VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share amounts)
 (Unaudited)
 
 Three Months Ended  Year Ended
 December 31, December 31,
 -------------------- --------------------
 2004 2003 2004 2003
 --------- ---------- --------- ----------
REVENUES:
 Oil, condensate and NGL
 sales $149,436 $104,544 $516,756 $428,350
 Gas sales 61,298 27,504 188,582 114,049
 Sulfur sales 417 410  1,366 1,715
 Gas marketing 21,345 10,655 71,476 70,633
 --------- ---------- --------- ----------
 Total revenues 232,496 143,113 778,180 614,747
 --------- ---------- --------- ----------
 
COSTS AND EXPENSES:
 Production costs 35,661 33,038 141,040 124,367
 Transportation and
 storage costs 3,586 2,281 11,086 7,401
 Production and ad valorem
 taxes 6,450 4,713 23,007 17,469
 Export taxes 17,359 5,227 43,050 31,041
 Exploration costs 10,993 4,212 31,993 21,607
 Gas marketing 20,192 9,945 67,601 68,038
 General and
 administrative 14,750 12,241 56,473 46,908
 Stock compensation 528 964 7,619 5,259
 Depreciation, depletion
 and amortization 30,515 22,351 103,202  87,814
 Impairment of proved oil
 and gas properties 2,134 6,050 6,049 6,050
 Accretion 1,694 1,558 6,626 5,980
 Other operating expense 4,260 5,126 2,327 6,067
  --------- ---------- --------- ----------
 Total costs and
 expenses 148,122 107,706 500,073 428,001
 --------- ---------- --------- ----------
 
OPERATING INCOME 84,374 35,407 278,107 186,746
 --------- ---------- --------- ----------
 
NON-OPERATING (INCOME)
 EXPENSE:
 Interest expense 12,494 15,506 51,815 69,834
 Loss on early
 extinguishment of debt  - 5,483 9,903 6,909
 Losses on derivative
 transactions 6,384 849 21,745 1,539
 (Gain) loss on
 disposition of assets (83 ) 527 (155 ) 1,194
 Foreign currency exchange
 (gain) loss 337 57 (775 ) 6,710
 Other non-operating
 (income) expense 14 (139 ) 644 (788 )
 --------- ---------- --------- ----------
 Net non-operating
 expense 19,146 22,283 83,177 85,398
 --------- ---------- --------- ----------
 
 Income from continuing
 operations before income
 taxes and cumulative effect
 of change in accounting 
 principle 65,228 13,124 194,930 101,348
 --------- ---------- --------- ----------
 
INCOME TAX PROVISION:
 Current 13,792 531 57,906 40,140
 Deferred  6,468 3,771 11,583 1,714
 --------- ---------- --------- ----------
 Total income tax
 provision 20,260 4,302 69,489 41,854
 --------- ---------- --------- ----------
 
 Income from continuing
 operations before
 cumulative effect
 of change in
 accounting principle 44,968 8,822 125,441 59,494
 
INCOME (LOSS) FROM
 DISCONTINUED OPERATIONS,
 net of income tax benefit
 of $30,852, $100,615,
 $30,722, and $75,136,
 respectively 204,065 (293,478 ) 207,151 (307,520 )
 --------- ---------- --------- ----------
 
Income (loss) before
 cumulative effect of change
 in accounting principle 249,033 (284,656 ) 332,592 (248,026 )
 
CUMULATIVE EFFECT OF CHANGE
 IN ACCOUNTING PRINCIPLE, 
 net of income tax provision
 of $4,104 - - - 7,119
 --------- ---------- --------- ----------
 
NET INCOME (LOSS) $249,033 $(284,656 )$332,592 $(240,907 )
 ========= ========== ========= ==========
 
 
 
 VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (Continued)
 (In thousands, except per share amounts)
 (Unaudited)
 
 
 Three Months 
  Ended Year Ended
 December 31, December 31,
 --------------- ---------------
 2004 2003 2004 2003
 ------- ------- ------- -------
 
BASIC INCOME (LOSS) PER SHARE:
 Income from continuing operations
 before cumulative effect
 of change in accounting
 principle $0.68 $0.14 $1.93 $0.93
 Income (loss) from discontinued
 operations 3.10 (4.57 ) 3.18 (4.80 )
 ------- ------- ------- -------
 Income (loss) before cumulative
 effect of change in accounting
 principle 3.78 (4.43 ) 5.11 (3.87 )
 Cumulative effect of change in
 accounting principle - - - 0.11
 ------- ------- ------- -------
 Net income (loss) $3.78 $(4.43 ) $5.11 $(3.76 )
 ======= ======= ======= =======
 
DILUTED INCOME (LOSS) PER SHARE:
 Income from continuing operations
 before cumulative effect
 of change in accounting
 principle $0.68 $0.14 $1.91 $0.92
 Income (loss) from discontinued
 operations 3.06 (4.53 ) 3.15 (4.78 )
 ------- ------- ------- -------
 Income (loss) before cumulative
 effect of change in accounting
 principle 3.74 (4.39 ) 5.06 (3.86 )
 Cumulative effect of change in
 accounting principle - - - 0.11
  ------- ------- ------- -------
 Net income (loss) $3.74 $(4.39 ) $5.06 $(3.75 )
 ======= ======= ======= =======
 
Weighted average common shares
 outstanding:
 Basic  65,824 64,272 65,046 64,022
 Diluted 66,567 64,799 65,784 64,328
 
 
 VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  (In thousands)
 (Unaudited)
 
 Year Ended December 31,
 -----------------------
  2004 2003
 --------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income (loss) $332,592 $(240,907 )
 Adjustments to reconcile net income (loss) to
  net cash provided by operating
 activities -
 (Income) loss from discontinued
 operations, net of tax (207,151 ) 307,520
 Cumulative effect of change in accounting
 principle  - (7,119 )
 Depreciation, depletion and amortization 103,202 87,814
 Impairment of proved oil and gas
 properties 6,049 6,050
 Accretion 6,626 5,980
 Dry hole costs and impairments of unproved
 oil and gas properties 21,227 11,629
 Provision for deferred income taxes 11,583 1,714
 Foreign currency exchange (gain) loss (775 ) 6,710
 (Gain) loss on dispositions of assets (155 ) 1,194
 Loss on early extinguishment of debt 9,903 6,909
 Stock compensation 7,619 5,259
 Losses on derivative activities 21,745 1,539
 Other non-cash charges included in net
 income (loss) 844 2,359
 Increase in receivables (32,659 ) (3,914 )
 Increase in payables and accrued
 liabilities 53,198 9,836
 Other working capital changes 3,753 9,965
 --------- ----------
 Cash provided by continuing operations 337,601 212,538
 Cash provided by discontinued
 operations 14,705 21,295
 --------- ----------
 Cash provided by operating
  activities 352,306 233,833
 --------- ----------
 
CASH FLOWS FROM INVESTING ACTIVITIES:
 Capital expenditures -
 Oil and gas properties (306,970 ) (140,502 )
 Gathering systems and other (2,816 ) (4,273 )
 Proceeds from sale of oil and gas properties 668 29,981
 Purchase of company, net of cash acquired (26,757 ) -
 Proceeds from sale of company, net of cash
 sold 241,482 116,107
 Payments on non-hedge derivative transactions (10,917 ) -
 Other (319 ) 3,487
  --------- ----------
 Cash provided (used) by investing
 activities - continuing operations (105,629 ) 4,800
 Cash provided (used) by investing
 activities - discontinued operations 7,840 (13,289 )
 --------- ----------
 Cash used by investing activities (97,789 ) (8,489 )
 --------- ----------
 
CASH FLOWS FROM FINANCING ACTIVITIES:
 Issuance of common stock 14,122 1,625
 Purchase of treasury stock (1,202 ) (3,117 )
 Redemption of 9 3/4% Senior Subordinated Notes
 due 2009 (157,313 ) -
 Redemption of 9% Senior Subordinated Notes due
 2005 - (50,750 )
 Redemption of 8 5/8% Senior Subordinated Notes
 due 2009 - (103,234 )
 Advances on revolving credit facility and
 other borrowings 715,900 289,100
 Payments on revolving credit facility and
 other borrowings (715,900 ) (322,900 )
 Dividends paid  (12,318 ) (10,862 )
 Other (6,423 ) (1,753 )
 --------- ----------
 Cash used by financing activities (163,134 ) (201,891 )
  --------- ----------
 
EFFECT OF EXCHANGE RATE CHANGES ON CASH 574 686
 --------- ----------
 
NET INCREASE IN CASH AND CASH EQUIVALENTS  91,957 24,139
 
CASH AND CASH EQUIVALENTS, beginning of period 32,264 8,125
 --------- ----------
 
CASH AND CASH EQUIVALENTS, end of period $124,221 $32,264
  ========= ==========
 
 
 VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
 CONSOLIDATED BALANCE SHEETS
 (In thousands, except shares and per share amounts)
 (Unaudited)
 
 A S S E T S
 
 December 31,
 -----------------------
 2004 2003
  ----------- -----------
CURRENT ASSETS:
 Cash and cash equivalents $124,221 $32,264
 Accounts receivable -
 Oil and gas sales 107,870 78,321
 Joint operations 12,479 7,480
 Income taxes receivable 31,571 7,421
 Prepaids and other current assets 39,012 6,660
 Assets of discontinued operations  - 224,321
 ----------- -----------
 Total current assets 315,153 356,467
 ----------- -----------
 
PROPERTY, PLANT AND EQUIPMENT, at cost:
 Oil and gas properties, successful efforts
 method 2,163,176 1,835,588
 Oil and gas gathering systems and plants 23,926 23,344
 Other 31,932 26,334
 ----------- -----------
 
 2,219,034 1,885,266
 
 Less: Accumulated depreciation, depletion
 and amortization 942,656 829,055
 ----------- -----------
 
 Total property, plant and equipment,
 net 1,276,378 1,056,211
 ----------- -----------
 
DEFERRED INCOME TAXES 13,200 -
 ----------- -----------
 
OTHER ASSETS, net 40,161 41,581
  ----------- -----------
 
 $1,644,892 $1,454,259
 =========== ===========
 
 L I A B I L I T I E S A N D S T O C K H O L D E R S' E Q U I T Y
 
CURRENT LIABILITIES:
 Revenue payable $33,740 $22,641
 Accounts payable - trade 50,775 41,893
 Current income taxes payable 23,565 23,545
 Derivative financial instruments payable 27,672 7,551
 Other payables and accrued liabilities 73,748 61,507
 Liabilities of discontinued operations - 27,914
 ----------- -----------
 Total current liabilities 209,500 185,051
 ----------- -----------
 
LONG-TERM DEBT 549,949 699,943
  ----------- -----------
 
DEFERRED INCOME TAXES 80,383 60,606
 ----------- -----------
 
LONG-TERM LIABILITY FOR ASSET RETIREMENT
 OBLIGATIONS  90,707 72,158
 ----------- -----------
 
OTHER LONG-TERM LIABILITIES 30,675 14,015
 ----------- -----------
 
STOCKHOLDERS' EQUITY:
 Preferred stock, $0.01 par, 5,000,000
 shares authorized, zero shares issued
 and outstanding - -
 Common stock, $0.005 par, 160,000,000
 shares authorized, 66,541,984 and
 64,720,975 shares issued and 66,012,252
 and 64,281,199 outstanding, respectively 333 324
 Capital in excess of par value 361,120 337,080
 Retained earnings 342,707 22,844
 Accumulated other comprehensive income
 (loss) (13,088 ) 70,482
 ----------- -----------
 
 691,072 430,730
 
 Less: Treasury stock, at cost, 529,732 and
 439,776 shares, respectively 4,319 3,117
 Less: Unamortized cost of restricted stock
 awards 3,075 5,127
  ----------- -----------
 
 Total stockholders' equity 683,678 422,486
 ----------- -----------
 
 $1,644,892 $1,454,259
  =========== ===========
 
 VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
 SUMMARY OPERATING DATA
 (Unaudited)
 
 Three Months 
 Ended Year Ended
 December 31, December 31,
 --------------- ------------------
 2004 2003 2004 2003
 ------- ------- ------- -------
PRODUCTION:
 
 Oil (MBbls) -
 U.S. 1,554 1,445 6,153 6,199
 Argentina (a) 2,447 2,683 9,900(b) 10,388
 Bolivia (a) 24 21 89 83
 Yemen (a) 348 - 514 -
 
 Continuing operations 4,373 4,149 16,656 16,670
 
 Canada  165 303 830 1,248
 Ecuador - - - 114
 
 Total 4,538 4,452 17,486 18,032
 
 Gas (MMcf) -
 U.S. 8,958 5,663 30,459 23,097
 Argentina 2,175 2,635 8,659(b) 9,838
 Bolivia 2,083 1,761 8,097 6,252
 
 Continuing operations 13,216 10,059 47,215 39,187
 
 Canada  2,486 4,207 14,077 19,153
 
 Total 15,702 14,266 61,292 58,340
 
MBOE from continuing operations 6,576 5,826 24,525 23,201
 
Total MBOE 7,155 6,830 27,701 27,755
 
(a) Oil production (in MBbls) before the impact of changes in
 inventories:
 
 Three Months 
 Ended Year Ended
 December 31, December 31,
 ------------- ------------------
 2004 2003 2004 2003
 ------ ------ ------- -------
 
 Argentina  2,888 2,647 10,347(b) 10,273
 Bolivia 23 22 94 83
 Yemen 279 - 561 -
 
 
(b) Argentina production for the year ended December 31, 2004, is
  estimated to have been reduced as the result of a labor strike and
 problems at a major oil loading facility by 527 MBbls of oil and
 429 MMcf of gas, or 598 MBOE.
 
MBbls - thousand barrels
MMcf - million cubic feet
MBOE - thousand barrels of oil equivalent
 
 
 VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
 SUMMARY OPERATING DATA
 (Continued)
 (Unaudited)
 
 Three Months 
 Ended Year Ended
 December 31, December 31,
 ----------------- -----------------
  2004 2003 2004 2003
 ------- ------- ------- -------
 
Average Sales Price (including
 impact of hedges):
 
 Oil (per Bbl) -
 U.S. $34.51 (a)$23.68 $29.29 (a)$24.98
  Argentina 33.16 26.02 31.74 26.14
 Bolivia 20.75 24.04 23.42 23.04
 Yemen 40.72 - 39.35 -
 Continuing operations 34.18 (a) 25.19 31.02 25.70
 
 Canada 33.05 28.16 29.27 28.18
 Ecuador - - - 26.87
 
 Gas (per Mcf) -
 U.S. $6.23 $4.01 $5.55 $4.20
  Argentina 0.76 0.48 0.67 0.46
 Bolivia 1.85 2.00 1.71 2.01
 Continuing operations 4.64 2.73 3.99 2.91
 
 Canada 5.03 4.34 4.85 4.35
 
Average Sales Price (excluding
 impact of hedges):
 
 Oil (per Bbl) -
 U.S. $41.83 $27.95 $36.97 $28.23
 Argentina 33.16 26.02 31.74 26.14
 Bolivia  20.75 24.04 23.42 23.04
 Yemen 40.72 - 39.35 -
 Continuing operations 36.78 26.68 33.86 26.91
 
 Canada 42.04 27.51 35.48 27.90
 Ecuador - - - 26.87
 
 Gas (per Mcf) -
 U.S. $6.18 $4.24 $5.54 $4.81
 Argentina 0.76 0.48 0.67 0.46
 Bolivia  1.85 2.00 1.71 2.01
 Continuing operations 4.60 2.86 3.98 3.27
 
 Canada 5.03 4.11 4.85 4.67
 
 
(a) The average oil sales price per barrel for the U.S. for the three
 months and year ended December 31, 2004 does not reflect realized
 losses of $7.03 and $1.78 per barrel, respectively. The average
 oil sales price per barrel for continuing operations for the three
 months and year ended December 31, 2004 does not reflect realized
 losses of $2.50 and $0.66 per barrel, respectively. These losses
 have been reflected in non-operating expense as they relate to
 settlements on economic hedges. Economic hedges are derivative
 financial instruments, intended to hedge a specific exposure, that
 do not qualify or ceased to qualify for hedge accounting under
 SFAS 133.
 
 
 VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
 FINANCIAL DATA RELATED TO DISCONTINUED OPERATIONS
  CANADA AND ECUADOR
 (In thousands)
 (Unaudited)
 
 Three Months Ended Year Ended
 December 31, December 31,
  -------------------- --------------------
 2004 2003 2004 2003
 --------- ---------- --------- ----------
REVENUES:
 Oil, condensate and NGL
 sales  $5,464 $8,527 $24,298 $38,244
 Gas sales 12,496 18,254 68,309 83,303
 Sulfur sales 165 120 503 604
 --------- ---------- --------- ----------
 Total revenues 18,125 26,901 93,110 122,151
 --------- ---------- --------- ----------
 
COSTS AND EXPENSES:
 Production costs 6,986 9,657 36,900 36,196
 Transportation and
 storage costs 169 308 1,443 2,604
 Production and ad valorem
 taxes 84 149 1,338 1,506
 Exploration costs 138 15,124 7,582 53,325
 General and
  administrative 2,945 3,730 10,235 11,219
 Depreciation, depletion
 and amortization - 14,359 23,900 56,211
 Impairment of proved oil
 and gas properties - 350,180 - 364,195
 Impairment of goodwill - 25,673 - 25,673
 Accretion 253 352 1,299 1,360
 Other operating (income)
 expense 83 (61 ) (58 ) (57 )
  --------- ---------- --------- ----------
 Total costs and
 expenses 10,658 419,471 82,639 552,232
 --------- ---------- --------- ----------
 
OPERATING INCOME (LOSS) 7,467  (392,570 ) 10,471 (430,081 )
 --------- ---------- --------- ----------
 
NON-OPERATING (INCOME)
 EXPENSE:
 Interest expense - 17 - 83
 Loss on disposition of
 assets  - 999 - 507
 Foreign currency exchange
 (gain) loss 1,832 60 2,358 (550 )
 Other non-operating
 (income) expense 179 447 (559 ) (208 )
  --------- ---------- --------- ----------
 Net non-operating
 (income) expense 2,011 1,523 1,799 (168 )
 --------- ---------- --------- ----------
 
 Income (loss) from
 continuing operations
 before income taxes 5,456 (394,093 ) 8,672 (429,913 )
 
INCOME TAX BENEFIT (151 ) (100,615 ) (21 ) (112,902 )
 --------- ---------- --------- ----------
 
INCOME (LOSS) FROM
 DISCONTINUED OPERATIONS
 BEFORE GAIN ON SALE 5,607 (293,478 ) 8,693 (317,011 )
 
GAIN ON SALE OF DISCONTINUED
 OPERATIONS, NET OF INCOME 
 TAX PROVISION (BENEFIT) OF 
 $(30,701), $0, $(30,701) 
 and $37,766, respectively 198,458 - 198,458 9,491
 --------- ---------- --------- ----------
 
INCOME (LOSS) FROM
 DISCONTINUED OPERATIONS $204,065 $(293,478 )$207,151 $(307,520 )
 ========= ========== ========= ==========
 
 
  VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
 REVISED 2005 TARGETS
 
 Previous Revised
 2005 2005
  Targets Targets(c)
 -------- ----------
Oil production (MMBbls):
 U.S. 5.8 5.8
 Argentina  11.9 12.3(e)
 Bolivia 0.1 0.1
 Yemen 1.4 1.4
 Total 19.2 19.6
 
Gas Production (Bcf):
 U.S.  27.6 28.3
 Argentina 8.0 8.0
 Bolivia 4.5 4.5
 Total 40.1 40.8
 
Total MMBOE 25.8 26.4
 
 Assumed NYMEX(a) prices:
 Oil $40.00 $40.00
 Gas $6.50 $6.50
 
Net realized price (before impact of hedging)
 as a percent of
 NYMEX(a) - Total Company:
 Oil 78% 75%
 Gas 68% 69%
 
DD&A per BOE (oil and gas only) $4.20 $4.65
G&A per BOE $2.40 $2.35
 
Production, transportation and storage costs
 per BOE $6.95 $7.35
Production, ad valorem and export taxes per BOE $3.15 $2.35
 -------- ----------
 Total LOE per BOE $10.10 $9.70
 
Non-Acquisition Capital Spending Budget (in
 millions) $250 $250
 
Cash Flow (before all exploration expenses,
 working capital changes
 and current taxes associated with property
 sales) (in millions) (d) $320 $320
 
EBITDAX (in millions)(b)(d) $440 $440
 
MMBbls  - million barrels
Bcf - billion cubic feet
MMBOE - million barrels of oil equivalent
 
(a) NYMEX
 Oil - Average of the daily settlement price per barrel 
 for the near-month contract for light crude oil as
 quoted on the New York Mercantile Exchange.
 
 Gas - Average of the settlement price per MMBtu for the 
 last three trading days for the applicable 
 contract month for natural gas as quoted on the 
 New York Mercantile Exchange.
 
(b) EBITDAX: Earnings before interest, taxes, DD&A, impairments, 
 exploration expenses, cumulative effect of change in 
 accounting principle, loss on early extinguishment of 
 debt, gains/losses on property sales and other 
 non-cash items.
 
(c) Targets do not reflect any future acquisitions or dispositions 
 of assets. Targets reflect the impact of existing hedges. See 
 "2005 Targets Updated" and "Forward-Looking Statements" 
 elsewhere in the release.
 
(d) The targets for non-GAAP financial measures are not reconciled 
 to the most directly comparable GAAP financial measure as the 
 company does not establish targets for such GAAP financial 
 measures.
 
(e) Includes additional sales volumes of 400,000 barrels for an 
 expected decrease in oil inventories. 
 
 
 VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
 COMMODITY DERIVATIVE STATUS
 
 OIL PRICE SWAPS
 
 NYMEX
 Reference
  Price
 Quarter Ending Barrels $ Per Bbl
------------------------------------------------- ---------- ---------
 
March 31, 2005 1,242,000 37.77
June 30, 2005 1,255,800 36.49
September 30, 2005 1,269,600 35.57
December 31, 2005 1,269,600 34.88
 
March 31, 2006  427,500 37.39
June 30, 2006 432,250 36.80
September 30, 2006 437,000 36.32
December 31, 2006 437,000 35.93
 
March 31, 2007 189,000 34.26
June 30, 2007 63,700 39.66
September 30, 2007 64,400 39.38
December 31, 2007  64,400 39.10
 
 GAS PRICE SWAPS
 
 NYMEX
 Reference
  Price
 $ Per
 Quarter Ending MMBtu MMBtu
------------------------------------------------- ---------- ---------
 
March 31, 2005  1,161,000 6.65
June 30, 2005 1,173,900 6.15
September 30, 2005 1,186,800 6.17
December 31, 2005 1,186,800 6.37
 
 GAS PRICE COLLARS
 
 NYMEX 
 Floor NYMEX Cap
 Reference Reference
  Price Price
 MMBtu $ Per $ Per
 For 2005 MMBtu MMBtu
-------------------------------------------------- --------- ---------
 
 1,825,000 6.00 6.80
 3,650,000 6.00 8.02
 1,825,000 6.00 8.73
  3,650,000 6.00 9.21
 
 
 VINTAGE PETROLEUM, INC. AND SUBSIDIARIES
 NON-GAAP FINANCIAL MEASURES
 
Cash flow excluding discontinued operations, a non-GAAP measure,
represents cash provided by operating activities before the impact of
discontinued operations, changes in working capital items related to
operating activities, all exploration costs, current taxes on property
sales and further adjusted for payments on derivative transactions no
longer qualifying for hedge accounting which are reflected as
investing activities under GAAP. This non-GAAP measure is presented
because management believes it is a useful adjunct to cash provided by
operating activities under accounting principles generally accepted in
the United States (GAAP). This non-GAAP cash flow measure is widely
accepted as a financial indicator of an oil and gas company's ability
to generate cash which is used to internally fund exploration and
development activities and to service debt and is comparable to
targets established by the company. This non-GAAP measure is not a
measure of financial performance under GAAP and should not be
considered as an alternative to cash provided (used) by operating,
investing, or financing activities as an indicator of cash flows, or
as a measure of liquidity.
 
EBITDAX excluding discontinued operations is also presented below
because of its wide acceptance by the investment community as a
financial indicator of a company's ability to internally fund
exploration and development activities and to service or incur debt.
Management also views the non-GAAP measure of EBITDAX excluding
discontinued operations as a useful tool for comparison of the
company's financial indicator with those of peer companies and is
comparable to targets established by the company. EBITDAX excluding
discontinued operations should not be considered as an alternative to
net income or cash provided by operating activities, as defined by
GAAP. The following table reconciles cash provided by operating
activities to cash flow excluding discontinued operations and EBITDAX
excluding discontinued operations (in thousands):
 
 Three Months Ended Year Ended
  December 31, December 31,
 ------------------ --------------------
 2004 2003 2004 2003
 --------- -------- --------- ----------
 
Cash provided by operating
 activities (GAAP measure) $96,092 $61,677 $352,306 $233,833
Adjustments to remove the
 impact of:
 Cash used (provided) by
 discontinued operations 19,941 (4,889 ) (14,705 ) (21,295 )
 Changes in working capital
 items related to
 operating activities (18,174 ) (4,232 ) (24,292 ) (15,887 )
 Exploration geological and
 geophysical costs 6,499 2,493 10,766 9,978
 Current tax provision
 associated with
 miscellaneous
 property sales - 1,668 - 8,601
 Payments on derivative
 transactions included in
 investing activities (10,917 ) - (10,917 ) -
 --------- -------- --------- ----------
 
Cash flow excluding
 discontinued operations
 (non-GAAP measure) 93,441 56,717 313,158 215,230
 
Current taxes 13,792 4,764 57,906 37,440
Interest expense 12,494 15,506 51,815 69,834
 --------- -------- --------- ---------
EBITDAX excluding discontinued
 operations (non-GAAP
 measure) $119,727 $76,987 $422,879 $322,504

========= ======== ========= =========