Mike Conaway: “Let me comment on what happens, or the mechanics of the exploration business in the domestic arena. I have got some…”

“Let me comment on what happens, or the mechanics of the exploration business in the domestic arena. I have got some statistics here that just are almost incomprehensible in their scope. E&P is an acronym or initials for exploration and production companies. Those are the folks that take the risk. They start by trying to find rock, underground, sometimes 2 and 3 miles deep, that has the potential for bearing oil and gas. And they do this through a variety of means, through seismic and geology, and sometimes just flat out guessing. But they do their best science at the project to try to determine where oil and gas might occur. Now it doesn't occur everywhere, unfortunately. But it does occur in certain spots. And it starts off with a geologist or a geophysicist or somebody who has an idea that this particular province or this particular area may produce oil and gas. So they spend some up front money trying to decide whether or not there is the potential for oil and gas being in place. They then will send out a land man to acquire the rights to drill in the acreage that they think is prospective.”