EEX's 2001 Operations Review

For 2001, EEX's Onshore U.S. operations achieved a drilling success rate of 85% in a 65 well program, including 52 of 59 development wells and 3 of 6 exploration wells. At year-end, an additional 6 wells were in process of completion and one well was drilling. Onshore average daily production in December was 132 MMcfe.

One of the highlights of the 2001 Onshore program was the development of EEX's 45% owned Langtry Field, Val Verde Basin, Texas. During the year, 13 wells were completed and tied to sales. At the end of the year, gross field production was 34 MMcfe per day (12 MMcfe per day net to EEX after royalties). Five additional development wells are planned in 2002.

At the Vaquillas Ranch Field (EEX 100% interest), 8 wells were completed and tied to sales in 2001. The field's production rate at the end of the year was 27 MMcfe per day gross (19 MMcfe per day net to EEX after royalties). Four additional development wells are planned in 2002.

In December, a three well workover program at Provident City Field increased EEX operated gross production from 0.5 to 13 MMcfe per day (0.4 to 7.7 MMcfe per day net to EEX after royalties). Three additional workovers are planned in 2002.

During the third quarter, EEX sold its interest in the Llano Field for $50 million cash plus an overriding royalty interest of 1/2 of 1% for the first 100 million barrels of oil equivalent total production from the Llano Field and 1% on all production thereafter. The purchaser also reimbursed EEX for the costs of the Llano No. 4 well that was drilling at the time of the sale.

The Glomar Arctic I drilling rig was returned to EEX on Nov. 27, 2001 by the Llano owners at the conclusion of the Llano No. 4 appraisal well. The rig was moved to EEX's Devil's Island Prospect at Garden Banks Block 344 in the greater Llano area. EEX entered into a joint venture agreement with Amerada Hess for the drilling of an exploration well on this prospect, utilizing the Arctic I drilling rig at its full day rate. Under the joint venture agreement, Amerada Hess will operate and earn an 80% interest in Garden Banks Block 344 (E/2) and Garden Banks Block 345 by participating with EEX in drilling the well. EEX will retain a 20% working interest after the well is drilled and pay 30% of the costs of the well up to the AFE amount, 20% thereafter. The well commenced drilling operations on Dec. 29, 2001.

The Llano Field owners are evaluating the proposal submitted by EEX and its co-owner for the use of EEX's floating production system and pipelines for a fast-track development scenario. In addition to pursuing the Llano proposal, EEX and the other co-owner continue to explore sale and sublease options for the floating production system in the Gulf of Mexico and international arenas.

EEX is marketing all of its interests in Indonesia. The Company received and is evaluating preliminary bids for these assets. EEX expects that a sale will occur during the first quarter 2002.

In New Zealand, the Company is seeking the participation of other companies in its North Taranaki block. In order to maintain its rights to the block, the Company must commit to drilling a well by March 2002. The Company relinquished its Waiau Basin block in December 2001.