Our price-risk program permits the utilization of agreements and financial instruments (such as futures, forward and options contracts, and swaps) to mitigate price risk associated with fluctuations in oil and natural gas prices. Below is a description of the financial instruments we have utilized to hedge our exposure to price risk.

• Price Floors – At February 28, 2003, we had in place price floors in effect through the October 2003 contract month for natural gas and April 2003 for crude oil. The natural gas price floors cover notional volumes of 3,150,000 MMBtu, with a weighted average floor price of $4.36 per MMBtu. The crude oil price floors cover notional volumes of 400,000 barrels of oil, with a weighted average floor price of $26.13 per barrel.
• Participating Collars – At February 28, 2003, we had in place certain “collar” financial transactions in effect through the June 2003 contract month. The natural gas collars cover notional volumes of 1,100,000 MMBtu, with a floor price of $3.00 per MMBtu and ceiling prices ranging from $4.75 per MMBtu to $6.00 per MMBtu, plus 60% participation by us in prices realized above the ceiling. The crude oil collars cover notional volumes of 360,000 barrels of oil, with floor prices ranging from $21.00 to $26.00 per barrel and ceiling prices ranging from $29.04 to $35.05 per barrel, plus 60% participation by us in prices realized above these ceilings.
• New Zealand Gas Contracts – All of our gas production in New Zealand is sold under long-term, fixed-price contracts denominated in New Zealand dollars. These contracts protect against price volatility, and our revenue from these contracts will vary only due to production fluctuations and foreign exchange rates.

Interest Rate Risk. Our Senior Notes have a fixed interest rate, so consequently we are not exposed to cash flow risk from market interest rate changes on our Senior Notes. At December 31, 2002, we had no outstanding borrowings under our credit facility, which is subject to floating rates and therefore susceptible to interest rate fluctuations. The result of a 10% fluctuation in the bank’s base rate would constitute 43 basis points and would not impact 2003 cash flows based on this same level of borrowing.

Financial Instruments & Debt Maturities. Our financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, bank borrowings, and notes. The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to the highly liquid nature of these short-term instruments. The fair values of the bank borrowings approximate the carrying amounts as of December 31, 2002 and 2001, and were determined based upon interest rates currently available to us for borrowings with similar terms. Based on quoted market prices as of the respective dates, the fair value of our Senior Notes due 2009 was $129.0 million at December 31, 2002, and $126.5 million at December 31, 2001. Based upon quoted market prices as of the respective dates, the fair value of our Senior Notes due 2012 was $189.2 million at December 31, 2002. Our credit facility with the banks expires October 1, 2005. Our $125.0 million Senior Notes mature on August 1, 2009. Our $200.0 million Senior Notes mature on May 1, 2012.