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	REMARKS FOR THE MESA BANKERS MEETING DALLAS, TX JUNE 15, 1988

Thank you, Mark.

Appreciate attendance on such short notice.

Certainly appreciate the way our banks have stood by us:
—Mesa and our banks have made a lot of money from our cooperative relationship

(SLIDE OF MESA LOGO)

Mesa has a proven track record that warrants continued bank support:
—$2,500 in 1956 into the largest independent producer of domestic oil and gas in the United States. . .we distribute $310 million annually

As you probably know, Mesa is primarily a natural gas producer. . .about 80% gas.

(SLIDE OF MESA’S PROVED DEVELOPED GAS RESERVES, COMPARED TO INDUSTRY)

Mesa ranks 14th among companies in terms of proved developed domestic natural gas reserves:
—Comment about other companies on the list

(SLIDE OF MESA’S PRODUCTION COMPARED TO THE INDUSTRY)

And we were the 17th largest domestic gas producer in 1987.

(SLIDE OF MESA’S EQUIVALENT RESERVES, 1983-87)

Mesa has consistently added reserves. . .largest reserve base ever in 1986; would have been larger in 1987 except for sales of properties outside our primary areas of interest:
—Reserve replacements actually exceeded production by 4%

Reserve quantity is only one factor; quality of reserves is very important.

Mesa’s focus remains on adding shallow, long-lived natural gas reserves.

(SLIDE OF MESA’S RESERVE LIFE INDEX, COMPARED TO INDUSTRY)

The result of this strategy. . .second longest reserve life index of the country’s top gas producers.

This means our gas will be around to benefit from future price increases.

(SLIDE OF MESA LOGO)

Mesa’s investment team has realized more than half a billion dollars in profits. . .$10 million in 1987, even after October’s market decline.

Sidney Tassin will tell you how our current investments are doing a little later.

Another thing you have to consider when dealing with Mesa is the industry’s condition:
—All signs indicate the natural gas industry has bottomed out and is on the upswing

The clearest indicator of things to come is the decrease in excess gas deliverability.

(SLIDE OF NATURAL GAS SUPPLY AND DEMAND)

As the slide shows, we expect U.S. gas supply and demand to come into balance during 1990.

(SLIDE OF GAS RESERVES PLOTTED AGAINST DRILLING RIGS)

The balancing of supply and demand is predictable. As this slide shows, the peak drilling years from 1978 to 1982 only leveled out the decline in gas reserves.

Once drilling dropped off, the country’s gas reserve base resumed its decline.

There’s a good possibility of localized gas shortages this winter, which would push prices up.

(SLIDE OF MESA’S GAS PRICE PREDICTIONS)

Once supply and demand balance, prices will rise.

The only thing that may restrict gas price increases would be the cost of alternate fuels such as oil and coal.

But because gas is a much cleaner fuel than oil or coal, we expect gas to sell at a premium on an energy equivalent basis by the mid-1990s. . .Clean Air Act consideration.

Other companies’ recent purchases of gas reserves in the ground for more than $1.10/Mcf reflect the market’s confirmation of our price predictions.

(SLIDE OF MESA’S PRICE PREDICTIONS CHARTED AGAINST THE MARKET’S INDICATED PRICE EVALUATION)

The top line on this slide represents what future gas prices would have to be to justify purchasing gas reserves in the ground for $1.10/Mcf.

The bottom line reflects Mesa’s price predictions.

What this demonstrates is that the market considers Mesa’s estimates to pretty much on target.

(SLIDE OF MESA LOGO)

To summarize, Mesa’s track record of growth, value enhancement and return on investment is outstanding. . .Our current stock repurchase plan is a prime example.

With Mesa common trading in the $12 to $13 range, the repurchase program accomplishes several things:
—Buying reserves at less than $1 per Mcf
—Realizing a 15.5% return on our investment
—Increasing our partners’ equity per share

If Mesa stock prices stay around the current levels, we will consider expanding our repurchase program after this initial phase is completed.

We are convinced that our scenario of the natural gas market is on target, and we are preparing for the inevitable absorbtion of the natural gas bubble.

In conclusion, I believe Mesa’s management team today is the best it’s ever been, with clear goals and the expertise and flexibility necessary to achieve them.

Now, here to tell you more about our management structure and philosophy is Mesa’s President and Chief Operating Officer, Paul Cain.