PNRG Primeenergy Resources Corp

Management Discussion

• We are an independent oil and natural gas company engaged in acquiring, developing and producing oil and natural gas. We presently own producing andnon-producing properties located primarily in Texas, Oklahoma and West Virginia. In addition, we own a substantial amount of well servicing equipment. All of our oil and gas properties and interests are located in the United States. Assets in our principal focus areas include mature properties with long-lived reserves and significant development opportunities as well as newer properties with development and exploration potential.
• We are the operator of the majority of our developed and undeveloped acreage which is nearly all held by production. In the Permian Basin of West Texas and eastern New Mexico the Company maintains an acreage position of approximately 19,830 gross (12,580 net) acres, 97% of which is located in Reagan, Upton, Martin, and Midland counties of Texas where our current horizontal drilling activity is focused. Recent results from our wells and the wells of other operators have proven the potential of the Lower Spraberry, Jo Mill and Wolfcamp A intervals, in addition to the Middle Wolfcamp. We believe our Permian Basin acreage has the resource potential to support the future drilling of as many as 375 horizontal wells.
• In Oklahoma we maintain an acreage position of approximately 81,800 gross (10,900 net) acres. Our Oklahoma horizontal development is focused primarily in Canadian, Kingfisher, Grady, and Garvin counties. We believe approximately 2,210 net acres in these counties hold significant additional resource potential that could support the drilling of as many as 105 new horizontal wells based on an estimate of four to eight wells per section depending on the reservoir target area.