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ANNUAL MEETING OF STOCKHOLDERS OF MESA PETROLEUM CO.
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PICKENS: WELCOME TO THE TWENTIETH ANNUAL MEETING OF STOCKHOLDERS OF MESA PETROLEUM CO. WE 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 BRIEFLY
COMMENT ABOUT MESA’S CURRENT ACTIVITY AND THE INDUSTRY IN GENERAL. AT THE CONCLUSION OF MY REMARKS, I WILL ANSWER ANY QUESTIONS
YOU MAY WISH TO ASK.
[Handwritten addition: 1. Fortune—Housekeeping]
[Handwritten addition: 2. Gulf—Det. Record]
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 BY RAISING YOUR HAND.
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. BEGINNING AT THE FAR LEFT ARE —
1. JACK LARSEN
2. MIKE NICOLAIS
3. CY WAGNER (OUR NEWEST DIRECTOR)
4. JERRY WALSH
5. HARLEY HOTCHKISS
6. WALES MADDEN
7. BOB STILLWELL.
ALSO SEATED ON THE PLATFORM TO MY RIGHT ARE —
1. JOHN BOROS, VICE PRESIDENT AND SECRETARY
2. BETTY LITTLE, OUR PARLIAMENTARIAN.
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. JESS JOHNSON
5. BOB KING
6. BOB MCCLESKEY
7. BILL POYNOR
8. JIM UPCHURCH
9. TEX CORLEY (OUR CONTROLLER)
[Handwritten addition: Lovejoy Mr. Carsey]
(INTRODUCE OTHER GUESTS AS APPROPRIATE).
ALSO, TOM BAUER IS HERE TODAY REPRESENTING ARTHUR ANDERSEN & CO., THE COMPANY’S AUDITORS. AFTER THE FORMAL PART OF THE MEETING,
TOM WILL BE AVAILABLE TO ANSWER ANY QUESTIONS WHICH MAY BE APPROPRIATELY DIRECTED TO HIM.
[Text stricken: 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 THE COMMON STOCK OUTSTANDING AS OF THE RECORD DATE. ACCORDINGLY, 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.
TAYLOR YOAKAM: MR. CHAIRMAN, I MOVE TO DISPENSE WITH THE READING OF THE MINUTES OF THE 1983 ANNUAL MEETING OF STOCKHOLDERS.
LES CARNES: 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. TOM BAUER, 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.)
I’D LIKE TO TAKE A FEW MOMENTS NOW TO DISCUSS CURRENT CONDITIONS WITHIN THE OIL INDUSTRY AND HOW MESA HAS RESPONDED TO THOSE CONDITIONS.
(SLIDE 1 — SUMMARIZED FIRST QUARTER RESULTS)
FIRST, I WANT TO ANNOUNCE OUR EARNINGS FOR THE FIRST QUARTER OF 1984. AS INDICATED ON THE SLIDE, OIL AND GAS REVENUES FOR
THE QUARTER HAVE INCREASED FROM $100 MILLION TO $104 MILLION.
TOTAL REVENUES INCREASED FROM $107 MILLION TO $123 MILLION.
EARNINGS PER SHARE FROM OPERATIONS WERE 16¢ VS. 21¢, SINCE THE SUPREME COURT REVERSED FERC ORDER 93, WHICH ALLOWED US TO COLLECT HIGHER GAS PRICES, WE WERE REQUIRED TO REDUCE NATURAL GAS REVENUES BY APPROXIMATELY
$9 MILLION FOR PRICE ADJUSTMENTS WHICH HAVE BEEN ACCRUED SINCE 1978. HAD IT NOT BEEN FOR THIS ADJUSTMENT, OPERATING EARNINGS
WOULD HAVE BEEN 23¢ VS. 21¢.
WE ALSO HAD A PAPER LOSS OF 6¢ PER SHARE RESULTING FROM THE DECLINE IN THE CANADIAN DOLLAR WHICH IS USED TO VALUE OUR CANADIAN
TERM ROYALTY. ALSO, LAST YEAR WE HAD A GAIN ON SALE OF OUR INVESTMENT IN GENERAL AMERICAN OIL OF 36¢ PER SHARE.
THE BOTTOM LINE, AFTER PREFERRED DIVIDENDS, IS 10¢ PER SHARE VS. 57¢.
COPIES OF OUR EARNINGS RELEASE WILL BE AVAILABLE AFTER THE MEETING.
WE ANTICIPATE THAT THE SECOND QUARTER WILL REFLECT THE PROFITS ON OUR GULF INVESTMENT, WHICH SHOULD BE IN THE NEIGHBORHOOD
OF $500 MILLION PRE-TAX.
(SLIDE 2 — COMPARISON OF FIRST QUARTER PRODUCTION)
FIRST QUARTER 1984 OIL PRODUCTION WAS UP 14% OVER THE FIRST QUARTER LAST YEAR. AND, NATURAL GAS PRODUCTION INCREASED 13% THIS
QUARTER DUE TO HIGHER SEASONAL DEMAND.
(SLIDE 3 — RIG COUNT)
1983 WAS A YEAR OF TRANSITION AND CHANGE FOR MESA AS THE COMPANY SHIFTED ITS EMPHASIS FROM EXPLORATION AND FOCUSED ON SEEKING
INVESTMENT OPPORTUNITIES IN UNDERVALUED ASSETS.
THIS TRANSITION HAS COME ABOUT DUE TO A NUMBER OF FACTORS WHICH AFFECT THE ENTIRE OIL INDUSTRY.
AND THE BEST BAROMETER OF [Text stricken: THE SITUATION] [Handwritten addition: industry activity] IS THE DRILLING RIG COUNT. [Handwritten addition: and this is a good place to start.]
FROM THE ALL-TIME HIGH OF 4,531 RIGS IN OPERATION IN DECEMBER 1981, THE COUNT HAS SLIPPED TO 2,156, LESS THAN HALF OF THE
HIGH WATER MARK.
HIGH FINDING COSTS, STABLE OIL PRICES AND DEPRESSED GAS MARKETS HAVE SERIOUSLY CURTAILED DRILLING ACTIVITY IN THE UNITED STATES.
(SLIDE 4 — RESERVE DEPLETION)
SINCE 1970, AFTER THE DISCOVERY OF PRUDHOE BAY, THE NATION’S RESERVES OF OIL AND GAS HAVE BEEN STEADILY DECLINING.
EVEN DURING THE LATE 1970s 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 FOR 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 BY RISING OIL PRICES.
AS LONG AS PRICES INCREASED FASTER THAN RESERVES DECLINED, THE INCOME STATEMENT LOOKED GOOD AND RESERVE REPLACEMENT WAS NOT
IN THE SPOTLIGHT.
(SLIDE 5 —)
HOWEVER, AS THE PRICE OF OIL DECLINED. . .AND THEN LEVELED OFF AT $29 A BARREL. . .RESERVE REPLACEMENT BECAME A GREATER CONCERN.
(SLIDE 6 —)
AT THE SAME TIME, MANY OF THE MARKET VS. INTEGRATED COMPANIES’ MARKET APPRAISED VALUES WERE HEAVILY DISCOUNTED VALUE FROM
THEIR APPRAISED VALUES.
FOR EXAMPLE. . .BASED ON THEIR RESPECTIVE MARKET VALUES AT JUNE 30, 1983, COMPARED WITH JOHN S. HEROLD’S APPRAISED VALUES,
NOT ONE OF THESE SIX INTEGRATED COMPANIES WAS SELLING FOR EVEN 50% OF THEIR APPRAISED VALUE. SUN CAME THE CLOSEST WITH 48%,
THE OTHERS RANGED DOWNWARD TO GULF AT ONLY 32%.
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 THIS DISPARITY IN VALUES AND RESULTING SHAREHOLDER DISCONTENT.
(SLIDE 7 — 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, GULF AND SUPERIOR CURRENTLY IN THE PROCESS OF BEING SOLD.
(SLIDE 8 — LOGO)
THE ABILITY TO ADJUST TO CHANGING CONDITIONS IS EXTREMELY IMPORTANT [Text stricken: TO THE INDUSTRY.]
MESA HAS ALWAYS BEEN WILLING AND ABLE TO MAKE NECESSARY 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 9 — AUSTRALIA MAP)
WE ALSO SOLD OUR INTERESTS IN AUSTRALIA FOR $42 MILLION LAST SEPTEMBER AFTER FINDING THREE OIL FIELDS THERE.
AS A RESULT OF THAT SALE, ALL OF MESA’S OPERATIONS ARE NOW CONSOLIDATED WITHIN THE UNITED STATES.
(SLIDE 10 — OIL PRODUCTION)
BECAUSE OF CONTINUING WEAK DEMAND FOR NATURAL GAS, WE ARE DIRECTING OUR DRILLING EFFORTS PRIMARILY TOWARD OIL PROSPECTS.
THAT EMPHASIS HAS PAID OFF IN SUBSTANTIALLY INCREASED OIL PRODUCTION IN EACH OF THE LAST SIX QUARTERS.
(SLIDE 11 — 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 12 — WELL PHOTO)
ADDITIONAL DRILLING IS PLANNED IN THIS AREA DURING THE REMAINDER OF THIS YEAR.
(SLIDE 13 — PHOTO OF S.E. NEW MEXICO)
IN THE PERMIAN BASIN DIVISION, INTENSIVE DRILLING CONTINUES IN EDDY AND LEA COUNTIES OF NEW MEXICO, AS WELL AS TERRY AND DAWSON
COUNTIES IN WEST TEXAS. (THIS IS THE BEST PICTURE WE COULD GET OF SOUTHEASTERN NEW MEXICO.)
(SLIDE 14 — PECOS SLOPE MAP)
DEVELOPMENT ACTIVITY IS ALSO CONTINUING IN THE PECOS SLOPE AREA OF SOUTHEASTERN NEW MEXICO.
(SLIDE 15 — PECOS SLOPE PHOTO)
SINCE 1979, WE HAVE DRILLED 202 SUCCESSFUL WELLS IN THE PECOS SLOPE FOR A 78% SUCCESS RATE.
(SLIDE 16 — BRAZOS A-39)
OUR GULF COAST BUDGET IS BEING REDUCED THIS YEAR IN VIEW OF HIGH FINDING COSTS AND CURRENT DEPRESSED MARKET CONDITIONS FOR
NATURAL GAS. MESA DID NOT PARTICIPATE IN OFFSHORE LEASE SALE ACTIVITY LAST YEAR, AND WE WILL NOT BE AN AGGRESSIVE PARTICIPANT
IN 1984.
ON BRAZOS A-39 (MESA 50%), TWO MIOCENE DEVELOPMENT WELLS HAVE BEEN COMPLETED AND TESTED. A THIRD WELL IS CURRENTLY BEING COMPLETED.
A FOURTH WELL WILL COMMENCE DRILLING IN JUNE. PRODUCTION FROM THIS PLATFORM SHOULD BEGIN IN THE THIRD QUARTER OF THIS YEAR
AT A CONTRACT RATE OF 20 MILLION CUBIC FEET OF GAS PER DAY.
(SLIDE 17 — ANNUAL BUDGETS)
WE HAVE CONSISTENTLY ADJUSTED OUR BUDGET TO REFLECT CHANGING INDUSTRY CONDITIONS.
OUR 1984 BUDGET IS CURRENTLY SET AT $109 MILLION, ALTHOUGH WE MAY INCREASE THAT DUE TO ADDITIONAL DEVELOPMENT DRILLING.
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 [Text stricken: ENERGY] [Handwritten addition: gas] EQUIVALENT BASIS.
HOWEVER, WE DO NOT EXPECT THAT 1984’S BUDGET OF $109 MILLION WILL BE SUFFICIENT TO REPLACE PRODUCTION THROUGH EXPLORATION
AND DEVELOPMENT, [Text stricken: UNLESS WE GET LUCKY.]
OUR 1984 BUDGET WILL BE ABOUT 40 PERCENT OF CASH FLOW AFTER MANY YEARS OF INVESTING MORE THAN OUR INTERNAL CASH FLOW.
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 EXPENDITURES OF 300 PUBLIC OIL AND GAS COMPANIES TO THE RESERVES THAT THOSE COMPANIES FOUND.
FROM 1980 TO 1982, THESE COMPANIES SPENT $166 BILLION ON WORLDWIDE OIL AND GAS ACTIVITIES.
THROUGH THOSE EXPENDITURES THEY FOUND ONLY $109 BILLION WORTH OF RESERVES.
IN OTHER WORDS, THEY RECEIVED 66¢ FOR EACH DOLLAR THEY SPENT, THE YEARS 1980-82 WERE NOT THE BEST FOR THE INDUSTRY, ALTHOUGH
AT THE TIME WE THOUGHT THEY WERE.
THAT ILLUSTRATES WHY MANY COMPANIES ARE LOOKING INTO ACQUIRING RESERVES AND WHY WE HAVE SEEN SO MUCH MERGER AND ACQUISITION
ACTIVITY RECENTLY.
(SLIDE 18 — 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.
HISTORICALLY, THIS HAS BEEN ACCOMPLISHED THROUGH A COMBINATION OF EXPLORATION, PROPERTY PURCHASES AND SALES AND MARKETABLE
SECURITIES INVESTMENTS.
(SLIDE 19 — 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, WHILE CITIES SHAREHOLDERS
AS A GROUP MADE $1.7 BILLION.
IN LATE 1982, MESA MADE A TENDER OFFER FOR APPROXIMATELY 51% OF THE OUTSTANDING SHARES OF GENERAL AMERICAN OIL COMPANY.
GAO SUBSEQUENTLY RECEIVED A HIGHER OFFER FROM PHILLIPS PETROLEUM.
HOWEVER, THE RESULTING EXCHANGE OF MESA DEBENTURES FOR GAO STOCK WHICH WE OWNED ELIMINATED $76 MILLION OF MESA DEBT AND GAVE
US A PRE-TAX GAIN OF $42.4 MILLION. GAO SHAREHOLDERS MADE $391 MILLION.
IN SEPTEMBER, WE SOLD 3.98 MILLION SHARES OF THE SUPERIOR OIL COMPANY FOR A PRE-TAX GAIN OF $31.6 MILLION, AND SUPERIOR SHAREHOLDERS
AS A GROUP, SHOULD REALIZE $2 BILLION FROM THE PROPOSED MERGER WITH MOBIL.
AND YOU’RE ALL AWARE OF OUR INVESTMENT IN GULF FROM WHICH WE EXPECT A PRE-TAX GAIN OF SOME $500 MILLION, WHILE ALL GULF SHAREHOLDERS
WILL REALIZE A GAIN OF SOME $6.5 BILLION.
IN THESE FOUR INSTANCES WHEN MESA HAS INVESTED IN THE MARKETABLE SECURITIES OF COMPANIES WHICH WERE LATER ACQUIRED, MESA HAS
REALIZED PRE-TAX GAINS TOTALING APPROXIMATELY $605 MILLION. HOWEVER, SHAREHOLDERS OF THESE ACQUIRED COMPANIES HAVE ACHIEVED
PRE-TAX GAINS OF $10 BILLION RESULTING DIRECTLY FROM THE ACQUISITIONS.
[Handwritten addition: And the Govt. steps in for about $3 billion in tax revenues.]
THE GULF/SOCAL TRANSACTION WILL RESULT IN PROBABLY THE LARGEST GAIN FOR SHAREHOLDERS IN HISTORY. THE GULF DEAL IS A MAJOR
EVENT IN MESA’S HISTORY; THEREFORE, WE HAVE PREPARED A SPECIAL CHRONOLOGICAL REVIEW TO SHOW YOU.
(INSERT SLIDE PRESENTATION ON GULF DEAL.)
(LIGHTS TURNED ON)
ALTHOUGH RELATIVELY FEW MESA EMPLOYEES WORKED FULL-TIME ON THE GULF DEAL, MANY MORE MADE SIGNIFICANT CONTRIBUTIONS.
IT’S IMPORTANT TO REMEMBER THAT THOSE OF US WORKING ON THE DEAL COULD ONLY DO SO BECAUSE OUR FELLOW EMPLOYEES WERE CONTINUING
TO DO THEIR JOBS AND KEEP THE COMPANY OPERATING, WHICH IS EVIDENT BY THE INCREASED OIL PRODUCTION WE’VE SEEN. IT WAS TRULY
A TEAM EFFORT.
I ALSO WANT TO RECOGNIZE OUR MESA SPOUSES, WHOSE SUPPORT AND UNDERSTANDING WERE AN INTEGRAL PART OF OUR SUCCESS.
AND, I WANT TO TAKE THIS OPPORTUNITY TO PUBLICLY THANK MY WIFE, BEA, WHO NOT ONLY PROVIDED MORAL SUPPORT, BUT ALSO BECAME
A WORKING MEMBER OF OUR GROUP ON MANY OCCASIONS.
THE RECENTLY DEFEATED LEGISLATION WOULD HAVE STOPPED THE GULF-SOCAL DEAL AS WELL AS FUTURE MERGERS IN THE PETROLEUM INDUSTRY.
TWO OF OUR DIRECTORS, WALES MADDEN AND CY WAGNER, WORKED HARD TO HELP DEFEAT THE LEGISLATION.
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 PACKAGE OF CIGARETTES.
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 HAVE 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 HAS 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 ARE NOT HERE TO SOLICIT CONTRIBUTIONS TODAY BUT WHEN WE DO ASK OUR SHAREHOLDERS AND EMPLOYEES TO CONTRIBUTE, WE HOPE THAT
THEY WILL CONSIDER THEIR VOLUNTARY CONTRIBUTIONS AS AN INVESTMENT IN A STRONG FREE ENTERPRISE SYSTEM AND 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 DEPRESSED 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 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 [Text stricken: AND CONCENTRATING ON OIL PROSPECTS.]
IN ADDITION, WE [Text stricken: WILL] [Handwritten addition: may] CONTINUE TO PURSUE UNDERVALUED ASSETS IN THE MARKETPLACE.
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.
I WILL NOW BE HAPPY TO RESPOND TO QUESTIONS.
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.