continue that. Given the volatility of the commodity prices, we just thought it was prudent
for our balance sheet to issue a little more equity.
<Q Leo Mariani>: Okay. I guess you also made some comments, Steve, about some potential
new play acreage that you are picking up here with Mariner. You did highlight the Niobrara is
adding some acreage here. What are your thoughts on obviously a big wave of industry activity in
some of these new oil windows or the plays particularly the Eagle Ford and the Niobrara?
<A G. Steven Farris>: Certainly the Niobrara is a new area for us. In fact, we got out of
the Rockies in 1995 and we have been trying although not publicly, to figure out a way to get back
in the Rockies. And this gives us a little foothold there. In terms of some of the other plays to
be real honest with you, we look at things that we know something about and that we can add value
to. If you look at the Granite Wash or you look at the Horn River, both of those plays where we
studied a long time and we put a lot of technology in it. I have to admit we have not done that in
the Niobrara yet. And we will be doing that going forward.
<Q Leo Mariani>: Okay. Any incremental G&A you guys expect to incur result of picking up
Mariner? It sounds like youre keeping a fair number of people here.
<A G. Steven Farris>: You mean well, on a BOE basis, it will probably be very similar
on what the total structure looks like going forward. Were just were going to have to put
organizations together and see what the needs are. Certainly, we have a need for a bunch of Mariner
employees.
<Q Leo Mariani>: Okay. Last question for you guys, clearly, as you pointed out Steve, $80
oil, $4 gas; is this changing your thoughts on capital allocation here on a kind of a real time
basis in terms of how you are viewing North American gas? Should we expect you guys to shift to
some funds around?
<A G. Steven Farris>: Well, weve shifted some funds around. We do except in projects that
make economics at $4.50 flat, we are very much a bias toward a oil in terms of what were doing in
the Permian Basin in terms of redrilling the Granite Wash wells even some of our projects on the
shelf are much more oily. And that just stands to reason, its better economics.
<Q Leo Mariani>: Okay. Thanks, guys.
Operator: Well go next to Wei Romualdo with Stone Harbor.
<Q Wei Romualdo>: Would you consider a tender of those Mariner bonds, given the cost, the
high coupon that they are?
<A Matthew Dundrea>: They have a make-whole provision. This is Matt Dundrea. They have a
make-whole provision, which is very expensive. And if we have if we did a tender, we would
essentially lose the cost, the benefit, by paying the premium in order to bring those bonds back.
So, at this point, the intention is to hold those bonds, the 8 and the 11.75 bonds, until weve
reached the first call dates respectively.
<Q Wei Romualdo>: Okay. Thank you.
Operator: Well go next to Ray Deacon with Pritchard Capital.
<Q Ray Deacon>: Yeah. Hey, Roger, I was wondering if there are a significant number of
properties from Devon or Mariner that are subject to pref rights. And I recall a couple of years
ago, you had made a look back put together a look back analysis on your Gulf of Mexico
investments to-date, and I was wondering if you would have that info handy.
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