Boone Pickens Homepage           Electronic Publishing Center
	NOTES FOR ANNUAL MEETING OF STOCKHOLDERS OF MESA PETROLEUM CO. AMARILLO TX APRIL 25, 1984

PICKENS: WELCOME TO THE TWENTIETH ANNUAL MEETING OF STOCKHOLDERS OF MESA PETROLEUM CO. WE CERTAINLY APPRECIATE YOUR INTEREST AND YOUR PRESENCE HERE THIS MORNING. AS USUAL, DURING THE FIRST PART OF THE MEETING, WE WILL COVER THE FORMAL BUSINESS. AFTER THAT, I WILL MAKE SOME BRIEF COMMENTS ABOUT MESA AND THE INDUSTRY IN GENERAL. AT THE CONCLUSION OF MY REMARKS, I WILL ANSWER ANY QUESTIONS YOU MAY WISH TO ASK.

IN ORDER TO GIVE THE ELECTION JUDGES TIME TO TALLY ANY ADDITIONAL PROXIES AND TO DETERMINE THE NUMBER OF SHARES REPRESENTED AT THE MEETING, WOULD ANY STOCKHOLDER PRESENT WHO HAS PROXIES WHICH HAVE NOT BEEN TURNED IN, PLEASE DO SO AT THIS TIME BY PASSING THEM TO THE CENTER AISLE. IF ANY STOCKHOLDER PRESENT WHO HAS NOT ALREADY VOTED BY PROXY DESIRES TO VOTE BY BALLOT, YOU MAY OBTAIN A BALLOT FROM DREW CRAIG, ONE OF THE ELECTION JUDGES.

THE MEETING TODAY WILL BE CONDUCTED UNDER THE GENERAL RULES OF PARLIAMENTARY PROCEDURE.

WHILE WE ARE WAITING FOR THE ADDITIONAL PROXIES AND BALLOTS TO BE COUNTED, I WOULD LIKE TO INTRODUCE THE DIRECTORS AND OFFICERS WHO ARE PRESENT HERE TODAY.
1. JACK LARSEN
2. HARLEY HOTCHKISS
3. WALES MADDEN
4. MIKE NICOLAIS
5. BOB STILLWELL
6. CY WAGNER
7. JERRY WALSH

ALSO SEATED ON THE PLATFORM TO MY RIGHT ARE:
1. JOHN BOROS, VICE PRESIDENT AND SECRETARY
2. BARRY CANNADAY, GENERAL COUNSEL

I WOULD ASK THAT OUR OFFICERS SEATED IN THE AUDIENCE STAND AS THEY ARE INTRODUCED.
1. BILL ALEXANDER
2. DAVID BATCHELDER
3. MARION CAUSEY
4. JESSE JOHNSON
5. BOB KING
6. BOB MCCLESKEY
7. BILL POYNOR
8. JIM UPCHURCH
9. TEX CORLEY

(INTRODUCE OTHER GUESTS AS APPROPRIATE).

ALSO, RANDAL McDONALD IS HERE TODAY REPRESENTING ARTHUR ANDERSEN & CO., THE COMPANY’S AUDITORS. AFTER THE FORMAL PART OF THE MEETING, RANDAL WILL BE AVAILABLE TO ANSWER ANY QUESTIONS WHICH MAY BE APPROPRIATELY DIRECTED TO HIM.

NOW FOR THE FORMAL PART OF THE MEETING —
AT THIS MEETING, WE WILL CONSIDER THE FOLLOWING PROPOSALS:
1. TO ELECT THREE MEMBERS OF THE BOARD OF DIRECTORS;
2. TO CONSIDER AND VOTE UPON THE APPROVAL OF ARTHUR ANDERSEN & CO. AS THE COMPANY’S INDEPENDENT PUBLIC ACCOUNTANTS FOR 1984; AND
3. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS THEREOF.

ACCORDING TO OUR STOCKHOLDERS’ LIST, ON THE MARCH 5, 1984, RECORD DATE THERE WERE OUTSTANDING 66,946,394 SHARES OF COMMON STOCK OF THE COMPANY. EACH SHARE OF STOCK IS ENTITLED TO ONE VOTE. ONE SHARE MORE THAN 50% OF THE ISSUED AND OUTSTANDING COMMON STOCK REPRESENTS A QUORUM FOR ALL MATTERS TO BE CONSIDERED AT THIS MEETING. WILL THE SECRETARY PLEASE ADVISE THE MEETING WHETHER OR NOT A QUORUM IS PRESENT.

MR. BOROS: MR. CHAIRMAN, OF THE SHARES OF CAPITAL STOCK ENTITLED TO VOTE AT THIS MEETING, THERE ARE PRESENT IN PERSON OR REPRESENTED BY PROXY            SHARES, OR APPROXIMATELY    % OF SUCH COMMON STOCK OUTSTANDING ON THE RECORD DATE. ACCORDINGLY, MR. CHAIRMAN, A QUORUM IS PRESENT.

MR. PICKENS: IN ORDER TO SAVE YOUR TIME, I WOULD ENTERTAIN A MOTION FROM THE FLOOR TO DISPENSE WITH THE READING OF THE MINUTES OF THE LAST ANNUAL MEETING OF STOCKHOLDERS HELD ON APRIL 27, 1983.

LES CARNES: MR. CHAIRMAN, I MOVE TO DISPENSE WITH THE READING OF THE MINUTES OF THE ANNUAL MEETING OF STOCKHOLDERS.

TAYLOR YOAKAM: I SECOND THE MOTION.

MR. PICKENS: IS THERE ANY DISCUSSION? (PAUSE) ALL IN FAVOR OF THE MOTION, PLEASE INDICATE BY SAYING “AYE.” THOSE OPPOSED, “NO.” THE MOTION IS CARRIED AND THE MINUTES OF THE LAST ANNUAL MEETING WILL NOT BE READ.

WE WILL NOW PROCEED WITH A TALLY OF THE VOTES. WILL THE SECRETARY PLEASE REPORT ON THE VOTING RESULTS FOR THE VARIOUS PROPOSALS ON THE BALLOT.

MR. BOROS
1. ELECTION OF DIRECTORS
THERE WERE            SHARES (APPROXIMATELY    % OF THE OUTSTANDING SHARES) VOTED IN FAVOR OF THE NOMINEES FOR THE DIRECTORS PROPOSED BY MANAGEMENT. CONSEQUENTLY, MR. PICKENS, MR. LARSEN AND MR. WALSH HAVE BEEN DULY ELECTED.

2. INDEPENDENT PUBLIC ACCOUNTANTS
APPOINTING ARTHUR ANDERSEN & CO. AS THE COMPANY’S INDEPENDENT PUBLIC ACCOUNTANTS FOR 1984 HAS BEEN APPROVED BY THE AFFIRMATIVE VOTE OF            SHARES OR APPROXIMATELY % OF THE SHARES OUTSTANDING.

MR. PICKENS: IS THERE ANY OTHER FORMAL BUSINESS TO BE BROUGHT BEFORE THIS MEETING. (PAUSE) IF NOT, I WOULD LIKE TO AGAIN MENTION THAT MR, RANDAL MCDONALD, REPRESENTING ARTHUR ANDERSEN & CO. AT THIS MEETING, IS AVAILABLE NOW TO ANSWER ANY QUESTION YOU MIGHT HAVE ABOUT THE COMPANY’S FINANCIAL STATEMENTS, (PAUSE FOR ANY QUESTIONS.)

MR. PICKENS’ INFORMAL REMARKS

I’D LIKE TO TAKE A FEW MOMENTS NOW TO DISCUSS CURRENT CONDITIONS WITHIN THE INDUSTRY AND MESA’S RESPONSE TO THOSE CONDITIONS.

(SLIDE 1 — SUMMARIZED FIRST QUARTER RESULTS)
FIRST. I WANT TO ANNOUNCE OUR EARNINGS FOR THE FIRST QUARTER OF 1984. [Handwritten addition: Focus on revenues, net income, earnings per share. Oil prod. Up    %. Didn’t do too bad during deal. Someone watching the store.]

(SLIDE 2 — COMPARISION OF FIRST QUARTER PRODUCTION)

(SLIDE 3 — LOGO)
1983 WAS A YEAR OF TRANSITION AND CHANGE FOR MESA AS THE COMPANY SHIFTED ITS EMPHASIS FROM EXPLORATION AND REFOCUSED ON SEEKING INVESTMENT OPPORTUNITIES IN UNDERVALUED ASSETS.

THIS TRANSITION HAS COME ABOUT DUE TO A NUMBER OF FACTORS WHICH AFFECT THE ENTIRE OIL INDUSTRY.

(SLIDE 4 — RIG COUNT)
AND THE BEST BAROMETER OF THE SITUATION IS THE DRILLING RIG COUNT.

FROM THE ALL-TIME HIGH OF 4,531 RIGS IN OPERATION IN DECEMBER 1981, THE COUNT HAS SLIPPED TO    , LESS THAN HALF OF THE HIGH WATER MARK.

HIGH FINDING COSTS STABLE OIL PRICES AND LIMITED GAS MARKETS HAVE SERIOUSLY CURTAILED DRILLING ACTIVITY IN THE UNITED STATES.

[Text stricken: THERE ARE SIMPLY NOT ENOUGH ECONOMIC PROSPECTS TO DRILL TODAY.]

[Text stricken: THOSE] [Handwritten addition: These] CONDITIONS ARE SHEDDING CRITICAL LIGHT ON THE INDUSTRY’S MOST SERIOUS PROBLEM—RESERVE REPLACEMENT.

[Text stricken: SLIDE 5— RESERVE DEPLETION]

SINCE 1970, [Text stricken: WHEN THE PRODUCTION OF] [Handwritten addition: after the discovery of] PRUDHOE BAY [Text stricken: CAME ON STREAM,] THIS NATION’S RESERVES OF OIL AND GAS HAVE BEEN STEADILY DECLINING.

EVEN DURING THE 1970s, [Handwritten addition: and early 80’s] WHEN DRILLING ACTIVITY WAS AT FEVER PITCH, THE INDUSTRY AS A WHOLE DID NOT REPLACE PRODUCTION.

THE PROBLEM IS MORE SERIOUS FOR THE MAJOR OIL COMPANIES THAN IT IS AMONG THE INDEPENDENTS.

IN 1982, WHICH IS THE LAST YEAR FOR WHICH WE HAVE COMPLETE DATA, THE MAJOR OIL COMPANIES REPLACED ONLY 63% OF THEIR COMBINED EQUIVALENT PRODUCTION.

THE INDEPENDENT OIL COMPANIES, HOWEVER, REPLACED 108% OF THEIR PRODUCTION IN 1982.

ALTHOUGH RESERVE REPLACEMENT HAS BEEN A SERIOUS PROBLEM FOR OVER A DECADE, IT WAS MASKED DURING THE 1970s [Handwritten addition: and early 80s] BY INCREASING OIL PRICES.

AS LONG AS THE FOCUS WAS ON THE INCOME STATEMENT, RESERVE REPLACEMENT WAS NOT IN THE SPOTLIGHT.

[Handwritten addition: Use highest price for each year. Just oil. No condensate BRP to get with Bob Penske.]

(SLIDE 6 — OIL PRICES)
HOWEVER, AS THE PRICE OF OIL DECLINED. . .AND THEN LEVELED OFF AT $29 A BARREL. . .RESERVE REPLACEMENT BECAME [Text stricken: MORE PROMINENT.] [Handwritten addition: a more focal point.]

(SLIDE 7 — MARKET VS. APPRAISED VALUE)
AT THE SAME TIME, MANY OF THE INTEGRATED COMPANIES’ MARKET VALUES WERE HEAVILY DISCOUNTED FROM THEIR APPRAISED VALUES.

FOR EXAMPLE. . .BASED ON THEIR RESPECTIVE MARKET VALUES AT JUNE 30, 1983, AND JOHN S. HEROLD’S APPRAISED VALUES AS OF DECEMBER 31, 1982, NOT ONE OF THESE SIX INTEGRATED COMPANIES WAS EVEN SELLING FOR 50% OF THEIR APPRAISED VALUE. SUN CAME THE CLOSEST WITH 48%. THE OTHERS RANGED DOWNWARD TO GULF AT ONLY 32%.

[Handwritten addition: 1. Dates off heading (all info in parens.). 2. Put one heading from side on top as the heading. Market price as a % of appraised value. (Market price)—at bottom across yellow bars.]

POOR RESERVE REPLACEMENT AND DISCOUNTED MARKET VALUES CAUGHT THE ATTENTION OF MANY SHAREHOLDERS AND HAS BECOME A MAJOR FACTOR IN THE RESTRUCTURING PROCESS CURRENTLY UNDER WAY IN THE INDUSTRY.

WE’VE SEEN MANY ACQUISITIONS AND MERGERS OCCUR AS A RESULT OF SHAREHOLDER DISCONTENT.

(SLIDE 8 — MERGERS)
DURING THE PAST YEAR OR SO, THEY INCLUDE:
CITIES SERVICE ACQUIRED BY OCCIDENTAL IN DECEMBER 1982;
GENERAL AMERICAN ACQUIRED BY PHILLIPS IN MARCH 1983;
GETTY, WHICH WAS JUST BOUGHT BY TEXACO;
AND, THE GULF AND SUPERIOR DEALS CURRENTLY IN THE WORKS.

(SLIDE 9 — LOGO)
THE ABILITY TO ADJUST TO CHANGING CONDITIONS IS EXTREMELY IMPORTANT TO THE INDUSTRY.

MESA HAS ALWAYS BEEN WILLING AND ABLE TO MAKE NEEDED ADJUSTMENTS.

FOR INSTANCE, IN 1979 WE SOLD OUR NORTH SEA AND CANADIAN PROPERTIES IN LIGHT OF ANTICIPATED POLITICAL CHANGES IN THOSE COUNTRIES.

AND MORE RECENTLY, WE’VE MADE MAJOR TRANSITIONS IN RESPONSE TO CURRENT CONDITIONS.

BECAUSE OF DECREASED DEEP DRILLING IN THE ANADARKO BASIN, WE MOVED OUR MID-CONTINENT DIVISION FROM OKLAHOMA CITY TO AMARILLO.

(SLIDE 10 — AUSTRALIA MAP)
WE ALSO SOLD OUR INTERESTS IN AUSTRALIA FOR $42.1 MILLION LAST SEPTEMBER AFTER FINDING THREE OIL FIELDS THERE.

AS A RESULT OF SUCH SALE, ALL OF MESA’S OPERATIONS ARE NOW CONSOLIDATED WITHIN THE UNITED STATES.

(SLIDE 11 — OIL PRODUCTION)
BECAUSE OF CONTINUING POOR DEMAND FOR NATURAL GAS, WE ARE DIRECTING OUR EXPLORATION EFFORTS PRIMARILY TOWARD OIL PROSPECTS[Handwritten addition: .] [Text stricken: IN THE WILLISTON BASIN OF NORTH DAKOTA AND IN SOUTHEASTERN NEW MEXICO.] [Handwritten addition: lighten green bar black line (a space between bars w/no color line.)]

THAT EMPHASIS HAS PAID OFF IN SUBSTANTIALLY INCREASED OIL PRODUCTION IN EACH OF THE LAST SIX QUARTERS.

(SLIDE 12 — MAP OF BEAR CREEK)
IN THE BEAR CREEK AND CORRAL CREEK FIELD AREAS OF NORTH DAKOTA. WE NOW HAVE 9 WELLS PRODUCING AT A COMBINED DAILY RATE OF 2,600 BARRELS OF OIL AND 4 MILLION CUBIC FEET OF GAS.

(SLIDE 13 — WELL PHOTO)
ADDITIONAL DRILLING IS PLANNED IN THIS AREA DURING THE REMAINDER OF THIS YEAR.

(SLIDE 14 — PHOTO OF S.E. NEW MEXICO)
IN THE PERMIAN BASIN DIVISION, INTENSIVE DRILLING CONTINUES IN EDDY AND LEE COUNTIES OF NEW MEXICO, AS WELL AS TERRY AND DAWSON COUNTIES IN WEST TEXAS. [Handwritten addition: No offense, but best pic we could take of this area.]

(SLIDE 15 — PECOS SLOPE MAP)
DEVELOPMENT ACTIVITY IS ALSO CONTINUING IN THE PECOS SLOPE AREA OF SOUTHEASTERN NEW MEXICO.

(SLIDE 16 — PECOS SLOPE MAP)
SINCE 1979, WE HAVE DRILLED 202 SUCCESSFUL WELLS IN THE PECOS SLOPE FOR A 78 PERCENT SUCCESS RATE.

(SLIDE 17 — BRAZOS A-39)
OUR GULF COAST BUDGET IS BEING REDUCED THIS YEAR IN VIEW OF HIGH FINDING COSTS AND CURRENT MARKET CONDITIONS FOR NATURAL GAS.

MESA DID NOT PARTICIPATE AGGRESSIVELY IN OFFSHORE LEASE SALE ACTIVITY LAST YEAR, AND WE WILL NOT [Handwritten addition: likely not be an aggressive participant.] PARTICIPATE AT ALL IN 1984.

ON BRAZOS A-39 (MESA 50%), TWO MIOCENE DEVELOPMENT WELLS HAVE BEEN COMPLETED AND TESTED AT INITIAL DAILY RATES OF 12 MILLION AND 5.2 MILLION CUBIC FEET OF GAS, RESPECTIVELY. A THIRD WELL IS CURRENTLY BEING COMPLETED. PRODUCTION FROM THIS PLATFORM SHOULD BEGIN IN THE THIRD QUARTER OF 1984 AT A CONTRACT RATE OF 20 MILLION CUBIC FEET PER DAY.

(SLIDE 18 - ANNUAL BUDGETS)
WE HAVE CONSISTENTLY ADJUSTED OUR BUDGET TO REFLECT CHANGING INDUSTRY CONDITIONS.

[Handwritten addition: CK acreage cost in 1981 (green)]

OUR 1984 BUDGET IS CURRENTLY SET AT $109 MILLION, ALTHOUGH WE MAY INCREASE THAT DUE TO [Text stricken: DEVELOPMENT] [Handwritten addition: additional development] DRILLING [Text stricken: OF OIL PROSPECTS.]

THAT IS A SIGNIFICANT REDUCTION FROM 1983’S BUDGET OF $223 MILLION AND OUR ALL-TIME HIGH OF $420 MILLION IN 1981.

I’D LIKE TO NOTE THAT EVEN THOUGH THE 1983 BUDGET WAS CONSIDERABLY REDUCED FROM THE PREVIOUS YEAR’S, THE COMPANY STILL REPLACED PRODUCTION ON AN ENERGY EQUIVALENT BASIS.

HOWEVER, WE DO NOT EXPECT THAT 1984’S BUDGET OF $109 MILLION WILL BE SUFFICIENT TO REPLACE PRODUCTION THROUGH EXPLORATION AND DEVELOPMENT, UNLESS WE GET LUCKY.

OUR 1984 BUDGET WILL BE ABOUT 40 PERCENT OF CASH FLOW. . .WHICH IS A LEVEL COMPARABLE TO THAT OF THE INDUSTRY AVERAGE.

WE HAVE ANALYZED THIS SITUATION CAREFULLY AND FEEL THAT THIS MOVE IS BEST IN LIGHT OF THE OUTLOOK FOR OIL PRICES AND THE CURRENT GAS MARKETS.

AS PART OF OUR STUDY, WE ALSO CAME UP WITH SOME OTHER INFORMATION WHICH I BELIEVE WILL BE OF INTEREST TO YOU.

WE COMPARED THE BUDGETS OF 300 PUBLIC OIL AND GAS COMPANIES TO THE RESERVES THAT THOSE COMPANIES FOUND.

FROM 1980 TO 1982, THESE COMPANIS SPENT $166 BILLION ON [Text stricken: DOMESTIC] [Handwritten addition: worldwide] GAS ACTIVITIES.

THROUGH THOSE EXPENDITURES, THEY FOUND $109 BILLION WORTH OF RESERVES.

IN OTHER WORDS, THEY RECEIVED 66 CENTS [Handwritten addition: in value] FOR EACH DOLLAR THEY SPENT.

THAT ILLUSTRATES WHY MANY COMPANIES ARE LOOKING INTO ACQUIRING RESERVES AND WHY WE HAVE SEEN SO MUCH MERGER AND ACQUISITION ACTIVITY RECENTLY.

[Text stricken: COMPANIES] [Handwritten addition: Some mgmts] HAVE BEGUN TO LOOK FOR WAYS TO INVEST THE SHAREHOLDERS’ MONEY.

(SLIDE 19 — LOGO)
OF COURSE, THAT KIND OF THINKING IS NOT NEW TO MESA.

BECAUSE WE PUT THE SHAREHOLDERS’ INTERESTS FIRST, IT IS OUR TOP PRIORITY TO EXPLORE AND PURSUE ALL POSSIBILITIES FOR ENHANCING THE SHAREHOLDERS’ INVESTMENT.

THIS HAS RESULTED IN THE COMPANY’S INVESTING IN MARKETABLE SECURITIES. [Handwritten addition: 22 consolidate]

(SLIDE 20 — INVESTMENTS AND GAINS)
IN 1982, WE SOLD OUR 4.1 MILLION SHARES OF CITIES SERVICE STOCK FOR A PRE-TAX GAIN OF $31.5 MILLION.

IN LATE 1982, MESA MADE A TENDER OFFER FOR APPROXIMATELY 51% OF THE OUTSTANDING SHARES OF GENERAL AMERICAN OIL COMPANY.
[Handwritten addition: Cities, GAO, Supplies. SH gain. Mesa’s gain. Pre-tax gains in marketable securities. Year company [Text stricken: investment securities] [Text stricken: shareholders] Mesa.]
GAO SUBSEQUENTLY RECEIVED A HIGHER OFFER FROM PHILLIPS PETROLEUM.

HOWEVER, THE RESULTING EXCHANGE OF MESA DEBENTURES FOR GAO STOCK ELIMINATED $76 MILLION OF MESA DEBT AND GAVE US A PRE-TAX GAIN OF $42.4 MILLION.

IN SEPTEMBER, WE SOLD 3.98 MILLION SHARES OF THE SUPERIOR OIL COMPANY ACQUIRED IN 1983 TO SUPERIOR FOR A PRE-TAX GAIN OF $31.6 MILLION.

AND YOU’RE ALL AWARE OF OUR INVESTMENT IN GULF, FROM WHICH WE EXPECT A PRE-TAX GAIN OF SOME $500 MILLION.

I’LL DISCUSS THE GULF DEAL AND THE CONSEQUENCES FOR MESA IN MORE DETAIL IN A FEW MOMENTS.

(SLIDE 21 — SHAREHOLDERS GAINS)
BUT FIRST, I’D LIKE TO TAKE A LOOK AT HOW GULF SHAREHOLDERS FARED COMPARED TO SHAREHOLDERS OF OTHER COMPANIES WHICH WERE ALSO INVOLVED IN RECENT MERGER AND ACQUISITION ACTIVITY.

THESE GAINS ARE BASED ON INCREASED MARKET VALUES RESULTING FROM THE ACQUISITION.

GULF SHAREHOLDERS WILL ENJOY GAINS OF 32% MORE THAN THE RUNNER-UP, GETTY. IN TOTAL, SHAREHOLDERS OF THESE FOUR COMPANIES WILL GAIN $17.6 BILLION AS A DIRECT RESULT OF ACQUISITIONS AND MERGERS.
(INSERT SLIDE PRESENTATION ON GULF DEAL.)

(LIGHTS TURNED ON)

THE RECENTLY DEFEATED LEGISLATION WOULD HAVE STOPPED THE GULF-SOCAL DEAL AS WELL AS FUTURE MERGERS IN THE PETROLEUM INDUSTRY.

WHAT IS PARTICULARLY DISTURBING ABOUT SUCH LEGISLATION IS THAT IT COULD BE PROPOSED AGAINST OTHER INDUSTRIES AND OTHER SHAREHOLDERS.

THE IMPACT OF THAT WOULD BE DEVASTATING.

THERE ARE 42 MILLION STOCKHOLDERS IN THE UNITED STATES.

THAT’S ONE OUT OF EVERY SIX AMERICANS.

AND IF WE ASSUME THAT MOST OF THOSE SHAREHOLDERS HAVE A SPOUSE, THAT MEANS THAT ABOUT 80 MILLION PEOPLE—OR ONE OUT OF EVERY THREE AMERICANS—WOULD BE DIRECTLY IMPACTED BY LEGISLATION AIMED AT STOCKHOLDERS.

IF THE CONGRESS IS GOING TO CONSIDER LEGISLATION AGAINST STOCKHOLDERS, THEN WE MIGHT AS WELL BEGIN PUTTING A WARNING LABEL ON STOCK CERTIFICATES MUCH LIKE THE ONE YOU FIND ON A CIGARETTE PACKAGE.

[Text stricken: WARNING: BUYING THIS STOCK MAY BE HAZARDOUS TO YOUR FINANCIAL HEALTH. YOU MAY NOT BE ALLOWED TO MAKE A PROFIT ON IT.]

WHAT WE HAVE WITNESSED IN CONGRESS VIVIDLY POINTS OUT THE IMPORTANCE OF CONTINUING POLITICAL ACTION TO PROTECT OUR RIGHTS AS SHAREHOLDERS AND CITIZENS UNDER THE FREE ENTERPRISE SYSTEM.

ALTHOUGH WE RETAIN GREAT FAITH IN OUR COUNTRY’S POLITICAL AND GOVERNMENTAL STRUCTURE, WE FEEL IT IS CRUCIAL THAT WE LEND ASSISTANCE TO THOSE WHO SUPPORT THE PRIVATE SECTOR.

VARIOUS PROHIBITIONS AGAINST CORPORATE DONATIONS TO POLITICAL ORGANIZATIONS AND CANDIDATES MAKE INDIVIDUAL FINANCIAL PARTICIPATION VERY IMPORTANT.

AS A RESULT, MESA’S BOARD OF DIRECTORS HAVE APPROVED THE FORMATION OF A POLITICAL ACTION COMMITTEE WHICH WILL RECEIVE VOLUNTARY CONTRIBUTIONS FROM MESA STOCKHOLDERS AND EMPLOYEES.

THROUGH THIS COMMITTEE. . .CALLED MESA PAC OR M-PAC. . .WE HOPE TO MAKE SIGNIFICANT STRIDES TOWARD PROMOTING A HEALTHIER BUSINESS CLIMATE.

WE HOPE THAT SHAREHOLDERS AND EMPLOYEES ALIKE WILL CONSIDER THEIR VOLUNTARY CONTRIBUTIONS AS NOT ONLY AN INVESTMENT IN A STRONG FREE ENTERPRISE SYSTEM, BUT ALSO AS AN INVESTMENT IN A STABLE AND SECURE ECONOMIC FUTURE FOR THEMSELVES.

IN CLOSING, I WOULD LIKE TO BRIEFLY COMMENT ON THE FUTURE OUTLOOK FOR THE INDUSTRY AND MESA.

THE INDUSTRY IS NOW IN THE MIDST OF A RESTRUCTURING PROCESS THAT IS EXTREMELY IMPORTANT FOR BOTH SHAREHOLDERS AND MANAGEMENTS.

THE ENTIRE INDUSTRY MUST BE RECEPTIVE TO MAKING THE CHANGES NEEDED TO MAKE THIS BUSINESS THRIVE AGAIN.

CONDITIONS ARE SUCH THAT WE CANNOT STAY ON THE COURSE WE HAVE FOLLOWED FOR THE LAST DECADE.

STABLE OIL PRICES, HIGH FINDING COSTS AND A POOR GAS MARKET HAVE PUT THE LID ON AGGRESSIVE DRILLING ACTIVITY.

WE SIMPLY CANNOT RELY ON EVER-INCREASING OIL PRICES TO MASK BASIC PROBLEMS LIKE RESERVE DEPLETION.

THE RESTRUCTURING PROCESS IS FAR FROM OVER, AND I BELIEVE WE’LL CONTINUE TO SEE MORE MERGERS AND ACQUISITIONS AS THE INDUSTRY CONTINUES TO MAKE ADJUSTMENTS.

CONGRESS CONTINUES TO MONITOR THIS ACTIVITY, AND WE HAVE YET TO SEE WHAT WILL FINALLY RESULT FROM THIS POLITICAL INQUIRY.

BUT MY BELIEF IS THAT RESTRUCTURING IS THE FREE ENTERPRISE SYSTEM WORKING TO CORRECT INEFFICIENCIES [Text stricken: IN THE] [Handwritten addition: within an] INDUSTRY.

IT SHOULD RESULT IN A MORE PRUDENT AND COST-EFFICIENT INDUSTRY THAT WILL BETTER BE ABLE TO HANDLE THE JOB OF ENSURING AMERICA’S ENERGY SUPPLIES WHILE, AT THE SAME TIME, GIVING ITS SHAREHOLDERS A FAIR RETURN ON THEIR INVESTMENT.

AT MESA, WE WILL CONTINUE TO MAKE ADJUSTMENTS THROUGH CLOSELY EVALUATING OUR DRILLING ACTIVITY AND FOCUSING ON OIL PROSPECTS.

IN ADDITION, WE WILL CONTINUE TO PURSUE UNDERVALUED ASSETS IN THE MARKETPLACE. [Text stricken: UNTIL INDUSTRY CONDITIONS IMPROVE.]

WE FEEL THAT IT IS OUR RESPONSIBILITY TO PROTECT AND ENHANCE THE INVESTMENTS OF YOU—THE SHAREHOLDERS AND OWNERS OF THIS COMPANY.

THAT IS OUR OVERRIDING GOAL, AND YOU CAN BE ASSURED THAT WE WILL WORK DILIGENTLY TO MEET YOUR EXPECTATIONS.

MR. PICKENS: IS THERE ANY OTHER BUSINESS TO COME BEFORE THE MEETING? (PAUSE) IF NOT, DO I HEAR A MOTION TO ADJOURN?

BOB PENKSA: I MOVE THE MEETING BE ADJOURNED.

MIKE MOORE: I SECOND THE MOTION.

MR. PICKENS: ALL THOSE IN FAVOR SAY, “AYE.” ALL THOSE OPPOSED, “NO.” I HEREBY DECLARE THE MEETING ADJOURNED. I WOULD LIKE TO INVITE EVERYONE TO JOIN US FOR REFRESHMENTS WHICH ARE BEING SERVED IN THE LOBBY AREA.

[Handwritten addition: Stock Charts
$114          Gulf          30]

[Handwritten addition: soon ensued]
[Handwritten addition: List committees. All SHs. $500mm.]
[Handwritten addition: Prospect quality going down faster than drilling costs.]