Mw Solution

MW Petroleum Apache's cost of capital Unlevered cost of capital: Risk free rate (10yr bond) Unlevered beta Equity risk premium Unlevered cost of capital

8.03% 0.82 5.70% 12.70%

From Exhibit 7 Aggregate MW Projections Production: Net Crude and Condensates (MB) Net Gas (MMCF) Casf Flows (in Millions): Revenues-Oil Revenues-Gas Total Revenues Direct Production Taxes Direct Operating Expense Overhead Fin. Book DD&A Net Income Before Taxes Federal and state income taxes: Current Deferred Total Income Taxes Profit Contribution Non-Cash charges Cash from Operations Capital Expenditures Free Cash Flow Terminal Value Total PV Total PV Interest tax shields: Assumed coupon on debt Assumed initial debt Year 1 interest Tax rate Year 1 tax shield Assumed cost of debt Growth rate (= g of op cash flow) Value of tax shield (perpetuity) Value of "Additional assets" Total value of MW

Aggregate MW Production and cash Flow Projections ($ millions except as noted) 1

2

3

4

5

6

7

8

9

10.0 50.2

9.8 49.5

8.9 43.7

8.1 37.5

7.1 31.8

6.5 28.1

6.5 26.2

6.6 24.4

6.4 21.6

203.9 100.3 304.2

210.9 106.3 317.2

202.3 104.7 307.0

190.3 97.9 288.2

183.0 90.3 273.3

176.1 85.4 261.5

184.5 84.0 268.5

194.4 80.0 274.4

197.5 77.2 274.7

27.5 81.7 36.6 71.4 87.0

28.5 83.5 38.7 60.0 106.5

27.3 84.1 36.3 49.6 109.7

25.5 85.9 33.6 45.7 97.5

24.1 89.7 31.0 37.0 91.5

23.0 92.2 28.8 30.2 87.3

24.1 93.7 29.2 31.6 89.9

25.0 97.0 29.3 28.9 94.2

25.4 93.3 27.9 23.0 105.1

41.2 (9.3) 31.9 59.6 27.7 87.3 34.1

37.4 (7.0) 30.4 56.9 23.3 80.2 9.4

39.5 (7.9) 31.6 58.3 23.6 81.9 1.9

39.9 (7.1) 32.8 61.4 21.8 83.2 2.6

40.7 (4.9) 35.8 69.3 18.1 87.4 2.0

54.2 57.6 55.3 48.3 (23.8) (19.4) (15.8) (13.2) 30.4 38.2 39.5 35.1 56.6 68.3 70.2 62.4 47.6 40.6 33.8 32.4 104.2 108.9 104.0 94.8 42.6 33.8 41.8 57.5 61.6

75.1

62.2

37.3

53.2

70.8

80.0

80.6

85.4

61.6 54.7 481.9

75.1 59.1

62.2 43.4

37.3 23.1

53.2 29.3

70.8 34.5

80.0 34.6

80.6 31.0

85.4 29.1

14.50% 300.0 43.5 36% 15.7 12.00% -4.06% 97.5 25.0 604.4

ns except as noted) 10

11

12

13

14

15

5.8 18.3

5.2 15.9

4.6 13.1

4.3 11.8

3.8 10.2

3.4 9.3

190.2 73.4 263.6

182.7 70.0 252.7

173.2 62.8 236.0

167.7 58.1 225.8

161.7 56.1 217.8

151.3 53.5 204.8

24.3 93.2 26.3 19.2 100.6

22.5 82.6 23.2 18.0 106.4

21.5 82.0 21.4 15.7 95.4

20.4 82.0 20.1 13.8 89.5

19.4 81.5 19.1 12.3 85.5

18.4 80.6 17.8 11.0 77.0 29.8 (1.8) 28.0 49.0 9.3 58.3 0.2

39.4 (4.1) 35.3 65.3 15.1 80.4 3.9

40.9 (3.7) 37.2 69.2 14.3 83.5 11.0

38.8 (3.2) 35.6 59.8 12.5 72.3 0.0

34.2 (2.6) 31.6 57.9 11.3 69.2 0.6

32.8 (2.0) 30.8 54.7 10.4 65.1 1.1

76.5

72.5

72.3

68.6

64.0

76.5 23.1

72.5 19.5

72.3 17.2

68.6 14.5

64.0 12.0

58.1 283.1 341.2 56.7

based on Exhibit 3

Proved Developed Reserves: Production and cash Flow Projections ($ millions except as noted)

Proved Developed Reserves

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

Production Crude and condensates (MB) Gas (MMCF)

9.4 45.3

8.1 36.8

7.1 29.5

6.3 25.0

5.3 21.7

4.5 18.6

3.7 16.5

2.9 14.9

2.4 12.8

2.2 11.3

1.9 10.3

192.0 90.5 282.5

180.4 82.1 262.5

168.2 73.5 241.7

154.5 67.8 222.3

139.4 64.1 203.5

124.5 59.2 183.7

109.1 56.7 165.8

94.7 54.2 148.9

82.7 50.4 133.1

75.7 47.6 123.3

72.0 45.8 117.8

25.5 79.9 33.9 58.0 85.2

23.6 80.3 32.2 45.2 81.2

21.6 79.8 28.6 35.6 76.1

19.9 78.9 25.9 29.1 68.5

18.0 76.0 23.0 23.8 62.7

16.2 71.0 20.4 19.1 57.0

14.4 63.8 18.3 19.6 49.7

12.7 56.1 16.1 16.6 47.4

11.4 49.9 13.9 13.3 44.6

10.5 48.2 12.6 10.7 41.3

9.8 45.5 10.8 9.0 42.7

48.5 (19.1) 29.4 55.8 38.9 94.7 5.4

44.4 (15.2) 29.2 52.0 30.1 82.1 2.0

39.3 (11.8) 27.5 48.6 23.7 72.3 2.7

34.1 (9.5) 24.6 43.9 19.6 63.5 0.5

29.9 (7.7) 22.2 40.5 16.1 56.6 0.6

25.9 (5.9) 20.0 37.0 13.2 50.2 0.8

23.6 (6.2) 17.4 32.3 13.5 45.8 0.8

21.5 (5.1) 16.4 31.0 11.5 42.5 0.6

19.3 (3.9) 15.4 29.2 9.5 38.7 1.1

17.5 (3.1) 14.4 26.9 7.7 34.6 0.4

17.4 (2.5) 14.9 27.8 6.4 34.2 0.1

89.3

80.1

69.6

63.0

56.0

49.4

45.0

41.9

37.6

34.2

34.1

89.3 79.2 388.7

80.1 63.1

69.6 48.6

63.0 39.0

56.0 30.8

49.4 24.1

45.0 19.5

41.9 16.1

37.6 12.8

34.2 10.3

34.1 9.2

Cash Flows (in millions): Revenues-Oil Revenues-Gas Total Revenues Direct Production Taxes Direct Operating Expense Overhead Fin. Book DD&A Net Income Before Taxes Federal and state income taxes: Current Deffered Total income taxes Profit contribution Non-cash charges Cash from operations Capital expenditures Cash flow Terminal value Total PV Total PV

2002

2003

2004

2005

1.7 8.5

1.5 7.6

1.4 6.7

1.2 6.2

66.7 41.1 107.8

63.4 38.2 101.6

59.9 36.9 96.8

56.6 36.1 92.7

9.1 44.1 9.7 7.5 37.4

8.5 44.5 9.0 6.3 33.3

8.1 43.7 8.3 5.3 31.4

7.7 43.0 7.8 4.5 29.7

15.2 (2.2) 13.0 24.4 5.3 29.7 0.1

13.4 (1.8) 11.6 21.7 4.5 26.2 0.1

12.7 (1.4) 11.3 20.1 4.0 24.1 0.5

12.0 (1.2) 10.8 18.9 3.3 22.2 0.1

29.6

26.1

23.6

29.6 7.0

26.1 5.5

23.6 4.4

22.1 92.1 114.2 19.0

after Exhibit 4

Proved Undeveloped Reserves

Proved Undeveloped Reserves: Production and cash Flow Projections ($ millions except a

1

2

3

4

5

6

Production Crude and condensates (MB) Gas (MMCF)

0.3 1.7

0.6 4.9

0.5 5.6

0.5 3.3

0.5 2.3

0.5 2.0

Cash Flows (in millions): Revenues-Oil Revenues-Gas Total Revenues

6.0 3.4 9.4

14.0 11.3 25.3

12.9 14.5 27.4

11.8 9.1 20.9

12.3 6.7 19.0

13.2 6.2 19.4

0.9 1.2 1.1 12.3 (6.1)

2.4 1.5 3.1 12.6 5.7

2.3 2.0 3.2 10.6 9.3

1.8 2.3 2.4 9.3 5.1

1.7 2.8 2.1 8.1 4.3

1.7 3.4 2.2 6.7 5.4

2.1 (4.1) (2.0) (4.1) 8.3 4.2 17.5

6.4 (4.2) 2.2 3.5 8.4 11.9 17.7

7.0 (3.5) 3.5 5.8 7.1 12.9 5.3

5.0 (3.0) 2.0 3.1 6.3 9.4 4.1

4.3 (2.6) 1.7 2.6 5.5 8.1 3.5

4.1 (2.1) 2.0 3.4 4.6 8.0 1.3

(13.3)

(5.8)

7.6

5.3

4.6

6.7

(13.3) (11.8) 42.5

(5.8) (4.6)

7.6 5.3

5.3 3.3

4.6 2.5

6.7 3.3

17.5 16.2 31.4

17.7 15.2

4.2

11.9

7.6

5.3

4.6

6.7

4.2 3.7 71.9

11.9 9.4

7.6 5.3

5.3 3.3

4.6 2.5

6.7 3.3

Direct Production Taxes Direct Operating Expense Overhead Fin. Book DD&A Net Income Before Taxes Federal and state income taxes: Current Deferred Total income taxes Profit contribution Non-cash charges Cash from operations Capital expenditures Cash flow Terminal value Total PV Total PV (standard NPV) Development capex PV @ risk free rate Total PV Cash flow net of dev cost Terminal value Total PV @ cost of capital Total PV Option valuation Time to expiration (yrs) Risk free rate Volatility d1 N(d1) d2 N(d2)

5 8.03% 50% 1.660621 0.951605 0.542587 0.706293

6 8.03% 50% 1.683559 0.953867 0.458814 0.676816

7 8.03% 50% 1.713865 0.956723 0.390989 0.652097

Call value

53.63

55.51

57.17

Flow Projections ($ millions except as noted)

7

8

9

10

11

12

13

14

15

0.5 2.0

0.7 2.2

0.8 2.3

0.7 1.9

0.7 1.6

0.7 1.3

0.7 1.3

0.7 1.0

0.6 0.9

16.1 6.6 22.7

21.0 7.1 28.1

27.1 8.2 35.3

25.2 7.2 32.4

25.3 6.6 31.9

26.8 5.5 32.3

28.7 5.2 33.9

30.9 5.2 36.1

29.3 4.5 33.8

2.0 3.3 2.5 6.8 8.1

2.5 3.3 3.0 5.8 13.5

3.1 4.5 3.7 4.6 19.4

2.8 3.4 3.3 3.7 19.2

2.8 3.7 2.9 4.3 18.2

3.0 4.2 2.9 3.6 18.6

3.1 4.5 3.0 3.0 20.3

2.9 4.7 3.1 2.5 22.9

3.0 4.8 2.8 2.1 21.1

5.1 (2.1) 3.0 5.1 4.7 9.8 0.1

6.5 (1.8) 4.7 8.8 4.0 12.8 0.3

8.0 (1.3) 6.7 12.7 3.2 15.9 0.0

7.7 (1.1) 6.6 12.6 2.6 15.2 0.1

7.6 (1.2) 6.4 11.8 3.1 14.9 8.1

7.5 (1.0) 6.5 12.1 2.5 14.6 0.0

7.9 (0.9) 7.0 13.3 2.2 15.5 0.2

8.8 (0.7) 8.1 14.8 1.9 16.7 0.0

8.1 (0.6) 7.5 13.6 1.6 15.2 0.0

9.7

12.5

15.9

15.1

6.8

14.6

15.3

16.7

9.7 4.2

12.5 4.8

15.9 5.4

15.1 4.6

6.8 1.8

14.6 3.5

15.3 3.2

16.7 3.1

15.2 67.8 83.0 13.8

9.7

12.5

15.9

15.1

6.8

14.6

15.3

16.7

9.7 4.2

12.5 4.8

15.9 5.4

15.1 4.6

6.8 1.8

14.6 3.5

15.3 3.2

16.7 3.1

15.2 67.8 83.0 13.8

after Exhibit 5

Probable Reserves

Probable Reserves: Production and cash Flow Projections ($ millions except as noted)

1

2

3

4

5

6

7

Production Crude and Condensates (MB) Gas (MMCF)

0.2 2.8

0.3 4.2

0.4 4.9

0.4 5.3

0.5 4.2

0.5 3.8

0.7 4.5

Casf Flows (in Millions): Revenues-Oil Revenues-Gas Total Revenues

3.7 5.8 9.5

6.3 9.4 15.7

8.0 11.6 19.6

9.6 14.1 23.7

13.3 12.3 25.6

14.3 12.3 26.6

17.0 13.0 30.0

0.8 0.4 1.3 0.4 6.6

1.3 0.7 1.9 0.8 11.0

1.7 0.8 2.3 1.2 13.6

2.0 2.6 2.8 2.5 13.8

2.2 4.4 3.0 1.6 14.4

2.3 4.7 2.9 1.3 15.4

2.7 5.3 3.1 1.5 17.4

2.9 (0.2) 2.7 3.9 0.2 4.1 10.0

3.7 0.0 3.7 7.3 0.8 8.1 4.3

4.8 (0.2) 4.6 9.0 1.1 10.1 11.4

4.8 (0.2) 4.6 9.2 2.2 11.4 14.0

3.8 0.3 4.1 10.3 1.9 12.2 2.6

4.2 0.3 4.5 10.9 1.6 12.5 0.5

5.5 0.1 5.6 11.8 1.6 13.4 0.3

Direct Production Taxes Direct Operating Expense Overhead Fin. Book DD&A Net Income Before Taxes Federal and state income taxes: Current Deffered Total Income Taxes Profit Contribution Non-Cash charges Cash from Operations Capital Expenditures Cash Flow Terminal Value Total PV Total PV

(5.9)

3.8

(1.3)

(2.6)

9.6

12.0

13.1

(5.9) (5.2) 42.5

3.8 3.0

(1.3) (0.9)

(2.6) (1.6)

9.6 5.3

12.0 5.9

13.1 5.7

Development capex PV @ risk free rate Total PV

10.0 9.3 32.3

4.3 3.7

11.4 9.0

14.0 10.3

4.1

8.1

10.1

11.4

9.6

12.0

13.1

4.1 3.6 71.4

8.1 6.4

10.1 7.1

11.4 7.1

9.6 5.3

12.0 5.9

13.1 5.7

Cash flow net of dev cost Terminal value Total PV @ cost of capital Total PV Option valuation Time to expiration (yrs) Risk free rate Volatility d1 N(d1) d2 N(d2)

5 8.03% 50% 1.628969 0.94834 0.510935 0.695302

6 7 8.03% 8.03% 50% 50% 1.654666 1.687115 0.951004 0.954209 0.429921 0.364239 0.666373 0.64216

Call value

52.72

54.65

56.34

lions except as noted)

8

9

10

11

12

13

14

15

0.9 4.2

0.8 3.3

0.7 2.4

0.6 2.1

0.5 2.0

0.4 1.5

0.4 1.3

0.3 1.1

19.6 11.6 31.2

20.3 10.7 31.0

19.8 9.3 29.1

18.6 9.5 28.1

17.1 10.1 27.2

15.8 8.8 24.6

14.5 8.1 22.6

13.4 7.3 20.7

2.9 5.7 3.3 2.0 17.3

3.1 6.0 3.0 1.5 17.4

3.0 6.4 2.8 1.4 15.5

2.8 7.0 2.6 1.4 14.3

2.7 7.4 2.5 1.4 13.2

2.5 7.4 2.2 1.4 11.1

2.3 7.3 2.0 1.3 9.7

2.1 7.2 1.9 1.3 8.2

5.8 0.0 5.8 11.5 1.9 13.4 0.6

5.5 0.0 5.5 11.9 1.6 13.5 0.3

5.4 0.0 5.4 10.1 1.4 11.5 0.5

5.0 0.0 5.0 9.3 1.4 10.7 0.5

4.7 0.0 4.7 8.5 1.4 9.9 0.0

4.0 0.0 4.0 7.1 1.4 8.5 0.2

3.5 0.0 3.5 6.2 1.4 7.6 0.5

3.0 0.0 3.0 5.2 1.3 6.5 0.0

12.8

13.2

11.0

10.2

9.9

8.3

7.1

12.8 4.9

13.2 4.5

11.0 3.3

10.2 2.7

9.9 2.4

8.3 1.8

7.1 1.3

6.5 51.0 57.5 9.6

12.8

13.2

11.0

10.2

9.9

8.3

7.1

12.8 4.9

13.2 4.5

11.0 3.3

10.2 2.7

9.9 2.4

8.3 1.8

7.1 1.3

6.5 51.0 57.5 9.6

after Exhibit 6

Possible Reserves

Possible Reserves: Production and cash Flow Projections ($ millions except as noted)

1

2

3

4

5

6

7

Production Crude and Condensates (MB) Gas (MMCF)

0.1 0.5

0.8 3.5

0.9 3.8

0.8 3.9

0.8 3.6

1.0 3.7

1.6 3.2

Casf Flows (in Millions): Revenues-Oil Revenues-Gas Total Revenues

2.1 0.6 2.7

10.1 3.6 13.7

13.2 5.1 18.3

14.4 6.9 21.3

18.0 7.2 25.2

24.1 7.7 31.8

42.3 7.7 50.0

0.3 0.2 0.4 0.7 1.1

1.2 1.0 1.6 1.4 8.5

1.6 1.5 2.1 2.2 10.9

1.8 2.1 2.5 4.9 10.0

2.2 6.5 2.9 3.5 10.1

2.8 13.1 3.4 3.1 9.4

5.0 21.2 5.2 3.6 15.0

0.8 (0.4) 0.4 0.7 0.3 1.0 9.7

3.1 0.0 3.1 5.4 1.4 6.8 9.8

4.2 (0.3) 3.9 7.0 1.9 8.9 22.4

4.4 (0.5) 3.9 6.1 4.4 10.5 38.9

3.2 0.7 3.9 6.2 4.2 10.4 27.4

3.2 0.7 3.9 5.5 3.8 9.3 6.8

5.4 0.2 5.6 9.4 3.8 13.2 0.7

Cash Flow Terminal Value Total PV Total PV

(8.7)

(3.0)

(13.5)

(28.4)

(17.0)

2.5

12.5

(8.7) (7.7) 8.6

(3.0) (2.4)

(13.5) (9.4)

(28.4) (17.6)

(17.0) (9.3)

2.5 1.2

12.5 5.4

Development capex PV @ risk free rate Total PV

9.7 9.0 86.6

9.8 8.4

22.4 17.8

38.9 28.6

27.4 18.6

6.8 4.3

1.0

6.8

8.9

10.5

10.4

9.3

12.5

1.0 0.9 83.1

6.8 5.4

8.9 6.2

10.5 6.5

10.4 5.7

9.3 4.5

12.5 5.4

Direct Production Taxes Direct Operating Expense Overhead Fin. Book DD&A Net Income Before Taxes Federal and state income taxes: Current Deffered Total Income Taxes Profit Contribution Non-Cash charges Cash from Operations Capital Expenditures

Cash flow net of dev cost Terminal value Total PV @ cost of capital Total PV Option valuation Time to expiration (yrs) Risk free rate Volatility d1 N(d1) d2 N(d2)

5 8.03% 50% 0.880888 0.810811 -0.23715 0.406272

6 7 8.03% 8.03% 50% 50% 0.971764 1.05487 0.834416 0.854258 -0.25298 -0.26801 0.400141 0.394348

Call value

43.81

47.91

51.50

ions except as noted)

8

9

10

11

12

13

14

15

2.1 3.0

2.4 3.2

2.3 2.8

2.0 1.9

1.7 1.3

1.6 1.4

1.4 1.2

1.2 1.0

59.1 7.0 66.1

67.4 7.8 75.2

69.4 9.3 78.7

66.8 8.1 74.9

62.7 6.1 68.8

59.7 5.9 65.6

56.4 5.9 62.3

52.0 5.7 57.7

6.8 31.9 6.9 4.5 16.0

7.9 33.0 7.3 3.5 23.5

8.0 35.1 7.6 3.3 24.7

7.1 26.4 6.9 3.3 31.2

6.7 26.3 6.3 3.2 26.3

6.4 25.7 5.9 3.2 24.4

6.1 25.8 5.7 3.1 21.6

5.6 25.6 5.3 3.1 18.1

6.1 (0.2) 5.9 10.1 4.4 14.5 1.0

7.8 0.2 8.0 15.5 3.7 19.2 0.7

8.9 0.0 8.9 15.8 3.3 19.1 3.0

10.9 0.0 10.9 20.3 3.3 23.6 2.3

9.4 0.0 9.4 16.9 3.3 20.2 0.0

8.8 0.0 8.8 15.6 3.2 18.8 0.1

7.9 0.0 7.9 13.7 3.2 16.9 0.0

6.7 0.0 6.7 11.4 3.1 14.5 0.0

13.5

18.5

16.1

21.3

20.2

18.7

16.9

13.5 5.2

18.5 6.3

16.1 4.9

21.3 5.7

20.2 4.8

18.7 4.0

16.9 3.2

14.5 72.3 86.8 14.4

13.5

18.5

16.1

21.3

20.2

18.7

16.9

13.5 5.2

18.5 6.3

16.1 4.9

21.3 5.7

20.2 4.8

18.7 4.0

16.9 3.2

14.5 72.3 86.8 14.4

MW Petroleum Summary of Valuation Ignoring Value of Financing and Exta Assets

Proved Developed Reserves Proved Undeveloped Reserves Risk Weighted Probable Reserves Risk Weighted Possible Reserves

$ $ $ $

Total Value

$

DCF Option (6-yr) 388.72 $ 388.72 42.48 $ 55.51 42.53 $ 54.65 8.61 $ 47.91 482.33

$

546.79