inland Water Drilling Activity1997 -2011

37. North Louisiana Drilling Activity

38. Number One Producing Natural Gas Field in the U.S. - 5.5 Billion Cubic Feet Per Day

39. Projected Economic ImpactHaynesville Shale 2010 - 14

40. Haynesville Shale Competing with other Shale plays

41. Basin by Basin Natural Gas NYMEX Breakeven Prices for 15% ATAX ROR Source: Company Data, Credit Suisse estimates

42. Taxes, Regulations, and Investment Incentives Make a Difference in the Competitive Race Comparison of A Typical Well Taxes PaidArkansas, Louisiana, Oklahoma, Texas

43. Liquids-rich basin economics far better than dry gas plays Liquids – Rich Basins Source - Credit Suisse Estimates

44. 2011 Regular Legislative Session Fiscal Session Industry has a target on its back Lost Inactive Well Incentive in 2010 Horizontal Drilling Incentive is target in 2011 Suspends severance taxes for 2 years or until payout Senate will look at repealing or suspending exemptions through a resolution $1.4 Billion Deficit Governor very clear about exemptions and tax increases

45. The Economic Impact of the horizontal well severance tax Incentive

48. Caddo Parish

49. Bossier Parish

50. Desoto Parish

51. Red River Parish

53. Shreveport (October 2009)

55. Louisiana’s Legal Climate“We’re Not On The Way to Judicial Hell- Are We?” Melissa Landry American Tort Reform Association Report on “Judicial Hellholes”

57. THE BEST STATES FOR BUSINESS AND CAREERS

58. Legacy Law suitsOver 220 Suits 2006 Act 312 Six Basic Components Requires timely notice of such litigation to the State Stays the litigation until thirty days after notice is give Permits the State to intervene in the litigation The act provides a role for the Office of Conservation with the LDNR in the determination of the most feasible plan for evaluation and or remediation of environmental damage Provides for the payment of all damages for the evaluation or remediation of environmental damages and further provides that the Court shall oversee actual implementation of the the plan adjudicated to be “most feasible” Allows the landowner and the State to recover attorney and expert fees, as well as costs from the responsible party or parties.

59. State Agencies Get into the Action and File Law Suits Attorney General Caldwell Files 27 Legacy Lawsuits Filed Petition to be heard – “The Attorney General has not authorized or approved the hiring of private legal counsel to represent the State of Louisiana in this matter and therefore any allegation, assertion or statement that the State of Louisiana is a Plaintiff in this matter is in error and should be stricken from the record.” Louisiana Department of Revenue – Files 21Lawsuits alleging under payment of severance. “Posted Field Price (Market Center) vs At the Wellhead Industry is currently working with the Department of Revenue to resolve the issue. Louisiana Department of Wildlife & Fisheries File Lawsuits for alleged Oyster Damages.

60. “Our membership is due for renewal in March. As a result of the constant litigation we have faced in our fields the owners of our Companies have been steadily divesting our interests in LA. We are about out and planning to end our operations in the near future.”

61. CNG Pricing – Louisiana Average - $1.97 GGE Louisiana Gasoline Average - $3.25 ($1.29 more expensive than CNG) Louisiana Diesel Average - $3.64 ($1.67 more expensive than CNG) Louisiana Stations Public Access Open - 5 Baton Rouge – 4 Bossier – 1 Under Construction / In Process - 7 Lafayette, Bossier, Alexandria, Kenner, Grant Parish, Shreveport (2) Municipalities moving to CNG Lafayette – 5 City Busses, 41 Vehicles committed so far Caddo – 15 Light Duty trucks, 17 Sherrif office vehicles Shreveport – 10 Refuse trucks

62. CNG

63. CNG Next Steps Working group established to develop a strategy to implement statewide CNG plan DEQ, DNR, DOTD, LED, DOA, LOGA (with industry reps) Identify corridors and establish L/CNG stations along the corridor Incentivize station operators to construct stations along corridor in target areas Incentivize fleet operators to convert long-haul trucks to LNG that travel along corridor

64. Gifford Briggs State of the Industry www.loga.la facebook.com/LouisianaOilGasAssociation iPhone (free): search “Oil & Gas News” @LaOilGasAssoc Slideshare.net/LaOilandGasAssoc