Transcript Slide 1

CRIMSON EXPLORATION INC.
Johnson Rice 2008 Emerging Growth
Energy Conference
Houston, TX
January 23, 2008
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
Certain statements included in this presentation are "forward-looking statements" under the Private Securities
Litigation Reform Act of 1995. Crimson Exploration Inc. (“Crimson” or “the Company”) cautions that strategic plans,
assumptions, expectations, objectives for future operations, projections, intentions, or beliefs about future events may,
and often do, vary from actual results and the differences can be material. Some of the key factors which could cause
actual results to vary from those Crimson expects include changes in natural gas and oil prices, the timing of planned
capital expenditures, availability of acquisitions, uncertainties in estimating proved reserves and forecasting
production results, operational factors affecting the commencement or maintenance of producing wells, the condition
of the capital markets generally, as well as the Company’s ability to access them, and uncertainties regarding
environmental regulations or litigation and other legal or regulatory developments affecting Crimson’s business.
Statements regarding future production are subject to all of the risks and uncertainties normally incident to the
exploration for and development and production of oil and gas. These risks include, but are not limited to, inflation or
lack of availability of goods and services, environmental risks, drilling risks and regulatory changes and the potential
lack of capital resources. The SEC has generally permitted oil and gas companies, in filings made with the SEC, to
disclose only proved reserves that a company has demonstrated by actual production or conclusive formation tests to
be economically and legally producible under existing economic and operating conditions. The Company and its
independent third party reservoir engineers use the terms “probable” and “possible” to describe volumes of reserves
potentially recoverable through additional drilling or recovery techniques that the SEC's guidelines may prohibit the
Company from including in filings with the SEC. These estimates are by their nature more speculative than estimates
of proved reserves and accordingly are subject to substantially greater risk of being actually realized by the Company.
All estimates of probable reserves in this presentation have been prepared by independent third party engineers. More
information about the risks and uncertainties relating to Crimson’s forward-looking statements are found in the
Company’s SEC filings.
2
COMPANY PROFILE


Corporate Overview

NASDAQ bulletin board (TK: CXPO)

EV – approx $390MM; Fully-diluted equity cap of approx $130 million (com & pref)

Oaktree Capital Management as equity sponsor

Producing assets focused in South Texas / Texas Gulf Coast & South LA

Emerging plays in the DJ Basin, FW Barnett Shale and West Texas Barnett Shale
$289.5MM acquisition from EXCO Resources, Inc. in May 2007





Pro Forma 2006 EBITDAX of $166 million
95 bcfe of proved reserves; 236 bcfe 3P (unrisked); 100+ drilling locations
>83,000 gross acres in prolific producing trends; 255 producing wells
Management familiarity with assets
Pro forma proved reserves of 141 Bcfe @ 1/1/07

79% proved developed; 84% natural gas; 6.8 year proved reserve life

~80% operated; ~70% average working interest

Approx 50 mmcfe/d current production (December 2007)
3
COMPANY HISTORY
2000 –

2001
2002 –

Gulf West Energy, predecessor to Crimson, obtains funding from Aquila Energy
Capital – buys Colorado, South Texas, and Grand Lake/Lacassine properties
Aquila Energy Capital withdraws funding – merchant banking meltdown

2004
2005


No capital for development/exploration
December 2004 – in desperate financial state
Oaktree Capital acquires stake though preferred equity infusion (Feb)


CEO Allan Keel and CFO Joseph Grady join Company in connection with Oaktree
recapitalization (Feb)
Expansion of management team

Reincorporated in Delaware – renamed Crimson Exploration Inc. (June)
2006

Evaluated/pursued approximately $3B in various acquisition opportunities
2007

Announces acquisition of assets from EXCO (May)
Future

3-prong strategy of acquisition, exploitation, and exploration
4
AREAS OF OPERATION
(proforma for EXCO Property Acquisition in 5/2007)
($ in millions)
Colorado
Total
Proved Reserves (Bcfe):
% Gas:
84%
Production (MMcfe/d)1:
56.7
Strip PV-10%:
$567
Reserve Life (Years):
6.8x
3P Reserves (Bcfe):
Proved Reserves (Bcfe):
141.4
% Gas:
75%
Production
DJ
BASIN
7.9
(MMcfe/d)1:
Strip PV-10%:
0.7
$24
3P Reserves (Bcfe):
7.9
281.6
BARNETT
SHALE
WEST
TEXAS
GULF COAST
SOUTH
TEXAS
Texas
Proved Reserves (Bcfe):
% Gas:
Production
Note:
(1)
Louisiana
116.1
87%
(MMcfe/d)1:
46.5
Proved Reserves (Bcfe):
17.1
% Gas:
47%
Production
(MMcfe/d)1:
9.4
Strip PV-10%:
$464
Strip PV-10%:
$78
3P Reserves (Bcfe):
256.3
3P Reserves (Bcfe):
17.1
Proved reserves as of December 31, 2006 and are third party engineered. 3P reserves only include the EXCO assets’ unrisked probable and possible reserves per Crimson
management. Strip PV-10% as of May 8, 2007.
Based on average daily production in January 2007.
5
PROVED RESERVE DISTRIBUTION – 1/1/07
(proforma for EXCO property acquisition in 5/2007)
Pro Forma Reserves by Category
Pro Forma PV-10% by Category (1)
PUD
13%
PUD
21%
PDNP
14%
PDP
54%
PDNP
25%
PDP
73%
Pro Forma Reserves by Region
Pro Forma PV-10% by Region (1)
Louisiana
12%
Colorado
6%
Louisiana
14%
Colorado
4%
Texas
82%
141 Bcfe
(1)
Texas
82%
$567 MM PV-10%
Pre-tax figure based on proved reserves and NYMEX strip as of May 8, 2007.
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MANAGEMENT TEAM
NAME AND TITLE
Allan D. Keel
President, CEO, Director
EXP.
>25
EXPERIENCE



E. Joseph Grady
SVP, CFO
>30



Jay S. Mengle
SVP, Operations & Engineering
>25
Tracy Price
SVP, Land & Business Development
>25





Thomas H. Atkins
SVP, Exploration
>25


VP/GM Westport Resources,
President/COO Mariner Energy & Woodside Energy (USA)
Energen
CFO - Texas Petrochemicals Holdings, Inc.
CFO - Forcenergy, Inc. & Pelto Oil Company
Deloitte & Touche
Shelf Asset Manager – GOM for Kerr-McGee
Senior management roles at Norcen Explorer and Westport Resources
SVP – Land / Business Development at Houston Exploration
Manager of Land / Business Development of Newfield Exploration
Land Manager for Apache Corporation
General Manager – GOM for Newfield Exploration
Exploration Manager for EOG Resources
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BOARD OF DIRECTORS
NAME AND TITLE
EXPERIENCE
Allan D. Keel
President, CEO, Director

Above
Lee B. Backsen

Continental Land & Fur Co. and Grant Geophysical
Senior exploration management positions with Burlington Resources, UMC
Petroleum, General Atlantic Gulf Coast, Kerr-McGee, Pelto Oil Co., Spectrum
Oil and Gas Co. and Shell Oil Co.

Skardon F. Baker
Senior Vice President, Oaktree Capital
Management

B. James Ford
Managing Director, Oaktree Capital
Management

Lon McCain







Joined Crimson’s board in February 2005
JP Morgan Investment Banking
Vice President in JP Morgan’s M&A group
Director of EXCO Resources, Inc. ,Cequel Communications, Trenton Media and
Red Technology Alliance
Consultant with McKinsey & Co
Director of Continental Resources, Inc. and Cheniere Energy Inc.
Previous CFO of Westport Resources Corporation
Principal of Petrie Parkman & Co.
Senior financial management positions with Presidio Oil Co., Petro-Lewis
Corporation and Ceres Capital
8
ORGANIZATION SUMMARY
Administrative
Exploration
Land
Production
Total
Pre-EXCO
Headcount
8
2
4
3
17
Recent Open Fully-Staffed
Hires Positions Headcount
6
8
22
7
1
10
5
1
10
14
1
18
32
11
60
9
FELICIA FIELD AREA
Area of Operations
Highlights
Field Overview

Legacy Westport Resources property

21,658 gross / 12,910 net acres

Felicia
(Liberty County)
Yegua, Cook Mountain, Wilcox and Vicksburg reservoirs (9,000’
to 15,000’)

Well defined hydrocarbon traps

Five 3-D surveys total over 500 sq miles within immediate trend
Upside Potential
Field Summary

Probable & Possible Reserves: ~72 Bcfe

30 amplitude related prospects (3 PUD, 10 Prob, 17 Poss)
30.0

Abandonment pressure could add as much as 25 Bcfe (net)
% Gas
85%
2007 Actual & 2008 Plans
% PDP
96%
Operators
Crimson/Cimarex/Edge
Working Interest
Proved Reserves (Bcfe) – 1/1/07
10 - 75%
Producing Wells
23
12/07 Production (MMcfe/d)
18.4

2007: Drilled 4 successful wells out of 5 total

2008: Drill 10 gross wells total (costs: 8/8)

10 (6.1 Net) exploitation wells: ~$3.5MM to drill, ~$5MM to
D&C
10
CAGE RANCH FIELD AREA
Area of Operations
Highlights
Field Overview
Cage Ranch
(Brooks County)

Legacy Westport Resources property

18,623 gross acres / 15,168 net acres

Frio and Vicksburg reservoirs (8,500’ to 12,000’)

Highly faulted structural traps

Upside Potential
Field Summary
Operators
Ten 3-D seismic surveys covering 176 square miles of outlined
area
Crimson/CHK/El Paso/Forest

PUD Reserves: ~13 Bcfe
Working Interest
85%

Probable & Possible Reserves: ~14 Bcfe
Proved Reserves (Bcfe) -1/1/07
28.0

Identification of additional shallow Frio oil traps
% Gas
94%

Evaluation of Deeper Vicksburg sands below existing production
% PDP
24%
Producing Wells
43
12/07 Production (MMcfe/d)
2.9
2008 Plans

Drill 4 gross wells total (costs: 8/8)

2 (1.9 Net) PUDs: ~$2.0MM to drill, ~$2.7MM to D&C

2 (2 Net) exploitation: ~$2.0MM to drill, ~$2.5MM to D&C
11
SW SPEAKS FIELD AREA
Area of Operations
Highlights
Field Overview
Speaks
(Lavaca County)

Legacy Westport Resources property

10,987 gross / 5,861 net acres

Miocene to Deep Wilcox reservoirs (2,000’ to 17,000’)
Upside Potential

PUD Reserves: ~8 Bcfe

Probable & Possible Reserves: ~42 Bcfe

26 identified drilling locations

Multiple behind pipe opportunities
Field Summary
Operators
Crimson/El Paso/XTO
Working Interest
35%
Proved Reserves (Bcfe) -1/1/07
21.0
2007 Actual & 2008 Plans
% Gas
97%

2007: Drilled 1 successful well out of 1 total
% PDP
58%

2008: Drill 5 gross wells total (costs: 8/8)
Producing Wells
24
12/07 Production (MMcfe/d)
2.7


4 (1.3 Net) PUDs: ~$4.0MM to drill, ~$6.0MM to D&C
1 (0.8 Net) exploitation: ~$4.0MM to drill, ~$6.0MM to
D&C
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STX – LOBO
Area of Operations
Highlights
Field Overview
STX – Lobo
(Zapata & Webb
Counties)

Non Operated Joint Venture

Lower Wilcox Lobo

2,800 Gross Acres/ 550 Net Acres

Well defined Hydrocarbon System

High Probability of Success
Upside Potential
Field Summary
Operators
Paloma/CHK/El Paso/Forest
Mulitiple Pays, Complex Geology
2007 Actual & 2008 Plans
Working Interest
20-24%
Proved Reserves (Bcfe) -1/1/07
0.0

2007: Drilled 6 successful wells out of 9 total
% Gas
100

2008: Drill 9 gross wells total (costs: 8/8)
% PDP
N/A
12/07 Production (MMcfe/d)
1.6

9 (2.0 net) Exploration wells: ~$1.6MM to drill, ~$2.7MM to
D&C
13
DJ BASIN
Area of Operations
Highlights
Field Overview

14,000 gross / 10,000 net acres

Acquired in 2000 with Aquila Energy Capital financing

DJ Basin
(Colorado)

Two development wells drilled in 2006, adding net production
of approximately 368 Mcfe/d
Long-life reserves; 32 producing wells
Upside Potential
Field Summary

PUD Reserves: ~3 Bcfe
Operators Crimson/Anadarko/EnCana/Forest

Probable & Possible Reserves: ~7 Bcfe
Working Interest
70 - 92%

42 identified drilling locations
8.0

Proved Reserves (Bcfe) – 1/1/07
Further potential evaluation in Niobrara, Codell and deeper
formations
% Gas
75%
% PDP
52%
2008 Plans
Producing Wells
32

12/07 Production (MMcfe/d)
0.7
Drill 10 gross wells total (costs: 8/8)

5 (3.5 Net) PUDs: ~$0.5MM to drill, ~$0.6MM to D&C

5 (3.4 Net) exploitation: ~$0.5MM to drill, ~$0.6MM to D&C
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BARNETT SHALE
Ft. Worth Barnett Shale Joint Venture



Approximate 10, 500 gross acreage position in
Tarrant / Johnson counties (core area)
Offset operators include Chesapeake Energy, EOG
Resources, etc.
12.5% WI (non-operated)
2007 Actual & 2008 Plans
 2007: Drilled 7 of 7 wells
 2008: None
 Announced proposed sale in 1Q:08 – approximately
$30MM ; 2.5 – 3x return
Ft. Worth Barnett Shale
(Johnson and Tarrant Counties)
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WEST TX BARNETT/WOODFORD SHALE
Culberson County, TX
SOUTHWESTERN
LOCATION
HALLWOOD
LOCATION
ENCANA
TD
13,500’
ENCANA
TD 11,000’
NRI: 77%
SOUTHWESTERN
TESTING
ENCANA
TD 11,000’
ENCANA
TD 11,000’
BULLD
OG TD
14,775’
HUDSPETH
PETRO-HUNT
DRILLING
CXP
ACREAGE
WI: 100%
PETROHUNT
DRILLING
EOG
TD 9,100’
2
LOCATIONS
SOUTHWESTE
RN ACREAGE
CRIMSON 24,000 ACRES
HALLWOOD
LOCATION
MATADOR
LEASES
CONCHO
TD 11,900’
RANGE
LOCATIO
N
EXPIRY: 2010
HALLWOOD
DRILLING
BURLINGTON
TD 13,450’
PETRO-HUNT
TD 13,500’
HALLWOOD
LOCATION
DRILLED WELL
CONCHO
DRILLING
QUICKSILVER
LOCATION
LOCATION
THOMPSON
DRILLING
DALLAS
2 LOCATIONS
QUICKSILVER
ACREAGE
QUICKSILVER
TD 10,368’
JEFF
DAVIS
5 MILES
16
CAPITAL EXPENDITURE PROGRAM
(Preliminary, subject to Board approval)
Estimated 2008 Capex by Region
Louisiana Colorado
5%
3%
Estimated 2008 Capex by Category
Other
1%
Lease
8%
South
Texas
35%
East Texas
31%
Exploitation
46%
SW Central
Texas
25%
$62.6 million
$62.6 million
$45
2008E Drilling Capital ($MM)
Development (Proved)
Exploitation (Prob/Pos s )
Exploration
Leas e Acquis itions
Total
2008E Drilling Schedule (# Wells)
Development
Exploitation
Exploration
Total
Development
23%
Exploration
23%
South
Texas
Central
Texas
East
Texas
5.3
3.7
8.8
4.0
21.8
5.5
5.1
4.1
0.8
15.5
0.1
18.4
1.1
19.6
6
2
14
22
7
3
5
15
1
10
2
13
Louisiana Colorado Other
TOTAL
2008
Unrisked
Potential
Bcfe (net)
(1)
1.3
0.8
2.1
1.8
1.5
3.4
1
6
5
1
2
11
-
0.3
0.3
-
14.3
28.7
14.7
4.8
62.6
22.9
26.6
49.5
21
20
22
63
(1) Excludes: seismic data (~$7.1MM), land delay rentals (~$0.5MM), & non-O&G capex (~$0.3MM).
17
FINANCIAL STRATEGY

Maintain conservative financial policy:







Maintain manageable debt levels




Senior revolver –$200MM borrowing base; $90MM available
Second lien facility - $150MM fully drawn; L+575; 5/2012 maturity
Excess cash flow, after capital expenditures, for revolver repayment, preserving flexibility
Balanced, conservative capital program




Borrowing capacity for acquisitions
Fund capex from operating cash flow
Utilize oil and gas derivatives to limit commodity price downside risk - ~75%
Target net debt / EBITDAX ratio under 2.5x
Target net debt / proved reserves under $1.80 / Mcfe
Target adjusted EBITDAX/interest over 3.5x
Low-risk drilling inventory to increase cash flow and asset value, and reduce debt
Exploration consists primarily of delineation/step-out drilling in existing, defined producing trends
Limited “wildcat” exploration
Expand investor base and opportunistically access equity capital for growth



Don’t need new equity to reduce debt levels
Provide “powder” for future acquisitions
Increase liquidity in stock to unlock value
18
TOTAL COMPANY PRODUCTION BY TYPE
(MMcfe/d)
19
TOTAL COMPANY PRODUCTION BY CATEGORY
(MMcfe/d)
20
REVENUE & EBITDAX
21
BALANCE SHEET
Actual
(000’s)
12/31/05
Cash /Current Assets
Property, Plant & Equipment, net
Other Assets
Derivative Instruments (Curr & LT)
Total Assets
$
Notes Payable/Current Debt
Other Current Liabilities
Long-term Debt
Asset Retirement Obligations (Curr & LT)
Derivative Instruments (Curr & LT)
Equity
Total Liabilities & Stockholders’ Equity
12/31/06
9/30//07
5,825
54,223
3,067
63,115
$
3,532
76,547
1,690
2,934
$ 84,703
$
$
121
4,626
1,103
1,311
3,149
52,805
$
$
$
63,115
$ 84,703
$
91
10,656
8,415
4,215
61,326
$
40,029
347,223
4,315
4,258
395,825
95
38,255
270,568
7,690
1,582
77,635
$ 395,825
22
ATTRACTIVE VALUATION VS. PEERS
CXPO EV @ 9/30/07 ($7.85/share) is pro forma the EXCO acquisition.
CXPO* EV @1/16/08 ($12.45/share) is pro forma the EXCO acquisition; assumes all Preferred shares are converted, thus increasing O/S by 5.8MM.
PV-10 values and proved reserves as of 12/31/2006 SEC filings.
EV based on companies’ 9/30/2007 SEC filings.
Source: Fortis Merchant Banking Weekly Market Update (1/7/08)
23
ATTRACTIVE VALUATION VS. PEERS
CXPO EV @ 9/30/07 ($7.85/share) & EBITDA is pro forma the EXCO acquisition.
CXPO* EV @1/16/08 ($12.45/share) & EBITDA is pro forma the EXCO acquisition.
Daily production based on most recent quarter. EBITDA estimates are Thomson FirstCall consensus.
EV based on companies’ 9/30/2007 SEC filings.
Source: Fortis Merchant Banking Weekly Market Update (1/7/08)
24
SUMMARY

Experienced management team – proven track record of growth

Low-risk growth potential through significant upside from 3P reserves

Inventory of lower risk exploitation and exploration opportunities in
the Barnett/Woodford Shale, South Texas Lobo and DJ Basin

Visible near-term debt reduction through free cash flow

Limited commodity risk due to aggressive hedging program

Strong financial partner in Oaktree Capital

Prospect generation capability for above-average value creation
25