Costs Incurred. The following table sets forth costs incurred related to our oil and gas operations:

	Year Ended December 31, 2002
	Total	Domestic	New Zealand
	-----------------	-----------------	-------------------
Acquisition of proved properties	$ 64,229,283	$ 5,415,932	$ 58,813,351
Lease acquisitions1	16,009,939	10,789,876	5,220,063
Exploration	18,395,335	7,571,215	10,824,120
Development	47,407,087	40,366,378	7,040,709
	-----------------	-----------------	-------------------
Total acquisition, exploration, and development2	$146,041,644	$64,143,401	$81,898,243
	-----------------	-----------------	-------------------
Processing plants	$7,845,520	$1,313,299	$6,532,221
Field compression facilities	2,251,247	2,251,247	---
	-----------------	-----------------	-------------------
Total plants and facilities	$10,096,767	$3,564,546	$6,532,221
	-----------------	-----------------	-------------------
Total costs incurred	$156,138,411	$67,707,947	$88,430,464
	============	============	============
	Year Ended December 31, 2001
	Total	Domestic	New Zealand
	-----------------	-----------------	-------------------
Acquisition of proved properties	$ 41,286,539	$ 40,491,203	$  795,336
Lease acquisitions1	31,225,493	25,688,068	5,537,425
Exploration	41,981,536	35,944,405	6,037,131
Development	132,246,713	112,597,856	19,648,857
	-----------------	-----------------	-------------------
Total acquisition, exploration, and development2	$246,740,281	$ 214,721,532	$ 32,018,749
	-----------------	-----------------	-------------------
Processing plants	$23,331,095	$817,454	$22,513,641
Field compression facilities	319,703	319,703	---
	-----------------	-----------------	-------------------
Total plants and facilities	$23,650,798	$1,137,157	$22,513,641
	-----------------	-----------------	-------------------
Total costs incurred	$270,391,079	$215,858,689	$54,532,390
	============	============	============
	Year Ended December 31, 2000
	Total	Domestic	New Zealand
	-----------------	-----------------	-------------------
Acquisition of proved properties	$ 34,191,883	$ 34,191,883	$                ---
Lease acquisitions1	20,842,103	16,315,749	4,526,354
Exploration	20,150,834	18,524,883	1,625,951
Development	104,083,409	93,931,500	10,151,909
	-----------------	-----------------	-------------------
Total acquisition, exploration, and development2	$179,268,229	$ 162,964,015	$ 16,304,214
	-----------------	-----------------	-------------------
Processing plants	$1,819,464	$755,119	$   1,064,345
Field compression facilities	203,789	203,789	---
	-----------------	-----------------	-------------------
Total plants and facilities	$2,023,253	$958,908	$1,064,345
	-----------------	-----------------	-------------------
Total costs incurred	$181,291,482	$163,922,923	$17,368,559
	============	============	============

(1)These are actual amounts as incurred by year, including both proved and unproved lease costs. The annual lease acquisition amounts added to proved oil and gas properties in 2002, 2001, and 2000 were $23,454,234, $22,470,263, and $16,791,834, respectively.

(2)Includes capitalized general and administrative costs directly associated with the acquisition, exploration, and development efforts of approximately $10,700,000, $11,600,000, and $10,300,000 in 2002, 2001, and 2000, respectively. In addition, total includes $7,000,000, $6,300,000, and $5,000,000 in 2002, 2001, and 2000, respectively, of capitalized interest on unproved properties.

Results of Operations. New Zealand operations began in 2001 while all our oil and gas operations in 2000 were domestic. The following table sets forth results of our oil and gas operations:

	Year Ended December 31, 2002
	Total	Domestic	New Zealand
	---------------------	---------------------	---------------------
Oil and gas sales	$ 141,195,713)	$ 112,065,003	$ 29,130,710
Oil and gas production costs	(41,497,312)	(33,088,958)	(8,408,354)
Depreciation and depletion	(55,254,467)	(42,807,364)	(12,447,103)
	---------------------	---------------------	---------------------
	44,443,934	36,168,681	8,275,253
Provision for income taxes	15,860,064	13,129,231	2,730,833
	---------------------	---------------------	---------------------
Results of producing activities	$ 28,583,870	$ 23,039,450	$ 5,544,420
	============	============	============
Amortization per physical unit of production
(equivalent Mcf of gas)	$1.11	$1.25	$0.80
	============	============	============
	Year Ended December 31, 2001
	Total	Domestic	New Zealand
	---------------------	---------------------	---------------------
Oil and gas sales	$ 181,184,635	$ 179,360,844	$ 1,823,791
Oil and gas production costs	(36,719,609)	(36,554,418)	(165,191)
Depreciation and depletion	(58,589,116)	(58,417,637)	(171,479)
Write-down of oil and gas properties	(98,862,247)	(98,862,247)	---
	---------------------	---------------------	---------------------
	(12,986,337)	(14,473,458)	1,487,121
Provision (benefit) for income taxes	(4,647,810)	(5,138,560)	490,750
	---------------------	---------------------	---------------------
Results of producing activities	$ (8,338,527)	$ (9,334,898)	$ 996,371
	============	============	============
Amortization per physical unit of production
(equivalent Mcf of gas)	$1.31	$1.32	$ 0.34
	============	============	============
	Year Ended December 31, 2000
	Total	Domestic	New Zealand
	---------------------	---------------------	---------------------
Oil and gas sales	$ 189,138,947	$ 189,138,947	$               ---
Oil and gas production costs	(29,220,315)	(29,220,315)	---
Depreciation and depletion	(46,849,819)	(46,849,819)	---
	---------------------	---------------------	---------------------
	113,068,813	113,068,813	---
Provision for income taxes	40,365,566	40,365,566	---
	---------------------	---------------------	---------------------
Results of producing activities	$ 72,703,247	$ 72,703,247	$               ---
	============	============	============
Amortization per physical unit of production
(equivalent Mcf of gas)	$1.11	$1.11	$               ---
	============	============	============

These results of operations do not include the effects of our hedging activities.

Supplemental Reserve Information. The following information presents estimates of our proved oil and gas reserves. Reserves were determined by us and audited by H. J. Gruy and Associates, Inc. (“Gruy”), independent petroleum consultants. Gruy’s summary report dated February 7, 2003, is set forth as an exhibit to the Form 10-K Report for the year ended December 31, 2002, and includes definitions and assumptions that served as the basis for the audit of proved reserves and future net cash flows. Such definitions and assumptions should be referred to in connection with the following information:

Estimates of Proved Reserves
	Total		Domestic		New Zealand
		Oil, NGL, and		Oil, NGL, and		Oil, NGL, and
	Natural Gas	Condensate	Natural Gas	Condensate	Natural Gas	Condensate
	(Mcf)	(Bbls)	(Mcf)	(Bbls)	(Mcf)	(Bbls)
	---------------	---------------	---------------	---------------	---------------	---------------
Proved reserves as of December 31, 19991	329,959,750	20,806,263	329,959,750	20,806,263	---	---
Revisions of previous estimates2	(4,300,787)	(455,606)	(4,300,787)	(455,606)	---	---
Purchases of minerals in place	26,567,925	2,196,547	26,567,925	2,196,547	---	---
Sales of minerals in place	(363,262)	(76,288)	(363,262)	(76,288)	---	---
Extensions, discoveries, and other additions	93,869,841	15,134,694	38,556,364	3,943,807	55,313,477	11,190,887
Production3	(27,119,491)	(2,472,014)	(27,119,491)	(2,472,014)	---	---
	---------------	---------------	---------------	---------------	---------------	---------------
Proved reserves as of December 31, 2000	418,613,976	35,133,596	363,300,499	23,942,709	55,313,477	11,190,887
Revisions of previous estimates2	(122,127,541)	5,621,556	(101,693,477)	8,460,690	(20,434,064)	(2,839,134)
Purchases of minerals in place	10,038,803	7,430,591	10,038,803	7,430,591	---	---
Sales of minerals in place	(7,508,064)	(555,586)	(7,508,064)	(555,586)	---	---
Extensions, discoveries, and other additions	52,353,909	8,907,852	50,810,697	6,257,441	1,543,212	2,650,411
Production	(26,458,958)	(3,055,373)	(26,458,958)	(2,971,112)	---	(84,261)
	---------------	---------------	---------------	---------------	---------------	---------------
Proved reserves as of December 31, 2001	324,912,125	53,482,636	288,489,500	42,564,733	36,422,625	10,917,903
Revisions of previous estimates2	(29,972,714)	5,298,439	(29,470,419)	8,675,082	(502,295)	(3,376,643)
Purchases of minerals in place	51,940,044	3,711,948	226,245	24,207	51,713,799	3,687,741
Sales of minerals in place	(3,839,124)	(464,490)	(3,839,124)	(464,490)	---	---
Extensions, discoveries, and other additions	10,822,919	12,180,558	197,919	11,304,782	10,625,000	875,776
Production	(27,131,578)	(3,770,128)	(15,780,059)	(3,074,674)	(11,351,519)	(695,454)
	---------------	---------------	---------------	---------------	---------------	---------------
Proved reserves as of December 31, 2002	326,731,672	70,438,963	239,824,062	59,029,640	86,907,610	11,409,323
	=========	========	=========	========	========	========
Proved developed reserves:
December 31, 1999	174,046,096	8,437,299	174,046,096	8,437,299	---	---
December 31, 2000	215,169,833	10,980,196	215,169,833	10,980,196	---	---
December 31, 2001	181,651,578	23,759,574	167,401,736	20,393,142	14,249,842	3,366,432
December 31, 20024	233,514,572	35,928,395	149,731,562	26,530,112	83,783,010	9,398,283

(1)Proved reserves exclude quantities subject to our volumetric production payment agreement, which expired with the last required delivery of volumes in October 2000.

(2)Revisions of previous estimates are related to upward or downward variations based on current engineering information for production rates, volumetrics, and reservoir pressure. Additionally, changes in quantity estimates are affected by the increase or decrease in crude oil and natural gas prices at each year-end. Proved reserves, as of December 31, 2002, were based upon prices in effect at year-end. The weighted average of 2002 year-end prices for total, domestic, and New Zealand were $3.49, $4.23, and $1.48 per Mcf of natural gas, $29.27, $29.36, and $28.80 per barrel of oil and $16.54, $17.30 and $12.24 per barrel of NGL, respectively. This compares to $2.51, $2.68, and $1.18 per Mcf, $18.45, $18.51, and $18.25 per barrel of oil and $10.70, $11.00 and $8.90 per barrel of NGL as of December 31, 2001, for total, domestic, and New Zealand, respectively.

(3)Natural gas production for 2000 excludes 405,130 Mcf, respectively, delivered under our volumetric production payment agreement.

(4)At December 31, 2002, 60% of our reserves are proved developed and 40% are proved undeveloped.

 

Standardized Measure of Discounted Future Net Cash Flows. The standardized measure of discounted future net cash flows relating to proved oil and gas reserves is as follows:

	Year Ended December 31, 2002
	Total	Domestic	New Zealand
	------------------------	------------------------	------------------------
Future gross revenues	$ 2,990,669,570	$ 2,578,435,576	$ 412,233,994
Future production costs	(720,599,745)	(612,094,088)	(108,505,657)
Future development costs	(224,792,520)	(208,492,520)	(16,300,000)
	------------------------	------------------------	------------------------
Future net cash flows before income taxes	2,045,277,305	1,757,848,968	287,428,337
Future income taxes	(599,195,484)	(512,966,321)	(86,229,163)
	------------------------	------------------------	------------------------
Future net cash flows after income taxes	1,446,081,821	1,244,882,647	201,199,174
Discount at 10% per annum	(609,212,030)	(540,375,347)	(68,836,683)
	------------------------	------------------------	------------------------
Standardized measure of discounted future net cash flows
relating to proved oil and gas reserves	$    836,869,791	$  704,507,300	$ 132,362,491
	============	============	============
	Year Ended December 31, 2001
	Total	Domestic	New Zealand
	------------------------	------------------------	------------------------
Future gross revenues	$ 1,706,475,138	$ 1,485,480,927	$ 220,994,211
Future production costs	(483,588,857)	(436,141,429)	(47,447,428)
Future development costs	(198,172,628)	(185,347,628)	(12,825,000)
	------------------------	------------------------	------------------------
Future net cash flows before income taxes	1,024,713,653	863,991,870	160,721,783
Future income taxes	(261,635,331)	(208,726,729)	(52,908,602)
	------------------------	------------------------	------------------------
Future net cash flows after income taxes	763,078,322	655,265,141	107,813,181
Discount at 10% per annum	(308,520,417)	(274,882,174)	(33,638,243)
	------------------------	------------------------	------------------------
Standardized measure of discounted future net cash flows
relating to proved oil and gas reserves	$    454,557,905	$   380,382,967	$ 74,174,938
	============	============	============
	Year Ended December 31, 2000
	Total	Domestic	New Zealand
	------------------------	------------------------	------------------------
Future gross revenues	$ 4,995,951,799	$ 4,737,560,630	$ 258,391,169
Future production costs	(817,127,348)	(807,436,139)	(9,691,209)
Future development costs	(204,620,116)	(180,320,116)	(24,300,000)
	------------------------	------------------------	------------------------
Future net cash flows before income taxes	3,974,204,335	3,749,804,375	224,399,960
Future income taxes	(1,321,061,952)	(1,243,731,594)	(77,330,358)
	------------------------	------------------------	------------------------
Future net cash flows after income taxes	2,653,142,383	2,506,072,781	147,069,602
Discount at 10% per annum	(1,075,183,917)	(1,017,995,158)	(57,188,759)
	------------------------	------------------------	------------------------
Standardized measure of discounted future net cash flows
relating to proved oil and gas reserves	$ 1,577,958,466	$ 1,488,077,623	$  89,880,843
	============	============	============

 

The standardized measure of discounted future net cash flows from production of proved reserves was developed as follows:

1. Estimates are made of quantities of proved reserves and the future periods during which they are expected to be produced based on year-end economic conditions.

2. The estimated future gross revenues of proved reserves are priced on the basis of year-end prices, except in those instances where fixed and determinable gas price escalations are covered by contracts limited to the price we reasonably expect to receive.

3. The future gross revenue streams are reduced by estimated future costs to develop and to produce the proved reserves, as well as certain abandonment costs, net of salvage value, based on year-end cost estimates and the estimated effect of future income taxes.

4. Future income taxes are computed by applying the statutory tax rate to future net cash flows reduced by the tax basis of the properties, the estimated permanent differences applicable to future oil and gas producing activities, and tax carry forwards.

The estimates of cash flows and reserves quantities shown above are based on year-end oil and gas prices for each period and do not include the effects of our hedging activities. Subsequent changes to such year-end oil and gas prices could have a significant impact on discounted future net cash flows. Under Securities and Exchange Commission rules, companies that follow the full-cost accounting method are required to make quarterly Ceiling Test calculations, using prices in effect as of the period end date presented (see Note 1 to the Consolidated Financial Statements). Application of these rules during periods of relatively low oil and gas prices, even if of short-term seasonal duration, may result in write-downs.

The standardized measure of discounted future net cash flows is not intended to present the fair market value of our oil and gas property reserves. An estimate of fair value would also take into account, among other things, the recovery of reserves in excess of proved reserves, anticipated future changes in prices and costs, an allowance for return on investment, and the risks inherent in reserves estimates.

The following are the principal sources of change in the standardized measure of discounted future net cash flows:

	Year Ended December 31,
	2002	2001	2000
	------------------------	------------------------	------------------------
Beginning balance	$ 454,557,905)	$ 1,577,958,466)	$ 438,943,834
	------------------------	------------------------	------------------------
Revisions to reserves proved in prior years--
Net changes in prices, production costs, and future
development costs	373,890,614	(1,692,627,074)	1,523,487,598
Net changes due to revisions in quantity estimates	2,582,633	(93,669,181)	(36,102,814)
Accretion of discount	60,298,619	231,325,481	56,405,451
Other	(88,675,455)	(204,768,815)	(220,119,873)
	------------------------	------------------------	------------------------
Total revisions	348,096,411	(1,759,739,589)	1,323,670,362
New field discoveries and extensions, net of future
production and development costs	190,461,371	110,213,160	359,265,150
Purchases of minerals in place	76,538,437	39,544,163	160,240,785
Sales of minerals in place	(5,769,642)	(50,131,970)	(598,021)
Sales of oil and gas produced, net of production costs	(99,698,403)	(144,262,145)	(159,331,003)
Previously estimated development costs incurred	48,752,814	94,107,760	65,953,028
Net change in income taxes	(176,069,102)	586,868,060	(610,185,669)
	------------------------	------------------------	------------------------
Net change in standardized measure of discounted
future net cash flows	382,311,886	(1,123,400,561)	1,139,014,632
	------------------------	------------------------	------------------------
Ending balance	$836,869,791	$454,557,905	$1,577,958,466
	============	============	============

 

Quarterly Data (Unaudited). The following table presents summarized quarterly financial information for the years ended December 31, 2001 and 2002: