SM Energy Company Annual Report 2002

← All annual reports

FY2002 Annual Report · SM Energy Company

Loading PDF…

Annual Report

2002

V A L U E S

To succeed in a cyclical business, we must be able to

FAIRNESS • EARNINGS • TRUST • CASH FLOW • INTEGRITY • EARNINGS PER SHARE

find and develop natural gas and crude oil reserves

CHARACTER • CAPITAL • HONESTY • STOCKHOLDERS EQUITY • RESPONSIBILITY • ASSETS

creatively, efficiently and economically by applying

PASSION • NET INCOME • RESPECT • CASH • KNOWLEDGE • COMMON STOCK • GOVERNANCE

our technical expertise, financial strength and

RESERVES • VERACITY • PRODUCTION • LOYALTY • WORKING CAPITAL • LEADERSHIP

discipline, the theme of our 2001 annual report. Not

REVENUE • TEAMWORK • CAPITAL EXPENDITURES • RELIABILITY • FULL CYCLE ECONOMICS

only has St. Mary been one of the top performing

STRENGTH • GROWTH • PROGRESSIVE • SUSTAINABILITY • QUALITY • ACQUISITIONS

companies since going public in 1992, the Company

C R E AT I V I T Y • N E T A S S E T VA L U E • C O M M I T M E N T • I N V E S T M E N T S • A D A P TA B I L I T Y

has created extraordinary returns for its shareholders

RETAINED EARNINGS • FAIRNESS • EARNINGS • TRUST • CASH FLOW • INTEGRITY

from its inception in 1908. Creating value for our

EARNINGS PER SHARE • CHARACTER • CAPITAL • HONESTY • STOCKHOLDERS EQUITY

stakeholders over the long-term requires a foundation

RESPONSIBILITY • ASSETS • PASSION • NET INCOME • RESPECT • CASH • KNOWLEDGE

of core values. For 94 years St. Mary has embodied

COMMON STOCK • GOVERNANCE • RESERVES • VERACITY • PRODUCTION • LOYALTY

a culture of passion, knowledge, fairness, trust,

WORKING CAPITAL • LEADERSHIP • REVENUE • TEAMWORK • CAPITAL EXPENDITURES

integrity and social responsibility. Opportunities,

R E L I A B I L I T Y • F U L L C Y C L E E C O N O M I C S • S T R E N G T H • G R O W T H • P R O G R E S S I V E

technologies and people may change over time, but

S U S TA I N A B I L I T Y • Q U A L I T Y • A C Q U I S I T I O N S • C R E AT I V I T Y • N E T A S S E T VA L U E

our core values will always remain intact.

Company At A Glance

Our Mission

St. Mary Land & Exploration Company (NYSE: SM) was founded
in 1908 and incorporated in 1915. The Company is engaged in the
exploration, development, acquisition and production of natural
gas and crude oil in five core areas in the United States.

Our mission is to build value by adding value at every phase of the
business, from prospect generation to reservoir engineering to
drilling to production to marketing to finance and to administration.
Our goal is to provide a long-term return to our shareholders in the
top-quartile of our peers while preserving underlying capital. We
will achieve this by attracting, motivating and retaining a talented
staff, the intelligent use of new technologies, and a focus on
growing asset value per share.

Operations

St. Mary operates in five core areas managed from four regional
offices. The Mid-Continent, Rocky Mountain, ArkLaTex, Gulf,
and Permian Basin regions are operated out of our offices in
Tulsa, Oklahoma, Billings, Montana and Shreveport and Lafayette,
Louisiana. Each office is staffed with a full complement of
geologists/geophysisists, engineers and landmen who have
extensive experience in the region/basin where they work. Our
Denver headquarters provides the administrative support and
oversight for the regions.

BILLINGS

DENVER

TULSA

SHREVEPORT

LAFAYETTE

St. Mary is a dominant operator in each of its core areas and
will operate approximately 81% of its $135 million exploration
and development capital expenditures budget in 2003. By
operating such a large amount of our budget, we are able to
maximize the benefit of the company’s expertise in the land,
geological, and engineering disciplines. In each core area we
focus on cautious detailed land and legal work, disciplined
geological interpretations, reservoir management, efficient
completion and stimulation techniques, and the application of
new technologies when warranted.

Acquisitions

100

Property Acquisitions
($ millions)

The acquisition of oil and gas assets and companies is an
important part of our growth strategy. We largely focus our
attention on smaller niche acquisitions in existing core areas
where we can utilize our
geologic knowledge of the
area, our technical expertise
and our financial flexibility. At
the same time we are actively
seeking larger acquisitions that
would allow us to expand our
existing core areas, acquire
additional geoscientists, and/or
gain significant interests in a
new basin within the U.S.

03
(budget)

In 2002 we spent $87.7 million on niche acquisitions, which

represented 45% of our capital expenditures program. In 2003
we are budgeting $90 million for acquisitions, which is 40% of
our total capital budget. Over the last five years we have completed
$232 million of acquisitions.

Financial Strategies

Through consistent economic growth in reserves and production,
St. Mary’s objective is to increase per share value in excess of
15% per year. To achieve that objective, we must replace, on
average, 200% of our production with full cycle economics in
the top quartile of our peer group. Over the past five years we
have replaced 223% of our production and have consistently
outperformed our peers. From December 1992, when we first
became a public company, through December 31, 2002, we have
provided our shareholders, in dividends and stock value, a
compounded rate of return of 16%.

Our strategy is also to maintain a strong balance sheet

Reserves Per Share
(MCFE)

by keeping our debt to capital ratio at 35% or less. A strong
balance sheet allows us to
weather cycles of low
commodity prices and be
opportunistic when capital
is not available to our peers.
We are willing to become
aggressive and increase our
debt to capital ratio during
down cycles in order to make
strategic acquisitions.

Financial Highlights

In thousands except per share, as adjusted for 2 for 1 split on 9/5/00, production and price data

2002

2001

2000

1999

1998

Income Statement Data

Oil and gas production revenues

Gains on sales and other

Total operating revenues

Net income (loss)

$ 185,670

7,536

$ 193,206

$ 27,560

$ 203,973

3,496

$ 207,469

$ 40,459

$ 188,407

7,259

$ 195,666

$ 55,620

Basic earnings (loss) per share

.99

$ 1.45

2.00

Cash dividends per basic share

.10

$ 73,387

1,527

$ 74,914

0.00

.10

$ 71,413

8,096

$ 79,509

$ (8,797)

(.40)

.10

Basic weighted average common

shares outstanding

27,856

27,973

27,781

22,198

21,874

Balance Sheet Data

Working capital

Total assets

Long-term debt

Stockholders’ equity

Average Net Daily Production

Oil (Bbls)

Gas (Mcf)

MCFE (6:1)

Average Sales Price

Oil (per Bbl)

Gas (per Mcf)

U.S. Reserves

Oil (Bbls)

Gas (Mcf)

MCFE (6:1)

2,050

537,139

113,601

299,513

7,713

104,558

150,836

$ 34,000

436,989

64,000

286,117

6,667

108,195

148,199

$ 40,639

321,895

22,000

250,136

6,551

104,769

144,075

$ 13,440

230,438

13,000

188,772

3,790

62,478

85,218

$ 9,785

184,497

19,398

134,742

3,493

69,698

90,656

$ 25.34

$ 3.00

$ 23.29

$ 3.73

23.53

3.44

16.56

2.21

12.98

2.16

36,119

274,172

490,887

23,669

241,231

383,247

20,950

225,975

351,673

18,900

207,642

321,042

8,614

132,605

184,289

Stockholders’ Equity
($ millions)

Reserves
(BCFE)

Production
(Daily MMCFE)

300

250

200

150

100

500

400

300

200

100

200

150

100

03
(projected)

To Our Shareholders

In a year when financial markets were in
turmoil because of scandal and impropriety,
we had a solid year growing reserves
28%, production 2% and earned $27.6
million of net income.

While the financial markets were characterized by scandal, scoundrels
and instability, the year 2002 reflected a return of some stability to
the oil and gas markets with NYMEX prices averaging $3.25/mmbtu
and $26.06/barrel, down approximately 18% on a realized MCFE
basis. We saw a gas storage overhang for most of 2002 reflecting
warm weather in late winter (‘01-’02), normal summer temperatures
and reduced demand as a result of a recession. Declining gas
deliverability and oil price premiums associated with terrorism and
Middle East turmoil moderated these conditions. Colder than normal
weather in late 2002 and declining deliverability wiped out the surplus
gas storage. We begin 2003 with high gas prices and less than
average storage. Despite good commodity prices, North American
gas production and drilling activity were in decline. For St. Mary it
was a year of substantial reserve growth. We had solid drilling
results overall led by the Mid-Continent region at the N.E. Mayfield
play. Acquisitions were a major growth component in 2002 with
the closing of the $69 million Burlington Resources transaction in
the Williston Basin, the largest acquisition in our history, together
with excellent niche acquisitions in the Arkoma Basin (Merchant
Resources) and E. Texas Horizontal Lime play (Huxley). The $69
million Flying J acquisition was announced in 2002 and closed in
January 2003. After the Flying J acquisition our reserves are 558
BCFE, the Rockies are 48% of our reserve base and we are 48%
oil. St. Mary completed a $100 million 5.75% convertible note
offering and moved to the NYSE (symbol: SM). The instability in
the financial markets placed increased pressure for governance
and oversight by our independent directors.

We modestly grew our production to 55.1 BCFE despite
no significant acquisitions until December, when the Burlington
Resources acquisition closed. Net income was $27.6 million, third
best in the history of the Company.

Net income for the year 2002 was $27.6 million or $.99 per
share compared to $40.5 million or $1.45 per share for the prior

year. Net cash provided by operating activities was $141.7 million
or $5.07 per share, up 11% from 2001. Production increased 2% to
55.1 BCFE. The average realized price declined 11% to $3.37/MCFE.
Unit costs overall were stable for the period as lease operating
expense (including taxes) declined $.10 to $.92 / MCFE, DD&A
(including impairments) increased $.02 to $.99 and general and
administrative expense increased $.04 to $.26.

Oil and gas reserves grew by 28% to 491 BCFE. Included in the

reserve calculation is a positive revision of 34 BCFE due to higher
year-end oil and gas prices. The Company replaced 305% of its
2002 production at an all-inclusive finding cost of $1.15 per MCFE.
We are pleased with these results and believe they compare favor-
ably with industry results.

We enter 2003 on a positive note. Oil and gas prices are high.

We have already closed approximately $74 million of our $90
million acquisition budget. We have an outstanding inventory of
prospects to be drilled. Rig and other service costs are moderate
and the rig count has not increased to the extent many had expected.
The long-term outlook for gas prices is excellent. The country’s
ability to supply gas remains difficult as the average decline rate for
natural gas has increased from 16% to 29% over the past twelve
years as a result of increased activity in the Gulf of Mexico where
reserve lives are very short, use of 3D seismic to identify smaller
reservoirs and better completion techniques. New sources of gas
such as LNG, frontier regions (e.g. deepwater Gulf of Mexico,
Mackenzie Delta, Alaska) and unconventional gas plays are both
more costly and have long lead times. We believe oil prices are
unusually high due to the Venezuelan strike and a threat of war in
Iraq. Longer term, however, we are beginning to see excess oil
capacity in the world diminish. A cautionary note to our general
optimism is the possible negative impact on demand for oil and

both Wyoming and Montana. We have an approximate 90%
working interest and believe the play has 150 BCF of potential
reserves. The Duchesne Deep prospect in Utah is a basin
centered tight gas play with the potential to add significant
reserves and drilling opportunities. We have reached total depth
on the first well, will complete the well and begin production
testing once a pipeline is constructed. Ultimately, we will have
an approximate 66% working interest.

• We will continue to control operations for approximately three-

quarters of our drilling capital expenditures and dominate our
core areas with our technical expertise.

As many of you know, Tom Congdon retired as Chairman of
St. Mary last year. Tom served as President, CEO or Chairman of
St. Mary for 36 years, almost half his life. Under his guidance, St.
Mary transformed itself from a royalty distribution company to a
passive oil and gas and real estate investment vehicle to a fully
operating public oil and gas company. Few companies, regardless
of their greatness, survive for 94 years. Fewer still are currently
Colorado’s Fastest Growing Company, Fortune Magazine’s ninth
fastest growing company in America and one of the top performing
E&P stocks over the past ten years since going public. St. Mary has
created tremendous value for its shareholders. None of our success
would have been possible without having very strong corporate
values. Tom instilled in St. Mary a culture of integrity and social
responsibility. This is much more than honesty in a legal sense,
but is an attitude of transacting business in an honorable manner
that builds relationships. It means treating people throughout the
organization with respect. It means treating the environment with
respect. It also means giving back to the community. When we
read newspaper headlines virtually every day bemoaning the greed
and dishonesty of corporate America, St. Mary is a reminder that a
company can be successful the old fashioned way. I have worked
with Tom since 1987 and cannot thank him enough for his faith in
me and for the opportunity that he gave me.

Our annual report theme this year recognizes the importance

of corporate values in building long-term shareholder value.
Tom Congdon has been instrumental in creating our corporate
culture and values.

March 3, 2003

Mark A. Hellerstein
Chairman, President and
Chief Executive Officer

gas should there be a double-dip recession or muddled growth in
the U.S. and world economies. A possible war with Iraq, the threat
of terrorism and unpredictable weather patterns create uncertainties
that can also influence our business.

We enter the year 2003 in excellent financial condition. We
have more prospects than ever before and a capital expenditure
budget of $225 million. Here is our plan to build value in 2003:

•

Production is forecast to grow to 70-75 BCFE, up from 55.1 BCFE
in 2002. Based on the NYMEX strip price at the end of 2002 of
$27.67 per bbl and $4.58 per MCF we would realize approximately
$4.04 per MCFE, after hedges. Lease operating expenses,
including taxes, are forecast at $1.18 – $1.28/MCFE and G&A
is forecast at $.21 – $.25/MCFE.

Of the $225 million budget, 40% is allocated for acquisitions,
20% for exploration and development in the Mid-Continent, 20%
in the Rockies and Permian, 8% in the Gulf Coast and 8% in
the ArkLaTex region. Four percent of the budget is allocated to
large potential plays, primarily unconventional gas plays. The
drilling portion of the budget represents a 28% increase over
2002, reflecting opportunities arising from the Burlington
Resources, Flying J and Huxley acquisitions completed in 2002
and early 2003. The more important planned exploitation activity
includes 16 wells at Northeast Mayfield in Oklahoma; ten wells
in the Arkoma Basin and nine Granite Wash wells in Oklahoma;
13 operated Red River, Bakken, Winnepegosis, Gunton and
Stonewall new and re-entry wells in the Williston Basin; seven
Almond tests at Wamsutter Arch in the Green River Basin; six
Odom Lime gas wells at Ft. Chadbourne and four injection
wells at the Shurgart waterflood project in the Permian Basin;
35 wells in the Arklatex region (ten horizontal James Lime
wells in East Texas and North Louisiana, three wells at Trinidad
SE and three wells at Terryville). In addition, we have two wells
planned at Judge Digby in the Gulf Coast.

• We have a large potential conventional exploratory well planned
at Carrier, where potential of the total play could exceed one
TCF with a planned working interest expected of approximately
25% after bringing in partners. This is elephant hunting with a
high degree of risk. At the Hanging Woman coal bed methane
play we have amassed a 145,000-acre leasehold position in
Wyoming and Montana where two pilot projects were put on
production in the spring of 2002 to evaluate the play. Future
development will depend on success in producing the Roberts
coal seam, adequate gas prices and favorable EIS decisions in

Capital Expenditures
($ millions)

Operating Cash Flow
($ millions)

250

200

150

100

150

125

100

03
(budget)

Legacy of Values

St. Mary’s history of building value for our
shareholders while creating a foundation of
core values is a reflection of Tom Congdon.
Although Tom has retired from the manage-
ment of St. Mary, his legacy of creating a
culture of passion, knowledge, fairness,
trust, integrity, and social responsibility will
continue. We will build upon the foundation
established by Tom to continue to create
value while maintaining our values.

After serving St. Mary as President, CEO or Chairman for 36 years,
Tom Congdon retired as Chairman of the Board in September 2002.
He continues to serve as a director and, together with his family,
maintains a significant on-going ownership in the Company. This
year’s annual report is not only dedicated to Tom, but also to his
legacy of creating a culture of passion, knowledge, fairness, trust,
integrity and social responsibility. Tom has helped to create in St.
Mary the corporate values that build a foundation for creating value
for all of the Company’s stakeholders: stockholders, employees,
the community and the environment.

Creating value for shareholders is essential for corporate
survival. St. Mary has done that for 94 years. Beginning with just
$68,000 of capital, today the Company has a market capitalization
of about $800 million. In the ten years since going public, St. Mary
has provided its shareholders a 16% return compounded annually.
Tom’s grandfather, Chester Congdon of Duluth, made a small fortune
early in this century from the development of iron mines in Minnesota
and copper mines in Arizona. He believed that true wealth flowed
from the earth — food, fibers and minerals. Through a series of
transactions, Chester and four associates acquired 25,000 acres of
land in St. Mary Parish, Louisiana ultimately rolling them into a
company first known as St. Mary Parish Land Company. St. Mary
leased portions of this acreage to Texaco, who in 1938 discovered
the Horseshoe Bayou Field, one of the “Giants” of the United States.
This was followed by Atlantic Richfield’s discovery of Bayou Sale
Field and Sun Oil’s discovery of Belle Isle Field.

Before planting his roots at St. Mary, Tom served in World
War II from 1944 to 1946, including a tour of the Pacific island
groups, China and Korea after hostilities ended. He was part of
the flood of veterans entering college on the GI Bill. He earned a
degree from Yale University in history and economics in 1950. Tom
continued at the Harvard Business School, graduating with an MBA
in 1952. Following in his grandfather’s and father’s footsteps, Tom
has a passion for land, and exploration in general, and mining and
oil and gas, in particular. He focused his early career in mining,
working for Climax Molybdenum Company as Financial Manager
and later served as a consultant to American Metal Climax, Inc. In
1958 he became general partner in Congdon and Carey, managing
mineral exploration programs in the United States, Canada and
Australia and was involved in three successful mines: the Equity
Silver Mine, for many years the world’s largest producer of silver in
North America, Candelaria, and Middle Buttes. Tom’s other interests
have included redevelopment of historic properties, including
Larimer Square and the Oxford Hotel in Denver in partnership with
Dana and John Crawford.

In 1966, Tom became president of St. Mary. Under his guidance

the Company transformed itself first from a royalty distribution
company to an oil and gas and real estate investment vehicle, and
secondly to a fully operating public oil and gas company. In all
these endeavors, Tom aligned himself with outstanding individuals,
oftentimes as partners, and established enduring relationships and
success based on fairness, trust, integrity and knowledge. Embedded
in these ideals are treating people with respect and having the
intellectual honesty to confront the brutal facts. These values,
together with a passion for the business, have been the core of St.
Mary’s corporate values. Not only are they the basis for creating
shareholder value, but also were critical in creating value for
employees through long-term employment, job satisfaction and
competitive compensation.

Serving shareholders and employees was not enough. Tom
believes that a corporation, as well as its leaders and employees,
has responsibilities to the community and the environment. Not only
does St. Mary contribute a percentage of its earnings to charitable
causes, but Tom has also served on the boards of a variety of
organizations. He was a trustee of the Denver Art Museum for many
years, including a term as its Chairman. Among other non-profit
participations, he chaired Colorado Public Radio and was a member
of the National Board of the Smithsonian Institution in Washington.
In recent years he has regularly lectured on economics in Vietnam
to classes selected by Ho Chi Minh’s Vietnam-USA Society.
Tom and his wife, Noel, continue to be active in cultural affairs
in both Denver and Aspen, Colorado. Married for forty-four years,
they have two daughters, Chelsea Brundige of Old Snowmass,
Colorado and Lucy Hanson of Port Townsend, Washington as well
as two grandchildren.

St. Mary also strives to be impeccable in its environmental
compliance, reflecting Tom and Noel’s concern for the environment
and future generations. Tom can even be seen driving around town
in his hybrid Toyota Prius automobile.

Tom, you may rest assured that your passion for the business

and the corporate values that you have instilled within the organization
are a legacy that will continue to form the foundation of St. Mary.
It is those values that will allow St. Mary to create value for its
shareholders, employees and the community for the years ahead.

Acquisitions

Acquisitions are a significant part of
St. Mary’s growth strategy. We allocate
approximately 35% to 40% of our
capital expenditures budget each year
for acquisitions.

The timing and level of expenditures for acquisitions is opportunity
driven and may vary considerably from our budget. With our strong
balance sheet and highly regarded stock, we have the financial
capability to make much larger acquisitions than what is included
in our budget.

In 2002 we completed $87.7 million of acquisitions that added
101.6 BCFE of proved reserves. Over the past three years we have
closed $182.4 million of acquisitions. Through February 15, 2003 we
have closed an additional $74 million of acquisitions that represent
approximately 75 BCFE of proved reserves. The $74 million spent
to date in 2003 is part of the $90 million we have allocated for
acquisition in our 2003 capital expenditures budget.

In 2002 we made the largest acquisition in the history of our

company. The $69.5 million purchase of oil & gas properties from
Burlington Resources in the Williston Basin of North Dakota and
Montana included 70.7 BCFE of proved reserves, 97% developed
and increased St. Mary’s production by 15%. This acquisition
fits our objective of making niche acquisitions in our core areas
that provide economies of scale and exploitation opportunities.
In January 2003 we closed the $69 million acquisition of oil & gas
properties from Flying J Oil & Gas Inc. and Big West Oil & Gas Inc.

Left to right: Doug York, Vice President–Acquisitions and Reservoir

Engineering; Dennis Zubieta, Corporate Staff Engineer; Jerry Hertzler,

Manager–Reservoir Engineering; Mary Bergmann, Geologist;

Kendra Kinzie, Director–Technical Services

Left to right: Terry Holzwarth, Vice President–Engineering,
Nance Petroleum Corp.; Regional Acquisition and Divestiture Engineers:
Robert Sharum, Mid-Continent region; Paul Veatch, ArkLaTex region;

not pictured, David Janise, Gulf region

The acquisition included 66.9 BCFE of proved reserves,
92% developed in the Williston, Powder River and Green River
Basins. Again the acquisition provides economies of scale and
exploitation opportunities.

St. Mary has on staff a team of engineers, geologists and support

personnel whose primary responsibility is to source and evaluate
acquisition opportunities. In addition to our home office staff, the
acquisition team includes a petroleum engineer in each regional
office who is responsible for identifying and evaluating acquisition
opportunities in his region. Once an acquisition opportunity survives
a filtering process and warrants a full evaluation, we assign other
professionals from within our organization to assist in a full
evaluation of the properties. We make proposals on those oppor-
tunities that meet our strict financial criteria, which includes
acceptable returns from the producing properties and an opportunity
to add value using our geologic concepts, reservoir management
and well completion and production techniques.

Financial Overview

We are responsible for providing financial
data that is honest, accurate, meaningful
and reliable. We build value for our share-
holders while maintaining the values instilled
by our Board of Directors and management.

St. Mary’s financial team is responsible for reporting financial
information to the public and its shareholders in accordance with
rules and regulations established for public companies trading
on the New York Stock Exchange. We take our responsibility
very seriously to provide financial data that is honest, accurate,
meaningful and reliable.

Over the past year financial markets have been impacted by

scandal and impropriety. New rules and regulations have been
implemented to make Boards of Directors and management more
accountable to their shareholders. Corporate governance has been
a hot topic and a focus for all management teams during the year.
We have studied the financial reporting and other requirements of
the Sarbanes-Oxley Act and the Securities and Exchange Commission
in addition to those added by our recent listing on the New York
Stock Exchange. We have adjusted, refined and added procedures
in order to comply with these new requirements. Since we have
always conducted our business in accordance with the spirit of
these new rules and regulations, minimal changes have been
necessary to comply with the new requirements.

The responsibilities of our financial team go beyond compliance
with rules and regulations. It is our obligation to provide our share-
holders and the public with published results that are accurate and
honest. We have a responsibility to our employees whose incentive
based compensation is based on accurate information. We have a
responsibility to our regions to provide honest and accurate feedback
of their operating results that will assist in our combined decision
making process.

Left to right: Bob Hanley, Vice President–Business Development

Rick Norris, Vice President–Finance, Treasurer, Secretary

Garry Wilkening, Vice President–Administration and Controller

Our state of the art software and accounting system is managed
and operated by experienced and talented professionals. Duties are
segregated in order to maintain a proper system of internal control.
A variety of checklists are maintained and monitored to assure that
all necessary accounting functions are being performed on a timely
basis. Our outside auditor, Deloitte & Touche along with our financial
management team and the audit committee of our Board of Directors,
review all published financial statements prior to their release.

We have developed a sophisticated management reporting
system that starts with accounting information that is combined
with other operating data. The information is analyzed in a variety
of ways with operating results provided on an individual well level
or grouped according to our operational needs. Management is
provided monthly reports that analyze operating results of each
region and the Company.

St. Mary is driven by its financial goals and objectives. Our
mission is to build value for our shareholders. At the same time
our legacy and the values instilled by our Board of Directors and
management will always require us to measure our performance
honestly and accurately. We will continue to maintain our values
while building value.

Our Chairman, President and Chief Executive Officer,
Mark Hellerstein rang the opening bell at the New York Stock
Exchange on November 20, 2002.

Operations Overview

We focus on the exploration, exploitation,
development and acquisition of oil and
gas properties in mature basins of the
continental U.S. St. Mary is a dominant
operator in five core areas where we will
operate approximately 77% of our drilling
capital expenditures in 2003.

Our operations at St. Mary are a combination of exploration,
exploitation, development and acquisition of oil and gas properties
in five core areas in the United States. Our five core areas, the
Mid-Continent region, the Rocky Mountain region, the ArkLaTex
region, the Gulf region and the Permian Basin region are operated
out of four regional offices. Senior technical managers with over
20 years of local professional experience head each of our regional
offices. Each office has a full complement of geoscientists, engineers,
land professionals and support personnel who have typically spent
most of their careers in the basin or region where they are working.
The regional offices are supported by centralized administration
in our Denver office.

Year 2002 was highlighted by excellent drilling results at
Northeast Mayfield in the Anadarko Basin and the two largest
acquisitions in the history of our company, one of which closed in
January 2003. Our exploration efforts in Northeast Mayfield have
grown from a deep single target Morrow Crook sand play to a
multi-target play with over a dozen identified pay zones to date,
and we are still counting. We drilled a number of prolific discoveries
in 2002 and have 16 wells in our budget for this area in 2003.

Ronald D. Boone

Executive Vice President and Chief Operating Officer

Reserve Base By Region
(After Flying J/Big West Acquisition)

Rocky Mountain – 48%

Mid-Continent – 27%

ArkLaTex – 10%

Permian – 8%

Gulf – 7%

Capital Expenditures Budget By Region

Acquisitions – 40%

Mid-Continent – 20%

Rocky Mountain/Permian – 20%

Gulf – 8%

ArkLaTex – 8%

Other Areas – 4%

The acquisition of oil and gas properties from Burlington
Resources in December 2002 and from Flying J Oil & Gas and Big
West Oil & Gas, which closed in January 2003, increased our
reserves nearly 40%. We expect our production rate to increase
approximately 28%. The acquisitions also included over 500,000 net
acres of oil & gas leases that will provide future exploration,
development and exploitation opportunities.

At year-end we were drilling a well in Duchesne County, Utah
that is targeting the Mesaverde sand. The well is located on over
12,000 acres of company-controlled leases. This basin centered gas
prospect has the potential to add significant reserves and drilling
opportunities to St. Mary.

Our 2002 production increased slightly from 2001 to a total of
55.1 BCFE, or an average daily production rate of 150.8 MMcfe per
day. Net proved reserves at December 31, 2002 increased 28% to
491 BCFE, 88% proved developed. Our reserve base at year-end
2002 was 56% natural gas and 44% oil, which became 52% natural
gas and 48% oil after closing the Flying J and Big West acquisition
in January 2003. During 2002 we participated in drilling 104 wells
with an 83% success rate.

We are budgeting $225 million for capital expenditures in 2003,

which represents a 17% increase over the $193 million spent in
2002. Exploration and development expenditures are projected to
be $135 million and $90 million is budgeted for property acquisitions.
We will operate approximately 77% of our drilling budget in 2003.
The $90 million property acquisition budget includes $74 million
spent in January 2003 for the Flying J and Big West properties and
to acquire additional interest in the Fort Chadbourne Odom Lime
Unit which we operate in our Permian Basin region. With a strong
balance sheet, we can remain opportunity driven in looking for
acquisition opportunities. We will be actively sourcing and evaluating
opportunities during 2003 for acquisitions that meet our
economic parameters.

We have the largest inventory of drilling prospects in the history

of our company. The inventory provides opportunities ranging from
low-risk, near term development projects to high-impact exploration
ventures. The majority of our drilling budget is devoted to low to
moderate risk projects. A success in any of the higher risk, higher
potential projects budgeted in 2003 would add meaningful reserves
to our company. Our task in 2003, as it is every year, is to continue
to develop prospects and to drill our prospect inventory. A major
effort in 2003 will be to assimilate the large property acquisitions
made in late 2002 and early 2003 into our operations. Following is
additional information about the operations in each of our core
areas and our plans for 2003.

(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
(cid:2)
PROVED RESERVES

148.7 BCFE

% OF TOTAL RESERVES

30%

GAS / OIL MIX

95% / 5%

PROVED DEVELOPED RESERVES

84%

CAPITAL EXP. BUDGET

$45 MILLION

Mid-Continent Region

The Mid-Continent region includes St. Mary’s properties in the
Anadarko and Arkoma Basins in Oklahoma and Texas. The region,
where we have been operating since 1973, is managed out of our
Tulsa, Oklahoma office by our 32 person staff.

The Mid-Continent region has provided our company with an

excellent base of operations and growth. The multi-pay potential
of the region helps to provide consistent and predictable results.
Approximately 42% of our core capital expenditures have been in
the Mid-Continent region over the past four years. Applying state
of the art technology in drilling, hydraulic fracturing, and innovative
completion techniques to the region’s tight gas reservoirs enables the
acceleration of production and associated cash flow. Our extensive
geologic database and experience in the region, along with our
large acreage position, allows us to continue to grow our prospect
generating capabilities year after year.

We enjoyed excellent drilling results in the Mid-Continent region
in 2002, completing 44 of the 50 wells we drilled for an 88% success
rate. The region’s results were highlighted by our success in
Northeast Mayfield that has grown from a deep single target Morrow
Crook sand play to a multi-target play where we have been able to
identify and map in excess of a dozen field pay zones. Due to the
density of wells drilled in the area into the Crook sand, we have
been able to map a number of shallower Morrow targets and the
recently completed Atoka interval. In several cases these newly
defined zones have been quite prolific and have greatly enhanced
the economics of drilling in the area. During 2002 we completed
eight wells in Northeast Mayfield and have not drilled a dry hole in
the field. The Lavonne 1-20 well (35% St. Mary interest) was
drilled in 2002 and had an initial rate of 15,200 Mcf per day. The
Legrand 1-32 well (46% St. Mary interest) produced at a rate of
8,700 Mcf per day and the Emily B. 1-25 (46% St. Mary interest)
produced at a rate of 9,200 Mcf per day. Subsequent to year end

the Brothers 2-20 (34% St. Mary interest) was completed at a rate
of 11,700 Mcf per day. The Baker 1-28 (93% before payout) and the
Benton 1X-21 (48%) were recompleted at rates of 8,400 and 5,600
Mcf per day, respectively. We are actively developing prospects and
acquiring leases in the area and have budgeted 16 wells to be
drilled in Northeast Mayfield in 2003.

During 2002 we added to our holdings in Coal County, Oklahoma

in the Arkoma Basin with the $7.5 million niche acquisition of oil
and gas properties from Merchant Resources #1 L.P. The properties
included in the acquisition adjoined our existing leasehold in the
area creating a prospect leasehold position covering 35 contiguous
sections. The acquisition included properties producing 1,200 Mcf
of gas and 65 Bbl of oil per day, undrilled locations and an 89-mile
gathering system. During 2002 we drilled 11 wells in Coal County
with an 82% success rate. Since the acquisition we have
increased gross production in the area from about two MMcf per
day to nearly seven MMcf per day. We have a large inventory of
undrilled prospects in the area and have budgeted ten wells to be
drilled in Coal County in 2003.

During 2002 we spent $56.3 million in the Mid-Continent region,

which represented 27% of St. Mary’s capital expenditures. The
Mid-Continent region accounted for 30% of our estimated proved
reserves at December 31, 2002, or 148.7 BCFE. Our reserves in the
region are 95% natural gas and 84% proved developed.

Our 2003 capital expenditures budget in the Mid-Continent region

is $45 million. We plan to utilize up to seven St. Mary operated
drilling rigs throughout the year to participate in 48 wells in the
region. We anticipate operating 36 of the wells to be drilled and
84% of our drilling expenditures in 2003. Approximately $20 million
of our budget in the Mid-Continent region is planned for the Morrow
program, which includes the 16 wells in Northeast Mayfield.
Approximately $8 million will be spent drilling nine Granite Wash
wells. We anticipate spending $6 million to drill ten wells in Coal
County to test the Wapanucka and Cromwell formations. We will
also be looking for niche acquisition opportunities that can provide
exploitation opportunities along with an acceptable return from
existing production.

Northeast Mayfield

Coal County, Oklahoma

Mid-Continent Capital Expenditures
($ millions)

Mid-Continent Proved Reserves
(BCFE)

Mid-Continent Technical Employees

03
(budget)
Exploration & Development (cid:2) Acquisitions

150

125

100

(cid:2)
Rocky Mountain and
Permian Basin Regions

Nance Petroleum Corporation, a wholly owned subsidiary, manages
our operations in the Rocky Mountain and Permian Basin regions.
Our Nance office in Billings, Montana includes a 35-person staff.
Nance has managed our interests in the Williston Basin since 1991,
initially under a joint venture partnership arrangement and as a
wholly owned subsidiary since June 1, 1999. Since 1999 the Nance
office has also managed our interests in other Rocky Mountain
Basins and the Permian Basin.

Rocky Mountain Region

The Rocky Mountain region includes the Williston Basin in
eastern Montana and western North Dakota, the Powder River Basin
in Montana and Wyoming and the Green River Basin in Wyoming.
The Williston Basin, where we have been a dominant operator
since 1991, anchors our activity in the Rocky Mountain region. Our
operations in the Powder River Basin increased significantly in
2001 when we initiated our coalbed methane project in the Hanging
Woman Basin described in the New Regions section of this report.
We recently increased our Powder River Basin presence with the
Flying J Oil & Gas and Big West Oil & Gas acquisition. Our operations
in the Green River Basin began with the 2001 acquisition from
Choctaw II Oil & Gas, Ltd. and have been increased with our recent
acquisition from Flying J and Big West.

Our proved oil and gas reserves in the Rocky Mountain region

have more than doubled with the December 2002 acquisition from
Burlington Resources and the January 2003 Flying J and Big West
acquisition, making us one of the largest operators in the Williston
Basin. Both acquisitions are excellent geographical additions in the
Williston Basin as evidenced by the map on the next page that shows
the properties acquired from Burlington Resources in relation to
the properties we owned prior to the acquisition. These properties
also bring additional exploitation opportunities to our prospect
inventory. We are currently scheduling 3-D seismic surveys over

Bob Nance, President
of Nance Petroleum,
received the prestigious
Chief Roughneck Award
for 2002.

Burlington Acquisition – An Excellent Fit

Samboca Prospect (Pecos County, Texas)

several of the acquired properties. With our ability to use 3-D seismic
to delineate structure and porosity development in the Red River
formation, we are confident we will be able to add significant new
reserves to these properties.

Our 2003 exploration and development capital expenditures
budget for the Rocky Mountain region is $33 million which is a
94% increase over the $17 million spent in 2002. We plan to drill
ten wells in the Williston Basin and seven wells in the Green River
Basin in 2003 in addition to a number of non-operated wells in
each basin. We are also planning to conduct ten 3-D surveys in the
Williston Basin during 2003.

Permian Basin Region

Our Permian Basin region includes properties in eastern New
Mexico and western Texas. Our operations in the region range from
exploration to exploitation to secondary recovery projects. The
Parkway Delaware Unit waterflood increased production from 450
Bbls per day in 1999 when the waterflood was initiated to over
1,200 Bbls per day in 2002. The production decline from the East
Shugart Delaware Unit waterflood, which is an analog to the
Parkway Delaware Unit, flattened in 2002 and is anticipated to start
increasing in 2003.

In 2003 we are planning to drill a significant exploration test
at our Samboca prospect in Pecos County, Texas that will target
the Barnett shale. If successful the well could set up a number of
development locations.

Our 2003 exploration and development capital expenditures

budget for the Permian Basin region is $12 million which is a
200% increase over the $4 million spent in 2002. In addition to
drilling four injection wells in the East Shugart waterflood and
a second well in the Samboca prospect, six in-fill wells are planned
at Ft. Chadbourne along with drilling at our HJSA project area.

Rocky Mountain/Permian
Technical Employees

PROVED RESERVES

246.7 BCFE

% OF TOTAL RESERVES

50%

GAS / OIL MIX

20% / 80%

PROVED DEVELOPED RESERVES

92%

CAPITAL EXP. BUDGET

$45 MILLION

Rocky Mountain/Permian
Capital Expenditures ($ millions)

Rocky Mountain/Permian
Proved Reserves (BCFE)

100

250

200

150

100

03
(budget)
Exploration & Development (cid:2) Acquisitions

(cid:2)
ArkLaTex Region

The ArkLaTex region includes our properties in east Texas, north
Louisiana, southern Arkansas and southern Mississippi. The region
is managed by our 18 person office in Shreveport, Louisiana.
St. Mary has been operating in the ArkLaTex region since 1992.
The region has grown through a series of major field discoveries
complemented by niche acquisitions. The discovery and development
of Bayou D’Arbonne, Haynesville, Box Church and more recently
the Trinidad field has provided the region with significant growth
and excellent economic returns to our company.

In 2002 we made two niche acquisitions totaling $5 million for

properties in the James Lime Horizontal Trend in Shelby County,
Texas. The acquisitions were primarily proved undeveloped locations
in the Huxley field in the 60-mile trend pictured on page 15 that
stretches from Sabine Parish, Louisiana to Angolina County, Texas.
Our initial well drilled on this acreage, the USA “N” No. 2-H, a
horizontal well with two 5,000 foot laterals, was completed in early
2003 and produced at a initial rate of 3,800 Mcf per day. We have
six additional wells planned for the Huxley field in 2003 that could
lead to additional development opportunities beyond 2003.

PROVED RESERVES

55.6 BCFE

% OF TOTAL RESERVES

11%

GAS / OIL MIX

85% / 15%

PROVED DEVELOPED RESERVES

75%

CAPITAL EXP. BUDGET

$19 MILLION

ArkLaTex Capital Expenditures
($ millions)

James Lime Horizontal Trend

03
(budget)
Exploration & Development (cid:2) Acquisitions

ArkLaTex Proved Reserves
(BCFE)

ArkLaTex Technical Employees

Trinidad Field – 2002 Completions

During 2002 we spent $15.8 million in the ArkLaTex region or
8% of our capital expenditures. We participated in 18 gross wells
in the region with an 83% success rate. In the Trinidad field where
we have a 25% working interest, we participated in seven wells
with an 86% success rate. The TXU-Airheart No. 1 was completed
at a rate of 2,200 MCFED in this field. During the fourth quarter we
completed the Dupre No.1 (90% St. Mary interest), a Cotton Valley
well in the Terryville field in north Louisiana at a rate of 2,400
MCFED. We have three wells planned in the Terryville field in 2003
that could create additional development opportunities.

Our 2003 capital expenditures budget in the ArkLaTex region
is $19 million, a 20% increase over our expenditures in 2002. We
plan to participate in 35 gross wells in 2003 and operate 25 of the
wells, which represents 85% of our drilling capital expenditures. In
addition to the wells to be drilled in the Huxley and Terryville fields
mentioned above, we plan to drill three wells in the Trinidad field
and four horizontal wells in the Spider field area in north Louisiana.
The balance of identified wells is a mix of exploratory and develop-
ment wells throughout our prospect inventory. As we do each and
every year, we will continue to search for new opportunities and
potential analog fields in which to apply our proprietary geologic
models and production techniques.

(cid:2)
Gulf Region

The Gulf region includes our properties in the Gulf of Mexico and
onshore in south Louisiana and south Texas. Our 13 person office
in Lafayette, Louisiana manages our diverse activities in the region.
Our presence in south Louisiana dates back to the early 1900’s
when our founders acquired a franchise property in St. Mary Parish
on the shoreline of the Gulf of Mexico. We have been receiving oil
and gas royalty income from these 24,900 acres of fee lands since
1938. Although the fee lands represent a smaller portion of our
company’s production each year, they yielded $3 million of gross
oil and gas royalty revenue in 2002. The onshore Gulf Coast and
Gulf of Mexico became a core area in 1999 with the acquisition of
King Ranch Energy when we acquired producing and non-producing
properties along with 260,000 gross undeveloped acres and a
large 3-D seismic database. The region contributed 23% of our
production in 2003.

The region is focused on development and exploitation oppor-
tunities. Using an extensive 3-D seismic database and subsurface
geological interpretation, our objective is to identify low to medium
risk drilling opportunities. Although the region is characterized by
rapid production decline rates, high initial production rates provide a
quick payout of drilling costs, and generally result in excellent returns
for operators who can minimize the number of dry holes drilled.
We continue to participate in the successful development of
the Judge Digby field, where we have interests ranging from 10%
to 20%. Our interest in the outside operated, ultra-deep field located
in Point Coupe Parish outside Baton Rouge, Louisiana was acquired
as part of the King Ranch Energy acquisition and has cumulative
gross production of over 490 Bcf of gas and 1.2 MMbbl of oil. The

PROVED RESERVES

39.9 BCFE

Gulf Capital Expenditures
($ millions)

% OF TOTAL RESERVES

GAS / OIL MIX

94% / 6%

PROVED DEVELOPED RESERVES

95%

CAPITAL EXP. BUDGET

$17 MILLION

03
(budget)
Exploration & Development (cid:2) Acquisitions

(cid:2)
Judge Digby

field is highly faulted and complex with a series of stacked sands as
depicted on the above cross section. We have participated in six new
discoveries without a dryhole since acquiring an interest in the field
in 1999. Two new Tuscaloosa sand wells were completed during
the year and a third well was sidetracked. The J. Wuertele #3 (14%
St. Mary interest) was drilled to 21,745 feet and completed in the
B-8 zone. During 2002 the well produced at rates as high as 60,000
Mcf per day. The Majors #4 (11% St. Mary interest) was completed
in the C-3 and C-4 Tuscaloosa sands and produced at 36,000 Mcf
per day. In 2003 we are planning two new wells and two sidetrack
wells in Judge Digby, along with a number of recompletions.

During 2002 we acquired additional interest in the High Island
field and plan to drill a second well in the field in 2003 to offset the
successful Miami Corp T-1 S/T (25% St. Mary interest) drilled in
2001. This well was completed in the Camerina sand and continues
to produce at a rate of 8,500 Mcf per day. The offset well will also
test the Marg. Howei sand above, and the Miogyp zone below the
Camerina sand.

We spent $28.3 million in the Gulf region in 2002 that accounted

for 15% of St. Mary’s capital expenditures. In addition to the
above-mentioned wells in Judge Digby, we drilled the Vermillion
281 A-4 (78% St. Mary interest) that had an initial production rate
of 720 Bbl of oil and 750 Mcf of gas per day. We also participated
in the recompletion of 12 wells in the Gulf region with a success
rate of 67%.

Our 2003 capital expenditures budget in the Gulf region is $17
million. In addition to the wells to be drilled in the Judge Digby and
High Island fields, we plan to drill a well in the Erath prospect to
recover by-passed reserves and three wells in our Centennial 3-D
project in the Spindletop field, along with several onshore and
offshore recompletions.

Gulf Proved Reserves
(BCFE)

Gulf Technical Employees

High Island Field

New Projects

We allocate up to 15% of our exploration and development budget
to higher risk, higher potential exploration ideas, non-conventional
exploration and opportunistic acquisitions that may be outside our
current core areas. We have allocated $9 million for large
target projects in 2003. We currently have three identified projects
in our large target portfolio that could add significant reserves if
successful. They range from a basin centered gas play and a coalbed
methane play, that could each become “gas mining” projects, to a
high-risk, high-reward exploration play.

Hanging Woman Basin

Duchesne Deep Project

Hanging Woman Basin

The Hanging Woman Basin is in the northern part of the Powder

River Basin along the Montana-Wyoming border. Through our
wholly owned subsidiary, Nance Petroleum Corporation, we have
amassed a 145,000-gross acre lease position over coalbed
methane resources. In 2002 two pilot projects that include 18 wells
were put on production to evaluate the coalbed methane potential
of the properties. The wells had been drilled to evaluate the
Anderson, Canyon, Cook, Roland and Roberts coal seams. The
majority of the wells were shut in during the third quarter as
production from one of the wells exceeded the allowable venting
standards. Additional testing from the Roberts coal is continuing
in the first quarter of 2003.

Given favorable results from Environmental Impact Statement

decisions expected during 2003, favorable gas prices and successful
testing of the Roberts coal, field development could begin in the
Hanging Woman Basin project as early as 2004.

We are budgeting $1.6 million for additional leases and drilling

in the Hanging Woman Basin project in 2003.

Duchesne Deep

In 2002 we acquired over 12,000 acres of leases in the Uinta
Basin in Utah to drill a basin centered gas test in the Mesaverde
formation at depths between 10,000 and 16,000 feet. Using current
technology and our experience and expertise to complete and
produce gas from wells drilled in tight gas sand formations, our
objective is to economically produce gas from the tight Mesaverde
sand. If successful this basin centered gas play could represent
significant new reserves to St. Mary.

The first well in the program was spud in September 2002 and
offsets a well drilled in the mid-1980’s that had 2,000 feet of sand
over a 4,000-foot section. The Ute Tribal KMV #1-28 was logged
and cased in early 2003. The well will undergo an extensive testing
program. Assuming the Ute Tribal KMV #1-28 well is successful,
$4.8 million is budgeted for additional acreage and to drill and
complete two additional wells in the project area in 2003.

Carrier Prospect

The Carrier prospect is located in Leon County, Texas near the
prolific pinnacle reef production in Leon, Limestone and Robertson
Counties. A 3-D seismic survey completed in 1998 identified a
platform reef complex at depths between 17,000 and 21,000 feet. We
own a majority interest in leases over the prospect and anticipate
drilling an initial 20,000-foot well in 2003 to test the prospect. Due
to the high-risk and cost of the prospect, we are seeking industry
participation. We anticipate retaining a 15% to 25% interest in the
prospect and have budgeted $1.5 million for drilling in 2003.

Board of Directors

Standing left to right:

Sitting left to right:

John M. Seidl
San Francisco, California
Chief Program Officer, Environment
Gordon and Betty Moore Foundation

Arend J. Sandbulte
Duluth, Minnesota
Director and Retired Chairman
ALLETE, Inc.

Barbara M. Baumann
Denver, Colorado
Executive Vice President
Associated Energy Managers, L.L.C.

Not pictured:
Robert L. Nance
Billings, Montana
President
Nance Petroleum Corporation

William J. Gardiner
Houston, Texas
Chief Financial Officer
King Ranch Inc.

Ronald D. Boone
Denver, Colorado
Executive Vice President and
Chief Operating Officer
St. Mary Land & Exploration Co.

Larry W. Bickle
Houston, Texas
Managing Director
Haddington Ventures, L.L.C.

Mark A. Hellerstein
Denver, Colorado
Chairman, President and
Chief Executive Officer
St. Mary Land & Exploration Co.

Thomas E. Congdon
Denver, Colorado
Retired Chairman
St. Mary Land & Exploration Co.

Kevin E. Willson
Vice President – Mid-Continent,
Drilling and Production

Douglas W. York
Vice President – Acquisitions and
Reservoir Engineering

Garry A. Wilkening
Vice President – Administration
and Controller

Linda A. Ditsworth
Assistant Vice President –
Land and Assistant Secretary

Michael F. Roach
Assistant Vice President –
External Reporting

Mark T. Solomon
Assistant Vice President –
Financial Reporting

David J. Whitcomb
Assistant Vice President –
Gas Marketing

Officers

Mark A. Hellerstein
Chairman, President and
Chief Executive Officer

Ronald D. Boone
Executive Vice President and
Chief Operating Officer

Robert L. Nance
Senior Vice President

Robert T. Hanley
Vice President –
Business Development

W. David Hart
Vice President – Geology, ArkLaTex

George M. Hearne IV
Vice President – General Manager,
ArkLaTex

Charles M. Jones
Vice President – General Manager,
Gulf Coast

Richard C. Norris
Vice President – Finance,
Treasurer and Secretary

Milam Randolph Pharo
Vice President – Land and Legal,
Assistant Secretary

Julian C. Pope
Vice President – Mid-Continent,
Land and Administration

Michael H. Rosenzweig
Vice President – Engineering,
ArkLaTex

Shareholder Information

INVESTOR SERVICES

You can reach our corporate office at:
St. Mary Land &
Exploration Company
1776 Lincoln Street, Suite 700
Denver, CO 80203
303-861-8140

We also have offices in Tulsa, Oklahoma, Billings, Montana
and Shreveport and Lafayette, Louisiana

St. Mary Operating Company
7060 South Yale, Suite 800
Tulsa, OK 74136-5741
918-488-7600

St. Mary Land & Exploration Company
330 Marshall Street, Suite 1200
Shreveport, LA 71101
318-424-0804

Nance Petroleum Corporation
550 N. 31st Street, Suite 500
Billings, MT 59101
406-245-6248

St. Mary Energy Company
202 Rue Iberville, Suite 110
Lafayette, LA 70508-3295
337-232-3100

DESIGN BY: MARK MULVANY GRAPHIC DESIGN (DENVER, COLORADO)

PHOTOGRAPHY BY: RON COPPOCK-KING (DENVER, COLORADO)

INVESTOR RELATIONS CONTACT

Stockholders, securities analysts or portfolio managers who
have questions or need information concerning St. Mary may
contact Bob Hanley Vice President–Business Development at
303-863-4377. E-mail: bhanley@stmaryland.com

Annual Reports, 10-Ks, 10-Qs
To receive an information packet on St. Mary, or to be added to
our mailing list, contact:
Investor Relations Coordinator, at 303-863-4322
E-mail: information@stmaryland.com

Please visit our web site at: www.stmaryland.com

Stock Transfer Agent
Any stockholder with questions or inquiries regarding stock
certificate holdings, changes in registration address, lost
certificates, dividend payments and other stockholder account
matters should be directed to St. Mary Land & Exploration
Company’s transfer agent at the following address or
phone number:

Computershare Investor Services
350 Indiana Street, Suite 800
Golden, CO 80401
303-262-0600

NYSE: SM
The Company’s common stock is listed for trading on the New
York Stock Exchange under the symbol SM.

The price range of the Company’s common stock by quarters
for the last two years is provided below. As of March 3, the
Company had 31,433,900 shares of common stock outstanding.

Market Prices

2002— Quarter Ended

2001— Quarter Ended

March 31

June 30

September 30

December 31

high

low

high

low

$23.25

$18.75

$35.00

$20.63

25.05

24.71

27.35

21.00

19.00

23.16

25.24

21.81

22.20

19.25

14.58

14.65

St. Mary Land & Exploration Company

1776 Lincoln Street

Suite 700

Denver, Colorado 80203

Telephone: (303) 861-8140

Fax: (303) 861-0934

Internet: www.stmaryland.com