Grant Thornton LLP Releases 6th Annual Survey of Upstream U.S. Energy Companies

Top Energy Executives Resilient in Face of Industry Challenges
HOUSTON--(Business Wire)--Top executives from the energy industry face more global
challenges in exploration, employee recruitment, and retention and
perception in their sector than ever before. This is according to
accounting, tax and business advisory firm Grant Thornton LLP, who
announced today the results of their 6th annual 2008 Survey of
Upstream U.S. Energy Companies.

More than 90 respondents to the survey (30 percent public and 70
percent private companies) want to see individual and corporate
leaders focus on increased access to new acreage for exploration,
training and developing people to replace the aging and shrinking oil
and gas workforce, and educating the general public about the energy
industry. The report's findings show signs of strength and weakness
within each of these areas.

Reed Wood, Grant Thornton LLP's partner-in-charge of the firm's
energy practice, says, "I believe this survey truly reflects what many
of the top seasoned industry leaders are facing in the market today."

New Acreage for Exploration

Successful exploitation of resources provides the greatest
potential for enhancing company value and growth, according to 2008
survey respondents. Consistent with the last four years, respondents
continue to believe the Gulf of Mexico offers the greatest potential
for new discoveries of crude oil and natural gas reserves. Alaska and
the Rocky Mountains are the next best potential areas.

Looking ahead, only 27 percent of 2008 survey respondents
anticipate more difficulty in securing contract drilling services over
the next 12 months. This, too, is fairly consistent with the 2007
survey results, where 29 percent of respondents anticipated difficulty
in securing contract drilling services in the following year.

Despite the fact that nearly 75 percent of this year's respondents
do not expect problems securing drilling contracts, the lack of good
exploration prospects is still one of the most critical issues facing
the oil and gas industry today.

Fifty-nine percent of survey respondents feel additional
legislative incentives are not required for the exploration and
production industry. However, 89 percent of respondents feel
additional legislation will be enacted to further protect the
environment. In light of this projected increase in legislative
action, 42 percent of all respondents are predicting an increase in
spending related to environmental remediation or study in 2008.

Training and Development

Respondents anticipate significant growth in industry employment
rates over the next three years, with 81 percent anticipating an
increase in 2008 and 65 percent anticipating an increase in 2010. In
addition to overall industry employment growth, 76 percent of
companies surveyed plan to increase their headcount in 2008, and 63
percent say an increase to headcount will be made in 2010. These
percentages compare favorably to the importance of attracting skilled
personnel, where respondents indicated this is the fourth most
important issue in 2008.

"Our industry's greatest challenge continues to be labor," says
Richard J. Alario, chairman, president and chief executive officer,
Key Energy Services. "Specifically, we regularly search for the best
ways to recruit, train and retain a new work force that is willing to
perform the dirty, dangerous and uncomfortable jobs we offer and that
our customers demand."

As young adults are lured into safe, comfortable office positions
with lucrative salaries, the oil and gas industry will continue to
struggle to find ways to persuade this generation into the oil fields.
Eighty-five percent of respondents anticipate difficulties in hiring
and retaining employees--up significantly from 69 percent in 2007 and
65 percent two years go.

Alario sums up the challenge by saying, "We will have to pay very
well, be loyal and care very much if we are to reverse the base
feelings the Y-genners have about our industry. We must now pay the
price for the graying of our industry and the unstable employment for
which it was so well known in slower times. Luckily, today we can
afford it."

Industry Perception

High commodity prices and energy consumption costs have cast the
energy industry into the spotlight again. According to 39 percent of
survey respondents, conservation could have the greatest impact on
reducing energy prices, followed by 18 percent for incentives to
increase drilling in the United States. As in past years, many
respondents commented that they want to see their leaders enhancing
the public's awareness of the risks, challenges and opportunities
confronted by all industry participants for their respective customers
and energy consumers.

Additional Findings

Here are some additional highlights from this year's survey:

-- 64 percent expect the recent trouble in the credit market to
affect their ability to secure funding.

-- According to 93 survey respondents, the average price of
natural gas must be $8.91 in order to justify an increase in
U.S. drilling activity of more than 20 percent.

-- 65 percent of survey respondents anticipate increases in their
U.S. spending in 2008 vs. 2007. Of the respondents that have
foreign operations, only 14 percent plan to increase foreign
expenditures.

-- Respondents anticipate a rise in merger, acquisition and
restructuring efforts in 2008, with 67 percent predicting such
activity. This trend is consistent with the 68 percent rise
predicted in 2007 survey results.

-- 64 percent use hedging instruments to effectively manage price
risk. Respondents also indicated that they have significantly
increased the use of hedging instruments over the prior year.

To order a copy of the survey or to view more detailed results,
visit www.GrantThornton.com/oilandgas.

About the Survey

This is the sixth annual survey of U.S. energy companies
commissioned by Grant Thornton LLP. Survey questionnaires were mailed
to senior executives of independent oil and gas operators and service
companies throughout the United States.

The survey period was from November 2007 through mid-December
2007. Issues explored by the Grant Thornton Survey of Upstream U.S.
Energy Companies were identified by seasoned professionals in Grant
Thornton LLP's Energy Practice.

More than 90 companies responded to the survey questionnaire. The
following indicate the relative size of the companies that responded
to the survey: average total assets at the end of 2007 - $678 million;
average revenues for the 2007 fiscal year - $348 million.

About Grant Thornton

Grant Thornton LLP is the U.S. member firm of Grant Thornton
International, one of the six global accounting, tax and business
advisory organizations. Through member firms in more than 110
countries, including 51 offices in the United States, the partners of
Grant Thornton member firms provide personalized attention and the
highest quality service to public and private clients around the
globe.

About Grant Thornton LLP's National Energy Practice

Grant Thornton LLP's National Energy Practice is dedicated to
serving the accounting and tax needs of public and privately owned
energy companies. Headquartered in Houston with significant energy
expertise in Dallas, Denver, Oklahoma City, Tulsa, Kansas City and
Wichita, Grant Thornton's energy practice group has experience in all
segments of the industry with a focus on exploration and production,
drilling and energy services, pipeline and distribution, and refining
and marketing.

Visit Grant Thornton LLP at www.GrantThornton.com.

Grant Thornton LLP
Jennifer Dollinger, 832-476-5065
jennifer.dollinger@gt.com
or
Pierpont Communications
Kerri Fulks, 214-217-7300
kfulks@piercom.com

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