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	T. BOONE PICKENS, JR. REMARKS TO POTENTIAL PURCHASERS OF MESA SUBORDINATED DEBENTURES JULY 23, 1984

BOSTON

I. INTRODUCE PEOPLE.

          A. MENTION RETIREMENTS.

II. GENERAL DISCUSSION OF MESA.

          A. OIL AND GAS EXPLORATION AND PRODUCTION COMPANY.

                 1. NO DIVERSIFICATION

                 2. NO DRILLING RIGS

                 3. NO REFINING OR MARKETING

          B. EMPHASIS ON GROWTH OF RESERVES THROUGH EXPLORATION AND ACQUISITION.

          C. HISTORICALLY AN AGGRESSIVE EXPLORER IN THE U.S., BOTH ONSHORE AND OFFSHORE, AND IN CANADA AND THE U.K.

          D. CONSOLIDATED OPERATIONS IN U.S. DURING 1979 THROUGH SALE OF CANADIAN AND U.K. PROPERTIES AND ACQUISITION OF MID-CONTINENT DIVISION OIL AND GAS PROPERTIES OF ASHLAND.

          E. ALSO IN 1979, DISTRIBUTED MESA ROYALTY TRUST TO SHAREHOLDERS ONE-HALF OF OIL AND GAS RESERVES.

          F. SUPPLEMENTED OIL AND GAS OPERATIONS WITH MARKETABLE SECURITIES GAINS OF:

III. 1984 HAS BEEN BUSY YEAR SO FAR.

          A. GULF DEAL CAME TO A CONCLUSION WITH THE SOCAL MERGER AT $80 A SHARE.

          B. PURCHASE OF MESA ROYALTY TRUST UNITS—$500 MILLION, ACQUISITION OF PROVED, PRODUCING RESERVES.

IV. IMPACT OF 1984 TRANSACTIONS

          A. GULF TRANSACTION

                 1. SUBSTANTIAL IMPROVEMENT IN FINANCIAL CONDITION

                 2. NET DEBT SLIGHTLY IN EXCESS OF ONE YEAR'S FUTURE NET CASH FLOW FROM PROVED RESERVES.

                 3. REALIZED PRETAX GAIN OF $400 MILLION, NET OF ALL COSTS.

                 4. DEFERRED INCOME TAXES ON GAIN UNTIL 1989.

                 5. CASH BEING UTILIZED IN TAX SHELTERING ACTIVITIES.

          B. MTR ACQUISITION

                 1. INCREASED OIL AND GAS RESERVES BY 550 BCF (50%) WITH LONG-LIFE, PROVED PRODUCING RESERVES IN THE HUGOTON FIELD.

                 2. EXTENDED RESERVE LIFE INDEX FROM 10 TO 13 YEARS.

                 3. ACQUISITION COST OF $.90 PER MCF, WITH CONTRACT EXPIRATION IN 1989 AND INFILL POTENTIAL.

          C. NOW HAVE 1.4 TRILLION CUBIC FEET OF GAS AND 33 MILLION BARRELS OF LIQIUDS WITH FUTURE NET CASH FLOWS BEFORE TAX OF $3.7 BILLION USING CONSTANT PRICING (10% PRESENT VALUE OF $1.7 BILLION).

V. PHILOSOPHY OF COMPANY

          A. ENHANCEMENT OF SHAREHOLDER VALUE.

          B. GROWTH OF OIL AND GAS RESERVE BASE.

                 1. HAVE CONSISTENTLY REPLACED PRODUCTION.

          C. REDUCED EMPHASIS ON EXPLORATION DURING CURRENT PERIOD OF OVERSUPPLY.

                 1. HAVE REDUCED BUDGET FROM $300 MILLION IN 1982, TO $225 MILLION IN 1983 AND $150 MILLION IN 1984.

                 2. MORE EMPHASIS ON OIL DEVELOPMENT.

                 3. GREATER PORTION OF BUDGET SPENT ONSHORE.

                 4. IMPROVE FINDING COSTS.

          D. ACQUIRE RESERVES, AS IN THE MESA ROYALTY TRUST ACQUISITION, WHEN ACQUISITION COSTS ARE MORE FAVORABLE THAN FINDING COSTS.

          E. HAVE SUPPLEMENTED OIL AND GAS EARNINGS WITH MARKETABLE SECURITIES GAINS OF $540 MILLION OVER LAST 21 YEARS.

          F. WILL CONTINUE TO INVEST THE SHAREHOLDERS' MONEY IN A MANNER WHICH MAXIMIZES RETURN.